SHRM Learning System 2015 - Organization

Structure of the HR Function
Organizational Effectiveness & Development

Workforce Management
Employee Relations
Technology & Data
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FOR SHRM-CP/SHRM-SCP
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Func:tiona! Area #5: Structure of the HR Functicm .............................................................2
Introduction ............................................................................................................................. .4
Section 1: The Strategic Role ofHR. ...................................................................................... 6

The Evolving Role of the HR ProfessionaL.. ....................................................................... 7
Changes That Impact the HR Profession ........................................................................... !!
Section 2: Understanding the Organization ........................................................................ 20

HR's Understanding of the Organization ......................................................................... .21
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Core Business Functions ................................................................................................... .2 I
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Organizational Design ....................................................................................................... 28
Organizational Structures ................................................................................................... 29
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Other Internal Environment Considerations ...................................................................... 35
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The External Environment ................................................................................................. 36
l Section 3: The HR Organization ......................................................................................... .40

J--··-·----··--------'Ihe..HR......unction....... ................................
HR Processes ..................................................................................................................... 41
) The HR Team ..................................................................................................................... 42
HR Structural Altematives ................................................................................................. 43
) Measuring and Demonstrating HR Value ......................................................................... .48
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Section 4: HR's Role in Organizational Strategy ................................................................ 58
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HR and the Strategic Process ................................................... , ......................................... 59
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HR's Role ........................................................................................................................... 59
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Aligning the HR Function with the Strategic Plan ............................................................ 63
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Developing the HR Strategy .............................................................................................. 67
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'!,, f,o:j'l:-H -Huil .,;;1.n at>d Vr;;;;Jv V!'hd>;dnl,.,. .................. .. 72
Introduction ............................................................................................................................ 74
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Section 1: Ove!'View of Organizational Effectiveness and .Development .......................... 76
) OED Efforts ....................................................................................................................... 77
OED Process ...................................................................................................................... 78
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ORGANIZATION
OED Strategies ................................................................................................................... 79

OED Benefits ..................................................................................................................... 83
Opportunities for OED ....................................................................................................... 85
HR's Role in OED ............................................................................................................. 86
Section 2: Organizational Gap Identification ...................................................................... 91

Assessments and Targets ................................................................................................... 92
Section 3: Implementing OED Initiatives ............................................................................ 98

OED Initiatives .................................................................................................................. 99
Workforce Support of OED Initiatives .............................................................................. 99
OED Tools ....................................................................................................................... ! 00
HR's Role in Implementation .......................................................................................... 109
Section 4: Measuring Organizational Effectiveness and Development .......................... 120

Demonstrating Value ....................................................................................................... 121
Functional Area #7: Workforce Management .................................................................. 126
Introduction .......................................................................................................................... 128

Section 1: Organizational Workforce Requirements ....................................................... 129
Workforce Requirements ................................................................................................. 130
....... .. .......... .130 ______ _
Restructuring ...................................................... ;..................................... ,....... , ..... "·'····'·131
Organizational Interventions ............................................................................................ 135
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Section 2: Workforce Planning ........................................................................................... 140
Workforce Planning Process ............................................................................................ 141
The Staffing Plan ............................................................................................................. 159
Section3: Employee Development ..................................................................................... 169

Development of Employees .................................................................. :.......................... 170
Talent Management ......................................................................................................... 170
Performance Management ............................................................................................... 177
Succession Pianning ........................................................... :............................................. 192
Section 4: Knowledge Management ................................................................................... 199

Managing Organizational Knowledge ............................................................................. 200
Knowledge Management Systems ................................................................................... 200
HR Information Technology ..................... ,...................................................................... 205
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ORGANIZATION
l Functional Area #8: Employee Relations .........................................................................212
Introduction .......................................................................................................................... 214
Section 1: The Employment Relationship ......................................................................... 216

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Towards "Employee Relations" ....................................................................................... 217
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" ·1 oyee and Emp loyer R'1gms
' · .. .. .. .... .. .. .... .... ... .... .. .... .. .. ... .. .. ....... .. .. .... ... .. .... ......... ..... .. 2 ·1 o/
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Employee Relationship Strategy ...................................................................................... 231
Section 2: Sustainable Employee Relations ....................................................................... 239

Sustainable Employee Relationships ............................................................................... 240
Employee Involvement .................................................................................................... 243
Employee Recognition and Reward ................................................................................. 246
Employee Communication ............................................................................................... 251
Including Managers and Supervisors ............................................................................... 253
Section 3: Third-Party Influences on Employee Relations .............................................. 258

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Complex Labor Environments ......................................................................................... 259
Labor or Trade Unions ..................................................................................................... 260
¥/orks Councils ................................................................................................................ 267
Governments and Other Groups ...................................................................................... 270
l- ...................................... ................... :..................................... 271
Contract Administration and Enforcement ...................................................................... 275
Section 4: When the Employee Relationship Falters ........................................................ 281

j Preserving the Relationship at Difficult Times ................................................................ 282
Industrial Actions and Unfair Labor Practices ................................................................ .282
Managing Conflicts with and between Employees .......................................................... 285
Conducting Investigations ............................................................................................... 292
Disciplining Employees ................................................................................................... 293
Functionai Area #9: Technology and Data ...................................................................... .304
) .1 ntroduction .......................................................................................................... ,..... ,......... 306
) Section 1: HR and Technology ............................................................................................ 308

HR Technology Use........................................................................................ . .......... 309
Leveraging HR Technology ............................................................... ,..... ,., ..................... 309
ORGANIZATION
Information Management. ................................................................................................ 312

Technology Advances ...................................................................................................... 316
Section 2: HR in the Era of Big Data ................................................................................. 331

Business Case for HR Measures, Metrics, and Analytics ................................................ 332
Measures, Metrics, and Analytics .................................................................................... 332
Standards in HR .............................................................................................................. .341
The Impact of Big Data .................................................................................................... 343
Using Technology for HR Measurement, Metrics, and Analytics ................................... 347
Section 3: HR Information Systems (HRIS) ...................................................................... 352

Human Resource Information Systems .......................................................................... .353
I-IRIS Selection ................................................................................................................. 353
HRIS Implementation ..................................................................................................... .361
Section 4: Policies for Technology Use in the Workplace ................................................ 366

Workplace Policies ......................................................................................................... .367
Collaboration.................................................................................................................... 367
Social Media ................................................................................................................... .370
Networking ..................................................................................................................... .375
Comn1lmications
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.............................................................................................................. 376
bir
w.[J -r-Ji:p l y ................................................... , ........................................................................ . 380
Glossary ....................................................................................................................................389
index ........................................................................................................................................... 395
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This domain in the SHRM Learning Systern<il' for S!-!RM-CP/SHRM-SCP
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includes five Functional Areas: "Stmcture of the HR Function," "Organizational
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Effectiveness and Development," "Workforce Management," "Employee
J Relations," and "Teclmology and Data."
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J Throughout the module, brief scenarios describe how the behavioral

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competencies listed in the SHRM Body of Competency and Knowledge"' apply
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to the Functional Area under discussion. The scenarios are titled, for example,
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"Leadership and Navigation Competency in Action" and are identified by the
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competency icons described in the HR Competencies module.
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Progress check questions are included at the end of each section to help you
monitor your learning. These will be most useful if you check your written
responses against the recommended answers and the content ofthe section.
While tli1s-inodule includes legal content, it should not be construed as legal

advice or as pertaining to specific factual situations. No general statement of law,
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no matter how seemingly simple, can be applied to any particular factual
situation without a full, careful, and confidential analysis of all relevant facts, the
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employer's policies and practices, and the applicable laws ofthe jurisdiction(s)
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in which the employer operates.
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© 2015 SHRM
Structure of the Hll Function encompasses the people-related processes, theories,
and activities used to deliver HR services that create and drive organizational
effectiveness. HR demonstrates value by selecting the appropriate delivery model
(e.g., Center of Excellence/COE, generalist, shared services) with an understanding
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Responsibility Statements: Sample Application of Competencies:
) Key responsibilities for all HR professionals • Business Acumen-The ability to
include: understand and apply organizational
strategy, mission, vision, and values in
;)
• Understanding business lines and
products/services (including revenue developing and implementing an HR
generation, profitability, and the strategy and tactical plan.
competitive market). • Critical Evaluation-The ability to
interpret workforce and employee
• Implementing solutions based on analysis
and understanding of the impact on the information and data to drive
organization of leading and lagging recommendations and decisions
financial, customer, operations, and concerning people and business.
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learning indicators. • Consultation-The ability to provide
• Designing and implementing the balanced and thoughtful guidance to
appropriate servicing model (centralized organizational stakeholders on matters
I versus decentralized). related to people and business.
• Demonstrating partnership capabilities
Knowledge Topics:
with non-HR business leaders to capitalize
on organizational success or to solve • Balanced scorecard philosophy
'i organizational issues. • Centralization versus decentralization
• Serving as the HR point-of-service contact • Defined approaches to roles and
lor key stakeholders within a division or functions for generalists and specialists
group.
• Due diligence methodologies
• Providing workforce consultation to all
• HR organizational structure and design
levels of leadership and management.
• HR functional integration approaches
• Delivering HR services and support that
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___c!emonsirataona's.husiness.knowledge .i'l?gotiationgnd influence techniques
and acumen contributing to organizational • Stakeholder analysis techniques
success. • Strategy design and implementation
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' • Analyzing data and performance • Structural model approaches to HR (e.g.,
indicators to ensure the effectiveness of Center of Excellence/COE, HR business
the HR organization. partner, shared services)
) Key responsibilities for advanced HR
professionals include:
) • Supporting the communication,
understanding, and implementation of the
organization's mission, vision, values, and
strategy.
• Designing and implementing the HR
) operational structure to ensure efficient
and effective delivery of services.
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• Developing appropriate measures and
) metrics (e.g., balanced scorecard) to
demonstrate the value of HR activities in
supporting organizational success.
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In the late 1980s, Peter Vail! described the emerging business environment as
upcrn1anent white water." Cmnparing it to the turbulent rapids in a river, Vaill
depicted an environment of chaos and rapid change, full of surprises, previously
unforeseen problems, increased complexity, and, above all, never-ending "white
water events."
Vaill's foresight has proved prophetic, as organizations-and the humans within

those organizations-have found themselves buffeted by the ever-increasing rapids.
Globalization, technology, diversity, outsourcing, and changing demographics and
employee attitudes and values all confront organizations. Some of the changes are
gradual, some abrupt. Yet all must be managed if an organization seeks to survive,
let alone thrive.
In this new reality, it is not enough to simply change; organizations must transform.
This requires more accountability, more leadership, more teamwork, and more
intense involvement with people. As a result, the human resources function has
never been more integral to an organization's success. The increased challenges and
of the business a11.<!more strategic role for
HR than in the past.
HR now "plays merely administering policies and procedures but

actively participating in organizational strategy and acting as a business partner
for all other functions. This requires HR professionals to understand the "big
picture" and how the l-IR processes and activities can be aligned with the
organization's overall strategy. This requires HR involvement in three major
areas:
Participation in creating the organization's business strategy, for

example:
• Providing current information about the organization's human capital.
" Identifying implications of strategy across functions.
• Applying knowledge of external forces that can affect the strategy.
• Communicating information about workforce planning and management
that will be necessary to implement the strategy.
4 © 2015 SHRM
ORGANIZATION Structure of the HR Function
e Aligning the HR strategy with the organization's strategy, for example:

* Using technology to expand HR capabilities and provide better data.
Revising hiring goals.
• Exploring ways to lower health-care costs or adjust compensation and
;' reward systems.
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$ Suppo;·ting other functions in their strategic roles, for example:
o Assisting in identifying new skill requirements.
0 Acquiring and retaining talent.
e Supporting succession planning and mentoring projects.
The necessity for strategic alignment requires that the HR professional

understand the organization's structure, business, and strategy and ensure that
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HR's structure, strategy, and activities align with each of them.
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In line with the SHRM Body of Competency and Knowledge, this Functional
) Area covers the following topics:
• Section 1, "The Strategic Role ofHR," looks at two aspects oftoday's
the
changes that are impacting the profession.
) • Section 2, "Understanding the Organization," examines organizational
design and stmctures and aspects of the organization's internal and external
environment.
• Section 3, "The HR Organization," looks at several aspects of the HR
organization, including HR processes, the HR team, HR structure, and ways
) to measure and demonstrate HR value.
• Section 4, "HR's Role in Organizational Strategy," describes the role HR
plays in the strategic planning process and the development and alignment of
the HR strategy.
Upon completion of this FLmctional Area, you wili have a clear picture of how to
ensure that HR has a seat at the table for all critical organizational decisions.
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© 2015 SHRM 5
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The Evolving Role of the HR Professional

HR's focus will always be people: acquiring, developing, and retaining talent. Yet
the traditional role of providing advice, service, and conlrollo other functions
within the organization has been elevated to that of a strategic business partner. As
a result, the HR function and the professionals within it must have knowledge and
competencies necessary lo perform at a strategic and organization-wide level.
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What constitutes a profession? In the mid-l960s, the American Society for
)
Personnel Administration (ASPA)-forenmner of the Society for Human Resource
Management (SHRM)-along with a group from Cornell University posed that
question to scholars and regulators. They dete1mined that a profession has five
characteristics that separate it from an occupation:
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• A national organization (such as SHRM) or another type of recognized
common voice that represents its members and promotes development of the
field.
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• A code of ethics that identifies standards of behavior relating to fairness, justice,
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truthfulness, and social responsibility.
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The..-SHRM Code of Ethics is av<Iilable
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www .shim.org/aboutlbylaws ethics/pages/codeofethics.aspx.
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• Research as a developed practice that encourages application to advance the
field. For example, each year the SHRM Foundation funds research into new and
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emerging areas of HR. Academic HR research is also conducted by numerous
colleges and universities around the world.
• An established, comprehensive outline of necessary knowledge

competencies. The HR profession's identified knowledge is presented in SHRM
) Body of Competency and Knowledge and is disseminated through websites and
publications sponsored by SHRM.
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0 A credentialing organization that sets the professional standards f(Jr the field.
The SHRM Certification Commission has established eligibility requirements
and examinations for the SHRM Certified Professional (SHRM-CP) and SHRM
Senior Certified Professional (SHRM-SCP).
© 2015 SHRM 7
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As an increasing number of organizations operate in a worldwide environment,

global competence-a set of consistent, recognizable global practices and impact-
has emerged as another important characteristic of a profession.
HR in the 20th Century

Emerging as a specialized function around 1900, HR had a narrow focus on
personnel and payroll administration. The personnel depatiment, as it was
known, hired the necessary workers for America's growing industries and kept
records for employee matters.
As the business environment changed, HR changed as welL In the first half of

the 20th century, unions and government regulations created additional HR
responsibilities, as did management practices designed to improve employee
productivity. In the second half of the 20th century, workplace-related legislation
required HR to manage compliance.
As their organizations changed, HR practitioners developed expertise in the

delivery of administrative and operational services to their clients-senior
management and functional areas. Figure I illustrates these two roles, both of
which are still central to the HR function.
j ----
Finance/accounting
t
1
Sales/marketing
I Research and development
Senior management
Operations
L Information systems
Figure 1: HR in the 20th Century
Administrative Services
The HR focus in this role is twofold: managing compliance issues and record
keeping. Often referred to as "transactional activities," these responsibilities
continue to be central to the HR function. However, technology has made the
delivery of these services easier. For example, human resource information
8 © 2015 SHAM
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systems (HRTS) manage HR data (e.g., employee records) and create

compliance reports. And in many organizations, employees can keep their own
records current by accessing internal or Web-based applications.
Operational Services
In every organization, there are routine tasks necessary to ensure smooth
operation. Many ofthe traditional activities ofHR-recruiting and hiring,
resolution of employment issues, employee communication--attend to the day-
to-day management of people. In addition, HR is called upon to interact with line
managers, consulting on specific issues and providing advice on improving
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performance, productivity, and job satisfaction. This often requires HR to
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develop perfonnance assessment and improvement processes and design
effective reward systems.
HR in the 21st Century

The new century has added a strategic role to the HR function. In addition to
providing administrative and operational services, the HR role has expanded to
being a strategic partner for senior and line managers. Having this "seat at the
table" for strategic decisions requires HR practitioners to enlarge their focus to
include global, long-tenn, and forward-thinking considerations.
- - - - - - - - - - - - - . - - - - - - - - · - - - - - - - - - - - - - - -..- - - - - - -
These higher-level activities are sometimes referred to as "transformational,"

I ), because they involve moving the organization in new directions and toward new
) outcomes. As an organization seeks new oppmtunities, HR provides a valuable
) perspective on the human factors inherent in any strategic decision.
Strategic HR activities may include:

)- e Preparing the organization for change.
• Forecasting human capital needs and the skills and knowledge required to
achieve strategic goals.
" Leading talent management.
• Organizational restructuring.
) • Developing performance management systems to support strategic
) objectives.
Figure 2 illustrates the way in which the HR function and the activities it
performs are now fiJlly integrated into the organization.
© 2015 SHRM 9
y
( ·--,
\Safes/marketing -.
1- Operational
L-- Strategic
Figure 2: HR's Integrated Roles
The HR role as strategic partner has transformed the traditional administrative

and operational roles, with both becoming more strategic in nature.
Strategic Administrative Role

HR's administrative activities are directly aligned with the organizational strategy:
_ _ _...:• TechnolQgy faciliJates the integration ofHR in strategic 111anagement HR data
and activities can be integrated into an enterprise management tool that enables
more timely access to shared data throughout the organization. This also allows
HR to access data to identify developing trends and begin planning.
• Tasks that are low in strategic value and are not necessarily considered core
HR functions can be outsourced to allow HR to focus on strategic activities.
Third-pmiy vendors can provide benefits plan administration, payroll
administration, background checks, and other less strategic tasks.
Strategic Operational Role

HR's operational activities are also directly aligned with strategic objectives:
• If part of the organization's strategy involves entering new international
markets, a globally based and culturally diverse workforce may require
nontraditional recruitment sources and require specific job skills such as
proficiency in other languages.
Talent acquisition and dcvciopment focuses on bringing the organization closer
to its goals.
10 © 2015 SHRM
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• HR partners with other functions to design incentives that promote rather than
discourage desired rewarding increased customer satisfaction
rather than decreased call time or the size of single sales rather than the number
of smaller sales.
• FIR monitors employee satisfaction and looks for ways to increase employee
by improving supervisory skills or soliciting employee
ideas.
Changes That Impact the HR Profession

The evolution of HR and its organizations has been driven by both internal and
external changes. As change continues, the ability of HR to respond as a
strategic business partner affects the organization's ability to respond and take
advantage of emerging opportunities.
Success will require organizations to master the ability to interpret the nature of
changes, identify opportunities, develop strategies, make decisions, and
measure the outcomes. Because HR is well-positioned to help respond to many
of these changes, the role of the HR professional will become increasingly
strategic ... and important.
i-
. Workforce/Workplace Changes
Changes in the workplace and the workforce will challenge HR professionals. For
example:
)
) o Economic disruptions, both short-term and long-term, force organizations to

respond. Downturns can require cost cutting (reductions in force [RIFs],
benefit cuts, lower travel budgets, and other spending controls) while at the
same time creating the need to "do more with less." The result can be lower
employee morale, higher levels of stress, and the loss of talent. Economic
upturns present different challenges: the need to quickly add staff by rehiring
laid-off employees, finding new hires, or using temporary or contract workers.
• Fluctuations in labor availability (either a shmiage or oversupply of potential

employees) may demand changes to compensation and benefit structures,
) talent acquisition procedures, and career paths.
© 2015 SHAM 11
• Employees are increasingly concerned with finding a balance between their

work and personal lives. Organizations that seek to retain the best employees
must be flexible in providing options that satisfy employee requirements.
Doing this well not only increases job satisfaction and retention; il makes
attracting ne\v talent easier.
• Workforce demographics are changing rapidly around the world. In Japan and
Europe, more people are exiting the workforce than are prepared to enter it.
According to Ernst & Young, other large economies such as Russia, Canada,
South Korea, and China will face the same challenge by 2020. Countries with
younger workforces-such as Brazil, Mexico, and Indonesia-are positioned
to take advantage of this demographic change; in India, one-third of the
population is now under 15 years of age. Many organizations are struggling
with twin factors of an aging workforce: the retirement of experienced baby
boomers (the generation born between 1946 and I 964) and the decision of
other workers who are choosing to stay in the workforce longer. With the
arrival ofMillennials or Generation Y, there is increased diversity of
workplaces in age. Ethnic diversity has increased as well because of national
population changes, increased labor mobility, and global organizations.
Demographics will continue to have a profound effect on organizations and
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o The persistent march of technology will continue to transform the way

organizations accomplish their missions. Technological innovations foster
improved communication while also creating challenges to maintaining a
strong internal culture. The ability to gather, analyze, and retain large amounts
of data has opened up new opportunities for organizations while also creating
privacy issues for customers and employees. Social media provides new
pathways to customers but can also be a drain on productivity.
Globalization
Virtually all organizations now operate in a global marketplace, from small
enterprises that sell via the web to overseas markets to large multinationals that
have a worldwide presence. Whatever the degree it affects an organization,
globaiization is a reality, and it brings with it both opportunities and
difficulties. Global competition forces organizations to differentiate their
offerings beyond price, requiring creative people and processes to deliver
12 © 2015 SHRM
I) ORGANIZATION Structure of the HR Function
higher value. Globalization also presents opportunities for collaboration:

Business partners can be located thousands of miles apart, yet operate in a
seamless fashion through technology. Supply chains may be located in widely
different locales.
1\ )
for the HR function, globalization presents very specific challenges, such as:
• Managing legal compliance across all areas in which the organization
I operates.
i e Finding, acquiring, and developing talent from a global labor market.
) e Ensuring consistency in all locations while maintaining cultural sensitivity
) and flexibility.
• Ensuring that communication-of both information and values-is effective
and efficient throughout the organization.
Globalization is covered in more detail in the "HR in the Global Context"

Functional Area in the Workplace module.
People are becoming more and more concemed with the ethics of the
organizations they work for or buy from. The almost instantaneous availability
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of infonnation has increased transparency as well as the need for higher
standards of ethical behavior.
Business ethics is defined as rules of conduct or moral principles that guide

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individual or group behavior. Its focus is on awareness of organizational values,
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guidelines, and codes and behaving within those boundaries when faced with
dilemmas in business or professional work. HR professionals are in a strategic
position to ensure that their organizations maintain cultures that demand ethical
behavior. Many serve as the primary ethics resource in their organizations and
are involved in formulating ethics policies.
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As a steward of ethics for the organization, HR practitioners may face a wide
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range of ethical dilemmas involving management, employees, customers, and
investors. Often these issues are not clear-cut; differing perspectives of the
involved parties make it difficult to find the "right" choice. In addition,
changing expectations of organizations and individuals can make ethics a
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particular challenge for HR.
© 2015 SHAM 13
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L'l some cases, compliance with the law will be the determining factor. But as
important are criteria beyond legal compliance as defined by the organization's
ethical code of conduct.
Issues of fairness may also require HR's involvement, for example, the
perception of a disparity in pay levels between similar workers or between
executives and other workers.
Ethics are discussed in the "Corporate Social Responsibility" Functional Area

in the Workplace module.
A sales and business development executive employed with a

telecommunications company is attempting to secure a large contract with a
South American country. Following a number of meetings, the country's
Ethical president starts to ask the sales executive for additional, unwritten terms and
Practice conditions to secure the contract. The executive is concerned with the
Competency unusual, non-contract requests, but she isn't certain if they are illegal or
in Action unethical. She recalls company training delivered online when she joined the
organization, but that was six years ago. She doesn't recall the specific
examples or responsibilities placed on her. She raises the matter with her
manager, who then engages the company's ethics officer who works within
the HR
Upon review and discussion with the ethics officer, the manager and the
sales executive are advised to cease and desist contract negotiations
because of the risk of violating applicable laws as well as the company's
ethics policy. This also highlights the need for more frequent and current
training by HR for all employees, particularly those dealing with other
countries and officials, not only at hire but annually. HR expands the ethics
training module to include current, relevant examples and legislation and
makes it an annual training requirement for all employees.
Organizational Growth or Retraction

As they respond lo changes in the marketplace, organizations may choose a
strategy of growth or retraction, each requiring the involvement of HR.
For example, both growth and retraction can result in a shirt of organizational
boundaries, including the movement of decision making, extended organizations,
and new organizational forms.
14 © 2015 SHRM
) Movement of Decision Making

} Growth can create the need for a change from traditional decision-making
\ processes that inhibit rapid response to threats and opportunities. In these
J situations, decision-making authority may move downward to line managers or
outward away tl·om headquarters to the tleld or other geographic pmis of the
organization. Retraction may cause the reverse movement of decision making,
upward to senior management or inward to headquarters. All of these situations
) require HR to adjust to the new process. For example, in times of growth HR
may need to decentralize to match the organizational process, share HR fimctions
with line managers, or relocate operational activities to where the decisions are
now being made. In times of retraction, the reverse may be required.
Extended Organizations
It can be common for organizations to have supply chain partners that require the
ability to communicate and collaborate effectively and efficiently. Outsourcing is
a common fonn of this. HR must help facilitate communication and collaboration
between partners as well as integrate systems, processes, and information with
partner HR functions.
New Organizational Structures

) - - · - - - ---+)rgaui;"ations-uften utilize mergersanctacquisn1ons (M&A) as part ora growth
strategy. Retraction can take the form of divestiture. Research has shown that the
earlier HR is involved in these activities, the more likely the achievement of the
j desired outcomes. For M&A, HR must consider issues such as:
) • Financial liabilities in terms of severance and continuation of benefits.
• Cultural differences between the entities.
e Effect on productivity, morale, and employee attitudes.
• Degree of redundancy in the new organization.
• Integration of systems, technology, processes, and procedures.
e Differences in compensation, employee classifications, and benefits.
ln a divestiture, HR must analyze the skills and t\.mctions of the divested unit and,
if the divestiture leaves a gap, determine if the cost of tilling the gap outweighs
the financial benefits oft he divestiture. If so, HR must undertake the same type of
l )
planning. implementation, and monitoring as with M&As. !n addition, unless the
change and its rationale are communicated, morale and productivity can be
severely atlectcd. Again, this is" critical role for HR.
© 2015 SHRM 15
The HR role in mergers, acquisitions, and divestiture is discussed further in the

"Business and HR Strategy" Functional Area in the Strategy module.
With all of the changes discussed here, there has never been more emphasis on
an organization's ability to measure the value of its investments (in time,
resources, and money) in all strategic and tactical initiatives. Prior to a
decision---acquiring new technology, adding (or subh·acting) employees,
entering a new market-there is a need for a clearly stated business case that
includes:
e A detailed description of the investment.
e How the investment contributes to the organization.
• How the investment will be designed, implemented, and measured.
e Financial assessments, such as a cost-benefit analysis.
The HR function must be able to create the business case for any investments it
proposes; in addition, it may be called upon to assist other functions in business
case development as well as provide assistance in the evaluation of proposed
investments.
Business case development is covered in more detail in the "Business and HR

Strategy" Functional Area in the Strategy module.
16 © 2015 SHRM
)
)
\.
)
Progress Check
Directions: Choose the best answer to each question.
I. Which characteristic separates a profession from an occupation?

