Chapter 2 : Strategic HR Management and Planning

Topics covered in this snack-sized chapter:



Strategic HR Management and Planning arrow_upward


  • Strategic Human Resource Management is the process of linking the human resource functions with the strategic objectives of the organization in order to improve performance.

  • Strategic Human Resource Management is designed to help companies best meet the needs of their employees while promoting company goals.
  • Strategic HR Planning is an important component of strategic HR management.
    • It is a process that identifies current and future human resource needs of an organization to achieve its goals.

    Strategic Planning arrow_upward


  • Strategic planning is a management tool that helps an organization focus on its energy:
    • To ensure that members of the organization are working toward the same goals.
    • To assess and adjust the organization's direction in response to a changing environment.
  • Purpose of Strategic HR Planning:
    • To ensure adequate human resources to meet the strategic goals and operational plans of the organization.
    • Keep up with social, economic, legislative, and technological trends that impact human resources.
    • Remain flexible so that the organization can adapt if future needs differ from expectations.

    Strategic Human Resource Management Model arrow_upward


  • Strategic HRM defines the organization’s intentions and plans for how its business goals should be pursued and achieved through its employees.
  • Six steps of strategy formulation and implementation process:
    • Environmental Analysis.
    • Organizational Mission and Goals Analysis.
    • Analysis of Organizational Strengths and Culture.
    • Analysis of Organizational Strategies.
    • Choice and Implementation of HR Strategies.
    • Review and Evaluation of HR Strategies.

    Environmental Analysis

  • A human resource manager will be able to identify environmental threats and opportunities which will help him or her formulate new action guidelines. This is accomplished by:
    • Careful and continuous monitoring of economic, social, and labor market trends.
    • Noting changes in governmental policies, legislation, and public policy statements.

    Organizational Mission and Goal Analysis

  • An organizational analysis, involving a close look at the organization’s overall mission and goals, is a second integral aspect of identifying human resource strategies.
  • A mission statement specifies what activities the organization intends to pursue and what its ultimate objectives are.

    • Analysis of Organizational Strengths and Culture

  • Human resource strategies should be formed only after a careful look at the strengths and weaknesses of the organization concerned and its culture.
  • Organization character is the product of all the organization’s features:
    • Its employees.
    • Its objectives.
    • Its technology.
    • Its size.
    • Its age.
    • Its unions.
    • Its policies.
    • Its successes and failures.
  • Organization character reflects the past and shapes the future.

    • Analysis of Organizational Strategies arrow_upward


  • A firm can choose from at least three major generic strategies:
    • Cost Leadership Strategy: Strategy to gain competitive advantage through lower costs of operations and lower prices for products.
    • Differentiation Strategy: Strategy to gain competitive advantage by creating a distinct product or offering a unique service.
    • Focus Strategy: Strategy to gain a competitive advantage by focusing on needs of a specific segment(s) of the total market.

    Choice and Implementation of HR Strategies

  • Given the firm’s objectives, strategies, and constraints, the human resource manager should examine each strategic option for its viability.
  • The ones that appear viable should be scrutinized in detail for their advantages and weaknesses before being accepted for implementation.
  • In formulating strategies, the human resource department must continuously focus on the following five major groups of activities:
    • Planning Human Resources.
    • Attracting Human Resources.
    • Placing, Developing, and Evaluating
    • Human Resources.
    • Motivating Employees.
    • Maintaining High Performances.

    Review and Evaluation of HR Strategies

  • Human resource strategies, however effective they prove to be, must be examined periodically.
  • All external and internal changes necessitate periodic strategy evaluation to ensure their continued validity.

    • Human Resource Management as Strategic Business Contributor arrow_upward


  • One of the most important shifts in the emphasis of HR management in the past few years has been the recognition of HR as a strategic business contributor.
  • This emphasis has several faces:
    • Enhancing Organizational Performance.
    • Expanding Human Capital.
    • Delivering Cost-Effective Compliance Systems.

    Enhancing Organizational Performance arrow_upward


  • Organizational performance can be seen in how effectively the products or services of the organization are delivered to the customers.
  • One goal of HRM is to establish activities that contribute to superior organizational performance:
    • Involvement in Strategic Planning: Human Resource is viewed in the same context as the other resource when organizational strategic planning is being done.
    • Decision Making on Mergers, Acquisitions, and Downsizing.
    • In all mergers and acquisitions, if they are viewed as strategic contributors, HR professionals will participate in the discussions prior to top management making final decisions.
    • Ensuring Financial Accountability for HR results
    • Human resource activities and efforts contribute to the financial results of the organization.
    • HRM that focuses on high performance work practices correlates with better performance of the organization.

    Expanding Human Capital arrow_upward


  • Human Capital is the intersection of an organization's skills, the required roles, and the people available.

  • Human capital is composed of the people in the organization and what capabilities they possess and utilize in their respective jobs.
  • HRM must be built to maximize the capabilities of diverse human resources.
  • HR professionals must be those who ensure that all people, regardless of their backgrounds, are provided opportunities to develop their capabilities.

    • Delivering Cost Effective Compliance Systems arrow_upward


  • The third part of HR management being a strategic business contributor is to deliver HR services and activities in a cost-effective manner that ensures compliance with applicable laws and regulations.       
  • Two aspects that must be considered in this area are:
    • Ensuring Legal Compliance
    • The role of HR is to ensure that the organization, its managers, and employees know of any relevant regulations. HRM reduces the legal liabilities of an organization and ensures compliance with the myriad regulations.
    • Demonstrating Administrative Efficiency
    • The final part of HR management is to deliver HR services and activities in a cost-effective and timely manner.


    Thank You from Kimavi arrow_upward


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