MGI Chapter 2 Strategic HRM
Two Phases of Strategic Management Strategic implementation requires that
"An organization has a variety of structural forms and organizational processes to choose from when implementing a given strategy" • Five variables • organizational structure • HRM tasks •task design •selection, training, and development of people •reward systems • types of information and information systems
Linkage Between HRM and the Strategic Management Process
- Strategic choice • Where to compete? • How to compete? • With what will we compete?
Strategic Planning and HRM Linkages
1. Administrative Linkage (4) - 0 value on HR - Makes decisions and tells everyone at the same time 2. One-Way Linkage (3) - low value on HR - Makes strategies and tells HR before telling everyone else 3. Two-Way Linkage (2) - medium value on HR ▪ Asks HR for issues and input and they take it into consideration at the meeting 1. Integrative Linkage (1) - High value on HR - HR is at the meeting with all other executives - More conversation and discussions - HR is at the same level with everyone else at meeting - Higher value of HR - Usually has chief HR Manager -> meaning they value employees input
Components for Strategic Formulation (1st phase)
1. Mission and Goals 2. Swat Analysis
There are 5 variables that determine success in strategy implementation,
1. Organizational Structure 2. Task Design 3. Selection, Training, and Development of People; 4. Reward Systems 5. Types of Information and Information Systems HRM has primary responsibilities of 3 out of the 5 variables, Task Design, Selection, Training, and Development of People, and Reward Systems
Two Phases of Strategic Management
1. Strategy Formulation - strategic planning groups decide on a strategic direction by defining the company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses 2. Strategy Implementation - Organization follows through on the strategy, devising the structure and allocating the resourcess
2nd phase Strategic Integration (or implementation)
1. Task Design 2. Resource Allocation 3. Rewards
Job Design
A addresses what tasks should be grouped into a particular job
Strategy Implementation Internal Growth Strategies
Companies must constantly hire, transfer and promote individuals. • Compensation weighted towards achievement • Joint ventures require conflict resolution
Strategy Implementation Directional Strategies
Concentration Internal Growth Mergers and Acquisitions Downsizings
The Role of Human Resources in Providing Strategic Competitive Advantage Emergent Strategies Intended Strategies
ES: • Consist of the strategies that evolve from the grassroots of the organization • Can be thought of as what organizations actually do, as opposed to what they intend to do • Usually identified by those lower in the organizational hierarchy IS: The result of the rational decision-making process used by top managers as they develop a strategic plan
Strategy Implementation Labor and Employee Relations
Employees - asset or expense? • How much should employees participate in decision making? • What rights do employees have? • What is the company's responsibility to employees? • The approach a company takes in making these decisions can result in successfully achieving its short and long-term goals or ceasing to exist.
❖ Jack Welch's main point:
HR department important because they know where to best place workers to get the most out of them!
Business Model
How the firm will create value for customers profitably
SWOT Analysis Internal External why do companies use SWAT analysis?
Internal - Strengths and Weaknesses External - Opportunities and Threats they're trying to set strategies to figure out what their limit is, what their weaknesses are and work off of that.
Strategy Implementation Mergers and Acquisitions
M&A on the increase HR needs to be involved • People issues can cause problems • Different organizational cultures • Conflict resolution
Strategy Formulation
Mission Goals External Analysis Internal Analysis Strategic Choice
Job Analysis:
Process of getting detailed information about jobs
Strategy Implementation HRM Needs in Strategic Types Role behaviors • Cost strategies • Differentiation strategies
RB: Behaviors required of an individual in his or her role as a job holder in a social work environment CS: companies define the skills they require and invest in training employees in these skill areas. DS: Employees are expected to exhibit role behaviors that include cooperating with others, developing new ideas, and taking a balanced approach to process and results.
HRM Function must be integrally involved in the company's strategic management process
So that HR can identify and solve problems
Internal Growth Strategy
Strategies focusing on market development, product development, innovation, or joint ventures make up IGS
Strategic HRM
The pattern of planned HR activities and deployments intended to enable an organization to achieve its goals
External Growth Strategy
Those attempting to integrate vertically or horizontally or to diversify are exhibiting an EGScon
Strategy Implementation Downsizing
Trend has slowed since 2008 • Tends to fall short of meeting companies' financial and organizational objectives, and has negative effects on employee morale and productivity • The HRM function must "surgically" reduce the workforce by cutting only the workers who are less valuable in their performance • Early retirement programs usually result in rehiring • Survivor morale issues
companies with a highly developed learning capabilities have a...
competitive advantage
the 2 phases of strategic management plan are
distinct yet interchangeable
the process of determining what tasks should be grouped into a particular job is known as
job design
generic strategies
similarities in the ways companies attempt to compete in a single industry
Goal of Strategic Management is
to deploy and allocate resources in a way that gives an organization competitive advantage
6 menus of HR practice
when companies choose their implementation a strategy
Strategic Management
• A process • An approach to addressing the competitive challenges an organization faces • Managing the "pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole." • Developing strategies for achieving the company's goals in light of its current environment is a process to address the organization's competitive challenges by integrating goals, policies and action sequences into a cohesive whole.
The Role of Human Resources in Providing Strategic Competitive Advantage Enhancing Firm Competitiveness
• Develop a human capital pool that gives the company the unique ability to adapt to an ever-changing environment. • Learning organization
Strategy Implementation Vertical Alignment
• HR practices and processes address the strategic needs of the business. • The link between strategy and HR practices is primarily through people. - Job analysis and design - Recruitment - Selection systems - Training and development programs - Performance management systems - Reward systems - Labor relations programs
Strategy Implementation Pay Structure, Incentives, and Benefits
• High pay and/or benefits relative to competitors can help company attract and retain high-quality employees, but might have a negative impact on overall labor costs. • Tying pay to performance can elicit specific activities and levels of performance from employees
Strategy Implementation Concentration Strategies
• Require that the company maintain the current skills that exist in the organization • Need for skill-based training and fair compensation
Strategic Types Porter's Cost and Differentiation
• Value can be created by reducing costs. • Value can be created by differentiating a product or service so the company can charge a premium price relative to its competitors