) ( ) a. Credentialing organization
} ( ) b. Acronym
( ) c. Membership dues
) ( ) d. Month] y newsletter
)
) 2. What is another name for administrative services performed by HR?
( ) a. Record keeping
( ) b. Value-added activities
( ) c. Transactional activities
( ) d. Busywork
3. Jn addition to providing administrative and operational services, what else must the 21st-
century HR f1mction do?
( ) a. Design office layouts.
\------ ____( ) b,__ Be located.closer.to..
1 ( ) c. Keep an eye on costs.
J ( ) d. Play a strategic role.
)
4. What must HR practitioners include in their focus in order to be a strategic partner?
( ) a. Performance appraisals
( ) b. Global, long-term, and forward-thinking considerations
( ) c. Local, short-term, and past performance considerations
( ) d. Employee assistance programs
5. What organizational change may cause decision-making authority to move downward to line
) managers?
l ( ) a. Growth
( ) b. Retraction
( ) c. Acquisition of a subsidimy
( d. Addition of a new product
© 2015 SHRM 17
6. What must be included in a business case?

( ) a. Pie charts
( ) b. HR-specific acronyms
( ) c. Financial assessments
( \
I d. Investment alternatives
18 © 2015 SHRM
> Progress Check Answers

I. a (p. 7)
2. c (p. 8)
3. d (p. 9)
4. b (p. 9)
5. a (p. 15)
6. c(p.l6)
l
)
)
)
}
)
I
)
)
l
© 2015SHRM 19
I I
Section 2:
11 d
"'" erstan d.mgth.e ...nrgamzatmn
· ·
HR responsibilities related to this section include:

• Understanding business lines and products/services (including revenue generation.
profitability, and the competitive market).
• Demonstrating partnership capabilities with non-HR business leaders to capitalize on
organizational success or to solve organizational issues.
• Providing workforce consultation to all levels of leadership and management.

• Delivering HR services and support that demonstrate one's business knowledge and
acumen contributing to organizational success.
This section is designed to increase your knowledge of:

• HR organizational structure and design.
\ HR's Understanding of the Organization

)
As a HR professional, understanding your organization is nmdamental. This
1
understanding allows you lu effectively provide administrative and operational
support for your organization. Just as importantly, it is crucial to HR's role as a
strategic business partner within the organization.
To be a contributor to the strategic business management process, the HR

professional must have a comprehensive understanding of the organization's
internal design and structure·-as well as the extemal
environment in which it operates.
This will facilitate the creation of parh1erships between HR and intemal business
in the organization's key business functions. By
understanding how these functions operate and identifYing internal needs and
emerging issues, HR can create lines of communication and collaboration to
support the goals of each function and of the overall organization.
' ) Building these partnerships allows the HR professional to:

) e Become fluent in the language of business.
• Increase the credibility of HR.
L-- during strategic plam1mg.
• Educate the organization on HR's value.
)
• Proactively affect strategic direction and outcomes for the organization.
Core Business Functions

To support their business partners as they work to ti.IIfill their own strategic
J
plans, HR professionals need to understand the core functions and business lines
)
witl1in their organizations, including the goals, perspectives, and challenges of
the functions/business lines.
All businesses perform certain core a greater or lesser extent,

depending on the size and nature of the organization. These core business
functions are illustrated in Figure 3. Executive management is ultimately
I
responsible for all of the core business functions and their efrect on the
)
organization's perfom1ance.
© 2015 SHRM 21
I !
Figure 3: Core Business Functions
Finance and Accounting

The role of finance and accounting is to process, document, and account for the
financial resources of the organization. Both accounting and finance departments
repmi to the chief financial officer (CFO).
Accounting manages the day-to-day finances and cash flow of the business. It is
concemed with accounts receivable (monies received from customers), accounts
payable (paying the company's bills), and balancing cash tlows on a regular basis.
Because different currencies and regulations exist worldwide, accounting can
become much more complex in global organizations. Fnancialmetrics (examples
include the balance sheet, liabilities, and assets) reflecl this function's perspective
and contribute to its common languages.
FinamT generally provides investment, capital acquisition, financial planning,

budgeting, and higher-level financial services to other parts of the organization
and its shareholders. The financial organization is involved in decisions regarding
global expansion, technology investments, and structuring strategic alliances.
One nfthe recurrent ways in which I!R interacts with finance is through finance's
recommendations for and reviews of annual budgets. Finance dcpmimcnts apply
22 © 2015 SHRM
different approaches to budgeting. Figure 4 describes four commonly used

) budgeting methods, each of which might be appropriate in different situations.
Zero-based , All objectives and operations are given a A department would need to
I priority ranking. justify its entire budget and
Each unit or goal is ranked, and then available show how its funding helps
funds are given in order. the organization meet its
goals.
All expenditures must be justified for each new
period, and budgets start at zero.
Incremental Also known as line-item budgeting. Installing new computer
Traditional form of budgeting. equipment or providing
training would increase the
Prior budget is the basis lor the next budget. budget.
The prior budget is simply increased by a set
percentage. Additional funds must be
requested based on need and objectives.
) Formula Dillerent units or operations receive varying A government agency could

percentages of the budget. General funding is experience a system-wide 5%
changed by a specific amount, and the unit budget decrease, which
budgets are adjusted accordingly. would be spread among its
units according to different
percentages.
)
Activity-based This type of budget recognizes the An organization asks
L---------- ·merretattonshrps among tlie vat1ous activities- resocc-u"'rc=-e:-:s:-t"'hey
required to create value in an organization. will need to produce specific
The basis tor budgeting is not how to divide a outputs or levels. More
)
set amount of money but how much it costs to resources are transferred
) from lower-priority areas or
perform different enterprise activities.
) areas with excess capacity.
Funding may be allocated based on the
strategic significance of the activities.
Figure 4: Budgeting Methods
Finance and accounting have achieved more prominence recently because of the
greater public interest in the transparency of fiduciary responsibilities and actions
and accountability for t1nancial reports. A number of countries now have laws
requiring varying degrees of corporate governance.
Accounting is also involved in the trend toward globalization. The two p1imary
organizations responsible for pron1ulgating accounting standards are the
International Accounting Standards Board (lAS B), based in London, United
© 2015 SHRM 23
I
Kingdom, and the Financial Accounting Standards Board (FASB), based in

Norwalk, Connecticut, United States. The IASB, which issues lntemational
Financial Reporting Standards (IFRS), and the FASB, which issues the U.S.
generally accepted accounting principles (GAAP), work together closely when
developing new accounting standards. A goal of this collaboration is to move toward
one set of accounting standards that would be accepted anywhere in the world.
Marketing and Sales

This is the part of the organization that brings in revenue. It is responsible for
positioning (marketing) and selling products and services (sales) to customers.
Consequently, it usually has the best intelligence about and the highest
awareness of customers, market needs, and competitive threats. Sales and
marketing are very different functions, but they depend on each other for
success and often report to one senior executive with responsibility for both
functions.
Global marketing activities are vital to the success of an enterprise operating

across borders. The product name, its key features, the price points,
positioning, and promotional campaigns are all highly susceptible to local or
regional differences. Without local market intelligence and decision making,
1
'
imp01iant and also very country- and culture-specific.
The sales operation also needs to be close to its customers. There are several
different organizational alternatives for the sales function, including a direct
sales force, distributors, dealers, or a strategic sales alliance. The HR
implications for each of these organizational alternatives vary greatly, not
only across regions but across countries as well.
Research and Development (R&D)

In a commercial enterprise, research and development (R&D) or new product
design and development is responsible for future revenue. TI1e function
depends heavily on talent acquisition and management. The importance of
R&D investment varies by the type of company. According to the "20 13
Global Innovation J 000 Study" (from Booz & Company), R&D spending
ranges from 2% of revenue in telecommunications to 27% in computing and
electronics. (The second and third positions in spending belong to the health-
24 © 2015 SHRM
care and automotive industries.) Globally, R&D spending bas increased

) steadily since I 998 (the base year oftbe study), but R&D investment in China
has outstripped the global rate and was almost twice the global rate in 2012 to
I 2013. It is worth noting that China's impressive rate of R&D spending is
) actually slowing, in line with a slowing rate of economic expansion. Only
Europe and Japan fell below a weighted global average.
R&D also exists in the public sector, in the fom1 of national research institutes
) or centers associated with universities. Public-interest R&D often focuses on
performing theoretical research (as opposed to applied research), promoting
) science and new technologies, perfonning public-interest scientific research
) (such as research into public health issues), and developing sustainable
) technologies.
Some organizations conduct R&D in a centralized manner (for example, with

a globalized strategy), while others focus R&D in business units so that
projects stay focused on customer needs.
. . . .
... R&D isnol related to levclsot'inno\,ation and .

· :: .....··pet:fbrmmnce;TIIe
) orie considered three financial pcrtormancc me tries (revenue growth;
) .·.. cari1ings befurc interest; and EBI;l'DA; and ;narke.t .
)
c:;pitaiization ihe top ten innovators outperformed thelop icn R&D ·
) . speridcrs. The study's authors note, "Innovation success isn't about how
. illliCh money companies spend but hO\V they spend It"
)
)
Operations
) This pan of the organization develops, produces, and delivers the company's
products and s<Jrviccs lo customers. The operations fimction is responsible for
) building the products and services that marketing and R&D define and that
) sales monetizes. It is therefore the source of the revenue for the enterprise.
"Products" can cover a far-ranging spectrum from the tangible (automobiles) to
' I intangible (software) to services (consulting engagements).
)
© 2015 SHAM 25
}
Global organizations may have plants and operations in different countries,

with each potentially serving different markets and customers. 11 addition,
operations departments may be tasked with locating manufacturing in countries
with lower cost structures than the headquarters country. The logistics,
planning, and coordination among global operations is, therefore, frequently
complex and sophisticated.
Information Technology
The information technology (IT) area manages the storage, access, exchange,
and analysis of information across the enterprise through hardware and software
systems. IT oversees networks used for voice and data communication as well
as hardware components and supports data storage and processing needs
throughout the organization. The chief infonnation officer, or CIO, is the
executive in charge of the IT function.
Increasingly, IT's major task is to snpp01t integration of data from different

organizational processes through an enterprise resource planning (ERP) system.
Through integration, IT helps make an organization's data more visible to
decision makers in real time. ERPs can include different modules according to
an organization's needs:
• mclude the generalledger;atn:nrsets
accounts payable and receivable, and financial statements.
• include budgeting and costing.
o include inventory management, workflow
management, work orders, quality control.
• Supply ehain from selection to claims payment.
• Customer relationship include sales account
information and activity.
• Project from schedules and budgets to resource
tracking.
• Human resources--examples include employee records, payroll, benefit
programs, tmining, and perfonnance management.
IT faces a number of major challenges. First, IT systems grow over time. This
means that some modules may be proprietary while the rest come from an
assmtment of vendors. Achieving smooth integration is often dit1icult or
impossible. Second, IT is charged with maintaining the security and reliability
26 © 2015 SHRM
of the organization's data--an ethical, legal, and business requirement. Systems

) must be made secure against internal and external tampering, and IT
management must plan for disasters that could interrupt access to critical data.
Third, it must manage the system for efficiency as well as security. System
) capacity and function must be weighed against the benefit of added storage and
) processing tasks. The Internet has helped in this area by making both off-site
) data processing applications and data storage available. Software as a service
(SaaS) is a cost-effective way for IT to suppott some specialized applications.
) The vendor is responsible for maintaining the software and the servers on which
it is stored, and the user pays only a subscription fee.
Human Resources
Organizations today realize that the most effective sh·ategies are not driven by
a single function, such as marketing/sales or operations, but are produced by
cross-functional collaboration. Because it participates in the strategic planning
process for the organization, HR understands the value the organization is
trying to create and the role each function plays in creating that value.
Because its mission as a core function is to deliver talent and services required
by the other functions, HR also understands the specific challenges each
l function faces. As a result, HR is well positioned to serve as a cross-functional
L__. --·-----------bridge;-Itcarr.--- -·----··
• Facilitate the high degree of cross-functional understanding and
) collaboration required to deliver results.
• Use its mission to advise core functions on how to align with the
organization's strategy.
• Identify and support the need for additional resources or training.
• Locate necessary talent resources dispersed throughout the organization.
For example, HR can increase employees' understanding and awareness of a

new branding strategy. It can identify the best change agents in the
organization and help develop powerful role models for the desired behaviors
I and attitudes. HR can benefit t!·om applying marketing's orientation and skills
) in reaching its own employees.
)
) Figure 5 summarizes some of the key connections between HR and the core
business functions discussed previously.
)
© 2015 SHRM 27
Finance and Coordinating requirements of different Providing training related to good

accounting markets in terms of currency, taxation governance to board members or on
and benefits, reporting compliance requirements with internal
Collaborating on start-up operations auditing
(examples include setting up accounts, Selecting an external auditor
filing necessary documents) Promoting inclusion of ethical
Collaborating on ways to manage costs dimensions in enterprise value system
of benefit programs and reduce tax and fostering ethical environment
burdens for global assignees throughout the organization
Marketing and Aligning incentive/compensation Promoting sharing of learning through
sales programs with strategies and local Internet or Intranet technology
cultures and practices Supporting teams in which marketing
Managing staffing plays a key role
Coordinating knowledge management
in different markets (for example,
ensuring that product training is
available in different languages)
Research and Developing talent pool with requisite Promoting processes that allow R&D
development expertise (including employees with up- personnel to devote more time to the
to-date knowledge and skills) task of innovation
Identifying employees with needed skills Identifying alliance or joint venture
throughout the organization partners, acquisitions, or vendors to
supply critical elements
i and
Promoting a climate that values intellectual property
innovation and continuous improvement
Operations Developing staffing plans Ensuring physical security of
Managing labor relations in different operations
markets Coordinating with local legal,
Dealing with intellectual property rights regulatory, and cultural requirements
Information Selecting the HR information system Using internet and extranei to foster
technology and implementing it better communication, knowledge
Using database analysis to support sharing, and coordination among
decision making and strategic initiatives internal and external stakeholders
Figure 5: Cross-Functional Relationships with HR
Organizational Design
An organization's design largely determines how it does business. It involves
dete1111ining the size and scope of the organization, necessary functions, how
communication happens, and how decisions are made.
I
28 © 2015 SHRM
' )
) All organizations evolve through phases of growth: their business life cycle.
Where an organization is in the business life cycle both illuminates and defines its
structure and strategies. For example, a start-up might have a very different design
than a mature organization. The focus of HR will vary in each phase of growth.
Another factor that influences an organization's design is its strategic orientation.

The selection of strategies both reflects and shapes the organization's structure and
culture. The choice of strategies is vital to develop and maintain competitive
advantage and successfully move through the business life cycle.
Because the role of HR varies with the strategic orientation of the organization, it
is vital that HR not only understands the strategy but, to the extent possible, is
involved with its formulation, development, implementation, and evaluation.
Business life cycles and strategies are covered in more detail in the "Business and
HR Strategy" Functional Area in the Strategy module.
Organizational Structures
The structure of an organization refers to how all functions are aligned to ensure
the best performance and synergy. The optimal structure for an organization
_!_ _ _ _ _ _ _ _ _ _ _ ___,d"cQends Q!l a
I organization, the strategic direction it has chosen, and the marketplace it serves.
)
Having a understanding of the elements of organizational structures allows HR to
guide organizations through the selection and implementation of the best elements.
Structural Principles
I
) There are three key principles that guide organizational structure: decision-making
authority, layers of hierarchy, and fonnalization.
Decision-Making Authority
This principle describes bow decisions are made within the organization. Authority
relates to the scope of responsibilities that define the area in which a manager or
supervisor is empowered to make decisions. The organization determines which
)
decisions can be made at each level of the organization and within each function in
order to ensure that the best decisions are made in the most timely manner. In a
global organization, decisions may be made at headquarters (centralized) or
delegated to other parts oflhe organization (decentralized).
© 2015 SHAM 29
Layers of Hierarchy
The hierarchical layers of an organization range fi·om the chief executive officer to
the employee in a function. Business process reengineering initiatives in the 1990s
were aimed at reducing the number of layers and waste within organizations. The
result was f1atter, more efficient organizations with fewer stall support positions.
The ratio of direct to indirect employees (people doing the work as opposed to
people supporting those doing the work) is a key metric of organizational
efficiency. Global organizations often value nimbleness or agility since their
interconnectedness and global exposure may often call for rapid organizational
response.
There are two important concepts when determining the layers of hierarchy:
e Chain of command refers to the line of authority within an organization.

Traditionally, a subordinate reported to only one superior. This eliminated the
confusion, loss of productivity, and stress that could result from an employee
i trying to follow the directions of two separate managers.
i
l
I
Today the chain of command is growing less distinct in many organizations.
As organizations push decision-making authority downward or become
and as or permanent work teams become more common, the
I line of authority can appear lateral or web-like.
!
!
@ Span of control refers to the number of individuals who report to a
supervisor. Executives, managers, supervisors, and subordinates are
1 hierarchically connected through the chain of command. Organizations in
which many subordinates report to few supervisors are referred to as "flat."
There are many factors that drive an organization toward a wider span of
control, including the desire for subordinates to communicate directly with
their ultimate supervisor and decision maker. However, spans of control that
arc too large can slow an organization, making it difficult for supervisors to
make decisions quickly. Many decisions must flow to the top, and the
decision queue can become crowded. Flat mganizations can be nimbler.
When decisions are made, they can be communicated and implemented
quickly.
30 © 2015 SHRM
)
Formalization
This principle refers to the extent to which rules, policies, and procedures govern
the behavior of employees in the organization. The more formal the organization,
the greater the written documentation, rules, and regulations. Some organizations
are more loosely structured than others. Formalization may serve an organization
well when uniformity is an for example, when there is low tolerance
for variations in pmis or when it is critical that, for reasons of compliance, a
process be conducted in a precise manner. It can, however, restrict employees'
abilities to respond to unusual situations or customer needs as well as stifle
creativity and innovation.
Over time, fonnalization becomes ingrained in an organization's culture and can

be difficult to change. This may be a challenge when an organization merges with
or acquires an entity with a dissimilar approach to fonnalization. Similarly, when
an organization expands into a country or region where different culturally defined
tastes for formalization prevail, it has to decide how to manage the differences to
achieve global cohesion.
Structural Alternatives
The goal is to have a structure that facilitates value creation and strategic alignment
1_ _ .. There-are-severahrltern.artvesms!fncturing an orgamzatJciiJ.
)
) Functional Structure
In a functional strucl11re, departments are defined by the services they contribute to
the organization's overall mission, such as marketing and sales, operations, and
) HR. (Even though an HR unit may be located in the field rather than at the
) organization's headquarters, it is still considered part of the HR function.)
Traditionally, this has been the most common organizational structure.
A related method is departmentalization by process. If the organization's work is

divided according to a linear process, the organization might be divided into
depmimcnts like design, supplies procurement, manufacturing, sales and marketing,
distribution, and customer service.
Figure 6 on the next page illustrates a functional structure.
In this structure, for example, all of the operations matter what

products they are working an-report to a single location.
© 2015 SHRM 31
T
Headquarters
T
J I
Research and
Development
Production
J Marketing
Information
Technology , ources
I
i Figure 6: Functional Organization
I
!I
I'
I
Headquarters
J
Worldwide Worldwide Worldwide
Product Group A Product Group B Product Group C
Research an:l 1-- Research ard Deve!oprrent r Research an:.l Develo

1- Manufacturing I- Manufacturing f- Manufactwing
Marketing I- Marketing
L Human Resources L Human Resources L Human Resources
Figure 7: Product Organization
Headquarters
J
Europe Asia-Pacific Africa Americas
I
1- Research and Development - Research and Development }--- Research and Development Research and Deveiopment
t-
I-
[
Manufacturing
MackeHng
Human Resources
t Manu!aclu ring
MackeHng
Human Resources
t-
1-
'
Manufacturing
Marketing
Human Resources
f-
L_
Manufacturing
Marketing
Human Resources
Figure 8: Geographic Organization
32 © 2015 SHRM
) Some units are considered line units while others are considered staff units. Line
) units are work groups that conduct the major business of the organization, such
as the production or marketing fimctions. Staff units assist the line units by
performing specialized services for the organization, such as accounting or HR.
In global organizations, the functional structure is usually seen in organizations

that are smaller and those that are in the early stages of globalization.
Product Structure
In an organization with a product structure, functional departments are grouped
)
)
under major product divisions. An automobile company, for example, may have
separate divisions for cars, trucks, and sport utility vehicles. Each of these
divisions will have its own marketing, sales, manufacturing, and finance functions.
More employees are required to staff this type of organization, but presumably this
is offset by accumulated experience and expertise. The truck division, for example,
should be much hetter at designing and manufacturing tmcks than a generic
vehicle operation.
Figure 7 on the previous page illustrates a product structure.
As shown in this example, a product stmcture can be global in nature. All global
}--··--- resources; talent, anasystems needed to plai], design; develop, and
single product family would be located in one geographic location. The sales
)
function may be dispersed to be closer to the customer, but everything else is
)
located at the product division.
)
) In a global product structure, the world is viewed as one market and talent pool.
) Employees and systems cross borders to provide economies of scale in
) developing and distributing worldwide products. Decision making is dispersed
and decentralized to the product groups.
) Geographic Structure
A geographic stmcture is very simiiar to a product structure, with the exception that
geographic than products--define the organizational chart. Each
region has its own complete and self-sufficient set of functions. More employees
are required to staff this type of organization than in a purely functional entcrplise,
but value is achieved because each division can be more responsive to local
) markets. Figure 8 on the previous page illustrates a geographic structure.
J
)
)
© 2015SHRM 33
The example shows the geographic structure for a multinational enterprise. Each
region or countty has its own division, and decision making is decentralized. The
region must be sufficiently large to support this structure. By being closer to
markets, a geographic structure can tailor and localize products and services
1nore easily than is possible using other organizational desig._11s.
A domestic organization may be structured around regions within its country.
Hybrid Structures
Hybrid structures combine elements of the f,mctional, product, and geographic
structures. Because changes are constantly being made based on market needs,
efficiencies, and product development resources, few enterprises have a purely
functional, product, or geographic stmcture. In addition, there are a number of
practical realities for large global organizations. Some locations may not be
equipped to handle all functional activities, especially manufacturing and
operations. Some local sites have a history of being one type of organization, and
it would be disruptive to change without expensive reengineering.
A common use of hybrid stmcture occurs when an organization first goes global.
During the domestic and international stages of globalization, an exp01t
______________ be attached to a fu11ctional
structure. A similar arrangement may be made when a company enters global
markets through alliances, partnerships, licensing, or even an acquisition. The
responsible depmtments are often grafted onto the existing organizational
structure. This hyblid enables an organization to keep its primary focus while still
opening up potential new opportunities.
Two examples of hybrid stmctures are the front-back structure and the matrix
organization.
• In the front-back structure, the organization is divided in two types of

fimctions:
% "Front" functions, defined by geographic locations or customer types
• "Back" functions, defined by product or business unit
The "front" focuses on customers or market groups, while the "back" designs
and develops products and services. The "front" units are close to customers
and can bring reports of customer dissatisfaction and emerging needs to the
I 34 © 2015 SHRM
"back" units. Front-back organizations may therefore be more responsive to

customer needs.
For example, the front end of an athletic clothing and shoe corporation may be
organized by geographic region (e.g., EMEA [Europe, Middle East, and
Africa], Latin America, or eastern region/western region) or by customer type
(e.g., global accounts, mass merchandisers, professional spmis, or
institutional). The back end might be composed of units specializing in
) clothing (men's and women's) or shoes (for different sports).
• A matrix structure combines departmentalization by division and function

to gain the benefits of both. It creates a dual rather than single chain of
command. As a result, some employees repmi to two managers rather than
one, with neither manager assuming a superior role. For example, a safety
training manager could repmi to both the vice president of manufacturing
and a product manager.
An organization may utilize a matrix structure when the vertical hierarchy

begins to obstruct value activities (e.g., when cross-functional teams are
used to design, develop, and market products) .
.L - - · - - · · - -..- - · - -..- - - - - - -
There are advantages and disadvantages to each type of organizational
) structure, as shown in Figure 9 on the next page.
J
Other Internal Environment Considerations
In addition to the organizational elements we've discussed to this point, it's
impmiant for the HR professional to understand other factors of the intemal
environment, such as important initiatives that are underway or being planned.
) These might include quality improvement, lean production, culture change, or
) new product development.
) By understanding the initiatives, HR can be a valuable business partner. This can

) include providing support for the design, implementation, management, and
) evaluation of strategic initiatives.
More infonnation on this topic can be found in the "Workfcm.:e Management"

Functional Area in this Organization module.
© 2015 SHRM 35
Functional Easy to understand Weak customer or product focus

Specializations develop Potentially weak communication
Economies of scale among functions
Communication within functions Weak grasp of broader
organizational issues
Career paths
Hierarchical structure
Fewer people
Product Economies of scale Regional or local focus
Product team culture More people
Product expertise Weak customer focus
Cross-functional communication
Geographic Proximity to customer Fewer economies of scale
Localization More people
Quicker response time Potential quality control
Cross-functional communication
Front-back High level of customer focus Possible conflict between front and
Flexibility (units can be added to back (tor example, explaining drops
meet demand for new products or in sales by mutual accusations of
emergence of new customers) poor performance)
Necessity for developing new skills
(customer/market focus) for all
employees
localization Unclear lines of authority

Availability of best global talent Bureaucratic behavior
Figure 9: Advantages and Disadvantages of Organizational Structures
The Externai
It also important for the HR professional to understand the external environment
in which the organization operates and the oppmtunities and threats it poses.
The key faclors that affect the exten1al environn1cnt can be sun11narizcd as
PEST;
e l'olitical. Shifts of power among lawmakers, impending laws and
regulations, or policies toward taxation, immigration, or labor relations.
• Economic. Gross domestic product, employment levels, household debt, or
economic trends.
36 © 2015 SHRM
I
i.
) • Social. Demographic shifts or trends, social habits and preferences, family

structure, or education levels and areas of focus.
• Technological. Standards in communication technology, access to
technological tools, or the quality and security of those tools.
PEST analysis looks at "big-picture" factors that might influence a decision,

strategy, market, or potential new business.
A tool that complements PEST analysis is the SWOT analysis, a simple and
effective process for gathering information on an organization's current state.
While the PEST analysis looks at the "big picture," the SWOT analysis explores
) these factors at a business, product line, or product level.
More information on PEST and SWOT analysis can be found in the "Business
and HR Strategy" Functional Area in the Strategy module.
The chief human resources officer (CHRO) at a local university just

participated with the president in developing the strategic plan for the
upcoming school year. One key element includes contract negotiations with
I the teachers' union. The last negotiation was unduly long, painful, and
Critical ----------
...-ffiisEiireeted by boll rsicJes;----·
Competency In order to better prepare for these talks, the CHRO:
in Action
) • Meets with the university president to understand his priorities and goals.
I • Conducts an HR SWOT analysis to review lessons learned from the last
) negotiations and what the hot buttons will be for the teachers' union this
time.
• Establishes a contract negotiation mission and vision for the team.
)
• Conducts an HR analysis to identify any gaps in information or details
) related to the union contract.
) • Determines if there are any critical people issues (e.g., wages, hours,
) benefits) that can be anticipated.
• Develops goals and solutions in anticipation of the union's requests.
)
) By proceeding through the HR strategic process highlighted above, the

CHRO will be well prepared to carry forward the position of the university
)
and efficiently and effectively improve this negotiation and its result.
© 2015 SHRM 37
Progress Check
1. What is a name for the phases of organizational growth?

