PHRi Mod 1 PDF

PHRi MODULE 1
HR ADMINISTRATION
Professional in Human Resources – International (PHRi)
2016 Edition
© 2016 International Human Resource Certification Institute

Professional in Human Resources – International (PHRi) Workbook
Module One: HR Administration
2016 Edition
Copyright © 2016 by International Human Resource Certification Institute
All rights reserved. No part of this book shall be reproduced, stored in a retrieval
system, or transmitted by any means – electronic, mechanical, photocopying,
recording, or otherwise – without written permission from the International Human
Resource Certification Institute (IHRCI). No patent liability is assumed with respect
to the use of the information contained herein. Although every precaution has been
taken in the preparation of this book, the publisher and author assume no
responsibility for errors or omissions. Neither is any liability assumed for damages
resulting from the use of the information contained herein.
International Human Resource Certification Institute (IHRCI)
Unit 4, 7F, Bright Way Tower, No. 33 Mong Kok Road.
Kowloon, Hong Kong
www.ihrci.org
Introduction
As an Instructor of the PHRi certification workbook serials, you have access to the
www.ihrci.org learning system. The system contains Glossary that provides a search box and a
description of the key terms in HR. Also, the system consists of over 900 practice exam
questions and answers with explanations in our database including pre-test, review-test, and
post-test:
Pre-test: It contains the same percentage of questions from each content area. Participants can
take a pre-test of that module to access their conceptual understanding of that specific area of
the PHRi Body of Knowledge. When the pre-test is completed, an overall correct percentage
is provided along with the number and percentage of questions answered correctly. The
answers with explanations to individual questions are also provided. Our system allows users
to save the results of the pre-test so that they can improve upon that later.
Review-test: Every review test contains questions with explanations which help to understand
the concepts of that particular knowledge area for each section of the study workbook. Once
you successfully finish reviewing for one section text in the workbook; you naturally get
access to the next section. Every new section helps construct on the earlier concepts learnt in
the previous knowledge areas. Please do step-wise study for all the knowledge areas.
Post-test: Once you complete with all the knowledge areas, have a post-test through the full
length simulated practice tests under the same testing conditions as the actual exams. With
170 questions covered during the 3.25 hours test. These tests are designed to help you get the
feel of the final PHRi Exam, with similar format and question types. Practice till you are near
to 80% correct answers in the post-test. This helped you in understanding areas where you
have improved since the last test as well as list down topics for which you needed more
revision.
Access to the learning system is valid for twelve (12) months from the date of purchase to
cover two test windows. Each practice for the pre-test, review-test, and post-test may be taken
as many times as you would like within the 12 months. Access to these practice exams is for
your individual use; your account is not to be shared with others. Your use of the online
practice exams signifies your acknowledgment of an agreement to these terms.
This workbook is not a textbook. These materials include workbooks and practice exams are
intended for use as an aid to preparation for the PHRi Certification Exam conducted by the
HR Certification Institute. By using all of the preparation materials, you will be well-versed in
the six key functional areas that make up the HR Certification Institute PHRi body of
knowledge. Studying these materials does not guarantee, however, that you will pass the
exam. These workbooks are not to be considered legal or professional advice.
Module 1: HR Administration
Acknowledgements .................................................................................................................... ix
Welcome to the HRBP/PHRi™ Learning System........................................................................x
Getting Started ......................................................................................................................... x
HRBP/PHRi Learning System Structure ............................................................................... xi
Learning System Development ............................................................................................ xiv
Information about Certification ............................................................................................. xv
HR Certification Institute HRBP/PHRi™ Knowledge Base................................................. xvi
Section 1.1: Strategic HR Management and Business Trends...................................................2

Introduction ..................................................................................................................................4
The Evolving Role of the Human Resource Professional ............................................................5
A Historical Perspective of Human Resources........................................................................ 5
HR Today: An Expanded Role ................................................................................................ 6
Administrative ......................................................................................................................... 8
New Competencies for the HR Profession ............................................................................ 10
Time Management and the Organization ............................................................................ 10
Strategic HR Management .........................................................................................................17
Stakeholders ........................................................................................................................... 17
Strategic Planning Process ..................................................................................................... 18
Strategy Formulation ............................................................................................................. 21
Strategy Development ........................................................................................................... 22
Strategy Implementation ........................................................................................................ 37
Strategy Evaluation ................................................................................................................ 38
Financial Measures ................................................................................................................ 40
Nonfinancial Measures .......................................................................................................... 41
The Balanced Scorecard ........................................................................................................ 42
Organizational Structure ............................................................................................................45
Functional Structure .............................................................................................................. 46
Product Structure ................................................................................................................... 46
Geographic Structure ............................................................................................................. 47
Front-Back Structure ............................................................................................................. 48
Matrix Structure..................................................................................................................... 48
HR Trends ..................................................................................................................................51
Globalization ......................................................................................................................... 52
Staffing .................................................................................................................................. 53
Compensation and Benefits ................................................................................................... 56
Human Resource Measurement and Metrics ......................................................................... 59
Employee Engagement .......................................................................................................... 60
Training and Development .................................................................................................... 60
Keeping Current on Business Trends .........................................................................................66
Technology for Today‘s HR Professional ..................................................................................68
Monitoring the Technological Front...................................................................................... 68
Human Resource Information Systems ................................................................................. 72
Knowledge Management Systems......................................................................................... 76
Practice Questions ......................................................................................................................79
Section 1.2: Gathering, Measuring and Reporting HR Data ...................................................84

Introduction ................................................................................................................................85
Understanding Research Terms and Techniques .......................................................................86
Inductive and Deductive Reasoning ...................................................................................... 86
Primary and Secondary Research .......................................................................................... 88
Experimental Research Process ............................................................................................. 89
Quantitative and Qualitative Data Analyses .......................................................................... 91
Reliability and Validity ....................................................................................................... 105
Human Resource Management and Evaluation Metrics ..........................................................107
Initial Considerations ........................................................................................................... 107
Frequently Used HR Metrics ............................................................................................... 108
Budgeted Headcount ................................................................................................................110
Strengths and Weaknesses of the Headcount Method ......................................................... 111
Evaluating HR‘s Strategic Contributions .................................................................................111
Financial Measures .............................................................................................................. 112
Performance Measures ........................................................................................................ 117
Trend Analysis ..................................................................................................................... 120
Reporting Methods ...................................................................................................................122
Practice Questions ....................................................................................................................124
Section 1.3: Workforce Planning and Employment Strategies .............................................128

Introduction ..............................................................................................................................129
Workforce Planning .................................................................................................................129
Benefits of Workforce Planning .......................................................................................... 131
Role of HR in Workforce Planning ..................................................................................... 131
Four-Step Process for Workforce Planning ......................................................................... 131
Job Analysis .............................................................................................................................134
Job Analysis Benefits .......................................................................................................... 136
Writing Job Descriptions and Specifications....................................................................... 136
Recruitment and Selection .......................................................................................................142
Employment Procedures ..........................................................................................................142
Staffing Options to Consider ............................................................................................... 143
Employment Contracts, Records and Documentation ......................................................... 147
Section 1.4: Change Management and Business Process Improvement for

HR Professionals ........................................................................................................................158
Introduction ..............................................................................................................................159
Change Management ................................................................................................................159
Managing Change ................................................................................................................ 159
Change Process Theory ....................................................................................................... 160
Managing Change in Organizations .................................................................................... 161
HR‘s Key Role in Managing Change .................................................................................. 164
Change Drivers .................................................................................................................... 165
Bibliography .............................................................................................................................236
Index .........................................................................................................................................241
Project Management .................................................................................................................169
Common Project Characteristics ......................................................................................... 170
Common Project Phases and Roles ..................................................................................... 171
Project Planning Tools......................................................................................................... 172
Project Success .................................................................................................................... 174
Quality Improvement Methods and Analysis ...........................................................................175
Quality Standards ................................................................................................................ 175
Quality Improvement Theories and Methods ...................................................................... 176
Data Gathering and Analysis Methods ................................................................................ 180
Benchmarking ...................................................................................................................... 184
Section 1.5: Organizational Policies, Procedures and Regulations .......................................194

Introduction ..............................................................................................................................195
The Influence of Law on the Organization .......................................................................... 195
Jurisdiction........................................................................................................................... 199
Legal Areas Monitored by HR .................................................................................................199
Laws of Employment........................................................................................................... 201
Compensation and Benefit Laws ......................................................................................... 202
Occupational Health and Safety .......................................................................................... 202
Anti-Discrimination, Harassment and Fair Work Laws ...................................................... 203
Exploring the Legal and Regulatory Issues for Your Organization .................................... 203
Considerations Involving Legal and Regulatory Environments.......................................... 204
HR Ethics and Professional Standards .....................................................................................211
HR‘s Role in Promoting Organizational Ethics .................................................................. 211
Corporate Social Responsibility (CSR) ............................................................................... 218
Policies, Procedures and Work Rules ......................................................................................225
HR Responsibilities for Workplace Policies, Procedures and Work Rules ........................ 225
Confidentiality and Privacy Regulations ..................................................................................228
Privacy Protection................................................................................................................ 228
Developing Employee Privacy Programs ............................................................................ 230
Acknowledgements
SHRM acknowledges its volunteer leaders and project team members for their valuable
contributions to the SHRM HRBP/PHRi Learning System:
Lead Subject Matter Expert

Diane M. Dowlin, CEBS, CCP, SPHR, GPHR International Human Resources, Senior
Manager, FIS Jacksonville, Florida
Subject Matter Experts
Mohamed Boraei
HRIS & Projects Manager, Qatar Foundation Timo Michel
Doha, Qatar Human Resource Business Partner, OBI
Group Holding GmbH
Brad Boyson, MS HRM, International/Emaar Wermelskirchen, Germany
Dubai, United Arab Emirates
Rachel Park
Cigdem (Cheedam) Ozdemir Evren Program Manager, Global Talent
HR Director, FNSS Defense Systems,Turkey Acquisition, Mastercard Worldwide
Singapore, Singapore
Arturo Gaitán Nicholls
Human Resource Analyst,Colombia Patchara Popaitoon
Researcher/Teacher/Lecturer, School of
Nancy Kaysarly, PHR Management University of Bath
OED Advisor, Cairo, Egypt Claverton Down, Bath, United Kingdom
Sameer Khanna, GPHR Aparna Rajesh, GPHR

Head of Human Resources, Jones Lang India HR Projects & Resourcing Specialist,
New Delhi, India Lafarge Emirates Cement
Dubai, United Arab Emirates
Howard A. Wallack, GPHR

Director, International Programs, Society for
Human Resource Management (SHRM)
Alexandria, Virginia
Program Development Team
Brian Dickson Dave Lord
Chief, Organizational Programs & Strategic Instructional Designer
Partnerships Society for Human Resource Management
Society for Human Resource Management (SHRM)
(SHRM) Alexandria, Virginia
Tiffany Pryor
Matthew Konetschni Manager, Curriculum Development
Director, Development and Training Society for Human Resource Management
Society for Human Resource Management (SHRM)
(SHRM) Alexandria, Virginia
Cornelia Springer, CAE
Instructional Design Consultant
ePath Learning, Inc. Real Time Process Solutions, LLC
New London, Connecticut Lorton, Virginia
Welcome to the HRBP/ PHRi™

Learning System
Welcome to the Human Resource Business Professional (HRBP/ PHRi)™
Learning System! This learning system represents a significant investment in
your career. Whether you are using these materials to prepare for the HR
Certification Institute‘s HRBP/PHRi certification exam or to advance your
professional development, you will find that it is comprehensive and easy to use.
The HRBP/PHRi certification exam was developed by the HR Certification

Institute to meet the needs of human resource professionals throughout the world
while adopting a universal perspective with respect to the human resource
discipline. Both these materials and the certification exam address human
resource management principles that transcend geographical boundaries.
The HRBP/PHRi Learning System is intended to cover the Knowledge Base tested by the HR
Certification Institute certification examination. The system‘s contents may not compare exactly
to the exam and some content will be tested in the exam that is not included within the learning
system. SHRM makes no claim that the use of this material guarantees passage of the HR
Certification Institute certification examination.
Getting Started
 You have already purchased and obtained this module through the Online
Learning Center. Note that the complete HRBP/PHRi Learning System
is composed of six modules.
 Be sure to familiarize yourself with the Online Learning Center
(https://www.epathcampus.com/SHRM/onlinelearningcenter/login/), where
you can find all modules purchased to date, as well as additional learning
aids, practice tests, e-flashcards and case studies. If you have not already
x
done so, take the Online Learning Center Orientation by clicking on the
corresponding link.
 First, go to the Practice Tests on the Online Learning Center and take the
Test Your Knowledge – Readiness Test. This test will help you
determine how to focus your study and preparation.
 Next, carefully read and study this module, Module 1: HR
Administration. Return to the Online Learning Center as directed within
the module.
 When finished with this module, take the Module 1 Practice Test on the
Online Learning Center, and use the flashcards and case studies for
additional practice.
 When ready, take the HRBP/PHRi Certification Practice Test on the
Online Learning Center.
 Purchase and study additional SHRM HRBP/PHRi Learning System
modules, as needed.
The learning system offers many features that allow you to learn in the way that
you feel most comfortable.
HRBP/PHRi/PHRi Learning System Structure

This SHRM HRBP/PHRi Learning System is not a textbook; it is a learning
process. By using all the available materials and resources, you will be well versed
in the four domains that compose the HR Certification Institute‘s Knowledge
Base.
The learning system consists of a set of Modules that are based on the six
domains within the HR Certification Institute‘s HRBP/PHRi Knowledge Base.
In the following table, the percentages represent the proportion of HRBP/PHRi
certification test questions that are based on the domains.
xi
HRBP/PHRi Learning System HR Certification Institute’s Knowledge

Modules Base Domains
Module 1: HR Administration HR Administration (22%)
Module 2: Recruitment and Selection Recruitment and Selection (22%)
Module 3: Employee Relations and Employee Relations and Communication

Communication (20%)
Module 4: Compensation and Benefits Compensation and Benefits (14%)
Module 5: Training and Development Training and Development (15%)
Module 6: Health, Safety and Security Health, Safety and Security (7%)
Learning System Modules
Each section in the HRBP/PHRi Learning System modules begins by stating

the behaviors and skills and knowledge from the Knowledge Base that are
addressed in that section.
In addition to the content, each module contains a variety of helpful tools,

including the following:
 Practice questions throughout to help you to check your understanding of
the content as you progress
 A bibliography that provides a list of print and Internet resources related to
the content
 An index that quickly directs you to essential topics
 Terms defined in the Glossary that display as blue text the first time the
term is used in a section
xii
 Icons that call your attention to specific content; these icons appear as
follows:
Indicates important content to which you should pay special attention
Links to a website or suggests an additional reading source for a topic
Directs you to other portions of the HRBP/PHRi Learning System, such

as other modules and sections
Directs you to the Online Learning Center
Indicates practice questions to check your understanding of the content as

you progress through a module
Online Learning Center
As a purchaser of a HRBP/PHRi Learning System module, you have access to

the Online Learning Center at:
https://www.epathcampus.com/SHRM/onlinelearningcenter/login/.
This website provides a variety of resources:

 Supplementary materials
 Full HRBP/PHRi knowledge base
 Case studies
 Online and printable glossary
 E-flashcards
xiii
 Practice tests
o Test your knowledge – readiness test
o Practice test for each module (with individual item feedback)
o HRBP/PHRi certification practice test
Be sure that you use all the components of the HRBP/PHRi Learning
System. Together the components help you learn and retain key content and
prepare for the certification exam.
Make use of the Online Learning Center at:

https://www.epathcampus.com/SHRM/onlinelearningcenter/login/
Learning System Development

The HRBP/PHRi Learning System materials were developed by the Society
for Human Resource Management (SHRM) using the HR Certification Institute‘s
Knowledge Base as a guide. Other than providing the Knowledge Base, the HR
Certification Institute had no role in the development of the learning system.
SHRM assembled a development team to create this learning system. The

development team included the following members:
 SHRM staff
 Subject matter experts (SMEs) from around the world
 An instructional development firm that includes content and software
developers
 Editing and word-processing specialists
Each member of the team brought a special perspective and talent to the
development effort.
Revisions to the materials are regularly scheduled to ensure that the learning
system materials are updated as the HR profession changes.
xiv
Information about Certification

Many of you have already made the decision to take the HRBP/PHRi certification
exam. Others may be considering whether certification is valuable at this point in
their career. There are many reasons to consider certification, including the
following:
 Professional certification establishes credibility. Earning the HRBP/PHRi
credential shows that a person has mastered the HR Knowledge Base and
has remained current on HR developments through the recertification
process.
 Certification recognizes professional achievement. It is a visible reminder
to coworkers and senior management of the holder‘s expertise.
 Certification elevates the status of the HR profession. As the number of
certified HR professionals grows, so does the status and prestige of the
certification.
 Certification allows you to make a greater contribution to your
organization‘s success. The knowledge and visibility you gain provide you
with an opportunity to make a difference in your organization.
From a practical standpoint, there are other individual advantages:

 Certification provides a sense of personal satisfaction from undertaking and
succeeding in a difficult endeavor.
 A highly valued certification gives you a distinct advantage in the job
market. Similarly, when you are hiring, certification gives you an extra
measure of confidence in a candidate.
 Certification moves with you as you change organizations and careers.
xv
HR Certification Institute HRBP/PHRi/PHRi Knowledge Base
At the foundation of the learning system materials and the HR Certification

Institute exam is a Knowledge Base. This Knowledge Base represents the HR
Certification Institute‘s most recent study of the HR profession expressed as
behaviors, skills and knowledge required to fulfill human resource
management responsibilities that are universal and that transcend global
boundaries.
For your convenience, the Knowledge Base for Module 1: HR

Administration is provided on the following pages. The full Knowledge Base
is available in the Online Learning Center
(https://www.epathcampus.com/SHRM/onlinelearningcenter/login/) and is
also available at http://www.hrci.org.
Module 1 Knowledge Base
Below are lists of the behaviors and skills and knowledge required for mastery of
content related to Module 1: HR Administration. The percentage after the
heading represents the percentage of questions on the HRBP/PHRi exam based on
the Knowledge Base domain defined by the HR Certification Institute on this
module.
Module 1: HR Administration (22%)

Purpose Statement for HR Administration:
HR professionals in the area of HR Administration should possess a combination

of behaviors and skills/knowledge that include monitoring activities for
opportunities to make improvements and using metrics to measure success,
providing and maintaining information related to the HR function. This
information may take the form of questions from employees, documentation of
employee information in paper forms or in a Human Resource Information
System.
xvi
Important behaviors for HR administration:
1. Use HR metrics and prepare reports to analyze HR issues (for example, the number of
employees hired and those who left, employee turnover, the cost per employee and budgets)
2. Format and maintain organization charts
3. Maintain, file and process HR forms (for example, notices, announcements, new hire forms
and salary forms)
4. Make sure the organization follows legal and industry regulations
5. Maintain human resource information systems (HRIS) data and employee files (for example,
make sure data is updated and correct)
6. Stay updated on new business trends
7. Answer or refer questions from employees as the first level of support
8. Work with external providers of HR services (for example, external recruiters, training
providers, benefit providers)
9. Monitor projects and suggest improvements (for example, ways to recruit better applicants;
resources for internal and external training; ways to improve insurance, benefits, or
compensation plans)
10. Assist managers in updating standard job descriptions in order to match any changes in job
requirements
Important knowledge and skills for HR administration:
01. Skills for planning and organizing (time management techniques)
02. Change management concepts including terms and factors, resistance to change and
communication techniques (but not including the implementation process)
03. Documentation requirements for employees and their employment
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04. Management of HR documents (for example, managing files, scheduling for records
retention)
05. Communication skills, both verbal and written
06. Human resources information systems (HRIS) for managing employee information
07. Employment best practices (for example, the best ways to recruit, select and retain
employees)
08. Organizational policies and procedures
09. HR ethics and professional standards
10. Confidentiality and privacy rules that apply to employee records, company data and
individual data
11. Tools and methods to analyze business data (for example, spreadsheets and databases)
12. Ways to report information (for example, presentation software, such as Power Point; and
word-processing software, such as Microsoft Word)
13. Different ways to classify employees(for example, workers who are full time, part time,
temporary, or those who receive payment by the day)
14. The number of employees in the budget, and the salary and benefit costs for these employees
xviii
1.1: Strategic HR
Management and Business
Trends
This section covers the following information from the

Knowledge Base:
Behaviors: 02. Format and maintain organization charts
05. Maintain human resource information systems (HRIS) data and

employee files (for example, make sure data is updated and
correct)
06. Stay updated on new business trends
08. Work with external providers of HR services (for example,

external recruiters, training providers, benefit providers)
Skills & Knowledge: 01. Skills for planning and organizing (time management techniques)
05. Communication skills, both oral and written
06. Human resource information systems (HRIS) for managing

employee information
Source: HR Certification Institute

Section 1.1: Strategic HR Management and Business Trends
Introduction ....................................................................................................................................4
The Evolving Role of the Human Resource Professional ...........................................................5

A Historical Perspective of Human Resources ............................................................................5
HR Today: An Expanded Role.....................................................................................................6
Administrative ..............................................................................................................................8
New Competencies for the HR Profession .................................................................................10
Time Management and the Organization ...................................................................................10
Strategic HR Management ..........................................................................................................17

Stakeholders ...............................................................................................................................17
Strategic Planning Process .........................................................................................................18
Strategy Formulation ..................................................................................................................21
Strategy Development ................................................................................................................22
Strategy Implementation ............................................................................................................37
Strategy Evaluation ....................................................................................................................38
Financial Measures .....................................................................................................................40
Nonfinancial Measures ...............................................................................................................41
The Balanced Scorecard .............................................................................................................42
Organizational Structure ............................................................................................................45

Functional Structure ...................................................................................................................46
Product Structure ........................................................................................................................46
Geographic Structure ..................................................................................................................47
Front-Back Structure ..................................................................................................................48
Matrix Structure .........................................................................................................................48
HR Trends ....................................................................................................................................51
Globalization ..............................................................................................................................52
Staffing .......................................................................................................................................53
Compensation and Benefits ........................................................................................................56
Human Resource Measurement and Metrics..............................................................................59
Employee Engagement ...............................................................................................................60
Training and Development .........................................................................................................60
Keeping Current on Business Trends ........................................................................................66
Technology for Today’s HR Professional ..................................................................................68

Monitoring the Technological Front ..........................................................................................68
Human Resource Information Systems ......................................................................................72
Knowledge Management Systems .............................................................................................76
Practice Questions ........................................................................................................................79

Module 1: HR Administration Section 1.1: Strategic HR Management and
Business Trends
Introduction
Human resource management (HRM) is an organization‘s design of formal
systems that ensures the effective and efficient use of human talent to accomplish
organizational goals. HRM is an essential function for organizations to remain
competitive and to fulfill their organizational missions.
Although the focus of human resources (HR) is the development of human

capital, the significance of HR‘s contributions is now more apparent. HR‘s
traditional function—to provide advice, service and control to other areas of the
organization—has expanded and developed a more global, strategic character.
This section examines the following topics:

 The evolution of the human resource profession into an essential function
of organizations worldwide
 Major success factors for today‘s HR professional
 Organizational structures
 Current HR and technology trends and how they impact HR roles and
responsibilities
4
Business Trends
The Evolving Role of the Human

Resource Professional
The role of the HR professional is evolving in ways that are significant but not yet
completely defined. How can HR professionals adapt as their traditional role
changes and expands? According to HRM experts, the following transitions are
necessary (Bates 2002):
 Move beyond the basics of HR knowledge and develop a greater
understanding and awareness of business functions and costs.
 Be ready to develop new skills and take on new responsibilities as previous
HR administrative tasks are outsourced and automated.
Figure 1-1. Facing the Future of HR
A Historical Perspective of Human Resources

In fulfilling their organizational responsibilities, HR staff has typically provided
three types of support: service, control and advice. The relative importance of
these three support types varies based on the organization.
5
Business Trends
Service
HR is a service-oriented function with a diverse customer base. This customer

base includes upper management, line management, employees, peers,
departments, legal and regulatory agencies, vendors, applicants, retirees and
families of employees. An example of HR‘s service role is answering employee
questions concerning benefit packages.
Control
Control involves reviewing and measuring employee performances to monitor

how well they meet the goals and needs of the organization. Controls are used to
evaluate supervisory and employee performance, to correct deficiencies and to
motivate employees. An example of HR‘s control function is designing a new
performance appraisal system.
Advice
HR professionals advise and assist line managers. This process involved gathering
facts, diagnosing problems, providing solutions and offering objective assistance
and guidance on employee-related problems. An example is providing a line
manager with specific policy and procedure steps for dealing with employee
grievances. Rather than managing the situation personally, the HR professional
gives responsibility to the line managers and provides the assistance they need to
increase productivity and work satisfaction.
HR Today: An Expanded Role

Many HR professionals still fulfill the roles of service, control and advice.
However, the scope of those roles in many organizations now has a stronger
strategic focus. HR professionals today often balance the following three major
responsibilities, listed here and shown in Figure 1-2:
 Strategic
 Operational
6
Business Trends
 Administrative
Figure 1-2. HR‘s Current Expanded Role
Strategic
HR‘s strategic role requires a long-term and forward-thinking focus. HR

professionals can help the organization create the right culture and build the right
structure. Strategic HR activities include the following:
 Help the organization prepare for change
 Forecast needs for specialized skills and knowledge that will be required to
achieve strategic goals
 Manage talent
 Restructure the organization
 Develop performance management systems that support strategic
objectives
To fulfill HR‘s strategic role, HR professionals must understand each of the

following elements:
 The organization‘s business and the environment in which it operates
 Notable competition
 Trends and events that could influence the organization‘s success
HR professionals must establish business partnerships with senior management

and with essential figures in other functions within the organization.
7
Business Trends
Operational
The operational role of HR involves both the development and deployment of HR

policies to ensure successful implementation of HR strategy (which was set at the
strategic level). By fulfilling its operational role, HR supports the attainment of
organizational objectives and goals.
The development of HR policies includes activities such as recruiting for current

job openings, resolving employee complaints and communicating with
employees. For example, part of the organization‗s strategy could involve
building a globally based and culturally diverse workforce. HR could use
nontraditional sources for recruitment and could require specific job skills such as
proficiency in other languages. HR professionals could also increase employee
engagement by the following two actions:
 Help employees develop better communication skills and channels.
 Develop and carry out employee involvement strategies.
In the deployment of HR policies, line managers are usually the people who apply
these policies in their local management. Therefore, at the operational level, HR
professionals need to work closely with the line managers to effectively deliver
HR practices to the employee. The HR practices deployed to employees should be
consistent with the organization‘s intended policies; this approach allows
employees to attain sufficient knowledge, skills and abilities to perform their
roles. Perhaps more importantly, effective deployment of HR practices can
strongly motivate employees to support the goals of the organization.
Administrative
Administrative responsibilities are treated as less important to allow HR
professionals to focus on the expanding roles that contribute more directly to the
organization‘s financial goals.
HR‘s administrative role focuses on dealing with compliance issues and record
keeping. Human resource information systems (HRIS) can help with this role.
8
Business Trends
HRIS applications manage HR data, such as employee records, and create

compliance reports. These responsibilities are made easier by technology. For
example, many employees keep their own information up-to-date by using self-
service computer stations. Human resource information systems are discussed in
more detail later in this section.
Some administrative functions are not considered core HR functions and are
outsourced to third-party providers, which are used in place of doing the work
internally. Examples of outsourced functions include the following:
 Administration. Outsourced functions include benefits plan
administration, payroll administration and background checks.
 Recruiting. Vendors such as staffing agencies are used to source, screen
and recommend potential employees for placement.
 Health care. Medical examinations are outsourced to third-party providers
rather than retaining professional medical staff within the organization.
 Training. Third-party providers develop and deliver training programs.
 Compensation. Organizations outsource salary and benefits surveys to
third-party providers.
 Legal. Organizations hire attorneys as outside counsel rather than retaining
attorneys on staff.
Depending on the business process used in the organization, HR staff may

complete some or all of the following tasks when working with third-party
providers:
 Prepare requests for proposals (RFPs).
 Solicit bids to provide services.
 Review the responses.
 Select the providers.
 Manage the relationship.
 Ensure performance by establishing metrics.
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New Competencies for the HR Profession

HR‘s expanded role has led to the need for new competencies for the HR
profession. The 2007 Human Resource Competency Study (HRCS) reported six
core competencies that are demonstrated by successful HR professionals (Society
for Human Resource Management, Staffing the Human Resource Function 2011):
 Credible activist. An HR professional who offers a point of view and
challenges assumptions.
 Cultural steward. An HR professional who helps shape an organization‘s
culture.
 Talent manager/organizational designer. An HR professional who
contributes to both talent management and organizational design.
 Strategy architect. An HR professional who recognizes business trends
and makes changes happen.
 Business ally. An HR professional who understands and contributes to the
success of the organization.
 Operational executor. An HR professional who manages people and
implements the organization‘s policies.
In addition to such competencies, HR professionals must have knowledge of other

business processes in order to manage the organization‘s talent. For example,
some organizations see strategic talent planning as a business process. Therefore,
the HR professional must possess business and financial skills as well as process
management skills (Society for Human Resource Management, More Than HR
Competencies Needed to Manage Talent 2009).
Time Management and the Organization

The evolving role of the HR professional includes knowledge of time
management techniques. Successful time management is based on consistently
applying a few techniques to how we approach work. Remember, you can control
your own time. Some of the techniques are listed below:
 Have a good planning system and use it.
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 Take on realistic goals and schedule accurately.

