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Module 01

The Strategic Role of Human Resource Development

Outline
Strategic Planning and Strategic Trends
The Basics of Strategic Planning The Strategic Planning Process Basic Strategic Trends Managerial Consequences of the Basic Trends

Outline
HR’s Strategic Role
HR’s Evolving Role Strategic Human Resource Management HR’s Role as a Strategic Partner HR and Technology HR and Employee Performance and Commitment Research Insight

After Studying This Chapter, You Should Be Able To:
Utilize your understanding of Human Resources Management to better understand human resources development. Explain what human resource development is and how it relates to Human Resources Management. Explain how human resources development relates to the management process. Give at least eight examples of how HR management concepts and techniques can be of use to all managers. Illustrate the HR management responsibilities of line managers and staff (HR) managers.

The Management Process
Planning Organizing Staffing Leading Controlling

Management Process
Planning
Goals and standards Rules and procedures Plans and forecasting.

Organizing
Tasks Departments Delegating Authority and communication Coordinating

Management Process
Staffing
Hiring Recruiting Selecting Performance standards Compensation Evaluating performance Counseling Training and developing

Management Process
Leading
Getting the job done Morale Motivation

Controlling
Setting standards Comparing actual performance to standards Corrective action

HRM Function

Human Resource Management is the process of acquiring, training, appraising, and compensating employees and attending to their labor relations, health and safety, and fairness concerns.

HRM People Functions Include:
Job analyses Labor needs Recruit Select candidates Orient and train Wages and salaries Incentives and benefits
Performance Communicate Train and develop Employee commitment Equal opportunity Health and safety Grievances/labor relations

HRM is Important to all Managers. Don’t Let These Happen to You!
The wrong person High turnover Poor results Useless interviews Court actions Safety citations Salaries appear unfair Poor training Unfair labor practices

HR – It’s All About Results
“For many years it has been said that capital is the bottleneck for a developing industry. I don’t think this any longer holds true. I think it’s the work force and a company’s inability to recruit train and maintain a good work force that does constitute the bottleneck….” F. K. Foulkes

Line and Staff Aspects of HR
Authority
Making decisions Directing work Giving orders

Line Managers
Accomplishing goals

Staff Managers
Assisting and advising line managers

Line Manager’s HR Jobs
The right person Orientation Training Performance Creativity Working relationships Policies and procedures Labor costs Development Morale Protecting

Staff Manager’s HR Jobs

Line authority Implied authority Functional control Employee advocacy

HR Department Organizational Chart

Strategic Planning and Trends
Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.

Recall Strategic Planning
There are three levels of strategic planning as shown below
Corporate Strategy

Business Strategy

Business Strategy

Business Strategy

Business Strategy

Functional Strategies

The Strategic Planning Process
SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats Best strategic plans balance a company’s Strengths and Weaknesses with the Opportunities and Threats the firm faces Basic strategic trends Globalization Technological advances The nature of work The workforce

Recall Importance of Globalization

80 70 60 50 40 30 20 10 0 1920 1950 1970 2000 % fortune 500 with a global presence

Technological Advances and the Nature of Work
Technology mandates and enables companies to be more competitive Knowledge intensive jobs in industries such as aerospace, computers, telecommunications, and biotechnology are replacing factory jobs in steel, auto, rubber and textiles
Carrier

The Workforce Itself is Diverse

Asian Black Hispanic Men Women

US Department of Labor website

Consequences of these basic trends
Global expansion Technology Strengths and Weaknesses Improved competition Uncertainty, Turbulence, Rapid Change, Changing power bases Companies must be Fast, Responsive, and Costeffective

HR’s evolving role

Protector and Screener

Change Agent

Strategic Partner

Strategic HRM
Strategic human resource management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility.
Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine

HR’s evolving role as strategic partner
Corporate strategy HR operations Corporate strategy HR programs Corporate strategy

FedEx

HR programs

How HR helps strategy execution
Functional strategies should support competitive strategies Value chain analysis Outsourcing Strategy Formulation

How HR helps form strategy
Formation of a company’s strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses Environmental scanning

The Value Chain Approach

HR and technology- End User Technology can be the Human Resources engine of change
Basic HR systems demand paperwork
70% of HR’s employees time = paperwork Off the shelf forms from Office Depot/Office max Online forms

