Strategic Human Resource Management:

Linking the People with the Strategic Needs of

the Business

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Strategic Management
Strategic management
The process of identifying and executing the
organizations mission by matching its
capabilities with the demands of its
environment.
Strategy
A strategy is a course of action.
The companys long-tem plan for how it will
balance its internal strengths and weaknesses
with its external opportunities and threats to
maintain a competitive advantage.
Business Vision and Mission
Vision
A general statement of its intended direction
that evokes emotional feelings in organization
members.
Mission
Spells out who the company is, what it does,
and where its headed.
Strategic Management Process
Strategic management tasks
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Translate the Mission into Strategic Goals
Step 4: Formulate a Strategy to Achieve the
Strategic Goals
Step 5: Implement the Strategy
Step 6: Evaluate Performance
Overview of Strategic Management
Strategic Human Resources Managemennt
Definisi:
Professional:

Strategic Human Resources Management: getting everybody from the top of the
human organization to the bottom doing things that make the business successful
Horace Parker, director of strategic education at the Forest Products Company.

Strategic Human Resources Management: getting everybody from the top of the
human organization to the bottom doing things that make the business successful
Bill Reffet, Senior Vice President of Personnel at the Grand Union.

Academics:

Strategic Human Resources Management is largely about integration and adaptation.

Its concern is to ensure that:
1. Human Resources (HR) management is fully integrated with the strategy and the
strategic needs of the firm;
2. HR policies cohere both across policy areas and across hierarchies;
3. HR practices are adjusted, accepted, and used by line managers and employees
as part of their everyday work.
Linking Corporate and HR Strategies
 The 5-P Model
ORGANIZATIONAL STRATEGY
Initiates the process of identifiying strategic
business needs and provides specific qualities
to them

INTERNAL EXTERNAL
CHARACTERISTICS CHARACTERISTICS

STRATEGIC BUSINESS NEEDS

Expressed in mission statements or vision
statements and translated into strategic
business objectives

STRATEGY HUMAN RESOURCES

MANAGEMENT ACTIVITIES

1. Human Resources Philosophy

2. Human Resources Policies
3. Human Resources Programs
4. Human Resources Practices
5. Human Resources Processes
Benefit The 5 P Model
5P model shows the interrelatedness of activities that are
often treated separately in the literature.

By using the 5P Model, we may gain greater understanding of

this complex interaction.

It highlights just how significant the strategy-activity link can

be.

HR Managers will find the process to meld human resources

activities more effectivelly
1. Human Resources Philosophy
Expressed in statements defining business values and culture

Expresses how to treat and value people

This statement is typically very general;

HR Philosophy can be dound in its statement of business values;
HR Philosophy are part of a larger statement of business (corporate) culture or
business values;
These generally follow from a statement of the firms vision or strategic business
objectives, and vision and objectives follow from its strategy.

Example: Pepsi-Cola International-PCI

Vision: Being No 1 by Creating Value through Leadership and Excellence
This vision includes being: the fastest growing, the most committed to customer service and
attuned to customer needs, the best operators, the best people-oriented company
PCIs Values:
Leadership In Our Brands
Leadership In Marketing
Leadership In Operations
2. Human Resources Policies
Expressed as shared values (guidelines)

Establishes guidelines for action on people-related

business issues and HR Programs

All of these statements provide guidelines for action on people-related business issues and
for the development of HR programs and practices based on strategic needs.
Flowing from the strategic business needs, they may include the need to hire skilled workers,
the need to improve worker prosuctivity, or the need to reduce health care costs.

Example: Pepsi-Cola International-PCI

One of the value is high standards of personal performance and the need was to develop communication skills
that would foster such performance in a decentralized international environment.

HR Policy at PCI:
Communication in an international environment is difficult is difficult. For PCI, the overlay of 150 potentially
different national culture makes it likely that some level of misunderstanding on almost any topic will occur on
regular basis.

