HRCI PHR – Business Management and Strategy – The HR Function and Business Environment

1. Elements of an Organizational Strategy (1)

Elements of an Organizational Strategy in topic one elements of an organizational strategy, we will focus on interpreting and applying information from various internal sources like accounting, marketing and operations to the development of the strategy plan. We will be deepening our knowledge of the organization’s vision, mission, values, business goals and objectives and we will gain a better understanding of corporate governance and regulatory compliance. The first phase of the strategy planning process is known as strategy formulation. This is where the organization’s vision and mission are developed and the values are defined. Not a quick and dirty process, it requires individuals working together to be introspective and to build consensus. The vision statement is a clear image of the company’s future.

The mission statement identifies the activities the companies will pursue and describes management’s course for the future and how the vision will be accomplished. Very statements clearly describe what is important to the company and they set the tone for the company’s culture and provide guidelines for the employee’s behavior.

Now digging down we see that there are multiple levels of strategy. First we have the corporate strategy which is high level and includes the vision, mission and values, as well as the business goals. Next is the functional strategy. This is at the tactical level. The divisions and departments should all have separate and very distinct strategies and it’s also vital to remember the functional strategies are in place to ultimately support and further the corporate strategy.

2. Elements of an Organizational Strategy (2)

Levels of Strategy there are two levels of organizational strategy corporate and functional. Corporate level strategy includes vision, mission values and business goals and functional level strategy. The divisions and departments include information systems, research and development, production of Operations, finance and Accounting, marketing and Sales and Human Resources. As mentioned earlier, the first phase of the strategic planning process is strategy formulation. This is where the mission and vision statements are developed and the values are identified. In the strategy formulation phase, HR must understand how the company creates value, how and when to communicate the mission, and how the values drive the policies and processes that we’re putting in place. The next phase is strategy development. Here we will concentrate on conducting sport analysis.

Esport Analyzes is an analysis of the internal strengths and weaknesses, as well as the external opportunities and threats that the organization faces. We are also going to establish long term goals, which are those goals that are three to five years in length, and we will be developing the corporate and then functional strategies. The third phase is strategy implementation. In this phase, we will concentrate on setting our short term goals. Those are six to twelve months in length, developing action plans, assigning resources, and then motivating the employees. Finally, the fourth phase is strategy evaluation. In this fourth and final phase, the focus will be on reviewing strategies, measuring performance, and taking any necessary corrective actions.

3. Elements of an Organizational Strategy (3)

Steps in developing an organizational strategy are formulation, development, implementation and evaluation. Just to remind you, organization’s vision should be inspirational and likely to be accepted by a large group of people, the stakeholders. Great organizational vision should push people people to want to do more and to grow beyond the status quo. The vision statement must be carefully developed. It is vital to ensure that the vision doesn’t limit the company to the present or be unreachable. The vision statement must be realistic, a visualization of the future, clear and broadly accepted. And the key to a strong vision statement is that it raises a similar image in the mind of every person who reads it or hears it.

So, organizational vision a realistic, credible and inspiring future for an organization. An organization’s mission. It is its reason for existence. A mission statement articulates the purpose of the organization. It identifies the activities the company will pursue and describes management’s course for the future and how the vision will be accomplished. It includes who the company is, what the company does and who the company’s customers are. And further, the mission statement helps keep management men and the employees focused and all moving in the same direction.

4. Elements of an Organizational Strategy (4)

Employees are a vital part of any organization, and how they are managed can contribute to the success of the company. These human resources aid in providing an organization with what can be a huge competitive advantage. Most HR activities are ultimately driven by and and support the company’s vision and mission and guide the Company’s values. Examples of these agile activities include recruiting and selection, new employee onboarding and orientation, employee training and development, compensation and benefits planning and administration, employee and labor relations, safety and health risk management, legal and regulatory compliance, change management and outsourcing. However, regardless of the activity, it is important to remember that we are focused on the people the human resources of the company. HR activities are generally related to providing, protecting, or managing the company’s most valuable asset and greatest competitive advantage its people.

