Snell 17e PPT Instructor Ch02

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Learning Outcomes
 Explain how human resources planning and a firm’s
mission, vision, and values are integrally linked to its
strategy
 Understand how an organization’s external
environment influences its strategic planning
 Understand why it is important for an organization to
do an internal resource analysis
 Explain the linkages between competitive strategies
and HR
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible website, in whole or in part. 2
Learning Outcomes
 Understand what is required for a firm to successfully
implement a strategy and assess its effectiveness
 Describe how firms evaluate their strategies and HR
implementation
Strategic Planning and Human
Resources
 Strategic planning
 Procedures for making decisions about the
organization’s long-term goals and strategies
 Human resources planning (HRP)

 Process of anticipating and providing for the movement
of people into, within, and out of an organization
Strategic Human Resources
Management (SHRM)
 Pattern of human resources deployments and activities
that enable an organization to achieve its strategic
goals
 Combines strategic planning and HR planning
 Strategy formulation - Provides input as to what is
possible given the types and numbers of people available
 Strategy implementation - Makes resource allocation
decisions to implement the devised strategy
Alignment of HRP and Strategic Planning
 Two-way process
 A firm’s HR strategy follows the business strategy and
helps implement it
 People, culture, and climate of a company constrain a
firm’s ability to achieve strategically
Step One: Mission, Vision, and Values
 Mission
 Basic purpose of the organization and its scope of
operations
 Strategic vision
 Clarifies the long-term direction of the company and its
strategic intent
 Core values
 Strong and enduring beliefs and principles that the
company uses as a foundation for its decisions
 Developing a mission statement
 Factors to be considered
 Organization’s reason of existence
 Need fulfilled by the organization in comparison to the
competitors
 Knowledge of the need and methods for fulfilling them
 Knowledge of market and the customers
 Core values of the firm that will be practiced by the employees
 HR’s role
 Communicates mission, vision, and values frequently
informally and formally
 Recruit and hire employees whose values are consistent
with the organization
 Translate mission, vision, and values into:
 Specific on-the-job behaviors
 Job descriptions
 Basis of employee rewards
Step Two: External Analysis
 Environmental scanning: Systematic monitoring of
major external forces influencing the organization
 Business environment: Factors that a firm cannot
directly control but can affect its strategy
 Remote environment: Forces that generally affect
specific firms
 Economy and ecological, technological, social, demographic,
and legal and regulatory changes
Step Two: External Analysis
 Competitive environment: Consists of a firm’s specific
industry
 Includes the industry’s customers, rival firms, new entrants,
substitutes, and suppliers
 HR’s external analysis
 Changes in a firm’s remote and competitive environments are
monitored and analyzed
 Affect hiring plans, recruitment and replacement polices
Figure 2.2 - Five Forces Framework
Step Three: Internal Analysis
 Core capabilities: Integrated knowledge sets within
an organization
 Distinguish the organization from its competitors and
deliver value to customers
 Value creation: What the firm adds to a product or
service by virtue of making it
 Value = benefits – costs
 Resources of core capabilities
 Processes - Standard routines for how work will be done
and results will be accomplished
 Systems - Information systems, databases, and
proprietary technologies
 People - Includes knowledge, skills, and abilities of
employees used to create value for customers
 Criteria for sustaining competitive advantage
 Resources should be:
 Valuable
 Rare
 Difficult to imitate
 Organized
 Trends of employment relationships and HR practices
 Strategic knowledge workers
 Hold unique skills directly linked to the company’s strategy
 Difficult to replace
 Core employees
 Skills are transferable
 Managers invest less in training and development
 Supporting workers
 Scope of duties is limited
 Employment relationships are transaction-based and focused
on rules and procedures
 External partners
 Hold skills that are unique and specialized
 Skills are not related to the company’s core strategy
Figure 2.3 - Mapping Human Capital
 Cultural audits: Audits of the culture and quality of
work life in an organization
 Firm surveys its employees on how they feel about a
number of issues
 Identifies groups with different views about the nature
of work and how it should be done
 Clan culture - Employees are closely knit and exhibit concern
for one another
 Values their customers, loyalty, and cohesion
 Adhocracy culture - Characterized by risk-taking, innovation,
and a spirit of entrepreneurship
 Market culture - Encourages competitive, result-oriented
behaviors
 Hierarchical culture - Characterized by formal structures and
procedures
 Values efficiency and stability
 Value-based hiring: Outlining behaviors that

