Strategic Planning

What is strategy?

• Criteria for decision-making

• Resources needed to achieve goals

• Long-term plans

• HR needs people to think of strategy to achieve long-term goals

Strategic Planning

Producers for making decisions about the organization’s long-term goals and strategies

Human Resource Planning (HRP)

Process of anticipating and providing for the movement of people:

• Into

• Within

• Out of an organization

Strategic Human Resources Management

Pattern of human resources deployments and activities that enable an organization to achieve its strategic goals

High-performance Work Systems

A group of human resource practices that increase an organization’s ability to:

• Attract

• Select

• Hire

• Develop

• Retain

HPWS stress

• Employee involvement and a culture of commitment rather THAN CONTROL

• Importance of the quest for excellence and expects employees to be highly qualified, competent, and engaged in improving the organization

Strategy formulation

Providing input as to what is possible given the types and number of people available

Strategy implementation

Resource allocation decisions: structure, processes, and human capital

Linking strategic planning and human resources

Strategic Management and HR Planning

1) Mission, Vision, and Values

2) External Analysis

3) Internal Analysis

4) Formulating Strategy

5) Strategy Implementation

6) Evaluation and Assessment

Mission, Vision, and Values

Mission: The basic purpose of the organization as well as its scope of operations

Strategic Vision: A statement about where the company is headed and what it can become in the future

Core Values: Strong beliefs and principles that the company uses as a foundation for decisions

External Analysis - Environmental Scanning

Systematic monitoring of the major external forces influencing the organization

External Analysis - Business Environment

• economic and ecological changes

• technological changes

• demographic changes'

• social changes

• legal changes

PESTEL

Political

Economic

Social

Technology

Environment

Legal

Factors HR should consider for the supply of labour

• migration in and out of the area

• mobility of the population

• firm’s demand for specific skills

• unemployment rate

• education levels

• government labor regulations

Five Forces Analysis

1) Threat of New entrants

• Barriers to entry

2) Competitive Rivalry

• number of competitors

3) Bargaining Power of Buyers

• number of customers

4) Threat of Substitutes

• number of substitute products available

5) Supplier Power

• number and size of suppliers

Rivalry against Existing Competitors

• Customers

• Rival firms

• New entrants

• Substitutes

• Suppliers

• Stakeholders

Stakeholders

Key people and groups that have interest in a firm’s activities and that can either affect them or be affected BY THEM

Primary stakeholder

Investors, employees, customers, suppliers, and creditors

• Transactional interactions

Secondary stakeholder

Community in which the firm operates

• government, business groups, and the media

Internal Analysis

Growing number of experts now argue that the key to a firm’s success is based on establishing a set of core capabilities

• Capibilities

• Composition

• Culture

Core capabilities

Integrated knowledge sets within an organization that distinguish it from competitors and deliver value to customers

• processes

• systems

• people

Value Creation

What the firm adds to a product or service by virtue of making it; amount of benefits provided by the product or service (after costs of making it are subtracted) Sus

Sustainable a competitive advantage through people

• Resources must be valuable

• Resources must be rare

• Resources must be difficult to imitate

• Resources must be organized

Different skills groups can be classified based on…

• how they add strategic value

• are unique to that organization

What does this model?

Mapping Human Capital

• Uniqueness

• Value

Cultural audits

Audits of the culture and quality of work-life in an organization

• How do employees spend their time?

• How do they interact with each other?

• Are employees empowered?

Corporate Culture

How people interact with one another in the workplace

Forecasting

Managers must continually forecast both the needs and the capabilities of the firm for the future to do an effective job at strategic planning

• forecasting the demand for labour

• forecasting the supply for labour

• balancing supply and demand considerations

HR Forecasting Model

Quantitative Approach

Trend analysis: forecasting labour demand based on an organizational index(such as sales)

Qualitative approaches

Management forecasts: opinions of

• supervisors

• department managers

• experts

• other knowledge

Forecasting the supply of employees

• Staffing tables

  • graphical representation of all organizational jobs

  • number of employees currently occupying these jobs

• Markov Analysis

  • Method for tracking the pattern of employee movements through various jobs

Markov Analysis

• percentage V.S. actual number of employees

Quality of fill

A metric designed to assess how well new hires are performing on the job

Skill Inventories

Files of personnel education, experiences, interests, and skills that makes it easy for managers to match job openings

Replacement charts

Listing current jobholders and people who are potential replacements if an opening occurs

Succession Planning

Process of identifying, developing, and tracking key individuals for executive positions

Human Capital Readiness

• Evaluating the availability of critical talent in a company and comparing it to the firm’s supply

• Employees needed and employees available represent a gap that must be filled

Strategy formulation

Moving from simple analysis to devising a coherent course of action

SWOT analysis

Comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes

Corporate Strategy

• A firm’s corporate strategy includes the markets in which it will compete, against who and how

• Some firms choose a concentration strategy that focuses on only a limited portion of the industry

Growth and diversification

Growth boosts these 3 elements:

• employee productivity

• greater number of employees

• employees developing or acquiring new skills

Low-cost strategy

Competing on productivity and efficiency

• keeping costs low to offer an attractive price to customers

Differentiation strategy

Competing on unique value added

• providing something unique and distinctive to customers

Vertical Fit/Alignmet

Focuses on the connection between the business objectives and the major initiatives in HR

Horizontal Fit/Alignment

Aligning HR practices with one another INTERNALLY to establish a configuration that is mutually reinforcing

Strategy Implementation - Hard S

• Strategy that lays out the route that the organization will take in the future

• Systems and processes to implement strategies

Strategy Implementation - Soft S

• Shared values, or core values as a guiding parameter for strategic planning

7-S Framework

Staffing options include….

• hiring full-time employees

• having current employees work overtime

• recalling laid-off workers

• using temp or contract employees

• outsourcing or offshoring

How to deal with surplus employees…

• layoffs, attrition, and termination

  • layoffs are often based on seniority and/or ability

Attrition

Natural departure of employees through quits, retirements, and deaths

Hiring freeze

New workers are not hired as planned or workers who have left are not replaced

Termination

Initiated by the employer to separate an employee from the organization PERMANENTLY

Severance pay

Lump-sum payments given to terminated employees, calculated on the basis of years

Benchmarking

The process of comparing the organization’s processes and practices to those of other companies

Two categories of metrics

• Human capital metrics: Assess aspects of the workforce

• HR metrics: Assess the performance of the HR function

Balanced Scorecard

Measurement framework that helps managers translate strategic goals into operational objectives

BSC four related cells…

• financial

• customer

• processes

• learning

Balanced Scorecard (BSC)

Organization Capability

Capacity of the organization to continuously act and change in pursuit of sustainable competitive advantage

2 ways flexibility can be achieved….

coordination flexibility: the ability to rapidly reallocate resources to new or changing needs

resource flexibility: having human resources who can do

• many different things in many different ways

Computing Turnover Rate

Computing Absenteeism rate