MARIA RENEE KHATRINA P PEREY,

DMD

Strategy-Driven
Human Resource Management
 STRATEGY AND STRATEGIC
PLANNING: THE ORGANIZATION
AND THE ENVIRONMENT

Strategy and Strategic Planning deals with

a process of looking at our organization and
its environment and determining what our
organization decides to do to meet the
requirements of that expected
future.
Strategic Planning
about planning for the long-term
future; and to be successful, you
need to plan using goals and
measurable standards
"When you fail to plan, you plan to
fail.”
a key part of the foundation of an
organization’s success
 The External Environment
The external environment consists
of a series of influences that
originate outside the organization
and that the company cannot
control.
9 Major Forces
Customers
Customers have more power
today than ever before, as they
have a major effects on the
organization’s performance
through their purchase of
products and services.
Competition
Businesses must compete for
customers, and their performance
is not simply a function of their
own actions
Organizations also frequently
compete for the same employees
and sometimes for suppliers; and
almost everyone has heard of one
organization stealing employees
from another similar
organization, especially in high-
technology fields.
9 Major Forces
Suppliers
Organizations buy resources
from suppliers
Partnerships with suppliers also
affect firm performance

Labor force
The employees of and the talent
pool available to an organization
have a direct effect on the
organization’s performance.

Shareholders
The owners of a corporation,
known as shareholders, influence
management

Society
Our society, to a great extent,
determines what acceptable
business practices are.
9 Major Forces
Technology
Computers and the Internet have
changed the speed at which, and
the manner in which,
organizations conduct and
transact business; and they are
often determining factors in the
firm’s business
processes.
Economy
No corporation has control over
economic growth, inflation,
interest rates, foreign exchange
rates, and so on.
In general, as measured by gross
domestic product (GDP),
businesses do better during times
of economic growth than during
recessions.
9 Major Forces
Government
National, state, and local
governments all set laws and
regulations that businesses must
obey.
National Association of
Manufacturers = The annual cost of
complying with all federal
government regulations averages
$19,564 per employee.
Occupational Safety and Health
Administration (OSHA) sets safety
standards.
Environmental Protection Agency
(EPA) sets pollution standards that
must be met.
Companies like Pfizer, Novartis, and
Merck cannot market drugs without
Food and Drug Administration (FDA)
approval
Virtually every employer must follow
wage guidelines from the
Department of Labor (DOL)
The major factors in
our analysis of our
internal
environment
What Is Strategy?

A Strategy is a plan
of action designed to
achieve a particular
set of objectives.
THREE MAJOR STRATEGIC QUESTIONS

What is our present situation (where are we now)?

Where do we want to go?

How do we plan to get there?

Visions and
Missions
 The Vision
A vision is what we expect to become
as an organization at a particular
point in time in the future. A vision
provides a focus point for the future; it
tells the company where it is headed
 The Mission
The mission statement lays
out our expectations of what we’re going to
do in order to become the organization that
we have envisioned. The mission statement
takes into account things like
whom we serve and how we serve them
Putting the Vision and Mission Together

When you put the vision and mission

together, the people in the organization get
a more complete picture of the direction in
which they are expected to go.
This allows all the people in the organization
to focus on going in that direction, and that
in turn makes it much easier for them to
help the organization achieve its goals.
This focus on an end result also gives
everyone a clearer picture of what is
expected of them individually.
A strong vision and a good
mission statement are
critical parts of the
strategic-planning
process. Everything else in
strategic planning comes
from the vision and
mission.

Vision + Mission = FOCUS!

Types of Strategies

Cost Leadership Differentiation Focus or Niche

Cost leaders do everything This strategy attempts to With this strategy, the
that they can to lower the create an impression of company focuses on a
organizational costs required difference for the company’s specific portion of a larger
to produce their products or product or service in the market. For instance, the
services mind of the customer. The company may focus on a
differentiator company regional market, a particular
stresses its advantage over its product line, or a buyer
competitors group.
 HRM and Cost Leadership
If our organization is following a
generic cost leadership strategy,
we are going to be most interested
in minimizing all internal costs,
including employee costs. So we

How Strategy
are concerne with maximum
efficiency and effectiveness.

