HUMAN RESOURCE MANAGEMENT

12th Edition

Chapter 3
The Managers Role in
Strategic Human
Resource Management

Part 1 Introduction

GARY DESSLER

Why Strategic Planning Is Important

To All Managers
The firms strategic plan guides much of what is
done by all to accomplish organizational goals.
Decisions made by managers depend on the goals
set at each organizational level in support of higher
level goals.

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FIGURE 31

Sample Hierarchy of Goals Diagram for a Company

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Fundamentals of Management Planning

The Planning Process
1

Set an objective.

Make forecasts and check assumptions.

Determine/develop alternative courses of action.

Evaluate the alternatives.

Implement and evaluate your plan.

All this planning produces a business plan

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Business Plan
The business plan provides a comprehensive view of the
firm's situation today and of its company-wide and
departmental goals and plans for the next 3 to 5 years.
It is the plan that investors or lenders want to see before
offering money to the firm.
There are no rigid rules, however, its main components
includes:
Description of the business (Ownership and products or services)
The Marketing Plan
The Financial Plan
The Personnel/ Human Resource Plan
The Production/ Operations Plan
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How Managers Set Objectives:

SMART Goals
S

Specific

Measureable

Attainable

Relevant

Timely
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Using Management by Objectives (MBO)

The MBO Process
1

Set overall organizational goals.

Set departmental (supporting) goals.

Discuss departmental goals with subordinates.

Set individual goals and timetables.

Give feedback on progress toward goal.

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The Strategic Management Process

Strategy
A course of action the organization intends to pursue to

achieve its strategic aims.

Strategic Plan
How an organization intends to match its internal strengths

and weaknesses with its external opportunities and threats to

maintain a competitive advantage over the long term.

Strategic Management
The process of identifying and executing the organizations

mission by matching its capabilities with the demands of its

environment.

Leveraging
Capitalizing on a firms unique competitive strength while

underplaying its weaknesses.

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Business Vision and Mission

Vision
A general statement of an organizations intended

direction that evokes emotional feelings in organization

members.

Mission
Spells out who the firm is, what it does, and where its

headed.

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FIGURE 35

The Strategic Management Process

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A SWOT Chart
SWOT Analysis
The use of a SWOT chart
to compile and organize
the process of
identifying company

Strengths,
Weaknesses,
Opportunities, and
Threats.

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FIGURE 37

SWOT Matrix, with Generic Examples

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FIGURE 38 Type of Strategy at Each Company Level

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Types of Corporate Strategies

Corporate Strategy Possibilities

Diversification

Concentration

Vertical
integration

Consolidation

Geographic
expansion

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Types of Strategic Planning

Corporate-level strategy
Identifies the portfolio of businesses that, in total, comprise

the company and the ways in which these businesses relate to

each other.

Diversification strategy implies that the firm will expand by adding new
product lines.
Related Diversification, diversifying in related products
Conglomerate Diversification, diversifying into unrelated products/
businesses.

Vertical integration strategy means the firm expands by, perhaps,

producing its own raw materials, or selling its products direct.
Horizontal Integration strategy means acquisition of additional
business activities that are at the same level of the value chain in
similar or different industries
Consolidation strategy reduces the companys size
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Geographic expansion strategy takes the company abroad.

Types of Competitive Strategies

Business-Level
Competitive Strategies

Cost leadership

Differentiation

Focus/Niche

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Types of Strategic Planning (contd)

Business-level/competitive strategy
Identifies how to build and strengthen the businesss

long-term competitive position in the marketplace.

Cost leadership: the enterprise aims to become the low-cost

leader in an industry.

Differentiation: a firm seeks to be unique in its industry

along dimensions that are widely valued by buyers.

Focus: a firm seeks to carve out a market niche, and

compete by providing a product or service customers can
get in no other way.

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HR and Competitive Advantage

Competitive advantage
Any factors that allow an organization to differentiate its

product or service from those of its competitors to

increase market share.
Superior human resources are an important source of
competitive advantage

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Types of Strategic Planning (contd)

Functional strategies
Identify the basic courses of action that each department

will pursue in order to help the business attain its

competitive goals.