A strong human resource strategy plan outlines how to bring the right people and the necessary number of people to the table, how to develop these people to their best, and how to keep these people within the organization. In order for any corporate strategy to succeed, HR needs to be at that table. That’s because HR has the potential to tap into and touch every other functional area of the company. As discussed previously, each functional strategy must align with and support the corporate strategy, and the HR strategy should lead the way. When developing an HR strategy, remember that the primary reason that HR function exists is to serve the needs of the company as a whole, as well as the needs of the other functions. And the best way to serve the needs of the Company and the functional areas is to ensure HR is positioned as the subject matter expert on strategic human resource planning and bag it up by providing the data and expertise others need to make their strategic plan successful.

5. Elements of an Organizational Strategy (5)

While the functional makeup of every company may be slightly different, most will have some common components accounting and finance, sales, marketing, operations, and of course, human resources. One important factor in supporting the various functions and ultimately the company, is to build relationships within those functional units. In order to illustrate this point, I will share the story of Laura, an HR manager who was my student a few years ago. Laura came to me after class and told me she was struggling in her job. She didn’t feel like she was doing much more than shuffling papers, and she felt completely disconnected from the rest of the company. It was clear that the managers and supervisors viewed Laura as just another in a long line of HR people who made work more difficult, not easier. I suggested Laura approach each of the managers and offered to buy them a cup of coffee.

She needed to get to know them and know what their department did, who the people were who worked in the departments, and what the manager’s top three employee related challenges were. Of the 15 managers, only three would take the time to meet with Laura the first time she asked. But she got to know those departments, the people, and the challenges they faced, and in all three cases, she was able to improve at least one situation, but it couldn’t end there. It took a few repeated invitations, and she got to talk with and eventually help every manager and supervisor in the company. Laura left the company a couple of years ago, but her influence remained. The first question the general manager asked each HR candidate was, how are you going to maintain and enhance the existing relationship between HR and the other department?

6. Elements of an Organizational Strategy (6)

Organizational functions, corporate strategies connected to different functional units in an organization including finance and accounting, research and development, marketing and sales, production operations, information systems and human resources. My students often ask to important questions at this point. First, why is it important for us to build cross functional relationships? And second, how can we do it? Well, the importance of cross functional relationships can be illustrated by a story that I tell all my classes. Fewer years ago, my wife decided she wanted a new dining room table.

Not just any dining room table, one that sits twelve. So imagine for a moment that we invited ten other people to dinner, each of them speaking a different language, each of them not understanding the other languages at the table. If we were simply to invite them over for dinner, that would be great. They would enjoy a good meal, no conversation or little conversation and no ability to communicate. However, if my wife and I both spoke at least conversationally each of their languages, we would be able to build bridges and bring those people together.

The same thing needs to happen in your organizations. You need to speak the language of business in order to build the bones and bridges between the various functional areas. So twelve people are seated around a rectangular dining table. Imagine this they have unique symbols to signify that everybody speaks a different language at the center of the table. The symbols are praised. Together, these symbols are connected to all the members present around the table. Corporate governance is a broad term, and it refers to the ways in which a corporation is managed, regulated and controlled, and is an important part of the legal and regulatory compliance responsibilities shared with the corporate HR function. Individuals and groups that have the greatest interest in ensuring the company or corporation conducts business in a legal and ethical manner or the stakeholders and these stakeholders are the company’s owners, or in the case of a corporation, the shareholders. In addition, the board of directors, company management and other stakeholders like the employees, all have reasons to want the organization to follow legal and ethical business practices.

7. Elements of an Organizational Strategy (7)

More specific to the realm of corporate governance is legislation such as the Sarban Oxley Act or Sox. Sox legislation was passed in the aftermath of the annual and warcom scandals, when it became obvious that senior corporate executives choose to ignore their obligations to act in the best interest of the corporation and its stakeholders. To ensure such incredible breaches of trust did not happen again, sox created the Public Company Accounting Oversight Board to oversee the auditing practices of public companies. This board, which is monitored by the securities and Exchange Commission, is tasked with protecting investors and the general public by setting ethics and reporting standards.