Human Resource Information Systems (HRIS) HR on the Internet

Trends: Increased Use of Internet
60%
54% 48% 42% 34% 27% 22% 16% 18% 18% 21% 16% 9% 10% 9% 8% 33%

0%
Telephone
Sep/Oct 00*

Internet
Sep/Oct 01* Jun 02*

Mail

In-person

Two years from now**

* Thinking now of your most recent contact with the federal government, what was the method of contact? ** Thinking about two years from now, what do you think will be your main method of contact with governments? (June, 2002)

HR portals
Employees can answer their own questions HR moves from reactive to proactive

Training and Development translates into performance
Can HR have a measurable impact on a company’s bottom line? Better HR Training translates into improved employee attitudes and motivation (e.g., working at home) Well run HR training programs drive employee commitment

TOYOTA

Factors affecting the training structure:
Management Philosophy Organizational Strategy Organizational Structure Size Technology Requirements Industry demands

Role of Training in Organizations
Regardless of where training lies in an organization, its role is to improve the organization’s effectiveness by: Providing employees w/ necessary KSAs Provide personal enrichment Increase competitive advantage Respond to specific organizational needs Increase organizational strategic capability Improve quality While staying within the budget!

Implications of Business Strategy for Training Implications of Business Strategy for Training

Strategy
Concentration

How Achieved
- improve quality

Key Issues
- current skills - develop work force

Training Implications
- team building - cross-training - people skills - on-the-job

Implications of Business Strategy for Training Implications of Business Strategy for Training

Strategy
Concentration

How Achieved
- improve quality

Key Issues
- current skills - develop work force - innovation - creating new jobs & tasks

Training Implications
- team building - cross-training - people skills - on-the-job - cultural training - creativity training - communication - technical skills - conflict resolution

Internal Growth

- global expansion - new products - joint ventures

Implications of Business Strategy for Training Implications of Business Strategy for Training
How Achieved
- improve quality

Strategy
Concentration

Key Issues
- current skills - develop work force - innovation - creating new jobs & tasks

Training Implications
- team building - cross-training - people skills - on-the-job - cultural training - creativity training - communication - technical skills - conflict resolution - integrate training systems - team building - identify capabilities

Internal Growth

- global expansion - new products - joint ventures - acquire firms

External Growth (acquisition)

- integration - redundancy - restructuring

Implications of Business Strategy for Training Implications of Business Strategy for Training
Strategy
Concentration

How Achieved
- improve quality

Key Issues
- current skills - develop work force - innovation - creating new jobs & tasks

Training Implications
- team building - cross-training - people skills - on-the-job - cultural training - creativity training - communication - technical skills - conflict resolution - integrate training systems - team building - identify capabilities - stress management - time management - cross-training - outplacement

Internal Growth

- global expansion - new products - joint ventures - acquire firms

External Growth (acquisition)

- integration - redundancy - restructuring - efficiency

Disinvestment

- cost reduction - redefine goals - sell assets

Key Training Roles
Researcher Needs Analyst Evaluator Program Designer Materials Developer Manager Marketer Counselor Change Agent Instructor Communicator

TRAINING COMPETENCIES
Computer and data analysis skill Research skills Understanding of Adult Learning Oral and Written Communication Skills Goal setting Understanding how careers develop Ability to coach and give feedback Cost/benefit analysis Project Management/Records Management Delegation skills Logistics Strategic Planning Negotiation General business and industry understanding

A Training Process Model
Utilizing Input-Process-Output Model
Needs Analysis/Assessment Design Development Implementation Evaluation Follow-up

Ultimate Goal of Training:
To provide and facilitate effective and efficient organizational learning that improves organizational performance

KSAs….
Knowledge - Info. we acquire & place into memory, how it’s organized into our structure & to our understanding of how/when it’s used Skills - Capacities needed to perform a set of tasks developed from a training experience Attitudes - Reflections of employee beliefs/opinions that support/inhibit behavior Abilities - General capacities related to performing a set of tasks developed over time as a result of heredity and experience

A Case Study
Dell’s dual HR roles OPERATIONS Deals with staff - benefits - compensation - call center MANAGEMENT Deals with management - education - recruitment - planning - training - personnel needs

Is There a “One Best HR Way”?
Follow a company’s operating and strategic initiatives All companies can benefit from
Profit sharing programs Results oriented appraisals Employment security Foster informal relationships- promote worldwide communications Develop global executives