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Achieving Strategic Fit

The Fit Point of View (Porter)
All of the firms activities must be tailored to or fit the

chosen strategy such that the firms functional strategies

support its corporate and competitive strategies.

Leveraging (Hamel and Prahalad)

Stretch in leveraging resourcessupplementing what

you have and doing more with what you havecan be

more important than just fitting the strategic plan to
current resources.

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FIGURE 39 Southwest Airlines Activity System

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Departmental Managers
Strategic Planning Roles
Department Managers
and Strategy Planning

Help devise
the strategic plan

Formulate
supporting,
functional/
departmental
strategies

Execute
the strategic
plans

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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.

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FIGURE 310 Linking Company-Wide and HR Strategies

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FIGURE 311 Basic Model of How to Align HR Strategy

and Actions with Business Strategy

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Strategic HRM Tools

Strategic HRM Tools

Strategy Map

HR Scorecard

Digital Dashboard

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FIGURE 315 Three Important Strategic HR Tools

Strategy Map

HR Scorecard

A graphical tool that

summarizes the chain
of activities that
contribute to a
company's success,
and so shows employees
the "big picture" of
how their performance
contributes to achieving
the company's overall
strategic goals.

A process for managing

employee performance
and for aligning all
employees with key
objectives, by assigning
financial and
nonfinancial goals,
monitoring and
assessing performance,
and quickly taking
corrective action.

Digital Dashboard

An information
technology tool that
presents the manager
with desktop graphs
and charts, so he or she
gets a picture of where
the company has been
and where it's going, in
terms of each activity
in the strategy map.

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FIGURE 313 Strategy Map for Southwest Airlines

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FIGURE 314 The Basic HR Scorecard Relationships

HR activities

Emergent employee behaviors

Strategically relevant organizational

outcomes

Organizational performance

Achieve strategic goals

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Creating an HR Scorecard
The 10-Step HR Scorecard Process
1

Define the business strategy

Identify required HR policies

and activities

Outline value chain activities

Create HR Scorecard

Outline a strategy map

Choose HR Scorecard
measures

Identify strategically
required outcomes
Identify required workforce
competencies and behaviors

Summarize Scorecard measures

on digital dashboard

10

Monitor, predict, evaluate

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Building A High-Performance Work System

High-Performance Work System (HPWS)
A set of human resource management policies and

practices that promote organizational effectiveness.

High-Performance Human Resource Policies

and Practices
Emphasize the use of relevant HR metrics.
Set out the things that HR systems must do to become an

HPWS.
Foster practices that encourage employee self-

management.
Practice benchmarking to set goals and measure the

notable performance differences required of an HPWS.

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KEY TERMS
business plan

offshoring

management by objectives (MBO)

strategic human resource

strategic plan

management

strategy

strategy map

strategic management

HR Scorecard

vision statement

digital dashboard

mission statement

high-performance work system

corporate-level strategy

human resource metric

competitive strategy

value chain

competitive advantage

HR audit

functional strategies

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FIGURE 316 Simple Value Chain for The Hotel Paris

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FIGURE 3A-1 Simple Value Chain for The Hotel Paris

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FIGURE 3A-2 Revenue per FTE (by Industry)

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FIGURE 3A-3 2007 Target Bonus Percentage for Executives

(Percent of Total Compensation, by Organizational Size)

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FIGURE 3A-4 Sample Metrics from SHRM Measurements Library

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FIGURE 3A-5 Highlights of SHRM Customized Benchmarking Service

Copyright 2011 Pearson Education

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FIGURE 3A-6 Customized Human Capital Benchmarking Report

for [Your Organizations Name Here]

Copyright 2011 Pearson Education

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FIGURE 3A-7 Customized Human Capital Benchmarking Report

for [Your Organizations Name Here]

Copyright 2011 Pearson Education

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TABLE 32

Examples of HR System Activities the Hotel Paris Can

Measure as Related to Each Chapter in This Book

Copyright 2011 Pearson Education

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