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Copyright© 2017 Pearson Education, Inc.
Part One
Introduction
Chapter 3
Human Resource Management Strategy and Analysis
Lecture Outline:
The Strategic Management Process
The Management Planning Process
What Is Strategic Planning?
The Strategic Management Process
Types of Strategies
Corporate Strategy
Competitive Strategy
Functional Strategy
Manager’s Roles in Strategic Planning
Strategic Human Resource Management
What Is Strategic Human Resource Management?
Improving Performance: The Strategic Context
Improving Performance: HR As a Profit Center
Sustainability and Strategic Human Resource Management
Strategic Human Management Tools
HR Metrics, and Benchmarking, and Data Analytics
Improving Performance Through HRIS
Benchmarking
Strategy and Strategy-Based Metrics
What Are HR Audits?
Trends Shaping HR: Digital and Social Media
Trends Shaping HR: Science In Talent Management
Evidence-Based HR and the Scientific Way of Doing Things
High-Performance Work Systems
Employee Engagement Guide for Managers: Employee Engagement and Performance
The Employee Engagement Problem
What Can Managers Do to Improve Employee Engagement
How to Measure Employee Engagement
How Kia Motors (UK) Improved Performance with an HR Strategy Aimed
at Boosting Employee Engagement
Chapter Review
Where Are We Now…
The main purpose of this chapter is to explain how managers formulate human resource
strategies for their companies. We’ll address the strategic management process, types of
Chapter 3: Human Resource Management Strategy and Analysis 3-2
Copyright© 2017 Pearson Education, Inc.
strategies, strategic human resources management, HR metrics and benchmarking, high-
performance work systems, and employee engagement.
Interesting Issues:
When the Ritz-Carlton Company took over managing the Portman Hotel in Shanghai, China, the
hotel already had a good reputation among business travelers. However, many luxury hotels
were opening there. To stay competitive, the Portman’s new managers decided to reposition the
hotel with a new strategy, one that emphasized outstanding customer service. But they knew that
improving the service would require new employee behaviors, and therefore new selection,
training, and pay policies and practices. We will see what they did.
Learning Objectives:
3-1. Explain with examples each of the eight steps in the strategic management process.
3-2. List with examples the main types of strategies.
3-3. Define strategic human resource management and give an example of strategic human
resource management in practice.
3-4. Give at least five examples of HR metrics.
3-5. Give five examples of what employers can do to have high-performance systems.
3-6. Describe how you would execute a program to improve employee engagement.
Annotated Outline:
I. The Strategic Management Process
A. The Management Planning Process – the basic management planning
process consists of five steps: setting objectives, making basic planning
forecasts, reviewing alternative courses of action, evaluating which
options are best, and then choosing and implementing your plan.
B. What is Strategic Planning? – 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.
C. The Strategic Management Process – Figure 3-2 sums up the strategic
management process. It has seven steps:
Step 1. Ask where are we now?
Step 2. Size up the situation: perform external and internal audits
Step 3. Formulate a new direction
Step 4. Translate the mission into strategic goals
Step 5. Formulate strategies to achieve the strategic goals
Step 6. Implement the strategies
Step 7. Evaluate performance
II. Types of Strategies
A. Corporate Strategy – identifies the portfolio of businesses that, in total,
comprise the company and how these businesses are related to each other.
Chapter 3: Human Resource Management Strategy and Analysis 3-3
Copyright© 2017 Pearson Education, Inc.
Concentration, diversification, vertical integration, consolidation, and
geographic expansion are all examples of corporate-level strategies.
B. Competitive Strategy – identifies how to build and strengthen the business
unit’s long-term competitive position in the marketplace. Examples of
competitive strategies include cost leadership, differentiation, and
focusers.
C. Functional Strategy – these strategies identify what each department must
do to help the business accomplish its strategic goals.
D. Manager’s Roles in Strategic Planning – devising a strategic plan is top
management’s responsibility. However, few top executives formulate
strategic plans without lower-level manager’s input.
III. Strategic Human Resource Management
A. What Is Strategic Human Resource Management?
1. Strategic HRM means formulating and executing human resource policies and
practices that produce the employee competencies and behaviors that
companies need to achieve their strategic aims.
B. Improving Performance: The Strategic Context
C. Improving Performance: HR As a Profit Center
D. Sustainability and Strategic Human Resource Management – today’s emphasis on
sustainability has important consequences for human resource management. HR
policies and practices can support a firm’s sustainability strategy and goals.
E. Strategic Human Management Tools
1. Strategy Map – summarizes how each department's performance contributes to
achieving the company’s overall strategic goal.
2. HR scorecard – a process for assigning financial and nonfinancial goals or
metrics to human resource management-related strategy map chain of activities
required for achieving the company’s strategic aims.
3. Digital Dashboards – presents the manager with the desktop graphics and
charts, showing a computerized picture of how the company is doing on all
metrics from the HR scorecard process.
