978-0134235455 Chapter 3 Lecture Note

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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

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

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

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

Chapter 3: Human Resource Management Strategy and Analysis 3-5

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,