Human Resource

Management
ELEVENTH EDITION
1
GARY DESSLER

Part 1 | Introduction

Chapter 3

Strategic Human Resource Management

and the HR Scorecard

PowerPoint Presentation by Charlie Cook

The University of West Alabama
After studying 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 seven steps in the
HR Scorecard approach to creating human resource
management systems.

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The Strategic Management Process
• Strategic Management
 The process of identifying and executing the
organization’s 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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Business Vision and Mission
• Vision
 A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
 Spells out who the company is, what it does, and
where it’s headed.

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FIGURE 3–1 The Strategic Management Process

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Step 1:Define The Current Business
The logical place to start is by defining ones current
business
• Specifically, what products do we sell, where do
we sell them, and how do our products or services
differ from our competitors
Step 2:Perform External And Internal Audits
• The next step is to ask, Are we heading in the right
direction? No one is immune to competitive
pressures
• Managers need to audit both the firms
environment, and the firms strengths and
weaknesses
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 Step 3:Formulate A New Direction
• What should our new business be, in terms of
what products we will sell where we will sell
them and how our products or services will
differ from competitors products?
• Managers sometimes formulate a vision
statement to summarize how they see the
essence of their business down the road.
• The vision statement is a general statement of
the firms intended direction; it shows, in broad
terms, what we want to become

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 Step 4:Translate the Mission into Strategic
Goals
• The company and its managers need strategic
goals. At Ford, for example, what exactly did
making “Quality Job One”
 Step 5: Formulate Strategies To Achieve The
Strategic Goals
• The manager chooses strategies courses of
action that will enable the company to achieve
its strategic goals
 Step 6:Implement The Strategies
• Strategy execution means translating the
strategies into action
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• The company’s managers do this by actually
hiring (or firing) people, building (or closing)
plants and adding (or eliminating) products and
product lines
 Step 7:Evaluate Performance
• Things don’t always turn out as planned
• Ford wants to focus its scarce resources on
modernizing and turning around its North
American operations. Like all companies, Ford
continually needs to assess its strategic
decisions

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FIGURE 3–2 A SWOT Chart

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FIGURE 3–3 Strategies in a Nutshell

Source: Arit Gadiesh and James Gilbert, “Frontline

Action,” Harvard Business Review, May 2001, p. 74.
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FIGURE 3–4 Relationships Among Strategies in Multiple-Business Firms

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 Types of Strategies

Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

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• A company’s corporate-level strategy identifies the
portfolio of businesses that, in total, comprise the
company and how these businesses relate to each
other
• A diversification corporate strategy implies that the
firm will expand by adding new product lines.
PepsiCo is diversified
• Over the years, PepsiCo added chips and Quaker
Oats. Such related diversification means diversifying
so that a firms lines of business still possess a logical
fit
• Conglomerate diversification means diversifying into
products or markets not related to the firms current
businesses or to one another
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• Vertical integration
A vertical integration strategy means the firm
expands by, perhaps, producing its own raw
materials, or selling its products direct. Thus, Apple
opened its own Apple stores
• Consolidation strategy
With consolidation strategy, the company reduces its
size
• Geographic expansion
With geographic expansion, the company grows by
entering new territorial markets, for instance, by
taking the business abroad, as PepsiCo also did
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 Types of Strategies (cont’d)

Business-Level/
Competitive
Strategies

Cost Leadership Differentiation Focus/Niche

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 COMPETITIVE STRATEGY
• A competitive strategy identifies how to build and
strengthen the business’s long-term competitive
position in the marketplace. Competitive advantage
as any factors that allow a company to differentiate
its product or service from those of its competitors to
increase market share
• Cost leadership means becoming the low-cost
leader in an industry
• Differentiation is a second possible competitive
strategy
• Focusers carve out a market niche. They compete
by providing a product or service that their
customers cannot get from their generalist
competitors 3–17
 FUNCTIONAL STRATEGIES
• Functional strategies identify the broad guidelines
that each department will follow
• In order to help the business accomplish its
competitive goals
• Each departments functional strategy should
make sense in terms of the business/ competitive
strategy
• High Pay Highly Productive Ground Crews
Frequent Departures Low Costs

© 2008 Prentice Hall, Inc. All rights reserved. 3–18

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 systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.

