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PART ONE INTRODUCTION
C H A P T E R
T T h r e e
Human Resource Strategy and
Performance
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Lecture Outline
I. The Strategic Management Process
A. The Basic Management Planning Process
B. What Is Strategic Planning?
C. The Strategic Management Process
D. Types of Strategies
E. Managers’ Roles in Strategic Planning
II. Strategic Human Resource Management
A. What Is Strategic Human Resource Management?
B. Sustainability and Strategic Human Resource
Management
C. Strategic Human Resource Management Tools
III. HR Metrics and Benchmarking
A. Types of Metrics
B. Benchmarking
C. Strategy and Strategy-Based Metrics
D. Workforce/Talent Analytics
E. Data Mining
F. Using HR Audits
G. Evidence-Based HR and the Scientific Way of
Doing Things
IV. Building High-Performance Work Systems
A. High-Performance Work Systems
B. High-Performance Human Resource Policies and
Practices
V. Employee Engagement and Performance
A. Employee Engagement
B. Why Is Employee Engagement Important?
C. The Employee Engagement Problem
D. What Can Managers Do to Improve Employee
Engagement?
E. How to Measure Employee Engagement
VI. Employee Engagement Guide for Managers
A. How Kia Motors Improved Performance with an HR
Strategy Aimed at Boosting Employee Engagement
B. The Challenges
C. The New HR Management Strategy
D. The Results
In Brief: This chapter explains
how to design and develop an HR
system that supports the
company’s strategic goals. It
explains the strategic management
process, what strategic HR
management is, HR metrics, high-
performance work systems, and
employee engagement. It discusses
how to create a strategy-oriented
HR system.
Interesting Issues: The human
resource function today continues
to play an increasingly visible role
in the strategic planning and
management process, requiring a
new level of skill and competency
among HR professionals. HR
managers must develop
measureable strategies that
convincingly showcase HR’s
impact on business performance.
Successful human resource
managers have adopted a
perspective that focuses on how
their departments can play a
central role in implementing the
firm’s strategy.
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ANNOTATED OUTLINE
I. The Strategic Management Process
A. The Basic Management Planning Process — The basic managerial
planning process involves setting goals, making basic planning
forecasts, reviewing alternative courses of action, evaluating which
options are best, and then choosing and implementing your plan. A plan
shows the course of action for getting from where you are to the goal.
Planning is always goal-directed.
1. Policies and Procedures — Policies and procedures provide the day-
B. What Is Strategic Planning? — A strategic plan is the company’s overall
plan for how it will match its internal strengths with its external
opportunities and threats in order to maintain a competitive position. The
strategic planner asks, “Where are we now as a business, where do we
C. The Strategic Management Process — The seven-step process involves
1) asking “where are we now”? 2) evaluating the firm’s internal and
external strengths, weaknesses, opportunities, and threats, 3)
D. Types of Strategies — A corporate-level strategy identifies the portfolio
of businesses that comprise the company and how these businesses
relate to one another. Concentration, diversification, vertical integration,
consolidation, and geographic expansion are all examples of corporate–
level strategies. A competitive strategy identifies how to build and
E. Managers’ Roles in Strategic Planning — Devising a strategic plan is top
management’s responsibility. However, top executives rarely formulate
strategic plans without the input of lower-level managers. Few people
II. Strategic Human Resource Management
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A. What Is Strategic Human Resource Management? — Strategic HR
management means formulating and executing human resource policies
B. Sustainability and Strategic Human Resource Management — This
means achieving financial performance while also achieving human
sustainability, environmental sustainability, and talent sustainability.
C. Strategic Human Resource Management Tools — Managers use several
tools to translate the company’s broad strategic goals into human
resource management policies and practices. Three important tools
include the strategy map, the HR scorecard, and the digital dashboard.
1. Strategy Map — The strategy map summarizes how each
department’s performance contributes to achieving the company’s
2. The HR Scorecard — The HR scorecard is not a scorecard. It refers
3. Digital Dashboards — A digital dashboard presents the manager
with desktop graphs and charts, showing a computerized picture of
how the company is doing on all metrics from the HR Scorecard
process.
III. HR Metrics and Benchmarking
A. Types of Metrics — Human resource managers use many measures. A
human resource metric is the quantitative gauge of a human resource
management activity such as employee turnover, hours of training per
employee, or qualified applicants per position.
B. Benchmarking — We must know “How are we doing?” in relation to
C. Strategy and Strategy-Based Metrics — Managers use strategy-based
D. Workforce/Talent Analytics— Employers use workforce analytics (or
“talent analytics”) software applications to analyze their human resources
data and to draw conclusions from it.
E. Data Mining — Data mining sifts through huge amounts of employee data
to identify correlations that employers then use to improve their
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C. The Employee Engagement Problem — Depending on the study, only
about 21–30% of employees nationally are engaged.
D. What Can Managers Do to Improve Employee Engagement? —
Managers can provide supportive supervision and can also make sure
E. How to Measure Employee Engagement — Gallup, Towers Watson, and
other vendors offer comprehensive employee engagement surveys
services.
VI. Employee Engagement Guide for Managers
A. How Kia Motors (UK) Improved Performance with an HR strategy Aimed
B. The Challenges — Kia UK faced rapidly falling sales, increased financial
losses, and low levels of emlployee engagement. Employee turnover
was at 31%.
