4
The
Competitive
Environment
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or duplicated, or posted to a publicly accessible website, in whole or in part.
LEARNING OUTCOMES
1 Describe the competitive environment of
human resource management
2 Identify three types of strategies and relate
each to human resource management
3 Discuss human resource strategy formulation
and relevant organizational factors
4 Discuss the processes through which human
resource strategy is implemented
5 Discuss how the human resource function in
organizations can be evaluated
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2
The Competitive Environment
• Organizations gain competitive advantage
through management of human resources
• Human resource manager adds value to the
organization by providing expertise
concerning how to use firm’s human
resources
• To accomplish its objectives and gain
competitive advantage
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3
Figure 4.1
Strategic Human Resource Management
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The Competitive Environment
• Strategic perspective
• A firm gains a competitive advantage when it
implements a strategy that its competitors are
unable to implement
• Influence of organizational purpose and
mission
• Describes the importance an organization places
on its human resources
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5
The Competitive Environment
• Influence of the top management team
• Sets the tone for the organization and plays a
major role in shaping its culture
• Role of corporate governance
• Monitors the actions of the top management
team to ensure that stockholders’ interests are
protected
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Types of Strategies
• Corporate strategy: Determines what
businesses the corporation will operate
• Business strategy: Deals with how the firm
will compete in each market where it
conducts business
• Functional strategy: Deals with how the
firm will manage each of its major functions
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Corporate Level Strategies
Growth strategy
• Pursued internally by opening additional locations or externally through
mergers, joint ventures, or the acquisition of other businesses
Retrenchment strategy
• Occurs when an organization finds that its current operations are not
effective, and major changes are needed to rectify the problem
Stability strategy
• Calls for maintaining status quo
Diversification strategy
• Used by companies that are adding new products, product lines, or
businesses to their existing core products, product lines or businesses
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8
Business-Level Strategy
• Adaptation model: Managers in an
organization should try to match the
organization’s strategy with the basic
conditions of its environment
• Defender strategy
• Prospector strategy
• Analyzer strategy
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Other Competitive Strategies
Differentiation strategy
• Attempts to develop an image or reputation for its product
or service that sets the company apart from its competitors
Cost leadership strategy
• Focuses on minimizing the costs as much as possible
Focus strategy
• Undertaken when an organization tries to target a specific
segment of the marketplace for its products or services
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Figure 4.3
Human Resource Strategies
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Components of HR Strategy
Organizational
design
Corporate culture
Unionization
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12
Interpersonal Processes
Psychological contract
• Overall set of expectations held by an individual with respect to what they
will contribute to the organization and what the organization will provide to
individual in return
Personality
• Relatively stable set of psychological attributes or traits that distinguish one
person from another
Motivation
• Set of forces that causes people to behave in certain ways
Stress
• Person’s adaptive response to a stimulus that places excessive psychological
or physical demands on that person
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13
Strategy Implementation
• Human resource managers help identify
potential leadership qualities among
existing employees
• To help structure procedures for developing and
enhancing those qualities
• Communication is an interpersonal process
directly related to the implementation of
human resource strategy
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Table 4.1
Human Resource Management That May
Lead to Improved Firm Performance
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SUMMARY
• Organization gains competitive advantage
through its management of human
resources
• Key to strategic operations is developing
and implementing effective strategies
• Interpersonal processes are important
because of the role they play in affecting
the performance effectiveness exhibited by
each employee in a firm
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KEY TERMS
•
•
•
•
•
•
•
•
•
•
•
Adaption model
•
Business strategy
•
Corporate strategy
Cost leadership strategy •
•
Culture
Differentiation strategy •
Diversification strategy •
•
Focus strategy
Functional strategy
Growth strategy
Mission
Motivation
Organization design
Personality
Psychological contract
Purpose
Related diversification
Retrenchment strategy
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KEY TERMS
•
•
•
•
Stability strategy
Stress
Top management team
Unrelated diversification
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