Affects HRM HRM and Differentiation

If our organization is following a
differentiator strategy, we’re
going to be more concerned with
employees who are flexible and
adaptable, who have the ability to
innovate and create new
processes, and who can work in
uncertain environments within
cross-functional teams
Strategic Analysis
There are two primary components of
strategic analysis used by most
organizations.
The first is called five-forces analysis, and it
is a tool that organizations use to analyze
the external competitive environment.
The second is called SWOT analysis (SWOT
stands for strengths, weaknesses,
opportunities, and threats), and it is used to
analyze the companyspecific environment.
Five-Forces Analysis
Five-forces analysis is again brought to us by Michael
Porter, who identified competition within an
industry as being a composite of five competitive
forces that should be considered
in analyzing competitive situations.
 Five-Forces Analysis
Rivalry among Threat of substitute Potential new
competitors products and services entrants
Porter calls this scrambling a substitute is any other product or In many industries
and jockeying for position. service that can satisfy the same today, all it takes to
Businesses do this in different need for a customer as an
industry’s offerings. enter is the ability to
ways, including competing for
customers on the basis
Be careful not to confuse create and host a
substitutes with rivals. Rivals offer
of price, quality, or speed of similar products or services and
website
delivery directly compete with one another

Power of suppliers Power of buyers

Virtually all firms have It refers to the balance
suppliers who sell parts, of power in the
materials, labor, or products.
relationship between a
Supplier power refers to the
balance of power in the firm and its customers
relationship between firms
and their suppliers in an
industry
 SWOT Analysis
SWOT analysis is a tool to analyze the
organization’s internal environment, meaning
its specific capabilities and limitations.
 S W
STRENGTHS WEAKNESSES
Weaknesses are what it is not good at—things
Strengths are, to put it simply, what it is
that it does not have the capabilities to
good at.
perform well.
Knowing exactly what it is good at
SWOT analysis alerts firms to the gaps in
allows a firm to make plans that exploit their capabilities so they can work around
those strengths. them, find help in those areas, or develop
capabilities to fill the gaps

O T
OPPORTUNITIES THREATS
A wide variety of situations and scenarios
An opportunity is a potential situation can threaten a firm’s chances of success,
that a firm is equipped to take from a downturn in the economy to a
advantage of. competitor launching a better version of a
product the firm also offers
Designing a Strategy

The next steps in the design

process include setting objectives,
creating a strategic plan,
implementing that plan, and
monitoring and evaluating its
success.
Setting Objectives

Objectives state what is to be accomplished

in singular specific, and measurable terms,
with a target date.
Here is a model adapted from Max Weber to
help you write effective objectives, followed
by an example.
To + action verb + singular, specific, measurable result + target date

Honda: To + make + two-thirds of overall unit sales from plug-in hybrid or

hybrid vehicles and zero-emission vehicles + by 2030
Create a Strategy
This is the point at which we determine
what we’re going to do to achieve the
objectives that we have set.
Taking into account the vision and mission
that we have decided on—and having
determined our environment and each of
our strengths, weaknesses, opportunities,
and threats—we begin to plan activities
within the organization that will allow us to
reach those objectives.
Implementing, Monitoring, and
Evaluating Strategies
“The best game plan in the world never
blocked or tackled anybody.”
No matter the organization and the
strategic plan—execution of the plan is the
key.
The goal here is to ensure that the mission
and objectives of the organization are
achieved.
Controlling is the process of establishing
and implementing mechanisms to ensure
that objectives are achieved
How HR Promotes Strategy
HR managers need to recruit, select, train,
evaluate, and interact with employees
differently based on different
organizational strategies
HR managers have to evaluate all of the
organizational characteristics to determine
what kinds of people to bring into the
organization and then how to maintain
those people once they have become a part
of the company
 Structure
Organizational structure
refers to the way in which
an organization groups its
resources to accomplish its
mission.
 Basics of Organizational Structure
Each of these components identifies a
way in which we divide the
organization up and group its
resources to make them more efficient
and effective.
Complexity
Vertical differentiation
deals with how we break the
organization up vertically
The organizational chart is
typically used to show the chain
of command
the first major component of
organizational structure, is the Horizontal differentiation
identifies how we break the
degree to which
organization up horizontally
three types of differentiation exist “holacracy” form of structure,
within the organization meaning a structure in which there
are no departments, job titles, or
managers

