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.
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