Societal Trends, Work Place Changes, and Human Resource Challenges
Societal trends
• Rapid Change • Globalization • Rise of Internet • Legislation • Hyper competitiveness • Rise of the service sector

Work place changes
• Competitive Position: Cost, Quality, Distinctive Capabilities • Decentralization • Downsizing • Organizational Restructuring • • • • • • • • • • Self-Managed Work Teams Small Businesses Organizational Culture Technology Outsourcing

Human Resource Challenges
Ethical Dilemmas and Social Responsibility Staffing, Development, and Productivity Job Design and Empowerment Brain Drain and Talent Shortage Safety Net and Job Insecurity

Human Resource Challenges in HK and China
Hong Kong
Declining growth, a stagnant economy Primarily service economy Influx of talents from mainland Unclear competitive edge in global market

Chinese mainland
Rapidly growth, especially private sector Competitive skilled & professional labor markets Evolving business and labor laws WTO and increasing competitiveness Business ethics

A Hong Kong Company: Computime
28 years old 30% annual sales growth in past 3 years 5% profit margin Production plant in Shenzhen Administrative and HQ offices in HK 7 divisions – 4 functions and 3 business units About 500 staff employees and 3000 production workers ISO objective but defective products due to rush

Computime (VMV)
Vision Mission
We act as one responsive, flexible and innovative team with full commitment and dedication to exceed our customers’ expectations in quality, cost, delivery and service.

Value

To become a global leader in electronics supply chain services through establishing long-term partnerships based on integrity and ethical business practices.

Customer First Zero Defect Innovations One Team Business Ethics Social Responsibility

Discussion Questions
What are the HR challenges facing Computime? What information do we need to identify the HRM challenges of Computime? How can Computime use HRM to stay competitive and sustain its rapid growth?

An HRM Framework for analyzing HRM challenges of a company

Business Business Strategies Strategies
Fit Consistency

Consistency Fit

Environment Environment
Consistency

HR Strategies And choices
Fit Consistency Fit

Improved Improved Firm Firm Performance Performance

Organizational Organizational Characteristics Characteristics

Organizational Organizational Capabilities Capabilities

Influence of Business Strategies on HRM
Business Strategy Overall cost leadership Common Organizational Characteristics
• Sustained capital investment • Tight cost control • Low-cost distribution system • Structured organization and responsibilities • Product engineering • Strong capability in basic research • Reputation for quality or technological leadership • Combination of business strategies above.

HR Strategies
• Explicit job descriptions • Detailed work planning • Emphasis on technical qualifications and skills • Emphasis on job-specific training • Emphasis on job-based pay Broad job classes Loose work planning External recruitment Individual-based pay performance appraisal as development tool • Combination of HR strategies above. • • • • •

Differentiation

Focus

The Importance of Organizational Characteristics on HRM

Overall management philosophy Structure Culture

Influence of Environment on HRM
Environmental Dimension Degree of Uncertainty Low • Detailed work planning • Job-specific training • Fixed pay • High dependence on superior • Control emphasis • Efficient production • Job-specific training • Fixed pay High • Loose work planning • Generic training • Variable pay • Multiple inputs for appraisals • Flexibility • Innovation • Generic training • Variable pay

Volatility

Influence Environment on HRM (cont.)
Environmental Low Dimension Magnitude of Change • Explicit job descriptions • Formal hiring and socialization of new employees • “make” skills • Uniform appraisal procedures • Control emphasis • Internal recruitment • Centralized pay decisions • High dependence on superior High • Broad job classes • Informal hiring and socialization of new employees • “buy” skills • Customized appraisals • Flexibility • External recruitment • Decentralized pay decisions • Multiple inputs for appraisals

Complexity

Importance of Organizational Capabilities on HRM

Leadership – at all levels Technology – process and product Management Systems – information and control Quality – reliability and timeliness Distinctive competences?

