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Afterstudyingthischapter,

youshouldbeableto:Outlinethestepsinthestrategicmanagementprocess.Explainandgiveexamplesofeachtypeofcompany-widestrategy.Explainwhatahighperformanceworksystemisandwhyitisimportant.ExplainthetenstepsintheHRScorecardapproachoncreatingtheHRMsystem.2©2009PearsonEducationSouthAsia.Allrightsreserved.HR’sStrategicChallengesStrategicplanAcompany’splanforhowitwillmatchitsinternalstrengthsandweaknesseswithexternalopportunitiesandthreatsinordertomaintainacompetitiveadvantage.ThreebasicquestionsinplanningCurrentbusinessposition?Futurebusinessposition?Howtoreachthefuturebusinessposition?3©2009PearsonEducationSouthAsia.Allrightsreserved.TheStrategicManagementProcessStrategicmanagementTheprocessofidentifyingandexecutingtheorganization’smissionbymatchingitscapabilitieswiththedemandsofitsenvironment.StrategyAstrategyisacourseofaction.Thecompany’slong-templanforhowitwillbalanceitsinternalstrengthsandweaknesseswithitsexternalopportunitiesandthreatstomaintainacompetitiveadvantage.4©2009PearsonEducationSouthAsia.Allrightsreserved.TheStrategicManagementProcessStrategicmanagementtasksStep1:DefinetheBusinessandItsMissionStep2:PerformExternalandInternalAuditsStep3:FormulatenewbusinessandmissionstatementsStep4:TranslatetheMissionintoStrategicGoalsStep5:FormulateaStrategytoAchievetheStrategicGoalsStep6:ImplementtheStrategyStep7:EvaluatePerformance5©2009PearsonEducationSouthAsia.Allrightsreserved.OverviewofStrategicManagementFigure3.1TheStrategicManagementProcess6©2009PearsonEducationSouthAsia.Allrightsreserved.Step1:DefinetheCurrent

BusinessDecisionson:ProductsandservicestoprovideWheretosellthemProduct/ServicesdifferencesfromcompetitorsExample:Rolexsellshigh-pricedqualitywatchesvs.Seikosellsinexpensivebutinnovativewatches7©2009PearsonEducationSouthAsia.Allrightsreserved.Step2:PerformInternaland

ExternalAuditsAnalyzeexternalandinternalsituationsUsageofSWOT(Strengths,Weaknesses,OpportunitiesandThreats)analysisthroughtheusageofaSWOTchart8©2009PearsonEducationSouthAsia.Allrightsreserved.Step2:PerformInternaland

ExternalAuditsFigure3.2ASWOTChart9©2009PearsonEducationSouthAsia.Allrightsreserved.Step3:FormulateaNewBusinessMissionandItsVisionVisionAgeneralstatementofitsintendeddirectionthatevokesemotionalfeelingsinorganizationmembers.MissionSpellsoutwhothecompanyis,whatitdoes,andwhereitisheaded.10©2009PearsonEducationSouthAsia.Allrightsreserved.Step4:TranslateMissionintoStrategicGoalsIfthecompany’smissionis“tomakequalityproducts”,whatdoesthismissionmean,foreachdepartment,intermsofhowtoimprovequality?11©2009PearsonEducationSouthAsia.Allrightsreserved.Step5:FormulateStrategiestoAchieveStrategicGoalsStrategy:AcourseofactionShowshowcompanywillmovefromthepresentbusinesstothenewbusinessSimpletounderstand12©2009PearsonEducationSouthAsia.Allrightsreserved.Step6:ImplementtheStrategiesImplementation=puttingintoactionHiringpeopleBuildingplantsaddingnewproductlinesInvolvesmanagementfunctions:PlanOrganizeStaffLeadControl13©2009PearsonEducationSouthAsia.Allrightsreserved.Step7:EvaluatePerformanceSuccessofstrategiesdependentonchangesinexternalfactorsE.g.NewtrendsmayreducedemandinoneproductandincreasethedemandforanotherStrategicControlnecessaryProcessofaccessingprogresstowardsstrategicgoalsandtakingcorrectiveactionsManagersstudynewsituationsandmakeadjustments14©2009PearsonEducationSouthAsia.Allrightsreserved.StrategiesinBriefCompany StrategicPrinciple