 Do not over-commit.
 Define priorities to decide between urgent and important tasks.
 Build in some flexibility to deal with the unexpected.
 Do not procrastinate. Manage your time every day.
 Define and use periods of quality time in your schedule.
 Learn to say No in a professional manner.
 Stay away from perfectionism and aim for excellence.
 Build in time for personal development.
Time Management
Figure 1-3. Quote by Kenneth Patton
By effectively managing our time, we can avoid a stressed and unproductive

workplace. Just as we spend so much effort on managing money, we need to
spend equivalent effort on managing time (Society for Human Resource
Management 2008). When the employees in an organization manage their time
appropriately, the results can be significant.
In Making It All Work, David Allen describes how to balance time and
accomplish what you need to do. The keys are control and perspective. The
dynamics of these two keys are intertwined, but achieving each one involves
different approaches. According to Allen, there are five stages to achieving
control and six Horizons of Focus that lead to the gaining of perspective.
Integrating all of them in a balanced way creates the most positive experience.
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As shown in Figure 1-4, the five stages to attaining control are capturing,
clarifying, organizing, reflecting and engaging. The six Horizons of Focus to gain
perspective include purpose/principles, vision, goals, areas of focus, projects and
actions.
Figure 1-4. Achieving Control and Gaining Perspective (Allen 2008)
Allen‘s matrix of self-management has four quadrants to help you assess your
situation and describe your actions. The matrix in Figure 1-5 displays varying
combinations of low to high control and low to high perspective.
Figure 1-5. Matrix of Self-Management (Allen 2008)
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By necessity, different tools, approaches and techniques are required at different

times and different circumstances. You can balance your time effectively by
following a set of ordered procedures and by applying the right set of behaviors
and thinking to the situation (Allen 2008).
Ways to Manage Your Time Effectively
Planning is the most important activity in managing your time effectively. It is

best to plan at the end of the preceding day or at the beginning of the new day.
Here are other ways you can manage your time effectively:
 Manage and control interruptions.
 Combine routine tasks and separate routine tasks from your high-priority
tasks.
 Break any large task or project into smaller pieces.
 Work on priority or routine tasks during that time of day that matches your
work habit preferences.
 Handle each piece of paper or document only once if at all possible.
Respond to it, file it or discard it.
 Delegate to others if appropriate and possible.
 Reserve uninterrupted blocks of time for difficult and lengthy projects.
During this time, refrain from meetings, e-mails and phone calls.
 Throughout the day review your objectives for that day and update or
reprioritize.
 Give yourself a break or several breaks during the day. Get up and stretch;
leave your desk for lunch. Getting away even for a few minutes from your
work will help you return alert and refreshed.
 Most importantly, maintain your work/life balance. Put family and other
social activities on your daily and weekly lists. Avoid the habit of ignoring
these constantly for work.
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There are ways in which we all waste time. Some are beyond our control, but
many are within our control. These are the ones we need to work on. Two of the
biggest challenges for managing time are also two that can easily be controlled:
1. Unnecessary and unproductive meetings
2. E-mails
Preventing Unnecessary and Unproductive Meetings
To prevent unproductive meetings, first determine if the meeting is really

necessary. Figure 1-6 outlines when it makes sense to have a meeting and when it
makes sense not to have a meeting.
Reasons to have a meeting Reasons NOT to have a meeting
Attendees can collaborate, You can more effectively accomplish your

review, evaluate, discuss, purpose by telephone, memo, report, e-mail or
problem solve and decide with one-on-one discussion.
each other.
Attendees can present It is premature to meet. The subject is too

significant information. uncertain or too insignificant to justify a meeting.
The meeting allows you to take The group needs a cooling-off period. There may
action. be too much anger or hostility among members.
The group can do something You can consider having one day each week when
together that you can‘t do better no meetings are held.
alone.
Figure 1-6. Reasons to Have or Not to Have a Meeting
Effective Meetings
There is one crucial key to effective meetings: make an agenda, and follow it. The
agenda drives the content and outcomes of the meeting and, where appropriate,
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should reflect the needs of all attendees, so everyone has an interest in the
outcomes. Here are some tips for fostering productive meetings:
 Start on time.
 Always make and follow an agenda. With each agenda item, include the
following:
o The topic stated in question form
o The person responsible for leading the discussion
o The information relative to the issue
o The time allotted for that issue
o The action/reason/purpose of the exchange
*Helpful Tip: Include with the agenda a not-on-agenda list of topics

that are off limits for this meeting. Indicate when these items may be
expected to appear on a future agenda.
 Avoid attending your subordinates' meetings unless specifically invited to
discuss a topic, and limit your time attending to the discussion of that topic.
 Limit presentations to ten minutes.
 Avoid having a meeting lasting over ninety minutes.
Managing E-mail
E-mail can take away two to three hours of productive time at the workplace. To
help manage your time on e-mail, check e-mails only at specified times during the
day, unless you are waiting for an urgent message. When you have planned to
devote a block of time to work on a project, do not interrupt it by checking e-
mails. Here are some other ways to better manage your e-mail:
 Create folders to sort and save appropriate e-mails.
 Touch each e-mail just once, just as for paper documents. Decide whether
to delete, save, respond to later, save for reference or retention or respond
to immediately.
 Keep e-mails short—no more than one to ten sentences. Communicate the
main point in the first or second sentence.
 After two rounds of trying to solve a problem via e-mail, use the phone or
talk in person.
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 If you can‘t respond immediately, let the other party know when you can
respond to avoid repeat messages.
 Remove yourself from as many distribution lists as possible.
 Use filters or rules to eliminate or to assign junk e-mails to a special folder.
 Use ―No response required‖ to end messages and to discourage
unnecessary replies.
 If people are sending you messages or jokes that you do not need and want,
ask them politely to stop.
 Use the subject line for the entire message or use shortcuts to convey a
quick message. Figure 1-7 and Figure 1-8 provide several suggestions and
an example.
Subject Line Shortcut Meaning of the Shortcut
NRN No reply needed
TY Thank you
NRB (date) (time) Need response by date and time
EOM End of message
Figure 1-7. E-mail Subject Line Shortcuts
Figure 1-8. Example of Subject Line Shortcut
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Strategic HR Management
Stakeholders
A stakeholder is a person, group or organization that has a direct or indirect
interest in the organization (for example, owners, investors, employees, suppliers
or the community).
An organization‘s value impacts the organization‘s stakeholders. The stakeholders

perceive that value in distinctive ways. HR professionals should be familiar with
the stakeholder concept as described below.
The stakeholder concept proposes that any organization operates within a

complex environment. This environment affects and is affected by various forces
or stakeholders, who all share in the organization‘s values and activities. The
needs of the different groups can make business objectives more complex.
R. Edward Freeman proposed the stakeholder concept in the mid-1980s as an

alternative to the shareholder perception. The shareholder concept believes that
the goal of a business is to create as much wealth as possible. This wealth is
returned to the shareholders in the business. The managers‘ goals should be to
maximize profit, both in the short term and long term. The stakeholder concept
recognizes the different types of value an organization creates (Freeman, Harrison
and Wicks, Managing for Stakeholders: Survival, Reputation, and Success 2007).
Figure 1-9 illustrates the stakeholder concept.
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Figure 1-9. Stakeholder Concept
Strategic Planning Process

After identifying its stakeholders, the organization can proceed with strategic
planning. Strategic planning is the process of positioning the organization for the
future. The future can be eighteen months, three years, five years or even longer.
The strategic planning process consists of four stages that an organization goes
through to generate its strategic plan. Shown in Figure 1-10, the process is a
cycle: a strategy is developed, implemented and evaluated. Then a new or
modified strategy is formulated based on the evaluation.
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Figure 1-10. Strategic Planning Process
Figure 1-11 shows what happens during each stage of the strategic planning
process.
Planning Stage Description

 Define the company‘s vision, mission and value statements.
Formulation
 Specify the core strategy.
 Establish strategic goals.
 Develop short- and long-term objectives from the strategic
Development
goals.
 Perform a strengths, weaknesses, opportunities and threats
(SWOT) analysis.
 Align internal systems and develop functional supporting
strategies.
 Create specific action plans.
Implementation
 Allocate budgets and resources to support objectives.
 Make plans to communicate to employees.
Figure 1-11. Stages of the Strategic Planning Process (continued to next page)
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Planning Stage Description

 On a regular basis, review external and internal factors for
Evaluation
changes.
 Review progress toward achieving strategic objectives and
measurable outcomes.
 Take corrective action.
Figure 1-11. Stages of the Strategic Planning Process (concluded)
Strategic planning in an organization is complicated by a number of factors,

including the following:
 Difficulty in gathering information in a timely fashion from all regions
within the organization
 Difficulty involving personnel from all regions in planning sessions
 Multiple operating environments, each of which includes diverse
economic, political, legal and cultural forces
 Different levels of risk and tolerance for risk
 Different technology platforms
A crucial step is to involve all the right people in the strategic planning process.
If stakeholders feel they are ignored or uninformed, then implementing the
strategy will be difficult, if not impossible. HR plays a unique organizational
role, which can impact whether people feel connected to or disconnected from
the company‘s overall strategy.
The strategic planning process involves people at different levels.

 Strategic planning team. The strategic planning team is usually a small,
high-level team. This team reviews and revises the organization‘s message
at crucial stages.
 Setting strategic goals, objectives and budgets. The strategy is divided
into goals, objectives and contributing factors. The strategic core team can
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expand to a much larger group of people to reflect a global composition.

The budgets approved by headquarters should reflect the priorities and
activities in the strategy.
 Development of functional strategies. If the organization‘s operations are
geographically dispersed, include a representative sample of HR
professionals from local operations for successful involvement.
 Communicating and motivating employees about the organization’s
strategy. Communicating about strategy requires a systematic process to
ensure that people know where the organization is going and what their
role is. Employees also need to be committed and motivated to help the
organization achieve its goals.
Each of the four steps in the strategic planning process is discussed in greater
detail.
Strategy Formulation
Strategy formulation is the first stage of the strategic planning process. This
stage includes the following actions:
 Define the organization‘s vision, mission and value statements.
 Specify the core strategy.
 Establish strategic goals.
The complete strategic plan comes from the organization‘s mission and strategic
goals. The mission statement expresses the organization‘s essential purpose and
value. Some global organizations choose to develop separate mission statements
for their subsidiaries to reflect the characteristic values and terminology of the
local cultures.
The mission statement defines the course for the organization. The strategic goals
start moving the organization and its people in the intended direction. Strategic
goals are turned into short-term and long-term objectives for each value-adding
activity and must be measurable.
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Figure 1-12. Sample Mission (used with permission)
The organization‘s strategy must be clearly communicated to the entire

organization. David Collis and Michael Rukstad provide an example of a
strategic goals chart (Collis and Rukstad 2008). A clear statement of strategy
should communicate the following to the entire organization:
 The strategy‘s desired endpoints
 The time frame for reaching the endpoints
 The scope or boundaries of the organization‘s activities (for example,
regional, business model or enterprise focus)
 The competitive advantage the organization will leverage to reach its goals
Strategy Development
Strategy development is the second stage of the strategic planning process. This
stage includes the following actions:
 Develop short- and long-term objectives from the strategic goals.
 Perform a SWOT analysis.
 Align internal systems and develop functional supporting strategies.
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This stage must address different organization issues, such as the following:
 Organizational competency refers to how an organization develops and
uses its core business capabilities to differentiate itself. Examples include
research and development, technology, customer relations and distribution.
 Market refers to how an organization positions its products and services.
Two frequently stated market strategies are being a low-cost provider and
creating the most value for customers. Some organizations choose to serve
a broad customer base; other organizations choose to serve a specific niche,
market segment or location. These choices have specific implications for
HR programs.
 Competition refers to how an organization responds to a competitive
threat. Will it compete aggressively or avoid direct conflict? Will it try to
eliminate competitors by acquisition or cooperate through alliance and joint
ventures?
The competitive strategy may be based on extensive analysis, such as that

introduced by Michael Porter in Competitive Strategy (Porter 1980).
Growth and market entry strategy refers to the decision to expand an

organization‘s presence. This strategy requires analyzing the tactical options
available for market entry or growth. Figure 1-13 lists some of the more common
tactics. (In this context, tactics refers to the implementation of strategy.) Many of
these tactics are low risk for market entry, and each tactic has its strengths and
weaknesses. Decisions about which tactic to pursue depend on timing, desired
control, strategic importance, risk management and financial incentives. Human
resources will be deeply involved in preparing and implementing the chosen
tactic. Therefore, HR professionals should be prepared to play a role in early
discussions of these options.
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Market Entry/
Description
Growth Tactics
Strategic alliances Strategic alliances include a number of organizations loosely or

tightly joined for a variety of purposes, including manufacturing,
marketing, distribution or sales. Some alliances involve customers,
partners and competitors.
Joint venture A joint venture is a form of strategic alliance with two or more
organizations developing a product or service together.
Equity partnership Equity partnership involves acquiring partial ownership through a

purchase of shares. This partnership can be general (sharing
proportionally in control, profits and liabilities) or limited (no
managerial authority and liability limited to investment). The
partnership agreement defines issues such as leadership and division
of profits and losses.
Licensing Licensing means that the organization designated by a legal entity in

the host country is granted the rights to produce or sell a product. This
is a low-risk entry strategy that avoids tariffs and quotas imposed on
exports. However, there is little control of the licensee‘s activities and
results.
Franchising Franchising is when a trademark, product or service is licensed for an

initial fee and ongoing royalties. Franchising is similar to licensing as
a low-risk entry strategy. This tactic involves an initial franchise fee
with ongoing royalties.
Figure 1-13. Market Entry and Growth Tactics (continued to next page)
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Market Entry/
Description
Growth Tactics
Contract Contract manufacturing means contracting for the manufacture of

manufacturing components or products as a means of lowering labor costs.
Turnkey operation A turnkey operation or BOT is an organization that includes

(also called BOT, everything needed to start operating in a certain location.
or build, operate
and transfer)
Management With a management contract, an organization is hired to manage and

contract run the daily operations of the business. Decisions about financing
and ownership reside with the owners.
Acquisition Acquisition results in the expansion of the organization‘s employee

base and facilities. Significant cultural, systems and management
challenges can occur during acquisitions. Data privacy can be a
serious issue.
Greenfield A Greenfield operation is the start-up of a new business plant or

operation operation, usually in a new location.
Brownfield A Brownfield operation is the reuse of land that was previously used
operation for industry or manufacturing.
Figure 1-13. Market Entry and Growth Tactics (concluded)
A start-up is a term used to describe an organization that recently began

operating and is in an early phase of development. HR‘s role in supporting the
start-up strategy occurs during the research, planning and implementation
phases.
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Global HR professionals prepare themselves for the start-up process by reviewing

information on the following:
 Country-specific employment-related issues such as employment practices,
recruiting sources, workforce relations, taxation and legally mandated
components of compensation and benefit plans
 Cultural, religious and ethical issues that will affect practices
The website http://www.doingbusiness.org offers country-specific information

related to doing business in other countries and complying with local labor laws.
The International Labour Organization (http://www.ilo.org) is another useful
resource for labor management in different locales.
Figure 1-14 shows some examples of the scope of the HR professional‘s

responsibilities during the following activities:
 Researching locations for start-ups
 Identifying local resources and challenges
 Localizing the global HR strategy as necessary
 Ensuring the fulfillment of local HR functions
Many of these tasks are familiar to the HR professional. However, with a start-up
each task must start at the beginning with no previous experience to build on.
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Researching New Operations
Political/business/social environment Industry/labor environment

 Real decision makers (that is, formal  Major business leaders
versus informal power structures)  Conditions in industry
 Government structures and attitude  Presence of union representation
toward business and use of collective bargaining
 Stability and continuity of policy across
Recruitment and hiring
changes in leadership and administration
 Typical education requirements
Workforce  Sources for recruiting and
 Employee classification system (for reliability of references
example, exempt/nonexempt,  Contracting requirements
hourly/salary, monthly)
 Enforceability of local system
 Use of contracts and restrictions on
hiring (for example, part-time or
temporary employment)
Compensation and benefits HR policies and procedures

 Pay structures, pay review cycle,  Payroll and tax procedures (for
progression example, HR information system
 Mandatory or customary bonus payments and learning management system
 Overtime, night or shift pay implications)
 Customary workweek
 Social restrictions on job
assignments (for example, who can
work certain shifts or jobs)
Figure 1-14. Sample Research Topics for Starting a New Global Business (Herod 2007)
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Environmental Scanning/SWOT Analysis
Environmental scanning can involve an analysis technique known as SWOT

analysis. SWOT is an acronym that stands for strengths, weaknesses,
opportunities and threats. The SWOT analysis is used to discover two things
about an organization:
 Distinctive capabilities that provide a strategic advantage
 Potential problem areas that must be addressed
An environmental scan is a survey of internal and external environments to

identify the following:
 Internal strengths and weaknesses
 External potential opportunities and threats to the proposed strategy
A SWOT matrix is illustrated in Figure 1-15.
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Internal External
Strengths Opportunities
 CEO backing  New markets
 Good communication system in  New partners
place  Improved brand awareness
 Initial excitement and good
motivation
 Strong vendor relationships
 Consistent with strategy
Weaknesses Threats
 No market research  Local rules and regulations
 Organizational resistance to  Environmental impacts

change  New competitors
 Workload is already excessive  Poor economy and
 Not enough resources assigned resistance to new
 Loss of focus investments
Figure 1-15. Sample SWOT Matrix
Strengths and weaknesses refer to the internal environment. Opportunities and

threats come from the external environment. The opportunities represent
favorable circumstances that the organization can leverage to produce a desired
effect. The threats indicate possible danger, harm or menace. Strengths and
opportunities can be leveraged. Weaknesses and threats are problems that must be
solved but can be difficult to control.
Figure 1-16 shows a hypothetical HR SWOT analysis. In this example, a real

estate and property development organization wants to expand its number of
properties, square footage and number of locations.
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Internal External
Strengths Opportunities
 Strong organizational  High growth in some
brand locations
 Good onboarding  Technology and building
program techniques
 High income potential
Weaknesses Threats
 Lack of cross-border  Lack of talent
experience  Individualistic culture
 Difficulty reaching  Financial crisis
diversity goals (for  Working with accounts
example, for women)
 Lack of valuable career
plans
Figure 1-16. A Hypothetical HR SWOT Matrix
HR’s Strategic and Tactical Roles in Internationalization

Mergers and Acquisitions
Mergers and acquisitions (M&A) are a common way for an organization to

develop a presence in a local market. However, there is also a significant risk of
failure. Figure 1-17 lists some of the potential benefits and risks of the M&A
strategy for expansion.
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Potential Benefits Potential Risks

 Acquire local company‘s  Meet administrative (political,
familiarity with local market legal and regulatory) resistance
forces and competitors to M&A
 Acquire known brands and  Incur liabilities of other
market share organization (for example,
 Gain access to new market of acquired rights of workforce,
consumers or customers lawsuits)
 Gain additional resources,  Incur loss of shareholder value
institutional knowledge and  Lose talent and productivity
skills during prolonged integration
period (integration of strategies,
management, workforce,
processes and technology)
Figure 1-17. Potential Benefits and Risks of Mergers and Acquisitions
HR’s due diligence in mergers and acquisitions. Many organizations have

developed their own due diligence checklists. Figure 1-18 lists typical factors HR
should include in its due diligence investigation. The investigation should use
multiple sources and local contacts and experts.
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Due Diligence Topics

Management Community labor environment
 Talent of current managers at top and  Union climate
middle levels  Availability of necessary skills
 Anticipated level of post-M&A
Current HR function
motivation of managers  In-house or outsourced
 Likelihood of retaining top  Future plan
management
HR policies and procedures
 Management pay structure
 Written or unwritten policies and
 Ability to recruit top managers
procedures
Management style  Compatibility with own policies and
 Centralized versus decentralized procedures
 Paternalistic, authoritarian or  Other required policies (for example,
collaborative regulatory, such as affirmative action)
 Distance of management style from
Effect of future business strategy
that of your own organization
 HR activities needed to support
 Probability that managers will be able
business strategy (for example, hiring,
to adapt to new style
closing of operations)
General employee information
Hidden costs of acquisition
 Types of employees (for example,
 Special contract terms with
full time or part time)
management
 Local customs of employment
 Benefit plans and transferability to new
 Retention plans, if applicable
employees
Work environment  Pension plan status (adequacy of
 Employee attitudes funding, distribution, retention of
 Type of worker representation and unvested percentage)
participation  Separation and incentive pay plans
 Rates of absenteeism and disability  Compensation packages
 Safety records  Pending lawsuits and judgments
 Complaints filed with regulatory
agencies
Figure 1-18. HR Due Diligence for M&A (Herod 2007)
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Strategic Alliances and Partnerships
In The Global Challenge: Frameworks for International Human Resource

Management (Evans, Pucik and Björkman 2010), the authors note that HR can
do the following to add value to strategic alliances and partnerships:
 Identify and select partners. HR can identify appropriate competencies
needed in a partner, analyze the impact of the partner‘s organizational and
ethnic cultures, and assess the strength of the partner‘s HR function.
 Negotiate the relationship. HR may help select and train the negotiation
team and contribute its own facilitation skills. HR must also address issues
such as transfer of competencies and ensure that the partner is developing
the appropriate staff and workforce.
 Implement alliances. This may involve contributing to
compensation/reward plans, development programs and transfers that will
improve alliance performance. HR may also help integrate cultures and
enable collaboration.
 Promote learning. Transfer of knowledge may be an important goal in the
alliance. HR can help ensure that opportunities for learning are built into
the arrangement and implement programs designed to stimulate learning.
Given the potential benefits, HR should be involved at an early stage in planning

these strategies and should be included in management teams.
Expanding Resources Across Borders
Offshoring, outsourcing and open sourcing are all ways of expanding resources
and increasing efficiency by using opportunities across borders.
Offshoring. Offshoring is transferring service or manufacturing operations to a

foreign country where there is a supply of skilled and less costly labor. For
example, a financial services company in the United Kingdom could open a
facility in Thailand to perform back-office banking transactions.
Cost savings may not be the only attraction of offshoring. Organizations may also
be attracted to the greater proximity that offshoring provides to growing markets
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or suppliers. There has also been a trend toward offshoring to certain areas
because of a greater availability of talent. India, China and Russia now provide
more than half of the supply of young professionals. In 2003, there were 30%
fewer engineers in low-wage economies than in mid- to high-wage economics,
but by 2008 the gap had narrowed to 18%. As education improves in emerging
and developing economies, the talent gap will continue to close (Farrell 2006).
Some of the factors for choosing one location over another relate to workforce
and talent issues. Therefore, HR‘s early and close involvement is important.
Figure 1-19 highlights main areas for HR research during the due diligence
period.
Due Diligence Topics for Offshoring
Cost and quality Talent pool

 Wage structure relative to  Size of labor force with required
other options skills
 Tax structures  Size of offshore sector and share
 Real estate of exports
 Infrastructure (for example,  Availability of vendors for
telecommunications networks, specific services (for example,
transportation, energy) IT)
Figure 1-19. HR Due Diligence for Offshoring (continued to next page)
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Due Diligence Topics for Offshoring
Sociopolitical environment Risk levels

 Government receptivity,  Political and labor unrest
amount of regulation  Natural disasters
 Ethical environment of  Personal and property security,
political and business intellectual property rights
communities  Economic stability
 Quality of life  Regulatory stability
 Accessibility
Figure 1-19. HR Due Diligence for Offshoring (Farrell 2006) (concluded)
Outsourcing. Outsourcing occurs when a company contracts with a third-party

vendor for the supply of products, services or component parts. Outsourcing can
occur to a domestic firm or across borders. This practice is a common way to take
advantage of global differences—for example, in cheaper labor or access to raw
materials or end users.
Outsourcing is a way of accessing special skills and knowledge that can raise the
quality level of an organization‘s products or services or enhance its ability to
respond quickly to customer demands. However, organizations generally do not
outsource their core competencies, the essential activities that create the
organization‘s characteristic value.
The advantage of outsourcing lies in a company‘s ability to acquire value without

a long-term investment in assets. Figure 1-20 lists reasons to outsource.
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Reasons to Outsource
 Reducing and controlling costs  Accelerating process
 Improving focus on core improvements
strategic competencies by  Managing difficult situations
transferring important but non- and deadlines
core competencies  Sharing financial risk
 Gaining access to world-class  Satisfying government reporting
talent requirements
 Freeing internal resources  Accessing technology
 Adding resources that do not  Obtaining critical mass
exist internally
Figure 1-20. Reasons to Outsource
In a cosourcing arrangement, an organization outsources only one part of a

function—for example, by retaining the more strategic aspects of compensation
but outsourcing the data-intensive activities.
The term insourcing has a variety of meanings, including the following:

 Contracting a function out to another entity that manages and performs the
function on-site
 Transferring a previously outsourced function back in-house
 Hiring of local workers by foreign organizations operating subsidiaries
locally
In International Human Resource Management: Policy and Practice for

Multinational Enterprises (Briscoe, Schuler and Claus 2008), the authors
describe the internal challenges of outsourcing:
 Internal divisions of the organization must agree to use the service or
product provider. Management may have to enforce the strategic decision
to outsource.
 The organization must define clear processes and parameters and establish
efficient communication channels with the provider.
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 If outsourcing results in workforce reductions, the organization must

manage the economic, legal, social and organizational costs.
 Externally, local instabilities and obstacles that prevent the contractor from
performing as promised can also jeopardize the organization‘s own
performance. This factor must be considered when choosing products or
services to be outsourced.
HR may be involved directly in outsourcing—by contracting out HR processes

or subprocesses—or indirectly. For example, HR may provide training and
decision support tools to help the organization‘s managers supervise the
outsourcing process. HR has a role in developing and monitoring relationships
with external stakeholders and in supporting the organization‘s corporate social
responsibility program. Therefore, HR may also evaluate vendors‘ performance
on such issues as labor conditions and environmental practices.
Strategy Implementation
The third stage of the strategic planning process is strategy implementation.
This stage involves three actions:
 Create specific action plans.
 Allocate budgets and resources to support objectives.
 Make plans to communicate to employees.
At this stage, the strategy becomes part of the organization‘s operations, priorities
and direction. A strategy is only as good as its implementation and evaluation.
Even a very thoughtful strategy can fail if it is not properly implemented.
The Role of HR in Implementing Strategy
HR has an important role as manager of the organization‘s human talent

resources. In this role, HR can promote successful implementation of an
organization‘s strategy. Managing talent means constantly analyzing the talent
pool against the requirements of the organization‘s strategy. How can HR retain
highly valuable assets and increase the general value of the organization‘s talent?
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 By developing strategic competencies

 By promoting the exchange of learning and experience throughout the
organization
HR can take the following actions to support implementation of the

organization‘s strategy:
 Maintain a talent pool of innovative, literate leaders who can be assigned to
strategically sensitive areas. This concept is discussed in Christopher A.
Bartlett and Sumantra Ghoshal‘s Managing Across Borders: The
Transnational Solution (Bartlett and Ghoshal 2002).
 Identify and develop key skills in the existing talent pool.
 Increase the pool of needed skills through targeted recruiting.
 Help define the interconnected roles of different parts of the organization.
 Establish methods for communication and collaboration.
 Create strategies for decreasing competition between units and enhancing
collaboration.
Strategy Evaluation
The last stage in the strategic planning process is evaluation, which involves
the following three actions:
 On a regular basis, review external and internal factors for changes.
 Review progress toward achieving strategic objectives and measurable
outcomes.
 Take corrective action.
Evaluation can and should occur at any time. Evaluation impacts the organization
in the following ways:
 Affects both the perceptions of external stakeholders and the behaviors of
internal stakeholders (management and employees)
 Confirms the continued relevance of the organization‘s strategy
 Demonstrates progress toward achieving specific goals based on that
strategy
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HR professionals can differentiate evaluation metrics by what they measure.
Activity versus Results
Figure 1-21 compares activity measures to results measures.
Activity Measures Results Measures
Activity measures focus on what an Results measures focus on the output of those
organization does (its processes). processes (improvements in time, money,
quality, efficiency, effectiveness and
credibility).
Activity measures identify problems and Results measures are essential to success.
areas for improvement and lead to
improved results.
Example: An organization‘s strategy is to Example: An organization‘s strategy is to

increase its ability to innovate. An activity increase its ability to innovate. A results
measure tracks the number of employees measure focuses on the number of new
who have attended workshops on products in development.
creativity.
Figure 1-21. Activity Measures versus Results Measures
Operations should examine what they are measuring and ensure the following:
 Results measures receive the most emphasis.
 The balance and the relationship between activity and results measures are
appropriate.
Cost Control versus Value Creation
Cost control measures focus on the ratio of operating costs to income. Value
creation measures focus on the following:
 Number of patents and product innovations
 Time to achieve competency
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 Development time for new products

 Effectiveness of knowledge sharing and global collaboration
 Strength of the employment brand
 Opening of new markets and opportunities for revenue
Cost control and value creation both are valuable and contribute to the
organization‘s financial goals. Leading organizations have a healthy balance
between cost and value creation measures. A strong emphasis only on cost control
or only on value creation can create challenges for strategic and organizational
alignment.
Benchmarks
Benchmarks are measures or markers used as a basis for judging or measuring

something else. Here are examples:
 For commercial enterprises: inventory turn, profit margin
 For nonprofits: ratio of fund-raising costs to total expenses
 For government agencies: the number of transactions with citizens
performed within a period of time
Additional information on benchmarks is presented in Section 1.4: Change

Management and Business Process Improvement for HR Professionals.
Financial Measures
A variety of metrics—both financial and nonfinancial—are used to evaluate the
effectiveness of organizational strategies. The choice of tactic depends on the
nature of the strategy and the organization‘s priority. We will discuss typical
financial and nonfinancial metrics and the balanced scorecard, beginning with
financial measures.
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Financial measurements can shape the future of an organization. Here are three
examples:
 Good performance data can increase the organization‘s value and ability to
attract talent.
 Senior management can earn rewards based on economic performance
measures.
 Labor unions can use financial reports to support demands for increases in
wages.
Excessive use of financial measures can overemphasize the importance of short-

term results. Viewing financial results as trends can help lessen this effect.
Financial measures must always be used within the context of a specific industry.
For example, profit margins are very different in financial services than in
manufacturing consumer goods.
Compensation levels can also be a financial metric. For example, an

organization‘s average wages can be benchmarked against industry averages to
identify potential vulnerabilities. A history of stagnant wages can signal problems
with retaining valuable employees.
Nonfinancial Measures
Nonfinancial measures examine changes in areas that are not measured in terms
of currency. However, the effects of these changes can be expressed in currency
to show their financial effect. Such measures may include the following:
 Share of market, which may signify competitive strength
 Reputation among investors, consumers, governments and political groups
 Level of brand awareness among consumers
 Achievements in social responsibility
 Recognizable employee brand (useful in recruiting and hiring)
 Reputations for quality, customer relations and innovation
 Efficiency (that is, use of most current, efficient technology and processes)
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 Activity ratios, which measure the efficiency with which resources are used
to generate profit (for example, number of inventory turns in a period,
average age of inventory, average collection and payment period, asset
turnover)
 Employee retention and job satisfaction ratings
The Balanced Scorecard

The balanced scorecard is a tool used to evaluate organizational strategies. This
tool must accommodate the varied goals of different strategies.
For additional information about the balanced scorecard, see Section 1.2:
Gathering, Measuring and Reporting HR Data.
Robert Kaplan and David Norton (Kaplan and Norton 1992) first introduced the
balanced scorecard as a metric that considers both financial and operational
performance. Kaplan and Norton believe that relying only on common financial
measures—such as return of shareholder value or revenue growth—gives an
incomplete picture of an organization‘s strengths and weaknesses. This is
especially true in modern organizations that succeed in their ability to innovate
and respond quickly to change. Kaplan and Norton also believe that traditional
measurement approaches do not account for the complex relationships between
different aspects of performance.
The purpose of a balanced scorecard is to achieve balance in three main areas:

 Between financial and nonfinancial indicators of success
 Between internal and external constituents in the organization
 Between lagging indicators and leading indicators of performance
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Figure 1-22 illustrates the general form of a balanced scorecard. (The scorecard
can be customized for different types of organizations.) The scorecard
incorporates measures from four perspectives and illustrates the interrelationship
of leading and lagging performance indicators (that is, the cause-effect
relationship between measures).
Figure 1-22. The Balanced Scorecard for a For-Profit Organization
Four perspectives are represented in the balanced scorecard.
Financial
Financial measures examine the effect of the organization‘s actions on its

financial goals. The typical financial measures are profitability, growth (for
example, in sales and market share) and shareholder value (for publicly held
companies).
Customer (External)
Kaplan and Norton (Kaplan and Norton 1992) found that customer concerns tend
to divide into the categories of time, quality, performance and service and cost.
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For example, customer measures of an organization‘s performance may include

the following:
 Time. How much time does it take to receive a product after an order has
been placed?
 Quality. Is a product being returned because of a flaw or because a service
is performed incorrectly?
 Performance and service. Does the product or service meet the
customer‘s needs and add value?
 Cost. Is the cost appropriate for the value delivered and the competitive
environment?
Operations (Internal)
The operations (or internal) perspective looks at how well the organization
performs the essential processes that create its value. These processes can directly
affect customers (for example, quality monitoring) or important competencies (for
example, technology and managing product life cycles).
Learning and Growth
The learning and growth perspective recognizes that remaining competitive or

sustaining value requires continuous improvement and innovation. Examples of
learning and growth measures include the following:
 The rate or number of new product introductions
 Rates of improvement in measures such as quality or productivity
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Leading indicators predict future performance. Improved customer loyalty (a

customer measure) eventually translates into increased revenue growth and
possibly improved profits (financial measures).
Lagging indicators (such as financial performance) show only what has

happened in the past. Consider an organization that is in the middle of
implementing a strategic initiative to improve performance. This organization
could see a disconnect between strong leading indicators and poor lagging
indicators. However, if the organization continues to improve the leading
indicators, the lagging indicators will eventually turn around.
For more information about the use of the balanced scorecard, refer to the
Balanced Scorecard Institute, http://www.balancedscorecard.org.
Organizational Structure
Organizational structure is a way to align and relate the parts of an organization to
get the most performance from all functions. Organizations must implement
organizational structures that provide a good fit with their industries—allowing
the right balance of local responsiveness, efficiency and sharing of learning and
innovation. The wrong organizational design can severely hamper the
organization‘s ability to achieve its goals. HR professionals should be familiar
with the elements of organizational structures, so they can guide their
organizations through choosing and implementing the elements that are right for
them.
Organizations can be structured according to function, product or geography.

