Role Of HR

“HR is a tool, not the objective”

Definition Of HR
• A strategic approach means taking a "longer" term, "big picture" approach to HR. Being strategic means operating HR programs or initiatives with the goal of making a direct contribution toward meeting major corporate long-term objectives. Rather than focusing on internal HR “issues”, a strategic focus means addressing and solving “business” problems through the effective use of people management programs. The primary goal of

strategic HR is to increase employee productivity and corporate revenue.



Elements Of HR
 HR increases employee productivity and profits  An external focus assures HR efforts are aligned with business goals and with changes in the business environment  HR helps to build a performance culture  HR provides a competitive advantage  There is an “external” focus  HR is proactive and future focused  There is a coordinated effort  There is a global approach  HR builds a brand  Technology permeates everything

Strategic Human Resources Actions
Competitive Analysis Measure and reward managers for good people management  Pay for performance SWAT team – (Special weapons & Statistics- CRT- Critical Response team) Analyzing "failures" Corporate Headcount “Fat” Assessment Plan Corporate headcount "fat" assessment plan -- Rather than
learning at the last minute that the organization needs to do a layoff, establish a set of assessment tools that will let you know in advance where headcount may be excessive. Monitor ratios, such as output per employee, employees to managers, overall department headcount to productivity, and overall labor costs per unit of output, to identify possible "fat" areas.

“Smoke” Detectors (Predictors)  Bench Strength (Back Fill) Plan -In a time of high turnover, it's increasingly essential to have a strategy
for identifying and developing individuals who can take over if an employee leaves. A "bench strength" plan differs from traditional succession planning in that it only covers replacing key jobs within a single department. It is not a company-wide succession plan. Individual managers are held responsible (and are rewarded) for developing at least one individual to fill every key job.

Bad Management Identification Programthem.

One of the primary reasons that employees quit their jobs is the bad management practices of their direct supervisor. Develop a program that can identify "bad managers," and then develop strategies for fixing these managers, transferring them back to more technical jobs, or releasing




Level One –Information Management

and Basic Transactions

 Processing of new-hire documentation, payroll, separations and benefits enrollment/changes

 Providing answers to employee and manager questions pertaining to policy, benefits, employment law


Level Two –

Providing Functional Services

 This level incorporates many of the activities that create the standard functional areas within HR including: staffing, compensation and benefits, employee relations, and training  The formation of standardized processes and policies for requesting more staff, developing staff, compensating staff, and performance management  Basic reporting on the status of talent management efforts


Level Three – Coordination of Efforts to Improve

Productivity • Improving the over-all productivity of the workforce requires that HR develop initiatives to continuously increase the dollar value of employee output while maintaining or reducing the average labor cost per unit. • Productivity Defined: The term productivity means different things to different people; • In Terms of HR- a measure of efficiency with regards to the use of human resources within a firm. In either case, productivity is simply the value of the outputs a firm produces divided by the costs of producing those outputs. The formula for productivity is simply: Productivity = Outputs / Inputs • To increase productivity, outputs must increase more than costs. There are two basic ways to accomplish this, decrease costs while maintaining output, or increase output while maintaining

How to Measure Employee Productivity?

HR must accept that it is their job to influence others within the organization to increase the productivity of our employees.


Calculating HR Productivity Measures
• • Revenue per Employee as a Presumptive Measure of Productivity


This is the first method to calculate Employee productivity. The formula to calculate this is Revenue per Employee = Total Revenues / Average # of Employees


 A good starting metric, and one fairly easy to calculate is revenue per employee. The two pieces of date required to calculate this measure, total current revenues and current employee count, are often easily available This metric is a very good indicator of efficiency when comparisons are made between firms of similar size in the same industry.


 It fails to include the cost of the employees in the calculation  This is important because firms with a large number of highly paid employees would on the surface, report the same ratio of revenue per employee as a low paying firm even though the actual cost of employees would be significantly higher.


II. People Cost to Total Cost Ratio

Another simple ratio to calculate is to identify what percentage of total variable costs are people costs. Effective management strategies reduce costs while simultaneously improving employee output. The very best firms keep the ratio of labor costs constant and they use technology and productivity tools to increase output.


III. People Cost To Output Value And Units
The last simple ratio to calculate is to identify the ration between people costs and the dollar value of the firm’s output. A similar measure calculates the labor cost per unit of production.

The ratio of people costs to the value of the firms output = Value of Firm Output / People Costs


Labor costs per unit of production (Units) = Number of Units Produced / Labor Hours Used


More Complex Productivity Measures
Profit Per Employee 1-Similar to the revenue per employee calculation, but the major difference here is that profit is substituted for revenue. For most firms, profit is a more accurate reflection of company success than revenue.   Profit per Employee = Gross Profit / Average # of Employees



More Complex Productivity Measures
2) Revenue Per People Rupee Another measure of productivity is a ratio between revenues and total employee costs.   Revenue per People Dollar = Total Revenues / Total People Costs When calculating total people costs, include the cost of all wages, benefits, and HR administration.


More Complex Productivity Measures

3-People Profit :The ultimate measure in productivity is called "people : profit." It is a ratio between profit and total employee costs. Firms that generate more dollars of profit per dollar spent on employee costs are the most productive. People Profit = Operating Income (Gross Profit – SG&A Expense) / Total People Costs

When calculating total people costs, include the cost of all wages, benefits, and HR administration.

Things HR Can Do To Increase Productivity

 Retention tools  Referral programs  Metrics (to increase accountability) and rewards that are tied to performance and productivity  Identifying what motivates, challenges and frustrates employees  Performance management programs that drop poor performing managers and employees  Incentive systems that focus on rewarding managers for great "people management" performance  On the job learning and growth opportunities (job rotations and special projects)  Rewards for sharing best practices between managers  Measures and rewards that Cross functional lines in order to increase cooperation  Forecasting and workforce planning


Level Four :Development of Competitive Advantage through : Talent  Level four signifies a major transition point as HR work begins to provide a strategic contribution.  Increasing competitive advantage is a focused effort to ensure that each key HR program and service is best in class when compared directly to that of competing firms.  The goal in level four is to identify and exploit weaknesses found in competing organizations.


Level Five: Develops Solutions to Strategic Business Problems and Opportunities
 Level five represents the pinnacle of work providing strategic contribution in HR  They attempt to address strategic business problems in areas such as product development, product/service quality, customer service and corporate position  Typical strategic business problem and opportunity efforts include:
 HR involvement in turnaround swat teams  HR consultation in product design and development efforts  Analysis of workforce management impact on time-to-market and innovation  Management of performance culture  HR involvement in merger and acquisition planning


Typical competitive advantage building efforts include:
 Competitive analysis of people programs found in competing organizations  Workforce planning and productivity forecasting  Employment branding

 Competitive intelligence gathering


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