Chapter 3: Human Resource Management Strategy and Analysis 3-5
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
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
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
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
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,
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managers need to study or “audit” the firm’s environment, and its internal strengths and
Step 3. Formulate a New Direction. The situation may require that management consider
strategic options for the company. Several years ago, for instance, Microsoft, facing a
Step 4. Translate the Mission into Strategic Goals. Given the situation, which strategic
option should we pursue? Here the manager compares his or her strategic options to see
which are most consistent with the firm’s opportunities and threats, and its strengths and
Step 6. Formulate Strategies to Achieve the Strategic Goals. Next, management translates
the new desired direction into actionable strategic goals. At P&G, for instance, strategic
goals might have included “generate 20% of corporate revenues from the Oil of Olay brand
Step 7. Implement the Strategies. Strategy execution means translating the strategies into
action. This means actually hiring (or firing) people, building (or closing) plants, and
adding (or eliminating) products and product lines. To do this, management uses the firm’s
Step 8. Evaluate Performance. Things don’t always turn out as planned. P&G soon built its
Oil of Olay line into a world-class brand. However, initially, at least, Microsoft’s new
3-5: Explain with examples how human resources management can be instrumental in
helping a company create a competitive advantage.
Competitive advantage is any factors that allow an organization to differentiate its product
or service from those of its competitors to increase market share. HR management can be
• Formulating and executing human resource policies and practices that produce the
employee competencies and behaviors the company needs to achieve its strategic
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Copyright© 2017 Pearson Education, Inc.
• Implementing new training and communications programs aimed at ensuring all
employees understand the importance of the business strategy, and what is required of
more resilient in terms of moving from job to job.
searching for innovative solutions.
3-6: Outline how you would implement an employee engagement program
This item can be assigned as a discussion question in MyManagementLab. Student
Individual and Group Activities:
3-7: With three or four other students, form a strategic management group for your college
or university. Your assignment is to develop the outline of a strategic plan for the
college or university. This should include such things as strategic goals, and corporate,
competitive, and functional strategies. In preparing your plan, make sure to show the
main strengths, weaknesses, opportunities, and threats the college faces, and which
prompted you to develop your particular strategic plans.
Students’ answers will vary.
3-8: Using the Internet or library resources, review the annual reports of five companies.
Bring to class examples of how those companies say they are using their HR processes
to help the company achieve its strategic goals.
In class, facilitate a discussion on how effective the HR processes at each company appear to
support strategic goals. Challenge students to come up with additional ideas for other
3-9: Interview an HR manager and write a short report on “The Strategic Roles of the HR
Manager at XYZ Company.”
Instruct students to follow the model outlined in this chapter for the steps in the strategic
3-10: Using the Internet or library resources, bring to class and discuss at least two examples
of how companies are using an HR scorecard to help create HR systems that support
the company’s strategic aims. Do all managers seem to mean the same thing when they
refer to HR scorecards? If not, how do they differ?
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Copyright© 2017 Pearson Education, Inc.
For each example, ask students to comment on how effective they believe the measures that
were selected by the company are in terms of allowing the company to assess HR’s
performance objectively and quantitatively, as well as serving as a tool for the HR manager
to build a measurable and persuasive business case for how HR is contributing to achieving
3-11: In teams of several students, choose a company for which you will develop an outline of
a strategic HR plan. What seem to be this company’s main strategic aims? What is the
firm’s competitive strategy? What would the strategic map for this company look like?
How would you summarize your recommended strategic HR policies for this company?
Students’ answers will vary.
3-12: Appendices A and B at the end of this book list the knowledge someone studying for the
HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each
area of human resource management (such as in Strategic Management and Workforce
Planning). In groups of several students do four things: (1) review Appendix A and/or
B, (2) identify the material in this chapter that relates to the Appendix A and/or B
required knowledge lists, (3) write four multiple-choice exam questions on this material
that you believe would be suitable for inclusion in the HRCI exam, and/or the SHRM
exam; and (4) if time permits have someone from your team post your team’s questions
in front of the class, so that students in all teams can answer the exam questions created
by the other teams.
Material in this chapter that could be covered in the HRCI certification exam include: Under
Strategic Management, the formulation of HR strategies to support the company’s overall
strategic plan; HR’s role in helping companies to build a competitive advantage; strategic HR
Experiential Exercise: Developing an HR Strategy for Starbucks
Purpose: The purpose of this exercise is to give students experience in developing an HR
strategy, in this case, by developing one for Starbucks.
Required Understanding: You should be thoroughly familiar with the material in this chapter.
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How to Set up the Exercise/Instructions: Set up groups of three or four students for this
exercise. You are probably already quite familiar with what it’s like to have a cup of coffee or
tea in a Starbucks coffee shop; but, if not, spend some time in one prior to this exercise. Meet in
groups and develop an outline for an HR strategy for Starbucks Corp. Assume for the corporate
strategy, Starbucks will remain primarily an international chain of coffee shops. Your outline
should include four basic elements: a basic business/competitive strategy for Starbucks, the
workforce requirements (in terms of employee competencies and behaviors) this strategy
requires, specific HR policies and the activities necessary to produce these workforce
requirements, and suggestions for metrics to measure the success of the HR strategy.
