Human Resource Management

Strategy and Analysis

Strategic Plan – company’s plan for how it will
match its internal strengths and weaknesses with
external opportunities and threats in order to
maintain competitive advantage

Strategy – course of action the company can pursue

to achieve its strategic aims
Strategic Management
A field that deals with managerial decisions and actions in
order to improve the long-run performance of organizations.
Serially dependent components or step:

1. Organizational identification 4. Strategy implementation

2. Environmental analysis 5. Strategy evaluation
3. Strategy formulation
Strategic Management
01 02

Organizational identifcation Environmental analysis

The development and Dependent on how the
identification of one’s organization is identified
current purpose and step 1, managers assess its
mission, goals and internal and external
objectives and one’s environment
values and cultures
Strategic Management
03 04
Strategy implementation
Strategy formulation
Aims to identify the Requires effective exploitation of
basis for the firm’s resources, optimum utilization of
competitive advantage management systems & effective
activation of HR practices
05
Strategy evaluation
Refers to the activities that determine how well the
formulated implemented strategy (intended or realized) has
achieved the goals designated by the organization
Strategic Management
Strategy formulation can take place at the corporate, business
or functional level
Functional-level
Business-level strategy formulation
Corporate-level strategy refers to the
strategy refers refers to the
strategy of a business philosophies, policies
to the overall unit in the organization
strategy of the and practices that
that deals with support the operation
organization managerial decisions of the major functions
and actions within the business
unit
Strategic Human Resource Management
Refers to the overall direction the organization wishes to pursue
in achieving its objective through people. (Armstrong & Long 1994)

Deals with those HRM activities used to support the firm’s competitive
strategy. (Wright & Snell 1989)

Means formulating and executing human resource policies and

practices that produce the employee competencies and behaviors the
company needs to achieve its strategic aims
Linking company-wide and HR strategies
Management formulates a “strategic plan” and measurable
strategic goals or aims

These plans & aims imply certain “workforce requirements,”

in terms of the employee skills and behaviors required to
achieve the firms strategic aims

HRM formulates “HR strategies (policies &

practices)” to produce the desired workforce skills,
competencies and behaviors
 Strategic HRM Tools – Managers use several tools to help them
translate the company’s broad strategic goals into specific HRM
policies and activities

Three (3) important tools

Strategy Map – shows HR Scorecard – process Digital Dashboards –

the “big picture” of how for assigning financial and presents the manager
each department’s non-financial goals or with desktop graphics and
performance contributes metrics to the HRM- charts. It is computerized
to achieving the related chain of activities picture of where the
required for achieving the company stands on all
company’s overall
company’s strategic aims those metrics from HR
strategic goal
and for monitoring results Scorecard process
Human Resources Strategies and Policies

Managers call the specific human resource

management policies and practices they use to
support their strategic aims human resource
strategies
Theories of strategic human resource managemet
Two theoretical frameworks of strategic human resource management
1. Resource-base view (RBV)
2. Integration approach

Resource-base view – argues that HRM influences performance

according to the human capital held by the organization; consist of
people who work therein and on whom organizational success
depends
Resource-base view
For any resource to be a source of competitive advantage it must be rare,
valuable, inimitable and non-substitutable; the HR practices of the
organization can lead a competitive advantage through developing a
unique and valuable human capital pool
Three (3) possible approaches:
High-performance management High-commitment management High-involvement management

the development of a the development of the treating of employees

number of interrelated mutual commitment as partners in the
HRM processes that within the organization, organization through
based on high levels of communication and
together improve
trust, that eventually involvement, ensuring
organizational
that high performance will
performance influences performance
ultimately be achieved
Theories of strategic human resource managemet
Integration approach –focuses more significantly on the link
between HRM strategy formulation and performance. It emphasizes
the alignment of HR policies and practices with HR are other
strategies across the organization outside the area of HRM
Three (3) possible foci for integration:
1. Horizontal integration
2. Vertical integration
3. Combined integration
Integration Approach

Horizontal integration – focus is on the organization developing a

range of interconnected and mutually reinforcing HR practices; the
argument being that such alignment will always produce superior results whatever the
accompanying circumstances

Underlying assumptions:
1. A linear relationship exists between HR practices and business
performance;
2. Best HR practices are universally applicable; and

3. Internal fit is the key concept

Integration Approach

Vertical integration – the organization is seeking to develop a range

of HR practices that fit the business’s strategies outside the area of
HRM; the logic here is that performance will be improved when the right fir, or match,
between the business strategy and HR practices is achieved

Underlying assumptions:
1. A non-linear relationship exists between HR practices and business
performance;
2. The impact of the HR practices on business performance is different for the
different level of the critical contingency variable; and
3. External fit is the key concept
Integration Approach
Combined integration – the organization formulates its strategy by
combining internal and external fit, makes use of bundles of HR
practices; the logic here is that different combinations of HR practices will lead to
higher business performance, depending on the organizational context.

Underlying assumptions:
1. A non-linear relationship exists between configurations of HR practices and business
performance;
2. Multiple unique configurations of HR practices results in maximal business
performance, referring to the concept of equifinality; and
3. The configurations are assumed to be ideal type that are theoretical constructs rather
than empirically observable phenomena; and
4. Internal and external fit is both the key concept
HR Metrics and Benchmarking
Types of Metrics – a measure organizations use to measure HR effectiveness
HR Metrics and Benchmarking
Benchmarking in Action – benchmarking means comparing the practices of
high-performing companies to your own, in order to understand what they do
that makes them better

Strategy-based Metrics – metrics that focus on measuring the activities that

contribute to achieving a company’s strategy aims
What is HR Audit?

“an analysis by which and organization measures where it currently

stands and determines what is has to accomplish to improved its
HR functions”

“a process of examining policies, procedures, documentations,

systems, and practices with respect to an organization’s HR
functions”
What is HR Audit?
Typical broad areas to cover with the HR audit includes
1. Roles and head count (including job descriptions, and employees by exempt/non-
exempt and full/part-time status)
2. Legal issues (compliance with federal, state, local employment-related legislation)
3. Recruitment and selection (including selection tools, background checks, and so on)
4. Compensation (policies, incentives, survey procedures, and so on)

5. Employee relations (union agreements, performance management, disciplinary

procedure, employee recognition)
6. Mandated benefits (social security, unemployment insurance, workers’ compensation
and so on)
7. Group benefits (insurance, time off, flexible benefits, and so on)
What is HR Audit?
Typical broad areas to cover with the HR audit includes
8. Payroll (internal vs external payroll options, FLSA compliance)
9. Documentation and record keeping (HR information systems, personnel files, I-9, and
other forms, and so on)
10. Training and development (new employee orientation, workforce development,
technical and safety, career planning, and so on)
11. Employee communications (employee handbook, newsletter, recognition programs)

12. Internal communications (policies and procedures, and so on)

13. Termination and transition policies and practices

Evidence-Based Human Resource Management

The used of data facts, analytics, scientific rigor, critical evaluation, and
critically evaluated research/case studies to support human resource
management proposals, decisions, practices and conclusions

Being scientific means doing two (2) things that are particularly important:
a. objective
b. experimentation