( ) a. Strategic orientation
( ) b. Organizational growth template
( ) c. Business life cycle
( ) d. Growth matrix
2. What is an example of a core function?

( ) a. Finance and accounting
( ) b. Cost control
( ) c. Innovation
( ) d. Strategic planning
3. What is another name for an organization's line of authority?

( ) a. Organizational chart
( ) b. Chain of command
( eaderslup
( ) d. Pecking order
4. What does the structural principle of formalization refer to?

( ) a. Organization's dress code
( ) b. Extent to which rules, policies, and procedures govem employee behavior
( ) c. Communication strategy
( ) d. Creation of an organizational chart
5. What type of structure may have an employee reporting to more than one manager?
( ) a. Front-back
( ) b. Geographic
) c. Matrix
) d. Functional
I
38 © 2015 SHRM
Progress Check Answers

1. c (p. 29)
2. a (p. 2l)
3. b (p. 30)
4. b(p.31)
5. c (p. 35)
..
© 20t5 SHRM 39
Section 3:
The HR

• Implementing solutions based on analysis and understanding of the impact on the
organization of leading and lagging financial, customer, operations, and learning
indicators.
• Designing and implementing the appropriate servicing model (centralized versus
-----GliJe-G81lt;:al}zedl. ------------------------
• Analyzing data and performance indicators to ensure the effectiveness of the HR
organization.
• Designing and implementing the fiR operational structure to ensure efficient and effective
delivery of services.
• Developing appropriate measures and metrics (e.g., balanced scorecard) to demonstrate
the value of HR activities in supporting organizational success.

• Balanced scorecard philosophy.
• Centralization versus decentralization.
• Defined approaches to roles and functions for generalists and specialists.
• HR organizational structure and design.
• HR functional integration approaches.
• Structural model approaches to HR (e.g., Center of Excellence/CO£, HR business partner,
shared services).
)
The HR Function
The HR function is designed and structured to serve the strategy of the overall
organization as well as the HR strategy. I11e structure of HR can take many
different forms, depending on the requirements of the organization.
The optimal HR structure is designed to:

e Assist in implementing and supporting the strategy.
• Facilitate the achievement of organizational and HR goals.
• Be consistent with the overall structural design of the company.
This section looks at several aspects of the HR organization, including HR

processes, the HR team, HR structure, and ways to measnre and demonstrate
HR valne.
HR Processes
HR processes can be grouped into the following general categories.
Actively participating in the creation and implementation of the

) organization's strategy
J--.---·..- - ·---·.,----i'erfurma=managemem processes
Job and organizational design
)
o Communication platforms
)
Knowledge management
)
• Selection and implementation of human resource information systems
• Participation in strategic projects
More information on organizational strategy can be found in the "Bnsiness

and HR Strategy" Functional Area in the Strategy module.
Creating and in1pierncnting a strategy to develop, manage, and

retain human capital
• Developing staffing plans
} • Attracting and recruiting talent

" Assisting managers in selecting the best candidates
© 2015 SHRM 41
* Preparing selected employees for effective participation in the

organization's culture and strategy
• Developing and implementing programs for training, communication,
benefits, and incentives
• Coiiecting and analyzing data as it relates to organizational success

• Developing a systematic approach to capturing, tracking, and analyzing
relevant data
$ Identifying conditions and trends in the workforce and in the extemal
environment that can suppmt strategic decision making
• Identifying effective practices and processes to create organizational
standards
• Ensuring legal compliance

• Complying with all relevant laws, rules, and regulations
'' Resolving employee disputes
Conducting labor relations
o Working through merger/acquisition and divestiture/RIP legal issues
• Completing daily HR operations
• Record keeping
• Using the human resource information system
• Answering employee. and business partner requests
The HR Team
The composition of the HR team will vary by organization, but the following are
the general roles and responsibilities:
• Leaders have a strategic role. They are typically part of the organization's
senior leadership team and often report directly to the chief executive officer
(CEO) or chief operating otlicer (COO). As senior leaders. they bring
infonnation about strengths, weaknesses, oppmtunities, and threats to the
organization's strategy to other leaders and patticipate in the development of
overail strategy. In addition, they develop and direct the strategy. priorities,
and focus for their HR team. HR leaders may have several titles: chief HR
oftlccr (CHRO), HR director, or vice president of HR.
42 © 2015 SHRM
• Managers are responsible for units within the HR function, such as

employee relations, talent acquisition, and organizational development. HR
managers plan, direct, and coordinate the activities for their unit and provide
input to the leader for HR strategy.
• Specialists (also known as functional experts) have expertise in specific

areas such as compensation and benefit design, talent management, metrics,
IT, occupational health and safety, organizational development, and
workforce relations. Their role is to apply best practices in their discipline to
advance the HR strategy.
e Generalists (also known as HR practitioners) are the HR 'jacks of all

trades." In many organizations, the generalist is the first point of contact for
employees and managers for all HR-related issues. They may have expertise
in one or more specialty areas of HR but are generally proficient enough in
each area to provide sound advice and direction to employees and managers.
HR generalists work closely with their specialist coworkers to ensure that
) the information and programs they are providing to their employees are
) accurate and complete. Generalists may also be embedded within countries
or business units.
)- --------
l HR Structural Alternatives
)
The manner in which HR is structured depends on its organization and areas
of responsibility. A critical factor is ensuring that the HR stmcture is aligned
with the organization's strategic plan. Creating HR alignment is discussed in
more detail in Section 4 in this Functional Area.
The types of HR structures are:

• Centralized vs. decentralized.
)
* Functional vs. dedicated.
Shared services.
)
)
e Centers of excellence (COE).
)
) Centralized/Decentralized HB
) Centralized HR is characterized by having all HR personnel located within
the HR department and from there delivering services to all parts of the
© 2015 SHRM 43
organization. Headquarters (or corporate) makes all HR policy and strategy

decisions and coordinates all HR activities and programs. The goal of the
centralized structure is to ensure standardized HR policies and processes
throughout the organization.
In decentralized HR, each part of the organization controls its own HR issues.
Strategy and policy may still be made at headquarters, with HR staff within
each function, business unit, or location carrying out the required activities.
For example, a local bank with a small number of branches may have a
centralized HR structme, handling all HR issues for the bank departments and
branches from one HR department at the bank's headquarters. A large national
bank with branches in many different cities, states, or regions may have a
decentralized HR structure. In this case, there would be a headquarters HR
staff but also dedicated HR functions at the branch or regional level.
Both structures have advantages and disadvantages. Centralized HR provides

more control and consistency across the organization, but it can also inhibit
flexibility and responsiveness as well as create an information bottleneck.
Decentralized HR allows for more direct contact between HR and other
functions and facilitates communication and responsiveness. The downside can
--- ---- --- ----
Some organizations have hybrid HR structures. For example, leaming

management may be determined by headquarters, with the content of the
leaming being determined at the functional, business unit, or location level.
Functional/Dedicated HR
Another structural alternative is between a functional or dedicated HR
structure. In their book The HR Value Proposition, authors Dave Ulrich and
Wayne Brockbank describe the two alternatives.
• Functional HR structure. In a functional HR organization, headquarters HR

is staffed with specialists who craft policies. HR generalists, who may be
located within divisions or other locales, implement these policies, adapt
them as needed, and interact with employees. This type of organization is
often found in the least diversified, but not necessarily small, businesses.
44 © 2015 SHRM
) • Dedicated HR structure. A dedicated HR organization allows businesses

) with different strategies in multiple units to apply HR expertise to each unit's
specific strategic needs. This is in some ways a "corporatized" HR, with an
HR function at headquarters and separate HR functions located (or
"embedded") in separate business units. Corporate HR articulates basic HR
values, develops tools to be used by the company-level HR functions, and
creates programs aimed at enhancing global literacy and leadership skills.
) The business unit HR staff develops local policies and practices.
)
Shared Services/Centers of Excellence (COEs)

Ulrich and Brockbank identify another structural altemative known as the shared
services modeL
)
This model is frequently used in organizations with multiple business units. Rather
)
than having to develop its own expettise in every area, each unit can supplement its
resources by selecting what it needs l:i"om a menu of shared services (usually
transactional) that the units agree to share.
Centers with specific areas of expertise develop HR policies in those areas and then
deliver this service to all units. In a globally integrated enteq)rise, the centers
) most appropriate unit or country. HR transactional work is thus shared by a network

) of centers, allowing HR professionals to spend more time working on strategic or
transformational activities that help to generate value.
A 20 I 0 survey by SHRM reported that the most common functions targeted for
consolidation were payroll and administration of health-care and retirement
) benefits. The top four positive outcomes for finns that have implemented the shared
) services concept are:
) • Reduced staff time spent on administrative tasks.
) Reduced administrative costs.
) • Consolidation of redundant functions.
* Better tracking of employee data.
Tt is wmth noting that multinational finns experienced the greatest resistance from
employees to implementing a shared services model.
J
)
)
© 2015 SHAM 45
Over time, some shared service centers may develop into centers of excellence
(COEs). A center of excellence (sometimes called a center of expertise) is
established as an independent department that provides services witbin a focused
area to intemal clients. It is funded by fees cross-charged to other functions. COEs
can be created for different purposes, such as quality assurance, project
management, and business process engineering.
HR COEs practice the most current and sophisticated approaches to HR functions

such as talent acquisition, performance management, or assignee administration.
Like shared service centers, COEs may be located anywhere in the global
organization, wherever the required capabilities can be created and accessed.
The SHRM survey discussed above also asked participants about their experience
with centers of excellence. The most common services offered by COEs are
planning and administration of employee development programs (training,
mentoring, coaching) and recruiting and staffing.
Advantages and Disadvantages of HR Structural Alternatives

The alternatives for structuring the HR function have advantages and
disadvantages, as shown in Figure I 0.
Functional HR Effective in enterprise with single Can isolate headquarters HR

strategies from realities in the line
Facilitates consistency between
headquarters policy and practices
and implementation in business
units
Dedicated HR Promotes strategic alignment Risks isolation of dedicated HR

between headquarters and units units and loss of shared
knowledge and experience
May lead to duplications and
inefficiencies
Shared services Offers expertise efficiently, reducing Risks underuse of service

and COE HR load of transactional activity in favor centers when their existence is
of value-creating activity not widely known
Balances standardization and
I localization
Figure 10: Advantages and Disadvantages of HR Structural Alternatives
46 © m15SHRM
ORGANIZATiON Structure of the HR Function
)
)
Business leaders at a firm have typically made decisions about corrective
) action and discipline without consulting HR. This has resulted in
) increasing complaints, lawsuits, and settlements. The current HR
structure doesn't align HR business partners with the four divisions;
Consultation rather it has one employee relations director assigned to all divisions.
)
Competency Aside from being overwhelmed, the director hasn't been able to provide
) in Action applicable training on policies and procedures or properly investigate
I incidents across the organization. Thus, management is ill-prepared to
) make sound decisions.
) Senior leaders from each of the divisions have approached the vice
) president of HR and raised concerns over HR's unresponsiveness,
management making misaligned decisions, and the overall cost this has
)
brought to their budgets.
After reviewing the current HR structure, roles, and responsibilities-
particularly those of the employee relations director-the vice president of
HR immediately decides to align one HR practitioner with each division in
order to Jearn the divisional structure and team, consult more quickly and
more often on all HR issues, and handle routine employee relations
matters, As a result, the employee relations director will be relieved of
having to deal with every matter herself. Moreover, this will allow the
) director to be more responsive and consultative on critical items and also
) provide needed employee relations training to management, thereby
) ensuring better administration of employee relations and its impact to the
)____________ -------------------------------------------
)
Third-Party Contractors
)
Using third-party contractors is both a structural alternative and a tool that can
)
be ntilized by HR. These relationships take the following fonns:
• Outsourcing, in which a third-party vendor provides selected activities
)
• Cosourcing, in which a third party provides dedicated services to I-IR, often
)
locating contractors within HR's organization
HR activities that are not strategic but are resource-intensive or that require
specialized expertise are candidates for outsourcing or cosourcing. A survey of
)
human resource outsourcing (HRO) companies shows a wide range of
)
outsourcing options, covering administrative activities, implementation of
)
services, and consultation on specit!c issues and projects. For example, HROs
)
can administer or implement:
Q Health and welfare plans.
" Benefit programs.
)
© 2015 SHAM 47
• Employee self-service centers.

• Leaming and development systems, including training and knowledge
management.
• Employee data retention and analytics.
• Recmitment programs.
Outsourcing can provide cost savings for an organization, but there is a loss of
managerial control. Cosourcing can be more expensive than outsourcing, but
there is more managerial control over the contractor.
HR must approach the decision to outsource or cosource strategically. The

choice should be aligned with the organization's strategic goals. For example,
an organization may commit to increasing the leadership capabilities of senior
management at all locations. To ensure that the task is accomplished as quickly
and as effectively as possible, the organization's HR function may choose to
outsource a talent search to one or more consultants specializing in this field
and with better access to informal networks of talent sources. Or an HR
function may decide to outsource benefits management so that it can assist in a
global strategic planning process.
The ·third-patty conll'actor's 'j)erforniance obJectives must be ahgned with th"'e-- - - -

strategic goals of HR and the organization. The reliability, capacity, and
expertise of potential contractors must be confirmed, as well as their ethical
character, since HR retains responsibility for a third-party contractor's practices
and ethical behavior. The agreement should define specific deliverables and
criteria such as conformance with organization policies and service levels.
Measuring and Demonstrating HR Value

Just as the organization must measure and demonstrate the value it is delivering to
stakeholders, HR must measure and demonstrate its value to the entire
organization. Measuring and reporting results has several important bendits for
HR:
• Reinforcing HR 's role in strategic development by measuring the effectiveness
ofHR strategies and senior management's implementation of those strategies
• Identifying opportunities tor redirection and improvement through periodic
measurement of progress on strategic objectives
48 © 2015 SHRM
I ORGANIZATION Structure of the HR Function
• Strengthening HR's relationship with intemal business partners by measuring

) the impact ofHR activities
) • Supporting future investment in HR programs
)
' )
i!
1---------------------- ---------------------------
) Performance Measures
)
Performance measures compare current performance against key performance
)
indicators (KPis). KPis are quantifiable measures of performance used to gauge
)
progress toward strategic objectives or agreed standards of performance. For
)
example, KPis could be the number of manufacturing defects in each completed
)
product or the number of supervisors trained in a quality improvement process.
Performance measures include balanced scorecards and audits, both of which

can be used to measuring the performance of the organizational strategy as well
)
as !he HR strategy.
Balanced Scorecards
Balanced scm·ecards provide a concise yet overall picture of an organization's
perl(_mnancc. They can be used to measure the effectiveness of specific
initiatives, entire departments, or the entire organization.
© 2015 SHRM 49
The balanced scorecard includes perfonnance metrics from four organizational

perspectives: financial, customers, internal business processes, and learning and
growth.
Using the area of recruiting as an example, an HR balanced scorecard would

look something like this.
o Objective: Reduce turnover costs.
• Description: Develop effective recruiting methods and new-hire orientation

methods to optimize the retention of new hires.
• Actions:
• Identify key attributes of successful employees who stay at the
company for two or more years.
Use technology more effectively for recruiting and screening
applications.
Identify selection methods that will contribute to successful hires.
w Integrate branding effmts into recruiting.
• Revise the orientation program to ensure new-hire retention.
• Measures:
0 Cost per hire (financial)
0 Turnover rates and costs (financial)
• Time to fill (internal business process)
• Customer satisfaction with new-hire performance (customer)
" New-hire satisfaction with orientation (learning and growth)
" Supervisor satisfaction with orientation (learning and growth)
50 © 2015 SHAM
For an HR balanced scorecard to be truly effective, it must:

• Contain accountability and measurable results .
• Be valid; the measurement system must contain measures, metrics, and targets
that are understandable and aligned to the objective and can be supported with
,: j
solid data.
) • Contain only those measures that are most important to the objective and the
company's strategic plan; that is, the measures must result in actionable items.
e Focus on results; simply measuring turnover or time to fill is ineffective if
no action is taken as a result of those measures. More meaningful measures
that arc aligned clearly with the company's strategic plan include
productivity and retention.
• Be carefully planned and executed.
)
More information on balanced scorecards can be found in the "Business and HR
Strategy" Functional Area in the Strategy module.
HR Audits
)
An HR audit involves a systematic and comprehensive evaluation of the
J organization's HR policies, practices, procedures and strategies to protect the
)
organization, establish best practices, and identify opportunities for
-----unproveinent. Such an obJective ass-essment of tlie organization's ·-
'
1
state helps to establish whether specific practice areas or processes arc
) adequate, legal and/or effective. Audit results also help to identify gaps in
)
HR practices which can then be prioritized for attention in an effort to
minimize lawsuits and/or regulatory violations, as well as to achieve and
maintain world-class competitiveness in key HR practice areas.
There are different types of HR audits and each is designed to accomplish

)
different objectives. "Conducting Human Resource Audits" (a SHRM
"toolkit") identifies the more common types shown in Figure 11 on the next
page.
Compliance audits largely deal with areas in which organizations are

particularly vulnerable. Most lawsuits and charges of discrimination can be
traced lo issues related to hiring, performance management, discipline, the
work environment, and termination.
© 2015 SHAM 51
Compliance Focuses on how well the organization is complying with current

employment laws and regulations
Best practices Helps the organization maintain or improve a competitive advantage by
comparing its practices with those of companies identified as having
exceptional HR practices
Strategic Focuses on the strengths and weaknesses of systems and processes to
determine whether they align with the HR departmental and/or the
Source: "Conducting Human Resource Audits," SHRM
Figure 11. Types of HR Audits
If regulatory compliance is not the objective for an audit, deciding what to audit
depends largely on the perceived weaknesses in the organization's HR environment
and the constraints of time, available resources, and/or budget. Keeping a log of
issues that have arisen but are not covered in the organization's procedures or
policies will help identify areas of weakness that can be addressed during the audit
process (except for issues that require immediate attention). Depending upon the
______ type of HR &lliiit,_the scove may be eit.l.wr comprehensive __________
HR professionals can perform an audit in-bouse-if they have the expertise, the
time, a willingness to objectively acknowledge inadequacies in current procedures
and, most importantly, the clout to make or influence necessary organizational
changes the audit identifies. Tt is important to note, however, that for any audit
(conducted by internal staff or an outside consultant who is not a lawyer),
everything connected with the audit is subject to discovery in litigation relating to
employment practices.
The actual process of conducting an audit typically follows the steps listed in
figure 12 on the next page.
SHRM offers a variety of resources related to HR audits. A good starting point

is the "Conducting Human Resource Audits" toolkit found at www.shrm.org/
TemplatesTools/Toolkits/Pages/HumanResourceAudits.aspx. Links to several
other SHRM audit resources are embedded in the toolkit. (This resource is
available to SHRM members only.)
I
52 © 2015 SHRM
)
) ·. . i t', .·.,· ·.
;;oo,,,
and type of audit. (e.g., comprehensive review of all practice areas or a limited review
of the adequacy of a specific process or policy)
Develop the audit Development of a comprehensive document that elicits information
questionnaire. during the inquiry (e.g., a list of specific questions)
Collect the data. Use of the audit questionnaire as 'a road map' to collect information
Benchmark the Comparison of the audit findings with HR benchmarks (e.g., other
findings. similarly-sized firms, national standards, or internal organizational
)
data)
Provide feedback Review of data and presentation of summarized findings and
about the results. recommendations (e.g., a written report and discussions) for the
organization's HR professionals and senior management team
Prioritization of recommendations based on the risk level (e.g., high,
.) medium, and low)
Development of a timeline for required action(s)
)
Create action plans. Development of action plans for implementing the changes
suggested by the audit, with the findings separated by order of
) I importance: high, medium, and low
Foster a climate of Constant observation and continuous improvement of the
continuous organization's policies, procedures and practices (e.g., continuous
improvement. monitoring of HR systems to ensure that they are up-to-date and
have follow-up mechanisms)
) .. - - -
Source: "Conducting Human Resource Audits," SHRM
)
Figure 12: The HR Audit Process
HB Metrics
) Both HR effectiveness and value are demonstrated by developing the right
) metrics. There are many metrics to choose from, and some common examples
are Jis ted in Figure 13 on the next page. Some may not be appropriate for a
) particular organization's strategy, location, or culture. Fom1Ulas for the same
metric can vary; it is important to use a consistent tormula throughout your
organization and when benchmarking.
)
) More information on metrics can be found in the:

) • "Total Rewards" Functional Area in the People module.
) • "Technology and Data" Functional Area in this Organization module.
) • "Business and HR Strategy" Functional Area in the Stratet,')' module.
)
© 2015 SHRM 53
)
OR•GANI7.ATION Structure of the HR Function
To reflect benefits of a change in workplace

conditions
Accruals Comparison of budget to actual costs To monitor expense accruals and make sure that
assignment budget and financial goals are met
Applicant yield , Percentage of applicants who To demonstrate effectiveness of recruiting
ratio of the selection process methods
Cost per hire Total costs of hiring divided by To demonstrate increased efficiencies in
recruitment and hiring process
Human capital Ratio of employment-related expenses to revenue To demonstrate value of HR programs
return on minus nonemployment expenses
investment
Human capital Revenue minus divided by cnmn"r"tivelv. to indicate increase in
value added number of full-time as the result of HR activities
Key talent I Percentage of key talent retained To demonstrate effectiveness of employee
retention and reward
Promotion pattern Percentage of internal promotions To demonstrate effectiveness of development
programs and strong culture
Success ratio ! Proportion of selected applicants To indicate effectiveness of recruiting, selection,
to be successful on the job and orientation methods
Training return on Economic benefit of enhanced To demonstrate value of strategic choice to invest
investment ' costs of
Transfer , Number or percentage of employees . To track internal competency development and
1 divisions to new jobs [ global talent management
Turnover costs Costs associated with separation, When turnover rate is combined with costs, to
and tr;:tininn demonstrate economic benefits of a change in pay
Turnover rate Proportion of or benefits
Vacancy costs Costs of substitute labor (temporary To support decision to outsource function or area
contractors, outsourcing partners) and decrease internal head count
benefits not paid because vacant
Figure 1$: Sample HR Metrics
54 © 20i5 SHRM
)
, I ORGANIZATION Structure of the HR Function
- Check
) 1
.. Which member of the HR team is the 'jack of all trades"?
) ( ) a. Specialist
I ( ) b. Generalist
( ) c. CHRO
( ) d. Manager
2. In what type of HR structure does each part of the organization control its own HR
.\ issues?
I
\ ) a. Distributed
) ( ) b. Departmentalized
( ) c. Decentralized
) ( ) d. Dispersed
3. What is an advantage of the shared services structure?

! ( ) a. Strategic partnering opportunities
Efficient
} ( ) c. Duplication of effmt
! ( ) d. Reduced staff requirements
') 4. What should HR measure rather than activities?

( ) a. Results
) ( )' b. Projects
) ( ) c. Meetings
( ) d. Progress
)
5. Which measure provides a concise yet overall picture of an organization's

performance?
\' ) a. Return on investment
( ) b. External audit
( ) c. Internal audit
( ) d. Balanced scorecard
)
)
© 2015 SHAM 55
)
)
6. What is a goal of an HR audit?

( ) a. Controlling costs
( ) b. Matching human capital to organizational needs
( ) c. Identifying gaps in HR practices
( )
d. Demonstrating strategic value
'
I
© 2015 SHRM
56
)
) Progress Check Answers

y 1. b (p. 43)
2. c (p. 44)
3. b (p. 45)
•.
A a (p. 49)
) 5. d (p. 49)
) 6. c(p.51)
.\
)
)
)
)
)
I
)
' )
)
\
,/
)
)
J
© 2015 SHRM 57
J
)
Section 4:
HR's Role in Organizationa! Strategy

• Demonstrating partnership capabilities with non-HR business leaders to capitalize on
organizational success or to solve organizational issues.
• Providing workforce consultation to all levels of leadership and management.
• Delivering HR services and support that demonstrate one's business knowledge and
--------,;a'"cu"'m"'e'"n ssturGlcccte!S:ss>..
• Supporting the communication, understanding, and implementation of the organization's
mission, vision, values, and strategy.