They can also use hybrid structures, such as front-back or matrix. We will discuss
these five structures in more detail.
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Functional Structure
The functional structure is the most common organizational structure. In this
structure, departments are defined by the services they contribute to the
organization‘s mission. For example, the departments can include HR, operations
and marketing and sales. Departments can also be defined by process. For
example, the organization can be divided into departments such as design,
manufacturing, distribution and customer service.
Figure 1-23 shows a functional structure. In this example, some units in the
structure are considered line units, and others are considered staff units. Line units
are workgroups responsible for the organization‘s major business functions (such
as production or marketing). Staff units help the line units by performing
specialized services for the organization (such as HR).
Figure 1-23. Functional Structure
Product Structure
In the product structure, functional departments are grouped under major product
divisions. For example, an automobile company can have separate divisions for
cars, truck and sports vehicles. Each of the divisions will have its own marketing,
sales, manufacturing and finance functions. More employees are needed to staff
this type of organization, but this need can be offset because of accumulated
experience and expertise. The truck division, for example, should be better than a
generic vehicle operation at designing and manufacturing trucks.
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Figure 1-24 shows a product structure.
Figure 1-24. Product Structure
Geographic Structure
A geographic structure is very similar to a product structure except that
geographic regions, rather than products, define the organizational chart. Each
region has its own complete group of functions. Although more employees may
be needed, each division can also be more responsive to local markets.
Figure 1-25 shows a geographic structure.
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Figure 1-25. Geographic Structure
Front-Back Structure
The front-back structure is a hybrid structure that mixes elements of the
functional, product and geographic organizational structures. The front-back
structure divides the organization into front functions (organized by geographic
locations or customer types) and back functions (organized by product or business
unit). For example, the front end of an athletic shoe corporation can be organized
by geographic region (such as Europe, the Middle East and Africa). The back end
can be organized by product area (such as shoes for different sports).
Matrix Structure
The matrix structure is another hybrid structure. The matrix combines the
functional and product structures to gain the benefits of both. This structure
creates two chains of command in the organization. Some employees may report
equally to two managers. For example, in Figure 1-26, the safety training manager
reports to both the vice president of manufacturing and product manager C.
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Figure 1-26. Matrix Structure with Two Chains of Command
Figure 1-27 summarizes the advantages and disadvantages of the various

organizational structures.
Type of
Advantages Disadvantages
Structure
 Easy to understand  Weak customer or product focus
Functional
 Specializations develop  Potentially weak communication
 Economies of scale among functions
 Communication within  Weak grasp of broader
functions organizational issues
 Career paths  Hierarchical structure
 Fewer people
Figure 1-27. Advantages and Disadvantages of Organizational Structures

(continued to next page)
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Type of
Advantages Disadvantages
Structure
 Economies of scale  Regional or local focus
Product
 Product team culture  More people
 Product expertise  Weak customer focus
 Cross-functional
communication
 Proximity to customer  Fewer economies of scale
Geographic
 Localization  More people
 Quicker response time  Potential quality control
 Cross-functional problems
communication
 High level of customer  Potential for conflict between
Front-back
focus front and back (for example,
 Flexibility (units can be explaining decreases in sales by
added to meet demand for mutual accusations of poor
new products or performance)
emergence of new  Necessity for developing new
customers) skills (customer/market focus)
for all employees
 Combines strengths of  Can be expensive and difficult to
Matrix
both functional and explain to employees
product structures  May result in conflicting
 Blends technical and priorities when individuals have
market emphasis more than one superior
 Develops managers who
are comfortable with
technical and marketing
issues
Figure 1-27. Advantages and Disadvantages of Organizational Structures (concluded)
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HR Trends
How do you determine what trends to analyze? Because your organization is
unique, the trends you analyze will also be unique. The organization‘s HR needs
change constantly in response to the economy, specific industry changes,
competition and localities where the organization has a presence.
In 2009, the Society for Human Resource Management (SHRM) published a list
of the future workplace trends according to SHRM‘s HR subject matter expert
panels (Society for Human Resource Management, Future Insights: The Top
Trends According to SHRM's HR Subject Matter Expert Panels 2009). Twelve
Special Expertise Panels compiled lists of the issues they believe will have the
greatest impact in the workplace.
The report identifies broad trends that impact many aspects of HR and the
workplace simultaneously. These broad trends include the following:
 Impact of the global recession on business strategy and employees
 Influence of social networking, especially as it relates to recruiting
 Continuing importance of work/life balance as employees deal with
multiple caring responsibilities and, in some cases, multiple paid jobs
 Need for measurement of results and the development and standardization
of important HR metrics
 Growing need for organizations to demonstrate a commitment to ethics,
sustainability and social responsibility
 Importance of globalization and integrating markets
 Continued emphasis on performance management
In 2011, the International Bar Association‘s Global Employment Institute (GEI)

reported on the most important HR issues of the next ten years, as identified by
HR leaders in multinational organizations (International Bar Association Global
Employment Institute 2011).
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The following issues were among the top international HR challenges:

 Human resources issues in transnational company operations
 Work/life balance as a significant factor in acquiring and retaining talent
globally
 Managing mobile employees and those working remotely in other countries
 Nondiscrimination and management of diversity in a global company
culture
 The use of the Internet and social networking communications in the
workplace (Heylman 2011)
More information about HR trends can be found at the following websites:

 http://www.shrm.org/Research/FutureWorkplaceTrends/Pages/default.aspx
 http://www.shrm.org/hrdisciplines/global/Articles/Pages/GlobalizationStudy.
aspx
 http://www.shrm.org/about/pressroom/Documents/future_of_hr.pdf
We will discuss trends in specific HR areas in more detail below.
Globalization
Christopher Bartlett and Sumantra Ghoshal (Bartlett and Ghoshal 2002) have
proposed the most recent and optimal form of global enterprise: the transnational
corporation (TNC). The TNC blends the standardization used by global
organizations with the localization approach of a multinational organization.
The result is glocalization—an organization with a strong global image but an
equally strong local identity.
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Global integration (GI)

 Global integration emphasizes consistency of approach, standardization of
processes and a common corporate culture across global operations.
 Decisions are made from a global perspective so that the organization‘s
brand and image are consistent and uniform.
Local responsiveness (LR)

 Local responsiveness emphasizes adapting to the needs of local markets and
allows subsidiaries to develop unique products, structures and systems.
 Company functions, processes and activities are modified to reflect local
conditions—including markets and cultural, legal and sociopolitical
situations.
Staffing
Staffing describes the act of selecting, hiring and training qualified people for
specific jobs, as well as reducing the workforce when needed. HR professionals
must consider current and future trends in order to effectively support the
organization‘s staffing needs.
In the 2009 SHRM report on future workplace trends (Society for Human
Resource Management, Future Insights: The Top Trends According to SHRM's
HR Subject Matter Expert Panels 2009), one of the Special Expertise Panels
identified trends related to staffing management. Some of these trends include the
following:
 Many workers are available (although not always qualified) to apply for
many jobs. However, other jobs are harder to fill and require a competitive
recruitment strategy.
 Workforce planning will be affected both by availability of qualified
workers and by changes in retirement patterns.
 HR needs to build competency in selecting and managing third-party
products and services.
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 Sustaining the employment brand is critical for recruitment and retention

regardless of the employment market and economic business conditions.
 Employers are increasingly using multiple selection measures—including
panel interviews, reference checks and work samples.
In addition, William Arruda, founder of Reach Communications Consulting Inc.,

identified technology trends that he says will find increasing use among
employers and corporate recruiters through 2012. These trends include the
following:
 Customized Google searches help recruiters quickly find relevant and
accurate information on potential employees. One example is the Search
Me button developed by United States-based Vizibility.
 Blended searches provide employers with a multimedia package of
information on job candidates, including photos and videos.
 Digital bridges let potential employees access online suites of career
marketing tools.
 Crowd sourcing allows colleagues and clients to make online
recommendations and reviews of a person‘s work skills (Society for
Human Resource Management, 'Search Me' Button Might Help Eliminate
Mistaken Identity 2011).
Proactive Recruiting Using Social Media
The use of social media is a growing technology trend. Social networking sites
available to recruiters include Facebook, LinkedIn and Twitter. Benefits of using
these media include a reduced cost of recruiting and a larger pool of potential
applicants. The LinkedIn Recruiter platform, for example, provides an
organization‘s recruiters with access to an expanding database of over 80 million
members in 200 countries (Society for Human Resource Management, Recruiting
Strategies for Social Media 2010). However, according to Sherrie A. Madia,
author of The Social Media Survival Guide, recruiters should balance social
media with continued use of their existing recruitment channels (Society for
Human Resource Management, Recruiting Strategies for Social Media 2010).
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Employment Branding
Employment branding is an organization‘s strategy to change how others perceive

it. The goal of employment branding is to project an image of the organization as
a desirable employer.
An effective employment brand is considered crucial for recruitment and retention

(Society for Human Resource Management, Future Insights: The Top Trends
According to SHRM's HR Subject Matter Expert Panels 2009).
More information about the employment branding trend can be found at the
following websites:
 http://www.shrm.org/Research/FutureWorkplaceTrends/Documents/10-
0028%20India_Article_Employer_brand_v5.pdf
 http://www.shrm.org/Publications/Books/Pages/CulturalFitFactor.aspx
Outsourcing
HR needs to build competency in selecting and managing third-party products and

services (Society for Human Resource Management, Future Insights: The Top
Trends According to SHRM's HR Subject Matter Expert Panels 2009). The use of
third-party contractors is also known as outsourcing. Outsourcing involves
transferring certain business functions outside the organization so that the
organization can focus on core activities.
Before considering outsourcing, organizations should be aware of the following

issues:
 The gap between what the organization needs and what the organization
currently has
 What role outsourcing can serve in closing those gaps
 The impact on the organization in terms of a reduction in workforce or
future dissatisfaction with the outsourcing arrangement (Society for Human
Resource Management 2008)
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Compensation and Benefits

Benefits are things that the employee receives in addition to a salary, such as
health insurance. Compensation refers to total rewards that the employee
receives for working, including pay and nonmonetary benefits.
HR Magazine‘s 2011 HR Trend Book reports a need for salary and incentive
overhauls as a result of the global financial crisis. As part of compensation
planning for 2011, organizations must align their compensation program with
their recovery strategy (Krell 2010).
Following are some of the significant trends related to compensation and benefits.
Transparent Executive Compensation
Poor performance by an organization can lead to closer scrutiny of the

compensation received by the organization‘s top executives.
In the 2010 SHRM report on trends, the Total Rewards/Compensation and

Benefits Panel identified the following trend:
Figure 1-28. Trend in Compensation
DolmatConnell & Partners, an executive compensation consulting firm, identified

the following top trends in executive compensation for 2009:
1. Low increases in base salaries
2. Restructuring of bonus plans
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3. Potential shifts in long-term incentive mixes

4. An increased potential for taking back previously awarded money or
benefits because of corporate underperformance
5. A more conservative approach by compensation committees (Society for
Human Resource Management, Executive Compensation: What Lies
Ahead? 2009)
Total Rewards Emphasis
Total rewards can be defined as all the tools an employer can use to attract,
motivate and retain employees (WorldatWork 2006).
The 2010 SHRM report on trends identified the following total rewards trend:
Figure 1-29. Trend in Total Rewards
A 2009 survey by Deloitte Consulting and the International Society of Certified

Employee Benefit Specialists (ISCEBS) identified the cost of providing health
care benefits as the top priority of total rewards specialists (Society for Human
Resource Management, Increased Cost Concerns Dominate 2009 Total Rewards
Trends 2009).
Generational Differences
HR professionals must be aware of the differing attitudes and motivations of

different generations of employees. C. Scott Boring, 2009 ISCEBS President,
cautions that each generation of employees has unique beliefs about work and
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Business Trends
rewards. However, in the 2009 survey by Deloitte and ISCEBS, 24% of the
respondents believed that their organization‘s leadership did not understand the
total rewards perspective of the different generations in the workforce (Society for
Human Resource Management, Increased Cost Concerns Dominate 2009 Total
Rewards Trends 2009).
Demand for Work/Life Balance
Employees are facing increased caring responsibilities (for example, caring for
their aging parents). This situation may lead to greater demands for work/life
balance benefits (Heylman 2011).
Preventive Health and Wellness Programs
Many organizations are adopting preventive health and wellness programs. These
programs combat the increase in preventable and chronic health conditions and
the accompanying increase in the organization‘s health insurance costs. Examples
of wellness programs include the following:
 Nonsmoking campaigns
 Stress management
 Weight management
 Hypertension (high blood pressure) screening and education
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Human Resource Measurement and Metrics

The 2010 SHRM report on future workplace trends identified the following trend
related to human capital measurement and HR metrics:
Figure 1-30. Trend in Human Capital Measurement and HR Trends
One significant trend is the ongoing effort to create a formal and standardized
definition of the practice of HR. This effort requires HR professionals to identify
and formalize a core group of universal HR principles and practices that are not
confined to any one nation or jurisdiction. An example of this trend is the course
material you are currently studying. Another example is the Society for Human
Resource Management‘s effort to establish an HR-specific series of ISO standards
that can be applied worldwide (Society for Human Resource Management,
SHRM Bid to Lead Global HR Standards Effort Ratified 2011). All such efforts
support the increasing objectivity and professionalism associated with the practice
of HR worldwide.
For more information about frequently used HR metrics, refer to the Section 1.2:
Gathering, Measuring and Reporting HR Data.
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Business Trends
Additional information about HR metrics and metrics calculators can be found at

the following websites:
 http://www.shrm.org/hrdisciplines/Pages/CMS_005910.aspx
 http://www.shrm.org/TemplatesTools/Samples/Metrics/Pages/default.aspx
Employee Engagement
Employee engagement is a measurement of employees‘ involvement,
satisfaction, happiness and loyalty with their employment. Engagement is
reflected in how hard employees work and in how long they stay with their
organization.
A recent online survey of over 5,000 executives from 109 countries identified
employee engagement as one of the top most critical HR topics (Society for
Human Resource Management, Study: Engage Employees and Middle Managers
2010). In order to engage their employees globally, organizations are encouraged
to do the following:
 View global HR decisions in the context of national culture.
 Use valid research to align HR practices with actual employee attitudes in a
local population.
 Collect data on national norms in order to interpret employee surveys
correctly.
 Recognize that the elements that create engagement also create the
employment brand. (Society for Human Resource Management,
Developing and Sustaining Employee Engagement 2010)
Training and Development

Recent technological advances have changed the methods that human resource
and training professionals use to design, deliver and administer training. The use
of technology—such as social media—is allowing learners to learn differently and
more effectively.
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Training should use more sophisticated tools that entertain as well as educate
employees. These tools can include gaming, social media and virtual worlds
rather than conventional slides and classroom approaches, according to Anders
Gronstedt of The Gronstedt Group, Inc. The use of innovative technology can
result in better-trained employees (Society for Human Resource Management,
Forget the Classroom: Turn to the Web for Innovative Learning Techniques
2010).
At the 2010 American Society for Training & Development (ASTD) International
Conference and Exposition, keynote speaker Charlene Li explained that the use of
social media tools can enhance social learning and connect it to formal learning.
Li identified the following five levels of engagement in social media-driven
learning (Society for Human Resource Management, Social Media Tools
Redefining Learning in Organizations 2010):
 Watching
 Sharing
 Commenting
 Producing
 Curating (in other words, organizing content into meaningful packages that
connect with the audience to create a meaningful experience)
Examples of using technology in training include the following:

 An anesthesiologist at a remote hospital watches a YouTube video to see
how to perform a particular procedure (Society for Human Resource
Management, Social Media Tools Redefining Learning in Organizations
2010).
 Employees improve sales by watching a weekly webisode (a short episode
played on the Internet) based on a popular television comedy (Society for
Human Resource Management, Forget the Classroom: Turn to the Web for
Innovative Learning Techniques 2010).
 Employees are presented with a sales case in the form of an alternate
reality game with clues hidden in the organization‘s Intranet (Society for
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Business Trends
Human Resource Management, Forget the Classroom: Turn to the Web for
Innovative Learning Techniques 2010).
Specific training trends are described in more detail below.
e-Learning
E-learning is on online method of training or education where participants attend

classes via the use of electronic media. E-learning can be delivered via the public
Internet, an organization‘s Intranet or extranet, satellite broadcast, DVD or
compact disk or other electronic means. E-learning technology can be used to
implement distance learning, which is the process of delivering educational or
instructional programs to locations away from a classroom or central site.
Getting-More-from-Less-Training Strategy
Human resources may face competition from other business functions for an
organization‘s limited—and sometime diminishing—resources. Many
organizations are reluctant to apply these resources toward additional talent
management and training. Therefore, HR professionals must focus on getting
more from less—that is, retaining and maximizing the productivity of the
strongest talent while minimizing staffing and training costs. A key to this
strategy is maintaining good communications with the organization‘s major
stakeholders (Society for Human Resource Management, Getting More from Less
Trend Will Continue in 2010, 2010).
Learning Management Systems
A learning management system (LMS) is computer software that administers,

tracks and reports on employee development opportunities, such as classroom and
online events, e-learning programs and training content. An LMS can track and
manage employee course registration and completion, career development and
other employee development activities. Many learning management systems also
offer testing and measurement capabilities.
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Business Trends
Learning Organization
Tetrick and Da Silva define a learning organization as, ―A learning organization

can create, acquire and transfer knowledge, and with this new knowledge, it can
then change its behaviors in order to improve organization performance.‖ (Tetrick
and Da Silva 2003)
Nancy R. Lockwood for the Society for Human Resource Management examined
organizational learning. Her research identified the following attributes for
organizational learning:
 A focus on organizational learning results in a competitive advantage.
 Effective learning refers not only to shifting what is learned but also how
learning occurs and evolves in an organizational context.
 Within a knowledge economy, cooperation, networking and collaboration
have essential roles in organizational culture.
 Learning organizations have cultures that are open to transformation and
continuous change.
 A learning culture allows for some risk-taking with some tolerance for
mistakes.
 Communities of competence are providing the structure in which to
describe and combine different strengths and core competencies—job
satisfaction, productivity and work quality improve as all members share
knowledge and expertise (Society for Human Resource Management,
Knowledge Management Series Part II: Organizational Learning 2005).
Learning Portals
Portal is a term used to describe a gateway or access point to the Internet. A

learning portal provides access to an organization‘s database of information and
resources regarding learning and training. Learning portals allow training and
learning information to be channeled and communicated effectively to employees.
Learning portals are often used together with learning management systems (see
above) to manage data, provide access to internal training programs and distribute
training-related information and resources to employees.
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Business Trends
Remote Project Collaborations
Organizations are dealing increasingly with technological advancements,

telecommuting, globalization and escalating travel costs. These factors are leading
to a demand for better options for remote communication and collaboration.
Software companies are responding by offering specialized suites of programs
that make it easier for virtual teams to communicate with each other and to use
project management tools collaboratively. HR professionals can use these new
tools to increase the involvement of local stakeholders in the training program
design and development process.
Social Networks
A social network is a group of people who interact because they have a common
interest. The group communicates either in-person or using technology (for
example, Facebook or Twitter). Social networking sites such as LinkedIn and
Plaxo Pulse are Internet-based services that allow individuals to do the following:
 Construct a public or semipublic profile within a bounded system
 Create a list or database of other users with whom they share a connection
 View and use their lists of connections and those made by others within the
system
HR professionals can use these sites for multiple professional purposes, including
identifying and contacting potential suppliers, leveraging learning and developing
mentoring and professional support relationships.
University Involvement
An emerging trend is linking organizations with national and international

universities to enhance knowledge and develop competencies within the
organization. One example is the Accenture-XLRI HR Academy, a training
academy in India launched by Accenture and the XLRI School of Business and
Human Resources.
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Business Trends
Virtual-World Simulations
Computer and electronic simulations are also growing in popularity. Training-

related simulations place the learner in a virtual work environment (for example,
managing an office or using a machine) and present a series of real-life
challenges. The learner has the opportunity to practice new skills and make
decisions in a supportive and low-risk environment. One of the better-known
virtual-world simulations is Second Life, an Internet-based video simulation
launched in 2003 by Linden Research.
Simulations offer a number of important benefits:

 Appealing to young learners with sophisticated technological expectations
 Actively engaging individuals in the learning process
 Providing additional opportunities for individuals to learn complex or
potentially dangerous skills in a realistic but safe environment
Web 2.0
The term, Web 2.0, was coined in 2004 to indicate a group of web-based
technologies characterized by interactivity. These technologies are focused on
building connections through the ability to interact and encourage collaboration
and community. Thomas Friedman wrote in The World is Flat that these
programs make connections possible across the world. He quotes Carly Fiorina of
Hewlett Packard who described information as ―…digital, mobile, personal and
virtual.‖ Digitization makes the information easy to transmit. This information
can be manipulated through many applications where people capture and
manipulate data without thinking about the technology (Society for Human
Resource Management, HR and Technology 2009).
More information about how organizations are using Web 2.0 tools can be found
in McKinsey & Company‘s report ―Building the Web 2.0 Enterprise: McKinsey
Global Survey Results‖ at the following website:
http://www.mckinseyquarterly.com.
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Business Trends
Webinars
A webinar is an interactive seminar on the Internet. Usually the webinar is a live

presentation. The webinar can be one-way communication with limited audience
interaction, or it can be limited two-way communication to allow full participation
between the audience and the presenter (for example, through the addition of
collaborative, polling and question-and-answer activities). This technological
solution provides many of the benefits of live classroom training without many of
the attendant costs of bringing the instructor to the audience or the audience to the
instructor.
Additional information on training and development is presented in Module 5:

Training and Development.
Keeping Current on Business Trends

The following suggested tasks for conducting trend research will vary based on
the circumstances associated with the research:
1. Understand your organization’s strategic vision. Focus your trend
analysis on issues that have the greatest influence on the organization.
Research external conditions first and then examine conditions internal to
your organization.
2. Collect information through research. Prioritize your research efforts to
encompass both an organizational focus and an HR focus.
3. Identify a pattern to use in predicting future events. Today‘s biggest
challenge with respect to research is not the access to information but
rather finding information that is relevant. Anticipate the events and issues
that have the greatest value. Through continued research, trends will
emerge.
4. Benchmark and measure to quantify the trend. Trend analysis is most
beneficial when you have a benchmark of the current situation. You may
be the first person to anticipate the trend. In this circumstance, you will
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Business Trends
define a benchmark from which to measure the trend. Then you can
compare your research findings with how the organization operates now.
Over time, subsequent comparisons should be captured.
5. Share your research findings. Other organizational leaders can benefit
from your research. Share your insights, experience and findings.
6. Gain perspectives and consensus from others. Your research has more
influence and validity when you include additional perspectives. Reaching
consensus with your stakeholders (anyone affected by the information)
increases the strategic value.
7. Measure outcomes from responding to trends. Continue to measure the
results achieved. As the environment changes, your earlier efforts will
create a basis to anticipate change.
8. Record outcomes as the basis for tracking future trends. Always keep
a defined basis (sometimes referred to as a baseline) to track future trends
and to continuously measure progress.
As an HR professional, your analysis of trends includes a personal world

perspective. Each person‘s world perspective is influenced by cultural
presumptions. These presumptions also influence how you perceive your research
findings.
Dr. Geert Hofstede‘s dimensions of culture may be helpful in understanding the

differences between cultures when you conduct trend research:
 Power distance
 Uncertainty avoidance
 Individualism/collectivism
 Masculinity/femininity
 Long-term/short-term
 Indulgence/restrain (Hofstede, Hofstede and Minkov 2010)
For example, uncertainty avoidance reflects the level of tolerance society

members have for uncertainty and ambiguity.
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Business Trends
When researching and communicating with other cultures, pay particular attention
to the concepts of time and personal space. Be aware that different cultures may
perceive and value time differently (Society for Human Resource Management,
When in Rome: Note Cultural Differences When Training, Experts Say 2009).
More information about Hofstede‘s dimensions of cultures can be found at the

following website: http://www.clearlycultural.com.
Additional information on cross-cultural communication is presented in Module

3: Employee Relations and Communication, Section 3.1: Communication in
the Workplace.
Technology for Today’s HR

Professional
HR‘s role in managing technology is to help identify new technologies that can
help with the following goals:
 Achieving the organization‘s strategic HR goals
 Facilitating the rapid pace of change due to technology
 Managing the cultural change and strategic redirection associated with the
introduction of new technology
Technology has allowed HR to reduce some administrative tasks—like benefits

administration and record keeping—and focus its attention on more strategic
tasks—like knowledge and talent management and strategy development.
Monitoring the Technological Front

Technology has changed, and the rate of change has increased dramatically in the
computer age, changing the way the organization does business. In order to be
better leaders and effective strategic partners, HR professionals must be aware of
technology trends, capabilities and issues.
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Business Trends
Consider the following factors when monitoring the technological front:

 Advances in technology
 Technological skills
 The digital divide
Advances in Technology
Changes in technology can alter both the structure of jobs and the structure of the
organization. Technology allows organizations to provide service twenty-four
hours a day to accommodate customers who live in all parts of the world. Also,
technology may provide employees with the tools to do a job more efficiently and
accurately. Technology has even affected the way in which organizations solve
problems. The phenomenon of swarming—the rapid linking of networks of
individuals through cell phones and other electronic devices—has been used to
brainstorm solutions to work situations. HR must be ready to capitalize on the
advantages of instantaneous and global communication, such as employee self-
service and e-learning.
The following are a few of the major changes in technology.
Electronic Record Keeping
Electronic data is subject to data retention laws and regulations. Improperly

deleting electronic records may be a legal violation. However, keeping documents
beyond compliance requirements can leave a business vulnerable. For example,
records discovered by plaintiffs can become evidence in court. Therefore, policies
must be in place for the conversion, migration, storage and legal destruction of
records. Keeping electronic data is particularly important in the event of litigation.
Under these circumstances, the employer must preserve electronic documents (as
well as hard-copy documents) until the matter is conclusively resolved. These
record management efforts include e-mails, backup tapes, local hard drives,
network drives, floppy disks, CD or DVD drives and any other removal drives.
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Business Trends
Electronic Signatures
In 1999, the European Union adopted the EU Directive on Electronic Signatures.