C. The New Human Resources Management Strategy — A new HR director
developed a new employee engagement strategy to improve employee
morale and address the high levels of employee turnover.
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 competitive advantage.
Strategy
A course of action the company can pursue to achieve its
strategic aims.
Strategic management
The process of identifying and executing the
organization’s strategic plan by matching the company’s
capabilities with the demands of its environment.
Mission statement
Summarizes what the company’s main tasks are today.
Corporate-level strategy
Type of strategy that identifies the portfolio of business
that in total, comprise the company and the ways in which
these businesses relate to each other.
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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 department’s functional strategy identifies what the
department must do in terms of specific departmental
policies and practices 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 goals.
HR Scorecard
A process for assigning financial and nonfinancial goals 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
thus presenting a computerized picture of where the
company stands on all the metrics from the HR Scorecard
process.
Human resource metric
The quantitative gauge of a human resource management
activity such as employee turnover, hours of training per
employee, 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
A set of human resource management policies and
practices that promote organizational effectiveness.
DISCUSSION QUESTIONS
3-1. Give an example of hierarchical planning in an organization. (LO 3.1: Explain, with
3-2. Define and give at least two examples of the cost leadership competitive strategy
and the differentiation competitive strategy. (LO 3.1: Explain, with examples, each of
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the steps in the strategic management process.) The cost leadership competitive strategy
3-3. What is a high-performance work system? Provide several specific examples of
the typical components in a high-performance work system. (LO 3.4: Answer the
question “What are high–performance work systems?” and give examples of how they
3-4. Explain why strategic planning is important to all managers. (LO 3.1: Explain, with
examples, each of the steps in the strategic management process.) The human resource
function today continues to play an increasingly visible role in the strategic planning and
3-5. Explain with examples each of the seven steps in the strategic planning process.
(LO 3.1: Explain, with examples, each of the steps in the strategic management
process.) First, define the current business and mission of the organization. The logical
place to start is by defining one’s current business. What products do we sell, where, and
3-6. List, with examples, the main generic types of corporate strategies and competitive
strategies. (LO 3.1: Explain, with examples, each of the steps in the strategic
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In a concentration (single-business) corporate strategy, the company offers one product
or product line, usually in one market. The WD-40 Company (which makes a spray
hardware lubricant) is one example.
A diversification corporate strategy means the firm will expand by adding new product
lines. PepsiCo is diversified. For example, over the years, PepsiCo added Frito–Lay chips
and Quaker Oats.
3-7. Define and give several examples of strategic human resource management. (LO
3.2: Define strategic human resource management, and give examples of strategic
human resource management in practice.) 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.
INDIVIDUAL AND GROUP ACTIVITIES
3-8. 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. It should include such things as mission and vision
statements; 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 identify which prompted you to
develop your particular strategic plans. (LO 3.1: Explain, with examples, each of the
Copyright © 2019 Pearson Education, Inc.
headed.” Use this exercise as an opportunity to discuss the problems that may be
created by not clearly defining the mission and vision, as well as the strengths,
weaknesses, opportunities, and threats.
3-9. Using the Internet or library sources, analyze the annual reports of at least 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. (LO 3.2: Define
3-10. Interview an HR manager and write a short report on “The Strategic Roles of the
HR Manager at XYZ Company.” (LO 3.2: Define strategic human resource
3-11. 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? How do they differ? (LO 3.3: Explain,
3-12. Possibly 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? (LO 3.1: Explain, with examples, each of the
3-13. For this activity, you will need the documents titled (1) “HRCI PHR® and SPHR®
Certification body of Knowledge” and (2) “About the Society for Human Resource
Management (SHRM) Body of Competency and KnowledgeTM Model and
Certification Exams.” Your instructor can obtain these documents from the
Pearson Instructor Resource Center and pass them on to you. These documents
list the knowledge someone studying for the HRCI or SHRM 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 the HRCI and/or SHRM documents; (2) identify the material in
this chapter that relates to the required knowledge the appendix lists; (3) write four
multiple-choice exam questions on this material that you believe would be suitable
for inclusion in the HRCI exam; and (4) if time permits, have someone from your
team post your team’s questions in front of the class, so the students in other
teams can take each other’s exam questions. (Covers all learning objectives) The
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Students can find the following assisted-graded writing questions at MyLab Management
3-14. What is the difference between a strategy, a vision, and a mission? Give one
3-15. Explain how human resource management can be instrumental in helping a
company create a competitive advantage. (LO 3.2: Define strategic human resource
management, and give examples of strategic human resource management in practice.)
HR in Action Case Incident 1: Siemens Builds a Strategy-Oriented HR System
3-16. 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. (LO 3.1: Explain, with examples, each of the steps in
3-17. Identify at least four of the strategically relevant HR system policies and activities
that Siemens has instituted in order to help human resource management
contribute to achieving Siemens’ strategic goals. (LO 3.2: Define strategic human
3-18. Provide a brief illustrative outline of a strategy map for Siemens. (LO 3.2: Define
1. Level of organizational learning:
APPLICATION EXERCISES
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to achieving the company’s goals, and 3) get a sense of accomplishment
from working at the firm. Beyond the supportive supervision, the steps the
2. What HR metrics could you use to evaluate the effectiveness of the
employee engagement initiative? (LO 3.5: Answer the question (with
examples) “Why is employee engagement important?”) The metrics used