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Strategic Human Resource

Management

What is STRATEGY ?

A chosen course of action

The word strategy traces its roots in the military origin and has been
derived from Greek word Strategia meaning :
Commander in Chief.
The development of the word traces it grounds to two words i.e. it is
composed of stratos (army) and agein (to lead). Tregoe and
Zimmerman define strategy as the framework which guides those
choices that determine the nature and direction of an organization.
In a management context, the word strategy has substituted the more
conventional term long-term planning to symbolize an explicit
pattern of decisions and actions carried out by the upper stratum of
organization. Johnson and Scholes (2006) define strategy as: Strategy
is the direction and scope of an organization over the long-term: which
achieves advantage for the organization through its configuration of
resources within a challenging environment, to meet the needs of
markets and to fulfill stakeholder expectations.

Strategic Management
Strategic management originated as a subject in 1950s and 60s.
Strategic management is thought to be an ongoing activity that
needs a regular modification of three major interdependent shafts:

The priorities of senior management, the environment, and the

resources available.
It is composed of certain decisions of top management that
determines the performance of organization in the long run.
It is the process of identifying and executing the organizations
mission by matching its capabilities with the demands of its
environment.

Definition
The art and science of formulating, implementing,
and evaluating cross-functional decisions that
enable an organization to achieve its objective.
The process of identifying and executing the
orga izatio s strategic pla while atchi g
company's capabilities with the demands of its
environment.
A set of managerial decisions and action that
determine the long-run performance of
corporation. It includes strategy formulation,
implementation, evaluation & control.
A stream of decisions and actions which leads to
the development of an effective strategy or
strategies to help achieve corporate objectives.

Reference
David

Dessler

Wheelen & Hunger

Glueck & Jauch

Business Vision and Mission

Vision
An organization vision is statement of its proposed direction that
shows where this organization wants to be in next 5-10 years.
This vision clears the direction and induces an emotional feeling in
organization members towards a shared progress.
Vision is the long term image of :What the Business should be
For an instance the same company that produces branded causal
wear has a vision :
To be renowned as paramount brand of casual wear in Pakistan
This statement has justifiable explained that in next 10 years the
company see itself as the leading brand of a specific casual line in
Pakistan

Mission

An organization`s mission shows the purpose of

organization's existence as well as it depicts the benefit of
organization's continuation to its customers and its
employees (current and potential).
For an instance a company that is providing branded casual
wear in Pakistan has stated it`s mission as:
To Provide quality casual wear with great retail customer
service and bestow careers for knowledgeable and skilled
young individuals.
This mission truly explains that organization values its
customers and want to entertain them through quality
products as well as it wants to provide long term careers for
those who are skilled and knowledgeable in their field.

Importance of Strategic Planning

Organization exist to achieve some purpose and if they fails to
achieve their ends ,to that extent they have failed.
Those aims or goal and the hard work put into accomplishing them
all depends on company plan .
People hired, and how you hired them, what you train them,
appraise and reward them depends on the goals that trickled down
to you form yours firms overall plan.

Hierarchy of Goals
In well run organization the goals from every top of the organization
down to where are you working should form a more-or-less

unbroken chain (or hierarchy) of goals.

At the top of the company ,the CEO and his/her staff set strategic
goals .
Lower manager level then set goals.
These goals should flow from and make sense in terms of the goal at
the next level up.
Management creates a hierarchy of departmental goals .

Fundamental of Management planning

1.
2.
3.
4.
5.

Objective setting
Forecasting
Determine Alternatives
Evaluate your alternatives
Implement and evaluate your plan

Business plan
Business plan gives a complete view of the organization's position
nowadays and of its company-wide and departmental goals and
plans . It incudes;

Description of business:
The Marketing Plan
The personnel/Human resource plan
The production/Operations plan
The financial plan

How Managers set Objectives

Setting SMART Goals:
Setting effective goal is therefore an essential management skill. To
check whether goals are good or not they use the acronym SMART.

S=Specific (make clear to achieve)

M=measurable(how will you know if you have met your goal).
A= attainable (goal should have outcomes that are realistic)
R=relevant (ultimate life out comes)
T=Timely (realistic time frame for achievement)

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Setting Motivational goals

Goals are only valuable if employees are encouraged to complete them:
Allocate specific goals
Allocate measurable goals
Allocate Challenging but feasible goals

Encourage participation

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Strategic Management Process

Strategic Plan :
A strategic plan is the company`s plan for how it will match its
internal strengths and weaknesses with external opportunities and
threats in order to maintain a competitive advantage .
A strategy is a course action.
HR managers today are more involved in partnering with their top
managers in both designing and implementing their companies
strategies.
Top management wants to see, precisely, how the HR managers
plans will make the company more valuable.

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Strategic Management Process

Strategic management comprises of a 7 Step process.
Define the current business.
Perform external and Internal Audits.
Re-define Mission and Vision

Strategy formulation
Developing organization goals
Strategy implementation.
Strategy evaluation

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Types of Strategic Planning

1.Corporate-level strategy:
Developed in the light of organization`s mission.
It determines the types of a business a corporation wants to be involved
in and what business unit should be acquired ,modified or sold.
Identifies the portfolio of businesses that, in total, comprise the
company and the ways in which these businesses relate to each other.
There can be several possibilities including but not limited to:
Diversification strategy implies that the organization will expand by
adding new product lines.
Vertical integration strategy means the firm expands by producing
its own raw materials, or selling its products by its own.
Consolidation strategy means reduces the organizations size.
Geographic expansion strategy might revolve around taking the
business to another province or taking it abroad.