The electronic signature technology must pass certain tests to be used as a legal
signature. Qualified electronic signatures would carry the same legal effect as
handwritten signatures. According to the Summaries of EU Legislation website,
the goal of this community framework for electronic signatures is as follows
(EUROPA 2008):
Figure 1-31. Goal for Electronic Signatures
Application Service Providers (ASPs)
An application service provider (ASP) hosts and runs an organization‘s software

applications on the Internet. Instead of purchasing software and installing it, the
organization pays the ASP on a subscription basis.
Advantages of using ASPs include the following:

 Automating administrative tasks (such as time and attendance tracking,
applicant tracking and other workforce management issues)
 Spending less money on software installation and maintenance
 Making IT resources available for other major tasks
 Creating efficiencies in various business processes (Society for Human
Resource Management 2007)
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Business Trends
One disadvantage of an ASP is the potential lack of customization. In addition,

experts advise caution and careful evaluation before choosing an ASP partner.
Because the market is currently young, ASPs may be better suited for activities
(such as HR activities) that are not critical to an organization‘s mission (Society
for Human Resource Management 2007).
Cloud Computing
Cloud computing refers to storing, developing or processing data on software

running on the Internet, instead of on a personal computer or the organization‘s
server (Zielinski 2009). For example, you can create a spreadsheet using a cloud
provider‘s application. The spreadsheet will be stored on the Internet and is
accessible any time you want to make changes and additions to the data
(Thornburg 2009).
Technological Skills
Organizations must train employees on the new technologies that allow them to
work anytime and anywhere. The need for new technological skills may emerge
quickly. An organization‘s success can depend on constant monitoring of needed
skills and educational options. Organizations must recognize that retraining
workers is an ongoing effort and important in building a skillful workforce.
Computer-based learning or e-learning may help organizations respond quickly to
new training needs.
The Digital Divide
As organizations become more dependent on the Internet, lack of access

(including broadband or high-speed access) to the Internet may create a divide
between those who have digital access and those who do not. The digital divide
can limit the following:
 Sharing of information
 Opening of educational and training opportunities
 Opportunities for small businesses located in communities without high-
speed access
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Business Trends
Human Resource Information Systems

HR professionals are experiencing a greater need for broad-based employee
information to help them make effective decisions and maintain necessary
information. This need is especially true for compliance purposes. A human
resource information system (HRIS) is a tool that supports human resources
functions. This tool can be used for gathering, storing, maintaining, retrieving and
revising HR data. An effective HRIS provides information the company needs to
track and analyze employees, former employees and applicants.
Most HRIS programs include three types of reporting or analytics:

 Standard reports
Standard reports include both regulatory-related reports and recruiting
reports.
 Ad hoc reports
An ad hoc report writer allows users to create their own reports beyond
the standard reports.
 Scorecards and dashboards
The balanced scorecard is a strategic evaluation tool. A dashboard is a
visual display of HR metrics. A role-based dashboard provides important
metrics for the role and is configurable to user preferences.
Does your organization need a special human resource information system? The
answer depends on how much information the organization needs to operate
efficiently. Smaller organizations typically need only the basic information
associated with payroll records. Larger organizations often want more specific
information for effective HR planning and may invest in the following technology
solutions:
 Self-service online applications can enlist employees in entering and
updating their own profiles and in initiating many transactions, such as
changes in beneficiaries or benefit options.
 Employees can answer many employment-related questions themselves by
accessing an online help desk.
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Business Trends
 Manager self-service software gives managers the ability to access crucial

information and to perform tasks themselves, without the help of HR
personnel. These tasks include managing performance reviews, accessing
report data, monitoring team members and managing employee salaries
and status changes (Society for Human Resource Management, Making the
Move to Manager Self-Service 2010).
More information about human resource information systems can be found at the
following website:
http://www.shrm.org/about/foundation/products/Pages/HRTechEPG.aspx.
HRIS Applications
Figure 1-32 shows some types of HRIS applications that apply to different
functional areas of HR.
HR Functional
HRIS Applications
Area
 Provides environmental  Provides quality and
Strategic
scanning results productivity improvements
management
 Tracks hiring, promotions,  Prints appropriate
Workforce
transfers and termination compliance data in the
planning and
rates by job group required format
employment
 Records the number and  Collects resumes and
percentage of each segment internal job applications
in apprenticeship and
training programs
Figure 1-32. Applications of HRIS (continued to next page)
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Business Trends
HR Functional
HRIS Applications
Area
 Outlines career path  Registers employees for
Human resource
development courses, monitors costs,
development
 Records information such as schedules trainers and
education, skills and classrooms
completed training programs  Evaluates employee
performance
 Tracks salary survey results  Facilitates analysis and
Total rewards
 Facilitates benefits comparison of salaries
administration across job classifications
 Facilitates employee self-  Prints compliance data in the
service appropriate format
 Tracks history of tuition
reimbursement
 Tracks retirement planning
 Stores employee discipline  Records union service data
Employee and
records  Maintains attitude survey
labor relations
 Records labor distribution results
data
 Identifies trends in on-the-  Monitors medical
Risk
job accidents and illnesses examinations and follow-up
management
and helps in development of procedures resulting from
preventive measures injury or illness
 Tracks insurance and  Identifies high-risk
workers‘ compensation conditions
claims by accident  Monitors accidents and their
 Tracks safety records costs by type and location
Figure 1-32. Applications of HRIS (concluded)
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Business Trends
Implementing HRIS Globally
The use of HRIS applications has provided valuable, consistent information to

management, but it has also encountered difficulties. Some HRIS systems are
time consuming and expensive to implement and maintain. This difficulty is
magnified when systems must span multiple countries with different technical
platforms and communications.
HRIS operations face a number of practical challenges:

 Affordability
 Different technology platforms in various units
 Types and quality of electronic access available
 Different understandings of terminology and meanings when collecting
data (for example, the varying definitions of contractor, temporary
employee, part-time employee and full-time employee)
 Different lengths of fields and records based on language and local
differences
 Attitudes and regulations toward employee data and privacy
 Cultural acceptance of the technology system (Employees‘ emotional
response to a technology should be carefully considered. Will an employee
with little computer experience be comfortable using a kiosk?)
HRIS Skill Banks and Skill Tracking Systems
HR professionals can use the human resource information system as a source for
internal recruitment. HRIS skill banks and skill tracking systems can help
generate computerized talent or skill inventories. These inventories can furnish a
list of people who have the needed knowledge, skills and abilities. Information
systems that include a compete record of each employee‘s qualifications allow
organizations to scan records quickly and to locate qualified candidates for vacant
positions.
However, HR professionals should be aware that skill inventories are only as

good as the data they contain. These inventories can be time consuming and
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Business Trends
costly to maintain, so consider carefully the type of data that is collected and used
in a skill tracking system. In many organizations, employees regularly update
their employee records (for example, as a part of the performance appraisal
process).
Selecting Human Resources Information Technology
Human resources information technology is an increasingly necessary tool to help

HR professionals manage employee information. Experts recommend that
organizations carefully evaluate the many available options. The HR information
technology that is selected must support the needs of HR and the organization
over time.
The Society for Human Resource Management, recommends answering the

following questions when selecting a human resources information system:
 What do you need the system to do?
 If you presently have a system, what about your present system works well
and what problems exist?
 What other processes can be automated?
 Who will have access to the system?
 What security controls will be needed?
 Will it need to be compatible with any other systems (that is, Accounting)?
Are there any major organizational changes planned that may impact the
choice of system (next 3-5 years)?
 How long do you expect to use this system?
 What kind of a budget do you have to work with? (Society for Human
Resource Management, HRIS: How Can I Find an HRIS System That Is
Right for My Company? 2005)
Knowledge Management Systems

An organization‘s human capital is its primary competitive advantage in the
global economy. To retain this advantage, employees must be able to quickly and
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Business Trends
efficiently share knowledge across both organizational and geographic

boundaries.
Knowledge management is the process of gathering, documenting and sharing

important information to improve the performance of employees and the
organization. Knowledge management can strengthen the ability of the
organization to innovate, to react to market conditions and to continually improve.
A knowledge management system is based on four activities, each of which must

occur for knowledge management to be successful:
 Inventory knowledge assets. This activity involves cataloging the tangible
assets of the company (such as white papers, presentations and articles),
best practices and areas of employee expertise.
 Create a knowledge base and directory. The cataloged information from
the first activity is entered into a system for easy access and retrieval. The
directory is a listing of employee skill banks and areas of expertise
(building connections). The knowledge base is all the tangible assets
(building collections).
 Use the system. The knowledge management system can be used both
informally (to educate employees and project team members) and formally
(as a basis to make employee assignments).
 Update the system. Maintain and update the system as people, projects
and information change.
Knowledge management becomes more difficult as organizations grow and

become more global. Challenges include the following:
 The physical task of inventorying and updating so many people and so
much knowledge
 Cultural and personal issues related to sharing information with others (If
information is perceived as power, there may be issues associated with
convincing people to share this valuable asset.)
 The relevance of best practices from one organization‘s environment and
culture to another
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Business Trends
Despite these challenges, developing workable knowledge management solutions

is a worthwhile endeavor. These solutions can make the organization smarter,
more agile and efficient. Organizations that find ways to enhance collaboration at
a global level and thereby speed knowledge creation have a major strategic
advantage.
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Business Trends
Practice Questions
Directions: Choose the best answer to each question.
1. Which one of today‘s HR roles includes helping the organization prepare for change?
a. Strategic
b. Administrative
c. Operational
d. Advice
2. Which one of today‘s HR roles focuses on dealing with compliance issues and record
keeping?
a. Strategic
b. Administrative
c. Operational
d. Control
3. The __________ proposes that any organization operates within a complex environment.
This environment affects and is affected by various forces that all share in an
organization‘s values and activities.
a. Mission statement
b. Strategic planning team
c. Strategic planning process
d. Stakeholder concept
4. What is the process of positioning the company for the future?

a. Knowledge management
b. Mission statement
c. Strategic planning
d. Stakeholder concept
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Business Trends
5. What happens during the Formulation stage of the strategic planning process?
a. Make plans to communicate to employees.
b. Review progress toward achieving strategic objectives and measurable outcomes.
c. Develop short- and long-term objectives from the strategic goals.
d. Define the company‘s vision, mission and value statements.
6. The __________ expresses the organization‘s essential purpose and value.

a. Stakeholder concept
c. Strategic planning process
d. Strategic planning team
7. During what stage of the strategic planning process is a SWOT analysis performed?
a. Formulation
b. Development
c. Implementation
d. Evaluation
8. A survey of internal and external environments that identifies the internal strengths and
weaknesses and external potential opportunities and threats to the proposed strategy is
known as __________.
a. Environmental scan
c. Stakeholder concept
d. Knowledge management
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Business Trends
9. All of the following are actions that HR can take to support implementation of the
organization‘s strategy except __________.
a. Maintain a talent pool of innovative, literate leaders who can be assigned to
strategically sensitive areas.
b. Create strategies for decreasing competition between units and enhancing
collaboration.
c. Identify and develop critical skills in the existing talent pool.
d. Do an environmental scan.
10. In which organizational structure are departments defined by the services they contribute
to the organization‘s mission?
a. Functional
b. Product
c. Geographic
d. Front-back
11. What is the main purpose for outsourcing?

a. It creates a strategy for decreasing competition and enhancing collaboration.
b. It projects an image of the organization as a desirable employer.
c. It identifies and develops critical skills in the existing talent pool.
d. It enables the organization to focus on core activities.
12. __________ is a systematic tool for gathering, storing, maintaining, retrieving and
revising HR data.
a. Human resource information system (HRIS)
c. Knowledge management system
d. Environmental scan
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Practice Question Answers

1. a (p. 7)
2. b (p. 8)
3. d (p. 17)
4. c (p. 18)
5. d (p. 21)
6. b (p. 21)
7. b (p. 19)
8. a (p. 28)
9. d (p. 38)
10. a (p. 46)
11. d (p. 55)
12. a (p. 72)
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1.2: Gathering, Measuring
and Reporting HR Data

Knowledge Base:
Behaviors: 01. Use HR metrics and prepare reports to analyze HR issues (for
example, the number of employees hired and those who left,
employee turnover, the cost per employee and budgets)
Skills & Knowledge: 11. Tools and methods to analyze business data (for example,
spreadsheets and databases)
12. Ways to report information (for example, presentation software,

such as Power Point; and word-processing software, such as
Microsoft Word)
14. The number of employees in the budget, and the salary and
benefit costs for these employees

Section 1.2: Gathering, Measuring and Reporting HR Data
Introduction ..................................................................................................................................85
Understanding Research Terms and Techniques .....................................................................86

Inductive and Deductive Reasoning ...........................................................................................86
Primary and Secondary Research ...............................................................................................88
Experimental Research Process .................................................................................................89
Quantitative and Qualitative Data Analyses ..............................................................................91
Reliability and Validity ............................................................................................................105
Human Resource Management and Evaluation Metrics .......................................................107

Initial Considerations ...............................................................................................................107
Frequently Used HR Metrics....................................................................................................108
Budgeted Headcount..................................................................................................................110
Strengths and Weaknesses of the Headcount Method .............................................................111
Evaluating HR’s Strategic Contributions ................................................................................111

Financial Measures ...................................................................................................................112
Performance Measures .............................................................................................................117
Trend Analysis .........................................................................................................................120
Reporting Methods ....................................................................................................................122

Module 1: HR Administration Section 1.2: Gathering, Measuring, and
Reporting HR Data
Introduction
Organizations use measurement systems to track results and plan their strategic
development. These measurement systems are an important part of any business
planning process. Metrics and measurements provide information on what works
and what does not.
Human resource professionals have the following responsibilities when measuring

and evaluating:
 Provide training on the purpose and use of essential metrics and
measurement tools.
 Provide measurement reports and data needed for organization-wide
assessments.
 Help the organization analyze and interpret measurements.
 Create and use programs that measure and evaluate HR programs and
initiatives.
Collecting data and analyzing metrics can be completed with little interaction
with people. However, these activities are still crucial to HR management. In
order to identify problems and improve processes, HR must define what success
is and then measure it. Using metrics and measures tells employees that the
organization is committed to specific values and goals.
This section examines the following HR responsibilities:

 Understanding research terms and techniques
 Describing the metrics and techniques used to gather HR data
 Understanding the methods and forms used to report HR data
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Reporting HR Data
Understanding Research Terms and

Techniques
HR can conduct its own research or use the research of others to support its
metrics. Any research that HR uses must be based on accurate measurements and
conclusions.
Your measurements are reliable only if you use reliable methods to collect and
analyze your data. Therefore, we will review the main concepts in data research
and analysis:
 Inductive reasoning and deductive reasoning
 Primary research and secondary research
 Experimental research process
 Quantitative and qualitative analyses
 Reliability and validity
Inductive and Deductive Reasoning

Inductive and deductive reasoning are processes for analyzing data. Both types of
reasoning are useful in some ways and limited in others. Figure 2-1 illustrates the
different approaches used in inductive and deductive reasoning.
Figure 2-1. Inductive and Deductive Reasoning Processes
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Reporting HR Data
Inductive reasoning starts with the specific and moves to a broader conclusion. It
involves two steps:
1. Look at a series of specific observations.
2. Design a rule that explains a pattern underlying the observations.
For example, an HR professional can gather data about a group of new hires who
are high performers. Most of the employees also speak more than one language.
The HR professional induces that, for this job, the ability to speak more than one
language is a good indicator of future success. The success of inductive reasoning
depends on the sample size and randomness, which are discussed later in this
section. In this example, a larger sample of new hires from different organizations
could produce a different pattern of data.
Deductive reasoning starts with the general and moves to a narrower conclusion.
It also involves two steps:
1. Start with a general or universal statement that is accepted as true.
2. Apply the premise to a new situation so that you can make a prediction or
improve your understanding.
For example, research at one organization shows that managers who maintain
very high levels of control have workers with lower morale. An HR professional
observes that a particular manager is very controlling. The HR professional
deduces that the organization will find lower morale in this manager‘s
department. The success of deductive reasoning depends on the reliability of the
starting premise.
Wherever possible an organization‘s procedures should be expressed using

inductive reasoning. In contrast, an organization‘s policies should be expressed
using deductive reasoning. Taken together the two reasoning methods explain
the how and the why of an organization‘s workplace rules.
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Primary and Secondary Research

Primary research involves data that the HR professional directly gathers for the
evaluation. Secondary research uses data that is gathered by others and reported in
various sources. Data from secondary research must be examined for relevance.
Methods of primary and secondary research are listed in Figure 2-2.
The choice between primary or secondary research depends on the question and
on practical limitations. For example, some questions are very specific and can be
answered only by primary research. Other questions are too broad to be tested
within a confined work environment and can be answered only by secondary
research.
Primary Research Secondary Research

 Experiments  Secondhand reports
 Pilot projects  Historical data (for example,
 Surveys and questionnaires HR records and census records)
 Interviews (exit, individual and  Purchased data (for example,
panel) Gallup data or Roper data)
 Focus groups  Professional journals, books and
 Direct observation other media
 Testing  Benchmarking and best-
practices reports
Figure 2-2. Sources of Primary and Secondary Research for Evaluating HR Effectiveness
Research projects can combine primary and secondary research. For example, an
organization wants to understand how recent technological changes have affected
frontline managers. Primary research can include the following:
 Focus groups of a cross section of managers
 Questionnaires sent to all managers
 Observation of several managers as they perform their daily tasks
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Secondary research can include the following:

 Articles about similar experiences in other organizations
 Analysis of personnel records to identify common elements in managers
who have been able to adapt to new technology
Experimental Research Process

Experimental research uses the scientific method to work with variables
(changing factors) and to examine the results. (Nonexperimental research does not
include variables. Instead, behavior is observed, measured and analyzed.)
Scientific research tries to be as objective as possible.
The HR professional can use the scientific method to discover the factors that
attract people to their jobs, that encourage them to stay at their jobs and that
motivate them to perform well at their jobs.
Five steps are included in the scientific method as indicated in Figure 2-3.
Figure 2-3. The Scientific Method
Step 1: Problem Analysis
Problem analysis means carefully defining the problem you are investigating.
Example
Sales figures are decreasing for all stores at a large organization. Employees
receive no sales training during this financial crisis. The HR professional should
conduct a short internal survey.
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Step 2: Hypothesis Formulation
Hypothesis formulation means describing the problem with a hypothesis. A

hypothesis is a specific, testable prediction that is derived from a theory and
describes a relationship between two variables.
Example
The HR professional makes the following testable hypothesis: after one year,
sales will increase more in stores where sales training is provided compared to
stores where sales training is not provided.
Step 3: Experimental Design
In an experiment, the researcher controls and manipulates parts of the research

environment to measure the impact of each variable. A well-designed experiment
helps us determine the causes with the greatest impact.
Example
All stores in the organization are divided into two similar and comparable groups
according to their sales turnover and size. In Group 1, the store employees receive
sales training. In Group 2, the store employees receive no sales training.
Step 4: Data Collection
Data consists of unanalyzed facts and figures. This data becomes information
when it is placed into a useful context (as with scientific research). Data may be
qualitative or quantitative. The difference between qualitative data and
quantitative data is discussed below.
Example
After one year, the sales turnover of both groups of stores is measured and
compared.
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Step 5: Data Analysis
The success of data analysis depends on the effort put into the first four steps.
Data analysis may be qualitative or quantitative. The difference between
qualitative data analysis and quantitative data analysis is discussed below.
Example
Data analysis shows that after one year, Group 1 (the group of stores with sales
training) has a better sales turnover.
This short internal survey helped HR promote more sales training for Group 2.
The survey also helped HR develop a sales training philosophy for the entire
organization.
Quantitative and Qualitative Data Analyses

Quantitative and qualitative data analyses both depend on the kind of data that is
used and how the data is collected. Quantitative analysis is based on a limited
number of data points that are easily measured. Qualitative analysis is based on
research that uses open-ended interviewing.
Many parts of the organization use only quantitative data analysis. The human
resources department is different from other parts of the organization because it
often uses both quantitative and qualitative data analysis.
Quantitative Analysis
Quantitative analysis uses a limited number of measurements to collect

numerical data. The use of statistics helps the HR professional with the following
tasks:
 Interpret the collected data
 Accomplish the desired research objectives
 Provide a cost-benefit analysis
 Communicate the results of the project
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HR professionals often used statistical methods to analyze compensation, benefits

and employee surveys.
Statistical methods used to interpret research data include descriptive statistics

and inferential statistics. We will discuss descriptive statics first.
Descriptive Statistics
Descriptive statistics condense and summarize large amounts of data for quick
understanding. Figure 2-4 shows types of descriptive statistics.
Descriptive Statistics
 Charts and graphs
 Frequency distributions and tables
 Measures of central tendency
 Measures of variation
 Measures of association
Figure 2-4. Types of Descriptive Statistical Data Used in Quantitative Analysis
Charts and Graphs
Showing data on a chart or graph lets the researcher see the distribution of scores.
Examples include pie charts, bar charts and graphs. The pie chart is a circular
chart that compares different parts as a percentage of a total amount. Figure 2-5
shows a pie chart.
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Figure 2-5. Pie Chart
The bar chart uses rectangular bars of different lengths to represent and compare
different values. Figure 2-6 shows a bar chart.
Figure 2-6. Bar Chart
The histogram and additional charts and diagrams are presented in Section 1.4:
Change Management and Business Process Improvement for HR Professionals.
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Frequency Distributions and Tables
Frequency distributions and tables are used to sort salary data. A frequency
distribution is a listing of grouped data, from lowest to highest. A frequency table
shows the number of people who receive a particular salary. Figure 2-7 shows a
frequency distribution and table for a determined of salary data.
Organization Salaries Number of

People
A 55,000 2
B 60,000 1
C 65,000 2
D 70,000 5
E 75,000 1
Figure 2-7. Frequency Distribution and Table
Frequency tables can be converted to histograms for a graphic representation of

the data.
Measure of Central Tendency
There are three measures of central tendency:

 The mean is the average score or value.
 The mode is the value that occurs most frequently.
 The median is the middle point above and below which 50% of the
scores are positioned.
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Example
Look at the data shown in Figure 2-8. There are 15 scores for a total of 155
points.
Figure 2-8. Example 1 of Measure of Central Tendency
The mean is the most common measure of central tendency. The mean is
calculated by adding all the data values and then dividing by the number of
values. The calculation in Figure 2-9 shows a mean of 10.33 based on the data in
Figure 2-8.
Figure 2-9. Calculation of Mean
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Figure 2-10 shows a graphical representation of the mean, median and mode for a
positively skewed distribution. In this distribution, most of the data values are at
the lower (left) end of the scale.
Figure 2-10. Example 2 of Measure of Central Tendency
The mean for salary data can be calculated as an unweighted average or as a

weighted average. The unweighted average, or raw average, gives equal weight to
every salary in the survey. Other factors (such as the number of people who
receive each salary) are not considered. The unweighted average is used when
organizations provide only the average salary data rather than actual salaries. The
weighted average, or weighted mean, considers the number of people who receive
each salary.
Figure 2-11 shows the salary data for unweighted and weighted average figures.
The unweighted average is 65,000 (325,000 divided by 5 average salaries
provided by the organization). The weighted average is 65,909 (725,000 divided
by 11 organization salaries).
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Organization Number of Annual Total

Incumbents Salary Salary
A 2 55,000 110,000
B 1 60,000 60,000
C 2 65,000 130,000
D 5 70,000 350,000
E 1 75,000 75,000
Totals: 5 11 325,000 725,000

Organizations
Figure 2-11. Salary Data for Unweighted and Weighted Average Figures
The mean is simple to calculate. However, problems can occur if there are very
few data values. For example, an organization provided a training program that
was rated by only five employees. If four employees rated the training program as
1 (indicating poor) and one rated it as 10 (excellent), the mean rating would be
2.8. This is not the best measure of perception of the training. In this case, the
mode, or the value that occurs most frequently, gives more information. In our
example, four out of the five data values are 1, indicating that most employees did
not find the training effective.
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Another problem occurs with a large number of data points that include extreme
scores. For example, an organization provided a training program that was rated
by 500 employees. Most of the employees rated the program as 7 on a 10-point
scale. However, some of the ratings were very high, and a few ratings were very
low. In this case, the median is the most useful. The median is the score that lies
directly in the middle of the values. To find the median, the data is listed in order
like the ascending order shown in Figure 2-8. The total number of data points are
counted (500) and then divided by two. The median is between data values 250
and 251 and is close to a rating of 7.
Quartiles and percentiles are also used to measure central tendencies. They both
show how groups of data are related to each other (also called dispersion).
Organizations use quartiles and percentiles to determine whether they lead, lag or
match the external market. For example, Figure 2-12 shows the range for one job
grade as reported in a salary survey.
Figure 2-12. Quartiles
Measures of Variation
Measures of variation show how much the data differs from the central tendency
values. In our training example above, the employees‘ rating of the training
program shows a large variation, with some very high ratings and some very low
ratings. This variation could indicate that some employees are insufficiently
prepared for the training. Measures of variation include the following:
 Range is the distance between the highest and lowest scores. The range is
calculated as the highest score minus the lowest score.
Example
The data 10, 11, 12, 68, 69 and 70 yields a range of 60 (70 minus 10).
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 Percentile is a point in a distribution that has a given percentage of cases

below it.
Example
If you take a test and are in the 68th percentile, you have scored better
than 68% of the test takers.
 Standard deviation shows how much the scores are spread out from the
mean or average. A normal distribution of data means that most of the
examples are close to the average and that only a few of them are very high
or very low. Normally, distributed data have graphs that look like the bell
curve in Figure 2-13. A large standard deviation tells you that the data is
diverse, while a small standard deviation tells you that the data is close
together. HR professionals use standard deviations to show performance
rating distributions.
Figure 2-13. The Theoretical Normal Distribution
Measures of Association
Measures of association show how two or more factors (variables) are related. For
example, income can be related to level of education, and the amount of air
pollution can be related to the incidence of respiratory disease.
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Measures of association include the following:

 Scatter diagrams show the relationship between data items using x and y
axes. These diagrams will be discussed later in this section.
 Correlation is a measure of the relationship between two variables. The
correlation coefficient is measured on a scale that varies from +1 through 0
to –1. When one variable increases as the other increases, the correlation is
positive. When one variable decreases as the other increases, the
correlation is negative. Complete correlation between two variables is
expressed by either +1 or –1. Complete absence of correlation is
represented by 0. Figure 2-14 shows a graphic representation of
correlation.
Figure 2-14. Correlation Coefficient
 Regression analysis is a statistical method that predicts a variable from

one or more other variables. The purpose of regression analysis is to
determine whether a relationship exists between variables and the strength
of the relationship.
A causal relationship exists when two variables are related in some way.
Three conditions must be met in a causal relationship:
o Evidence of association must exist.
o The dependent variable must change in a consistent way after the
independent variable changes.
o All other possible causes must be eliminated.
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Inferential Statistics
We have looked at five different types of descriptive statistics. Now we will

consider three different types of inferential statistics, as shown in Figure 2-15.
Inferential Statistics
 Population
 Sample
 Normal distribution
Figure 2-15. Types of Inferential Statistical Data Used in Quantitative Analysis
Inferential statistics lets you form a conclusion about a characteristic of a

population by studying a sample taken from that population. Three concepts
important in inferential statistics include population, sample and normal
distribution.
Population
A population is a group or a collection (of people, objects or measurements) that

you want to form conclusions about. A few examples follow:
 All the employees of an organization
 All the parts produced on a given day
 All the test scores of math students at a given level in a given district
Sample
HR professionals often do not use or cannot use an entire population to test a

hypothesis. Instead, they form conclusions about the population based on a part of
the population, or a sample. A sample of a population has the characteristics of
the whole group. For example, consider a cup of coffee with three cubes of sugar,
as shown in Figure 2-16.
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Assume the sugar represents the population. Add the sugar, and then take a sip
from the cup to taste if the coffee is sweet. This represents sampling the
population. You do not need to drink the whole cup of coffee to see if it has
enough sugar.
Figure 2-16. Sampling
Do not sample a population by choosing only people you know. In addition, make
sure that the sample is random. In random sampling, each member of the
population is equally likely to be chosen. An example of random sampling is in
surveys of voters before and after elections.
Normal Distribution
The normal distribution is the distribution that you expect to see after
conducting a random sampling across a large population. When you use
inferential statistics, you assume that the sample and the population under
examination conform to the characteristics of a normal distribution.
Qualitative Analysis
Qualitative analysis is based on research that uses open-ended interviewing to

explore and understand the opinions and behavior of individuals or a group of
individuals.
Qualitative research is the best research method for gathering information in

depth and in discovering underlying motivations, values and perceptions. In
contrast, quantitative surveys are best for gathering a breadth of information
regarding how many or how much.
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Qualitative research has many applications, including the following:

 Identifying strengths and weaknesses
 Exploring alternative communication methods
 Brainstorming/idea generation
Qualitative research can take many forms. A typical example is an interview with
individuals or groups. Some benefits and cautions related to common qualitative
research tools are described below.
Individual or Panel Interviews
An interview involves asking a carefully planned, structured series of questions in

a face-to-face setting. Interviews give researchers qualitative information and
yield additional insights through probing questions.
Figure 2-17 lists benefits of interviews and cautions regarding their use.
Benefits of Interviews Cautions for Interviewing

 Yield insightful information  An interviewer‘s nonverbal
 Provide opinions and reactions signals can influence responses.
to events  Interviewers should not ask
 Allow for personal connection leading questions.
to interviewee  Interviewees might answer
 Are flexible with what they think is correct.
Figure 2-17. Interview Benefits and Cautions
Surveys and Questionnaires
Many HR professionals find interviews to be more effective when used with the
questionnaire. Questionnaires involve asking a series of prepared questions in
written form. Four common approaches are listed below:
 Rating scales
 Yes, No or Don‘t Know answers
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 Open-ended essay questions

 Structured questions with multiple-choice answers
Rating scales provide fixed quantitative responses. For example, participants are
asked to read a series of statements and to indicate their degree of agreement, with
1 representing strong disagreement and 5 representing strong agreement. Rating
scales may consist of an odd or even number range. A scale of 1 to 5 allows
participants to choose a centered response (3). A scale of 1 to 6 does not contain a
center value and forces participants to choose a value in the lower range (1, 2 or
3) or the higher range (4, 5 or 6).
Rating scales are easy for participants to answer when the directions are clear.
These scales are sometimes combined with qualitative information. Qualitative
information may be obtained through open-ended questions that encourage
broader reactions than rated items.
Figure 2-18 lists benefits of surveys and questionnaires and cautions regarding
their use.
Benefits of Using Surveys and Cautions When Using Surveys and

Questionnaires Questionnaires
 Interviewee anonymity  Surveys and questionnaires are
 Efficiency less flexible than interviews.
 Standard data collection  Low response rates could yield
little data.
Figure 2-18. Survey and Questionnaire Benefits and Cautions
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Observation, Organizational Records and Testing
Some data-gathering methods have problems with objectivity, availability or cost-

effectiveness. In those cases, you can use a supplemental form of analysis.
Examples include the following:
 Observational techniques. For example, the person being observed is not
aware that his or her behavior, production or responses are being recorded.
 Archival information in organizational records. This information
includes performance appraisals, turnover data and personnel records.
 Job-relevant tests. Job-relevant means that the test accurately reflects a
person‘s ability to do a task, such as assembling electronic components or
using equipment.
When you collect personal data as part of a qualitative analysis, be aware of the
laws concerning data privacy in your country.
Reliability and Validity

Before you begin to analyze data, be sure that all data are generated in an
objective way. For example, use the same questionnaire or interviewer‘s manual,
the same time frame and comparable sample groups.
Your goal is to gather reliable and valid information that you can use to make
objective conclusions about a particular situation.
Reliability is the ability of an instrument to measure consistently. It is also

defined as the ability to repeat an experiment and get similar results.
Parallel Forms
This method uses two tests that are identical except for the test questions. For
example, a pre-test and a post-test can be considered parallel forms if they are
designed correctly. After both tests are completed, the two scores are correlated.
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Test/Retest
This approach measures the consistency of test scores over time. Participants take
the same test at two different times. After both tests are completed, the scores for
each individual are correlated.
Internal Consistency
Internal consistency tells you how well a test or procedure assesses the same
characteristic, skill or quality. For example, a test is divided into two equivalent
parts. The same person takes both parts of the test. Then scores from each part of
the test are correlated. These scores should be the same or very similar.
Rater Agreement
Do different raters or observers give consistent estimates of the same behavior?