Human Resource Strategies and Choices
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Determining HR needs– HR planning and job analysis (chapter 2) Importing HR – recruiting and selection (chapter 5) Preparing HR – socialization and training (chapter 8) Compensating HR – setting compensation (chapter 10) Evaluating HR – appraising and managing performance (chapter 7, 14) Incentives HR – rewarding performance (chapter 11) Appreciating HR differences – managing diversity (chapter 4) Developing HR – career development (chapter 9) Protecting HR – designing and administering benefits (12) Positive HR relations – developing employee relations (chapter 13) HR in global companies – international HRM (chapter 17) Exporting HR – separation, downsizing and outplacement (chapter 6)

Questions to consider
1. 2. 3. How much responsibility does an organization have to shield its employees from the effects of rapid changes in the environment? Does an employer have an ethical responsibility to train employees who lack basic literary and numerical skills? Why yes or why no? In today’s increasing chaotic business and economic environment, does an employer have a responsibility to help employees prepare for these changes that may affect their jobs and careers? All civil servants in HK will face a pay reduction of 1 to 5% this October. Is this fair to the employees? Why yes or why no? Some European countries have laws barring organizations form using computer technology that invades employee privacy. Do you believe that similar laws should be developed in Hong Kong? Why yes or no?

4. 5.

HRM and the Bottom Line
Research has shown consistently a clear link between progressive HR practices (e.g., High involvement HR systems) and Sales Productivity Retention

An Exceptional Company: Southwest Airline
31 years old Post 9/11, SWA had no layoff, posted profits and did not reduce flights What account for the success of SWA? Can or how can SWA sustain its success? Can other companies imitate SWA’s approach to HRM? If not, why not? What can Computime learn from SWA?

Continuum of Resources Sustainability
Level of Resource Sustainability Low (Easy to Imitate) Slow-Cycle Resources • Strongly shielded • Patents, brand name • Gillette: Sensor razor Standard-Cycle Resources • Standardized mass production • Economies of scale Complicated processes • Chrysler: Mini-van Fast-Cycle Resources • Easily duplicated • Idea driven • Sony: Walkman

Source: Suggested by J. R. Wiliams, “How Sustainable Is Your Competitive Advantage?” California Management Review (Spring 1992), p. 33.

Typical Value Chain for a Manufactured Product

Raw Materials

Primary Manufacturing

Fabrication

Product Producer

Distributor

Retailer

Source: Suggested by J. R. Galbraith, “Strategy and Organization Planning,” in The Strategy Process: Concepts, Contexts, Cases, 2nd ed., edited by H. Mintzberg and J. B. Quinn (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 316.

Corporate Value Chain
Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Support Activities Technology Development (R&D, product and process improvement) Procurement (purchasing of raw materials, machines, supplies) Profit Margin
Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.

Inbound Logistics (raw materials handling and warehousing)

Operations (machining, assembling, testing)

Outbound Logistics (warehousing and distribution of finished product)

Marketing and Sales (advertising, promotion, pricing, channel relations)

Service (installation, repair, parts)

Primary Activities

Basic Structures of Corporations: Simple and Functional
I. Simple Structure Owner-Manager

Workers

II. Functional Structure Top Management

Manufacturing

Sales

Finance

Personnel

Basic Structures of Corporations: Divisional

III. Divisional Structure* Top Management

Product Division A

Product Division B

Manufacturing

Finance

Manufacturing

Finance

Sales

Personnel

Sales

Personnel

*Conglomerate structure is a variant of the division structure.

Engineering Perspective on Quality

Product Design Life Cycle
Idea Generation Preliminary Design Prototype Development Final Definition Product Design & Evaluation Implementation Prototype Iterations

Operations Perspective on Quality
The Systems View of Operation Management

Planning

Organizing

Inputs

Conversion Process

Outputs

Customers

Feedback
Controlling

Operations Perspective on Quality
An Operations Management Competence Model The Sand Cone Model Cost Efficiency Speed

Dependability

Quality

Strategic Management Perspective on Quality
A Generic Strategic Planning Process
Firm Mission and Goals External Analysis Strategic Options Business Level Strategy Corporate Level Strategy Operational Subplans Organizational Design Conflict Politics and Change Strategic Alignment Between Structure and Goals Org. Reward Systems Internal Analysis

Marketing Perspective on Quality
A Marketing System

Organization
Offering Offering Offering Payment

Intermediary
Payment

Payment

Customer

Financial Perspective on Quality The Deming Value Chain
Cost decrease because of less rework, fewer mistakes, fewer delays, snags; better use of machine-time and materials

Improve Quality

Productivity Improves

Capture the Market

Stay in Business

Provide Jobs and More Jobs

Financial Perspective on Quality
Basic Economic Quality Level Model
Cost
Total Quality Costs = Sum of Losses and Gains

Minimum Cost Losses due to poor quality Optimum Quality Level

Costs of Improving Quality

Quality

The Three Spheres of Quality

Quality Management

Quality Assurance

Quality Control