I. HR’s Strategic Challenges
A strategic plan is 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. The HR strategy needs to support the company’s strategic plan. In formulating their HR strategies, HR managers must address three basic challenges: 1) support corporate productivity and performance improvement efforts; 2) employees play an expanded role in employers’ performance improvement efforts; 3) HR must be more involved in designing – not just executing – the company’s strategic plan.
A. The Strategic Management Process:
Strategic management is the process of identifying and executing the organization’s mission, by matching the organization’s capabilities wit the demands of its environment. It consists of several related tasks:
1. Define the Business and Its Mission – Managers choose strategies to get the company from where it is to where it wants to be tomorrow. The company’s vision is a general statement of its intended direction that evokes emotional feelings in organization members. The mission is more specific and shorter term, communicating “who we are, what we do, and where we’re headed”
2. Perform External and Internal Audits – SWOT analysis is a commonly used tool that identifies the company’s strengths and weaknesses, opportunities and threats.
3. Formulate new business and mission statements – Decides on new business, products to sell, where to sell, and how the products differ from competitors.
4. Translate the Mission into Strategic Goals – Operationalize the mission by getting specific around goals.
5. Formulate a Strategy to Achieve the Strategic Goals – A strategy is a course of action, showing how the enterprise will move from where it is now to where it wants to be as stated in its vision, mission and strategic goals, given its opportunities, threats, strengths and weaknesses.
6. Implement the Strategy – Translating the strategies into actions and results.
7. Evaluate Performance – Assessing progress toward strategic goals and taking corrective action as needed. Strategic control keeps the company’s strategy up to date, and identifies where adjustments need to be made
B. Types of Strategic Planning – Managers have three levels of strategic planning.
1. Corporate-level strategy – Identifies the portfolio of businesses that comprise the company and the ways in which these businesses related to each other. Diversification, vertical integration, consolidation and geographic expansion are all examples of corporate level strategies.
2. Business-level/competitive strategy – Identifies how to build and strengthen the business’s long term competitive position in the marketplace. Companies try to achieve competitive advantages for the business they are in, which allow them to differentiate its product or services from those of its competitors to increase market share. Examples of competitive strategies include cost leadership and differentiation.
3. Functional strategies - identify the basic course of action that each department will pursue in order to help the business attain its competitive goals.
When You’re On Your Own: Using Computerized Business Planning Software. There are several business planning software packages available to help the small business owner write top-notch strategic and business plans.
C. HR and Competitive Advantage
In order to have an effective competitive strategy, the company must have one or more competitive advantages. Technology itself is rarely enough to set a firm apart as most companies today have easy access to the same technologies, so that the real differentiation is people and the management system.
D. Strategic Human Resource Management
HR strategies refer to the specific courses of action the company pursues to achieve its aims. It means formulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aims.