• Due diligence methodologies.
• Negotiation and influence techniques.
• Strategy design and implementation.
II ) ORGANIZATION Structure of the HR Function
I)
II !
HR and the Strategic Process
As a business partner that understands the process by which strategy is created
and executed, HR can bring significant expertise and perspective to the strategic
planning process and can also ensure that the HR strategy is aligned with the
overall organizational strategy.
This section discusses the role HR plays in the strategic planning process,
II' II
! alignment ofthe HR function with the strategic plan, and development of the HR
strategy.
Note that strategy is covered in more detail in the "Business and HR Strategy"
Functional Area in the Strategy module.
)
) Role
)
HR plays important roles in the strategic process:
)
e Leveraging its strengths in the development of the organization's sb·ategic
plan
Contributing its perspective and ensuring that all HR implications are
identified and fully considered
Performing due diligence

'j
)
Leveraging Strengths
One reason that HR is a particularly valuable partner in the strategic planning
) process is that, by virtue of its work in managing the talent portfolio, HR knows
) the entire organization-geographically and functionally-and its external
environment.
)
This includes the following:
)
s Functional and country decision maket·s. Because of its involvement in staff
) and training, HR professionals understand what each function does, how it
) works, who it competes against, and what it needs to succeed. HR can also
assess organizational, legal, and cultural challenges lo organizational
I integration in a global context.
'/
© 2015 SHRM 59
• Employees. HR knows the talents and potential weaknesses of management

and staff-for example, the ability of the organization to develop a strategy
based on innovation, discipline, flexibility, or customer focus. They also can
describe the organization's culture and subcultures and their possible effects
on strategy.
" Suppliers. Suppliers can both increase the resources of an organization and
pose challenges to it (through, for example, their ability to perform on
contracts and their ethical behavior). HR's knowledge of suppliers may
suggest ways to overcome geographic distance and exploit economic
differences.
• Communities. Interacting continually with communities in all the locales in

which the organization operates, HR professionals understand their cultural
values, competitive forces, and constraints. This also allows HR to identity
potential synergies and conflicts.
o Government and labor groups. Interactions with government officials and

labor groups in the course of managing workforces allow HR professionals
to assess issues that may need to be overcome to successfully implement the
strategy.
HR also helps integrate these stakeholders by implementing horizontal project

groups and project-oriented training, managing career development and
international assignments, and building shared vision and values.
Though the main focus of HR is to execute the organizational strategy, the HR

professional can contribute an important perspective throughout the strategic
planning process. For example, because of its expertise in selection and staffing,
training and development, and organizational development, HR can ensure thai
those perspectives arc considered as the strategy is being formulated.
By being fluent in the language of business, by speaking in financial terms, and

by expressing the value of its work in relation to its impact on the bottom line,
I-HZ can be a compelling component in strategy discussions.
60 © 2015 SHAM
An aerospace manufacturer unveiled its organizational strategy during the

Q4 results briefing. A key element for the forthcoming year's strategy is to
actively pursue targets for acquisition to expand the company's global
I
footprint. The company currently operates in 17 countries but plans to double
Business
Jl,cumen this over the next two years. It was determined that acquisition is the best
j
Cornpctency strategy to accomplish this goal.
ln Action
In response to this announcement, HR has taken the following steps to
proactively participate in and support the strategy:
\
' • Hire an HR practitioner with at least ten years' M&A experience to add
specific bench strength to the HR team in this new key area.
• Meet with business stakeholders involved with targeting companies to
learn their profiles and employee demographics.
J
• Advise business leaders concerning relevant HR issues and
)
considerations (e.g., benefits, compensation, culture, retention bonuses)
)
pre- and post-acquisition.
J • Ensure HR participation at all acquisition meetings by reiterating the
importance of employee considerations, cultural differences, and relevant
employment and labor laws and by demonstrating value through
)
appropriate questions and unsolicited subject matter expertise.
• Constantly communicate with and prepare affected HR colleagues so
that they are informed and ready to act.
HR's solution to this specific organizational strategy directive demonstrates
1 understanding at the highest business level as well as a broad and
----awessive the - - --··--···-
} organization's global growth.

)
Neqotiatinq and lnfluencinq

J - - -
To effectively engage in the strategic process, the HR professional must be able
to "tell the HR story" to leadership and other stakeholders. Often this requires
the ability to negotiate and influence.
Negotiation is the process where two or more parties work together to reach an
J agreement on a matter. There are six phases to the negotiation process:
Preparation. The negotiator should identify critical "needs," "wants" that

could be concessions, and possible demands ti·om the other side.
)
e Relationship building. Trust is built with the exchange of personal

information that reveals character.
© 2015 SHRM 61
}
• Information exchange. Positions and needs are explained by both sides. A

more thorough understanding of positions usually leads to more-balanced
agreements.
Persuasion. Negotiators seek mutually beneficial options rather than trying to

win the other side to their own position. This is possible since both sides have
a broader understanding of each other's divergent interests and can find
solutions that satisfY needs on both sides.
• Concessions. Both sides find "wants" that are not essential to agreement. The
attitude toward concessions can vary among cultures. Some plan to make
small concessions, while others never make concessions-at least, formally.
• Agreement. Agreements may be legal instruments or verbally expressed

understandings. The requirement of a legal contract may itself be offensive to
some cultures, who view it as a sign of lack of tmst in the relationship.
Negotiators must also be alert to agreement that is only apparent and may
result from a desire to avoid conflict.
Negotiation is also discussed in the "Business and HR Strategy" Functional Area

in the Strategy module.
The ability to influence comes from credibility. More than just expertise,
credibility means doing what is promised, building personal relationships of trust,
and communicating clear and consistent messages with integrity.
Influence starts by understanding the beliefs and goals of others. Who are the key
stakeholders that must be served? What are their goals and values? What is
important to them? What do they want? When these requirements are fully
understood, HR professionals can use their influence to provide value to the
organization.
Due Diligence
An important HR role in the planning and execution of organizational strategy is
in the due diligence process. Due diligence refers, in general, to an intensive
investigation of all factors sunounding a business decision to ensure that all risks
are understood. Due diligence can be applied to hiring and other HR activities as
well as organizational strategy.
62 © 2015 SHAM
)
) ORGANIZATION Structure of the HR Function
'/ For example, if a strategy involves a merger or acquisition, due diligence

) involves identifying:
)
• Structural issues, such as the arrangement of reporting relationships, titles,
')
the design of how the organizations interact with customers/clients, and the
relationships with vendors.
e Technological considerations, such as direct product/service provisions;

.l mechanisms for communication and data tracking; the use, type, and impact
of each organization's enterprise management tools; and the ability for
integration of the technology.
• :Financial considerations, such as the compensation stmcture, union

contracts, obligations to a union pension fund, stock options, incentive plans,
) and the full range of benefits administration.
• Legal issues, such as rep01iing requirements that differ by jurisdiction or

type of business, legal constraints on the closing of facilities or elimination
of redundant personnel, and benefit and nonbenefit issues (e.g., severance
and tax codes).
) As we've discussed, it's cmcial for HR professionals to understand the business

that ihey support. This begins with a thorough review of the organization's
) strategic plan and an assessment of the organization's internal strengths and
) weaknesses and external threats and opportunities (SWOT). The HR professional
must understand how the strategic plan will affect not only the HR business
plan-for example, the need to develop certain talent management programs or
downsize the workforce-but also the business plans of all the other functions in
the organization.
)
HR must partner with other functions to ensure that the organization's human
.! capital matches its needs: that there is the right amount of the right talent and
that processes accurately support the organization's mission and values and
} produce the desired value. Because of its traditional role as an expert in
) workforce planning and management, HR can play a pivotal role in helping other
functions achieve their long- and short-term objectives.
© 2015 SHRM 63
HR Strateqic Ail<!::mment
'"'-
Aligning the HR function with the strategic plan involves the following actions:
@ Recognize that HR's purpose is to serve the needs of both the

organization as a whole and its constituent functions. HR professionals
need to represent themselves as service providers for the entire organization.
Efforts to prove that HR has a strategic business focus may be unsuccessful if
the needs ofHR are put first in strategic planning discussions. Instead, HR
must show how it can identify and help the organization manage strategic
planning's implications for all employees. Explicitly aligning the HR business
plan with the organization's strategic plan demonstrates an awareness ofHR's
strategic relationship with the organization. New programs and services and
recruitment and hiring goals should be tied directly to strategic objectives.
• Position HR as an expert on strategic human resource planning that can

provide valuable support at an organizational and functional level. As a
member of the strategic planning team, HR's role is to forecast the
organization's human resource needs in light of the strategy, identify areas that
are not presently aligned with strategy, and work with leaders and functional
managers to implement solutions. HR is also responsible for measuring the
strategic ofthe organization's \yorkforce and the organizatio_1_1'_s_______
employee relations. For example, HR may identify a shift in human resources
from one area of operations to another as a result of the organization strategy.
HR can then work with management to determine the need for downsizing,
hiring, and retraining. The skill of workforce planning is discussed in more
jl!
' I detail in the "Workforce Management" Functional Area in this Organization
module. Figure 14lists some of the strategic human capital measures that must
be monitored by HR.
Innovation and creativity Productivity

Employee attitudes Workforce profile
Workforce stability Job creation and recruitment
Employee capability Compensation and benefits
)
Human capital investment Compliance and safety
Leadership Employee relations
Figure 14: Common Human Capital Measures
64 © 2015 SHRM
)
) 0 Ensure that HR fulfills its basic mission. HR's mission is to supp01i the
I ) creation and maintenance of a highly motivated and participative workforce. This
) involves using essential HR practices, such as efficient recruiting of candidates
.l whose strengths can contribute to the organization's grmvth, identifying and
building essential and new skills for the organization's workfi:Jrce, developing
) creative compensation and reward systems that retain valued employees, and
implementing complaint and feedback/communication processes to convey the
organization's commitment to listen lo employees and be fair and transparent
)
o Understand the roles of other functions within the organization and the
processes they perform. To fulfill this expert role, HR must understand how
) other functions perform their work and their priorities, values, and business
plans. (Section 2 in this Functional Area discusses typical roles played by
functions in organizations.)
)
) e Build partnerships across the organization and create relationships and

) alliances with key individuals and groups outside the organization. The task
of aligning HR with the strategic plan will be made easier if you can develop
) working relationships with key individuals and groups throughout the
organization and in its larger community-such as HR peers and business
)_·-·--·-·----·-----Pmfe.ssionals_ in other organizations,
) organizations. These relationships provide insight into these groups' perspectives
on the organization and the comtmmity. The broader your perspective, the more
) accurately you will be able to represent the needs of the entire organization and
') make recommendations that are strategic and appropriate. Establishing
relationships with outside groups and individuals will provide insight into
opporl1mities, limitations, and threats to the organization posed by external
'I forces, such as workforce plans in other organizations or education programs at
I
local schools and institutions. These internal and external relationships are also
instrumental in building supp01t for initiatives HR may implement
w Learn about your organization's industry. The most successful executives

have spent time in a variety of positions. Start building your industry knowledge
by networking with other departments and becoming involved in task forces or
cross-functional projects outside the scope of traditional HR duties. This will
help you build the necessary organizational knowledge lo make useful
recommendations during strategic planning. Researching best practic:es of other
organizations also helps to build industry know ledge.
© 2015 SHRM 65
• Use facts and objective data as support for your suggestions. As a consultant
to the strategic planning process, you will need to provide tangible evidence to
back up the recommendations you propose. You may not be comfmtable with
numerical analysis and repmts, but an HR professional in a strategicaily
managed organization must become fluent in measuring strategic outcomes in
order to leverage HR's power and authority and build solid business cases for
your recommendations.
e Contribute to measuring strategic success. Since organizations must be able to

demonstrate the effects of chosen strategies, HR must move from simply
measuring the effect of HR initiatives to measuring the effect of the
organization's strategic initiatives. HR can play an impmtant role here by
identifying key benchmarks early in the strategic business management process,
gathering data during and after implementation, analyzing data, and planning
responses.
SHRM provides a variety of resources such as chats and webcasts, educational

products and conferences, publications, and research reports that aid HR
professionals in their strategic planning efforts; see www.sl11m.org.
It's important for HR management to ensure that the perspectives and interests of all
HR units and staff throughout ihe organization are takenrnto accountT!gureTI______ _
provides a checklist for involving HR professionals in the strategic alignment
process.
!
0 Identify the key HR constituencies. 0 Create an HR alignment matrix that
0 Establish an HR planning team. includes motivation and training and
I
,.
coaching line managers. '
0 Participate in developing strategy maps
that link financial, customer, operations, 0 Develop a motivation, communication,
and learning and growth measures for and training program for HR
each strategic objective. employees and partners.
0 Develop working committees to review 0 Deliver the program to all employees.
strategy maps and identify HR impacts 0 Continue to involve employees in
for each location. strategy implementation.
0 Assign working teams to align HR with )
each strategic objective.
Figure 15: Checklist for Involving HR Professionals in the Strategic Alignment Process
' ''
.)
66 © 2015 SHAM
)
) ORGANIZATION Structure of the HR Function
! Developing the HR Strategy

In The Differentiated Workforce, Brian Becker, Mark Huselid, and Richard
13eatty argue that HR should tkvelop a strategy that is aligned with the
capabilities needed to execute the organization's strategy. HR must shift its
focus from people to strategy, and it must commit to divetting a greater share of
)
its resources from developing the entire workforce to developing strategic talent
within the organization.
i )
The HR Strategic Process
'J Figure 16 illustrates the steps to develop an HR strategic plan.
/
[\\ .
..
Step 1:
,, Step 2: Step 3: Step 6: Step 7:
Step 4: Step 5:
Getthe big Conduct an Develop HR Conduct a Determine Develop HR Develop
1 goals.
\
picture. HRSWOT mission and detailed HR critical imp!emen-
v
analysis. vision analysis. people me tries, tation and
statements. issues. evaluatton
plan.
i . and
)
- "'----· • -sotur . ·
...
')
J
Figure 16: Steps in the HR Strategic Planning Process

17
)
' _} Step 1: Get the "Big Picture."

The initial step is to gain an understanding of the organizational context and
) previous strategic planning efforts of the organization. The goal is to identify
) specific organizational goals that the HR strategy will address and the
organizational context that influences the strategy (e.g.. culture. values, ethics).
\ ) Step 2: Conduct an HR SWOT Analysis.

When conducting an HR SWOT analysis, the organizational SWOT analysis
should be reviewed, if one exists. The organizational SWOT review looks at the
)
© 2015SHRM 67
j
specific strengths, weaknesses, opportunities, and threats that directly or

indirectly affect the people side of the business. For example, if "customer
dissatisfaction" is identified as a threat, this may indirectly be attributable to
employee disengagement.
It is also valuable to conduct a PEST analysis to determine additional influences

on the HR strategy.
Step 3: Develop HR Mission and Vision Statements.

This requires taking into account all of the essential context that was examined
during the first two steps. (The vision statement should reflect the ultimate
goals of the organization and the likely future environment that the organization
will operate within.) The HR mission and vision are described as they relate to
the organizational mission and vision.
More information on mission and vision statements can be found in the

Step 4: Conduct a Detailed HR Analysis.

This step includes a review of current human resources systems. This can be
j ---···accomplished in a nmnberufways (e.g:, document analysjs, focus gtoups,
interviews). The goals of this step are to identify:
• The gaps that exist between the current and future systems in terms of
talent acquisition, pe1formance management, total rewards, training and
development, and talent engagement. This includes the results from the
SWOT and PEST analyses. i
<> How the HR strategy will address the gaps to align with the organizational
strategy.
Step 5: Determine Critical People Issues.

The future people needs are compared with the cmTent HR systems and any
gaps between the two are identified. The goal is to identify critical
discrepancies between "what is" and "what is needed.':
Step 6: Develop HR Goals, Metrics, Consequences, and Solutions.

This step describes the specific steps that HR will take and how they will be
measured to align the HR strategy with the organizational strategy. Balanced
68 © 2015 SHRM
I scorecards and audits are useful tools to measure the performance of the HR
strategy; these were discussed in the previous section ofthis Functional Area.
I I
I Step 7: Develop an Implementation and Evaluation Plan.

This plan should provide clear direction on the timing, resources, risks, and
) support that each imitative will require.
)
Figure 17 is a checklist for developing an HR strategic plan.
) 0 Review strategic statements 0 Develop action plan to

) (mission, vision, values). achieve HR objectives.
) 0 List measurable strategic objectives. 0 Allocate HR resources to
each objective.
0 Develop HR mission statement and
goals based on corporate strategy. 0' Communicate and train
HR employees and
) 0 Develop specific and measurable HR
partners.
objectives.
)
0 Demonstrate how each HR activity 0 Evaluate and review HR
) strategy.
supports corporate strategic
objectives.
··--. ··--···--·--·-
Figure 17: Checklist for Developing a HR Strategic Plan
More infmmation on strategy can be found in the "Business and HR Strategy"

\ )
) © 2015 SHRM 69
Progress Check
I. What makes HR a valuable pminer in the strategic planning process?

( ) a. Access to employment records
( ) b. Knowledge of the entire organization
( ) c. Ability to provide training
( ) d. Payroll administration
2. What is the process where two or more parties work together to reach an agreement on a
matter?
( ) a. Negotiation
( ) b. Strategic planning
( ) c. Performance evaluation
( ) d. Meeting of the minds
3. What is the purpose of due diligence?

( ) a. To determine staffing levels
-----r; b. To match people to positions
( ) c. To ensure that all risks are understood
( ) d. To identify financial goals
4. When aligning the HR function with the strategic plan, what must be recognized as HR's
purpose?
I '
( ) a. HR value creation
( \
J b. Identifying HR responsibilities
( ) c. Getting a "seat at the table"
( ) d. Serving the needs of the organization
5. What is the purpose of conducting a detailed HR analysis during the HR strategic process?
( ) a. Determining 1-1 R goals
( ) b. Identifying HR gaps
) c. Rewriting the code of ethics
) d. Identifying high performers
70 © 2015 SHRM

1. b (p. 59)
2. a (p. 61)
3. c (p. 62)
4. d(p.64)
) 5. b (p. 68)
)
)
)
)
. )
)
)
)
. )------·--···-- · · · - - · - - - - · - - - - - · - ·--·------·-----··--··-----
\
.I
© 2015 SHAM 71
I
Organizational Effectiveness and Development deals with the overall structure
and functionality of the organization-that is, measuring the effectiveness and
growth of people and processes from long- and short-term perspectives, and leading
necessary organizational change initiatives. HR demonstrates value by aligning
the organization's vision, mission, and goals with day-to-day
including organizational design, development, performance measures, and standards.
'
' !
Responsibility Statements: Knowledge Topics:

) Key responsibilities for all HR professionals • Business solution and performance
)
include: analysis
• Cllange and culture metrics
• Ensuring that workforce activities are
• Change management theories and
accurately reflected in job descriptions and
other key documents (e.g., applicant approaches
) tracking systems, job postings, performance • Consulting techniques
management systems). • Design approaches for a motivational
work environment
• Creating and monitoring metrics to assess
• Design approaches for work activity
organizational development and
l effectiveness. • Group dynamics
• How employees learn culture
) • Recognizing and eliminating barriers to
• How organizational cultures are created
organizational development and
effectiveness. • Influence techniques
) • Knowledge management approaches
• Planning for internal or external resources to
(e.g., organizational storytelling
deliver appropriate short-term development
techniques)
interventions and activities.
• Labor supply and demand analysis
• Motivational theories
Key responsibilities for advanced HR • Organizational behavior theories
)
professionals include: • Organizational culture versus national
\) • Consulting on, planning, and designing culture
organizational structures that align with the • Organizational design structures and
effective delivery of activities in support of approaches (e.g., customer, functional,
the achievement of organizational strategy. geographic, matrix, program)
• Assessing organizational needs to identify • Organizational learning approaches
'• ''·----·--critical·competencmsror opera!lonal--···--·-. .
viQaiiiZaliOIIall1t:eus·ana IYSIS
. ·--···--··--··------
] effectiveness. techniques
J • Consulting on, developing, and designing • Performance management theories,
performance standards and assessment structures, and approaches
)
metrics. • Project management approaches
• Roles and responsibilities (e.g., chain of
\I command, span of control)
Sample Application of Competencies:
• Strategic-tactical alignment
} • Business Acumen-The ability to • Types of cultures (e.g., authoritarian,
understand organizational strategies and dominant cultures, mechanistic,
apply this knowledge to create a plan for participative, subcultures)
effective growth. • Understanding individual differences and
) • Critical Evaluation-The ability to interpret perceptions
organizational information and performance
data to ensure the implementation of
effective and efficient business solutions.
I Relationship Management-The ability to
•
manage interactions with key stakeholders
j and provide appropriate recommendations
and solutions based on in-depth
);
organizational knowledge and expertise.
y
Organizational effectiveness and development (OED) is a discipline within human
resources that serves to unite and advance the business objectives of all functions of
an organization. The principles associated with OED arc universal to organizations
large and small, in every public- or private-sector industry, and to governmental,
nongovernmental, and nonprofit organizations.
OED is concerned with the overall mnngemenl of the organization and its functions,
including both the long-term and short-term identification and development of its
human resources. The vast usefulness of organizational effectiveness and
development strategies can be categorized under the following focal areas:
• Current and future-focused organization-wide talent management
• Organizational effectiveness
• Organizational structure and job design
• Ongoing performance and productivity initiatives
e Organizationalleaming
While these categories might suggest that each aspect of OED can be executed
- - - ---ifloopoodently,-th<:>-b0St-results are achieved aspects-me integr.ateu.._ _ _ __
Area covers the following topics:
• Section I, "Overview of Organizational Effectiveness and Development,"
looks at the OED process, strategies, benefits, and opportunities and at HR's
role in OED.
• Section 2, "Organizational Gap Identification," covers identifying needs for
OED.
74 © 2015 SHRM
ORGANIZATION Organizational Effectiveness and Development
) e Section 3, "Implementing OED Initiatives," looks at categories of OED

1 strategies, workforce support for OED, and several OED tools.
$ Section 4, "Measuring Organizational Effectiveness and Development,"
discussed the evaluation of OED initiatives.
)
)
:L--··--·--·-----··--·--·---··--··--····--··--··--·--·----··--·-.-···--·--·--·-·--·
\'
l
)
© 2015 SHAM 75
Section i:
Overview of Organizational Effectiveness

and Development

• Ensuring that workforce activities are accurately reflected in job descriptions and other
key documents (e.g., applicant tracking systems, job postings, performance management
systems).
• Recognizing and eliminating barriers to organizational development and effectiveness.
Planningiorinte1nal ol·extematlesoUices to delive1 app1opliate sh01t-term-tlmtelopment
• Consulting on, planning, and designing organizational structures that align with the
effective delivery of activities in support of the achievement of organizational strategy.
• Consulting on, developing, and designing performance standards and assessment metrics.

• Business solution and performance analysis.
• Change management theories and approaches.
• Consulting techniques.
• Design approaches for a motivational work environment
• Design approaches for work activity.
• Influence techniques.
• Organizational design structures and approaches (e.g., customer, functional, geographic,
matrix, program).
• Performance management theories, structures, and approaches.
• Strategic-tactical alignment.
I ,
)
) ORGANIZATION Organizational Effectiveness and Development
OED Efforts
Organizational development (OD) is the process of enhancing the
effectiveness and efficiency of an organization and the weii-being of its
)
members through planned interventions. Developing or improving the
organization through such interventions leads to the achievement of better
I
results.
I
A good HR leader or OD professional will regularly monitor and analyze
organizational metrics to gauge operating, workforce, and cultural health.
)
Appropriate metrics will help the professional recognize opportunities and
barriers, educate line leaders about associated risks, and solicit their
ownership of the needs. The correct metrics will also help focus improvement
efforts.
) To plan and implement organizational effectiveness and development efforts

) in a manner that adds value to the organization, the human resource
professional must:
• Understand and support alignment of all strategic and tactical business

c1_ _ _ _ _ _ _ _ _ _ · · - - andQ!'Q&ram objectives. l:msiness unit's tas;,tical plans____ . .________ _
implement the strategic business objectives of the organization, and each
unit's tactics must be coordinated with other unit plans and objectives. In
the same way, all of the human resource and OED initiatives within the
HR department must be aligned with the organization's strategy, with
each other, and with country-specific requirements.
I
) o Focus on essential skills that the organization, including HR, will need to
\ fulfill its strategy, for example, fostering innovation or leading teams.
Key stakeholders, including leadership, >hould be involved in every stage of an

OED initiative, from conception through implementation and evaluation.
Organizational effectiveness and development is an ongoing process that should
) be fully integrated into the organization's culture.
I Some charactetistics of effective organizational effectiveness and development

plans are described in Figure 1.
© 2015SHRM 77
)
Alignment Helps ensure that plans reinforce, complement, and build

on each other and support overall organizational goals and
strategies
Common tools Allow for easy comparisons
- - - - - - - - - - - - - + - -_ ___:_
and collation of data
_:__ _ _ _ _ _ _ _ _ _ _ __
Common language Avoids confusion and misunderstanding
------
Explicit assumptions Allow the validity of underlying assumptions to be
challenged
Fact-based Clarifies the difference between what is known and what is
supposed
Flexibility Recognizes and accepts that assumptions are likely to
change
Multiple perspectives Provides access to diverse perspectives
Figure 1: Characteristics of Effective OED Plans
OED Process
Organizational effectiveness and development is a way of solving a problem or
closing a gap (which could be a gap in competencies, processes, or resources) so
that an organization can achieve its strategic goals. A development initiative may
forms,-but the process of orgariJzatwnal effectiVeness and -----
development follows these steps:
• Identify gaps in strategic capabilities. HR collects data to identify current

capabilities of the organization's talent. The cutTent situation is compared
with future needs (as noted in the workforce management plan) to identify
possible gaps in capabilities and opportunities for growth. Recognized
problems are studied to identify root causes, understand the scope of
deficiencies, and design successful responses.
Data should be collected ti·om all those affected ---decision makers,

managers, and staff. Information gathered at this point wi II help in the design
of an effective and efficient initiative.
Jn the case of a global enterprise, HRD must understand both the

organizational culture and the local cultures affected by the initiative.
- - - - --------------------·---
78 © 2015 SHRM
e Develop an action plan. Objectives are defined, teams are assembled, and
an appropriate tactic for development is chosen-for example, job
assignments or a mentoring program.
In a global enterprise, HR must also attend to the needs of local cultures.

