Human Resource Management

Sixteenth Edition, Global Edition

Chapter 3

Human Resource
Management Strategy and
Performance

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Learning Objectives (1 of 2)
3.1 Give examples of each of the seven steps in the
strategic management process.
3.2 List with examples the main types of strategies.
3.3 Define strategic human resource management, and
give an example of strategic human resource management
in practice.

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Learning Objectives (2 of 2)
3.4 Give at least five examples of HR metrics.
3.5 Give five examples of what employers can do to have
high-performance systems.
3.6 Explain how you would design a program to improve
employee engagement.

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The Management Planning Process
• The Hierarchy of Goals
• Policies and Procedures
Figure 3-1 Sample Hierarchy of Goals Diagram for a Company

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What is Strategic Planning?
• A strategic plan is the company’s overall plan for how it
will match its internal strengths and weaknesses with its
external opportunities and threats in order to maintain a
competitive position.

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The Strategic Management Process
Figure 3-2 The Strategic Management Process

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Learning Objective 3.2: List with
Examples the Main Types of Strategies

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Types of Strategies
1. Corporate Strategy
2. Competitive Strategy
3. Functional Strategy

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Corporate Strategy
• Identifies the portfolio of businesses that, in total,
comprise the company and how these businesses relate
to each other.

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Corporate-Level Strategies
1. Concentration
2. Diversification
3. Vertical Integration
4. Consolidation
5. Geographic expansion

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Competitive Strategy
• A strategy that identifies how to build and strengthen
the business’s long-term competitive position in the
marketplace, which is also known as
business-level/competitive strategy.

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The Three Standard Competitive
Strategies
1. Cost Leadership
2. Differentiation
3. Focus

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Functional Strategy
• A strategy that identifies the broad activities that each
department will pursue in order to help the business
accomplish its competitive goals.

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Managers’ Role in Strategic Planning
• Devising the company’s overall strategic plan is top
management’s responsibility. However, few top
executives formulate strategic plans without lower-level
managers’ input.

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Learning Objective 3.3: Define Strategic
Human Resource Management, and Give
an Example of Strategic Human Resource
Management in Practice

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HR in Action at the Hotel Paris

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What is Strategic Human Resource
Management?
Strategic human resource management – means
formulating and executing human resource policies and
practices that produce the employee competencies and
behaviors the company needs to achieve its strategic aims.

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Sustainability and Strategic Human
Resource Management
• Strategic human resource management means having
human resource policies and practices that produce the
employee skills and behaviors that are necessary to
achieve the company’s strategic goals, and these include
sustainability goals.

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Strategic Human Resource Management
Tools
• Strategy map
▪ A strategic planning tool that shows the “big picture” of how
each department’s performance contributes to achieving the
company’s overall strategic goal.
• The H R scorecard
▪ The process for assigning financial and non-financial goals or
metrics to the human resource management
• Digital dashboards
▪ Presents the manager with desktop graphs and charts, and a
computerized picture of where the company stands on all
those metrics from the HR Scorecard process.

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HR Metrics, Benchmarking, and Data
Analytics
• Human resource metrics – the quantitative gauge of a
human resource management activity.
• Benchmarking – comparing the practices of high-
performing companies’ results to your own.
• Data Analytics – using statistical and mathematical
analysis to find relationships and make predictions.

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Metrics for the SHRM (1 of 4)
Organizational Data Employment Data
• Revenue • Number of Positions Filled
• Revenue per FTE • Time-to-Fill
• Net Income Before Taxes • Cost-Per-Hire
• Net Income Before Taxes • Employee Tenure
per FTE • Annual Overall Turnover
• Positions Included Within Rate
the Organization’s • Annual Voluntary Turnover
Succession Plan Rate
• Annual Involuntary
Turnover Rate

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Metrics for the SHRM (2 of 4)
HR Department Data Expectations for Revenue and
• Total HR Staff Organizational Hiring
• HR-to-Employee Ratio • Percentage of Organizations
• Percentage of HR Staff in Expecting Changes in Revenue
Supervisory Roles in 2011 Compared to 2010
• Percentage of HR Staff in • Percentage of Organizations
Professional/Technical Roles Expecting Changes in Hiring in
• Percentage of HR Staff in • 2011 Compared to 2010
Administrative Support Roles
• Reporting Structure for the Head
of HR
• Types of HR Positions
Organizations Expect to Hire in
2011
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Metrics for the SHRM (3 of 4)
HR Expense Data Metrics for More Profitable
• HR Expenses Organizations
• HR Expense to Operating • Total HR Staff
Expense Ratio • HR-to-Employee Ratio
• HR Expense to FTE Ratio • HR Expenses
• HR Expense to Operating
Compensation Data Expense Ratio
• Annual Salary Increase • HR Expense to FTE Ratio
• Salaries as a Percentage of • Annual Salary Increase
Operating Expense • Target Bonus for Non-Executives
• Target Bonus for Non-
Executives
• Target Bonus for Executives

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Metrics for the SHRM (4 of 4)
Tuition/Education Data Metrics for More Profitable
Organizations
• Maximum Reimbursement
Allowed for Tuition/Education • Target Bonus for Executives
Expenses per Year • Maximum Reimbursement
Allowed for Tuition/Education
• Percentage of Employees
Expenses per year
Participating in
Tuition/Education • Percentage of Employees
Reimbursement Programs Participating in
Tuition/Education
Reimbursement Programs
• Time-to-Fill
• Cost-Per-Hire
• Annual Overall Turnover Rate

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Strategy-Based Metrics
• Strategy-based metrics specifically focus on measuring
the activities that contribute to achieving a company’s
strategic aims.

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What Are HR Audits?
• The HR audit generally involves using a checklist to
review the company’s human resource functions.

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High-Performance Work Systems
• Policies and Practices
– HR metrics
– Extensive trainings
– Linked performance and compensation management
– Aspire to encourage employee involvement and self
management

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Employee Engagement and Performance
• Employee engagement refers to being psychologically
involved in, connected to, and committed to getting one’s
jobs done.

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What Can Managers Do to Improve
Employee Engagement? (1 of 2)
• Provide supportive supervision.
• Ensure employees understand how their departments
contribute.
• See how their efforts contribute to achieving the company’s
goal.

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What Can Managers Do to Improve
Employee Engagement? (2 of 2)
• Ensure employees get a sense of accomplishment from
working at the firm.
• Ensure employees are highly involved.
• Employers should hold managers responsible for
employee engagement.

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