You can check reliability by calculating the percentage of agreement between
raters. For example, a group of raters is observing an employee conducting a
meeting. They rate the employee‘s behavior as excellent, good, fair or poor in
twenty categories. The employee receives the same rating in fifteen out of twenty
categories. In this case, the percentage of agreement is 75%.
Training helps clarify the rules for rating and improves reliability among raters.
This is particularly helpful when you are using multirater instruments, such as
360-degree feedback surveys or evaluating employees using an assessment center.
Validity is the ability of an instrument to measure what it is intended to measure.

Validation answers two questions:
 What does the instrument measure?
 How well does the instrument measure it?
An instrument or method that is reliable is not always valid. However, an

instrument that is valid is always reliable.
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Human Resource Management and

Evaluation Metrics
We have discussed how HR supports the organization by providing training and
contributing data. HR professionals also have another important responsibility.
They must evaluate the effectiveness of HR functions and processes.
It is important is measure things correctly. It is even more important to measure

the correct things.
Initial Considerations
Before measuring and evaluating data, human resource professionals should
carefully consider the following:
 How were the data generated?
 Why were the data generated?
 Are the data comparable?
 Were the data correctly analyzed?
 Are different cultural understandings involved?
 Are the data privacy protected?
HR professionals should also consider opportunity costs. When you have a

limited budget or limited resources, the opportunity cost is the value of what you
must give up when you choose another option. For example, when an employee
participates in a day of training, the opportunity cost is the loss of participation in
work-related activities.
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As HR professionals gather and use data from different locations, they should also
consider the impact of cultural differences. For example, an organization with its
headquarters in one country conducts surveys only inside its own boundaries
because of data privacy considerations. In these situations, the HR professional
can take either of the following actions:
 Identify a different data collection method
 Do not include data from specific locations in the final analysis
Frequently Used HR Metrics

HR metrics can be used in the following ways:
 Comparing to metrics from previous years to see if organizational
performance has improved or declined
 Showing the benefit of HR practices and how HR professionals contribute
to the organization
 Comparing to the metrics of other organizations (benchmarking) to identify
best practices, areas of excellence and areas requiring improvement
An HR Metrics Toolkit, with sample spreadsheet templates and other

information regarding HR measurements and metrics, can be found at the
website of the Society for Human Resources Management,
http://www.shrm.org/hrdisciplines/Pages/CMS_005910.aspx. (This resource is
available to SHRM members only.)
Figure 2-19 describes some frequently used HR metrics and how they are used.
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Figure 2-19. Frequently Used HR Metrics
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Budgeted Headcount
The headcount method is one of the most straightforward methods used to create
a budget that accounts for compensation-related employee costs. Figure 2-20
provides an overview of the headcount method.
Figure 2-20. The Budgeted Headcount Method
A more detailed headcount estimate can be made by further subdividing an

organization into staffing layers and functions. Subdividing helps obtain a better
estimate of cost allocation as well any subsequent revenue-related forecasting.
Figure 2-21 provides examples of how you may want to subdivide an

organization.
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Figure 2-21. Subdividing for Headcount
Strengths and Weaknesses of the Headcount Method

One significant strength of the headcount method comes from its simplicity. The
headcount method is easy to understand, communicate and apply. It is most useful
for work that is routine and where the unique differences between job holders will
have little impact on the range of possible job productivity.
One significant weakness of the headcount method is its failure to differentiate

between the competence and subsequent potential productivity of different
individuals; all employees are considered equally productive using this budgeting
method. This weakness is especially profound in knowledge-based work where
one highly competent employee can be as productive as numerous less-competent
employees put together.
Evaluating HR’s Strategic

Contributions
Any organizational function can be measured at two levels: effectiveness and
efficiency. Effectiveness measures how well the organization has met its goals.
Efficiency measures whether operations are done on time and within budget.
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The efficient and effective use of human resources contributes to the

organization‘s success and profitability. HR can actively contribute to the
organization‘s strategic plan in the following ways:
 By suggesting ways for the organization to measure the effectiveness of the
strategic plan
 By demonstrating the value of HR activities to the organization‘s financial
considerations and organizational goals
HR professionals use a variety of metrics to measure the impact of organizational

changes. We will discuss four financial measures, two performance measures and
the analysis of trends.
Financial Measures
Human resource professionals can use the following four financial measures to
evaluate HR‘s strategic contributions:
 Return on investment
 Cost-benefit analysis
 Break-even analysis
 Financial statement analysis
Return on Investment
Return on investment (ROI) is defined in many different ways. In basic terms,

return on investment is a calculation that measures the economic return on a
project or investment. This calculation is for a specific investment or for a specific
commitment of money that is made.
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Figure 2-22. Formula for Calculating Return on Investment
Example
An organization lost 100 employees last year, at a cost of 10,000 each, for a total
of 1,000,000. With a new program that will require a one-time investment of
300,000, you can reduce turnover by 50%. This will mean a savings of 500,000.
The net savings the first year will be 200,000. The net return on investment of this
program for the first year would be 66.6%.
Figure 2-23. Sample ROI Calculation
ROI calculations require the following actions:

 Establish clear objectives.
 Define achievements in a measurable way that can be translated into a
monetary value.
 Gather data carefully.
Figure 2-24 illustrates ROI methodology.
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Figure 2-24. ROI Methodology
Cost-Benefit Analysis
The cost-benefit analysis presents data as a ratio. Management uses this analysis
to measure how programs impact the organization‘s profitability.
Figure 2-25. Formula for Calculating the Cost-Benefit Ratio
Example
A new HR program will result in total savings of 10,000. The cost of the program
will be 2,000. The cost-benefit ratio is calculated as follows.
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Figure 2-26. Sample Cost-Benefit Ratio Calculation
In HR, a cost-benefit analysis of all HR activities and programs should be

completed on a regular basis. Ideally, this happens once a year in conjunction
with the budget cycle.
The cost-benefit analysis process for the entire HR function includes the
following steps:
1. Identify each program in the HR plan.
2. Evaluate the effectiveness of each program based on the following:

o Cost versus projected benefits of the program
o Relevance of the program to corporate objectives
o Willingness and ability of line managers to execute the program
o Economic risks of not executing the program
3. Prioritize all programs and assign staff resources.
The return on investment calculation is for a single specific investment.
The cost-benefit analysis compares two or more options to help with decision
making.
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Break-Even Analysis
A break-even analysis is one of the simplest forms of cost-benefit analysis. In this

analysis, you find the time at which total revenue associated with the program is
equal to the total cost of the program.
To calculate the break-even point, divide the total cost by the total revenue.
Figure 2-27. Formula for Calculating the Break-Even Point
Example
A program has an annual cost of 35,000 and is expected to generate a savings of

40,000 the first year. The break-even point would be about 10.5 months.
Figure 2-28. Sample Break-Even Point Calculation
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Financial Statement Analysis
A financial (or income) statement explains revenues, expenses and profits over a
specified period of time—usually a year or a quarter. Financial (or income)
statement analysis is a common metric among investors. This analysis is used in
the following ways:
 To determine the financial health of an organization
 To measure the overall impact of a strategic plan
HR professionals can analyze financial statements in various ways:

 To calculate financial ratios, such as the rate of return the organization is
earning on the shareholders‘ retained earnings and assets
 To calculate profit margins, such as the gross profit margin, operating
profit margin and net profit margin
Performance Measures
HR professionals should focus on measuring results rather than on measuring
activities. An example of an activity is establishing a dispute resolution training
program for managers. An example of a result that can be measured is the number
of employees retained as a result of a change in dispute resolution. HR can
collaborate with internal stakeholders to select significant measurement points.
This collaboration will have two impacts:
 Ensuring that efforts are being directed at strategically significant
improvements
 Building understanding of the process and its value, which is essential for
cooperation in data gathering
We will discuss two performance measures, the balanced scorecard and

performance audits.
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The Balanced Scorecard

The balanced scorecard approach provides a concise and complete picture of an
organization‘s performance. Four main areas are assessed in a balanced
scorecard:
 Finance
 Customers
 Internal business processes
 Learning and growth
Additional information about the organizational use of the balanced scorecard

can also be found at the website of the Balanced Scorecard Institute,
http://www.balancedscorecard.org.
The steps for implementing the balanced scorecard system are similar to the steps
in strategic planning.
Step 1: Plan the Process
Planning involves the following points:

 Confirm the scope of the project and establish a project timeline.
 Outline a project communication approach.
 Determine organizational participation and roles.
 Confirm expected project deliverables.
Goals must be in place before the scorecard is used. If possible, recruit a person
from the organization‘s top-level management to provide support for the process.
Step 2: Design the Scorecard
Designing involves the following:

 Focus on measures that actively support the organization‘s strategy.
 Identify critical success factors.
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 Develop an action plan.

 Collect and prepare data.
 Decide on tracking measures.
Scorecards should be designed to match the organization‘s strategic goals.

Measurements should be tied to specific organizational activities.
Step 3: Employ and Refine Measures
In Step 3, the organization takes the following actions:

 Employ scorecards.
 Monitor performance gaps.
 Refine measures of the scorecard.
 Identify implementation issues.
You can use the balanced scorecard to measure the effectiveness of specific
initiatives of entire departments or the entire organization. Two examples follow.
 The Minnesota Department of Revenue used the balanced scorecard to
measure an initiative to increase taxpayer compliance. Measures included
revenue collected (the financial perspective), taxpayer education and
support (customer perspective), tax policy and internal processes (the
process perspective) and staff self-assessment (the learning and growth
perspective).
Programs should be piloted before they are formally implemented. Gradually use
the balanced scorecard in every division, department and process. Ideally,
scorecard use should start at the top of the organization, so people have direction
and understanding about the total organizational mission and vision.
Performance Audits
Performance audits assess the performance and management of a program by an

objective evaluator, using objective criteria.
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Reporting HR Data
An HR audit measures HR effectiveness and efficiency and demonstrates the

value of HR in helping an organization meet its strategic goals. The HR audit has
two main functions:
 Help organizational decision makers understand what is happening with
various HR activities
 Allow HR managers to determine which programs and positions should
be eliminated or enhanced
You can use HR audit checklists to indicate what items should be included in any
HR audit. The HR audit tool should allow HR professionals to assign a numerical
value to an assessment. This numerical value shows how effectively the
organization has put basic HR activities in place and how well these HR activities
are being performed. Either HR staff or a third-party contractor can conduct an
audit. The benefit of using an outside source is that it can be more objective in its
evaluation than using internal staff.
Before starting an audit, make sure that you have agreement to fix any legal
compliance problem you may discover as part of the audit. If you learn about a
problem and then ignore that problem, you may increase your organization‘s
liability.
Trend Analysis
Trend analysis uses statistics to determine whether relationships exist between

two variables. A manager who is looking at HR trends must look for variables
related to HR that seem to change predictably over time. The manager is
analyzing past performance as a predictor of the future.
Example: Using the six years of performance data in Figure 2-29, the HR
manager for ABC Books wants to project the demand for employees for years
seven and eight.
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Reporting HR Data
Labor Productivity HR Demand

Business Factors
Year (annual sales per (number of
(sales in millions)
employee) employees)
1 3.613 11,120 325
2 3.748 11,120 337
3 3.880 12,520 310
4 4.095 12,520 327
5 4.283 12,520 342
6 4.446 12,520 355
Figure 2-29. Performance of ABC Books
A simple trend analysis plots the number of employees each year for the last six
years. Figure 2-30 shows the trend analysis. You can use a statistical formula to
calculate the slope of the trend line. Then project this trend for two more years to
predict the number of employees. (The example assumes there is no turnover.
Turnover should also be considered when deciding on a final estimate.)
Figure 2-30. Trend Analysis Example
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Reporting HR Data
HR forecasts depend on the ability to predict variables (such as level of sales)

within workable limits. When you project figures into the future, the major
determinant is whether relationships will continue to exist. You must clearly
identify any assumptions used in the forecast. This identification will help other
people interpret and accept the information.
Reporting Methods
Reporting methods are ways in which you can effectively present data and
information that you have collected.
When you select the right reporting method, it can help you communicate the
organization‘s dynamics and make your presentations more valuable, accurate and
efficient.
When creating a report, be sure to highlight your data points and to focus on the
message. Many times the message can get lost in headings, graphics and other
formatting elements.
One reporting method is the Excel chart, which can be used to display lines, bars,
pie charts and scatter diagrams. Bar charts and pie charts were discussed earlier in
this section. Scatter diagrams are presented in Section 1.4. Before you choose a
method of presentation, carefully consider the type of information you are
presenting. For example, pie charts are useful when the information represents
parts of a whole. Line charts often represent tendencies of change as a function of
time.
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Reporting HR Data
The PowerPoint presentation is a delivery tool that allows you to create slides to
deliver your information. Whether you use PowerPoint or another presentation
program, consider the following guidelines for presentation design and delivery
(Reynolds 2008):
 Use the slides as an aid for the presentation, rather than depending on the
slides to present all your information for you.
 Make sure that the information on the slides does not distract the audience
from your spoken presentation.
 Don‘t overload the slides. Include only the most important and meaningful
information. Make each slide as simple and as concrete as possible.
 Try to evoke emotions. For example, use unexpected facts or scenarios to
capture the attention of your audience.
 Keep your presentation friendly and conversational.
 Interact with the audience as you present the information.
 Add images and other visual content that complements the presentation.
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Reporting HR Data
Practice Questions
1. You are creating a new hire training program for call center representatives. You decide to
run several focus groups and send out questionnaires. What term best describes these
types of research efforts?
a. Direct research
b. Indirect research
c. Primary research
d. Secondary research
2. Part of your HR responsibilities is to track job descriptions and salaries across the
organization. You need to sort salaries from lowest to highest and then track the number
of employees receiving the salary amount. What analysis tool can help you classify this
level of information?
a. Frequency table
b. Pie chart
c. Regression analysis
d. Secondary research
3. What is the mean of the following salaries?

Salaries: 40,000
50,000
65,000
76,000
a. 55,500
b. 40,000
c. 57,750
d. 76,000
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Reporting HR Data
4. What term is used to describe the ability of an instrument to measure consistently?

a. Reliability
b. Validity
c. Inferential
d. Normal
5. Participants in a training program are rating a facilitator‘s skills. They rate the facilitator‘s
skills as excellent, fair or poor in twenty categories. The trainer receives the same rating in
twelve out of twenty categories. What is the percentage of agreement?
a. 55%
b. 48%
c. 62%
d. 60%
6. Your organization invested 100,000 in an advertising campaign to promote a new service.

Your organization received 150 calls from the campaign, and half of the callers bought the
service. The amount of services bought totaled 500,000. What was the return on
investment?
a. 4%
b. 40%
c. 400 %
d. 4000%
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Reporting HR Data

1. c (p. 88)
2. a (p. 94)
3. c (p. 95)
4. a (p. 105)
5. d (p. 106)
6. c (p. 113)
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Reporting HR Data
1.3: Workforce Planning

and Employment Strategies

Knowledge Base:
Behaviors: 03. Maintain, file and process HR forms (for example, notices,
announcements, new hire forms and salary forms)
10. Assist managers in updating standard job descriptions in order to

match any changes in job requirements
Skills & Knowledge: 03. Documentation requirements for employees and their
employment
04. Management of HR documents (for example, managing files,

scheduling for records retention)
07. Employment best practices (for example, the best ways to recruit,
select and retain employees)
13. Different ways to classify employees(for example, workers who

are full time, part time, temporary, or those who receive payment
by the day)

Section 1.3: Workforce Planning and Employment
Strategies
Introduction ................................................................................................................................129
Workforce Planning...................................................................................................................129
Benefits of Workforce Planning ...............................................................................................131
Role of HR in Workforce Planning ..........................................................................................131
Four-Step Process for Workforce Planning .............................................................................131
Job Analysis ................................................................................................................................134

Job Analysis Benefits ...............................................................................................................136
Writing Job Descriptions and Specifications ...........................................................................136
Recruitment and Selection ........................................................................................................142
Employment Procedures ...........................................................................................................142

Staffing Options to Consider ....................................................................................................143
Employment Contracts, Records and Documentation .............................................................147

Module 1: HR Administration Section 1.3: Workforce Planning and
Employment Strategies
Introduction
An organization‘s success is built on the quality of its employees. Often, it is the
job of HR administration to recruit talented employees for positions and to ensure
employees support the goals and vision of the organization. To be viable,
workforce planning and employment strategies must be assimilated into the
organization‘s strategic objectives. In so doing, HR professionals must consider
both short- and long-term needs of the organization so that staffing requirements
can be anticipated in a timely manner.

 The scope of responsibilities related to workforce planning
 How to conduct a job analysis
 Employment strategies that can offer innovative solutions for your resource
needs
 How to maintain records for employees
Workforce Planning
Workforce planning is a disciplined process used to analyze an
organization‘s workforce and to prepare for future staffing needs.
Workforce planning helps HR determine whether future skill needs will
be met by recruiting, by training or by outsourcing the work.
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Organizations should conduct a regular and thorough workforce planning

assessment so that staffing needs can be measured, that training and development
goals can be established and that contingent workforce options can be used.
Workforce planning examines the type of work organizations will do in the future
and how that work will be performed. Workforce planning should consider
internal factors such as employees‘ skills and abilities and external factors such as
technologic advancements, social, economic and political conditions. Figure 3-1
illustrates these considerations for workforce planning.
Figure 3-1. Workforce Planning Considerations
130
Benefits of Workforce Planning

Many HR professionals believe that the ultimate benefit from workforce planning
is a vibrant, internal employee environment that transcends the boundaries
between business units and geographies. Additional benefits of workforce
planning are listed here:
 Allows managers to anticipate change rather than be surprised by events
 Provides managers with strategic methods for addressing present and
anticipated workforce issues
 Prepares HR for recruitment needs, restructuring events, downsizing
impacts and retraining
Role of HR in Workforce Planning

HR departments are typically responsible for many of the workforce planning
activities. Workforce planning is often a large-scale effort that requires budgeting
and resourcing. Senior management and leaders should be involved, so they can
contribute to the workforce planning process and provide the support you may
need. Several best practices for your workforce planning efforts are listed here:
 Designate a specific member of the HR team to manage the process.
 Find a leader to champion the plan.
 Involve major stakeholders in the workforce planning process.
 Align the plan with the company‘s strategic business plan.
 Coordinate the workforce plan with succession planning and career
development initiatives.
 Make workforce planning an ongoing activity, with continuous evaluation
of changes in the internal and external environment that may affect the
organization‘s staffing needs.
Four-Step Process for Workforce Planning

Use the four-step process shown in Figure 3-2 to help guide your workforce
planning.
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Figure 3-2. Workforce Planning Process

(Society for Human Resource Management, Practicing the Discipline of Workforce Planning
2010)
Supply Analysis
The purpose of supply analysis is to analyze the organization as it currently exists

and to identify the supply of labor and skills that are essential to the organization.
The supply analysis should evaluate the number of employees and workforce
demographics such as retirement projections.
A supply analysis also involves making projections of attrition due to the

following factors:
 Resignations
 Retirements
 Internal transfers
 Promotions
 Involuntary terminations
By examining these factors, a profile can be developed to predict what will

happen if no action is taken in recruiting, training or outsourcing.
Demand Analysis
The purpose of the demand analysis is to forecast the organization‘s future

workforce composition. This forecast should take into consideration a wide range
of business issues, as shown in Figure 3-3.
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Figure 3-3. Demand Analysis
Gap Analysis
The next step in the process compares the supply model with the demand model
to identify gaps between the composition of the current workforce and future
workforce needs. See Figure 3-4.
Figure 3-4. Gap Analysis
The workforce planning professional may want to categorize a variety of future

scenarios and then select the future that is most likely to occur, with contingency
planning for alternative futures. When conducting this analysis, be sure to identify
the additional number of employees with requisite skills and knowledge who will
be needed and employees who will no longer be needed because of limited skills
and knowledge.
133
Solution Analysis
Solution analysis is the process of creating strategies to close the gaps identified
during the gap analysis. Strategies may include the actions listed here:
 Recruiting
 Training and retraining
 Using contingent staff
 Outsourcing
The approaches selected will depend on whether the organization will need to
expand, contract, restructure or rely on contingent staff to meet new workplace
demands.
After a plan has been created, have leaders evaluate whether the plan can
anticipate and respond to future needs so that sound business decisions can be
made and executed. Performance indicators will include the following measures:
 Will the solution lead to profitability?
 Will the organization achieve a return on investment?
 Will the solution lead to productivity?
For additional information on workforce planning, see Module 2: Recruitment

and Selection.
Job Analysis
A job analysis is the process of gathering, examining and interpreting data about
the job‘s tasks and responsibilities. HR professionals conduct job analyses during
workforce planning and other employment activities such as hiring individuals,
evaluating current employees, accommodating persons with disabilities and
improving workplace efficiencies.
134
A job analysis evaluates the job, not the person doing the job.
The final product from a job analysis is an understanding of all duties and
responsibilities, a percentage of time spent for each group of tasks, the job‘s
relative importance in comparison with other jobs, the knowledge, skills and
abilities (KSAs) needed to perform the job and the conditions under which the
work is completed.
A job analysis requires the cooperation of the employee in the position, his or her
manager(s) and coworkers. Figure 3-5 lists the tasks to complete when conducting
a job analysis.
Figure 3-5. Job Analysis Tasks (Society for Human Resource Management, Job Analysis: How
Do I Conduct a Job Analysis to Ensure the Job Description Actually Matches the Duties
Performed by the Employee in the Job? 2010)
135
If there is more than one person doing the same job, make sure to observe and
obtain feedback and information from more than one person. You will want to
compare your findings with the employees and managers until you have an
accurate reflection of the job duties and responsibilities.
Job Analysis Benefits

Job analysis serves a wide variety of uses, as shown in Figure 3-6.
Figure 3-6. Uses of Job Analysis
Writing Job Descriptions and Specifications

The data you gather from a job analysis can be used to help write job descriptions
and specify the qualifications employees need in order to be successful in their
136
job roles. When writing and updating job descriptions, HR professionals should
work directly with managers who have specific knowledge of the job role.
Job descriptions are tools for workforce planning, recruiting, determining

salary ranges and levels or grades, establishing job titles, creating
employee‘s job goals and conducting performance reviews.
Job descriptions can also be used for career planning and, in some countries, for
meeting legal requirements for compliance purposes. In some cases, having
written job descriptions that accurately reflect the employee‘s job duties and
responsibilities can prevent legal issues. Organizations should audit their job
descriptions every few years, usually in conjunction with a compensation study
and whenever the organization‘s purpose, mission or structure changes.
A well-written job description summarizes the most important features

of a job, including a description of the work that details the required
tasks, knowledge, skills, abilities, responsibilities and reporting structure.
The following outlines the benefits job descriptions provide organizations:

 Defines the jobs for performance planning, transfer, promotion, staff
planning and career
 Uses standard formats that allow for consistent application
 Gives employees written definitions of their jobs
 Provides reliable sources for comparing job salary surveys
 Helps organizations move swiftly to increase or replace staff due to
increased business or turnover
 Helps the people responsible for workflow to perform systematic analyses
of organizations‘ work processes from start to finish (Society for Human
Resource Management, Job Analysis: How Do I Conduct a Job Analysis to
Ensure the Job Description Actually Matches the Duties Performed by the
Employee in the Job? 2010)
137
Elements of Job Descriptions
Job descriptions are typically written by HR with input from management and
should include the following elements.
Summary
The summary is a four- or five-sentence overview that summarizes the purpose

and objectives of the job. The summary section also covers the primary
responsibilities of the job, the results the worker is expected to accomplish and the
degree of freedom to act (for example, independently or under direct supervision).
Figure 3-7 is an example of a summary for a Director of Commercial Sales.
Figure 3-7. Job Description: Summary
Essential Functions
The essential functions are the tasks, duties and responsibilities of the job. The list
often includes statements explaining why the function is required. Figure 3-8 is an
example of essential functions for a Director of Commercial Sales.
Figure 3-8. Job Description: Essential Functions
138
Nonessential Functions
Nonessential functions are desirable but unnecessary aspects of the job that could
be reassigned to other employees if needed. Answering the following questions
can help HR professionals determine if a function is nonessential:
 How often must the function be performed?
 Can the function be performed by another employee?
 Can the function be eliminated or outsourced?
Figure 3-9 shows examples of nonessential functions for a Director of

Commercial Sales.
Figure 3-9. Job Description: Nonessential Functions
Knowledge, Skills and Abilities (KSAs)
KSAs are the specific competencies required for job performance. Figure 3-10
provides several KSAs for a Director of Commercial Sales.
Figure 3-10. Job Description: KSAs
139
Supervisory Responsibilities
Supervisory responsibilities include the scope of the person‘s authority, including

a list of job positions that report to the supervisor.
Working Conditions
Working conditions should list the environment in which the job is performed,
especially any unpleasant (or dangerous) conditions.
Minimum Qualifications
Minimum qualifications include the minimum knowledge, skills and abilities

required to enter the job.
Success Factors
Success factors are personal characteristics that contribute to an individual‘s

ability to perform well in the job. Figure 3-11 provides two success factors for a
Director Commercial of Sales.
Figure 3-11. Job Description: Success Factors
Helpful Resources for Writing Job Descriptions
Various resources are available for HR professionals to help develop job

descriptions, including SHRM Online, http://www.shrm.org, and O*NET, the
Occupational Information Network. O*NET, http://online.onetcenter.org, is the
replacement for the Dictionary of Occupational Titles (DOT).
140
O*NET moves occupational information into the technological age. It provides a

comprehensive database of worker attributes and job characteristics applicable in
both the public and private sectors and a common language for defining and
describing occupations. O*NET‘s flexible design also captures rapidly changing
job requirements.
The goal of O*NET is to improve the quality of dialogue among people who
communicate about jobs in the economy, generate employment statistics and
develop education and training programs. Employer hiring requirements will have
the same meaning for the following groups:
 HR practitioners
 Workers
 Education and training developers
 Program planners
 Students
Job Specifications
A well-written job description is the basis for writing effective job specifications.
Job specifications can be a separate section of the job description or a separate
document.
A job specification identifies the qualifications necessary for an

incumbent to be able to perform the job.
Job specifications must be carefully worded and reflect what is necessary for
satisfactory performance (see Figure 3-12). For example, if three years of
experience and a bachelor‘s degree in business would suffice, don‘t list six years
of experience and a master‘s degree in finance.
141
Figure 3-12. Job Specifications
Recruitment and Selection