Spatial differentiation
deals with the physical separation of
different parts of the organization
can make it much more difficult to
manage the organization due to the fact
that the organization is spread out among
many locations
 the second major
component of
organizational
structure
the degree to which

Formalization jobs are standardized

within an organization,
meaning the degree to
which we have created
policies, procedures,
and rules that
“program” the jobs of
the employees
 the third major component
of organizational structure
is the degree to which
decision making is
concentrated within the
Centralization organization.
The degree of centralization
in an organization has to do
with dispersion of authority
for decision making and
delegation of authority.
Is There One “Best” Structure?

No. The best structure is one that fits

the firm’s current competitive
situation as well as its internal
capabilities and that enables it to
implement its strategies
successfully.
Organization design has to start out
with a clear focus on KEY ACTIVITIES
needed to produce KEY RESULTS
How Does Structure Affect HRM?
In a small entrepreneurial firm, there usually
is no HRM department, but someone has to
perform the HR functions.
In the more bureaucratic organization, you
would most likely look for and hire people who
had significant depth of expertise in a narrow
area within their field of knowledge, so that
they could apply that expertise in a highly
efficient manner.
The organizational structure will affect
virtually every function of the HR manager.
 What Is Organizational
Culture?
Organizational culture consists of the
values, beliefs, and assumptions about
appropriate behavior that members of
an organization share. It is primarily
learned through observing people and
events in the organization.
Artifacts of Organizational Culture

Heroes Stories Slogans

such as founders and often about founders and
others who have made others who have made such as at McDonald’s
outstanding extraordinary efforts. "love ko 'to" or at
contributions to their Public statements and Jollibee "bida ang saya"
organizations. speeches can also be
considered stories.

Symbols Ceremonies
such as plaques, pens, such as awards dinners
jackets for top achievers
 Three Levels of
Culture

The three levels of

culture include behavior,
values and beliefs, and
assumptions
Three Levels of Culture

Level 1: Behavior Level 2: Values and beliefs Level 3: Assumptions

Behavior includes the Values represent the way Assumptions are values and
observable things that people believe they ought to beliefs that are so deeply
behave; and beliefs represent ingrained that they are considered
people do and say or the
unquestionably true. They serve as
actions employees take. "if, then” statements like “If I
an automatic pilot to guide.
do X, then Y will happen.” Assumptions are often the most
stable and enduring part of
culture and are difficult to change
behavior.
How Culture Controls Employee
Behavior in Organizations?
Because organizational culture is based at
least partly on assumptions, values, and
beliefs, it is a very powerful force in
controlling how people act within its
boundaries.
Chances are quite high that you act
differently within these different “cultures.”
We all act to conform, for the most part, to
the culture that we happen to be in at that
point in time, because the culture’s values
push us to act that way
Social Media and Culture Management