The Survivance Oxley Act was passed in 2002, so Sox also sets new standards of independence for auditors, their corporate responsibility, and for ethical behavior. For example, auditors are restricted in the non audit related services they can provide and require rotation of audit partner assignments at least every five years. Further, the Serbians Oxley Act clearly prohibits insider trading by banning the officers and directors of a corporation from buying or selling company stock during pension fund blackouts.

The regulation contains whistleblower protections, established specific ethical requirements for senior financial officers, and strongly encourages the development and implementation of a written code of ethics for the organization. Organizations rely on us HR practitioners to maintain high ethical standards and to carry out our responsibilities in a professional manner. We can assume other roles to help the organization comply with turban’s Oxley Act, for example, clearly define stakeholder roles and responsibilities, investigate all whistleblower retaliation complaints, ensure adequate financial disclosure procedures, manage the move to a more transparent culture, and ensure consistent, solid and efficient HR processes.

8. Elements of an Organizational Strategy (8)

Before we move on, we are going to pause for a moment so that you can answer some review questions. There are key elements that form the basis of an organization strategy. Organizational strategy is the direction an organization takes with the objectives of achieving its goals in the long term. Match each purpose statement with a key element it describes. Some elements may not match to a purpose. Here we have the options provides a realistic and futuristic image of the organization’s future if the organization’s reason for existence forms the foundation of the organization’s corporate culture and this is the target vision, mission values, functional management and processes this is the answer for you to compare. A company’s vision statement provides a realistic and futuristic picture of where the leaders want to take the organization in the future.

The vision statement is based on the capabilities of the organization and should not be entrenched in the present or the past. A good mission statement articulates the purpose of the organization and how it will achieve its goals. The value of a company show what is important to it, what it believes and in, and the behavior expected of employees. Although good functional management is critical to a department’s performance, it isn’t a key element of organizational strategy. Organizational strategy links organizational processes and activities to the key elements of an organization’s strategic plan, but the processes by themselves are not key elements. The components of a corporate strategy include vision, mission and values statements.

Match each organizational strategy statement with the element of the strategy it represents. Here you have the options to save customers time and money by providing training and customized products to be the most innovative software development company within three years. We believe the customers deserve to be treated with dignity and respect and these are the targets mission statement, mission statement and Values Statement and this is the answer for you to compare. As usual, this is an example of a mission statement. Mission statements articulate the purpose of the organization and how it will realize its purpose. This is an example of a vision statement.

Vision statements provide an inspirational but attainable picture of the organization’s future. This is an example of a values statement. Value statements are the core of what is important to the organization. While organizational functions differ from organization to organization, there are some that most organizations have in common. Which functional areas are common to most organizations? Here we have the options human resources, finance and accounting, marketing and sales, production or operations, health and Safety and or Quality Management and this is the answer for you to compare. Option One this option is correct. Human resources support the organization and the other functional units and are necessary for an organization’s success.

Option Two this option is correct finance and accounting is responsible for handling how money comes in and goes out of an organization. Option Three this option is correct marketing and sales activities create a demand for the company’s product. Option Four this option is correct. Production and or operations is the process by which a product or service is created by the company. Option Five this option is incorrect. Although large corporations often have units dedicated to health and safety, it is not functional areas common to most organizations. In option six, this option is incorrect. Quality management ensures the products or services meet or exceed standards and is often part of production or and or operations function, not a functional unit by itself. Corporate strategy is supported by functional level strategies from every function of an organization. Which statements describe the activities of HR’s functional strategy that support the organization’s strategy plan.

Here have the options gathering data on skill requirements, retention rates and personal productivity to maximize resources and reduce production waste. Dealing with compliance issues. Related to government regulations, managing change in the organization, providing direction as to whether a company should be a leader or a follower in technological innovations and or aligning financial resources with business activities. This is the answer. Option One this option is correct. Incorporating information gathered by human resources is a key component in achieving an organization’s strategy and determines things such as whether the company needs to hire low skilled employees or high skilled employees. Option two. Dissoption is correct.