IV. HR Metrics, Benchmarking, and Data Analytics
A. Improving Performance: Through HRIS: Tracking Applicant Metrics for Improved
Talent Management
B. Benchmarking – occurs when an organization compares the practices of high
performing companies’ results to your own, to understand what makes them better.
C. Strategy and Strategy-Based Metrics – benchmarking is only part of the
process. To reveal the extent to which your firm’s HR practices are
supporting its strategic goals, strategy-based metrics are used to measure
the activities that contribute to achieving the company’s strategic aims.
D. What Are HR Audits? – these audits are a way for an organization to
measure where it currently stands and determines what it has to
accomplish to improve its HR functions.
E. Evidence-Based HR and the Scientific Way of Doing Things – evidence-
based HR is the use of data, facts, etc. to support HR proposals, decisions,
Chapter 3: Human Resource Management Strategy and Analysis 3-4
Copyright© 2017 Pearson Education, Inc.
practices, and conclusions. This requires managers to be more scientific
in making organizational decisions. This approach requires objectivity,
experimentation, quantification, explanation, prediction, and replication.
F. Trends Shaping HR: Digital and Social Media
1. Talent Analytics – tools that enable employers to analyze, in new
ways, employee data both on obvious things (like employee
demographics, training, and performance ratings), but also data
from new sources (like company internal social media sites, GPS
tracking, and email activity).
G. Trends Shaping HR: Science In Talent Management
V. High-Performance Work Systems –a set of human resource management policies
and practices that together produce superior employee performance.
VI. Employee Engagement Guide for Managers: Employee Engagement and Performance
A. The Employee Engagement Problem – Gallup distinguishes among
engaged employees “who work with passion and feel a profound
connection to their company,” and not engaged employees who are
essentially “checked out,” and actively disengaged employees.
B. What Can Managers Do to Improve Employee Engagement? – managers
improve employee engagement by taking concrete steps to do so, such as:
providing supportive supervision, making sure employees understand
how their departments contribute to the company’s success, see how their
efforts contribute to achieving the company’s goals, get a sense of
accomplishment from working at the firm, and are highly involved – as
when working in self-managing teams.
C. How to Measure Employee Engagement – firms like Gallup
(www.gallup.com) and Tower Watson (www.towerswatson.com/en-US)
offer comprehensive employee engagement survey services.
D. How Kia Motors (UK) Improved Performance with an HR Strategy
Aimed at Boosting Employee Engagement
1. The Challenges
2. The New Human Resources Management Strategy
3. How to Execute an Employee Engagement Strategy – executing
Kia UK’s employee engagement HR strategy involved six steps:
Step 1. Set measurable objectives.
Step 2. Held an extensive leadership development program.
Step 3. Instituted new employee recognition programs.
Step 4. Improved internal communications.
Step 5. Instituted a new employee development program.
Step 6. Made a number of changes to its compensation and other
polices.
4. The Results
Chapter Review
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Copyright© 2017 Pearson Education, Inc.
Chapter Section Summaries:
3-1: Strategic planning is important to all managers.
3-2: Each function or department in the business needs its own functional strategy, and strategic
human resource management means formulating and executing human resource policies and
practices that produce the employee competencies and behaviors the company needs to
achieve its strategic aims.
3-3: The manager will want to gather and analyze data prior to making decisions.
3-4: A high-performance work system is a set of human resource management policies and
practices that together produce superior employee performance.
3-5: Employment engagement is important because it drives performance and productivity.
3-6: Actually executing Kia UK’s employee engagement HR strategy involved six steps.
Discussion Questions:
3-1: Give an example of hierarchical planning in an organization.
Top management approves a long-term or strategic plan. Then each department, working
with top management, creates its own budgets and other plans to fit and contribute to the
company’s long-term plan.
3-2: What is the difference between a corporate strategy and a competitive strategy? Give
one example of each.
This item can be assigned as a discussion question in MyManagementLab. Student
responses will vary.
3-3: Explain why strategic planning is important to all managers.
A plan shows the course of action for getting from where you are to the goal, and planning
is always “goal-directed.” So, a strategic plan is the company’s overall plan for how it will
match its internal strengths and weaknesses with external opportunities and threats in order
to maintain a competitive advantage. Strategic management is the process of identifying
and executing the organization’s strategic plan, by matching the company’s capabilities
with the demands of its environment and therefore is important to any manger that intends
to meet his or her goals.
3-4: Explain with examples each of the seven steps in the strategic management process.
Step 1. Ask, Where Are We Now? The logical place to start is by asking, “Where are we
now as a business?” Here the manager defines the company’s current business and mission.
Specifically, “What products do we sell, where do we sell them, and how do our products
or services differ from our competitors’?” The manager will traditionally focus on four
aspects of the current business.
Step 2. Size up the Situation: Perform External and Internal Audits. The next step is to ask,
“Are we heading in the right direction given the challenges that we face?” To answer this,