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Types of Strategic Planning-cont2.Business-level/competitive strategy:

To identify a strategy through which the company will compete its
competitors to remain in the market place.
Cost leadership:
to reduce the cost as much as feasible and keep the prices equivalent to
Or less than market.
Differentiation:
A company seeks to be unique in its industry along extents that are
widely valued by buyers.

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Types of Strategic Planning Cont3.Functional strategies:

Organization is sub divided in to many domains like Finance
,Production Marketing, HR etc.
Every domain has a separate function and they need to know how
they can work to achieve organizational goals.
Functional strategy is the line of action that can be followed by
every department to help the business achieve its goals.
It is designed and managed in a coordinated way so that the
functions interrelate with each other and at the same time they
collectively allow the business strategy to be implemented properly.

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Strategic Human Resource

Management

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Strategic Human Resource Management

The linking of HRM with strategic goals and goals in
order to improve business performance and develop
organizational cultures that raise innovation and
flexibility.
Formulating and executing HR systemsHR policies
and activitiesthat produce the employee competencies
and behaviors the company needs to achieve its strategic
aims

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Human Resource Managements

Strategic Roles
Strategic Planning
Roles

Strategy
Execution
Role

2008 Prentice Hall, Inc. All rights reserved.

Strategy
Formulation
Role

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ROLE OF HR IN STRATEGIC MANAGEMENT

PROCESS
Administrative Linkage:
This is the minimal level of integration, and we will call it as No
Integration as here the HRM functions focused is only to perform
the day-to-day activities. Here HRM function does not provide any
sort of input for companys strategy formulation.
One-Way Linkage:
Here the firms strategy body develops the strategic plan and then
informs the HRM function about the plan and HR is then only
involved to facilitate the implementation by aligning its HR strategy
with the companys strategic plan.
Two-Way Linkage:
This linkage considers human resource issues during the strategy
formulation process. Here the HR is called in the strategy
formulation phase and expected to give its input with respect to
people related issues which can arise in the potential strategic
choices.

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ROLE OF HR IN STRATEGIC
MANAGEMENT PROCESS -Cont Integrative Linkage:
The HR personnel are an integral member of the strategy
development team and guide the overall strategic management
process. In the light of integrative linkage HR gets involved in
strategic management starts from environmental scanning & lasts
till strategy evaluation
Environmental Scanning:
HR plays its role during environmental scanning and performs
environmental scanning in order to identify the people related
business issues. A vital element of HRs role in environmental
scanning phase is to make know if people are accessible, internally
or externally, to achieve the organizations goals. Eventually, this
detailed scanning will increase organizations ability to proceed and
get advantage. This is the best achieved when the HR team takes
part in organizations strategy board.

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ROLE OF HR IN STRATEGIC
MANAGEMENT PROCESS -Cont Re-Define Mission & Vision:
Human resource professionals are well positioned to play an
instrumental role in helping their organization re-define its mission
and vision after performing the environmental scanning. HR is
present at the decision table of organizations strategy board
meeting along with the line manager of other business discipline
including finance, marketing, and manufacturing; where in the light
of the defined business and environmental scanning results a
combined effort is put in for defining the mission and vision.

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ROLE OF HR IN STRATEGIC
MANAGEMENT PROCESS -Cont Strategy Formulation:
During the strategy formulation phase a strategic direction of
organization is set in light of environmental scanning and newly
defined mission and vision. In this phase the senior level HR
professionals of organization work hand-in-hand with top
management to define the corporate and business strategies which
should be linked with organizations mission and vision. Its not
only a lip service from HR, but it is an HR advisory role where HR
creates a complete link between organizations mission, vision
statement and corporate and business strategy. But to act as an
advisor HR professionals must have the knowledge of the business
as a whole and specifically about the industry in which organization
is operating.

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ROLE OF HR IN STRATEGIC
MANAGEMENT PROCESS -Cont Develop Organizational Goal:
HR guides the whole audience of strategy board meeting by
explaining the mechanism of how to set Specific, Measurable,
Achievable, Realistic and Time-bounded goals (SMART Goals)
In all the four perspective of balanced scorecard for realizing the
organizations mission and vision in light of corporate and business
strategies.
Strategy Implementation:
Strategy implementation is all about putting the formulated
strategies into action. These actions can perform better through
some managed system which is developed by HR people in shape of
HR policies and procedures, especially the performance
management policy and procedures for linking the organizational
and departmental goals with individual employees performance.

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ROLE OF HR IN STRATEGIC
MANAGEMENT PROCESS -cont Strategy Evaluation:
This is the ultimate constituent of strategies management process
that includes monitoring of the usefulness or effectiveness of

strategies choice and implementation. If company uses a balanced

scorecard approach to strategy evaluation, then HR plays a catalytic
role in coordinating teamwork within the senior team, as a

scorecard is needed to be evaluated collectively and this evaluation

should be owned by the senior team, which necessitates instilling of
a well-built teamwork at the top table.

Strategy Evolution Process

There are two main tools that are used in strategy evolution process;
one is balanced scorecard and the other is audit.

a)

The Balanced Scorecard: Balance score card is also used as

a measuring tool for strategy-evaluation. This tool depicts that the

goals that were developed in four perspectives using balanced

scorecard have been achieved or not. The achievement of goals reflects

that the strategy formulation was a success and vice versa.

b)

Auditing: Auditing is another frequently used tool in strategy-

evaluation. An audit is the evaluation of an organization itself,

strategies, goals, its systems, processes, projects or products. It is

conducted by any expert, independent, and unbiased person or

person, known as auditors.

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Components of a Strategic
HRM

Human Resource
Professionals

Human Resource
Policies and
Practices

Employee Behaviors
and Competencies

Interpreting Strategy into HR Policy and Practice

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Traditional HR versus Strategic HR

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