)'
Will a standard solution work locally? If not, can it be adapted to accomplish
I
both organization and local needs? What will be needed to create an effective
)
local version of the initiative? Can the same criteria for success be used in
)
the organization's different locations?
) e Manage the OED project. HR manages the project to make sure that it
I meets the defined objectives within the allocated budget and resources.
) Necessary changes in direction, scope, and resources are communicated to
management and documented.
" Evaluate the results. When ready, the initiative is rolled out to the field, and
responses and experiences are monitored and documented for later study.
Problems in implementation are identified and addressed. The impact of the
initiative on the organization's strategic goals is measured. If the initiative is
deemed effective, it is adopted; if not, it may be revised or abandoned.
)
. Figure 2 on the next page shows the stages of the organizational effectiveness and
)_.- · ..- · - · · - · - · - -.. - - - - · - - · · - - · · -..· - - · - - - - - - · - · - · · · - · - - · · - - · - - · - - - -
development process.
·,.
OED Strategies
y OED strategies cut across many functional areas of an organization.
Development initiatives may focus on the organization's talent, effectiveness,
structure, performance, or productivity. Integration and synchronization of all
initiatives provide the best results.
Talent Development
Key to talent development is to first do a thorough review ofthe organization's
strategic plans and annual goals in order to develop a deep understanding of all
CJitical abilities needed to achieve those goals and to then evaluate whether the
)
competencies to achieve these goals are clearly defined. If not, time must be spent
) to translate the goals into competencies and then to verif'; those competencies
needed to execute all plans. The competencies should then be built into job
' )
descriptions, job postings, and the perfonnance management system. All strategic
plans and amlllal goals should be reviewed for workforce competency implications.
,\
© 2015 SHRM 79
• Identify current capabilities and compare

with needs of organizational strategy.
• Analyze problems to understand root causes
and possible fimitations on solutions.
• Define objectives for

• Measure the results the OED program.
and evaluate to • Design program,
determine if change taking into account
is happening and local differentiation.
desired behaviors • Establish budget and
are occurring. schedule and assign
staff.
• Monitor project development against objectives

and parameters.
I
• Develop and implement communication plan.
• Monitor implementation and resolve problems
Figure 2: Stages of OED Process

I.
lJ
An organization should be aware of its current talent competencies and be
working to develop those competencies toward the company's identified
strategic talent needs. The most successful talent management initiatives take
into consideration the strategic needs of the organization as well as the
individual needs of the employee. The more overlap an initiative has between
organizational and individual needs, the greater the opportunity for joint
satisfaction.
Strategic talent development is described in Figure 3 on the next page.
Additional infom1ation on talent development can be found in the "Workforce

Management" Functional Area in this Otganizarionmodule.
80 © 2015 SHRM
)
Identify the talent needs • Ensure that the current job descriptions accurately reflect the
of the business. What is work to be done to achieve business objectives, and prepare
essential to meet the job descriptions for any anticipated positions.
business objectives? • Clarify performance standards and assessment metrics.
• Compare skill set inventories (formal and informal) of the
incumbents to the selected future competencies.
• Identify any competency deficiencies.
)
} Develop existing staff. • Determine if adequate staffing exists or if recruitment efforts
will be required.
) • Coordinate selection processes.
) Develop comprehensive workforce development initiatives
) that grow internal technical/functional capabilities as well as
the management and employee behavioral practices needed
to achieve results.
Build bench strength. • Establish a comprehensive performance management
program that stresses instituting stretch goals.
• Communicate performance expectations.
• Measure performance objectively and regularly, and provide
) candid, honest feedback on a regular basis.
) • Develop coaching or mentoring programs and internal social.
networks between experienced and more-junior employees
)
to promote knowledge sharing.
) • Identify the positions for which succession planning (a
proactive program designed to keep talent in the pipeline)
' I
makes sense. These often include key positions, positions
J------·-··----·-·--· ·----wittn:firectiTTlpact-cJtTstrategiClJfactices, amttl1oseWith---··-·-·-·-
lengthy learning curves.
Figure 3: Talent Development Activities
Performance Improvement
Another role of OED is to ensure that the business is functioning at peak levels
) through performance improvement programs. This involves accurately
) identifying sources of unacceptable outcomes and intervening to create effective
practices.
Most performance or productivity problems fall into the categories discussed in

Figure 4 on the next page.
Additional information on pcrfom1ance management can be found in the

"Workforce Management" Functional Area in this Organization module.
© 2015 SHRM 81
Behavioral These are often manifested as • Clarified expectations and work

communication problems, a lack of processes
collaborative effort between people
• Education
or groups, inadequate team
performance levels, or performance • Consistent workplace practices
I quality issues. They are frequently • Strong leadership
the result of inadequate leadership • Conflict resolution practices
or of unclear performance
expectations, such as insufficient
communication of performance
standards or inconsistent use of
metrics or accountability standards.
Cognitive These are deficiencies in knowledge • On-the-job training, work
or skills. expansion
• Coaching/mentoring
• Training
Technological These are problems with the • Address problems associated
equipment, materials, and with inadequate, inaccessible,
information used to perform the faulty, or inaccurate equipment,
work, including their accessibility, materials, or information that
availability, and accuracy. employees rely on to perform
their jobs.
Process- Problems with how the work is done • Review systems to obtain
related can stem from inefficient systems, feedback and conduct regular
process measurement data, • Determine process measures and

impractical procedures, or data collection techniques.
cumbersome reporting structures.
• Identify problems before they
become significant obstacles.
• Design and implement process
improvement strategies.
Cultural Problems within the workplace • Typically, cultural shifts require
atmosphere or environment tend to multifaceted OED interventions.
be the most challenging to remedy. • Solutions derived from internal
Matters concerning employee sources rnay be the most
satisfaction, leader-employee desirable, as credibility and
relationships, leadership styles, familiarity levels are high.
corporate responsiveness to
change, and policy flexibility are all • Conversely, using an external tool
examples of cultural challenges. or facilitator may provide a more
holistic and objective perspective,
thereby balancing the emotional
components associated with
internal relationships and
performance history.
Figure 4: Performance Problems
82 © 2015 SHRM
)
) Organizational Structure and Job Design

Organizational structure aligns and relates parts of an organization so the
organization can achieve its maximum perfom1ance. Organizational stmcture is
the method by which work flows through an organization. It allows groups to
work together within their individual functions to manage tasks. The structure
chosen will affect an organization's success in carrying out its strategy and
objectives. HR professionals should understand the characteristics, benefits, and
limitations of various organizational stmctures to assist in this strategic alignment.
)
) Within the organizational structure, HR professionals must also consider the
) design of jobs and work tasks to ensure that individual employee efforts align
) with strategic goals. Research describes the importance of strategic alignment of
job and task design not only for business success but also in fostering workforce
job satisfaction and employee engagement.
) Additional information on organizational structures and job design can be found

) in the "Structure of the HR Function" Functional Area in this Organization
module.
'j
OED Benefits
I
'--·--··----·---- - - - · - - - · · · - - -..- - - - .. - - · · - - - - -
To keep pace in a constantly evolving business world, organizations often need
to implement enterprise-wide changes affecting their processes, products, and
) people. Change is a fact of life in businesses today, and change initiatives are not
limited to big companies. According to SHRM's "2007 Change Management"
survey report, 80% of organizations had planned or implemented major
)' organizational initiatives requiring change management during the previous 24
) months.
)
Organizational leaders must identif'y and respond quickly to market changes and
unexpected challenges. Agile leadership-from CEOs down to line-level
managers--separates high-performing from lower-pertcmning organizations.
Companies that consistently outperform competitors in protltability, market
) share, revenue growth, and customer satisfaction reported much greater agility
) than lower performers.
)
According to the 20 I 0 organizational and leadership agility survey conducted by
the Institute for C01porate Productivity, more than75%of survey respondents
) © 2015 SHRM 83
said that their business environment is changing or rapidly changing. In spite of

this response:
e Only 44% of companies said that they are adept at identifying and making
needed incremental changes to a "high" or "very high" extent.
@ Only 40% said that they recognize and respond to strategic challenges in a
timely manner.
o Less than a third (32%) said that they anticipate and initiate changes needed
for sustained high performance beyond their immediate strategic challenges.
In their publication "Traits of Truly Agile Businesses," Accenture reported the

results of a survey they conducted in 2013 that investigated business agility in
strategy, organization, marketing, operations, and finance. They surveyed 1,300
senior-level executives in 13 industries in 16 countries. Their analysis compared
companies that self-reported increases in sales of greater than I 0% and companies
that reported a decrease in sales in the previous fiscal year. As a result of this
research, five critical enablers of company agility emerged. Agile companies had
leaders that:
e Actively build seasoned, diverse leaders and management teams. Leaders

ensure that managers up and down the organization are fully accountable and
··-----nave1J.wriglrrco:mpeterrcies tcr·harrd:lr.rdiverse-sercrf-ci:rcttmstaneeo.---------
• Speed up decision making. They establish a culture of making critical

decisions at speed-always ensuring that those decisions are tuned to market
conditions.
" Prioritize strategic decisions. They distinguish between the decisions that
affect everyday operations and the bigger decisions that concem the company's
strategic direction.
• Prepare their ecosystems to act quickly. They ann their business

ecosystems-suppliers, customers, and a range of third-party partners--with the
resources, information, and tools to take decisive, well-orchestrated action--
and to quickly measure the results and correct their course when needed.
• Invest in and ma!'e more use of data and analytics to run the business.
Leaders understand the competitive value of deeper insights and know how to
mine many sources of data---not just their own---to obtain those insights.
84 © 2015 SHRM
)
I
)
Opportunities for OED

) During the recent economic downtum, corporations around the world became
) good at delivering their core products and services with fewer resources by
adopting a "do more with less" operating style. Many companies have reaped
some short-term benefits due to cost savings. However, these short-term
.\
benefits might inflict long-term problems on the organizations' overall
) capability, organizational structure, business processes, and levels of
) workforce engagement, such as:
o Diminished capacity, capability, and agility. Not being properly staffed

can directly influence a company's cost stmcture, cash flow, and ability to
-creriver goods and/or sei'Vices.Dlbmatety, iliilli.illsliecrcapacity
lagging response times will affect an organization's ability to remain
competitive.
)
• Misaligned organizational structure. Many of these reorganizations
I
produced structural gaps in roles, work processes, accountabilities, and
critical information flows. Structural gaps may occur if companies
)
eliminate jobs without eliminating the work, forcing employees to take on
y
additional responsibilities. This can create problems because lower-level
employees who step in may be ill-equipped to perform the required duties
and higher-level executives who must take on more-tactical
I
responsibilities may feel that their leadership skills are being minimized.
l
)
• Broken business processes. Many organizations will admit that, even
prior to the economic downturn, many core business processes were not
)
documented, were not supported by technology, and relied too heavily on
the "tribal knowledge" of long-tenn employees. Many businesses have not
© 2015 SHAM 85
)
analyzed the impact from their cuts and the conesponding critical gaps
that have developed. By failing to address these issues in a timely manner,
companies risk losing core efficiencies, thus damaging the customer
experience-a primary driver of revenue sustainability.
• Declining workforce engagement. While doing more with less can

improve productivity, it can also damage employee morale. More workers
(managers and individual contributors alike) are juggling additional
responsibilities, working longer hours, missing family time, and
performing jobs that are one or two levels above or below their pay grade.
Organizations should address the inadvettent costs and complexity issues

generated by doing more with less. To ensure long-term viability,
organizations must realign these critical elements to fit the new economic
realities without diminishing their core capabilities and competitive
differentiation.
HR's Role in OED

Whether it is an economic downturn or some other influence, businesses
_ _,n"'ea:ed_to_adjust_to_hruhimemal and_external factors in order to thrive. This · · - -
means constantly reassessing business practices to meet cunent and future
needs and always aligning development initiatives with the organization's
strategic plan.
HR should be involved in major organizational changes from the beginning.

Early involvement of HR can facilitate improvement of employee
understanding of change and communication between management and
nonmanagerial employees. Positive outcomes of communication efforts can
include:
• Identification and mitigation of potential risks.
• Increased employee buy-in and satisfaction.
• Increased trust between management and nonmanagerial employees.
• Identification of needed change-related training initiatives to improve
employee skills and proficiency throughout the change process.
• Increased leadership cohesiveness.
86 © 2015 SHRM
)
I ORGANIZATION Organizational Effectiveness and Development
i In their 2014 publication "Future Insights," SHRM outlined the top OED trends
according to their HR subject matter expert panel. The panel identified the
following trends.
)
HR professionals must:
) • Increase focus on the development and engagement of high professional

employees who possess deep expertise, drive
) innovation, and uniquely contribute to the organization's value proposition.
)
) • Take responsibility to educate line management and help them acquire skills
to become more proactive in managing and coaching talent.
• Become skilled in organizational design and change management required to

effectively implement enhanced organizational structures.
)
• Develop supeiior commtmication and situational leadership skills,
)
motivation, energy, and learning agility. Leaders must have the ability to
recognize and respect cultural differences and to reconcile the issues cultural
diversity creates.
• Integrate the workforce planning process with career planning and employee
engagement to provide infom1ation and supp01i for employees to help them
identify and choose from available career paths and job opportunities.
)
J
• Interact with the technology specialists to produce accurate models to use in
I
planning and managing the workforce, including decision support tools and
j
predictive anal ytics.
)
)
• Use creative development tools such as mobile technologies for just-in-time
learning via "pulled" rather than "pushed" instruction.
I HR prorcssiona!5 should be involved in the organization .fi.w gaps,

)
developing action pla!lS, implcmentlng tlmse ph1ns, and evahtaling
mganizatlmml effectiveness and develnpmentiniliativeg,
© 2015 SHRM 87
Without having been asked, an OED director with an auto parts manufacturer has
been collecting and assimilating workforce data into a cohesive dashboard of
indicators. After a few months of plotting the data, she notices disconcerting trends
coming out of the engineering division, which is seen as central to the company's
Critical growth into new components. Specifically, she notices:
Evaluation • Higher levels of turnover in the 25- to 34-year-old demographic, which is
Competency considered essential to the talent pipeline.
in Action e Low employee engagement scores from a recent employee survey.
• Aggregate management 360-degree feedback scores pointing to a limited ability
of managers to give effective performance feedback and create meaningful
professional growth.
• Higher levels of employee relations grievances.
e Higher levels of absenteeism.
o Exit interview data trends pointing to a lack of meaningful direction from and
relationship with management.
The OED director needs to convince senior management that employees are
voluntarily leaving the company for reasons other than money alone. Using the
collected data, the OED director builds a business case detailing underlying
causes of poor employee retention and its implications for executing against
current operating plans, being able to attract talented applicants, and building a
robust talent pipeline of future leaders and technical expertise.
Knowing that the VP of engineering can easily explain away any collected data
point, the OED director formats the reporting to build a solid "wall of data." Any one
piece of data can still be dismissed but not the whole collectively. She collects and
prepares external data that demonstrates the business return on investment of
pertormance management practices; she also prepares information on
performance management best practices and what it would
develop the skill in managers as an essential management practice.
The OED director demonstrates the ability to interpret organizational information
and pertormance data to ensure the implementation of effective and efficient
business solutions by:
e Making sound decisions based on evaluation of available information.
• Applying critical thinking to information received from organizational
stakeholders and evaluating what can be used for organizational success.
3 Gathering critical information.
e Analyzing data with a keen sense for what is useful.
• Maintaining expert knowledge in the use of data, evidence-based research,
benchmarks, and HR and business metrics to make critical decisions.
• Maintaining expert knowledge and the ability to interpret data and make
recommendations.
• Making decisions with confidence based on analysis of available information to
drive business success.
• Analyzing the information necessary for evaluating and using data and for
making effective decisions.
• Sponsoring initiatives for process improvement using evidence-based solutions.
• Communicating the impact on organizational strategy of relevant and important
findings from data analysis_
88 © 2015SHRM
Organizational Effectiveness and Development
l
I
Progress Check
) 1. What contributes the most to companies consistently outpcrfmming competitors in

) profitability, market share, revenue growth, and customer satisfaction?
r ( ) a. Agile leadership throughout the organization
J ( ) b. Employee ownership of the company
)
( ) c. Active shareholder involvement
)
( ) d. Training and development initiatives
)
2. Unclear performance expectations are often a contributing factor in which type of

performance problem?
( ) a. Technological
)
( ) b. Cultural
) ( ) c. Behavioral
( \) d. Process-related
3. Taking cultural differences into consideration occurs at what stage of the OED development
·---
\ ( ) a. Identifying gaps in strategic capabilities
( ) b. Developing an action plan
)
( ) c. Managing the OED project
( ) d. Evaluating the results
J
t';
l
' 4. Problems with the critical flow of infonnation in an organization is an example of which
banier to OED success?
1
( ) a. Diminished capacity, capability, and agility
( ) b. Misaligned organizational structure
( ) c. Broken business processes
( ) d. Declining workforce engagement
' )
© 2015 SHAM 89

1. a (p. 83)
2. c (p. 82)
3. b (p. 79)
4 b (p. 85)
· - - - · - - - - · - - · - · · - - · - - · · · - - - · · - - ..
90 © 2015 SHRM
)
C" .... t')

"eC dO!! t.:
Organizational Gap Identification

)
)
• Recognizing and eliminating barriers to organizational development and effectiveness.
• Assessing organizational needs to identify critical competencies for operational
effectiveness.
}
• Consulting on, developing, and designing performance standards and assessment metrics.

• Change and culture metrics.
) • Organizational culture versus national culture.
• Organizational design structures and approaches (e.g., customer, functional, geographic,
I matrix, program).
) • Organizational needs analysis techniques.
• Roles and responsibilities (e.g., chain of command, span of control).
) • Understanding individual differences and perceptions.
)
' )
Assessments and Targets

Organizational etrectiveness and development involves more than jnst
specialized interventions; its practice should be integrated into the organization's
daily operations. One of the simplest tools OED practitioners use is the ADDIE
model, shown in Figure 5.
Assess the difference between the present and desired

A
performance levels and what is contributing to the gap.
Design the intervention/solution, keeping in mind who
D the end user/target audience is, what the business
objectives are, and how outcomes will be measured.
Develop the intervention and identify who should be
D involved, who has credibility, and in what manner
information about the intervention should be delivered.
Implement the intervention.
Evaluate the intervention by measuring the outcomes
E
against objectives.
Figure 5: ADDIE Model
This flexible and adaptable model can be used to assess the differences between
existing and desired performance at three levels---organizational, task, and
individual.
• The organizational level deals with macro, wide-scope needs. It may

include analyzing elements of the organizational structure such as the way an
organization structures jobs to coordinate work (departmentalization), the
number of individuals who report to a manager (span of control), or the line
of authority (chain of command). It 1nay also involve analyzing the
company's strategy of managerial centralization or decentralization (where
decision making occurs).
Additional information on organizational structure is found in the "Structure

of the HR Function" Functional Area in this Organization module.
92 © 2015 SHRM
) Organizational Effectiveness and Development
• The task level looks at skills needed to perfonn the requisite job duties. It
requires an analysis of the critical tasks and activities required to build a
product anc!lor deliver services and the business processes to execute the work.
It may also involve evaluating tbe roles and accountabilities required to
execute the core work processes.
) • The individual level deals with enhancing employee competencies. Once key
jobs, processes, and accountabilities have been identified and prioritized
according to the organization's strategic plan, HR must evaluate current
employee competencies and identify gaps in meeting strategic goals. This
requires an objective analysis of what the organization expects from its
employees in terms of performance and commitment and what it provides them
I in exchange for their contributions.
)
It may also be important to look at what phase of development the organization is

) in when considering OED initiatives.
• In the start-up phase, organizations are usually very centralized, with basic
structures and informal systems.
In the second phase, which is focused on growth or expansion, processes need
8
to become more formalized in order to keep up with demand. Recruitment of

'-------------·----·new staff and1l1.ii!Ciing new teamslsOften the focusOTDED
1
• Once the organization becomes more mature (phase 3), it may focus on
consolidation or introduction of new products and services. Growth may be
slower, more formalized systems will be in place, and training to maintain
flexibility and skills in the workforce may be emphasized to improve
J
productivity.
)
• Finally, when leadership realizes that the organization is in decline (the fourth
)
phase), they will often employ a series of efforts to turn the tide, such as
)
product enhancement or cost-reduction programs. At this point, an
.I
organization has to rebuiid learning and innovation capabilities and shape a
)
new pro±! table direction. There may be movement toward drastic changes to
alter the decline trajectory, often characterized by risk taking, acquisition, and
diversification.
)
)
Additional info1mation on organizational effc.ctivcncss and development phases
I
)
is found in the "Business and HR Strategy" Functional Area in the Strategy
module.
)
© 2015 SHRM 93
l )
An accurate data collection process must occur as part of the assessment phase.
Properly identifying a problem or gap is critical to recommending a sustainable
solution and to developing a consistent measurement of that solution. During the
design phase, when project objectives are established, the standards (what
success will look !ike) and metrics (measurements used to gauge success) are
detennined. Taking the time and effott to identify standards and metrics ensures
that the evaluation phase findings will be useful in detennining whether the
intervention achieved its objective.
Remember that each action creates a new outcome. This dynamic sustains the
organizational effectiveness process cycle of continuous assessment,
implementation, and evaluation. Development at any of the three levels becomes
a process integrated into daily organizational operations. Successful
organizations understand that all development practices need to be seen as in a
constant state of evolution.
Change Readiness
As development strategies are being assessed, the HR professional must also
consider and assess readiness to change. Change is difficult for most individuals,
so proactively preparing for possible issues will assist the change process. Figure
some things that shoulo be considered when mrtmtmg organizatiOnal
effectiveness and development.
../ What is the nature of the change? ../What fears might people have
../ What is the expected duration? about the change?
../ What key milestones are ../ How much resistance is
associated with the change? anticipated? From whom?
../ Where is the organization in the ../ How will the organization deal with
change process? the temporary drop in productivity
../ Who will have primary responsibility that may result from the change?
for implementing the change? / What benchmarks wiil be
../ What language and cultural factors established?
../ How will local interests and needs
will impact the change?
be gathered and considered during
/ What role will HR play in
change planning and
implementing the change?
implementation?
Figure 6: Assessing Readiness for Change
--------------- - -
94 © 2015SHRM
)
Cultural Assessment
A well-defined organizational culture is a common denominator among the most-
admired companies. They have consensus at the top regarding cultural priorities
and values that focus on the organization and its goals. Leaders in these companies
live their cultures eve1y day and go out of their way to communicate their cultural
identities to employees as well as prospective new hires. They arc absolutely clear
about their values and how those values define their organizations and determine
I
how the organizations are run.
)
)
HR professionals must also consider the manner in which both extemal (national)
)
and organizational cultures influence the decisions they make as they plan and
)
deploy organization-wide initiatives. Organizational leaders and HR professionals
should understand the national cultural values in the countries in which the
organization operates to ensure that management and HR practices are appropriate
)
and will be effective in operations in those countries. National cultural differences
)
should be considered when implementing organizational effectiveness and
development initiatives in global businesses.
HR professionals need to evaluate carefully the cultural messages the organization

to its C!Uployees and the degree to whicJ:l what may be seen as_a_ __
universal "organizational culture" has actually been ethnocentrically defined. HR
should also be aware that organizational cultures may, in some cases, be in direct
conflict with local cultures. It may be necessary to reconcile these dilemmas and
)
adapt OED initiatives to align with local cultural perceptions and expectations.
)
The degree to which national and organizational cultmes influence employees is
I
situational, so no single response is appropriate under all circumstances.
I
)
)
I Additional information on organizational culture can be found in the "Employee
) Engagement" Functional Area in the People module.
)
© 2015 SHAM 95
Progress Check
l. What refers to the number of individuals who report to a manager?

( ) a. Centralization
( ) b. Span of control
( ) c. Chain of command
( ) d. Departmentation
2. What is a common denominator among the most-admired companies?

( ) a. The organizational culture is secondary to the national culture.
( ) b. The company has a well-defined organizational culture.
( ) c. The company emphasizes diversity in its workforce.
( ) d. The company holds tightly to the founder's organizational values.
96 © 2015 SHRM
H
I I
I
1. b (p. 92)
2. b (p- 95)
I
)
I
)
I )
)
)
)
)
. J
)
)
)
)
© 2015 SHRM 97
' )
Section 3:
Implementing OED Initiatives

• Planning for internal or external resources to deliver appropriate short-term development
• Consulting on, planning, and designing organizational structures that align with the
effective delivery of activities in support of the achievement of organizational strategy.

• Consulting techniques.
• Group dynamics.
• Motivational theories.
• Organizational behavior theories.
• Project management approaches.
• Strategic-tactical alignment.
OED Initiatives
OED intervention strategies are generally divided into three categories:
interpersonal, work process, and structural.
• Interpersonal strategies deal with work relationships between employees.

