Human Resource

Management
1

TWELFTH EDITION

GARY DESSLER
BIJU VARKKEY
Part 1 | Introduction

Chapter 3

The Managers Role in Strategic Human Resource

Management

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e

After reading this chapter, you should be able to:

1. Outline the steps in the strategic management
process.
2. Explain and give examples of each type of
companywide and competitive strategy.
3. Explain what a strategy-oriented human resource
management system is and why it is important.
4. Illustrate and explain each of the eight steps in the HR
Scorecard approach to creating human resource
management systems.

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e

32

The Strategic Management Process

Strategic Management
The process of identifying and executing the

organizations mission by matching its capabilities

with the demands of its environment.

Strategy
A chosen course of action.

Strategic Plan
How an organization intends to balance its internal

strengths and weaknesses with its external

opportunities and threats to maintain a competitive
advantage over the long-term.
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Resource Management, 12/e

33

Business Vision and Mission

Vision
A general statement of an organizations intended

direction that evokes emotional feelings in

organization members.

Mission
Spells out who the company is, what it does, and

where its headed.

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Resource Management, 12/e

34

FIGURE 35

The Strategic Management Process

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Resource Management, 12/e

35

FIGURE 37

A SWOT Chart

Strengths

Weaknesses

Example: Market leadership

Example: Large inventories

Opportunities

Threats

Example: New overseas markets

Example: Market saturation

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

36

FIGURE 38

Relationships Among Strategies in Multiple-Business Firms

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Resource Management, 12/e

37

Types of Strategies
Corporate-Level
Strategies

Diversification
Strategy

Vertical
Integration
Strategy

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Resource Management, 12/e

Consolidation
Strategy

Geographic
Expansion
Strategy

38

Types of Strategies (continued)

Business-Level/
Competitive
Strategies

Cost Leadership

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Resource Management, 12/e

Differentiation

Focus/Niche

39

Achieving Strategic Fit

The Fit Point of View (Porter) consists of the

idea that each departments strategy needs to fit
the parent businesss competitive aims.

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

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Resource Management, 12/e

310

Strategic Human Resource Management

Strategic Human Resource Management
The linking of HRM with strategic goals and

objectives in order to improve business performance

and develop organizational cultures that foster
innovation and flexibility.

Involves formulating and executing HR systemsHR

policies and activitiesthat produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e

311

FIGURE 36

Linking Company-Wide and HR Strategies

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

312

Creating the Strategic Human Resource

Management System
Components of a
Strategic HRM System

Human Resource
Professionals

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

Human Resource
Policies and
Practices

Employee
Behaviors and
Competencies

313

FIGURE 310
Strategy
Map for
Southwest
Airlines

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e

Source: Adapted from Creating a Strategy Map,

Ravi Tangri, Team@TeamCHRYSALIS.com.
314

FIGURE 312 Three Important Strategic HR Tools

Copyright 2011 Dorling Kindersley (India) Pvt. Ltd

Authorized adaptation from the United States edition of Human
Resource Management, 12/e

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
315

Measuring HRs Contribution

The HR Scorecard
Shows the quantitative standards, or

metrics the firm uses to measure

HR activities.
Measures the employee behaviors

resulting from these activities.

Measures the strategically relevant

organizational outcomes of those

employee behaviors.

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

316

Creating an HR Scorecard
The 8-Step HR Scorecard Process
1

Define the business strategy

Identify required HR policies

and activities

Outline value chain activities

Choose HR Scorecard
measures

Outline a strategy map

Identify strategically required

outcomes

Summarize Scorecard
measures on digital dashboard
and monitor, predict, and
evaluate

Identify required workforce

competencies and behaviors

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Resource Management, 12/e

317

FIGURE 314

Simple Value Chain for The Hotel Paris

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Resource Management, 12/e

318

HR Metric*
Absence rate

Five Sample HR Metrics

How to Calculate It
# of days absent in month
Average # of employees during month # of workdays

Cost per hire

100

Advertising + agency fees + employee referrals + travel cost of

applicants and staff + relocation costs + recruiter pay and benefits
Number of hires

HR expense
factor
Time to fill

HR expense
Total operating expense
Total days elapsed to fill job requisitions
Number hired

Turnover rate

Number of separations during month

Average number of employees during month

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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

100

Sources: Robert Grossman, Measuring Up, HR Magazine, January 2000, pp. 29

35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, Improving the Return on
Human Capital: New Metrics, Compensation and Benefits Review,
January/February 2000, pp. 1320; Thomas E. Murphy and Sourushe Zandvakili,
Data and Metrics-Driven Approach to Human Resource Practices: Using
Customers, Employees, and Financial Metrics, Human Resource Management 39,
no. 1 (Spring 2000), pp. 93105; [HR Planning, Commerce Clearing House
Incorporated, July 17, 1996;] SHRM/BNA 2000 Cost Per Hire and Staffing Metrics
Survey; www.shrm.org. See also, SHRM Research 2006 Strategic HR
319
Management Survey Report, Society for Human Resource Management..

KEY TERMS
strategic plan
strategic management
vision
mission
SWOT analysis
strategy
strategic control
competitive advantage
strategic human resource management
HR Scorecard
metrics
value chain analysis
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Authorized adaptation from the United States edition of Human
Resource Management, 12/e

320