Strategic Human Resource Management (Gary Dessler)

Managers formulate corporate strategies, and then competitive strategies for each of their businesses. Then, we’ve seen that once a business decides how it will compete, it turns to formulating functional (departmental) strategies to support its competitive aims. One of those departments is human resource management and its functional strategies are human resource management strategies.

What Is Strategic Human Resource Management?

Every company needs its human resource management policies and activities to make sense in terms of its broad strategic aims. For example, a high-end retailer such as Neiman-Marcus will have different employee selection, training, and pay policies than will Walmart. 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. The following Strategic Context feature illustrates this.

Figure 6

The basic idea behind strategic human resource management is this: In formulating human resource management policies and activities, the aim must be to produce the employee skills and behaviors that the company needs to achieve its strategic goals.

Figure 6 graphically outlines this idea. First, management formulates strategic plans and goals. In turn, executing these plans and achieving these goals depends on having the right mix of employee competencies and behaviors. And finally, to produce these required employee competencies and behaviors, the human resource manager must put in place the right mix of recruitment, selection, training, and other HR policies and practices.

Human Resource Strategies and Policies

Managers call the specific human resource management policies and practices human resource strategies. For example, several years ago, Newell Rubbermaid changed its emphasis from manufacturing and selling housewares such as Rubbermaid and Levelor Blinds to mostly marketing them. Implementing this plan called for new personnel competencies and behaviors. Its human resource management team began by benchmarking the firm’s big marketing competitors to see what their best human resource practices were. They then met with the heads of each of Newell Rubbermaid’s divisions, for example, to develop new training programs and a plan for adjusting each division’s staffing needs. 

Strategic Human Resource Management Tools

Exactly what human resource strategies do we need? Managers use several tools to translate the company’s broad strategic goals into human resource management policies and practices. Three important tools include the strategy map, the HR scorecard, and the digital dashboard.

STRATEGY MAP The strategy map summarizes how each department’s performance contributes to achieving the company’s overall strategic goals. It helps the manager and each employee visualize and understand the role his or her department plays in achieving the company’s strategic plan. Management gurus sometimes say that the map clarifies employees’ “line of sight,” by linking their efforts with the company’s ultimate goals.

THE HR SCORECARD Many employers quantify and computerize the strategy map’s 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 non-financial goals or metrics to the human resource management–related strategy map chain of activities required for achieving the company’s strategic aims.

The idea is to take the strategy map and to quantify it. Managers use special scorecard software to facilitate this. 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), and 

(3) the resulting firm-wide strategic outcomes and performance (such as customer satisfaction and profitability).

DIGITAL DASHBOARDS The saying “a picture is worth a thousand words” explains the purpose of the digital dashboard. 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. 

Source : Gary Dessler. Fundamental of Human Resource Management. Third Edition. Pearson. 2014

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