Strategic HRM

Perspective
V. Lale Tzner, Professor

Current Issues in HRM 2015

Introduction
Goal of strategic management To deploy and allocate
resources in a way that gives organization a competitive
advantage.
HRM function must be integrally involved in the
companys strategic management process.
What is a strategy?

What is Strategic Management?

Strategic Management is a
process, an approach to
addressing the competitive
challenges an organization faces.

Strategic human resource

management is the pattern of
planned human resource
deployments and activities
intended to enable an
organization to achieve its goals.

Components of the Strategic Management

Process
Strategy Formulation
Strategy Implementation

Model of the Strategic Management Process

Strategy Formulation
Forecasts of
Labor Demand
External
Analysis

Strategy Implementation
HR Practices

Opportunities
Threats

Mission

Goals

Strategic
Choice

Internal
Analysis

Strengths
Weaknesses

Human
Resource
Needs
Skills
Behavior
Culture

Recruiting,
Training,
Performance management,
Labor relations,
Employee relations,
Job analysis
Job design,
Selection,
Development,
Pay structure,
Incentives,
Benefits

Human
Resource
Capability
Skills,
Abilities,
Knowledge

Firm
Performance
Productivity,
Quality,
Profitability

Human
Resource
Actions
Behaviors,
Results

Strategy Formulation
External
analysis
Opportunities
Threats

Mission

Strategic
Choice

Goals
Internal
analysis
Strengths
Weaknesses

Strategy Formulation
Five components of the strategic management process:

A mission is a statement of the organization's reasons for being.

Goals are what the organization hopes to achieve in the medium-to
long-term future
External analysis consists of examining the organization's
operating environment to identify strategic opportunities and
threats.
Internal analysis attempts to identify the organization's strengths
and weaknesses.
Strategic choice is the organization's strategy, which describes
the ways the organization will attempt to fulfill its mission and
achieve its long term goals.

Strategy Implementation
Organizational
structure

Types of
Information

Task Design

Product
market
strategy

Performance

Reward
systems

Selection,
training, and
development
of people

Views of Human Resource Management

(HRM)
Human resources provide a source for
competitive advantage
The quality of HRM is a critical influence on
the performance of firms
A strategic approach is a characteristic of
HRM
Personnel management is seen as
operational
The role of business strategist will be a key
role of HR specialists of the future

The HRM Strategic View

Sustainable competitive advantage. Why has HR been
redesigned? To make our organizations more
competitive and create sustainable competitive
advantages. This is the basis for strategic HRM.
Strategy and strategic planning deal with the concept
of creating sustainable competitive advantages.
Sustainable competitive advantage is a capability that
creates value for customers that rivals cant copy
quickly or easily, and allows the organization to
differentiate its products or services from competitor
products or services.
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Goals of Strategic HRM (SHRM)

The main goals of strategic HRM. In the 21stcentury organization, the primary HRM function
is no longer just ensuring that the company has
(1) the correct number of employees with the
levels and type of skills the organization
requires and
(2) control systems to make sure employees are
working toward the achievement of the goals in
the strategic plan. This is a control model for
organizational management that doesnt work
in todays organization.
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Strategic Human Resource

Management
Strategic Human Resource Management
The linking of HRM with strategic goals and objectives in order
to improve business performance and develop organizational
cultures that foster innovation and flexibility.
Involves formulating and executing HR systemsHR policies and
activitiesthat produce the employee competencies and behaviors
that the company needs
to achieve its strategic aims.

FIGURE 36 Linking Company-Wide and HR Strategies

Source: Gary Dessler, Ph.D., 2007.

