Chapter 2

Strategic Human
Resource Management

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 Learning Objectives
1. Describe differences between strategy formulation and strategy
implementation.

2. List strategic management process components.

3. Discuss HRM function’s role in strategy formulation.

4. Describe linkages between HRM and strategy formulation.

5. Discuss typologies of strategies and associated HRM practices.

6. Describe HR issues and practices associated with directional

strategies.
 Introduction
 Goal of strategic management is to deploy and
allocate resources in a way that gives an
organization competitive advantage.
 HRM function must be integrally involved in the
company’s strategic management process.
 A business model is how the firm will create
value for customers profitably.
• fixed and variable costs
• contributing and gross margins

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 Business Model Accounting Concepts

Fixed Costs Variable Costs

Margins Gross Margin

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 What is Strategic Management?

Strategic management
Strategic human resource
is a process to address
management (SHRM) is the
the organization’s
pattern of planned HR
competitive challenges
activities and deployments
by integrating goals,
intended to enable an
policies and action
organization to achieve its
sequences into a
goals.
cohesive whole.

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 Strategy Strategy
Formulation Implementation

2 Phases
of Strategic
Management
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 Strategic Management Process Model
Strategy Formulation Strategy Implementation
HR Practices
• Recruiting
• Training
External Analysis • Performance management
•Opportunities • Labor relations
•Threats • Employee relations
• Job analysis Firm
• Job design Performance
• Selection
• Development • Productivity
HR • Pay structure • Quality
Strategic Needs • Incentives • Profitability
Mission Goals •Skills • Benefits
Choice •Behavior
•Culture

HR
Internal Capability HR Actions
Analysis •Skills, •Behaviors
•Strengths •Abilities •Results
•Weaknesses •Knowledge

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Strategy - Decisions about Competition

How?

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Strategic Planning and HRM Linkages

Administrative

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Strategy Formulation

External
Analysis
•Opportunities
•Threats

Internal
Analysis
•Strengths
•Weaknesses

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SHRM-Strategy Formulation

Mission

Goals

Strategic Choice

Internal Analysis

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 Strategy Implementation Variables

Organizational
Structure
Types
Task
of
Design
Information
Product
Market Performance
Strategy Select
Reward Train
Systems Develop
People

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HRM’s 3 Implementation Variables:

Task People

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Strategic Implementation
HR Practices
•Recruiting
•Training
•Performance management
•Labor relations
•Employee relations
•Job analysis
•Job design
Human •Selection
Resource •Development
Needs •Pay structure
•Skills •Incentives
•Behavior •Benefits
•Culture
Human
Human Resource
Resource
Capability Actions
•Skills, •Behaviors
•Abilities •Results
•Knowledge -productivity
-absenteeism
-turnover
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HRM Practices

Recruitment
/Selection

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 Porter’s Strategies

Cost

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5 Categories of Directional Strategies

Concentration

Internal Growth

External Growth

Mergers &
Acquisitions

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HR’s Role - Strategic Competitive Advantage

Strategic Competitive
Advantage =

Emergent Strategies

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 Summary
 HR are most important asset and single largest
most controllable cost within the business model.
 HR professionals must develop business,
professional-technical, change management and
integration competencies.
 HRM has a profound impact on the strategic plan
implementation by developing and aligning HRM
practices that ensure the company has motivated
employees with necessary skills.

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