HR professionals often help develop organizational level compliance plans related to labor and employment laws and employee safety, in addition to policies to ensure compliance in day to day business. Option Three this option is correct. Corporate strategies often involves changes to the business which often impact the people who do the work. HR professionals play a key role in managing change in the organization to ensure retention of employees. Option Four this option is incorrect. Providing direction and innovations is the type of support a research and development function would provide as part of its contribution to an organization’s strategy. Option Five this option is again incorrect. Aligning financial and business activities is the type of support to finance and accounting function would provide as part of its contribution to an organization’s strategy. Corporate governance refers to the rules, processes or laws by which corporations are managed, regulated and controlled. What are key elements of corporate governance?

Here I have the options independence of auditors prohibited insider trading, protecting of whistleblowers auditing processes us. Securities and Exchange Commission compliant with existing corporate laws. This is the answer for you to compare. Option One this option is correct. Independence of auditors from those they audit is important to ensure the best interest of stakeholders. Option Two this option is correct. Banning insider trading ensures that officers and directors of the company can’t trade stock when employees are not able to trade the stock. Option Three this option is correct. Ethical corporate governance protects employee who report corporate fraud or mismanagement from being fired, provides remedies for reinstatement if fired, and forbids agents of the company from retaliating in any way. Option Four this option is incorrect.

Although auditing processes are regulated by edical corporate governance, they are not a key element. Independence of auditors from those they are auditing is a key element as it ensures the objectivity of the audit. Option five this option is incorrect. The US. Securities and Exchange Commission oversees and approves the board empowered to set auditing ethics, quality control and reporting standards. And option six this option is correct. The responsibility of organizational leadership to run the organization’s business in a manner that is compliant with existing laws and regulations is a key element of corporate governance.

9. Key Strategic Business Concepts (1)

Key strategic business Concepts a strong competitive advantage often translates to customer loyalty, increased profits, and greater value for the organization and its stakeholders. In topic II, Key Strategic Business Concepts, the expectation that HR be a strategic partner in the organization is explored. To meet that expectation, you as an AGR professional must show you have the knowledge, skills and abilities necessary to fill such an important role. A major part of the knowledge required is familiarity with key business concepts, and knowledge is not enough. Next, we need to use these concepts to understand the organization’s strategic direction. The key business concepts we will discuss here are competitive advantage strategies, which include cost advantage, differentiation and a number of other strategies business case development and corporate responsibility. Also, it is vital to the organization’s success that strategies be chosen carefully as they will reflect and help shape the structure and culture of the company. Competitive advantage can come from a number of areas superior employees or human capital advantage.

Creative marketing, exceptional leadership, operational excellence, and customer intimacy are a few examples. The benefits of a strong competitive advantage often translate to customer loyalty, increased profits, and greater value for the organization and its stakeholders. As we said repeatedly. According to Michael Porter, a leading authority on competitive strategy, two basic types of competitive advantage are cost leadership and differentiation. Cost leadership requires an organization to be the low-cost provider in its industry.

Cost advantages may come from a number of sources, including economies of scale, proprietary processes or technologies, and well negotiated supplier or agreements. From an HR viewpoint, cost leadership focus on increasing efficiencies and productivity, easily sharing information across the organization, centralized decisionmaking and emphasis on cross training and job rotation and continuous process improvements. One key element to keep in mind is that cost leaders are experts in identifying and exploiting any and all sources of cost advantage, whether you love them or not. Walmart, for instance, is an excellent example of a cost leader.

10. Key Strategic Business Concepts (2)

So elements of competitive advantage, organizational capabilities and organizational resources result in cost advantage, which in turn leads to value creation. Differentiation strategies work to set the company’s product or service apart from competitive competitors by giving it unique traits that consumers value and are willing to pay a premium to have. Differentiation factors include product features, superior quality, a refined delivery channel, or even a specific marketing approach.

