STRATEGIC HUMAN RESOURCE MANAGEMENT

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. ( Business models)
Strategy - A course of action the company can pursue to achieve its strategic aims.
Case in point:
Problem: Sale of sugared drinks plummets
PepsiCo Strategy: Diversification strategy;
Coca-cola Strategy: Concentration strategy
Strategic Plan- The process of identifying and executing the organization’s strategic plan by
matching the company’s capabilities with the demands of its environment.

Strategic Management Process

Step2: Step5:
Step1: Step3:
Perform Step4: Translate Formulate
Define the Formulate
external and the mission into strategies to
current a new
internal strategic goals achieves the
business direction
audits strategic gaols

Strategic planning

Step6:
Step7: Evaluate
Implement the
performance
strategies

Strategic execution Strategic Evaluation

VISION STATEMENT -A general statement of the firm’s intended direction; it shows , in
broad terms, “ what we want to become.”
Levels of Strategies
• Corporate level strategy
• Competitive strategy
• Functional strategy
Corporate level strategy
A 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.
• Concentration (Single-business)
• Diversification (multi-line)
• Vertical integration (forward or backward or both)
• Consolidation (Size-reduction)
• Geographic expansion (entering new markets)
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/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 HRM- Formulating and executing human resource policies and practices
that produce the employee competencies and behaviours the company needs to
achieve its strategic aims.
 Strategic human resource management is to ensure that human resource management
is fully integrated into strategic planning, that HRM policies cohere both across policy
areas and across hierarchies and that HRM policies are accepted and used by line
managers as part of their every day work. (Guest)
Concerns of SHRM

• Analysing the opportunities and threats existing in the external environment.

• Formulating strategies that will match the organisation’s (internal) strengths and weaknesses with
environmental (external) threats and opportunities.

• Implementing the strategies so formulated.

• Evaluating and controlling activities to ensure that organisation’s objectives are duly achieved.

Need and Importance of SHRM

• Allows identification, prioritisation and exploitation of opportunities.

• Provides an objective view of management problems.

• Represents a framework for improved co-ordination and control of activities.

• Minimises the effects of adverse conditions and changes.

• Allows major decisions to better support established objectives.

• Allows more effective allocation of time and resources to identified opportunities.

• Allows fewer resources and lesser time to be devoted to correcting erroneous or ad hoc decisions.

• Creates a framework for internal communication among personnel.

• Helps to integrate the behaviours of individuals into a total effort.

• Provides a basis for the clarification of individual responsibilities.

• Gives encouragement to forward thinking.

• Provides a co-operative, integrated and enthusiastic approach to tackling problems and opportunities.

• Encourages a favourable attitude towards change.

• Gives a degree of discipline and formality to the management of a business.

(Fred R. David)

Corporate Strategies

• Growth - A growth strategy is when an organization expands the number of markets served or
products offered, either through its current businesses or through new businesses. Because of its growth
strategy, an organization may increase revenues, number of employees, or market share. Organizations
grow by using concentration, vertical integration, horizontal integration, or diversification.

• Stability - A stability strategy is a corporate strategy in which an organization continues to do what it

is currently doing. Examples of this strategy include continuing to serve the same clients by offering
the same product or service, maintaining market share, and sustaining the organization's current
business operations. The organization does not grow, but does not fall behind, either.

• Renewal - When an organization is in trouble, something needs to be done. Managers need to develop
strategies, called renewal strategies that address declining performance. The two main types of renewal
strategies are turnaround, divestment and liquidation strategies.

Business Strategy: Market driven or resource driven?

Market-driven Strategy

In a market-driven business strategy, the external environment is the key characteristic that influences
the long-term profitability of a company. The important steps in deciding a market-driven strategy are
taking stock of company mission, vision and objectives, understanding the nature of the environment in
which a company is doing its business, knowing company competitive position in its chosen product
market, an assessment of company internal capabilities by way of resource position, and a resource use
efficiency by way of internal value chain and product portfolio analysis. A company may go by generic
strategy of cost leadership, differentiation and focus, or industry specific strategy of integration,
diversification, innovation, downsizing, outsourcing, merger and acquisition, joint venture and alliance.

Resource-driven Strategy

• The firm’s competitive advantage originates from its possession of valuable resources which provides
it capabilities to generate goods and services that are demanded by the market. A firm would have
competitive advantage over its competitors when it pursues its business policy in such a way that it
uses those resources intensively over which it has cost and productivity advantage over its
competitors. Some of the common resources which could make a difference in profitability among
firms are financial resources, physical plant and land-based resources and technological resources.
Apart from these tangible resources, a firm uses many other intangible resources, e.g., organizational
knowledge resources, reputation and goodwill, organizational cultural resources, human resources and
organizational competencies. These resource-based differences in profitability originate from the
presence of various types of imperfections in the resources markets. Human resource practices of an
organization could be a source of competitive advantage because good human resource practices
encourage development and maintenance of healthy, productive, and cooperative culture within an
organization which the competition may find hard to imitate.

Integrating HR Strategy with Business Strategies

• To be taken seriously as HR professionals, they need to be relevant to our audience. They need to
understand and adopt the goals and objectives of the organization and make them our goals and
objectives. To do this requires that HR strategies are directly linked to the strategies – and ultimately
the success – of the business.

• Understand the business strategy; #Assess current conditions;

• Plan and implement the HR strategy; and

• Measure and evaluate results and adjust as needed..