Following the job analysis, the organization recruits and selects the most qualified
candidate for an open position.
Recruitment is the process of attracting, screening and hiring qualified people for
a job. Selection is the process of hiring the most suitable candidate for a job. HR
professionals should follow best practices in the following tasks:
 Developing a recruiting strategy
 Developing internal and external recruitment sources
 Becoming familiar with the most current recruiting tools and technologies
 Gathering the information needed to make a selection decision
Detailed information about best practices in recruitment and selection is presented in

Module 2: Recruitment and Selection.
Employment Procedures
One of the primary responsibilities of HR is to manage the daily needs of an
organization‘s staff. Staffing responsibilities are considerable and often touch
every milestone of an employee‘s career, from signing an employment contract
through retirement. If HR professionals are expected to respond quickly and
142
within legal limits, they must have an understanding of employment options and
how these can apply to individual employees.
Staffing Options to Consider

Today‘s labor market presents many different ways to staff an organization with
talent. It is best to discuss these options with the leaders in your organization and
to consider the contractual and legal implications for each option. You should
have terms such as full time and part time clearly defined and documented. Figure
3-13 provides descriptions of three traditional staffing options.
Staffing Option Description
Full time Employees scheduled to work a full workweek on an

ongoing basis; benefit eligibility depends on the
organization.
Part time Employees scheduled to work less than a regular

workweek on an ongoing basis; benefit eligibility depends
on various factors (for example, number of hours worked).
Independent Self-employed individuals hired on a contract basis for

contractor specialized services. Independent contractors generally
have a high degree of independence, judgment, skill and
discretion. They are compensated on a contract or fee
basis.
Figure 3-13. Traditional Staffing Options
Flexible Staffing
As organizations look for cost-effective and creative ways to recruit talent and to
ensure the organization‘s success and growth, flexible staffing offers employers
several desirable alternatives.
143
Also referred to as alternative staffing, flexible staffing uses alternative

recruiting sources and workers who are not regular employees.
Figure 3-14 shows several situations of how flexible staffing can provide a
solution for your workforce needs.
Figure 3-14. Flexible Staffing Scenarios
Figures 3-15 and 3-16 summarize important characteristics for some of the more
prevalent types of flexible staff, organized according to whether the employees
are on an organization‘s payroll or administration functions are outsourced to
staffing firms.
144
Flexible Staffing Options Offered by the Organization
Type Description
Temporary assignments Employees hired to work on a specified job to

supplement the regular workforce on a short-
term basis or for a specified period of time.
Temporary employees or Employees hired to work directly on a

floaters company‘s payroll for a short period of time,
which may require employees to float between
positions or departments.
On-call workers Employees who report to work only when

needed.
Seasonal workers Employees hired to perform seasonal work in a

variety of industries such as agriculture,
construction, tourism and recreation.
Figure 3-15. Flexible Staffing Options Offered by the Organization
Flexible Staffing Options through Outsourcing
Type Description
Finite temporary help Workers recruited, screened and employed by a temporary

help firm. The firm assigns individuals to work at client
sites for a finite duration such as covering an employee‘s
medical leave.
Figure 3-16. Flexible Staffing Options through Outsourcing (continued to next page)
145
Type Description
Temp-to-hire programs Workers hired on a temporary basis, usually through a

temporary placement firm. Employees understand they
may be offered regular employment if they perform
competently.
Contract workers Highly skilled workers supplied by a firm for long-term

projects. A contract defines the terms of agreement for
services provided by the worker.
Figure 3-16. Flexible Staffing Options through Outsourcing (concluded)
Legal Considerations for Flexible Staffing
The risk of assuming that an individual will not be regarded as your employee
could be significant. In some countries, if an organization misclassifies workers,
the organization may be required to pay fines and to provide workers with
retroactive benefits available to regular employees. Organizations should check
with legal sources to be sure they are compliant.
Alternate Work Schedules
Organizations may depart from the traditional workday or workweek to improve

organizational productivity and employee morale by giving employees increased
control over the hours they work. This approach can help employees balance the
demands of their personal life and work life. They can remain employed and keep
their skills current and still have the flexibility they require to take care of their
personal needs.
The use of alternative work schedules can also benefit the organization. Some
potential benefits include savings on overtime payments, work assignment
flexibility, increased productivity, reduced fatigue and lower rates of absenteeism.
Descriptions of flexible work arrangements are summarized in the Figure 3-17.
146
Type Description
Flextime Employees work an established number of hours per week

with varying starting and ending times.
Compressed workweek Employees work a compressed full week in fewer than five
days.
Regular part time Employees work less than full-time hours.
Job sharing Two part-time employees share one full-time job.
Phase retirement Employees gradually reduce the number of work hours

before full retirement.
Telecommuting Employees use electronic computing and

telecommunications equipment.
Working from home Employees work from their home rather than in the
company office(s).
Figure 3-17. Alternative Work Schedules
Employment Contracts, Records and Documentation

Once an organization decides on a staffing arrangement, the terms of the
agreement should be put into writing. Reaching consensus on the specific
mechanics of the arrangement requires attention to detail.
147
Figure 3-18. Agreements
The best agreement is one that accurately and precisely reflects the underlying
transaction. HR may need to work with legal counsel who are experienced in
writing staffing contracts when defining the terms for staffing.
Employment Contracts
A written contract helps clarify employment terms and avoid misunderstanding

and misinterpretation. While oral employment agreements are generally just as
enforceable as written ones, some terms can become hard to prove if one side
disagrees with specific terms or outright denies having agreed to the terms.
When contracts are put in writing, they should be designed to meet the needs of
the organization and the employee. Even with written contracts, any local and
national laws apply.
There are many items to consider in drafting a written employment contract.

Specific contract terms will vary based on the organization, the job and any
applicable laws. The following list names some items that may be covered in an
employment contract:
 Terms and conditions of employment
 General duties and job expectations of the employee
 Confidentiality and nondisclosure terms
 Invention or non-piracy clauses
 Compensation and benefits
148
 Noncompete clauses
 Change of control
 Terms for resignation/termination
 Relocation
 Severance provisions
 Appropriate signatures and dates
Maintaining Employee Records
Organizations have their own unique employment record maintenance practices.

Employee records can be maintained in paper form, scanned or completed and
maintained electronically. No matter what format is used, the maintenance,
security and retention requirements should be standardized and adhere to related
laws (Society for Human Resource Management, Complying With Workplace
Records and Reporting Requirements 2010).
Figure 3-19 illustrates a typical employee life cycle and the major milestones at
which HR professionals should generate and maintain employee records.
Figure 3-19. Employee Life Cycle
149
Audit Checklists
HR must give special consideration to where and how to maintain files, limiting
access to protect applicants and employees from discrimination, identity theft,
breach of privacy and any other legal violations. In some cases, HR may use
checklists to ensure the policies are being met. Figure 3-20 is an example of audit
checklist for personnel files.
Figure 3-20. Audit Checklist for Personnel Files (Society for Human Resource Management,
Audit: Personnel Files: Employment (Personnel) Records Audit Checklist 2010)
150
Documenting Employee Performance and Corrective Action
For legal purposes, performance documentation is among the most

important items in an employee‘s file. Current performance information
helps the supervisor justify the comments in the performance appraisal.
Documentation of employee performance can show the reasoning that led

to actions such as an increase in pay or a termination.
The following describe two common documentation practices:

 Performance diary: A performance diary is a record of crucial incidents or
tasks that are performed by the employee.
 Performance records: Performance records are notes that contain
performance indicators such as unit measures, quantity and quality measures,
and accounting and cost measures. Performance records should relate to the
employee.
All performance documentation must be specific, objective, accurate and

consistent.
The following guidelines will assist in your documentation efforts:

 Document as situations occur.
 Keep performance notes on all employees.
 Document job-related observations.
 Use objective criteria.
 Support your observations with facts.
 Focus on the deficiencies, not the perceived underlying cause.
 Avoid emotion; write with respect.
 Avoid conclusions; provide facts for others to use in reaching logical
conclusions.
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Remember that others may read your comments, so be sure that your
documentation is accurate and objective and that it focuses on behavior. Well-
written documentation can provide the following benefits:
 Improve employee performance
 Assist in communication with employees
 Help identify training and career development activities
 Reward and recognize good performance
Records Management Programs
Reporting requirements are often confusing, and organizations may not

understand what records to keep and for how long. A records management
program can help reduce this burden. To help determine the requirements for a
records management program, ask the following questions:
 What data and records currently exist?
 Where are the records stored?
 What records need to be kept and for how long?
 Who should have access?
 Is our record maintenance process efficient and compliant?
 What system will work best to ensure compliance with changing
requirements?
An effective records management program is the blueprint for compliance with

laws and regulations. A number of main elements should be considered when
developing, implementing and maintaining a records management program:
 Definition of record
 Retention schedule
 Access
 Storage and format
 Security and privacy
 Compliance with laws on record retention
152
 Careful and timely destruction of documents

 Consistent policy implementation and periodic audits (Society for Human
Resource Management, Complying With Workplace Records and
Reporting Requirements 2010)
Electronic Records
Your organization‘s records management program can include a policy that

provides broad guidance concerning paper documents and electronically stored
data. Electronic data includes e-mail, web pages, word-processing files, computer
databases and any other information that is stored on a computer and that exists in
a medium that can only be read through the use of computers. It can also include
hidden electronic data left behind when a manager adds or deletes text to a
performance review, formulas employees used for making spreadsheet
calculations, edits to a memorandum and other unintentionally stored data.
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Practice Questions
1. An employee is inquiring if he can work 7 a.m. to 3 p.m. instead of the company‘s

standard 8 a.m. to 4 p.m. Which of the following describes this alternative work schedule?
a. Compressed workweek
b. Regular part time
c. Flextime
d. Modified shift
2. What type of employee reports to work only when needed?

a. On-call workers
b. Finite temporary help
c. Seasonal workers
d. Floaters
3. __________ is the process of creating strategies to close the gaps identified during the gap
analysis.
a. Gap analysis
b. Demand analysis
c. Supply analysis
d. Solution analysis
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4. What is the purpose of a demand analysis?

a. To identify the supply of labor and skills that are vital to an organization
b. To identify gaps between the composition of the current workforce and future
workforce needs
c. To assess the current demand of an organization‘s workforce
d. To forecast the organization‘s future workforce composition
5. When maintaining files, what can HR use to help protect applicants and employees from
discrimination, identity theft, breach of privacy and any other legal violations?
a. Performance records
b. Gap analysis
c. Audit checklist
d. Retention schedule
6. What is the primary purpose of a performance diary?

a. To compute the average time needed for crucial tasks
b. To record crucial incidents performed by the employee
c. To decide the attitude of incumbents toward the job
d. To help supervisors rank employees‘ efficiency
155

1. c (p. 147)
2. a (p. 145)
3. d (p. 134)
4. b (p. 132)
5. c (p. 150)
6. b (p. 151)
156
1.4: Change Management and
Business Process Improvement
for HR Professionals

Knowledge Base:
Behavior: 07. Answer or refer questions from employees as the first level of
support
09. Monitor projects and suggest improvements (for example, ways

to recruit better applicants; resources for internal and external
training; ways to improve insurance, benefits, or compensation
plans)
Skills & Knowledge: 02. Change management concepts including terms and factors,
resistance to change and communication techniques (but not
including the implementation process)

Section 1.4: Change Management and Business Process
Improvement for HR Professionals
Introduction ................................................................................................................................159
Change Management .................................................................................................................159

Managing Change ....................................................................................................................159
Change Process Theory ............................................................................................................160
Managing Change in Organizations .........................................................................................161
HR‘s Key Role in Managing Change .......................................................................................164
Change Drivers .........................................................................................................................165
Project Management ..................................................................................................................169

Common Project Characteristics ..............................................................................................170
Common Project Phases and Roles ..........................................................................................171
Project Planning Tools .............................................................................................................172
Project Success .........................................................................................................................174
Quality Improvement Methods and Analysis .........................................................................175

Quality Standards .....................................................................................................................175
Quality Improvement Theories and Methods ...........................................................................176
Data Gathering and Analysis Methods .....................................................................................180
Benchmarking ..........................................................................................................................184

Module 1: HR Administration Section 1.4: Change Management & Business Process
Introduction
Change is constant in the world today for organizations and the people working in
them. It is important for organizations to adopt a planned process that uses the
principles of behavioral science to improve the way their organization functions.
This process is called organizational development.

 HR‘s role in communicating and managing change in organizations
 Project planning and management
 Business process improvement activities
Change Management
Managing Change
HR professionals need to develop the skill of managing change. Change is the
process of alteration or transformation that individuals, groups and organizations
experience for external or internal reasons. Change may be the result of a large-
scale strategic planning movement or of the introduction of operational changes
such as a new e-mail system. HR should be involved in managing the people
issues resulting from change.
The key to managing the change process is to be proactive, rather than reactive.
Participating in strategic planning allows HR professionals to have an impact on
upcoming change initiatives.
159
Organizations have to be flexible enough to adjust to consumer demands in order

to succeed in today‘s competitive economy. If an organization cannot change, it
will be replaced by another organization that expects changing needs.
Organizations that consistently do better than their competitors are not only open
to change but also have an underlying motivation to profit from change.
Change Process Theory

The change process theory explains the dynamics of organizational change.
Understanding these dynamics allows HR professionals to offer the proper
initiative to address the change. Figure 4-1 represents social psychologist Kurt
Lewin‘s three stages of the change process.
Figure 4-1. The Stages of Change Process Theory (Dessler 2008)
Unfreeze the current state: The purpose of this stage is to get people to accept
that the change will occur. Reducing factors that work against change is crucial at
this stage.
Move toward the new state: During the second stage, the focus is on getting
people to alter their behavior.
Refreeze the new state: Once the change has been carried out and generally
accepted, the focus should be on reinforcing and maintaining the changes. The
focus is on making the new idea a regular part of the organization (Dessler 2008).
160
Conditions That Make Change Possible
In their article, The Psychology of Change Management (2003), Emily Lawson

and Colin Price identify several conditions that make it easier for people to get to
the point where they will consider or try a new way of doing things:
 Shared purpose. If people believe in the overall purpose and reason for
the change, they will make an effort to change themselves.
 Reinforcement systems. The following support factors must be present
and must match the desired change initiative:
o Structures
o Management processes
o Encouragement
o Measurement
o Communication
 Consistent role models. The presence of a role model makes change real
and demonstrates that change is possible. Many role models (in addition to
managers and executives) need to be present throughout the organization to
keep the message of change alive until it becomes part of the way the
organization operates (Lawson and Price 2003).
Managing Change in Organizations

In a business environment characterized by constant change, it is no longer
enough for an organization to accept change. An organization must know how to
embrace change, that is, how to adapt and make changes quickly, effectively and
economically, with as little negative effect on the stakeholders (the organization,
shareholders, employees and communities) as possible (Jellison 2006).
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The J Curve of Change
In Managing the Dynamics of Change: The Fastest Path to Creating an

Engaged and Productive Workforce, Jerald M. Jellison writes: ―Change
suggests progress, growth, success and also the possibility of uncertainty, failure
and fear. The fundamental challenge of implementing change is how to help
people through their fears and doubts so they experience the joys of growth and
success. Knowing how to deal with these human aspects of change is important to
your success as a manager and leader‖ (2006).
To deal with these human dimensions of change, Jellison introduces the J Curve
of Change. The J Curve of Change describes people‘s performance, thoughts and
emotions as they deal with change. As shown in Figure 4-2, first there is a drop in
performance, followed by a ragged period of limited progress and then a steep
climb in performance improvement.
Figure 4-2. The J Curve of Change (Jellison 2006)
Jellison defines five stages in the J Curve of Change:

 Stage 1: The plateau. Before change is announced, employees are on a
performance plateau, following conventional patterns where they are
comfortable with the routine and have mastered their work. Resistance
appears when change is announced and continues to grow with varying
intensity as realization of the change moves into Stage 2.
162
 Stage 2: The cliff. As employees are forced to do things differently, the

Stage 1 pattern is reversed: failures now outnumber successes. The greater
the difference between the new and old ways of doing things, the greater
the drop in performance. Resistance becomes intense in Stage 2.
Employees are openly opposed to the change and express their desire to
return to the old ways.
 Stage 3: The valley. This is the stage where the shift between the old and
new ways of doing things can be observed. In the first half of Stage 3, net
performance is still decreasing but at a slower rate. Employees‘ negativity
also decreases. Uncertainty still exists. As employees move into the second
half of Stage 3, successes begin to outnumber failures, and cautious
optimism appears.
 Stage 4: The ascent. Performance improves remarkably, and the curve
rises almost as rapidly as the earlier descent. Skills are sharpened,
inefficiencies are eliminated, and problems are considered solvable
challenges rather than insurmountable barriers. Employees are confident
and motivated, driving performance higher.
 Stage 5: The mountaintop. In Stages 2, 3 and 4, performance was below
Stage 1 level. Now performance surges beyond its past highs as employees
find new and creative ways to apply the new approach and to invent new
solutions to old problems (Jellison 2006).
Activation
Activation is designed to promote early positive experiences, so the J Curve of

Change becomes more like a checkmark: moving the person from resistance to
conversion. Leaders can use the following key aspects of activation to change
Resisters into Doers and Believers:
 Break the change down into small steps.
 Front-load rewards.
 Make it safe to make mistakes.
 Provide guidance and training.
 Encourage involvement.
163
 Sympathize with negative feelings.

 Make it easy to get started.
 Stay committed to implementing the change.
The challenge for a leader or coach is to sympathize with those in Stage 1 and
help others through the tough times. The leader‘s main responsibility is in the first
half of the J Curve—meeting regularly with people and communicating often. As
employees achieve success, leaders should encourage celebration of results, so
employees will be ready for the next change. ―Even the boldest mountaineer
pauses at the peak to savor the view‖ (Jellison 2006).
HR’s Key Role in Managing Change

HR plays a key role in helping employees develop flexibility during change,
focusing on the following actions:
 Involve employees in the change process, so they will be more committed
to the outcome of change initiatives.
 Communicate with employees and top management throughout the
process.
 Educate employees that change is an ongoing and necessary process.
 Expect resistance and find ways to manage it.
 Show personal commitment, and present a positive attitude toward the
changes.
 Reinforce change with incentives.
 Use peer and group influence to show support for the change.
 Ensure that top management is visible and supportive of change initiatives.
 Remind top management that it has discussed and processed the changes
for a longer period of time than the rest of the organization; it will take
time for others in the organization to arrive at the same place as top
management.
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Change Drivers
Drivers of global organizational change and organizational development activity
and their impact are described in Figure 4-3.
Drivers of Change and

Impact
Organizational Development Efforts
Leadership or business strategy Changes in leadership and business strategy

changes often go hand in hand and may lead to some of
the additional changes listed here:
 Process improvements
 Mergers and acquisitions
 Organizational expansion
 Value creation efforts
Mergers and acquisitions Organizational development support may be

needed when a new group is brought into the
organization. International merger and
acquisition activities often require integration of
different national and organizational cultures.
Figure 4-3. Drivers of Organizational Change

165
Drivers of Change and Organizational

Impact
Development Efforts
Process improvements Quality and reduced time-to-market initiatives

are often significant reasons for organizational
change.
Cost reductions Cost reductions produce immediate financial

benefits for the organization. Efforts to reduce
costs may include the following:
 Reduce inventory
 Identify/use lower cost resources
 Evaluate suppliers
 Rationalize or renegotiate
Organizational expansion When an organization expands, HR

professionals should be involved in the
planning and carrying out of activities related
to the following factors:
 Start-up
 Planning
 Development
 Training
Including HR, will ensure strategic alignment

and assist in the risk analysis of global
expansion activities.
Figure 4-3. Drivers of Organizational Change

166
Drivers of Change and

Impact
Organizational Development Efforts
Value creation Value creation efforts tend to be long range,

but they are important to the continued
organizational growth.
Quick threat response Organizations must be prepared to respond

immediately across borders and around the
world if any one of the following occurs:
 A competitor acts
 Technology changes
 Legal requirements are revised
Figure 4-3. Drivers of Organizational Change (Kotter 1996)

(concluded)
Figure 4-4 shows an integrated view of Lewin‘s and Kotter‘s change strategy
models. It was developed by human resource practitioner Cesar Aguirre to
effectively explain the theoretical and practical aspects of the change management
process (Aguirre 2007). HR professionals may find this view helpful in describing
the total process of change.
Adapted by Cesar Aguirre—The Human Assets Group Corp., 2006 (Aguirre 2007).
Figure 4-4. An Integrated View of Change Strategy
167
As explained earlier in this section, most models for change include some aspects
of Lewin‘s model by describing the following:
 Activities that prepare for change (Unfreeze)
 Activities essential to making the actual change possible (Move)
 Activities or steps that focus on acceptance and adoption of the change
(Refreeze)
The model developed by John Kotter (Kotter 1996) describes change management
techniques for successfully carrying out the change.
 Create a sense of urgency.
 Assemble a strong guiding team.
 Provide a clear vision.
 Over-communicate.
 Empower action.
 Ensure short-term successes.
 Consolidate progress.
 Institutionalize.
The following recommendations may help to support over-communication

during change processes:
 Develop a written communication plan.
 Communicate consistently and frequently.
 Identify HR as a point of contact for employee questions.
 Plan enough time for providing clear responses.
 Use multiple communication channels (for example, speaking, writing,
Intranet, training bulletin boards).
 Communicate all important change information as soon as the
information is available.
 Clearly communicate the vision, the mission and the objectives of the
change management effort.
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Checklist for Assessing Readiness for Change
HR professionals can assist organizations in evaluating readiness and planning for

change by asking questions such as those shown in Figure 4-5.
Figure 4-5. Checklist for Assessing Readiness for Change
Project Management
Project management is a discipline that involves planning, organizing and
managing resources to bring about the successful completion of specific project
goals and objectives. It requires skill to oversee a project from start to finish.
A project team is a group of people who come together for a specific project.
169
Common Project Characteristics

A project is a series of tasks and activities. Projects vary in their duration and
complexity; however, all projects have the characteristics listed here:
 Stated goal and objectives
 Schedule with defined start and end dates
 Budget that establishes limits on the dedicated use of resources, both
monetary resources and human resources
Let‘s look at an HR project example shown in Figure 4-6.
Common Project Characteristics HR Example
Stated goal and objectives: An HR manager defines a goal to audit all job
descriptions and to reclassify employees following
All projects are established to fulfill
a merger between two organizations. Key
some need or requirement in the
objectives are to do the following:
organization. Within each project,
 Review all job descriptions.
there is a goal to be reached.
 Make changes to the job descriptions as
Objectives outline a path for
appropriate to reflect new responsibilities
achieving the goal.
under the merged organization.
 Reclassify employees as necessary.
 Communicate and explain the changes to
employees, supervisors and managers.
Schedule: The HR manager establishes a completion date for

six months following the merger.
Projects have a timeline that
finishes in a target completion date.
Figure 4-6. Common Project Characteristics (continued to next page)
170
Common Project Characteristics HR Example
Resource budget: A project team is established that includes the HR

manager, a compensation specialist and a staffing
All projects will use various
specialist. Together they determine that they will
resources (people, equipment, time
need administrative help to make the necessary
and money).
changes to the job descriptions.
Figure 4-6. Common Project Characteristics (concluded)
Common Project Phases and Roles

Projects have similar phases and roles, including the following:
 Conception: The project idea is born, and goals and objectives are
established. Senior management lend support as a project sponsor is needed
to support the project‘s efforts and ensure success. The purpose of a written
project charter includes the following:
o Describes the sponsorship
o Provides a basis for measurement of the project‘s success
o Aligns the project with organizational strategy
 Selection of manager and team: Managing a project involves many
responsibilities, which can be categorized into three main roles:
o Interpersonal: The project manager is a leader and liaison, with top
priorities building team norms and fostering harmony.
o Informational: The project manager is a spokesperson who gathers
and spreads information and is responsible for helping team members
communicate effectively.
o Decisional: The project manager allocates resources, negotiates
differences and encourages project progress.
171
 Planning, scheduling, monitoring and control: Throughout this phase of

the process, the project manager creates a project schedule and assigns
resources, and the work begins. The project manager is then responsible for
the following tasks:
o Overseeing the quality of work, the progress against the schedule and
the use of resources needed to complete the project
o Paying attention to risks and obstacles that could delay the project‘s
progress
o Taking action to mitigate risk and to remove obstacles
 Completion: In the same way the project conception was documented in a
charter, project completion should be documented in a report that describes
the following:
o Accomplishments and gaps
o Observations for future success
o Next steps
 Evaluation: Project managers may conduct evaluations at various points
throughout the process. At a minimum, project effectiveness should be
assessed at the end of the process, by referring to the goals and objectives
defined at project start.
Project Planning Tools

Project managers and their team members use a variety of tools and techniques to
plan, schedule and manage their projects. Two tools most commonly associated
with project management are Gantt charts and program evaluation and review
technique (PERT) charts.
172
Gantt Chart
The Gantt chart is also known as a horizontal bar chart, a milestone chart or an
activity chart. The Gantt chart graphically displays steps in a project in order by
start date and plots their expected duration with start points and end points. Each
activity includes the amount of work required to proceed from one point in time to
another. Gantt charts are used to plan a project or to monitor the progress of a
project. Figure 4-7 shows an example of a Gantt chart.
Figure 4-7. A Sample Gantt Chart
Program Evaluation and Review Technique (PERT) Chart
A program evaluation and review technique (PERT) chart is a project

management tool used to schedule, organize and coordinate tasks within a project.
It is generally used for very large, complex projects.
A PERT chart presents a graphic illustration of a project. Circles or rectangles

represent project milestones and are linked by arrows to show the sequence of the
tasks. When building the PERT chart, two inputs are required:
 Tasks required to complete the project
 Sequence of the tasks
173
Figure 4-8 is a sample PERT chart. Tasks that must be completed in sequence (A,
B, C, E and F) are called dependent or serial tasks. These tasks take the longest
time to complete and compose the critical path (that is, these tasks are crucial).
For the whole project to be completed and referred to on time, critical path tasks
must be completed on time. Task D is not dependent on other tasks and can be
completed at the same time as the other tasks. It is referred to as a parallel or
concurrent task.
Figure 4-8. Sample Section of a PERT Chart
Project Success
To help ensure project success, here are some considerations that should be
followed in any project:
 Continuous communication. Open, two-way communication is necessary
throughout the entire project. The project manager should constantly
update and explain the project to management, to customers and even to
the project team; however, each person on the project team should also be
responsible for this communication. Communication updates should be
incorporated into the project plan.
 Identification of success factors. The project team should identify the
factors in the organization that will help them reach the project objectives.
 Use of proven methodology. The project team should follow a consistent
project plan and methodology that has been proven to produce results.
 Use of contractors. If using third-party contractors, their role must be
clearly defined.
174
For more information on project management go to

http://www.pmi.org/Business-Solutions.aspx.
Quality Improvement Methods and

Analysis
Quality Standards
A number of methods for determining quality in organizations have been used in
recent years. In many countries, national standards are the most familiar and
therefore the most commonly used. The International Organization for
Standardization (ISO) is the world‘s largest developer of international standards.
The goals of ISO are to provide the following:
 A common basis for continuous improvement
 Defect prevention/variation and waste reduction
 A starting point for a closer working relationship among suppliers
The main purpose of ISO is to enhance and help trade between countries. Using
International Standards means that organizations can develop products and
services that are widely accepted internationally. Therefore, organizations using
International Standards can compete on many more markets around the world.
For more information on ISO, go to http://www.iso.org/iso/home.html.
175
Quality Improvement Theories and Methods

Quality assurance, customer satisfaction and continuous improvement are key
objectives for organizations that provide products and services. Over the past
thirty years several quality-related concepts and methods have been introduced
and used by many organizations in order to more systematically and continuously
improve the quality of their customer value proposition (CVP).
 Systems Theory
 TQM (Total Quality Management)
 Six Sigma
 Lean Six Sigma
Systems Theory
The systems theory is common in organizational development and is crucial to

achieving quality. A system is composed of interacting parts that work together to
achieve a goal. A system is meant to take in inputs, process them and produce
outputs, as shown in Figure 4-9.
Figure 4-9. System
176
According to the systems theory, organizations need to understand the

relationship between input, process and output and the environment in which
they occur. This understanding will help the organization improve its processes,
making them more efficient and cost-effective.
Total Quality Management (TQM)
Total quality management (TQM) is a strategic, integrated management system

for achieving customer satisfaction that involves all managers and employees. It
uses methods to continuously improve an organization‘s processes. Such a system
can provide the following benefits:
 Find and eliminate problems that interfere with quality.
 Identify customer(s) and satisfy their needs.
 Eliminate waste.
 Encourage pride and teamwork.
 Create an environment that encourages creativity.
TQM is closely associated with the Japanese continuous improvement concept

known as Kaizen. Kaizen is a Japanese business philosophy advocating the need
for continuous improvement in quality, technology, processes, company culture,
productivity, safety and leadership.
Six Sigma
Six Sigma is a strategy that identifies and removes the causes of defects and errors
in manufacturing and business processes. This strategy originated in the 1980s
and uses data and facts to measure performance of a process or a product. Six
Sigma targets three main areas:
 Improving customer satisfaction
 Reducing cycle time
 Reducing defects
177
Figure 4-10. History of Six Sigma (Pande and Holpp 2002)
Six Sigma lends itself well to manufacturing, but it is increasingly used in

financial industries, health care, government, public education and other
environments. Here are some examples:
 A hospital system studied variations and made improvements in patient
care practices, patient costs and hospital utilization. Other areas of focus
were billing errors, excess inventory, excess overtime and employee
turnover.
 A debt collection agency gathered historical information and solved
process problems, which improved debt collection rates.
 The HR function of a service agency reduced the cycle time of recruitment,
the payroll processing cycle, the number of employees working on
weekends and employee attrition.
To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities. A Six Sigma defect is defined as anything outside of
customer specifications; a Six Sigma opportunity is the total number of chances
for a defect.
178
Six Sigma uses two processes, DMAIC and DMADV:

 DMAIC (define, measure, analyze, improve, control) is an improvement
system for existing processes falling below specifications and looking for
incremental improvement.
 DMADV (define, measure, analyze, design, verify) is an improvement
system used to develop new processes or products at Six Sigma quality
levels.
Both Six Sigma processes are carried out by two groups:

 Six Sigma Green Belts (employees)
 Six Sigma Black Belts (project leaders)
The processes are overseen by Six Sigma Master Black Belts (quality leaders).
Lean Six Sigma
Lean Six Sigma is a strategy that eliminates waste and improves process flows.
Lean focuses on resource optimization through logistical coordination and
inventory minimization. The difference between Lean Six Sigma and Six Sigma is
as follows:
 Lean Six Sigma is about eliminating waste, taking time out of processes
and creating better flow.
 Six Sigma is a business strategy built around the concept that organizations
gain a competitive edge by reducing variations, thus defects. Eliminating
variations is a long and involved process.
To make a decision about whether to use Lean Six Sigma or Six Sigma tools, you
can look at the types of business problems that need to be solved.
Lean Six Sigma tools are more appropriate if the following business problems
exist:
 There seems to be a lot of waste.
 There is a need to minimize inventories and redundancies.
 There is a need to improve work flows.
179
 There is a need to speed up processes.