Strategic Human Resource

Challenges
Basic Strategic
Challenges

Corporate
productivity and
performance
improvement
efforts

Expanded role of
employees in the
organizations
performance
efforts

Increased HR
team involvement
in design of
strategic plans

Human Resource Managements

Strategic Roles

Strategic
Planning
Roles

Strategy
Execution
Role

Strategy
Formulation
Role

The Role of HRM in

Strategy Formulation

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Relationships Between Organisational

Strategy & HR Strategy (1 of 5)

Figure 2.1 Potential relationships between organisational strategy and HR

strategy

Relationships Between Organisational

Strategy & HR Strategy (2 of 5)

Figure 2.1 Potential relationships between organisational strategy and HR

strategy

Relationships Between Organisational

Strategy & HR Strategy (3 of 5)

Figure 2.1 Potential relationships between organisational strategy and HR

strategy

Relationships Between Organisational

Strategy & HR Strategy (4 of 5)

Figure 2.1 Potential relationships between organisational strategy and HR

strategy

Relationships Between Organisational

Strategy & HR Strategy (5 of 5)

Figure 2.1 Potential relationships between organisational strategy and HR

strategy

Link Between Business & Strategy (1 of

2)

Separation typical picture of 20 years

ago still exists today in smaller
organisations

Fit reflects importance of people in

achieving organisational strategy

Dialogue recognises the need for two

way communication

Link Between Business & Strategy (2 of

2)

Holistic Organisational staff key to

competitive advantage

HR Driven Places HR strategy in prime

position

Theoretical Perspectives of HRM

1. Universalist approach
2. Fit or contingency approach
3. Resource based approach

Universalist Approach

One high commitment model of labour

management

Relates to high organisational

performance in all contexts

Clarity of goals

Fit or Contingency Approach

Based on two critical forms of fit:

- external (vertical integration)
- internal (horizontal integration)

Strength of Fit or Contingency

Approach
Provides a simple framework that shows how
selection, appraisal, development and reward
can be mutually geared to produce the
required employee performance

Resource Based Approach (1 of 2)

Concerned with the relationships between

internal resources, strategy, & business
performance

Focuses on promoting sustained competitive

advantage via developing human capital

Resource Based Approach (2 of 2)

HR unique and cannot be copied by others

Focus much wider also on skills, knowledge,

attitudes and competencies

Value created by matching individual

competencies to requirements of the business

Resource Criteria Required To Sustain

Competitive Advantage
1. Valuable
2. Rarity
3. Inimitable
4. Non substitutable
(Wright et al, 1994)

HR as a Source of Sustained
Competitive Advantage

Figure 2.5 A model of human resources as a source of sustained

competitive advantage
Source: P. Wright, G. McMahon and A. McWilliams (1994) Human resources and sustained
competitive advantage: a resource-based perspective, International Journal of Human
Resource Management, Vol. 5,
No. 2, p. 318. Reproduced with the permission of Taylor and Francis Ltd. See
www.tandf.co.uk/journals.

HRM Practices
Job Analysis - the process of
Job design - making decisions
getting detailed information about
about what tasks should be
jobs.
grouped into a particular job.
Recruitment - the process
Selection - identifying the
through which the organization
applicants with the appropriate
seeks applicants.
knowledge, skills, and ability.
Training - a planned effort to
Development - the acquisition of
facilitate learning of job-related
knowledge, skills, and behavior
knowledge, skills, and behavior.
that improves employees' ability
to meet the challenges of future
jobs.

Performance management - helps ensure that employees activities

and outcomes are congruent with the organizations objectives.
Pay structure, incentives, and benefits.
Labor and employee relations.

32

Strategic Types
Porter's Generic Strategies
overall cost leadership, or
differentiation.

33

HRM Needs in Strategic Types

Different strategies require different types of
employees.
Role Behaviors:
Cost strategy firms seek efficiency and therefore carefully
define the skills they need in employees and use worker
participation to seek cost-saving ideas.
Differentiation firms need creative risk takers.

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Factors Affecting The Role of HR

Function in Strategy

Senior HR person being member of board of

directors

Overall philosophy of the business towards

valuing its people

The mindset of the Chief Executive (CE)

The working relationship between the CE and

most senior HR person