MGHB12H3 Chapter Notes - Chapter 002: Markov Chain, Delphi Method, Labor Mobility
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CHAPTER 2: STRATEGY & HR PLANNING
25 September 2013
Strategic Planning are procedures for making decisions about the organization’s long-term goals and
strategies. It focuses on how the organization will position itself relative to its competitors to ensure its
long-term survival, create value, and grow. Human Resources Planning (HRP) is the process of anticipating
and providing for the movement of people into, within, and out of an organization. Strategic Human
Resources Management (SHRM) is the pattern of human resources deployments and activities that
enable an organization to achieve its strategic goals.
Strategic Planning and HR Planning: Linking the Processes
HRP relates to strategic planning in several ways, at a fundamental level: Strategy formulation and
strategy implementation. HRP provides a set of inputs into the strategic formulation process in terms of
what is possible, whether a firm has the types and numbers of people available to pursue a given strategy.
HRP is important in terms of strategy implementation, as once the firm has devised its strategy, the
company’s executives must make resource allocation decisions to implement that strategy (IE: Firm’s
structure, processes, human capital). HRP and strategic planning tends to be most effective when there is
a reciprocal relationship between the two processes.
Step 1: Mission, Vision, and Values
Mission is the basic purpose of the organization as well as its scope of operations. Strategic Vision is a
statement about where the company is going and what it can become in the future; clarifies the long-
term direction of the company and its strategic intent. Core Values are the strong and enduring beliefs
and principles that the company uses as a foundation for its decisions.
Step 2: Environmental Analysis
Mission, vision, and values drive the analysis of external opportunities and threats. These changes
represent opportunities and some of them represent threats to the organization. Environmental Scanning
is the systematic monitoring of the major external forces influencing the organization:
Economic factors and development information (IE: General, regional, global conditions)
Industry and competitive trends (IE: New processes, services, innovations)
Technological changes (IE: Information technology, innovations, automations)
Government and legislative issues (IE: Laws, administrative rulings)
Social concerns (IE: Childcare, eldercare, environment, educational priorities)
Demographic and labor market trends (IE: Age, composition, literacy)
The competitive environment includes the specific organizations with which the firm interact (IE:
Customers, rival firms, new entrants, substitutes, suppliers).
Many factors influence the labor supply (IE: Demographics, population, national and regional economics,
education, etc). At an operational level, the change in labor supply directly influences hiring plans that
must take into account the demographic composition of the population in the area in which the
organization is located or plans to locate. With a “maturing” workforce, HRP must consider the
implications for recruitment and replacement policies. From a strategic standpoint, changes in the labor
supply can limit the strategies available to firms. High growth companies may find it difficult to find the
talent they need to expand their business.
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Step 3: Internal Analysis
Internal analysis provides strategic decision makers with an inventory of organizational skills and
resources as well as performance levels.
Capabilities: People as a Strategic Resource
o Core Capabilities are integrated knowledge sets within an organization that distinguish it
from its competitors and deliver value to customers. It tends to be limited in number, but
they provide a long-term basis for technology innovation, product development, and
o Organizations can achieve a sustained competitive advantage through people if they:
People are a competitive advantage when they improve efficiency
Value increased when employees find way to decrease costs or provide
something unique to customers
Knowledge, skills, abilities not available to competitors
Resources difficult to imitate
Employees cannot be copied by others
Resources must be organized
Composition: The Human Capital Architecture
o Managers must determine whether people are available, internally or externally, to
execute an organization’s strategy
o Managers have to make tough choices about whom to employ internally, contract
externally, how to manage different types of employees with different skills
o Strategic Knowledge Workers are a group of employees who tend to have unique skills
directly linked to the company’s strategy and are difficult to replace (IE: R&D scientists).
Companies tend to make long-term commitments to these employees, investing in their
continuous training and development
o Core Employees are a group of employees who have skills that are valuable to a company
but are not particularly unique or difficult to replace (IE: Salespeople)
o Supporting Workers are a group of employees who have skills that are of less strategic
value to the firm and available in the labor market
o Partners and Complementary Skills are a group of individuals with skills that are unique
but frequently are not directly related to a company’s core strategy (IE: Lawyers)
Culture: Values, Assumptions, Beliefs, and Expectations (VABEs)
o Cultural Audits are audits of the culture and quality of work life in an organization
o Values Based Hiring is the process of outlining the behaviors that exemplify a firm’s
corporate culture and then hiring people who are a fit for them
Forecasting: A Critical Element of Planning
Forecasting the Demand for Labor
Product or Service Demand
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