Dell Bedirect

eBay Focusontradingcommunities

GeneralElectric Benumberoneornumbertwoinevery

industryinwhichwecompete,orgetout

SouthwestAirlines Meetcustomers’short-haultravelneeds

atfarescompetitivewiththecostof automobiletravel

Vanguard Unmatchablevaluefortheinvestor-owner

Wal-Mart Lowprices,everydaySource:AritGadieshandJamesGilbert,“FrontlineAction,”HarvardBusinessReview,May2001,p.74.15©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningThreetypesofstrategies:CorporatestrategyCompetitivestrategyFunctionalstrategy16©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.3RelationshipsAmongStrategiesinMulti-BusinessFirms17©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningCorporatestrategyCompany-wideIdentifiestheportfolioofbusinessesthat,intotal,comprisethecompanyandthewaysinwhichthesebusinessesrelatetoeachother.18©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFourpossiblecorporatestrategies:Diversificationstrategyimpliesthatthefirmwillexpandbyaddingnewproductlines.Verticalintegrationstrategymeansthefirmexpandsby,perhaps,producingitsownrawmaterials,orsellingitsproductsdirect.Consolidationstrategyreducesthecompany’ssizeGeographicexpansionstrategytakesthecompanyabroad.19©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.4CorporateStrategies–Company-wide20©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningBusiness-level/competitivestrategyIdentifieshowtobuildandstrengthenthebusiness’slong-termcompetitivepositioninthemarketplace.21©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningThreepossiblecompetitivestrategies:Costleadership:theenterpriseaimstobecomethelow-costleaderinanindustry.Differentiation:afirmseekstobeuniqueinitsindustryalongdimensionsthatarewidelyvaluedbybuyers.Focus:afirmseeksto

carveoutamarketniche,andcompetebyprovidingaproductorservicecustomerscangetinnootherway.22©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.5CorporateStrategies–Businesslevel23©2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFunctionalstrategiesIdentifythebasiccoursesofactionthateachdepartmentwillpursueinordertohelpthebusinessattainitscompetitivegoals.24©2009PearsonEducationSouthAsia.Allrightsreserved.HRandCompetitive

AdvantageCompetitiveadvantageAnyfactorthatallowsanorganizationtodifferentiateitsproductorservicefromthoseofitscompetitorstoincreasemarketshare.SuperiorhumanresourcesareanimportantsourceofcompetitiveadvantageE.g.Toyota’sself-managedteams25©2009PearsonEducationSouthAsia.Allrightsreserved.StrategicHumanResourceManagementStrategicHumanResourceManagementThelinkingofHRMwithstrategicgoalsandobjectivesinordertoimprovebusinessperformanceanddeveloporganizationalculturesthatfosterinnovationandflexibility.FormulatingandexecutingHRsystems—HRpoliciesandactivities—thatproducetheemployeecompetenciesandbehaviorsthecompanyneedstoachieveitsstrategicaims.26©2009PearsonEducationSouthAsia.Allrightsreserved.LinkingCorporateandHRStrategiesFigure3.6LinkingCompany-WideandHRStrategiesSource:©2003,GaryDessler,Ph.D.27©2009PearsonEducationSouthAsia.Allrightsreserved.HRM’sStrategicRolesEffectiveHRmanagersareableto:HandlealargerportfolioWorkcloselywithtopmanagementtoformulateandimplementcompany’sstrategicplansTwobasicplanningroles:StrategyExecutionStrategyFormulation28©2009PearsonEducationSouthAsia.Allrightsreserved.StrategyExecutionRoleTheHRdepartment’sstrategies,policies,andactivitiesmustmakesenseintermsofthecompany’scorporateandcompetitivestrategies,andtheymustsupportthosestrategies.29©2009PearsonEducationSouthAsia.Allrightsreserved.StrategyFormulationRoleHRhelpstopmanagementformulatestrategyinavarietyofwaysby:Supplyingcompetitiveintelligencethatmaybeusefulinthestrategicplanningprocess.Supplyinginformationregardingthecompany’sinternalhumanstrengthsandweaknesses.Buildapersuasivecasethatshowshow—inspecificandmeasurableterms—thefirm’sHRactivitiescananddocontributetocreatingvalueforthecompany.30©2009PearsonEducationSouthAsia.Allrightsreserved.CreatingAStrategic