 There are human mistakes.
Six Sigma tools are more appropriate if the following business problems exist:
 There are quality issues.
 There is too much variation.
 There are complex problems.
 There are challenging root cause identifications.
 There are numerous technical considerations.
For more information on Six Sigma go to

http://www.isixsigma.com/sixsigma/six_sigma.asp.
Data Gathering and Analysis Methods

Improvement efforts begin with understanding the problem. In some cases, the
problem may be evident and can be easily fixed, while in other cases the problem
may involve many business functions and input from thousands of employees.
The tools outlined below are often used to help gather and analyze data for
improvement initiatives:
 Process-flow analysis
 Cause-and-effect diagram
 Histogram
 Scatter diagram
 Pareto chart
 Gantt chart
The following paragraphs describe each of these tools in detail.
Process-Flow Analysis
A process-flow analysis (or flowchart) is a diagram of the steps involved in a

process. This diagram shows a process and its outputs. Figure 4-11 illustrates a
process flow for the assembly of a pen.
180
Figure 4-11. Process Flowchart
Cause-and-Effect Diagram
A cause-and-effect diagram (or Ishikawa diagram or fishbone diagram) maps the

factors that affect a problem or a desired outcome. HR professionals use cause-
and-effect diagrams to explain employee turnover or to better understand a
process failure. Figure 4-12 shows a cause-and-effect diagram.
181
Figure 4-12. Cause-and-Effect Diagram
Histogram
A histogram is a graph that shows how a single type of measurement is

distributed. The data is represented by rectangles of varying heights, with the
rectangles usually touching. Data that is normally distributed has a histogram that
is bell-shaped. Many other distributions do not follow this pattern and can still be
depicted by a histogram. Figure 4-13 is an example of a histogram.
Figure 4-13. Histogram
182
Scatter Diagram
A scatter diagram shows possible relationships between two variables. For

example, an HR professional wants to find out if there is a relationship between
years of education and amount of income. The years of education are placed on
one axis and the amount of income on the other. In the scatter diagram example in
Figure 4-14, the amount of each factor rises along an imaginary diagonal line. The
level of education and the amount of income are rising together. The scatter
diagram makes it easy to see points or conditions that do not fall near this line.
Figure 4-14. Scatter Diagram
Pareto Chart
A Pareto chart is based on the Pareto Principle, which states that 80% of effects
come from 20% of causes. A Pareto chart is a vertical bar graph where the bar
height shows the frequency or impact of causes. Figure 4-15 is a sample Pareto
chart.
183
Figure 4-15. Pareto Chart
Gantt Chart
A Gantt chart, described previously in this section, is helpful for analyzing project
timelines and for tracking your data analysis processes.
See Figure 4-7 for an example of a Gantt chart.
Additional charts and diagrams are presented in Section 1.2: Gathering, Measuring
and Reporting HR Data.
Benchmarking
Benchmarking is the process of measuring key criteria that can be compared
across organizations. Benchmarks are useful because they provide insights into
the ways other organizations manage similar functions. An organization can
benchmark data for almost any aspect of its operation.
184
Benchmarking, depicted in Figure 4-16, involves two organizations that have

previously agreed to share information about their processes or operations. Any
organization has the right to retain information considered private. The companies
may or may not be competitors. Third-party services are often used when the
direct sharing of information may breach confidentiality, privacy or competition
regulations.
Figure 4-16. Benchmarking
The benchmark you use must be comparable to the function or situation you are
assessing. For example, turnover can differ widely from organization to
organization and from branch to branch within an organization.
The industry and the number of employees in an organization can impact

human capital metrics. When comparing your organization to others, be sure that
the other organizations are in similar industries and have similar employee
numbers.
Kinds of Benchmarking
Organizations choose to compare themselves to other organizations for many

different reasons. The benchmarks are based on a very wide range of factors, from
energy use to research and development expenditures. The following describes
four kinds of benchmarking:
 Internal benchmarking: when comparisons are made inside the
organization
185
 Competitive benchmarking: when comparisons are made against

competitors
 Industry benchmarking: when the organization‘s standards are compared
to the standards of other organizations in the same industry
 World-class benchmarking: when the organization‘s level of
achievement is compared to the achievement of the best organizations in
the world, regardless of industry (Hindle 2008)
HR Benchmarking
Benchmarking can be applied to the HR function. Figure 4-17 lists examples of

human resource criteria that may be helpful for your organization to benchmark.
Benchmark Examples
 Health care cost per employee  Turnover rate
 Pay and benefits as a  Turnover cost
percentage of operating  Time to fill jobs
expense  Human value added
 Cost per hire
 Return-on-training investment
Figure 4-17. Human Resource Benchmark Examples

(Society for Human Resource Management 2006)
In some situations, you will need to gather or exchange comparison data quickly.
Informal benchmarks provide a useful initial measure. For example, social
networks and Internet platforms allow people around the world to post questions
and get answers quickly and easily. Informal benchmarks are less exact, but they
are often faster and less expensive.
186
There is a difference between the terms benchmarking and competitive

analysis. Competitive analysis compares a product from the organization with a
competitor‘s product. Characteristics and prices of both products are compared.
Benchmarking not only compares price and characteristics but may also compare
additional factors such as how the product is designed, developed and
distributed.
Benchmarking Limitations
Benchmarking is a difficult process that demands commitment for success.

Consider the following limitations before deciding to benchmark:
 Availability of competitors that are suitable for comparison
 Difficulties in comparing data
 Constraints in resources, such as time, money and expertise
 Resistance from staff (Business Performance Improvement Resource 2011)
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Practice Questions
1. Which stage of Lewin‘s Change Process Theory focuses on getting people to accept the
new desired state?
a. Unfreeze the current state
b. Move toward the new state
c. Refreeze the new state
d. Prepare tentative plans
2. Which stage of Lewin‘s Change Process Theory involves getting people to accept that the
change will occur?
a. Unfreeze the current state
b. Move toward the new state
c. Refreeze the new state
d. Prepare tentative plans
3. What is the focus of Stage 3 of Lewin‘s Change Process Theory, Refreeze the New State?
a. Getting people to accept the new, desired state
b. Assisting employees in adapting to change
c. Making the new idea a regular part of the organization
d. Getting people to accept that the change will occur
188
4. In which stage of Jellison‘s J Curve of Change are employees openly opposed to the
change and are expressing their desire to return to the old ways?
a. Plateau
b. Cliff
c. Valley
d. Ascent
5. All of the following are common characteristics of a project except:

a. Reinforcement systems
b. Stated goals and objectives
c. Resource budget
d. Schedule with defined start and end dates
6. A strategic, integrated management system for achieving customer satisfaction that

involves all managers and employees and uses quantitative methods to continuously
improve an organization‘s processes is known as __________.
a. Systems Theory
b. Change Process Theory
c. Lean Six Sigma
d. Total Quality Management (TQM)
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7. Which approach is about eliminating waste, taking time out of processes and creating
better flow?
a. Lean Six Sigma
b. Six Sigma
c. Systems Theory
d. Total Quality Management (TQM)
8. What tool maps the factors that affect a problem or a desired outcome?
a. Histogram
b. Pareto chart
c. Scatter diagram
d. Cause-and-effect diagram
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191

1. b (p. 160)
2. a (p. 160)
3. c (p. 160)
4. b (p. 163)
5. a (p. 170)
6. d (p. 177)
7. a (p. 179)
8. d (p. 181)
192
1.5: Organizational Policies,

Procedures and Regulations

Knowledge Base:
Behavior: 04. Make sure the organization follows legal and industry
regulations
Skills & Knowledge: 08. Organizational policies and procedures
09. HR ethics and professional standards
10. Confidentiality and privacy rules that apply to employee records,

company data and individual data

Section 1.5: Organizational Policies, Procedures and
Regulations
Introduction ................................................................................................................................195
The Influence of Law on the Organization ..............................................................................195
Jurisdiction ...............................................................................................................................199
Legal Areas Monitored by HR..................................................................................................199

Laws of Employment ...............................................................................................................201
Compensation and Benefit Laws ..............................................................................................202
Occupational Health and Safety ...............................................................................................202
Anti-Discrimination, Harassment and Fair Work Laws ...........................................................203
Exploring the Legal and Regulatory Issues for Your Organization .........................................203
Considerations Involving Legal and Regulatory Environments ..............................................204
HR Ethics and Professional Standards ....................................................................................211

HR‘s Role (CSR) in Promoting Organizational Ethics ...........................................................211
Corporate Social Responsibility (CSR)....................................................................................218
Policies, Procedures and Work Rules ......................................................................................225

HR Responsibilities for Workplace Policies, Procedures and Work Rules .............................225
Confidentiality and Privacy Regulations .................................................................................228

Privacy Protection ....................................................................................................................228
Developing Employee Privacy Programs ................................................................................230

Module 1: HR Administration Section 1.5: Organizational Policies, Procedures and
Regulations
Introduction
Legal systems impact an organization‘s mission and ability to conduct its business
activities. The legal and regulatory environment is often complex, which can
provide a challenge for HR management. To be effective, it is crucial for HR
professionals to conduct a comprehensive review of related laws and to
understand how these laws affect the organization‘s business activities and
employees.

 The influence of law on the organization
 Legal areas monitored by HR professionals
 HR ethics and professional standards
 Policies, procedures and work rules
 Confidentiality and privacy regulations
The Influence of Law on the Organization

HR professionals must be proficient learning about related laws and applying
these laws to employment practices. For example, if your organization is required
to follow certain safety and health laws, these laws will direct how your safety
practices are shaped and enforced.
If your organization is conducting business abroad, you will need to understand

the laws of not only your country but also the laws of countries where your
organization has a presence. Figures 5-1 through 5-3 demonstrate how laws across
country borders can impact your organization.
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Regulations
Figure 5-1. Example 1 of Laws across Country Borders
Seeking Legal Advice
Each of the previous examples requires the HR function to carefully evaluate the
legal and regulatory environment in the context of the organization‘s strategic
mission. It is recommended you seek expert legal advice for specific legal
disciplines and the laws of specific countries. Legal professionals can help you
identify potential concerns, mitigate undesirable consequences and ultimately
avoid litigation.
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Regulations
The complexities of legal and regulatory issues are also reflected in the
legal profession. Lawyers are able to practice law within predetermined
geographies and specialties. As an HR professional, you will often seek
advice from more than one lawyer. Or your organization‘s legal counsel
may engage additional experts.
Rule of Law
The rule of law states that all citizens are subject to the laws of their country, that
no individual is above the law, and that everyone must obey the law. Due process
protects citizens against abuses of power by governments and deprivation of their
rights.
There are three major legal systems of the world. Definitions are listed in Figure
5-4. Many national legal systems are actually hybrids, blending civil, common
and religious laws.
Type of Description
Law
Civil Civil law is based on written codes, such as laws, rules or regulations
created by legislative bodies. The law is applied in a deductive
manner to each matter brought before a legal court, which will make
a decision by applying the specific language of the directive to each
specific case. Civil law is the most prevalent form of law.
Common Common laws have evolved over time through court decisions and
legal precedence among English-speaking people. Common law is
created by judges, unlike civil law, which is created by legislators.
Religious Religious laws are based on religious beliefs and codes.
Figure 5-4. Legal Systems of the World
197
Regulations
For those organizations conducting business abroad, HR should seek legal advice
for how international and extraterritoriality laws may apply to HR issues.
Definitions for each type of law are described in Figure 5-5.
Type of Law Description
International law International law involves both the relationships between

nations and the treatment of individuals within national
boundaries. Jurisdiction usually comes from treaties,
conventions, pacts, protocols and covenants. Nations may
also enter into joint agreements regarding such employment-
related issues as totalization (alignment of pension plans) and
visas.
Extraterritoriality Extraterritoriality law is defined with the following two

law definitions:
 Being exempt from local law, or having immunity

from the laws of the country in which one is living
 The extension of the power of a country‘s laws over

its citizens outside that country‘s sovereign national
boundaries
For example, the United States has enacted a series of laws

that relate to employment. Under certain circumstances, these
laws govern the non-United States‘ operations of United
States‘ organizations.
Foreign compulsion exception applies when a law of an

organization's home country does not apply because it is in
conflict with laws of the country where the organization is
doing business.
Figure 5-5. Legal Systems of the World

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Regulations
Directly versus Indirectly Binding Law
An international law or treaty directly binds the nation-states that are

participants, not their individual citizens. These states are bound to
change these legal obligations into national laws.
For organizations and their employees, these international or

supranational laws and agreements are indirectly binding.
Jurisdiction
Jurisdiction refers to the right and power to interpret and to apply the law, often
within a certain geographical region. The question of jurisdiction may directly
affect some organizations. Under territorial jurisdiction, a legal body may decide
cases based on any activity that occurs within its borders (with some exceptions).
Because some organizations operate across more than one jurisdiction,

they are liable to a litigation phenomenon called jurisdiction or forum
shopping. This situation occurs when plaintiffs bring their suit in a
jurisdiction that is more likely to be sympathetic to their claims.
The change in jurisdiction may mean expanded discovery rules will

apply. The organization‘s documents and communications may become
public, and global reputations may be damaged in the process.
Legal Areas Monitored by HR

Many federal laws, common laws and international laws help frame the
relationship between organizations and employees. These laws protect and secure
the rights of employers as well as employees, both union and nonunion.
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Regulations
HR professionals often play a key role in employee relations by developing

policies and procedures, supportive communication and training programs. HR
helps keep the entire organization compliant.
The legal environment monitored by HR typically includes, but is not limited to,
the areas identified in Figure 5-6. These legal areas are described in the sections
to follow.
Figure 5-6. Legal Areas Monitored by HR
200
Regulations
Laws of Employment
Laws of employment typically address the following employment conditions:
 Work rules: Work rules include items like hours worked, time off and
length of shifts.
 Redundancy: Redundancy (also known as layoff) refers to instances in
which employment ends due to reductions in the number of employees
needed, relocation of the facility or other situations.
 Termination: Termination refers to instances when an employee‘s
employment ends either for voluntary reasons (quitting, end of contract,
mutual agreement) or involuntary reasons (misconduct, disciplinary).
 Employment contracts: The employment contract law includes both the
legal aspects of the agreement between the employee and employer as well
as cultural influences.
 Immigration and/or citizenship laws: Many countries have various levels
of restriction regarding employment of nonnationals of their country. These
laws often apply to government employment, the military and other
positions.
 Labor or industrial laws, customs and practices: These laws address
various issues concerning employment conditions. The customs and
practices include conditions that cannot be directly attributed to a written
law or to terms in the employment contract. Two examples are described in
Figures 5-7 and 5-8.
Figure 5-7. Local Customs versus Department Policy
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Regulations
Figure 5-8. Local Practice versus Employment Agreement
Compensation and Benefit Laws

Compensation (also called remuneration) and benefit laws describe the conditions
for how employees are compensated (or remunerated) and the benefits accorded
employees as part of their employment. These laws vary greatly from country to
country. Legislation has been enacted for the following reasons:
 To arrange a minimum wage
 To govern overtime pay
 To protect employees from wage discrimination
 To decide how compensation is taxed
HR professionals should have a thorough understanding of compensation and

benefits laws for all jurisdictions where the organization has a presence.
Occupational Health and Safety

Organizations operating in the twenty-first century must comply with laws,
regulations, minimum requirements and recommended industry best practices
regarding the management of occupational health, environmental, safety and
quality aspects across the value chain.
In the International Labour Organization (ILO) health, safety and environment

(HSE) guidelines, every employee has a right to a safe workplace, safe
environment and competent supervision, among others. Because of the nature of
202
Regulations
HSE regulations and the need to ensure strict compliance, HR plays a primary
role in managing the accountability process.
Some countries have practices that are quite lax in comparison to those in other
countries. In these cases, employers expect the HR professional to advise and
develop policy to ensure that in their place of work employees know they are
highly regarded.
Anti-Discrimination, Harassment and Fair Work Laws

Anti-discrimination, harassment and fair work laws vary from country to country.
These laws may be influenced by cultural and societal norms. HR professionals
should have a thorough understanding of anti-discrimination, harassment and fair
work laws for all jurisdictions where the organization has a presence.
The HR professional‘s responsibility is to develop policy and practices consistent

with the corporate culture to ensure employees of their care and also to be seen as
a preferred and best practice employer.
Exploring the Legal and Regulatory Issues for Your

Organization
Identifying the legal and regulatory issues for your organization requires a
disciplined and ongoing process. The five steps outlined in Figure 5-9 can help
guide your exploration.
Figure 5-9. Identifying Legal Issues for Your Organization
203
Regulations
Throughout the five-step process, seek the advice of your organization‘s legal
counsel to help with the following:
 Identifying issues
 Interpreting related laws
 Ensuring that the policies and procedures are compliant
In addition, the following additional resources can help you understand local laws
and regulations:
 Chambers of commerce, boards of trade or business networks
 Law schools (both the schools‘ libraries and faculty)
 Consultants
 Legal firms
 Industry associations
Considerations Involving Legal and Regulatory

Environments
Figure 5-10. Anonymous Quote
There are many questions you need answered as you identify the legal and
regulatory issues for your organization. The following worksheets provide a list of
questions you can use to inventory the parameters of your legal environment.
There are three worksheets. Each worksheet contains questions that pertain to one
dimension of the legal environment. Figure 5-11 summarizes the purpose for each
worksheet.
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Regulations
Primary Question Answered by Purpose

Worksheet
Worksheet 1: Where does the  Identify the localities where the

organization operate? organization has a presence.
 Evaluate if additional jurisdictional
issues exist.
Worksheet 2: What does the  Identify how the products or

organization produce? services provided by the
organization impact the legal
environment.
 Locate regulations specific to your
organization‘s industry.
 Determine how the products or
services produced impact employee
work conditions.
Worksheet 3: What are the  Inventory the laws and regulations

parameters of the laws affecting that affect employee and labor
employee and labor relations? relations.
 Focus on the laws and regulations
monitored by and relevant to HR.
Figure 5-11. Worksheet Summary
Worksheet 1: Where Does the Organization Operate?
Directions: Figure 5-12 contains exploratory questions about where your

organization has a presence. Your responses represent the potential geographical
areas whose laws should be considered as part of your legal environment.
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Regulations
Exploratory Question Your Response
What is your location? Country State, Province, etc.
Where does the organization Country State, Province, etc.

have other physical
locations? For example,
divisions, headquarters,
offices, plants, warehouses,
etc.
To where does the Country State, Province, etc.

organization export products
or services?
From where do your Country State, Province, etc.

suppliers import materials,
goods or services to the
organization?
Figure 5-12. Worksheet: Organization‘s Geographical Presence
Worksheet 2: What Does the Organization Produce?
Directions: Figure 5-13 contains exploratory questions about laws and

regulations associated with the products or services produced by your
organization. These responses identify laws and regulations that impact your
organization‘s strategic planning. Depending on the number of territorial
jurisdictions identified in the previous worksheet, it may be necessary to complete
more than one production worksheet.
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Regulations
What industry-specific regulations, tariffs,

etc., guide your organization?
Carefully consider the locations of

production facilities. Are there territorial List the countries whose regulations should
jurisdiction considerations? be considered.
What laws or regulations address

requirements about employee training or
credentials?

production facilities. Are there territorial List the countries whose regulations should
be considered.
jurisdiction considerations?
What industry regulations or mandates

relate to employee safety? To handling of
materials?

List the countries whose regulations should
production facilities. Are there territorial
be considered.
jurisdiction considerations?
Figure 5-13. Worksheet: Summary of Industry-Specific Laws and Regulations

207
Regulations
Is your organization affected or influenced

by laws with respect to intellectual property
rights? If so, what laws apply?
List the countries whose regulations should

be considered.
What other industry-specific legal issues

should be considered?
Figure 5-13. Worksheet: Summary of Industry-Specific Laws and Regulations

(concluded)
Worksheet 3: Labor Laws and Codes Worksheet
Directions: Figure 5-14 provides exploratory questions about laws and

regulations associated with labor laws and codes. Depending on the number of
territorial jurisdictions identified in the earlier worksheet, it may be necessary to
complete more than one labor laws and codes worksheet.
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Regulations
What laws guide the

contract of employment?
List the countries whose regulations should be considered.
What laws guide hiring

practices?
What laws impact time

worked? Time off?
What laws guide wages and

compensation?
Figure 5-14. Worksheet: Summary of Labor Laws and Codes

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Regulations
What laws apply for labor

relations?
What laws influence health

and safety? Of employees?
At the workplace?
What laws influence

workplace closure? Transfer
of ownership? Corporate
restructuring?
Figure 5-14. Worksheet: Summary of Labor Laws and Codes

(concluded)
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Regulations
HR Ethics and Professional Standards

Today‘s investors are very concerned with the ethical practices of the
organizations in which they choose to invest. Investors and customers alike
closely scrutinize how organizations conduct their business. They are asking the
types of questions as shown in Figure 5-15.
Figure 5-15. Ethical Questions
Ethics is a system of moral principles and values that creates appropriate conduct.
In a business environment, the rules or standards of ethical behavior should rule
the conduct of the following members of the organization:
 Officers
 Directors
 HR professionals
 All employees
HR’s Role in Promoting Organizational Ethics

HR plays an important role in organizational ethics. Ethical issues in HR raise
fundamental questions about fairness, justice, truthfulness and social
responsibility, but ethical issues can be difficult to resolve.
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Regulations
Often, HR‘s role includes the following tasks:

 Deciding on the organization‘s ethics policy
 Establishing supportive procedures and training
 Creating a culture where ethics is valued and violations will result in
disclosure
 Conducting investigations and using discipline, when required
HR should be involved enough in organizational operations to be able to

recognize ethical violations. HR should be seen as a responsible management
party to whom violations may be reported. Sometimes HR professionals must be
risk takers to effectively fulfill these responsibilities. Many ethical situations are
not clear-cut and require experience and expertise to come up with a workable
solution.
Reporting Ethical Violations

In accordance with the law, organizations should create a quick, effective and
consistently applied method for a nonsupervisory employee to report ethical
violations without retribution (whistle-blowing). HR should take a leading role in
responding to, investigating and internally resolving these reports. Figure 5-16
provides a sample procedure that an organization could create for the reporting of
ethical violations.
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Regulations
Step Action
Step 1  Employee directs concerns to his or her immediate supervisor within five
(5) working days of the date the incident occurred.
 Supervisor responds to the complaint within five (5) working days.
Step 2 If the problem is not resolved by the initial meeting:

 Employee submits a written complaint to the department head within five
(5) working days and forwards a copy of the letter to HR.
 The letter must include the following information:
o Description of the incident
o Date the incident occurred
o Suggestions for resolution
o Date the employee met with the immediate supervisor
o Copy or summary of the immediate supervisor‘s response
Step 3 The department head takes the following steps:

 Schedules a meeting with the employee within five (5) working days to
discuss the complaint
 Issues a decision within five (5) working days of the meeting
Step 4 If the employee is dissatisfied with the decision of the department head:
 Employee appeals the decision in writing to HR within five (5) working
days.
 HR investigates the complaint.
 HR calls a meeting with the parties directly involved to facilitate a
resolution.
Figure 5-16. Process for Reporting Ethical Violations

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Regulations
Step Action
Additional  If the employee fails to initiate a timely appeal, the problem will be
Guidance considered settled.
 The conflict resolution procedure can only be initiated by an individual
and not by a group of employees.
 The organization has the right to impose appropriate disciplinary action
for any conduct it considers to be disruptive or inappropriate.
 No employee will be retaliated against for filing a complaint under this
procedure.
Figure 5-16. Process for Reporting Ethical Violations

(Society for Human Resource Management, Conflict Resolution Policy and Procedure 2010)
(concluded)
Ethics Hotline
A whistle-blower or ethics hotline is a helpful tool for employees to report ethical

violations. A whistle-blower/ethics hotline provides the following benefits:
 Provides a confidential way for employees to report issues to management
 Lessens the potential for retaliation
 Reduces the possibility of inappropriate or illegal actions
HR’s Role in Creating an Ethical Environment
How do HR professionals manage the dilemmas they face when dealing with
ethical issues in the workplace? How can they give advice to their organizations
about the options available? Creating and enforcing an organizational code of
ethics is one way.
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A code of ethics can be defined as principles of conduct within an

organization that guide decision making and behavior. This code is the
foundation from which organizational norms and attitudes arise. These
norms are important in all aspects of the organization, including the
following:
 New employee training
 Performance standards
 Organizational planning
The common frame of reference provided by a code of ethics is very

important while an organization is working on a strategic planning
process.
Below are steps that organizations can take to establish an ethical workplace:
 State corporate values in no more than a few sentences. Ensure the values
are published and understood by employees and customers alike.
 Act according to the published values.
 Conduct ethical awareness training for employees.
 Outline specific responsibilities for decision making to ensure
accountability.
 Encourage open discussion about controversial issues, ethical questions
and anything that may fall into gray areas.
 Do not allow retaliation against those who voice ethical concerns in
good faith.
 Use corrective discipline, as required.
 Have clear policies regarding conflicts of interest.
The process of creating an ethical environment should always begin at the top of
the organization. An ethical environment should receive continuous reinforcement
from leadership at all levels.
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Who Handles Ethical Issues?
There are many people within the organization whose involvement in ethics
issues is critical. These include the following roles:
 Chief executive officer (CEO): The first and most important is the chief
executive officer of the organization. The CEO should establish the
necessary ethical standards and conduct business in a manner consistent
with those standards.
 Chief financial officer (CFO): The CFO must ensure that all the
organization‘s financial records are accurate. Financial records are an
essential part of ethics compliance.
 Internal auditing group: Along with the organization‘s external auditors,
these individuals also ensure accurate reporting and compliance.
 General counsel: The organization‘s general counsel provides important
legal guidance and is also responsible for corporate and governmental
compliance.
 Chief human resources officer (CHRO): The CHRO assists in the
development of the following ethics issues:
o Policy
o Training
o Enforcement
 Ombudsperson or chief ethics officer: The ombudsperson or chief ethics
officer oversees the ethics function. The ethics officer can be effective by
doing the following:
o Reporting to the CEO and the board of the organization
o Being highly visible
o Being a dedicated confidential resource
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Regulations
 Chief risk officer (CRO): The CRO of an organization is the person

responsible for the effective control of significant risks to the organization.
A main priority for the CRO is to ensure that the organization is in full
compliance with applicable regulations. This position may also deal with
the following:
o Insurance
o Internal auditing
o Corporate investigations
o Fraud
o Information security
If corporate ethics includes legal compliance, ethical conduct and corporate social
responsibility, it is helpful to group these matters under one corporate officer. If
these responsibilities are divided among several officers, different approaches
may result.
The chief ethics officer communicates standards of conduct in terms of

organizational values and culture and instills these standards throughout the
organization. This position may also be involved with the ethical sensitivity of
major organizational decisions. Ideally, an effective ethics officer would be
consulted on business issues that pose value-laden decisions. However, this
person should not be the only one responsible for ethics. All levels of
management must support policy development, training and enforcement.
The SHRM Code of Ethical and Professional Standards
The SHRM Code of Ethical and Professional Standards in Human Resource

Management, originally developed in 1972, was revised in November 2007 to
reflect changes in the HR profession. It provides useful and practical guidance in
ethical decision making.
The reputation of HR professionals depends on each of us serving the needs of

our various stakeholders in the most morally responsible manner possible and
leading our individual organizations to conduct business in an equally responsible
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manner. The six provisions of the code, outlined in Figure 5-17, apply specifically
to SHRM members.
Figure 5-17. SHRM Code of Ethics Provisions
Visit the SHRM website at http://www.shrm.org/ethics for additional information

on ethics.
Corporate Social Responsibility (CSR)

Today, organizations are more aware of social practices and of how business can
impact people, communities and the environment and have a lasting economic
influence. HR professionals must be familiar with trends that relate to corporate
social responsibility (CSR) and recognize how CSR efforts can support
organizational goals and values.
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To explain the case for CSR, John Elkington developed the concept of the three
pillars. The three pillars concept provides three criteria for organizational success:
People, Planet and Profit. This concept is illustrated in Figure 5-18 (Savitz 2006).
Figure 5-18. CSR Strategy
Examples for these three CSR strategy pillars include the following:
 People provide fair and beneficial business practices toward labor and the
community in which a corporation conducts its business.
 Planet provides sustainable environmental practices.
 Profit provides lasting economic impact to the economic environment, not
just internal profit.
More organizations are now including CSR as one of their core organizational
strategies. In his book, The Triple Bottom Line, Andy Savitz compares
corporate focus in 1950s and 1970s to today‘s focus on CSR. This comparison is
illustrated in Figure 5-19.
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Figure 5-19. Comparison of Corporate Focus in 1950s, 1970s and Today (Savitz 2006)
In other words, today an organization's responsibility should be to its

stakeholders, rather than to its shareholders. Organizations should focus on social
causes that align with their businesses to create shared value across their
stakeholders (Porter and Kramer, Strategy and Society: The Link Between
Competitive Advantage and Corporate Social Responsibility December 2006).
Philanthropy
One way to demonstrate CSR is through philanthropy. Philanthropic activities are

increasing among modern organizations that believe their success depends on the
support of society. By participating in philanthropic activities, organizations can
make long-term investments in causes that help society while enhancing the
company‘s reputation with stakeholders.
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Philanthropy is often recognized through implementation of corporate citizenship

programs such as establishing a charitable fund, staffing volunteer programs and
partnering with nonprofit organizations. More and more organizations recognize
that including corporate citizenship in their goals and objectives fosters
sustainable growth. Figure 5-20 lists the goals and benefits of corporate
citizenship programs.
Figure 5-20. Goals and Benefits of Corporate Citizenship Programs
A recent trend in citizenship programs is to seek a charitable organization that

offers opportunities for its employees to volunteer without incurring
administrative costs. These programs form a partnership of citizenship and
sustainability. Figures 5-21 through 5-23 show examples of successful programs.
Figure 5-21. Example 1 of a Corporate Citizenship Program (Society for Human Resource
Management, The Changing Face of CSR Partnerships 2010)
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Figure 5-22. Example 2 of a Corporate Citizenship Program (Society for Human Resource
Management, The India Way 2010), (Bartlett and Ghoshal 2002), (Tata Sons, Ltd. 2008)
Figure 5-23. Example 3 of a Corporate Citizenship Program (Walmart 2010)
For more information on the financial performance of leading sustainability-driven

companies worldwide, visit the following websites:
 Human Development Index (HDI): http://hdr.undp.org/
 Environmental Sustainability Index (ESI): http://sedac.ciesin.columbia.edu/
 Environmental Performance Index (EPI): http://epi.yale.edu/
 Genuine Progress Index (GPI) Atlantic: http://www.gpiatlantic.org/
 GPI Pacific: http://www.gpipacific.org/
 Dow Jones Sustainability Indexes: http://www.sustainability-index.com/
 FTSE4Good Index: http://www.ftse.com/
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Environmental Sustainability
Many corporations are working toward environmental sustainability goals.