These interventions are directed at improving interpersonal, intrapersonal,
intergroup, and intragroup relations. Efforts are often aimed at clarifying work
) expectations and operating norms to prevent misunderstandings or conflicts
) and to promote cooperative and collaborative relationships.
)
) • Work pt·ocess strategies focus on how work gets accomplished in the system.
The processes must provide adequate resources to achieve the organization's
goals. These strategies often include such activities as job design, job
simplification and specialization, grouping jobs into departments by function
) or product, and analyzing work tlow and human factors to achieve
coordination and communication among departments.
" Structural strategies look at how the structure of the organization is helping
or hindering it. They examine issues such as span of control and repo1ting
L___ many ·
mid-level managers and may restructure to cut waste, reduce redundancy, and
improve profits.
)
1 Workforce Support of OED Initiatives

)
When done well, change gives the organization a competitive advantage that
)
allows it to be more nimble and relevant. Companies that can quickly adapt are the
winners in a world where the competitive landscape changes overnight. A report
written by Carolyn Aiken and Scott Keller at McKinsey & Company suggests that
)
80% of what leaders care about when trying to enlist support for change docs not
rnatter to 80% of the workforce.
If buy-in is critical for your success, you must involve employees in the OED
process. People support what they help create. Remember, all change creates
moments of instability and anxiety.
----- - - - - - -
) © 2015 SHRM 99
As agents of change, HR professionals and other leaders can do the following:
e Link change to external factors that are driving the organization's need to
change and increase competitiveness.
• Examine the language you usc to describe and promote organizational

effectiveness and development. Are changes discussed only from the
perspective of a crisis to be averted, or are opportunities to advance the
organization's mission, vision, and values reinforced? Our language reflects
thinking, and when it comes to leading change, thinking drives action.
• Involve others in crafting and implementing the plan. Remember that people
generally support change for their reasons and not yours. Do the hard work of
communicating the need and opportunity for change based on what is
I important to those from whom you need support. While compliance can be
mandated, commitment is volunteered.
I
II • Use resistance as your fi"iend. Ask questions and listen. Be patient and realize
! that the concerns rmsed by a few are probably shared by others. Domg so
II
I'
aLlows you to identify potential barriers to making organizational change work
and increases your odds ofbuilding support.
·
• Focus on the change adding so much value that anxiety and fear are
minimized. Strategically invest in the future, and inspire hope.
OED Tools
Whether the needed OED plan is interpersonal, work process, or strnctural, HR
professionals have a variety of tools from which to choose. All of the strategies
discussed next can be used to guide an organization through a process of change,
but this is not an all-inclusive list. The main point is that the solution, whatever the
tlnal fonn, is assisting the organization to flourish during change.
Team Building
Team building is a group intervention in which a team is engaged in a series of
activities designed to help them examine how they function and how they could
function better. This includes both the nature of their work (what they do or create
I
100 © 2015 SHRM
)
! )
together) and how they coordinate and collaborate on their efforts (how they work
together). Emphasis is on early identification and solution of problems that stand
in the way of group effectiveness. The purpose of a team-building intervention is
to facilitate the alignment ofthe management team with the team's mission and
goals and to develop effective team dynamics for working together to accomplish
these goals.
)
Team building for organizational effectiveness and development may focus on:
• Goals and priorities tor the OED initiative.
) • Role and responsibility of each team member.
) • Procedures and norms for assigning tasks, monitoring progress, and evaluating
) results; for communicating and coordinating efforts; for making decisions.
• Interpersonal relationships within the team; procedures and norms for sharing
information, making decisions, determining and understanding
) responsibilities, resolving conflict, and handling disagreements.
) o Understanding and improving shared processes used to provide the team's
product or services.
• Organizational systems affecting the work of the team and how they can be
used to support a change.
• Client/customer expectations of the team, perceptions of team performance,
L
of client relati"onships. -- -------------
When working with teams, the HR professional must be aware of f,'1"0Up dynamics
and how the dynamics of the group can be used to facilitate consensus on a way
)
forward. There are several tools that can be used to assist in group decision
!
making. The following are some commonly used decision-making tools:
• SWOT analysis. This tool is used to identify strengths, weaknesses,

opportunities, and threats associated with an action or an entity. It is a qualitative
analysis and does not provide a numerical score. When applied to decision
making, team members would consider:
" Strengths the team currently possesses that could help ensure a positive
)
outcome-for example, access to equipment needed to implement the action
)
or a high level of trust with stakeholders.
)
,. Inherent weaknesses that would prevent the team Jl·om properly
implementing this decision--for example, lack of manpower or expertise.
© 2015 SHRM 101

• Additional oppmtunities that would be available to the team if they pursued

this path.
New external threats they might meet as a result of taking this step.
• Multi-criteria dedsion analysis (MCDA). The team determines critical

characteristics of a successful decision (e.g., ability to meet project
requirements, likelihood of success, or least chance of causing secondary risks).
A matrix is used to score each alternative and compare results.
• Cost-benefit analysis (CBA). The direct and indirect costs of implementing

each altemative are subtracted from its quantifiable and nonquantifiable benefits.
The key to using this tool properly is to capture all costs, especially indirect
costs, and to value nonquantifiable benefits accurately. The analysis can be
made more complex by considering issues such as the time value of money.
• Force-field analysis. Force field analysis may be used to process some of the
issues raised during a brainstorming session. It was designed to analyze the
forces favoring and opposing a particular change. The factors that could
influence an outcome in either a negative or positive manner are listed on either
side. The factors are assigned weights to indicate their relative strengths. Based
on this analysis, the group can decide to pursue opportunities with scores
. -·-·--· - - - - - · - - - - - · slmwing
or decide how to allocate resources to mitigate negative risks and enhance
oppmtunities.
102 © 2015 SHRM

I
)
Diversity Programs
Changing your organization to one that values and promotes diversity may be a
I requirement for organizational success. OED initiatives aimed at implementing
and creating respect for a diverse culture must focus on:
• Recruiting strategies.
Creating an environment where everyone feels welcome and included.
)
• Creating development programs that deal with employees' fears and
stereotypes.
• Monitoring progress related to diversity plans.
)
)
Note that while the business benefits and moral value of increasing diversity are
)
clear, there are legal restrictions in many countries on an employer's considering
gender, race, etc., in decision making.
Additional infonnation on diversity is found in the "Diversity and Inclusion"

)
Functional Area in the Workplace module.
)
Quality Initiatives
Quality initiatives go hand in hand with human resource development.
Developing people and their talents and skills-building excellence-allows_·-·--·-----
. ··--·---·-------·----------
organizations to improve quality.
The fo!Jowing discussion of total quality management is excerpted from the

) Foundations in Quality: Certified Manager of Quality/Organizational
Excellence program of the American Society for Quality (ASQ) and is used with
I the pennission of ASQ.
)
) Total Quality Management
) Total quality management (TQM) is 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. The benefits of such a system are to:
) $ Find and eliminate problems that interfere with quality.
) o Identify customer(s) and satisfy their needs.
) • Eliminate waste.
)
• Encourage pride and teamwork.
)
• Create an environment that is conducive to creativity.
-----·- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
© 2015 SHRM 103
The philosophy of total quality management varies somewhat between the

three gurus who popularized the concept and strategies for achieving total
quality: W. Edwards Deming, Joseph M. Juran and Philip B. Crosby.
W. Edwards Deming was theAn1erican pioneer who took his 14-point

·progmm for productivity and quality to Japan in1950,.where he had
. <1 receptive audience. Japan's award fbr excellence in quality;the 6cming .
Prize, is. nmi1cd:;if1cr hi1ii. Dcming's.mcssagc to top ml!nagcrs was that it; the.:· .
.• organization was essentially theit'fatiluind no one else's.
· joseph M..Juran "fitness to iise;'' whicli eniphasizes the ·

. reliability of a product or service fbr its users. The Jumn Trilogyl"' incorporates
.quality planning, quality control, and quality improvcmerlt.
Crosby dcvclo1ied a 14-pointpmg!'am fotquality maringcmcnt ...

(similar to Deming). To th..;sc' points, 'he lldded four quality absolutes: a
·. dctlnition of quality. a prevention system (rather than. appraisal of quality), a
pcribmumce standard (zero dcrccts}, and tho mcasurcrnent tlt'quality (the Ctlst
of noncwrfbrmnncc ),
"-.-:-:--·-----.. ---
Systems Theory
i: Systems theory is widely applied in OED interventions and is essential to the
I' I quality movement. A system is comptlsed of interacting pa1ts that work together
to achieve an objective. A system is intended to absorb inputs, process them,
and produce outputs, as shown in Figure 7,
(
Process J
Figure 7: System
According to systems theory, t>rganizations need to understand the relationship

between the input process, and output components and the environment in
______ _,___ , .... , ..
104 © 2015 SHRM

which they occur. By doing so, organizations can improve their processes,
making them more efficient and cost-effective.
Quality Standards
) A number of qualitative methods for determining quality in organizations have
) been established in recent years. Among them is the Baldrige Performance
) Excellence Program, established by the U.S. Department of Commerce, for which
organizations undergo a series of stringent self-examinations concerning their
) quality processes. In recent years winners of the Baldrige award have included
) both for-profit and nonprofit organizations and service and production facilities.
The Baldrige Criteria for Performance Excellence are structured in seven
categories: leadership; strategic planning; customer focus; measurement, analysis,
and knowledge management; workforce focus; operations focus; and results.
For more information on the award criteria, see www.nist.gov/baldrige.
!SO 9000 standards have also been adapted as a benchmark for determining
quality systems in organizations. The goals of ISO 9000 are to provide:
• A common basis for continuous improvement.
•Defect prevention and waste reduction.
'----·· ---·---.----;x. stmtmg pomf tor a closer working relationship among
The focus of !SO 9000 registration is conformity to practices specitled in the

) registrant's own quality systems. Its central purpose is to enhance and facilitate
trade.
)
) Quality Contiol Tools

) The total quality process involves an awareness of the need for change and a
) commitment to change. Support structures, such as performance improvement
teams, need to analyze the processes in the workplace with an eye toward
improving them. This is accomplished by using the following quality tools:
• Process-flow analysis is a diagram of the steps involved in a process. Also

known as flowcharts, these diagrams depict a process and its outputs.
}
) • A control chart is an illustration of variations from normal in a situation
) over time. The control chart bas upper and lower control limits drawn on
)
© 2015 SHRM 105

either side of a process range, which allows users to see if the process is out
of range.
• A cause-and-effect diagram (also referred to as an Ishikawa diagram or

fish bone diagram) uses a visual to map out a list of tactors that are thought
to affect a problem or a desired outcome. An HR manager might usc a
cause-and-effect diagram to explain employee turnover or to understand a
process failure.
e A scatter diagram is an illustration that depicts possible relationships

between two variables. For example, an HR manager might want to
determine 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, and they might be expected to rise along an imaginary
diagonal line-that is, the level of education and the amount of income
might rise together. The scatter diagram makes it easy to see points or
conditions that do not fall near this line.
• A histogram is a graphic representation of the distribution of a single

type of measurement. The data is represented by a series of rectangles of
··--var-ying-heigllt&,--v.,ith the rectangles nsnalLy_.touching.D.ata that is - · - - - -
normaily distributed has a histogram that is approximately bell-shaped,
but many other distributions do not follow this pattern and can still be
depicted by a histogram.
• Check sheets are simple visual tools used to collect and analyze data.
Employees make a check mark to keep tmck of the number of calls,
problems, sales, etc. Check sheets are often used for the initial data
collection.
• A Pareto chart contains vertical bar graphs on which the bar height refiects
the frequency or impact of causes. A Pareto chart is based on the Pareto
principle, which states that 80% of effects come from 20% of causes. The
bars are arranged in descending order of height from left to right. Categories
represented by the tall bars on the left indicate the most frequent causes of
the problem, although they may not be the most important in relation to the
goals of the business. The Pareto chart allows users to focus on the problems
that otTer the greatest potential for improvement.
106 © 2015 SHRM

) Figure 8 shows examples of these charts and diagrams.
, ' ).. ( Peopl<> 1
"'""'"''"()
..
,,e,__.,..
) """''..."
.
)
)
'""''"""
.... -·· ···-·-·-.
··-\'
. ..
!
,
-··"'( '
' /
I
I
) Cause-and-Effect Diagram Check Sheet

)
- - - - - - - -..- · - - · - - - - - - - - - + - - - - - - - - - - - - - - - - -
""
90 """
""'
"
SO%
"
70%
)
"' SO% Number of
) "' TransactiOns
"
4()%
" "l.
30%
" J ""
"''·
23% 22'<.
" iilO"'}
pa•ls
.. A'IW J\>,>1;<1'bO?<J
zesl wroog eum
;JOSI<o<l!>: \'IM'\j
oo1ust packag.ng
'
[_ _______________ ___ _.
Number of Oo;eunencos -- . __________________________________ _________
Ttme in Seconds
..
.\
Pareto Chart Histogram
Cool<ol lor $uol•c•
• •
) • •
Income • •
) Leva I • •
•
• • • • • ••
•
Education Level
.. ;
)
)
)
Control Chart
Scatter Diagram
Figure 8: Quality Control Tools
© 2015 SHRM 107
)
Theory of Constraints (TOC)

An idea related to TQM is the theory of constraints (TOC), a systems
management philosophy that is intended to help organizations continually
achieve their goals. TOC was developed by Eliyahu M. Goldratt and described
in his book The Goal. Goldratt makes specific applications for TOC solutions in
the areas of operations, supply chain/logistics, finance and accounting, project
management, and marketing and sales.
Goldratt's theory is that every organization faces constraints; otherwise, they

would be capable of unlimited production. However, the greatest constraints
come from policies and not from physical entities such as resources or
materials.
TOC uses focusing steps to concentrate improvement efforts on the component

most capable of producing the most positive impact on a system. An
organization identifies the weakest link in the system, detennines whether it is a
physical constraint or a policy-related issue, "exploits" or utilizes every bit of
the constraining component, and adjusts the rest of the system to enable the
constraint to operate at maximum effectiveness.
f the constrainrlrnsbeerretirrrtmtted-amliSJJUiungerlmtding back the-system',---

perfonnancc, the organization repeats the steps, looking for the next thing
constraining perfonnance. If the constraint has not been eliminated, the
organization elevates the constraint by taking whatever action is needed to
eliminate it, which may involve major changes and financial investments.
Six Sigma
Six Sigma is a quality approach that can produce significant benefits and is
applicable to many industries and processes. It is a disciplined, data-driven
apJjroach and methodology for eliminating defects.
Six Sigma is a measure of quality that strives for ncar perfection. 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 tor a
defect.
108 © 2015 SHRM

While Six Sigma lends itself well to manufacturing, it is increasingly used in

financial industries, health care, government, public education, and other
environments. For example:
• A hospital system studied variations and made improvements in patient care
practices, patient costs, and hospital utilization. Other areas of focns were
billing errors, excess inventory, excess overtime, and employee turnover.
l • The HR function of a service agency reduced the cycle time of recruitment,
the payroll processing cycle, the number of employees working on
I )
weekends, and employee attrition.
Six Sigma uses two improvement processes, DMAIC and DMADV:

• DMAIC (define, measure, analyze, improve, control) is a system for existing
processes falling below specifications and looking for incremental
improvement.
• DMADV (define, measure, analyze, design, verifY) is a system used to
)
develop new processes or products at Six Sigma quality levels.
)
Both of these processes are executed by Six Sigma Green Belts (employees)
and Six Sigma Black Belts (project leaders) and are overseen by Six Sigma
Master Black Belts (quality leaders).
Additional information on Six Sigma can be found at www.isixsigma.com.
HR's Role in Implementation

) Most of HR' s organizational effectiveness and development work occurs when
) changes in the competitive environment require revisiting or redesigning the
) organization and its goals or maintaining or achieving alignment to a finn's
)
business strategy.
HR's roles and responsibilities in organizational design should include:

• Providing leaders with a structural diagnosis by identifYing the root causes
of organizational performance issues.
• Helping leaders evaluate a range of clear design options.
• Ensuring that leaders align organizational design decisions with short- and
long-term strategic goals by identifying critical activities, strengths, and
weaknesses.
)
© 2015 SHRM 109
• Helping leaders understand their roles and responsibilities that ensure that the
structure is properly implemented.
• Continually monitoring the structure for al.ignment with the company's
business strategy and highlighting challenges as needed.
• Pl.anning for internal or external resources to deliver appropriate short- or long-
term development interventions and activities and ensuring that those resources
have the appropriate subject matter expertise and credibility to be effective or
have the appropriate background, relationship-building skills, and cultural
familiarity to quickly build credibility.
. . .. . . . . .·. . .
. HR contributesto theorg<inizatiorl design and ilnplemcntationprocess by:.

• · Providing tools that measure the current internal and external environment
and organizational ..
• DcrMnstratingkm)wJcdge of the pros and cons. of various organizational
structures.·
• Encouraging lcaMrs to cnniider stmtcgyas a eomcrstone in design and .
stmcture decisions. . ..
" Creating releVI.U\t and accnratejob. designs allcrthe ot'ganizational
···stmcfure·is-de!cmiincd;·-----·--·····--· ··• -----·-- -· -------------
.Helping managers perlbrm eHcci.ively through dcvdopirig aj1propriatc.
···•· manage;nc;l! skills and leadership {jl.lillitics. .· ·
I
i
... • Helping employees understand the link between organiza!ional'structure ..•· ..
andthcir contributimis, whcre;to get what-they
· is aligned with the corporate strategy..···
and the structure
I
II
!
The HR business partner (BP) who supports the operations division of a
furniture manufacturer sits through a cross-divisional design review that
evaluates the designs. production capability, and potential market reach for a
new line of office furnishings. In that review, significant gaps in coordination
Business
and communication are surfaced in how the organization collaborates and
Acumen integrates their work efforts.
Competency The chief operating officer asks the VP of operations to pull together a series
in Action of cross-divisional teams to identify and assess the risks associated with these
(continued gaps and put practices in place to address them. Separately. following a
on ne-xt conversation with the VP of HR, the HR business partner learns that the CEO
page) wants to identify development opportunities for recently identified high
potentials (Hi-Pos).
---··-·--·····----------------------
110 © 2015 SHRM
Business The HR business partner sees an opportunity to link what organizational leaders
Acumen see as separate business needs into one effort that meets the objectives of both
Competency needs and minimizes stress on the organization from extra work.
in Action
(conciuded) The HR BP sees a unique chance to create excellent development opportunities
for the identified Hi-Pos. It would put them in a position to study the
organization's integrated product development practices inclusive of all key
organizational stakeholders in the market analysis, design, and manufacturing of
new product lines. These Hi-Pos would gain increased exposure to other
organizational elements and learn and better understand the interfaces and
would need to identify, sell, and institute new organization practices. They would
also get exposure to, and scrutiny from, the senior management team. The
senior management team, in turn, would get fresh eyes on a problem, the
chance to test and assess their developing talent and build the talent pool, and
diminish organizational stress by addressing two business needs with one
coordinated process.
The HR BP puts together a proposal and business case for aligning these efforts
that highlights the benefits of this approach and addresses any potential
challenges to it. After soliciting and obtaining support from the HR VP, the BP
gets the backing of the CEO and COO and other organizational leaders.
Pulling together these two business needs into one effort that addresses the
needs of both highlights the HR BP's understanding of where business needs
(the gap analysis effort) can be met by a key HR process (developing key
talent). This aligns a key operational need with an important HR strategic
process.
The HR BP demonstrates the ability to understand organizational strategies and
apply this knowledge to create a plan for effective growth by: · - - · · · - - · - - · - __ _
!----·--··-------.---·Bevelopingrtl'tiJusmess strateg1efs to anve key busmess results-.-
) • Evaluating ail proposed business cases for HR projects and initiatives.
• Examining all organizational problems in terms of integrating HR solutions to
maximize return on investment (ROI), profit, revenue, and strategic
.1 effectiveness.
• Ensuring that the ROI for all HR initiatives adds to organizational value.
) e Aligning HR strategy, goals, and objectives to overall business strategy and
objectives.
• Demonstrating fluency in the language of business administration as used by
senior leaders.
Communicating OED Changes

Sometimes decisions about major organizational changes are made at the lop
management level and then trickle down to employees. As a result, why and how
the company is changing may be unclear.
)
To avoid this problem, .HR should be involved in change planning early to help
)
motivate employees to pmiicipate. While the solution is being developed, HR
needs to develop a plan for communicating the program to the
© 2015 SHRM 111

both the content of the message and the way in which it will be communicated.
Change-related information should be communicated to employees via multiple
forms (e.g., e-mails, meetings, training sessions, intemal social media, and press
releases). It should originate from multiple sources (e.g., executive management,
HR and other departments); management endorsement should be used to support
adoption of the program.
Communication should include the reason for the action (what forces, preferably
external, are driving the change), the benefits to the organization and its
divisions/locations, major components of the initiative, and support that will be
available.
When ready, the initiative is rolled out to the field, and responses and
experiences must be closely monitored and documented for later study. Problems
in implementation should be quickly identified and addressed.
Typically, when organizations undergo change initiatives, leaders tend to focus

on laying out the procedural steps they must take, but they often ignore the
human component of change: steering their team toward the new vision,
transforming the culture, encouraging leaming and growth, and communicating.
A course shift will require employees to think, act, and behave differently to
align to the new direction. They will not automatically adapt to new processes.
It's only natural for them to feel fmstrated and to demonstrate some level of
resistance.
To guide your team through a successful transformation, consider these actions:
• Start with a vision. You need a common vision on how your team will
work together and with any stakeholders to make the change initiative a
reality. With a stated vision, you'll eliminate any confusion for your
employees or any stakeholders on how the team will adapt. Prioritize setting
this vision ahead of all other tasks. Your team members must remain
focused on and aligned with this vision, so try to avoid starting competing
initiatives at the same time. Introducing too many new things at once will
create an implosion of all efforts.
I
I
112 © 2015 SHRM
I
" e
Develop a strategy. After creating a vision, engage your team members

about how to get there. They and other stakeholders need to understand
their roles in implementing a strategy that will fulfill the vision.
Understand who your stakeholders are and what they need so that you are
) able to work with them. Questions you need to answer include the
) following:
• What new skills and abilities will employees need?
• How will employees learn them?
• What is the plan for communicating with employees and other
stakeholders about the change?
• How will you measure success?
• What is needed to make transformation stick?
e Be a champion of change. For successful change to occm, you need to be

a dynamic role model. Employees need to know that their leader is
personally committed to the success of the change. Practice this by
removing barriers, providing resources, ensuring learning, partncring with
stakeholders, supporting employees through change, measuring progress,
and quickly managing resistance.
- - - - - - - - - - - - - - - - - -- - - - - - - - -
• Communicate early and often. Middle and front-line leaders are the
primary communicators to employees. Communication from them should
be frequent and consistent. Everyone affected by the change needs to
)
know what it entails, why and how it is happening, and what's in it for
them. Don't impose change; engage employees in a conversation about it.
Ask them what they think and how they are feeling. They will talk if you
)
listen.
)
e Get in front of problems. Concern is a normal response to a change

initiative. Create a safe environment and a mechanism that allows
employees to air their issues and bring forth problems before there is any
chance of escalation or derailment. Create or use existing channels and
I
opportunities for obtaining feedback. Respond fairly, reasonably, and in
)
alignment with the vision of the change, regardless of anyone's role or
)
)
level in the organization. Keep in mind thai what you think is a small issue
may be a large concern tor the person atTected.
)
)
© 2015 SHRM 113

II
,,
just the design but also, more critically, the

organization design structure that involves a i nificant change in
centralizing common engineering resources that had previously been
Relationship dispersed across multiple operating divisions. This new central resource,
Management which would define common design processes and their deployment,
Competency would matrix out employees to the divisions on assignment. HR must get
in Action division leaders who previously had full control of their engineering
(continued resources to buy in and support the centralized engineering resource
on next design.
page)
The HR leader meets individually with the division heads representing
product design, manufacturing, and packaging and the new head of the
centralized engineering function to surface specific personal concerns
(those that would inhibit accomplishing their operating goals) and
organizational concerns (the practicality of making this work). The HR
leader summarizes all inputs, identifies and surfaces legitimate operating
concerns, and designs a process to alleviate individual concerns.
HR then conducts one-on-one meetings and facilitates a group design and
decision-making process to collectively identify operating guidelines and
determine service level agreements between the shared engineering
resource and each division.
114 © 2015 SHAM

Relationship This effort allows:

) Management • Each division leader to surface personal reservations and identify risk
Competency
) management plans to address their concerns thai they can share with
in Action
(conc:!uded)
the engineering division.
)
• Definition of how required engineering resources will be requested and
) made available in a timely manner.
) • Determining service level agreements to set expectations for service
quality and measurement.
\
• Identifying a conflict resolution process for issues that arise after
implementation.
The HR leader demonstrates the ability to manage interactions with key
stakeholders and provide appropriate recommendations and solutions
based on in-depth organizational knowledge and expertise by:
• Promoting successful relationships with stakeholders.
e Managing internal and external relationships in ways that promote the
best interests of all parties.
" Championing the view that organizational effectiveness benefits all
stakeholders.
• Negotiating with internal and external stakeholders to advance the
interests of the organization.
)
• Fostering a culture that supports intraorganizational relationships (e.g.,
silo-busting).
• Fostering effective team building among stakeholders.
• Designing strategic opportunities and venues for building employee
networks and relationships.
l--·--·.
Experts estimate that effective communication strategies can double employees'

) acceptance of change. However, often companies focus solely on tactics such as
) channels, messages, and timing while failing to do a contextual analysis and
) consider the audience. Some of the specific communication pitfalls and possible
remedies for them are the following:
)
e The wrong messengers are used. Studies have found that employees tend to
trust information from managers. Understanding the organization's culture
) will dictate who is the best messenger for change-the manager, the senior
) executive team, or HR.
)
) • Communication is too sudden. Leaders and managers need to prepare

employees for change, allow time for the message to sink in. and give them
an opporiunity to provide feedback before a change is initiated .
© 2015 SHRM • 115

• Communication is not aligned with business realities. Messages should be

honest and include the reasons behind the change and the projected
outcomes.
• Communication is too narrow. lfthe communication focuses too much on

detail and technicalities and docs not link change to the organization's goals,
it will not resonate with employees.
Executive leaders and HR professionals must be great communicators during

change. They should roll out a clear, universal, consistent message to everyone
in the organization at the same time, even across multiple sites and locations.
Managers should then meet both with their teams and one on one with each team
member.
.. . . . : .. . . . ·. ·. . . . ·.
·.. Lenders cxplaiti the changcnnd \vhy it is needed, be iruthl'ul about its
. benefits a;1d cha!lenges, listen and respond to cmplo)•ccs' reactions arid·
implications, and then ask and work tor individuals' commitment.
..
·------==================
An OED director for a film and television media company is asked by the
executive vice president (EVP) of television advertising sales to "do some
team building" with the disgruntled team of a senior vice president (SVP) who
also happens to bring in more revenue than the other four SVPs collectively.
Ethical The EVP says he wants to "build up the morale" in the "over-stressed
Practice department."
Competency
in Action After holding one-on-one interviews with all team members, it is highly evident
(continued on that, as a team, they are highly functional, and, in fact, that is what seems to
next page) hold them together. To a person, however, they describe the highly abusive,
inappropriate management style of their boss, the SVP. Some of them express
a significant fear of retribution just for having opened up to discuss what they
have experienced. Team members reveal being pressured to work 12- to 14-
hour days and skip family events. Some have experienced belittling comments
about their personal appearance made publicly, including derogatory
comments against protected classes. The SVP called one employee at his
mother's funeral and insisted that he come back to work that afternoon.
The OED director ensures confidentiality, to the maximum extent possible, of
who said what, reassures the employees of the company's no-retaliation
policy, and notes that some of these incidents need to be reported and that
could lead to a separate investigation.
116 ©2015SHRM
Ethical Before sharing feedback with the SVP, the OED director meets with the EVP
Practice and shares the very disconcerting, and potentially explosive, feedback that has
Competency been gathered. The EVP's response is, "! understand this is a problem. But let
in Action me be perfectly clear, you will not do anything to demotivate the SVP, cause
(concluded) him to leave, and put that revenue stream at risk." You share this with the
) head of HR and are told to "make it work and don't rock the boat."
) The OED director feels a personal sense of responsibility to address the serial
harassment doled out by the SVP. He knows, however, this is more than just a
) sense of his personal and professional integrity. He also has a hunch that now
that this information has been shared with a member of human resources and
in turn with the EVP, he has a duty to look into this further to understand any
additional legal risk to the company for not addressing this harassment.
The OED director meets with and shares the information with internal legal
counsel and solicits and gains suppor1 for building a legal and business case
to take action to stop this manager's behavior immediately. The case presents
a risk assessment of potential legal consequences for the company, the SVP,
and the EVP for knowing about these behaviors and not having taken action to
prevent them. The business case presents the impact of a mass exit by the
team reporting to the SVP. Once better aware of these risks, the EVP decides
to take action.
The OED director demonstrates the ability to integrate core values, integrity,
and accountability throughout all organizational and business practices by:
• Acting with personal, professional, and behavioral integrity.
e Responding immediately to all reports of unethical behavior or conflicts of
interest.
• Empowering all employees to report unethical behavior or conflicts of
)__._.. ______ ---------lnterestwi-tbout-feru=-o-f-reptisal. --------------------
) $ Showing consistency between espoused and enacted values.
) e Establishing oneself as a credible and trustworthy resource to whom
employees may voice concerns.
) e Challenging other executives and senior leaders when potential conflicts of
) interest arise.
• Withstanding politically motivated pressure when developing strategy.
• Setting the standard as a role model of ethical behavior by consistently
conforming to the highest ethical standards and practices.
) • Balancing organizational success and employee advocacy when creating
strategy.
)
)
)
)
)
© 2015 SHRM 117

Progress Check
1. HR receives word that several work groups have expressed "panic" about an OED initiative
because they are afraid restructuring of jobs may mean that their groups will be eliminated.
Which OED approach should be evaluated to avoid future problems with this type of
misunderstanding?
( ) a. Interpersonal
( ) b. Procedural
( ) c. Structural
( ) d. Work process
2. Which type of OED initiative might include job design, system change, and work-flow
analysis?
( ) a. Interpersonal
( ) b. Procedural
( ) c. Stmctural
( ) d. Work process
3. Which quality tool will show if a process is out of"normal" range?