HRSystemComponentsoftheHRprocessHRprofessionalswhohavestrategicandotherskillsHRpoliciesandactivitiesthatcomprisetheHRsystemitself(Recruitment,Selection,TrainingandReward)Employeebehaviorsandcompetenciesthatthecompany’sstrategyrequires.31©2009PearsonEducationSouthAsia.Allrightsreserved.CreatingAStrategic

HRSystemFigure3.7ThreeMainStrategicHumanResourceSystemComponentsSource:AdaptedfromBrianBeckeretal.,TheHRScorecard:LinkingPeople,Strategy,andPerformance(Boston:HarvardBusinessSchoolPress,2001),p.12.Copyright©2001bytheHarvardBusinessSchoolPublishingCorporation;allrightsreserved.32©2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemCompaniesshouldcreateaHRsystemthatfitsitsneedsTrendtowardsinstallingHRsystemsthatbroadlysharemanycharacteristicsAimofthesesystemsistomaximizeemployees’competenciesandcommitmentEmployersexpectHRmanagerstointroduceHRactivitiesthatcreatevalueforthecompanysuchasmoreprofitandbiggermarketshare33©2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemHigh-involvementemployeepractices(suchasjobenrichmentandteam-basedorganizations)Highcommitmentworkpractices(suchasimprovedemployeedevelopment,communications,anddisciplinarypractices)FlexibleworkassignmentsOtherpracticesincludethosethatfosterskilledworkforcesandexpandedopportunitiestousethoseskills34©2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemFigure3.8CharacteristicsofaHigh-PerformanceWorkOrganization35©2009PearsonEducationSouthAsia.Allrightsreserved.TranslatingStrategyintoHRPolicyandPracticeHRmanagerstotranslate:Company’sstrategyintoemployeecompetenciesandbehaviorsTheseemployeecompetenciesandbehaviorsintospecificHRpoliciesandpracticestoachievecompany’sgoals.36©2009PearsonEducationSouthAsia.Allrightsreserved.Formulatebusinessstrategy“Whatarethestrategicgoalsofthebusiness?”Identifyworkforcerequirements“WhatemployeecompetenciesandbehaviorsmustHRdelivertoenablethebusinesstoreachitsgoals?”FormulateHRstrategicpoliciesandactivities“WhichHRstrategiesandpracticeswillproducetheseemployeecompetenciesandbehaviors?”DevelopdetailedHRScorecardmeasures“HowcanHRmeasurewhetheritisexecutingwellforthebusiness,intermsofproducingtherequiredworkforcecompetenciesandbehaviors?”Figure3.9ABasicModelofHowtoAlignHRStrategyandActionswithBusinessStrategySource:AdaptedfromGarrettWalkerandJ.RandalMacDonald,“DesigningandImplementinganHRScorecard,”HumanResourcesManagement40,no.4(2001),p.370.TranslatingStrategyintoHRPolicyandPractice37©2009PearsonEducationSouthAsia.Allrightsreserved.TheHRScorecardApproachHRScorecardMeasurestheHRfunction’seffectivenessandefficiencyinproducingemployeebehaviorsneededtoachievethecompany’sstrategicgoals.TocreateanHRscorecard,you:Mustknowwhatthecompany’sstrategyis.MustunderstandthecausallinksbetweenHRactivities,employeebehaviors,organizationaloutcomes,andtheorganization’sperformance.Musthavethemetricstomeasurealltheactivitiesandresultsinvolved.38©2009PearsonEducationSouthAsia.Allrightsreserved.BasicHRScorecard

RelationshipsFigure3.10BasicHRScorecardRelationshipsHRactivitiesEmergentemployee

behaviorsStrategicallyrelevant

organizational

outcomesOrganization

performanceAchieve

strategicgoals39©2009PearsonEducationSouthAsia.Allrightsreserved.UsingtheHRScorecard

ApproachDefinetheBusinessStrategyOutlinetheCompany’sValueChainOutlineaStrategymapIdentifytheStrategicallyRequiredOrganizationalOutcomesIdentifytheRequiredWorkforceCompetenciesandBehaviors40©2009PearsonEducationSouthAsia.Allrightsreser

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