Solution:
Instant Feedback
3. Human Resources Programs
Articulated as Human Resourcs strategies

Coordinates efforts to facilitate change to adress major

people-related business issues

Shaped by HR Policies, HR programs represent coordinated HR efforts specially intended to

initiate, disseminate, and sustain strategic organizational change efforts necessitated by the
strategic business needs.
These efforts, have several elements in common: 1) They receive their impetus from the
firms strategic intentions and directions; 2) They involve human resources management
issues; 3) They also share the reality of having strategic goals against which program
effectiveness can be

Example:FPC
In 1980s , FPC became aware of a decline in large-volume and commodity lumber business. FPC
decided a massive reorganization. This change would have impact everything. So to meet this
massive challenge, The management established a Leadership Institute.
4. Human Resources Practices
For leadership, managerial, and operational roles

Motivates needed role behaviors

The Roles that individuals assume in organizations fall into three categories:

Leadership Roles Managerial Roles Operational Roles

Establishing direction Directing In Service Setting, greets Customers
Aligning People Delegating as they enter sales area
Motivating and inspiring individuals Organizing and coordinating Manufacturing, reads blueprints
accurately

Example: The company that has defined a need to improve quality, HR will provide group
participation in problem solving, training in statistical measures of quality control
5. Human Resources Processes

For the formulation and implementation of other

activities

Defines how these activities are carried out

This area deals with how all the other HR activities are identified, formulated
and implemented;
HR processes seem to vary along continuum of extencive participation by all
employee to no participation by any employees. Two continuum could be used to
differentiate between the formulation and implementation stages. Example: High
Participation/implovement during formulation, but low involvement at
implementation.
HR Process requires concistency and a systematic orientation.
 Putting It All Together:
The Case of Grand Union
Company Profile
The Grand Union is a large retail grocery operation with the majority of stores
located in well-established neighborhoods.

In the mid 1980s, The advent of the super store, the smallest of which was
about twice the size of Grand Unions largest store

The Grand Union had defins as a grocery store a traditional high-volume, low-
margin, limited-selection, discount driven, 40.000 square foot grocery store.

5 years ago, the Top Management Team decided that competing with the new
100.000 square foot stores (Wal-Marts largest Hypermart is 260.000 square
feet) was not a viable merchandising strategy.

A directly competitive strategy would have called for moving stores from their
current space-bound locations and uprooting relationships with customers,
suppliers and communities.
 The 5-P Model in The Grand Union
ORGANIZATIONAL STRATEGY
Change from grocery stores to a high-quality,
customer driven business

INTERNAL EXTERNAL
CHARACTERISTICS CHARACTERISTICS
New Competitors

STRATEGIC BUSINESS NEEDS

To sell the best quality products, which meant

STRATEGY HUMAN RESOURCES

MANAGEMENT ACTIVITIES

1. Human Resources Philosophy

2. Human Resources Policies
3. Human Resources Programs
4. Human Resources Practices
5. Human Resources Processes
HR Philosophy

Employee Was Valuable

Long Term Source Of Competitive

Advantage

Effort to Provide Existing Job

Retraining As Needed

Promotion Oportunities
HR Policies

Customer Team
Orientation Oriented

Distributed Continous
Leadership Improvement
HR Program

Establishing Senior HR Council & Executive

Operating Comitte

Mounting Major Activities to Rally All Employee

To Change

Effort to Provide Existing Job

Developing Leadership Program to Ensure that the

changeClearly Inlude Top Management
 HR Practices

HR Training & Performance

Staffing Compensation
Planning Development Appraisal

Longer term More More Skill Customer Relate to

Focus Socialization Trainig Measures Performance
Tie to the need More Customer Feedback Apraisal Reward
off the Business Opportunities Service Training and Celebration
HR Process: The Corporate HR Management Can
Assist Senior Manager in Formulating Change
Become a model of Change
Develop and Guide Divisional HR
Change Organizational Structure
Serve as Clearing House
Serve as Trainer For Other HR Personell
Do Benchmark Analysis
Develop HRIS Capability
Audit Competencies
 Summary

Successful SHRM efforts begin with identification of

Identification strategic needs

Employee participation is critical to linking strategy

Linking & HR practices

Strategic HR depends on systematic & analytical

Mindset mindset

Corporate HR departments can have impact on

Impact organizations efforts to launch strategic initiatives