Social media is one of the mechanisms that we

now use to both monitor and control
organizational environments.
Companies can also actively seek out information
internally using various forms of social
media and can even ask company members to
interact on social media platforms.
The same is true for the external environment,
from following competitors on social media sites
to following government Web pages and media
links.
Social media continues to become more important
to business and government
An Introduction to Data
Analytics and HR
Technology Data analytics is the process
of accessing large amounts
of data in order to analyze
those data and gain insight
into significant trends or
“HR is ripe for patterns within
organizations or industries.
disruption and Big data involves the
collection of extremely
transformation.” large data sets that data
analytics on these data sets
would have been impossible
until recently, since we just
did not have the computing
power or the programs
available
A Brief on Data Analytics
Companies like Google grew up on data analytics and big
data.
And Google analyzes all of that data looking for patterns
that it can use. Many other companies have joined this
movement, including some powerful outsourcers like
IBM and Oracle, who are selling big data services.
Other companies are doing their own big data analysis.
Analysis of big data is providing information that
companies can immediately act on as well.
“The communication skills and personal warmth of an
employee’s supervisor are often crucial in determining
the employee’s tenure and performance"
“We can measure, and therefore manage, more precisely
than ever.”
HR Technology
Analytics tools and other HR technology can be used for many
HR functions, such as talent acquisition and management,
training and development, work and job analysis,
productivity analysis, motivation, retention, and
engagement.
The convergence of HRM and big data is sometimes called
workforce science.
The ability to measure actions and reactions in large numbers
and find patterns in them is going to change the
management of people in organizations—not just in the long
term, but in the immediate future.
Just about every aspect of employment, from selection and
onboarding to training, compensation and benefits,
performance reviews and mobile workforce management is
being managed through a variety of computers and personal
technology devices like smartphones and tablets.
 Successful discovery and
utilization of data in HR metrics

Desired
is one major point of difference
between top companies and

Outcomes
others.
“The evidence is clear: data-
driven decisions tend to be better
decisions,”
“Smart leaders across industries
will see using big data for what it
is: a management revolution
Human Resource Management
Systems (HRMS)

Human resource management systems

(HRMS) are interacting database systems
that “aim at generating and delivering HR
information and allow us to automate
some human resource management
functions.”
How Do HRMS Today’s systems include
such key features as

Assist in workforce management,

performance monitoring of

Making the recruiting process, e-

Decisions?
mail alert systems, and
predictive analytics.
These new systems are very
user-friendly
Measurement Tools
for Strategic HRM Some of the most
common tools are:

economic value added

(EVA)
Housed within many
balanced
HRMS are statistical
scorecards, including
packages for HRM
organizational

scorecards and HR

scorecards
return on

investment (ROI).
Economic Value Added (EVA)
designed as a method for calculating the
creation of value for the organization’s
shareholders
a measure of profits that remain after the cost of
capital has been deducted from operating profits

a measure of how much money we made

through our operations minus the mount of
money that we had to spend or borrow (at a
particular interest rate) in order to perform
those operations.
Return on Investment (ROI)
a measure of the financial return we receive because of
something that we do to invest in our organization or its
people.
These areas include training, outsourcing, benefits, diversity,
and many others.
To calculate ROI, you need two figures: the cost of the
investment and the gain that you receive from making the
investment. From there, the calculation is pretty simple:
Balanced
The balanced scorecard
(BSC) measures

Scorecard financial, customer

service, internal

(BSC) process, and learning

and growth (or
sustainability)
measures.
 identifies HR

HR
deliverables and HR
system alignment,

Scorecard compares HR alignment

with strategy, and
measures
organizational gains
created by HR practices.
 Four Dimensions of the HR scorecard
Identifying HR system alignment through the
Identifying HR deliverables use of a high-performance work system
(HPWS).

a set of HR practices that can improve the

recruiting, selection, training, acquisition, development, and retention of a
talented and motivated workforce
employee development,
including comprehensive employee
compensation and incentives, recruitment and selection procedures,
and many more compensation and performance
management systems, information sharing,
and extensive employee involvement and
training

Aligning the system with Identifying HR efficiency

company strategy measures
This is the process of comparing the
This is the process of measuring the
HPWS with the organization’s
returns that the organization gets from
strategic plan and making sure that
its HR management policies through the
the HR procedures being followed
use of items such as the EVA and ROI
match well with a strategic direction calculations above
of the company
Thank you!