exemplify a firm’s corporate culture and hiring people
who are a fit for them
 Forecasting - Key elements
 Forecasting demand for labor
 Forecasting supply of labor
 Balancing supply and demand considerations
Figure 2.4 - Model of HR Forecasting
 Forecasting a firm’s demand for employees
 Quantitative approaches
 Trend analysis: Forecasts labor demand based on an
organizational index such as sales
 Modeling or multiple predictive techniques - Combine several
factors to predict employment levels
 Qualitative approaches
 Management forecasts: Opinions of supervisors,
department managers, or experts, knowledgeable about the
organization’s future employment needs
 Delphi technique - Solicits and summarizes judgments of a
preselected group of individuals
 Forecasting the supply of employees
 Staffing tables: Graphic representations of all
organizational jobs
 Contains numbers of employees currently occupying those
jobs and future employment requirements
 Markov analysis: Tracks the pattern of employee
movements through various jobs
 Quality of fill: Metric designed to measure how well new
hires are performing on the job
 Skill inventories: Files of personnel education,
experience, interests, and skills
 Allow managers to quickly match job openings with employee
backgrounds
 Management inventories - Data gathered on managers
 Replacement charts: Listings of current jobholders
and potential replacements if an opening occurs, used
for succession planning
 Succession planning: Identifying, developing, and tracking
key individuals for executive positions
 Human capital readiness: Evaluating the availability
of critical talent in a company and comparing it to the
firm’s supply
 Difference between the quantity and quality of
employees required and available represent the gap that
needs to be remedied
 Provides managers a foundation to establish future
strategy and specific requirements for developing talent
to implement it
Step Four: Formulating Strategy
 SWOT analysis: Comparison of strengths,
weaknesses, opportunities, and threats for strategy
formulation purposes
 Strategy formulation builds on SWOT analysis to
devise a coherent course of action
 Corporate strategy
 Growth and diversification
 Mergers and Acquisitions
 Strategic alliances and joint ventures
 Business strategy
 Low-cost strategy
 Focuses on efficiency, productivity, and minimizing waste
 Linked to HR planning through productivity and outsourcing
activities
 Differentiation strategy
 Based on delivering high-quality products, innovative
features, speed to market, or superior service
 Functional Strategy
 Vertical fit/alignment
 Focuses on the connection between the business objectives

and the major initiatives in HR
 Horizontal fit/alignment
 Aligning HR practices with one another internally to establish
a configuration that is mutually reinforcing
Step Five: Strategy Implementation
 Organizations strive for balance between demand and
supply considerations
 Demand is based on forecasted trends in business
activities
 Supply depends on locating required human resource
 To meet human resources demands, organizations

have staffing options
Figure 2.9 - The 7-S Model
Step Five: Strategy Implementation
 If labor shortage is acute, company develops talent from
ground up
 Firms restrict hiring, reduce their employees’ work
hours, and consider layoffs when forecasts project
surplus employees
 Organizations have to be prepared to exit and enter new
lines of business, restructure, outsource, offshore and
downsize
 HR managers should ensure no laws are violated while
downsizing
Step Six: Evaluation
 Benchmarking: Looking at an organization’s
practices and performances in an area and comparing
them with those of other companies
 Gathering competitive information
 HR metrics
 Human capital metrics assess aspects of the workforce

 HR metrics assess the performance of the HR function
 Managers can gather informal information on
competitors through certain legal means
Figure 2.11 - Building the Metrics
Model
 Measuring a firm’s strategic alignment
 Balanced scorecard (BSC): Helps managers translate
strategic goals into operational objectives
 Related cells - Financial, customer, processes and learning
 Measuring horizontal fit
 Managers identify key workforce objectives they look to
achieve
 Identify HR practices used to elicit or reinforce the
objectives
 Evaluate each HR practice
 Successful HRP helps increase organizational
capability
 Organizational capability: Capacity of the
organization to act and change in pursuit of sustainable
competitive advantage
 Flexibility
 Coordination flexibility - Ability to rapidly reallocate
resources to new or changing needs
 Resource flexibility - Result from having adaptable
people and resources that can be used different ways

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 Human resources planning (HRP)

 Value-based hiring: Outlining behaviors that

 Focuses on the connection between the business objectives

 To meet human resources demands, organizations

 Human capital metrics assess aspects of the workforce

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