Sustainable development can be defined as ―meeting today‘s needs without
hampering future generations‖ (Wirtenberg, Russell and Lipsky 2008).
Sustainability projects generally target environmental issues, such as the

following:
 Climate change
 Water shortages
 Energy conservation
 Health care (Schwab 2008)
The United Nations collaborating center, called the Global Reporting Initiative,
has published the Sustainability Reporting Guidelines to promote benchmarking
standards for sustainability. More than 1,500 organizations have adopted these
guidelines (Global Reporting Initiative 2006).
HR’s Role in Implementing CSR
HR can do the following to support the implementation of the organization‘s CSR

strategy:
 Help create an ethical management and staff through hiring:
o Include scenario-based values questions in the interview process.
o Perform reference and background checks to learn about the applicant's
past behavior and integrity.
o Emphasize the company‘s adherence to its code of conduct.
 Examine transgressions for organizational significance:
o Consider the possibility that the work environment may have
contributed to the transgression.
o Correct any flaws in the ethical infrastructure of the organization.
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 Serve as a connection with the organization‘s communities:

o Identify opportunities for social engagement, and establish
partnerships.
o Promote volunteer opportunities, and identify employee expertise with
community need.
 Ensure that employees and suppliers understand and support the
organization‘s ethical code by using the following techniques:
o Issue regular communications about the organization‘s CSR policy to
all stakeholders.
o Train management to use ethical criteria in evaluating employee
performance.
o Reward employees for ethical actions under difficult conditions.
o Plan periodic reviews of suppliers‘ compliance with the organization‘s
CSR policies and standards of ethics.
 Review all HR policies and practices to ensure consistency with the
organization‘s values and CSR strategies.
 Institute volunteer programs.
For more information about the international guidelines for CSR, visit the following
websites:
 The Organization for Economic Co-operation and Development (OECD)
Guidelines for Multinational Enterprises based on International Labour
Organization (ILO) Conventions: http://www.oecd.org
 The Global Reporting Initiative (GRI) guidelines for creating a GRI
Sustainability Report: http://www.globalreporting.org
 The United Nations Global Compact's ten principles addressing employee
legal rights, labor and environmental issues:
http://www.unglobalcompact.org
 The International Organization for Standardization (ISO) 26000 Social
Responsibility certification process: http://www.iso.org
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Policies, Procedures and Work Rules

Policies, procedures and work rules help an organization achieve its long-term
plans. HR is a key player in the creation and successful deployment of
organizational policies, procedures and work rules.
Any discussion of work rules requires an understanding of policies and

procedures. Work rules are specific to an organization; they are shaped by internal
factors. Organizations use fewer work rules now than they have in the past. Many
organizations are finding that employees‘ self-confidence and productivity are
often best nurtured when employees have the freedom to make their own
decisions.
Collective bargaining agreements often address the terms and conditions of

employment. These terms and conditions include the following:
 Work rules
 Discipline procedures
 Opportunities to pursue grievances
 The right to employment opportunities and jobs
Organizations may send clear statements and policies showing the values the
organization will support, but these actions do not change the terms agreed upon
in the workers‘ agreement.
HR Responsibilities for Workplace Policies, Procedures and

Work Rules
The concepts behind the words policies, procedures and work rules are
interrelated, but the terms do have different meanings. Often the HR professional
must translate how policies, procedures and work rules apply to day-to-day
interactions and activities.
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Policy
A policy is a method to help guide and make decisions. Policies are general in
nature, whereas procedures and work rules are more specific to a given situation.
Figure 5-24: Example of a Policy
Properly conceived and carried out, policies are intended to help management and
employees make intelligent decisions. The decisions should be consistent with
those policies. Policies provide a basis for HR management practices and a
framework within which these practices are established.
The meaning of policies is not standardized. Here are examples:

 In large organizations, policies may be documented in an employee
manual. These written policies become the basis for consistent conduct.
 In small organizations, policies that guide conduct are often considered an
unwritten code of conduct. Policies in smaller organizations are passed on
through observations or word of mouth.
If an organization does not intend to abide by a policy, the policy should not be
published. Keep in mind that a written policy provides credibility only if it is
backed up by actions.
Policies, written or unwritten, are not permanent. The HR function must

periodically review policies and revise those that are out of date; however,
frequent changes in policies may suggest management problems.
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Procedures
A procedure is a detailed, step-by-step description of the method of handling an

activity. Procedures are more specific than policies. A procedure often provides
details of the what, when, where and who for a given situation.
Figure 5-25: Example of a Procedure
Work Rules
Work rules reflect management decisions regarding specific actions to be taken,

or avoided, in a given situation. Work rules and procedures are similar because
they are both intended to guide action and to leave no room for interpretation.
Figure 5-26: Example of a Work Rule
Employee Handbooks
Employers can use a variety of methods to communicate policies, procedures and

work rules to employees. Employee handbooks are the most popular format. They
are usually available online. Many organizations also distribute hard copies to
new employees on their first day of work. The handbook explains major HR and
employee policies and procedures and describes the employee benefits.
An employee handbook can be effective in providing information to the

employee. It has proven to be useful for the following reasons:
 Properly orients new employees
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 Helps maintain consistency among supervisors

 Reduces the number of misunderstandings over workplace policies
 Supports disciplinary action and avoids charges of unlawful discrimination
 Potentially reduces the need for employees to seek out union representation
Most employee handbooks include similar types of information. Specific policies,

procedures, programs and other items will vary. An employee handbook may
include (but is not limited to) the categories outlined below:
 Introductory information
 Employment information
 Compensation
 Time off
 Employee benefits
 Leaving the organization
 Other information
Confidentiality and Privacy

Regulations
Every organization has a need to keep certain information confidential. HR
typically maintains sensitive employee data and information relating to employee
and management issues. As a result, HR professionals must understand relevant
privacy laws and develop processes and procedures to secure and safeguard
sensitive employee data.
Privacy Protection
Because of the nature of their jobs, HR professionals have access to employees‘
private and confidential information. They also hear management decisions, like
layoffs, in advance in order to make preparations. Any leakage of information can
easily result in one of the following consequences:
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 Theft (for example, national identification number)

 Use of confidential information against someone (salary, medical issues
and performance appraisals)
 The spread of information from employee to employee before management
approves the message
 Loss of trust in the HR department
In some countries, private information is protected by law:

 In the United States (US), age and medical information is protected by law,
and any information shared is subject to punishment by law.
 In the European Union (EU), the Directive on Protection of Personal Data
protects employees‘ personal data and impacts employers in how personnel
records are kept, how personal information is disclosed and whether
personal data is transferred to third parties or outside the EU.
 In the United Kingdom (UK), the Data Protection Act is related to
personnel records and restricts the collection, retention and use of
information.
 The Privacy Act of Australia covers the public, private and health sectors
and includes ten National Privacy Principles that must be followed. The act
governs how organizations should collect, store, use and disclose personal
information and gives certain rights to Australian citizens, such as the right
to know what information an organization holds about them and the right
to correct it if it is wrong.
To keep records and information safe, here are some basic precautions for HR
employees:
 Prepare procedures about confidentiality and ensure they are effectively
communicated.
 Train your HR employees on confidentiality.
 Stay current on legal requirements and regulations about confidentiality.
 Categorize the confidential data, and authorize staff accordingly.
 Only allow authorized entry to the area where you keep employee data.
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Regulations
 Be cautious about authorization of database users. (For example, if you are

using an enterprise resource planning (ERP) database that all employees
have access to, a mistake in authorization may cause confidential
information to become available for everyone to see.)
 Carry out all investigations and disciplinary actions with the utmost
confidentiality.
In addition, you should take precautions at your workspace and at home:

 Do not leave your computer without locking it.
 Do not leave confidential information on the screen before you leave your
workspace, even when you lock the computer. For example, you may come
back to your desk with someone to work on a different task. When you
unlock your computer, the confidential information will still be displayed.
 Do not share your password or write it down where it can be seen.
 Do not leave confidential paperwork on your table or throw confidential
papers in the trash without destroying them first.
 Pay attention to who is around when you talk on the phone if you are
talking about confidential issues.
 Keep job applications confidential regardless of any relationship you may
have with the applicant‘s current employer.
 Do not discuss employee information and workplace issues with friends.
Additional information about security is provided in Module 6: Health, Safety,

and Security.
Developing Employee Privacy Programs

Laws and regulations will dictate what data must be protected on behalf of the
employees, but your organization will develop its own unique processes for
carrying out these laws. Figure 5-27 provides guidelines for developing employee
privacy programs.
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Regulations
Developing an Employee Privacy Program
 Analyze all business processes that involve personal employee data.

 Eliminate the collection of data that is not put to use, and restrict access by
individuals without a legitimate need for it.
 Decide how to handle requirements related to notice, legitimacy (that is,
consent) and access.
 Develop strategies for overcoming other significant compliance risks.
 Formalize procedures for the business processes that have been identified.
 Document all employee data flows, including those that will remain
unchanged.
 Create a privacy policy.
 Include robust monitoring and enforcement mechanisms.
 Educate the entire workforce on the privacy policy and procedures that
have been established. Transactions involving personal employee data are
not limited to the HR department.
 Monitor the internal and external environments (for example, new business
initiatives and privacy regulations, respectively) for potential impact on the
company‘s privacy program.
Figure 5-27. Checklist for Developing an Employee Privacy Program
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Practice Questions
1. Why should you seek expert legal advice for specific legal disciplines and the laws of
specific countries?
a. To lessen the potential for retaliation
b. To provide a confidential way for employees to report issues to management
c. To help identify potential concerns, mitigate undesirable consequences and
avoid litigation
d. To help the organization achieve its long-term plans
2. In which basic group of major legal systems are laws established by court decisions and
legal precedence?
a. Civil
b. Common
c. Religious
d. National
3. What is the definition of the extraterritoriality level of law?

a. Involves both the relationships between nations and the treatment of individuals
within national boundaries
b. Laws are enacted by the highest or federal legislative bodies of a country
c. A regional organization of nation-states with a body of supranational laws
d. The extension of the power of a country‘s laws over its citizens outside that
country‘s sovereign national boundaries
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Regulations
4. __________ refers to the right and power to interpret and apply the law, often within a
certain geographical region.
a. Jurisdiction
b. Civil law
c. Levels of law
d. Laws of employment
5. What is the definition of ethics?

a. Regulations created by countries or legislative groups about the rights of people
b. The right and power to interpret and apply the law, often within a certain
geographical region
c. A system of moral principles and values that create appropriate conduct
d. Laws established by our court decisions and legal precedence
6. All of the following are benefits of a whistle-blower/ethics hotline except:

a. Provides a confidential way for employees to report issues to management
b. Lessens the potential for retaliation
c. Reduces the possibility of inappropriate or illegal actions
d. Helps identify potential concerns and mitigate undesirable consequences
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Regulations
7. A __________ is a method to help guide and make decisions.

a. Procedure
b. Policy
c. Regulation
d. Work rule
8. Which method of communicating policies, procedures and work rules to employees has
proven to be useful in reducing the number of misunderstandings over workplace
policies?
a. Laws of employment
b. Corporate social responsibility (CSR)
c. Ethics hotline
d. Employee handbook
9. Why is it important that HR professionals understand relevant privacy laws and develop
processes and procedures?
a. To secure and safeguard sensitive employee data
b. To help identify potential concerns and mitigate undesirable consequences
c. To lessen the potential for retaliation
d. To properly orient new employees
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1. c (p. 196)
2. b (p. 197)
3. d (p. 198)
4. a (p. 199)
5. c (p. 211)
6. d (p. 214)
7. b (p. 226)
8. d (p. 228)
9. a (p. 228)
You have completed Module 1: HR Administration. Next, if you feel ready, go

to the Online Learning Center at
https://www.epathcampus.com/SHRM/onlinelearningcenter/login/, and check
your knowledge by completing the Case Studies, Module 1 Practice Test and the
HRBP/PHRi Certification Practice Test. Also try the e-flashcards to check
your knowledge of terminology.
235
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240
Module 1: HR Administration Index
Index
Aguirre, Cesar ......................................... 167
code of ethics .................. 214, 215, 216, 218
alternate work schedules ......................... 146
compensation ..... 32, 36, 56–57, 74, 92, 110,
application service provider (ASP) ........... 70 137, 148, 171, 228
ASP ............ See application service provider competencies............. 33, 35, 36, 38, 64, 139
audit checklist ................................. 120, 150 confidentiality and privacy ..................... 228
employee privacy programs ................ 230
balanced scorecard .................... 117–18, 119 privacy protection................................ 228
Barlett, Christopher A ............................... 38 corporate social responsibility (CSR) ..... 218
corporate citizenship programs ........... 221
benchmarks ....................................... 184–86 environmental sustainability ............... 223
applied to the HR function .................. 186 HR's role ...................................... 214, 223
kinds .................................................... 185
limitations............................................ 187 cost per hire ............................................. 186
benefits....... 9, 27, 30, 54, 65–66, 68, 74, 92, cost-benefit analysis.......... 91, 114, 115, 116
103–4, 115, 136, 137, 146, 166, 177, 186,
214, 221, 227–28 cost-benefit ratio ............................. 114, 115
Boring, Scott C.......................................... 57 CSR .........See corporate social responsibility
break-even analysis ......................... 112, 116 data analysis .............................................. 91

qualitative .............................................. 91
break-even point...................................... 116 quantitative ............................................ 91
budgeted headcount ................................ 110 data gathering and analysis methods cause-
and-effect diagram .............................. 181
cause-and-effect diagram .......... 180, 181–82 Gantt Chart .......................................... 184
histogram ............................................. 182
change drivers ......................................... 165 Pareto Chart ......................................... 183
process-flow analysis .......................... 180
change management ................................ 159
scatter diagram .................................... 183
assessing readiness for change ............ 169
HR's role .............................................. 212 deductive reasoning ............................ 86–87
in organizations ................................... 161
Deloitte Consulting ................................... 57
change process theory ............................. 160
demand analysis ...................................... 132
change strategy models ........................... 167
descriptive statistics .................................. 92
charts and graphs....................................... 92
digital divide ....................................... 69, 71
cloud computing........................................ 71
241
e-Learning ..................................... 62, 69, 71 flexible spending ............................... 143–46
electronic record keeping .......................... 69 flexible staffing ................................. 143–46
electronic signatures.................................. 70 frequency distributions........................ 92, 94
Elkington, John ....................................... 219 full-time............................... 32, 75, 143, 147
employee engagement............................... 60 Gantt Chart...................................... 173, 180
employee handbooks......................... 227–28 gap analysis ..................................... 133, 134
employee life cycle ................................. 149 generational differences ............................ 57
employee records .............................. 76, 149 Ghoshal, Sumantra .............................. 38, 52
employment branding ............................... 55 global integration ...................................... 53
employment contract............... 142, 147, 148 globalization.............................................. 64
employment procedures .......................... 142 Gronstedt, Anders See The Gronstedt Group,
Inc.
environmental scanning ............................ 28
budgeted headcount .......................... 110–11
essential functions ................................... 138
headcount method
ethics and professional standards strengths and weaknesses .................... 111
............................. 195, 211 ethical questions
................................................................. 211 health and wellness programs ................... 58
reporting ethical violations (whistle
blowing) ........................................... 212 histogram............................. 93, 94, 180, 182
SHRM Code of Ethical and Professional
Standards ......................................... 217 Hofstede, Geert ................................... 67–68
European Union ................................ 70, 229 Hofstede‘s dimensions of culture.............. 68
evaluation metrics ....................... See metrics HR ethics and professional standards

code of ethics....................................... 218
experimental design .................................. 90 ethics hotline ....................................... 214
HR‘s role ............................................. 214
experimental research process ............ 86, 89 who handles ethical issues?................. 216
scientific method ................................... 89
step 1: problem analysis ........................ 89 HRIS ......... See human resource information
step 2: hypothesis formulation .............. 90 system (HRIS)
step 3: experimental design ................... 90
step 4: data collection ............................ 90 human capital .................................. 4, 59, 76
step 5: data analysis............................... 91 measurement of ..................................... 60
financial measures................................... 112 human resource (HR)

administrative role................................... 8
financial statement analysis ............ 112, 117
242
human resource information systems (HRIS) Jellison, Jerald M. ................................... 162

..................................................................... 8
globally.................................................. 75 job analysis.............................................. 136
help with administrative role................... 9 definition ............................................. 134
HRIS applications ................................. 73 job description ............................... 136–38
skill banks and skill tracking systems ... 75
job descriptions . 136–38, 136–38, 140, 170–
human resource management (HRM) ......... 4 71
definition ................................................. 4 benefits ................................................ 137
evaluation metrics ............................... 107 elements............................................... 138
writing ................................................. 136
human resources (HR) ................................ 4
creating an ethical environment .......... 214 job specification ...................................... 141
current expanded role .............................. 7
ethics and professional standards ........ 195 jurisdiction 59, 198, 199, 202, 203, 206, 208
evaluation metrics ................................. 39
historical perspective............................... 5 Kaplan, Robert .......................................... 42
implementing CSR .............................. 223
knowledge management................ 77, 76–78
legal areas monitored by ..................... 199
metrics ................................. 40, 51, 59, 85 knowledge management systems .............. 76
new competencies ................................. 10
operational role........................................ 8 knowledge, skills and abilities (KSAs).. 135,
role in outsourcing................................. 55 139
role of HR in implementing strategy..... 37
role of HR in workforce planning ....... 131 KSAs ...... See knowledge, skills and abilities
strategic role ............................................ 7
trends ..................................................... 10 laws ......................................................... 195
anti-discrimination, harassment and fair
hypothesis formulation.............................. 90 work ................................................. 203
compensation and benefit.................... 202
independent contractor ............................ 143 identifying the legal issues .................. 203
influence of law on the organization... 195
inductive reasoning ............................. 86, 87 influence on the organization ............. 203
laws across country borders ................ 196
International Organization for
occupational health and safety ............ 202
Standardization (ISO).................. 175, 224
of employment..................................... 201
International Society of Certified Employee
Lawson, Emily ........................................ 161
Benefits Specialists ............................... 57
Lean Six Sigma ......................... 176, 179–80
interviews .......................................... 54, 104
learning management systems (LMS) ...... 62
ISCEBS
See International Society of Certified learning organization ................................ 63
Employee Benefits Specialists
learning portals.......................................... 63
ISO ..........See International Organization for
Standardization legal and regulatory environments.......... 204
J Curve of Change............................. 162–63
243
legal systems of the world....................... 197 front-back structure ............................... 48

functional structure................................ 46
Lewin, Kurt ............................................. 160 geographic structure .............................. 47
matrix structure ..................................... 48
Li, Charlene............................................... 61 product structure.................................... 46
LMS ......... See learning management system outsourcing...... 33, 35–37, 55, 132, 134, 145
administrative .......................................... 8
local responsiveness ............................ 45, 53 cosourcing ............................................. 36
flexible staffing ................................... 143
M&A ............... See mergers and acquisitions
HR's involvement .................................. 37
Madia, Sherrie A ....................................... 54 insourcing .............................................. 36
internal challenge .................................. 36
matrix structure ................................. 179–80 reasons to outsource .............................. 36
mean .............................................. 96, 95–96 Pareto Chart .............................. 180, 183–84
measures of association............................. 99 part-time .............................. 27, 75, 143, 147
measures of central tendency .................... 92 performance audits.......................... 117, 119
measures of variation .......................... 92, 98 performance documentation.................... 151
median ................................................. 96, 98 performance measures .............. 41, 112, 117
mergers and acquisitions (M&A)...... 30, 165 PERT .....See program evaluation and review
benefits and risks ................................... 31 technique
HR's due diligence........................... 31–32
policy....................................................... 226
metrics9, 39, 51, 59, 60, 72, 83, 85, 86, 108–
9, 112 Price, Colin ............................................. 161
initial considerations ........................... 107
primary research.................................. 86, 88
mission statement...................................... 21
privacy programs .................................... 230
mode.......................................................... 96
problem analysis ....................................... 89
nonessential functions ............................. 139
procedure 142, 195, 200, 204, 212, 214, 225,
nonfinancial measures............................... 41 227
Norton, David ........................................... 42 process-flow analysis .............................. 180
O*NET .............................................. 140–41 product structure ................................. 46–48
offshoring .......................................... 140–41 program evaluation and review technique

..................................................... 172, 173
operational role of HR ................................ 8
project management .......... 64, 169, 172, 173
organizational structure............................. 45 common project characteristics........... 170
244
common project phases and roles........ 171 ROI.........................See return on investment

data gathering and analysis methods... 180
definition ............................................ 169 rule of law ............................................... 197
project planning tools.............................. 172 Savitz, Andy............................................ 219

Gantt Chart .......................................... 173
PERT Chart ......................................... 173 scatter diagram ................ 100, 122, 180, 183
project success ........................................ 174 scientific method ....................................... 89
qualitative data analysis secondary research ........................ 86, 88–89

description of....................................... 102
individual or panel interviews ............. 103 selection ............................................ 54, 142
quality improvement ............................... 175 self-management ....................................... 12

quality standards.................................. 175
SHRM ........See Society of Human Resource
theories and methods ........................... 176
Management
quantitative data analysis .......................... 91
SHRM Code of Ethical and Professional
charts and graphs ................................... 92
Standards ............................................. 217
description of ......................................... 91
descriptive statistics............................... 92 Six Sigma .................................. 176, 177–80
frequency distributions and tables......... 94
measure of association .................. 99–100 skill banks and skill tracking systems ....... 75
measure of central tendency .................. 94
measure of variation .............................. 98 social media .................................. 54, 60, 61
observational ....................................... 105
organizational records ......................... 105 social network ........................................... 64
surveys and questionnaires.............. 103–4
tests ...................................................... 105 Society for Human Resource Management
(SHRM) ................................................. 51
questionnaires ............................... 88, 103–4
solution analysis ...................................... 134
records management programs ............... 152
staffing .......... 53, 62, 110, 130, 131, 143–44
recruitment ... 8, 27, 53, 54, 55, 75, 131, 142, options ................................................. 143
178
stakeholders.... 17, 18, 20, 37, 38, 62, 64, 67,
reliability ........................... 27, 86–87, 105–6 117, 131, 161, 217, 220, 224
explanation of ...................................... 105
internal consistency ............................. 106 standard deviation ..................................... 99
parallel forms....................................... 105
rater agreement .................................... 106 start-up .............................................. 25, 166
test/retest.............................................. 106 definition ............................................... 25
scope of the HR professional‘s
remote project collaboration ..................... 64 responsibilities ................................... 26
reporting methods ................................... 122 statistics............................... 91, 92, 101, 140

descriptive statistics............................... 92
return on investment ............................... 112 inferential statistics.............................. 101
245
strategic alliances ................................ 24, 33 techniques for ........................................ 13
strategic HR management ......................... 17 time to fill................................................ 186
strategic plan ..................................... 21, 112 TNC.................See transnational corporation
strategic planning ................ 37, 38, 159, 206 total quality management (TQM) ........... 177
strategic planning process ................... 18–21 total rewards ........................................ 58, 74
strategy development ................................ 22 TQM............... See total quality management

actions.................................................... 22
market entry strategy ............................. 23 training ... 60–66, 71, 73, 89, 90, 91, 98, 106,
117, 130, 131, 132, 134, 186, 207
strategy evaluation .................................... 38 trends ..................................................... 62
actions.................................................... 38
activity versus results ............................ 39 transnational corporation (TNC)............... 52
benchmarks............................................ 40
cost control versus value creation ......... 39 trends.... 4, 41, 51–54, 56–62, 66–67, 66–68,
112, 218
strategy formulation .................................. 21 analysis of.............................................. 67
compensation and benefits .................... 56
strategy implementation............................ 37 conducting trend research...................... 66
role of HR .............................................. 37 globalization .......................................... 52
human resource measurement and metrics
strengths, weaknesses, opportunities, threats ........................................................... 59
(SWOT) analysis ................................ 19, 28 in employee engagement ....................... 60
in staffing............................................... 53
supply analysis ........................................ 132 training and development ...................... 60
surveys .............................. 9, 60, 88, 92, 102 turnover cost............................................ 186
systems theory......................................... 176 validity ........................................ 67, 86, 105
technological skills.............................. 69, 71 virtual-world simulations .......................... 65
technology.. 9, 20, 23, 30, 36, 41, 44, 54, 61, webinar...................................................... 66
68
advances in ............................................ 69 whistle blowing ....................................... 212
digital divide.......................................... 71
human resource information systems work rules................................ 195, 201, 225
......... 72 knowledge management systems
............................................................... 76 work/life balance..................... 13, 51–52, 58
monitoring ............................................. 68
technology skills.................................... 71 workforce planning ........................... 129–32
benefits ................................................ 131
time management ...................................... 10 definition ............................................. 129
effective meetings ................................. 14 role of HR ............................................ 131
managing E-mail ................................... 15
246

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PHRi MODULE 1

© 2016 International Human Resource Certification Institute

Module One: HR Administration

Copyright © 2016 by International Human Resource Certification Institute

International Human Resource Certification Institute (IHRCI)

Unit 4, 7F, Bright Way Tower, No. 33 Mong Kok Road.

Kowloon, Hong Kong

Section 1.1: Strategic HR Management and Business Trends...................................................2

Section 1.2: Gathering, Measuring and Reporting HR Data ...................................................84

Section 1.3: Workforce Planning and Employment Strategies .............................................128

Section 1.4: Change Management and Business Process Improvement for

Section 1.5: Organizational Policies, Procedures and Regulations .......................................194

Lead Subject Matter Expert

Subject Matter Experts

Sameer Khanna, GPHR Aparna Rajesh, GPHR

Howard A. Wallack, GPHR

Welcome to the HRBP/ PHRi™

The HRBP/PHRi certification exam was developed by the HR Certification

HRBP/PHRi/PHRi Learning System Structure

HRBP/PHRi Learning System HR Certification Institute’s Knowledge

Module 1: HR Administration HR Administration (22%)

Module 2: Recruitment and Selection Recruitment and Selection (22%)

Module 3: Employee Relations and Employee Relations and Communication

Module 4: Compensation and Benefits Compensation and Benefits (14%)

Module 5: Training and Development Training and Development (15%)

Learning System Modules

Each section in the HRBP/PHRi Learning System modules begins by stating

In addition to the content, each module contains a variety of helpful tools,

Indicates important content to which you should pay special attention

Links to a website or suggests an additional reading source for a topic

Directs you to other portions of the HRBP/PHRi Learning System, such

Directs you to the Online Learning Center

Indicates practice questions to check your understanding of the content as

Online Learning Center

As a purchaser of a HRBP/PHRi Learning System module, you have access to

This website provides a variety of resources:

Make use of the Online Learning Center at:

Learning System Development

SHRM assembled a development team to create this learning system. The

Information about Certification

From a practical standpoint, there are other individual advantages:

HR Certification Institute HRBP/PHRi/PHRi Knowledge Base

At the foundation of the learning system materials and the HR Certification

For your convenience, the Knowledge Base for Module 1: HR

Module 1 Knowledge Base

Module 1: HR Administration (22%)

HR professionals in the area of HR Administration should possess a combination

Important behaviors for HR administration:

2. Format and maintain organization charts

4. Make sure the organization follows legal and industry regulations

6. Stay updated on new business trends

7. Answer or refer questions from employees as the first level of support

Important knowledge and skills for HR administration:

01. Skills for planning and organizing (time management techniques)

03. Documentation requirements for employees and their employment

05. Communication skills, both verbal and written

08. Organizational policies and procedures

09. HR ethics and professional standards

This section covers the following information from the

Behaviors: 02. Format and maintain organization charts

05. Maintain human resource information systems (HRIS) data and

06. Stay updated on new business trends

08. Work with external providers of HR services (for example,