Mergers, Acquisitions, and Strategic
Human Resource Management
Chapter 3
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What is strategic HRM?
Strategic HRM is developed through three steps:
1. Decide on the strategic goals
2. Identify employee skills and
behaviors necessary for success
3. Formulate HR management policies
and practices that will produce these
required skills
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The Strategic Management Process
The process begins by
developing a strategic
plan that describes how
internal strengths and
weaknesses will be
matched with external
opportunities and
threats
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Steps in Strategic Management
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Step 1: Define the current business
Begin by asking these questions:
– What products do we sell?
– Where do we sell these products?
– How do our products or services differ from
our competitors?
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Step 2: Perform External and Internal
Situational Audits
• The key to success is adaptation
• Situational audits require SWOT (strengths,
weaknesses, opportunities, and threats) analysis
• Insert Figure 3-2
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Step 3: Formulate a New Business
Direction
• What should our new business be in terms of
product, placement and competitive advantage?
• The vision statement describes the following:
What do we want to become?
• The mission statement explains the following:
Where are we now?
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Step 4: Translate the Mission into
Strategic Goals
• Operationalize the mission for managers
• What does the mission mean to each
department?
• What goals follow implementation?
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Step 5: Formulate Strategies to
Achieve the Strategic Goals
• What is the game plan?
• Decide on a course of
action
– Best strategies are
concise
– Easily communicated
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Step 6: Implement the Strategies
• Get the game plan going
• Do what needs to be done
– Hire or fire people
– Build or close plants
– Adding or eliminating products and product
lines
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Step 7: Evaluate Performance
• Evaluate, evaluate, evaluate
• Ongoing process vis-à-vis strategic control
• Addresses the following questions:
– Are resources being utilized as planned?
– Are discrepancies explained?
– Do changes in our situation suggest change?
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Types of Strategies
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Corporate Strategy
• Top-level, company-wide
• Identifies the portfolio of existing business
segments
• Strategic possibilities include the following:
– Diversification or vertical integration
– Consolidation
– Geographic expansion
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Competitive Strategy
• Identifies how to build upon and strengthen the
business’s
long-term
marketplace
position
• Identifies and
develops
competitive
advantage
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Competitive Advantage
• Cost leadership indicates that the enterprise
intends to become the low-cost leader in the
industry
• Differentiation strategies seek to be unique in its
industry along dimensions valued by buyers
• Focusers carve out niche markets and compete
by providing a product/service that customers
can get through no other means
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Functional Strategies
• Identifies basic courses of action that each
department will pursue to achieve strategic
goals – consider Southwest Airlines
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The Importance of Leverage
• Leverage means
supplementing what you
have and doing more
with what you’ve got!
• Human resources can
be a crucial competitive
advantage!
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HRM Creates Competitive Advantage
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Four Important Strategic HR Issues
1. HR must understand that employees play a
key role in employers’ performance
improvement efforts
2. HR teams should support corporate
productivity and performance improvement
efforts
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Four Important Strategic HR Issues, cont.
3. HR units must be more involved in designing –
not just executing – the strategic plan
4. HR managers must understand how to create
value
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How Involved Is HR in Strategic
Management?
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What Roles Does HR Play?
• Strategy
execution
• Strategy
formulation
• SWOT analysis
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Translating Strategy into HR Policy and
Practice
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HR’s Role in Mergers and Acquisitions
• Early HR involvement creates synergy
• HR involvement increases M and A success
rates
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Specific HRM M&A Roles
• Manage the deal price
• Manage the messages
• Secure top team and key talent
• Prioritize and manage activities
• Define and implement an effective HR service
delivery strategy
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Specific HRM M&A Roles, cont.
• Develop a workable change management plan
• Design and implement the right staffing model
• Align total rewards
• Measure synergies
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