Strategy Formulation

 Importance of Human Resources to Strategy

 Theoretical Foundations
 International Strategy
 Human Resource Contributions to Strategy
 Strategy-Driven Role Behaviors and Practices
 Strategic Human Resource Activity Typology
 Strategic Human Resource Firm Typology
 Network Organizations and Strategy
 Organizational Learning
 Integration of Strategy and Human Resource Planning
 The HR Manager and Strategic Planning
 Summary
 Case 4—Integrating Strategy and Human Resource Managem
 Importance of Human Resources to
Strategy Formulation

 People as a source of competitive advantage

 Distinctive competencies can be attained through:
Employee skills
Organizational cultures
Management processes
Systems
 Importance of controlling labor costs
 Awareness of inefficient use of human resources
 Key questions—e.g., “What kinds of people will be
needed to lead this organization in the future?”
 Strategic Concepts and Definitions

 One definition: strategic HRM is "the pattern of

planned human resource deployments and activi
ties intended to enable an organization to achiev
1
e its goals.”
 Four theoretical influences that strategic
considerations have on HR practices in
clude:
(1) Resource-based view
(2) Behavioral view
(3) Cybernetics systems
2
 Strategic HRM:
A Theoretical Framework1

Firm Strategy
Institutional/Political
Forces

Resource
Resource Dependence
Based View HRM Practices Institutional
of the Firm

Behavioral
Cybernetic,
Agency/Transaction Approach
Costs

Firm-Level Outcomes
HR Capital Pool HR Behaviors (Performance,
(Skills, Abilities) Satisfaction,
Absenteeism, etc.
 Strategy

 Strategy performs directional, coordinat

ing, decision making, and resource allo
cation functions
 Strategy “is the pattern or plan that inte
grates an organization's major
goals, policies, and action seque
1
nces into a cohesive whole.”
 Strategic Planning

 The strategy formulation process (i.e., strategic pla

nning) is typically comprised of the following steps:
(1) Development of organizational philosophy and mission
statement
(2) Environmental scanning
(3) Analysis of strengths, weaknesses, opportunities, and threats
(SWOT analysis)
(4) Formulation of strategic objectives
(5) Generation of alternative strategies for achieving objectives
(6) Evaluation and selection of strategies

 Formal/comprehensive versus informal/incremental str

ategic planning
 Functions of Strategic Planning1

1. Periodic forward scanning

2. Analysis based on longer time frame
3. Communication about goals and resource allocation
4. Framework for short-term plan evaluation and
integration
5. Institutionalization of longer-term time horizons
necessary for investments such as in
research and development
6. Decisional criteria framework for short-term decision
making
 Competitive Strategy in
Business Units

1
Five forces affecting potential profitability:
(1) Ease with which new competitors can
enter an industry
(2) Customers’ bargaining power
(3) Suppliers’ bargaining power
(4) The strength rivalry among the industry’s
competing firms
(5) The availability of substitutes for the
industry’s goods or services
 Other Issues

 Planning in strategic business units

 Human resource strategy

 Human resource planning or staffing pl

anning
 International Strategy

 Three basic international strategies:

 Multinational or multdomestic strategies
 Global strategies
 Transnational strategies
 Strategic alliances
 Obtaining sustainable competitive advantag
e
 Globally competent managers
 Global location of production facilities
 Human Resource Contributions
to Strategy

 Environmental scanning & competitive in

telligence

 Implementation of resource reallocation

decisions

 Lead time for dealing with labor shortage

s & surpluses
 Strategy-Driven Role Behaviors
and Practices

 Different strategies require different HR

practices and role behaviors
 The competitive strategies of (1) innov
ation, (2) quality enhancement, and (3
) cost reduction can be used to explain
how different employee behaviors are ne
eded for successful implementation of
different strategies
 Other Important Issues

 Network organizations and strategy

 Organizational learning

 Integration of strategy and human resourc

e planning

 The HR manager and strategic planning

 Benefits of Integrating HR Planning
with Strategic Planning1

1. Generates more diverse solutions to complex

organizational problems
2. Ensures consideration of human resources in
organizational goal-setting processes
3.Ensures consideration of human resources in
assessment of organization's abilities to
accomplish goals and implement strategies
4. Reciprocal integration prevents strategy
formulation based on personnel
rigidities/preferences
5. Facilitates concurrent consideration of
strategic plans and managerial
 Strategic Components of HRM
Relevant to Internal Fit1

1. Management awareness
2. Management of the function
3. Portfolio of programs
4. Personnel skills
5. Information technology
6. Awareness of the environment
BIBLIOGRAPHY
 Strategic Human Resource Management Charles Greer, Person
 Strategic Human Resource Management Jeffrey Mello, Cengag
e Learning, latest edition
 www.shrm.org/
 www.citehr.com
 Source: Extracted from Baird, Lloyd and Meshoulam, Ilan. (198
8). "Managing two fits of strategic human resource managemen
t." Academy of Management Review,