( ) a. Process-flow analysis
( ) b. Control chart
( ) c. Scatter diagram
( ) d. Histogram
118 © 2015 SHRM

Progress Checl\ Answers

1. a (p. 99)
2. d (p. 99)
3. b (p. 105)
)
)
J
)
--·--·-
)
)
)
)
)
)
© 2015 SHRM 119

Section 4:
Measuring Organizational Effectiveness

and Development

• Creating and monitoring metrics to assess organizational development and eltectiveness.

• Change and culture metrics.
I
-----
II
I'
' Demonstrating Value
II
)
Any OED initiative needs to be evaluated for its effectiveness. One way to
show effectiveness is to have an accurate analysis at the beginning of the
initiative, which is accompanied by metrics with which to measure the
I initiative. These metrics are used to measure change over the course of the
I initiative. That change is compared to the investment made for the initiative
to demonstrate the return on investment (ROI). While the calculation is a
I l
I J simple equation that shows that the retum is measurably greater than the
I investment, the trickier part is actually defining the terms "return" and
)
"investment" for a particular development initiative and then quantifying
)
them. For example:
)
)
)
• Sample returns. Average value of increased production or service units;
) increased quality of units; proficiency; reduced occurrence of errors,
accidents, waste, damage, repetition, and downtime; reduced
absenteeism; reduced time spent by other employees instructing or
waiting for others; improved customer/employee/public relationships.
• Sample investments. Finances (costs of delivery and lost opportunities);

___time (time invested versus..time-spentf,-reiJHtatien;-relatienshi:pS":------···--·· --···--
)
) Metrics should be used to measure the effectiveness of the OED change

effort itself, but eventually the impact of the change should be noted
(positively or adversely) in the metrics the organization uses to measure its
performance.
OED initiatives often are developed to remediate an identitled business gap

or performance problem such as poor product development cycle times, poor
customer satisfaction metrics, cost overruns, or poor safety metrics. Metrics
identifying these problems all indicate oppornmities for organizational
improvements and associated competencies to get there. These metrics
provide the base line from which the OED initiative will be measured. For
example, poor safety metrics might have been identitled through an analysis
of the number of workers' compensation claims. The number can he
compared to and analyzed after a safety initiative to see if the initiative had a
positive or inadequate effect on the number of claims.
© 2015 SHAM 121

Cultural Assessment
An example of an initiative that may be difficult to quantify would be an
organizational desire to shift culture. How do you measure this? Begin by
identifying the key dimensions of culture, such as values, degree of hierarchy,
people and task orientations, and more. Then, by performing these next steps,
you will help the organization assess its culture:
o Develop a cultural assessment instrument. This instJUment should enable

members of the organization to rate the organization on the key cultural
dimensions.
• Administer the assessment. Survey respondents should include individuals

at all levels and in all functions, divisions, and geographical units of the
organization.
o Analyze and communicate assessment results. Leaders and HR executives

should discuss areas of agreement and disagreement about the organization's
culture.
•
____*_ _::C::_o.nduct employee focus groups. Just because top management leaders
agree on culture-does not mean that all-employees see !lungs_____
that way.
• Discuss culture until consensus forms around key issues. Focus on "Who
are we?" and "What makes us who we are?" Organizations that decide that
where they are now is not where they want to be may need to look at moving
the organization to embrace a different culture.
Cultural assessments, and other activities such as cultural audits and 360-degree
feedback, may also help uncover cultural inconsistencies. They help evaluate
how the current culture supports or detraets from the business strategy. What sort
of culture is most in line with the company's strategy, and how does this
compare to the current way things are done? Then leaders and HR professionals
can eliminate the inconsistencies and develop strategies that move toward
improving the company's ability to meet or exceed its business objectives. For
example, if customer service is a focus of the company's cultnre, evaluate how
much time employees spend visiting customer sites, how much interaction they
I 122 © 2015 SHRM

i ORGANIZATION Organizational Effectiveness and Development
L have with customers, what customer service training they receive, and other
I
indicators of a customer service focus. These tangible customer service
indicators can then be measured before and after the OED initiative to provide
dala for the initiative's success or failure.
I
)
)
)
Additional information on metrics is found in the "Technology and Data"
Functional Area in this Organization module.
)
)
)
)
·--·---·--·-- ··--·---··-·--·--··--·-
)
)
)
)
)
© 2015 SHRM 123

1. What is a measure of the business impact of an OED initiative?

( ) a. Mentoring time
( ) b. Time invested
( ) c. Cost of delivery
( )
/
d. Increased production
2. What would indicate a cultural shift as a result of an OED change initiative?

( ) a. Fewer product returns due to quality issues
( ) b. Summarized focus group data for management
( ) c. Consensus on key cultural issues
( ) d. Number of cultural assessments collected
1I
I
© 2015 SHRM
124
l.d(p.121)
I 2. a (p. 122)
!
)
)
)
)
)
)
)
)
)
)
---------------------------------- ------------
------···--· ------------------------
© 2015 SHRM 125
Workforce Management enables the organization to meet its talent needs and
close critical skill gaps using data-driven processes (e.g., worldorce planning,
succession planning) that inform HR initiatives. HR demonstrates value by
facilitating financial and operational growth, continuity, or stability.
lj - -· •. _
)

Key responsibilities for all HR professionals • Business Acumen-The ability to
include: understand the organization's evolutionary
• Implementing approaches (e.g., "buy or stage (introduction, growth, maturity, or
build") to ensure that appropriate decline) and ensure that the strategic plan
) workforce levels exist to deliver on addresses the unique needs of each
organizational goals ·and objectives. stage, in terms of size and structure.
)
• Planning short-term strategies to build • Critical Evaluation-The ability to
) interpret growth or retraction patterns and
individual skills, knowledge, abilities, and
l competencies that support organizational data, in order to make decisions and
) bench strength. recommendations as to organizational
size, structure, and reporting relationships,
• Implementing strategies for restructuring
as well as the acquisition (internally
the organization (e.g., acquisition,
developed or externally obtained) of
downsizing).
competencies, knowledge, skills, and
• Implementing succession plans for abilities.
optimizing organizational growth and
• Relationship Management-The ability to
effectiveness.
manage interactions with key stakeholders
• Designing and implementing programs and provide appropriate recommendations
and solutions for management and and solutions that address current and
) retention of organizational knowledge. future organizational gaps.
)
Key responsibilities for advanced HR
1 professionals include: Knowledge Topics:
) • Consulting on and initiating strategies to • Communication techniques
) create a robust workforce plan that • Employee development techniques and
current and futurE) __________
organizational needs, including workforce • Knowledge management, retention, and
l size and structure. transfer techniques
• Initiating and designing strategies (e.g., • Learning theories and philosophies
leadership development, succession • Needs assessment techniques (e.g.,
planning, training) to address organizational, training)
organizational gaps between current and • Restructuring approaches
J future employees' competencies, • Succession planning techniques
knowledge, skills, and abilities. • Workforce planning techniques and
• Designing and implementing strategies to analyses (e.g., gap and solution,
retain organizational knowledge. implementation and evaluation, supply and
• Designing strategies for restructuring the demand, workforce profile)
organization (e.g., acquisition,
downsizing).
.)
)
!i The most important asset of any organization may be its people. Without a
competent and motivated workforce, no organization can survive. Without skilled
and motivated people, products and services cannot be created, value cannot be
Jl
delivered to customers, and the most well-designed strategy cannot be successful.
II
I
[!
l
Workforce management encompasses all the activities needed to ensure that
the skills, knowledge, abilities, and performance ofthe workforce meet current
and future organizational and individual needs. This includes organizational
development, workforce planning, talent management, employee development,
and knowledge management.
Human resources plays a vital role in these activities, ensuring that the right
people arc in the right job with the right skills-and at the right time. In addition
i
to administering policies and procedures, HR may also actively participate in
organizational strategy and act as business pmtner for all other functions. This
requires HR professionals to understand the "big picture" and how workforce
management can be aligned with the organization's overall strategy.
i ·--- Fl.inctional Area Overview . -·--···--····--··------
r This Functional Area reviews the key elements of workforce management and
the role HR plays in each element. In line with the SHRM Body of Competency
and Knowledge, it covers the following topics:
• Section 1, "Organizational Workforce Requirements," looks at the key areas
of organizational structure, restructuring, and organizational development.
• Section 2, "Workforce Planning," describes the workforce planning and
analysis process.
• Section 3, "Employee Development," covers talent management,
performance management, and succession planning.
• Section 4, "Knowledge Management," looks at knowledge management and
the related use of HR information technology.
Upon completion, you will have a clear picture of how to ensure that HR can
effectively meet the workforce needs of organizations, both today and in the
future.
128 © 2015 SHRM

Section1:
Organizational Workforce Requirements

)
)
)
• Implementing approaches (e.g., "buy or build") to ensure that appropriate workforce levels
exist to deliver on organizational goals and objectives.
• Consulting on and initiating strategies to create a robust workforce planlhat addresses
current and future organizational needs, including workforce size and structure.
---.-trrittatiiT[aTid designing strategres (e.g., leaaershrpaevelopment, succession planning,
training) to address organizational gaps between current and future employees'
competencies, knowledge, sliills, and abilities.
• Designing strategies for restructuring the organizatron (e.g., acquisition, downsizing).
)
)
• Employee development techniques and approaches.
• Restructuring approaches.
• Workforce planning techniques and analyses (e.g., gap and solution, implementation and
evaluation, supply and demand, workforce profile).
ORGANIZATION Workforce Management
Workforce Requirements
Every organization has different workforce requirements. The number of
employees; the skiiis, knowledge, and expertise they must have; the way they are
deployed-all are dependent on the structure of the organization. As a result, it is
important for HR professionals to understand the specifics ofthe organization they
serve and the roles they play in ensuring that the right workforce is in place to
meet organizational needs.
In this section, we will examine three areas of particular importance to HR:

e Organizational structure, including strategic orientation
& Restructuring, including its drivers and forms
• Organizational development (OD), including organizational culture, HR's role
in OD, and examples of OD intervention strategies
Organizational Structure
An organization's workforce requirements are largely determined by its structure:
the size and scope of the organization, necessary functions, how communication
happens, and how decisions are made.
-··--··--·--··--
"-Tile' structure of an brgmiizatioh refersmtmw-all functions<ne aligned
the best performance and synergy. The optimal structure for an organization
depends on a variety offactors: the industry, the mission and goals of the
organization, the strategic direction it has chosen, and the marketplace it serves.
Having an understanding of the elements of organizational structures allows HR

to ensure that workforce requirements are met. The goal is to have a structure that
facilitates value creation and strategic alignment.
There are several altemativcs to structuring an organization:
c Functional. Departments arc defined by what services they contribute to the

organization's overall mission, such as marketing and sales, operations, and
HR.
0 Product. Functional departments are grouped under major product divisions,

with each division having its own marketing, sales, manufacturing, and
finance functions.
130 © 2015 SHAM

,,) ORGANIZATION Workforce Management
)
• Geographic. This is similar to a product structure, with the exception that
geographic regions-rather than products-define the organizational chart
e Hybrid. These types of structures combine elements of the functional,

) product, and geographic structures; common examples include:
) " Front-back, where the organization is divided into "front" fimctions
defined by geographic locations or customer types.
• Matrix, which combines departmentalization by division and function to
gain the benefits of both.
) Organizational structure is also discussed in the "Structure of the HR Function"

) Functional Area in this Organization module.
Restructuring
No organization can maximize success without continually evaluating its structure.
Restructuring is the act of reorganizing legal, ownership, operational, or other
) organizational structures. It is a proactive adjustment to meet changing business
needs.
Restructuring occurs when an organization makes changes in the size, number, or

l----·---·--- relatiorts!llpofdepamnents. After restriictunng, certam groups wilTfepoi'ftorufterent--
)
departments; some new departments may be created while others are disbanded.
I
) HR plays a crucial role in restructuring, helping the organization "right-size"

) resources relative to market demand or take advantage of cost synergies after a
merger, acquisition, or joint venture. Restructming can also release least-productive
) resources and cut costs to boost profitability.
)
Drivers of Restructuring
Organizations restructure for a number of reasons. Dr. Gaanyesh Kulkami, CEO
and Principle Consultant of enveJiis, a Mumbai-based consultancy, identifies four
major drivers of restmctming:
• Strategy. When organizations change their strategy, they may create new
divisions to facilitate new prodLtcts or services or to move into new markets.
Y The new strategy may mean stat! increases in some areas and decreases in
) others, which will then require restructuring.
© 2015 SHRM 131

e Structure. Organizations rearrange their stmcture to follow a new business

model, move into new markets, produce new products or services, improve
efficiency, or reduce costs. Restructuring is then required to meet the needs of
the new organization.
= Downsizing. Organizations commonly downsize to remain fhnctional during a

loss of revenue. They may choose to close departments, drop product lines, lay
off staff, or sell facilities. Restmcturing may then be required to meet the needs
of the new, smaller organization.
Expansion. When an organization expands, new departments may be required

to accommodate new products or facilities. The structure is then rearranged to
include new staff and departments.
Forms of Restructuring
Competition, the drive for greater productivity, and the need for quick response to
marketplace changes have made traditional organizational boundaries more fluid. As
a result, restructuring is often necessary, and it may take one of several forms.
Redistribution of Decision-Making Authority

organizatiBns grow larg€r,.tmditiona! may _ __
cumbersome that the organizations become dangerously slow in responding to
competitive threats or technological changes and opportunities. As a result,
decision-making authority may move downward in the organization---toward line
managers-and outward-from headquarters to field.
These shifts affect HR as well. The responsibilities in the operational HR role will
continue to be shared with line management. A variety of activities, such as
recruiting for open positions and resolving employee complaints, are daily
management functions that can often be resolved by or shared with the line
manager. The shift in responsibilities to line managers may require a matching
decentralization of HR, a sharing with line management of some of the historical
HR functions, or a relocation of many operational activities from headquarters to
regional offices.
Extended Organization
The extended organization is becoming more common today as supply chain
paiinen; create processes and infonnation channels that allow their organizations to
132 © 2015 SHRM

)
) ORGANIZATION Workforce Management
i communicate and collaborate fluidly at many different functional points. The

businesses remain separate entities but may appear to outsiders as one entity.
I Extended organizations are formed through the use of outsourcing, strategic
I alliances, or partnerships.
)
Mergers and Acquisitions (M&A) and Divestiture

') Organizations may also try to enhance their productivity and competitiveness by
adding to the value of the firm (e.g., increasing assets or accessing new markets)
through mergers and acquisitions (M&A) or by shedding assets that do not
) contribute to the bottom line through divestiture. In both cases, restructuring is
) required to align leadership and functions.
)
Recent studies have shown that the early involvement of HR in these activities helps
ensure that the strategic actions achieve their intended effects. HR roles in M&As
)
include:
• Preparing HR staff for M&A activity.
• Performing due diligence.
• Planning integration.
e Imp Iemen ting, monitoring, and measuring.
J
)- ___________In adivestiture, HR must analyze the fun,:tions ofthe divested unit ami, ________
if the divestiture leaves a gap, detennine if the cost of filling the gap outweighs
the financial benefits of the divestiture. If divestiture is considered the better
option, this is still a major change initiative and must be approached as such. The
) potential loss of working relationships and necessary changes in work processes
) require the same type of planning, implementation to plan, and monitoring as
) withM&As,
More infonnation on mergers, acquisitions, and divestiture can be found in the

)
)
Downsizing
When an organization is facing financial pressures or changing marketplace
conditions, they may downsize by reducing staff; eliminating departments, or
otherwise restructuring.
Downsizing can be accomplished through layoffs, reductions in force, or

termination. When determining which employees should be laid employers
© 2015 SHRM 133

usually consider skills, work record, and seniority. A straight seniority approach
is most objective hut may not meet the employer's iong-tenn needs. In white-
collar workforce reductions, less consideration is customarily given to seniority
and more is given to the perfonnance and skills of the individual as matched
against the requirements of the post-layoff organization.
Possible alternatives to downsizing include asking employees to sustain pay cuts,

offering voluntary tetmination and/or retirement with additional benefits, or
asking employees to accept a rednced work schedule.
The process of managing the way peopie leave an organization is called

organizational exit or offboarding. HR's role in managing the offboarding of
employees is to:
e Handle the administrative processes.
• Coach supervisors to handle the termination discussions.
e Gather information that will be useful in improving the work experience for
cun-ent and future employees.
• Implement lessons learned.
HR must also help the retained employees confront challenges such as:
job
• Increased workload.
• Different work assignments.
s Changed organizational priorities.
• Departure of leaders and managers who once defined the organization's
character.
Departure of long-term employees who were knowledgeable about
operations.
• Loss of colleagues, possibly friends ("survivor guilt").
® Fear that their own jobs may be in jeopardy, causing them lo look for other
employment.
l-IR can take the tollowing measures after downsizing:

Clearly communicate the rationale for the new goals and structures.
• Provide employees with specific examples of behaviors that arc appreciated
as well as what will not be tolerated.
134 © 2015 SHRM

)
• Ensure that the transition period is as speedy as possible; the longer things get
) dragged out, the more likely employees are to view the situation as leadership
failure.
• Suppot1 leaders and managers in leading by example and helping employees
sec how new challenges can be met.
) • Clearly define job definitions and responsibilities.
• Realign rewards as necessary to support organizational goals.
An H R practitioner for a steel fabrication plant learns thai there is a

possibility to introduce a new product to the mix. Understanding that the
current staff is working at capacity on the existing products, the HR
practitioner takes a look at the experience and training of the existing team
Business
.Acumen members and their potential to learn and lead new product activities. The
Competency HR practitioner then identifies a local temporary staffing organization that
)
in Action can provide quality temporary employees to either back-fill the current work
.) or work on the new project.
The HR practitioner also identifies the costs for the human resources
needed and for any training and development activities that would be
)
required to support the new product. She approaches the plant manager
with a plan that will support his expansion strategy and provides the
financial and other pertinent data he needs to include in his business
By choosing this approac11, the HR practitioner is able to exhibit

understanding of the business needs and requirements and also ensures
that the manager will have the information needed to successfully introduce
a new product set to the plant.
.
I
•
Organizational interventions
An organization's restructuring often calls for organizational development
)
(OD) interventions to help the organization's members adjust to change.
00 interventions are appropriate when an organization:

• Experiences a merger or acquisition that introduces a culture that is not
compatible.
• Experiences low trust, high turnover, or high stress.
• Lacks the ability to manage conflict.
)
)
J
© 2015 SHRM 135
During these times, HR often acts as a change agent. A change agent is

responsible for positively portraying the upcoming change during the
facilitation of the actual change activities. ln the role of change agent, the
HR professional can help the organization understand the full range of HR
development programs and processes available to support the OD
intervention.
OD interventions occur on both a large and small scale. They can be

changes that improve the effectiveness ofthe organization (e.g., a new
employee involvement program) or that enhance the relations of groups or
individuals (e.g.,job rotation within a team).
Common types of OD interventions include team building, flexible work

and staffing, diversity programs, and quality programs. For example, if an
organization decides to lay off ten employees during a downsizing effort,
the HR professional may facilitate a team-building workshop for the
remaining team members, focused on redesigning the group structure and
process. Flexible work/staffing interventions help employees deal with the
pressures exerted by work and family issues that may directly affect an
individual's ability to cope with change; strategies include flexible work
1
1 ··---··--- telecommuting, phased telitement, and othet option"t.c---
OD interventions can improve:

• Productivity (efficiency and effectiveness).
• People's satisfaction with the quality of their work life.
o The ability of the organization to revitalize and develop itself over
time.
o Organizational processes and outputs.
HR professionals should be involved in evaluating the effectiveness of the

intervention strategy, even if they were not directly involved in its
implementation. For example, if a third-party contractor was hired to
conduct change workshops, the internal HR professional should partner
with the contractor in designing the evaluation of the program, as the HR
professional understands the internal nuances of the culture and will be
able to show management the retum on investment of this HR intervention.
136 © 2015 SHRM

) Organizational development is covered in more detail in the "Organizational

Effectiveness and Development" Functional Area in this Organization module,
l
)I
and the change management process is examined more closely in the "Business
I ) and HR Strategy" Functional Area in the Strategy module. Flexible work and
IJ staffing is also discussed later in this Functional Area, and additional information
can be found in the "Employee Engagement" Functional Area in the People
module.
l
)
)
)
)
)
,)
)
}.-----···---·--··----·--··-----·--·--------
.)
l
)
)
© 2015 SHRM 137
)
Proaress Check
Directions: Choose the best answer to each qnestion.
1. In which type of organizational structure are departments defined by the services they
contribute to the organization's overall mission?
( ) a. Product
( ) b. Geographic
( ) c. Functional
( ) d. Hybrid
2. What is a driver of restructuring?

( ) a. HR initiatives
( ) b. Levels of hierarchy
( ) c. Interest rates
( ) d. Strategy
3. What is one role for I-IR in a merger or acquisition?

( ) a . Searching for appropriate candidates
.....
( ) b. Perfonriing due diligence ··----
( ) c. Developing press releases

( d. Creating cost/benefit criteria
4. What is the process of managing the way people leave an organization?

( ) a. Succession planning
( ) b. Organizational divergence
( ) c. Offboarding
( ) d. Outbounding
5. What is a common type of OD intervention?

( ) a. Mergers and acquisitions
( ) b. Team building
( ) c. Budgeting
( ) d. Perfonnance reviews
138 © 2015 SHRM

I
j Progress Check Answers
) 1. c (p. 130)
l. ) 2. d (p. 131)
l 3. b (p. 133)
) 4. c (p. 134)
I
'
J 5. b (p. 136)
.J
)
)
)
)
l
)
)
© 2015 SHRM 139

Section 2:
VVorkforce Planning

'
exist to deliver on organizational goals and objectives.
I1----- • Consulting on and initiating strategies to create a robust workforce plan that addresses
current and future organizational needs, including workforce size and structure.

r
• Workforce planning techniques and analyses (e.g., gap and solution, implementation and
evaluation, supply and demand, workforce profile).
\IVorkforce Planning Process

From the inception of the HR function, one ofHR's roles has been staffing the
I organization: identifying organizational human capital needs and then providing an
adequate supply of qualified individuals for jobs in the organization. Through
staffing, the organization's current and future needs for knowledge, skills, and
)
abilities (KSAs) must be met. As such, staffing plans must support an
organization's strategic plans.
Ideally, HR is directly involved in the organization's strategic planning process,

bnt it may be responsible only for forecasting an HR planning strategy. Some
organizations develop separate strategic and HR plans; others combine them into
one document. Either way, it is vital that both processes are aligned. HR planning
must consider the organizational strategy in order to anticipate employee skill and
)
· labor needs. This requires that the HR professional look at where the organization
)
is now as well as where the organization intends to be in the future.
Workforce planning is the process of analyzing the organization's workforce and

determining steps required to prepare for future needs. Workforce planning
strategically aligns an organization's human capital with its business direction.
A workforce analysis examines the cutTent and future workforce needs and
helps provide answers to questions that shape an organization's staft1ng strategy.
© 2015 SHRM 141

By taking a systematic approach to anticipate human capital needs, HR

professionals can help to ensure that the appropriate KSAs will be available
when needed to accomplish organizational goals and objectives.
Forecasting involves identifying expected future conditions based on information

about the past and the present. It is a helpful planning method when considering
HR supply and projecting future demand. The actions to be taken may be
influenced by a variety of internal factors (e.g., age of the workforce) as well as
external factors (e.g., skill availability). In addition, HR must increasingly
monitor and control the cost of engaging human capital.
Forecasts are always subject to some enor, as the conditions on which they are
based may change. But with careful planning, HR professionals can generally
forecast with enough accuracy to help sustain organizational objectives and
strategies.
Every organization has a workforce mix that is optimal to meet its unique needs.
Even so, there is a fairly standard workforce analysis process that is used to
identify staffing needs. This process typically examines four areas:
• Supply analysis
·····-···--····-·· 0 DeJnam:J:·anatys · --I
0 Gap analysis
e Solution analysis
The first three areas combine to provide a workforce profile: a picture of the
cun·ent state of the organization's workforce as well as a view of future
requirements. From those views, the final area looks at potential ways to fill
current gaps and provide for the future.
Figure I on the next page illustrates the workforce analysis process and the key
questions addressed at each stage.
Supply Analysis
The workforce analysis process begins by analyzing supply: the skill mix in the
organi:.-:ation as it exists now and the future needs based on attrition and
organizational growth or adjustment.
142 ©
)
}
) \1\fork.force Planning Process

'•
' From the inception of the HR function, one ofHR's roles has been staffing the
organization: identifying organizational human capital needs and then providing an
,.'
adequate supply of qualified individuals for jobs in the organization. Through
staffing, the organization's current and future needs for knowledge, skills, and
)
,, abilities (KSAs) must be met. As such, staffing plans must supp01t an
' organization's strategic plans.
Ideally, HR is directly involved in the organization's strategic planning process,

but it may be responsible only for forecasting an HR planning strategy. Some
)
organizations develop separate strategic and HR plans; others combine them into
J
one document. Either way, it is vital that both processes are aligned. l-IR planning
)
must consider the organizational strategy in order to anticipate employee skill and
)
labor needs. This requires that the l-IR professional look at where the organization
is now as well as where the organization intends to be in the future.
Workforce planning is the process of analyzing the organization's workforce and

determining steps required to prepare for future needs. Workforce planning
strategically aligns an organization's human capital with its business direction.
A workforce analysis examines the current and future workforce needs and
l helps provide answers to questions that shape an organization's stafl1ng strategy.
.l
)
... .. -· ... .. - - - - - - · - · - - -
© 2015 SHAM 141

By taking a systematic approach to anticipate human capital needs, HR

professionals can help to ensure that the appropriate KSAs will be available
when needed to accomplish organizational goals and objectives.
Forecasting involves identifying expected future conditions based on information

about the past and the present. It is a helpful planning method when considering
HR supply and projecting future demand. The actions to be taken may be
influenced by a variety of internal factors (e.g., age of the workforce) as well as
external factors (e.g., skili availability). In addition, HR must increasingly
monitor and control the cost of engaging human capital.
Forecasts are always subject to some error, as the conditions on which they are
based may change. But with careful planning, HR professionals can generally
forecast with enough accuracy to help sustain organizational objectives and
strategies.
Every organization has a workforce mix that is optimal to meet its unique needs.
Even so, there is a fairly standard workforce analysis process that is used to
identify staffing needs. This process typically examines four areas:
• Supply analysis
• Demand analys;,;· -----
• Gap analysis
e Solution analysis
The first three areas combine to provide a workforce profile: a picture of the
current state of the organization's workforce as well as a view of future
requirements. From those views, the final area looks at potential ways to fill
current gaps and provide for the future.
Figure I on the next page illustrates the workforce analysis process and the key
questions addressed at each stage.
Supply Analysis
The workforce analysis process begins by analyzing supply: the skill mix in the
organio<ation as it exists now and the future needs based on attrition and
organizational growth or adjustment.
142 © 2015 SHRM

)
';
)
Supply Analysis: Where are we now? What do we have?
) • Do we have the right personnel mix to enable the organization to achieve its short-term and long-
term business goals?
I l
•
•
What KSAs are lacking?
Do we need to expand our workforce levels to meet business demand 7
! • What internal redeployment, development, and/or cross-training will meet our supply needs?
j•
,I
) Demand Analysis: Where do we want to be? What do we need?
• Are we retrenching or growing? How fast? In what areas?