Again, from an agile perspective, differentiation strategies should focus on reducing cost in areas not related to differentiation, supporting strong research and development to ensure a constant flow of innovative products, excellent marketing to reach customers who value their product or service, ongoing product knowledge and quality training for employees, and decentralized decision making for quicker speed to market.

A great example of differentiation strategy and value creation is Volvo. For years they have used Delve vehicles safety features as part of a great marketing campaign. It worked on me a few years ago. I totaled my car on a rollover accident with my young daughter in the vehicle. From that day forward, my wife and I have only both and driven volumes. Organizational branding can be a powerful competitive advantage when the company’s brand is well known, well respected and valued in the marketplace. Organizational branding is a deliberate outward message managed by an organization which often emphasizes its values, corporate strategy, mission, image and activities and it sets the company apart from its competitors. It plans the company firmly in the minds of customers and employees.

From an HR perspective, organizational branding projects an image of the organization as a great place to work and reflects intangibles like its culture, attitudes and employee relationships. A focus strategy requires that a specific segment or target market is served while excluding all others. Product leadership is distinguished by the requirement that the company always be in the forefront of the market and with the newest and most innovative products and services. Customer intimacy allows the company to personalize products and services to meet very specific customer needs. This type of strategy is supported by using market data and tracking customer behaviors to understand each and every customer. The human capital advantage strategy relies heavily on superior employees. They generally know more, act quickly, collaborate well, and genuinely care about the customers.

11. Key Strategic Business Concepts (3)

A business case establishes and describes a specific organizational problem or challenge and argues that the proposed solution is the best solution. A business case provides evidence to support the proposed solution as well as its details on the solutions, design, implementation and financial data to allow company leaders to make an informed decision. Generally, a business case will include a statement of the problem. This should be concise yet thorough enough and explain the direct, indirect and or potential negative impact on the fulfillment of the company’s strategic objectives. Next, the objectives which should address the concerns of management and finally, a description of the potential solutions. While recommending a single solution, reasonable alternatives approach should be addressed in order to give management and decision makers an opportunity to weigh all options. The scope is determined by factors like business case drivers, boundaries, deliverables, project teams and the schedule. Defining the scope of a business case before it is developed allows for the needed resources to be identified and goes a long way in setting management’s expectation. Corporate social responsibility is about how corporate citizens manage their businesses and their interrelationship with all of their stakeholders in order to produce an overall positive impact on society. Corporate social responsibility is also defined as the continuing commitment by business organizations to behave in an ethical and responsible manner to contribute to economic development while improving the quality of life on their employees lives and their families lives. Exhibiting corporate ethics and values through good corporate citizenship programs benefits the local, regional, national and international communities. Supporting causes that are aligned with the company’s own values, supports those communities and reflects well on the organization and all of its stakeholders.

12. Key Strategic Business Concepts (4)

So the corporate citizen and the society. The social responsibility of corporations toward various stakeholders in marketplace, workplace, environment and community. These stakeholders include shareholders and customers in the marketplace, employees and unions in the workplace, government and other environmental, regulators and community. There are four key phases to a corporate citizenship program. Phase one is called reactive philanthropy. Here the company makes a number of small donations to charities and is often based on the request or recommendations of people on the leadership team. Phase two, strategic contributions, is where donations are formally managed and focused on a more limited cop, more relevant to the companies and its values. The goal is to enhance the company’s reputation in the community. Phase three, which is mainstream involvement.

This is where community involvement is more closely linked to immediate business matters. External reputation and internal goodwill are key factors. Donations are no longer limited to money. They now include donations of products or services, paid volunteer time for employees, and encouraging or requiring company leaders to sit on charitable boards. Phase Four corporate Accountability few companies reach this stage. This is where the organization clearly reports on all corporate citizenship policies and practices and also employs independent verification through a process called social auditing. So developing a Corporate Citizenship Program there are four phases of corporate citizenship program which can be imagined in a pyramidal shape from top to bottom. These phases are corporate accountability, mainstream involvement, strategic contribution and reactive philanthropy.

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