Chapter 2: Strategy and Human Resources Planning

If nothing else, my students should learn that…

• It is important for HRM to align its policies and processes with the business strategy in order to provide value to the organization (external fit), and that the policies and processes are mutually reinforcing (internal fit). HR planning follows the same pattern as organizational strategic planning, and hence the two processes are complementary.

• In order to evaluate the effectiveness of strategy, it is imperative to take the ‘people side’ into consideration. Sole reliance on financial documents (e.g., financial statements, cash flow statements, income statements) largely ignores investment in human capital.

Learning objectives

• Identify the advantages of integrating human resources planning and strategic planning. • Understand how an organization’s competitive environment influences its strategic planning. • Understand why it is important for an organization to do an internal resource analysis. • Describe the basic tools used for human resources forecasting. • Explain the linkages between competitive strategies and human resources. • Understand what is required for a firm to successfully implement a strategy. • Recognize the methods for assessing and measuring the effectiveness of a firm’s strategy.

Why is this chapter important?

The purpose of this chapter is to highlight the nexus of strategy and HR planning. It emphasizes the use of planning as a means of ensuring that qualified employees will be available to meet staffing needs when and where they occur. Moreover, it focuses on how HRM policies and practices can contribute toward achieving an organization’s strategic goals. This chapter is important because it situates HRM within the broader organizational agenda, and demonstrates how it can be