Chapter 2

• Strategic Human Resource Management (SHRM)


  A process and approach to addressing competitive challenges organizations face, managing the "pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole"
• Business Model


  Story of how firm will create value for customers and how it will do so profitably, including concepts like fixed costs, variable costs, margins, and gross margin
• Strategic Management Process


  1. Strategy formulation: Strategic planning groups decide on strategy

  2. Strategy implementation: Organization follows through on strategy
• Role of HRM in Strategy Formulation

  • Answers the question "With what will we compete?"
  • Four levels of integration between HRM and strategic management function: Administrative linkage, One-way linkage, Two-way linkage, Integrative linkage
• Five Major Components of Strategy Formulation

  • Mission
  • Goals
  • External analysis
  • Internal analysis
  • Strategic choice
• SWOT Analysis for Google, Inc.

  • Strengths: Expanding liquidity, Operational efficiency, Broad range of services portfolio
  • Weaknesses: Issues with Chinese government, Dependence on advertising segment, Losses at YouTube
  • Opportunities: Growing demand for online video, Growth in Internet advertising market, Inorganic growth
  • Threats: Weak economic outlook, Invalid clicks, Microsoft–Yahoo! deal
• Variables to Consider in Strategy Implementation

  • Organizational structure
  • HRM tasks
  • Task design
  • Selection, training, and development of people
  • Reward systems
  • Types of information and information systems
• Organizational Culture


  A complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business
• Talent


  Individuals who can have a disproportionate (positive or negative) impact on the firm, key groups of employees who are critical to driving value in the value chain that drives value to the customer
• HRM Practice Options


  • Job Analysis and Design
  • Recruitment and Selection
  • Training and Development
  • Performance Management
  • Pay Structure, Incentives, and Benefits
  • Labor and Employee Relations
• Job Analysis


  Process of getting detailed information about jobs
• Job Design


  Addresses what tasks should be grouped into a particular job
• Recruitment


  Process through which the organization seeks applicants for potential employment
• Selection


  Process by which the organization attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics to help it achieve its goals
• Training


  Planned effort to facilitate the learning of job-related knowledge, skills, and behavior
• Development


  Acquiring knowledge, skills, and behavior that improve employees' ability to meet challenges of existing jobs or jobs that do not yet exist
• Performance Management


  Ensures employees' activities and outcomes are congruent with organization's objectives
• Pay Structure, Incentives, and Benefits

  High pay and/or benefits relative to competitors can help company attract and retain high-quality employees, tying pay to performance can elicit specific activities and levels of performance from employees
• Labor and Employee Relations

  Employees - assets or expenses?, How much should employees participate in decision making?, What rights do employees have?, What is the company's responsibility to employees?
• Porter's Cost and Differentiation Strategies

  Value created by reducing costs, Value created by differentiating a product or service so the company can charge a premium price relative to its competitors
• HRM Needs in Strategic Types

  • In cost strategies: companies define the skills they require and invest in training employees in these skill areas
  • In differentiation strategies: employees exhibit role behaviors such as cooperating with others, developing new ideas, and taking a balanced approach to process and results
• Directional Strategies


  • Concentration
  • Internal growth
  • Mergers and acquisitions
  • Downsizings
• Concentration Strategies


  • Company must maintain current skills that exist in organization, Need for skill-based training and fair compensation, Appraisals are more behavioral, and behaviors are established through extensive experience
• Internal Growth Strategies


  • Companies must constantly hire, transfer, and promote individuals, Compensation weighted towards achievement, Joint ventures require conflict resolution
• Mergers and Acquisitions


  • HR needs to be involved, People issues can cause problems, Different organizational cultures—standardization?, Conflict resolution
• Downsizing


  • Disadvantages: Tends to fall short of meeting companies' financial and organizational objectives, Has negative effects on employee morale and productivity, Early retirement programs usually result in rehiring, Survivor morale issues
  • Advantages: Allows company to "get rid of dead wood" and make way for fresh ideas, Opportunity to change organization's culture, Demonstrate to top-management the value of company's human resources to its ultimate success
• Strategy Evaluation and Control: Must constantly monitor effectiveness of both the strategy and implementation process, Helps identify problem areas and either revise existing structures and strategies or devise new ones
• Emergent Strategies


  Strategies that evolve from grassroots of the organization, What organizations actually do, not what they intend to do, Usually identified by those lower in organizational hierarchy, Intended strategies are result of rational decision-making process used by top managers to develop strategic plan
• Enhancing Firm Competitiveness


  • Develop human capital pool that allows the company to adapt to ever-changing environments, Becoming a "learning organization" that allows people to continually expand capacity to achieve desired results