Application Case: Siemens Builds a Strategy–Oriented HR System
3-13: Based on the information in this case, provide examples for Siemens of at least four
strategically required organizational outcomes and four required workforce
competencies and behaviors.
Strategically required organizational outcomes would be the following: 1) An employee
selection and compensation system that attracts and retains the human talent necessary to
support global diversification into high-tech products and services; 2) A “learning
company” in which employees are able to learn on a continuing basis; 3) A culture of
3-14: Identify at least four of the strategically relevant HR policies and activites that
Siemens has instituted in order to help HR contribute to achieving Siemens’ strategic
goals.
1) Training and development activities to support continuous learning through a system of
combined classroom and hands-on apprenticeship training to support technical learning; 2)
Continuing education and management development to develop skills necessary for global
3-15: Provide a brief illustrative oultine of a strategy map for Siemens.
Student answers will vary but the strategy map should answer the following questions: 1)
What overall goals does Siemens want to achieve?; 2) What must Siemens do
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Continuing Case: The Carter Cleaning Company – The High–Performance Work
System
3-16: Would you recommend that the Carters expand their quality program? If so,
specifically what form should it take?
Most students will agree that there are opportunities to expand the quality program. The
employee meeting approach is a good start in terms of utilizing high-involvement
organizational practices. There are opportunities to maximize the overall quality of their
3-17: Assume the Carters want to institute a high performance work system as a test
program in one of their stores. Write a one-page outline summarizing important HR
practices you think they should focus on.
Students should include some of the following ideas in their outline: The types of HR
practices they would implement to improve quality, productivity, financial performance;
methods for job enrichment; strategies for implementing and leveraging a team-based
Hotel Paris: Improving Performance at the Hotel Paris –The Hotel Paris
International
3-18: Draw a more simplified and abbreviated strategy map for the Hotel Paris.
Specifically, summarize in your own words an example of the hierarchy of links
among the hotel’s HR practices, necessary workforce competencies and behaviors, and
required organizational outcomes.
• What overall goals does the Hotel Paris want to achieve?
• What does the Hotel Paris do operationally to achieve its goals?
• What employee attitudes and behaviors will produce the desired operational outcomes?
The above strategy map for the Hotel Paris succinctly lays out the hierarchy of main
activities required for the Hotel Paris to succeed. For example, the Hotel Paris could
endeavor to improve workforce competencies and behaviors by instituting an improved
Chapter 3: Human Resource Management Strategy and Analysis 3-11
Copyright© 2017 Pearson Education, Inc.
3-19: Using Table 3-1 and Figure 3-9, list at least 15 metrics the Hotel Paris could use to
measure its HR practices.
• Number of qualified applicants per position
• Percentage of jobs filled from within
• Number of hours of training for each employee
• Percentage of the workforce eligible for incentive pay
• Percentage of the workforce routinely working in a self-managed, cross functional, or
My Management Lab
Students can find the following assisted-graded writing questions at mymanagementlab.com.
Answers to these questions are graded against rubrics in the MyLab.
3-20: Define and give at least two examples of the cost-leadership competitive strategy and the
differentiation competitive strategy.
3-21: You own a small business and your friend, over lunch, just mentioned that “it sounds like
you have an employee engagement problem.” What exactly would you do to improve
employee engagement in your company now?
Key Terms:
Strategic Plan – 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.
Strategy – A courses of action the company pursues to achieve its strategic aims.
Strategic Management – The process of identifying and executing the organization’s mission
by matching the company’s capabilities with the demands of its environment.
Vision Statement – A general statement of the firm’s intended direction; it shows, in broad
terms, “what we want to become.”
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Mission Statement – Summarizes the answer to the question, “What business are we in?”
Corporate-Level Strategy – Type of strategy that identifies the portfolio of businesses that, in
total, comprise the company and the ways in which these businesses relate to each other.
Competitive Strategy – A strategy that identifies how to build and strengthen the business’s
long-term competitive position in the marketplace.
Competitive Advantage – Any factors that allow an organization to differentiate its product or
service from those of its competitors to increase market share.
Functional Strategy – A strategy that identifies the broad activities that each department will
pursue in order to help the business accomplish its competitive goals.
Strategic Human Resource Management – Formulating and executing human resource
policies and practices that produce the employee competencies and behaviors the company needs
to achieve its strategic aims.
Strategy Map – A strategic planning tool that shows the “big picture” of how each department’s
performance contributes to achieving the company’s overall strategic goal.
HR Scorecard – A process for assigning financial and nonfinancial goals or metrics to the
human resource management related chain of activities required for achieving the company’s
strategic aims and for monitoring results.
Digital Dashboard – Presents the manager with desktop graphs and charts, and a computerized
picture of where the company stands on all those metrics from the HR Scorecard process.
Human Resource Metric – The quantitative gauge of human resource management activities,
such as employee turnover, hours of training per employees, or qualified applicants per position.
Strategy-Based Metrics – Metrics that specifically focus on measuring the activities that
contribute to achieving a company’s strategic aims.
HR Audit – An analysis by which an organization measures where it currently stands and
determines what it has to accomplish to improve its HR function.
High-Performance Work System (HPWS) – A set of human resource management policies
and practices that promote organizational effectiveness.