CHAPTER

2 STRATEGY AND HUMAN RESOURCES PLANNING

In this chapter you will understand how human resources planning and strategy efforts
should be integrated. You will understand various stages of the strategic management
process. You will comprehend the importance of internal resource analysis and have
knowledge of basic tools of human resource forecasting. You will learn the importance
of formulating and implementing the appropriate strategies. You will also recognize
methods for assessing and measuring the effectiveness of a firm’s strategy.

LEARNING OBJECTIVES

After studying this chapter, you should be able to

Understand how an organization’s competitive environment influences its

strategic planning.

Understand why it’s important for an organization to do an internal resource

analysis.

Describe the basic tools for human resources forecasting.

Explain the linkages between competitive strategies and HR.

Understand what’s required for a firm to successfully implement a strategy.

Recognize the methods for assessing and measuring the effectiveness of a

firm’s strategy.

© 2010 Cengage Learning. All Rights Reserved. This edition is intended for use outside of
the U.S. only, with content that may be different from the U.S. Edition. May not be scanned,
copied, duplicated, or posted to a publicly accessible website, in whole or in part.
17
18 Managing Human Resources
CHAPTER SUMMARY RELATING TO LEARNING OBJECTIVES

Strategic human resources management (SHRM) integrates strategic planning

and HR planning. It can be thought of as the pattern of human resources deployments
and activities that enable an organization to achieve its strategic goals. HR planning and
strategies become especially critical when organizations consider global strategies,
including mergers, joint ventures, offshoring, the relocation of plants, product
innovations, and downsizing, or when dramatic shifts in the composition of the labor
force are occurring. Analyzing the firm’s competitive environment is central to strategic
planning. The competitive environment includes the specific organizations with which
the firm interacts. Firms analyze the competitive environment in order to adapt to or
influence the nature of competition.

Conducting an internal analysis to gauge the firm’s strengths and weaknesses

involves looking at the firm’s “three Cs”—its culture, capabilities, and composition. An
internal analysis enables strategic decision makers to inventory the organization’s skills
and resources as well as their performance levels.

An organization’s success increasingly depends on the knowledge, skills, and

abilities of employees, particularly as they help establish a set of core capabilities that
distinguish an organization from its competitors. When employees’ talents are valuable,
rare, difficult to imitate, and organized, a firm can achieve a sustained competitive
advantage through its people. HRP is a systematic process that involves forecasting
demand for labor, performing supply analysis, and balancing supply and demand
considerations. Forecasting demand requires using either quantitative or qualitative
methods to identify the number and type of people needed to meet organizational
objectives. Supply analysis involves determining whether sufficient employees are
available within the organization to meet demand and whether potential employees are
available on the job market.

As organizations plan for their future, top management and strategic planners must
recognize that strategic-planning decisions affect—and are affected by—HR functions.
On the one hand, HRP plays a reactive role in making certain the right number and type
of employees are available to implement a chosen business plan. On the other hand,
HRP can proactively identify and initiate programs needed to develop organizational
capabilities upon which future strategies can be built. HRP and strategic planning tend
to be most effective when there is a reciprocal relationship between the two processes.

© 2010 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the
U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied,
duplicated, or posted to a publicly accessible website, in whole or in part.