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FIGURE 3–6 Linking Company-Wide and HR Strategies

Source: © Gary Dessler, Ph.D., 2007.

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Strategic Human Resource Challenges

Basic Strategic
Challenges

Corporate Expanded role of

Increased HR
productivity and employees in the
team involvement
performance organization’s
in design of
improvement performance
strategic plans
efforts efforts

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Human Resource Management’s
Strategic Roles

Strategic
Planning
Roles

Strategy Strategy
Execution Formulation
Role Role

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Creating the Strategic Human Resource
Management System

Components of a
Strategic HRM System

Human Resource Employee

Human Resource
Policies and Behaviors and
Professionals
Practices Competencies

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FIGURE 3–8 Three Main Strategic Human Resource System Components

Characteristics of HPWS
• multi-skilled work teams
• empowered front-line
workers
• extensive training
• labor-management
cooperation
• commitment to quality
• customer satisfaction

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People,
Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.
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FIGURE 3–9
Basic Model of How to
Align HR Strategy and
Actions with Business
Strategy

Source: Adapted from Garrett Walker

and J. Randal MacDonald, “Designing
and Implementing an HR Scorecard,”
Human Resources Management 40,
no. 4 (2001), p. 370.
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 STRATEGY MAP
• The strategy map provides an overview of how each
departments performance contributes to achieving the
company’s overall strategic goals
• It helps the manager understand the role his or her
department plays in helping to execute the company’s
strategic plan
• Southwest Airlines evoke that Southwest has a low-cost
leader strategy. The strategy map for Southwest
concisely lays out the hierarchy of main activities
required for Southwest Airlines to succeed.
• At the top is achieving company-wide, strategic financial
goals. Then the strategy map shows the chain of
activities that help Southwest Airlines achieve these
goals
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FIGURE 3–A4
Strategy
Map for
Southwest
Airlines

Source: Adapted from “Creating a Strategy Map,”

Ravi Tangri, Team@TeamCHRYSALIS.com.
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 THE HR SCORECARD
• Many employers quantify and computerize the strategy
maps activities. The HR Scorecard helps them to do so
• The HR Scorecard is not a scorecard. It refers to a
process for assigning financial and nonfinancial goals or
metrics to the human resource management related chain
of activities required for achieving the company s strategic
aims
• The computerized scorecard process helps the manager
quantify the relationships between
• (1) the HR activities (amount of testing, training, and so
forth)
• (2) the resulting employee behaviors (customer service,
for instance)
• (3) the resulting firm-wide strategic outcomes and
performance (such as customer satisfaction and
profitability)
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FIGURE 3–A1 The Basic HR Scorecard Relationships

HR
Activities

Emergent
Employee
Behaviors

Strategically
Relevant
Organizational
Outcomes

Organizational
Performance

Achieve
Strategic
Goals

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Creating an HR Scorecard

The 10-Step HR Scorecard Process

Identify required HR policies

1 Define the business strategy 6
and activities

2 Outline value chain activities 7 Create HR Scorecard

Choose HR Scorecard
3 Outline a strategy map 8
measures
Identify strategically required Summarize Scorecard
4 9
outcomes measures on digital dashboard
Identify required workforce
5 10 Monitor, predict, evaluate
competencies and behaviors

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 DIGITAL DASHBOARDS
• A digital dashboard presents the manager with desktop
graphs and charts, showing a computerized picture of how
the company is doing on all the metrics from the HR
Scorecard process
• Management translates its strategic plan into workforce
requirements, in terms of measurable worker
competencies and behaviors. Then formulates supportive
HR strategies, policies, and practices (such as new
training programs), intended to produce these workforce
competencies.
• Finally, the HR manager picks measures by which to
gauge whether his or her new policies and practices are
producing the required employee competencies and
behaviors
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FIGURE 3–A2 The Seven Steps in the HR Scorecard Approach to Formulating
HR Policies, Activities, and Strategies

Source: © Gary Dessler, Ph.D., 2007.

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