Chapter 2 – Strategy and human resources planning

 Strategic planning: procedures for making decisions about the org’s long term goals and strategies
 Human Resource Planning (HRP): Process of anticipating and providing for the movement of people
into, within, and out of an organization
 Strategic Human Resources Management (SHRM): Combination of strategic planning and HRP
 Strategic planning and HRP are linked through two issues: strategy formulation and strategy
implementation

Steps in strategic planning

 Step 1: Mission, vision, values
o Mission: Basic Reason for existing
o Strategic Vision: How the organization will achieve its goals and missions
o Core Values: Underlying assumptions
 Step 2: External Analysis (analyze opportunities and threats)
o Environmental scanning: systematic monitoring of forces influencing the organization
 Economic, technological, demographic, legal and regulatory changes.
o 5 forces model: New entrants, customers, substitutes, suppliers, rival firms
 Step 3: Internal Analysis (analyze strengths and weaknesses)
 Corporate Culture
 Core Capabilities: people, processes and systems that separate company from
competition.
 Composition
o Forecasting:
 Demand: measured by technology available, financial resources, organization
growth, turnover rate. If the demand is greater than supply, then balance by hiring
full-time, part-time people and recall laid off people
 Supply: measured by demographic changes, labor mobility, unemployment rate,
education rate, government policies. If supply is greater than demand, then balance
by lay-off, termination, attrition, hiring freeze
 Step 4: Formulating strategy
o Corporate Strategy: Growth and diversification, mergers and acquisitions, strategic
alliances, joint ventures
o Business strategy: Low cost strategy: compete on productivity and efficiency, differentiation
strategy: compete on value added
o Functional strategy: Ensuring alignment
 Vertical fit/alignment: focuses on the connection business objectives and HR
initiatives
 Horizontal fit/alignment: How different HR functions fit and align with each other
 Step 5: Strategy implementation
o Taking action: reconciling supply and demand
 Balancing supply and demand considerations
 For balancing demand: Hiring more full time employees, having employees
work overtime, outsourcing or offshoring work, having temporary or
contract employees
  For balancing supply: Organizational downsizing, making layoff decisions,
attrition, hiring freeze, termination decisions
 Step 6: Evaluation and assessment
o Benchmarking: identifying best practices and comparing the practices of your company’s to
that of your competitors
o Human Capital Metrics: Measures of the workforce, how many times are they absent, how
is their productivity, what degrees do they have
o HR Metrics: Assessments on how well HR has been. See how well people are hired and how
they are retained