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Strategic Human Resource Management

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Strategic human resource management is the process of linking the human resource function with the strategic objectives of the organization in order to improve performance.

Strategic management

The word вЂ?strategy’, deriving from the Greek noun strategus, meaning вЂ?commander in chief’, was first used in the English language in 1656. The development and usage of the word suggests that it is composed of stratos (army) and agein (to lead). In a management context, the word вЂ?strategy’ has now replaced the more traditional term вЂ" вЂ?long-term planning’ вЂ" to denote a specific pattern of decisions and actions undertaken by the upper echelon of the organization in order to accomplish performance goals. Wheelen and Hunger (1995, p. 3) define strategic management as вЂ?that set of managerial decisions and actions that determines the long-run performance of a corporation’. Hill and Jones (2001, p. 4) take a similar view when they define strategy as вЂ?an action a company takes to attain superior performance’. Strategic management is considered to be a continuous activity that requires a constant adjustment of three major interdependent poles: the values of senior management, the environment, and the resources available.

Model of strategic management

In the descriptive and prescriptive management texts, strategic management appears as a cycle in which several activities follow and feed upon one another. The strategic management process is typically broken down into five steps:

1. Mission and goals

2. Environmental analysis

3. Strategic formulation

4. Strategy implementation

5. Strategy evaluation.

1. Mission and goals

At the corporate level, the strategic management process includes activities that range from appraising the organization’s current mission and goals to strategic evaluation. The first step in the strategic management model begins with senior managers evaluating their position in relation to the organization’s current mission and goals. The mission describes the organization’s values and aspirations; it is the organization’s raison d’Ð"Єtre and indicates the direction in which senior management is going. Goals are the desired ends sought through the actual operating procedures of the organization and typically describe short-term measurable outcomes.

2. Environmental analysis

Environmental analysis looks at the internal organizational strengths and weaknesses and the external environment for opportunities and threats. The factors that are most important to the organization’s future are referred to as strategic factors and can be summarized by the acronym SWOT вЂ" Strengths, Weaknesses, Opportunities and Threats.

3. Strategic formulation

Strategic formulation involves senior managers evaluating the interaction between strategic factors and making strategic choices that guide managers to meet the organization’s goals. Some strategies are formulated at the corporate, business and specific functional levels. The term �strategic choice’ raises the question of who makes decisions and why they are made. The notion of strategic choice also draws attention to strategic management as a �political process’ whereby decisions and actions on issues are taken by a �power-dominant’ group of managers within the organization. Child affirms this interpretation of the decision-making process when he writes: When incorporating strategic choice in a theory of organizations, one is recognizing the operation of an essentially political process, in which constraints and opportunities are functions of the power exercised by decision-makers in the light of ideological values. In a political model of strategic management, it is necessary to consider the distribution of power within the organization. According to Purcell and Ahlstrand , we must consider �where power lies, how it comes to be there, and how the outcome of competing power plays and coalitions within senior management are linked to employee relations’. The strategic choice perspective on organizational decision-making makes the discourse on strategy �more concrete’ and provides important insights into how the employment relationship is managed.

4. Strategy implementation

Strategy implementation is an area of activity that focuses on the techniques used by managers to implement their strategies. In particular, it refers to activities that deal with leadership style, the structure of the organization, the information and control systems, and the management of human resources. Influential management consultants and academics emphasize that leadership is the most important and difficult part of the strategic implementation process.

5. Strategy evaluation.

Strategy evaluation is an activity that determines to what extent the actual change and performance match the desired change and performance. The strategic management model depicts the five major activities as forming a rational and linear process. It is, however, important to note that it is a normative model, that is, it shows how strategic management should be done rather than describing what is actually done by senior managers. As we have already noted, the notion that strategic decision-making is a political process implies a potential gap between the theoretical model and reality.

Hierarchy of strategy

Another aspect of strategic management in the multidivisional business organization concerns the level to which strategic issues apply. Conventional wisdom identifies different levels of strategy вЂ" a hierarchy of strategy:

1. Corporate

2. Business

3. Functional

Corporate-level strategy

Corporate-level strategy describes a corporation’s overall direction in terms of its general philosophy towards the growth and the management of its various business units. Such strategies determine the types of business



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