• If the organization is moving in a new direction, does the current staff have the needed KSAs to
be successful?
• Does the organization need to redefine job descriptions to achieve its long-term goals?
• How many employees are needed in each job area?
Gap Analysis: What is lacking? What knowledge, skills, and abilities currently
exist and are needed in the future?
• Where are the KSA gaps in our current supply?

• What competencies currently exist in the organization?
• What competencies will be needed in the luiure 7
• Where are the gaps?
I
'
I
)
)
Solution Analysis: What can we afford? How will we get what we need?
• How much money will be allocated to staffing future KSAs?

• Should we build, buy, or borrow the talent?
y • Will we look internally or externally to fill vacancies?

• What sources shculd we use?
• Can the gaps be filled by workers in the local area, or will we have to seek applicants elsewhere?
)
• What level of applicants are we seeking to I ill vacancies? Is it best to hire people at a full
performance level, or should we seek entry-level candidates and train/develop them?
• Are the needed KSAs specialized and require individuals wtth advance training?
• Wili we need the KSAs shcrt-term or long-term? Full-time or part-time'!
• What are the costs versus the benefits of the recruitment strategy?
)
) Figure 1: Workforce Analysis Process
)
')
© 2015 SHRM 143

I
)
Accurate supply forecasts account for movement into and inside the organization
(new hires, promotions, and internal transfers) and out of the organization I )
(resignations, retirements, involuntary terminations, and discharges).
Forecast approaches include a variety of quantitative and qualitative analyses.

Specific analysis tools may range from a manager's "best guess" to rigorous
mathematical applications.
I
'')
For the HR professional, a logical starting place is to consult with line managers.
Skills and time utilization are examined to determine ways the organization can
use its existing human resource capabilities more fully. This way, HR is able to
project the available supply of talent by analyzing whether:
• Employees are using their time appropriately.
• Work should be reallocated to provide more effective use of skills.
• Jobs need to be redesigned.
• Productivity rates are changing.
• Current staff has the ability to achieve the desired outputs.
• Staff growth is exceeding the expansion of outputs.
@ The staff has the right kinds of skills.
• Skills are not being applied or are missing.
The information from this analysis identifies time and skills that are not being
appropriately applied.
Having assessed current staff competencies, projections of internal supply might

seem to be a simple calculation: Consider the number of people in each job, along
with the number of people who will transfer or who will leave the organization, and
the number of people who will be lett provides an estimate of the internal supply.
Untortunately, reality is rarely that simple. There are many variables involved in
forecasting, such as:
• Will the jobs remain the same?
e What are the anticipated and required employee skill sets?
o Will some jobs be eliminated while others are added or combined?
• Will historical data hold true in the future?
e Will new employees compare to fmmer employees in terms of productivity,
punctuality, sick days, attitudes, and leadership abilities')
144 © 2015 SHRM

j As a result, there are impotiant tools that HR professionals use to improve their
forecasts.
Trend and Ratio Analysis Projections

Trend and ratio analyses use statistics to determine whether relationships exist
between two variables. A manager forecasting HR needs must look for variables
related to HR that appear to change predictably over time--in short, looking at
past performance as a predictor of the future.
Here is an example of a trend analysis. Using the six years of performance data
in Figure 2, the HR manager of ABC Medical wants to project the demand for
I employees in years seven and eight.
)
)
et. <•r,·.·r······
·. .,.•.•·.·. ·. ·.•·.•·..
i>
'(e.'itr.·..' ·.· ..a· ·,·.·."'. .
·.·.·.· .· ·.· c·.·...·s·.· ·.s·.·.·.·. ······,,
. . ·n· ..••·..'...· .· .·,·. .m
•.•.••·•.•
·.·.·,·.·
' .• ·. ,·.·. _·,.. .•
··.o·.·
. . ...·. ·s·.·.·.·).···.··.
..·.··.·.n·.·.· .
·. ·. ·.•·.-•.· •·•· •· · .•.· •· .·. P · .P.·.
. .· .·.·.r.·.··.<!
.•b..•.•·.o········,··.···r.:.·..
·.·.·····.L·.·.·.·.·.a ..·•... u.·.·.·.. c.· t.•. .
..• ·.'·'·"···········.i..t. Y.·. . •.·.·•· ·•· .·. . •.•.•. •. • . •.• .•.•.· ·• ·•· ·.•·. ·.······'·f···'··.
.
<(nl.liJ:ll:!!!rPf.l,lrnPioy(;Jf.!!?)
. . . .
.
R.·.······. .•.•. . o.·····. e.'.·'.m.•. ·.·.····.a.'·.
. . . . .. . .
r.• ·.·.··.·.+.<.·.··
d.··.·.·····.····...•.....
. . . .
( i 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
6
1--···--- - - - - - - - - -
I
$4.283
$4.446
=1
-Ftgure 2: Performance aTA13C Medicc!.l ______..- - · - · - - · - - · - - -
$'12,520
$12,520
342
355
···-·-----
To accomplish this, a simple trend analysis (as shown in Figure 3) can be used that
plots the number of employees each year for the last six years and then simply
projects this trend out for two more years to predict the number of employees needed.
3801
370 "
360 "
350 I •
Number of 3401 ;i
Employees 330
... I
G l
320
'i'o//
310
2 3 4 5 6 7 8
) Years
i)
Figure 3: Trend Analysis for ABC Medical
© 2015 SHRM 145

A statistical formula can be used to calculate the slope of this trend line.
Whatever means is used, the trend line is continued out for the next two years to
predict the number of employees needed.
The HR manager for ABC Medical could also use a ratio analysis. The data from
Figure 2 shows that labor productivity (Sales 7 Number of employees) has
remained at $12,520 for the past four years. If the management of ABC Medical
assumes that labor productivity will stay at $12,520 and sales are predicted to
increase to $5 million in year seven, the calculation is as follows:
$5,000,000 7$12,520 = 399 employees
Based on this ratio analysis, the HR manager will need to hire 44 new employees
(399- 355) to achieve the increase in sales.
However, if management believes that new efficiencies created by better training

and equipment will increase labor productivity to $13,000 for year seven, the
following ratio applies:
$5,000,000 7$13,000 = 384 employees
In this case: the HR manager will need to hire 29 new employees

to achieve the increase in sales.
The ability to predict variables such as level of sales, production, or service

within workable limits or ranges most often becomes the foundation for
making the HR forecast. Therefore, in trend and ratio analyses, when figures
are projected into the future, the key detenninant is whether relationships will
remain the sam<:. In this case, the clear identification of assumptions
underlying the forecast is critical to interpretation and acceptance of the
information.
Turnover Analysis
In our ABC Medical examples, the assumption was that was no turnover. But
turnover must be analyzed and factored in when estimating human capital
requirements. Employees may leave an organization for a variety of reasons, ' i
such as retirement, resignation, dismissal, layoff, disability, leave of absence, or

I j
death. Turnover is a metric that is normally expressed using an annualized
146 © 2015 SHRM

)
f,
i formula that tracks the number of separations and the total number of workforce
employees per month.
figure 4 shows ABC Medical's workplace data: monthly separations and total
workforce numbers for one year.
) January 15 250
February 5 245
) March 5 240
----
April 2 238
----
May 3 235
June 10 225
( ) July 5 220
August 0 220
---·- ----
September 4 216
·······-----
October 1 215
) November 15 200
) December 0 200
----------··-
--T 5- 2;7.04
Figure 4: Separations at ABC Medical

( y
To calculate the annualized employee turnover percentage, the HR manager:

,, o Divides the total number of employees for the year (2,704) by 12months.
l
'} This yields an average monthly workforce of225 employees.

Divides the number of separations for the year by the average number of
l
' !
employees per month:
'.)
65
- "' 28.9%
225
)
Turnover can also he calculated for shorter time periods (e.g., the first three
months of the year), and then the results can be annualized to project what the
\ annual turnover would be for i 2 months.
J . --..-··-··-·----...
© 2015 SHRM 147
Two common methods for projecting turnover are:

e Examining previous turnover rates and adjusting them to ret1ect knowledge
of changing conditions such as pay rates and the economy.
• Analyzing trends in turnover rates for particular geographic locations or
occupational categories.
Flow Analysis
Employees can flow in, up, clown, across, and out of an organization, so
examining this flow is important in supply analysis. To accomplish this, HR
professionals must separate employees by levels, occupational groupings, or
organizational units.
There are three methods to accomplish flow analysis:
• Analyze the career development plans for employees on an aggregate basis

by job function, division, or other organizational classification. Using the
target positions for employees and their rating of readiness for the positions
(e.g., immediately, one year, two years), the availability of talent for
positions can be projected.
Obtain estimates fi·om each diVISIOn of transfers and promotions mto, otlnir,-··-·· ····--,
and within the divisions. These estimates may be aggregate and may reflect
the subjective probability of movement based on histolical data.
e Project future movement through statistical analysis. Models of employee

flows project the numbers of employees who will remain in an organizational
classification based on past transition rates or probabilities. One caution,
,' I
though: Past transition rates and probabilities may have limited value in
predicting future trends. Like everything else, these too are affected by I
change. ' I
Figure 5 on the next page shows movement in the shipping department of ABC
Medical for the first quarter of the year.
This simple flow analysis allows the HR manager to visualize the change in the
department and predict future staffing needs.
148 © 2015 SHRM

)
I l
Promotions 5
Resignations 13
i( !' Transfers 5 Demotions 0
Promotions 4 Retirements 4
New hires 15 Terminations 3
) Recalls 10 Layoffs 15
Total 34 Total 40
)
Figure 5: Flow Analysis tor ABC Medical
)
\J Demand Analysis
Demand analysis considers the model organization of the future and its human
capital needs. Once the supply model is developed, data can be compared to the
demand analysis projections and gaps can be identitied. including numbers of
employees and gaps in skills.
)
L-------+AOmarul-anal:ysis..sAookl-not project
scenarios should be considered, as the potential impact on gaps may be
considerably different.
Demand analysis requires an understanding of both internal and external

environments that may affect demand. This is accomplished through the use of
) environmental scanning, which is covered in the "Business and HR Strategy"
)
) Various techniques may be used in demand analysis. Two of the most common
arc judgmental forecasts and statistical forecasts. In both, the basic issue is
forecasting the number of employees and the skills required to meet future
organizational goals.
. I'
Judgmental Forecasts
) Judgmental forecasts usc information n·om the past and present to predict
expected future conditions. These forecasts utilize information provided by
J
) individuals associated with the industry to project future industry needs.
)
© 2015 SHRM 149
)
To effectively use judgmental forecasting, HR needs estimates of:

• New positions or skill sets needed.
• Positions to be changed, eliminated, or left unfilled.
• Job sharing.
• Job design needs or organizational structure changes.
• Costs of changes.
• Adjustments in overhead, contracted labor, and supervision.
Judgmental forecasting can be divided into three types:
• Managerial estimates. As the name implies, these consist of

projections made by managers. This can work two ways: from the top
down or the bottom up. The success of this method is entirely dependent
upon the quality of information provided to managers to use in making
i
estimates.
l
II Delphi technique. This technique progressively collects infonnation
I
I.
from a group on a preselected issue. After the coordinator identifies the
issue and participants, each participant lists his/her ideas about the issue
in question in a brief, concise manner and returns the list anonymously
I ···--····--,tcr;o·rhe coordinator. No attempr shollld be made to evaluate m justify tht: ___ . ___,
I
l ideas at this stage. Then the coordinator prepares and sends a second
I
' questiom1aire to pmticipants that contains all of the ideas sent in
response to the first questionnaire and provides space for participants to
I
refine each idea, to comment on each idea's strengths and weaknesses
for addressing the issue, and to identify new ideas. The coordinator
i repeats the process until it becomes clear that no new ideas are emerging
and that all strengths, weaknesses, and opinions have been identified.
This technique is designed to facilitate group involvement, problem

solving and individual thinking while avoiding "group think." The
process is usually done by and by updating documents on a cloud
or shared drive, thus using technology to enhance communication
choices and shorten the time necessary for completion.
Figure 6 illustrates the Delphi technique.
150 © 2015 SHAM

'I
Coordinator identifies judgment issue and

develops questionnaire,
Prospective participants are identified and

asked io cooperate,
I
/ Coordinator sends questionnaires to

participants, who record their judgments
rec:OtTimfmd8tirTns and return the qUl9Stiion:nai:res.
)
Coordinator anonymously compiles

and reproduces participants' responses,
Coordinator sends the compiled list of

judgments to all participants.
Participants comment on ideas and

propose a final judgment
)
>
Coordinator accepts consensus judgment

as group's choice.
Figure 6: The Delphi Technique

y
)
• Nominal group technique, This technique accesses a variety of individuals
)
to forecast ideas and assumptions and then prioritize issues. Unlike the
Delphi technique, the individuals are brought together for a face-to-face
discussion, which is led by a moderator. The nominal group technique
process is as follows:
'' Patiicipants independently write down their ideas,
\ ' Each participant presents one idea to the group, without discussion, in a
round-robin fhsb ion.
© 2015 SHAM 151

)
• Ideas are summarized on a flip chart or blackboard.

"" The group discusses and clarifies ideas.
o Ideas are ranked independently by pa1iicipants.
o Rankings are pooled, and the ideas with the highest rankings are
identified as the major problems or issues that need addressing
Statistical Forecasts
Statistical forecasts generally fall into two categories: regression analysis and
simulations.
" Regression analysis can be further subdivided into two types:
• Simple linear regression is a projection offuture demand based on a

past relationship between employment level and a single variable related
to employment. For example, a statistical relationship between gross
sales and number of employees (such as the trend analysis for ABC
Medical) might be useful in forecasting the number of employees needed
in the future if sales increase by 25%.
Multiple linear regression operates the same as simple linear regression,

except that several variables are utilized to project future demand. For
example, ABe-Medical might add
determine the number of employees needed.
• Simulations are representations of real situatious in abstract form; they are

often referred to as "what if' scenarios. They provide organizations with the
opportunity to speculate as to what would happen if certain courses of action
are pursued. For example, ABC Medical might consider the ramifications of
changing a compensation system, doing business online, or changing their
supply chain.
Statistical methods are also discussed in the "Business and HR Strategy"

Functional Area in the Slrategy module.
Gao
.--Analvsis
.,
The supply analysis identified the staftlng levels and the KSAs that are currently
available, and the demand analysis determined the staft!ng levels and KSAs that
wi !l be needed in the future.
152 © 2015 SHRM

)
)
)
)' The next step in the workforce analysis process is the gap analysis, This is the
process of compming the supply analysis to the demand analysis to identify the
differences in staffing levels and KSAs needed for the fi.Iturc. This process of
' l reconciling the differences between supply and demand establishes the goals and
) objectives for the staffing plan.
) A gap analysis may identify deficiencies in staffing needs as well as any surplus
I ), of staffing levels in certain jobs and/or KSAs. A surplus can result from a
.I number of factors, including operation efficiencies, new technology, lower
attrition rates, and changes in the business or industry.
Examples of stat1lng gaps are shown in Figure 7.
).:
Skill gap New skills are needed to perform new jobs.
)
Competency gap New attitudes and behaviors are needed to be
) successful.
Distribution gap Talent is not properly spread throughout the enterprise.
)
Diversity gap The organization is too homogeneous.
)
Deployment gap Talent cannot be sent where it is needed most.
Time gap It takes too long to achieve results.
)
Cost gap Too much money is being spent on talent acquisition and
)
development activities.
Knowledge-sharing gap Organizational learning is not occurring.
I
Succession gap It is not clear from where the next generation of leaders
)
will come.
)
Retention gap The best talent is leaving the organization.
Figure 7: Examples of Staffing Gaps
Gap information may a!so surface as part of an environmental scan and an

analysis of the organization's internal strengths and weaknesses and external
opportunities and threats-a SWOT analysis. More information on those topics
)
is included in the "Structure of the HR Function" Functional Area in this
)
Organization module and in the "Business and HR Strategy" Functional Area in
the Strategy module.
© 2015 SHRM 153

Prioritizing the Gaps

Once the gaps have been identified, they must be analyzed and prioritized to
detennine which ones will be addressed. Rarely can all gaps be addressed at the
same time or completed in the one- to three-year time frame of a typical staffing
plan. High-priority gaps arc used as the basis for defining the plan's tactical
objectives.
Management and other key stakeholders should be involved when gaps arc
prioritized. The following criteria can be used to establish priorities and make
recommendations:
• Permanence. Does the problem identified in the gap analysis occur on an

ongoing basis, or is it due to some temporary factor that may be resolved
without having to take any action?
• Impact. How significant is the impact of this gap on the business compared
to other identified gaps?
Control. To what extent is the problem reflected in this gap controllable with
a reasonable expenditure of resources, or is the solution likely to be more
-------------'e'"xweJ)J)_iYseJhan the problem itself?
• Evidence. How cettain is the quality of the data? Does the evidence provide
a clear indication that the gap is a serious problem, or is more evidence
required?
• Root cause. To the extent that the gap indicates a problem that needs to be
addressed, is it the root cause of the problem? Or is there a deeper problem
that must be fixed to eliminate this gap permanently?
Some gaps may appear unexpectedly. for example, a key executive withOLlt a
successor may suddenly decide to retire, or a recently agreed-upon joint venture
may require an executive with unique knowledge and skills. These gaps quickly
become high priorities.
Other gaps will not come as a surprise, especially ii' they have been targeted as
long-term objectives in the HR strategic plan. In these cases, the priority may be
to simply continue chipping away at the gap, perhaps at 10% to 20% per year.
154 © 2015 SHRM

)
Figure 8 provides examples of gaps that might be addressed for a multinational

Il enterprise (MNE).
I
I I ··-•····•.'ii
Aii executives will have at
least two years' experience in
( ri " 185% must be
I
standard from expatriate or addressed.
) nonheadquarters countries. shorter-term international
assignments.
) ----------·------------
) At least three potential 30% of these positions are 70% need successton
candidates must exist for each in compliance. plans.
)
senior vice president or
) managing director position in
the organization.
All senior managers working 5% of these employees 95% require language

in the China divisional offices speak Chinese. training.
must speak Chinese.
Global attrition rates for the Current attrition rates are A gap of 7% must be
top 10% of scientists and at 14%. closed.
sales representatives will be
\ 7% or less.
) Average time to hire a Current time to hire is 70 25 days need to be
) manager needs to be 45 days. days. eliminated.
L---·---··--------- -------·---··---·----·
Figure 8: Examples of Staffing Gaps in an MNE
I I
) Two additional factors to consider when analyzing and prioritizing gaps are:
• Whether there is sut11cient support within the organization to apply
) resources to attack the gap.
• Whether employees who must assist in addressing the gap will be willing
.,
i to make it their priority.
For example, i Clhe leadership believes that fresh perspectives from outside
the organization are needed, there may not be sutllcient support for this
particular objective until cmTent sta1T fully understands the need for change
and innovation.
)
Defining Tactical Objectives
High-priority gaps identified in the workforce analysis process arc the basis for
detining tactical objectives. Tactical objectives focus on closing high-pliority
© 2015 SHRM 155

gaps in the near term (as opposed to the long-term HR strategic objectives). They
specify in concrete and measurable terms which gaps must be closed and when.
as recruitment, selection, or relocation, or they may apply to multiple functions.

For example, improving retention could relate to all three of these staffing
functions and possibly more.
A common approach applied to developing tactical objectives is the acronym

S.M.A.R.T. Are the objectives:
• Specific enough lo preclude uncertainty about what they mean?
• Measurable? For example, will it be clear when progress has been made and
when it has been achieved?
• Attainable, yet challenging?
• Relevant given the current environment the organization faces?
• Time-based, with clearly defined dates of completion?
The previous example for an MNE (Figure 8) listed five gaps between the future
vision and the current state for various staffing dimensions. Figure 9 looks at
three of these gaps, along with sample tactical objectives.
156 © 2015 SHAM

)
y
\
) All executives will have at 15% have met this 85% must be addressed.
least two years' experience standard from expatriate
in nonheadquarters or shorter-term
countries. international
assignments.
) Tactical objective: By the end of the fourth quarter of year 2, the 100% goal will be
achieved among all senior-level sales executives. By the same time, the gap across all
executives will be reduced from 85% to 50%.
All senior managers 5% of these employees 95% require language
working in the China speak Chinese. training.
) divisional offices must
) speak Chinese.
) Tactical objective: By the end of year 1, 75% of all senior managers working in the
China divisional offices must be enrolled in intensive training in Chinese for at least
three hours per week. By the end of year 3, 50% of this group of senior managers
,, must speak Chinese fluently enough to lead a business meeting with Chinese
nationals.
Global attrition rates for the Current attrition rates are A gap of 7% must be closed.
top 10% of scientists and at 14%.
sales representatives will
be 7% or Jess.
Tactical objective: By the end of year 2, attrition rates for the top 10% of scientists
1 . - - ----anG-sale&representatives-will be redl:lc-et!-te-4+o/cr,l3asedon year-£-dataonly. ---
end of year 3, the attrition rate will be 7%, based on year 3 data only. (Note: Country X
will be exempted from this objective to avoid interference with their country-wide
attrition reduction program.)
Figure 9: Examples of Tactical Objectives for an MNE

I
)
Note how, in each case, the tactical objective indicates that significant progress
will be made short-term in closing the gap, but none will be completely closed
)
during this time period. This is acceptable because the future vision is understood
to be longer term (in this case, seven years).
These tactical objectives support the organization's staffing needs because they:
• Specify which gaps will receive focused attention.
e Describe the degree to which the gap will be closed.
• Specify the time frame in which this will be achieved.
• Describe the localities or functional groups to which the objectives will apply.
• identify special considerations to be made because of unique local conditions.
© 2015 SHAM 157

Soiution Analysis
The final stage in the workforce analysis process is the solution analysis. This is
an examination of how the organization can get what it needs to meet the tactical
objectives within budget constraints. Solution analysis considers whether an
organization should have a continuous recruitment program or wait until
vacancies appear before engaging in an intensive effort to fill openings.
During solution analysis, an organization decides whether to "build," "buy," or

"borrow" the talent needed to attain the staffing levels and KSAs required to
meet the tactical objectives:
• "Building" the talent refers to redeploying as well as training and developing
the current workforce to meet the fuhJre needs of the organization.
• "Buying" the talent refers to recruiting and hiring employees.
• "Borrowing" the talent reters to outsourcing, leasing, and contracting with
others to get the work done.
Labor market trends should be considered during solution analysis. The U.S.
Department of Labor (DOL) Bureau of Labor Statistics (BLS) conducts ongoing
surveys of employers, analyzes the data, and then produces estimates on jobs,
wages, the labor force, employment and unemployment, layoffs, and numerous
oner drrorce=relnted statistics. 3ee the BL3 website;-ww w.bls.gov, forcum:nt------
data. Some state agencies also publish workforce data.
United States Census Bureau data is another useful information source. Census data
provides insights on general trends such as the migration of workers, the aging of
the workforce, and the changing racial and ethnic diversity of the nation. See the
Census Bureau, census. gov, for the most recent census data.
The ultimate goal of the workforce analysis process is to create a staffing plan
that will be in alignment with the organization's strategic plan and support the
future needs of the organization. Founding the stafting plan on data collection
and analysis positions HR as a strategic business partner by ensuring that the
right people arc in the right place at the right time.
Additional information on workforce planning is available through SHRM's

"Practicing the Discipline of Workforce Planning" Toolkit; see www.shrm.org/
Templates Tools/Toolkits/Pages/Practicing WorkforcePlanning.aspx. (This
resource is available to SHRlvl members only.)
158 © 2015 SHRM

The Staffing Plan

The stat1ing plan tnrns workforce analysis data and tactical objectives into reality.
A staffing plan describes-in some detail-how the tactical objectives are going to
be achieved through the delegation of tasks and the application of resources.
Planning approaches may vary within organizations, but the important points arc
)
that the processes shonld be:
• Consistent with other HR planning initiatives.
• Collaborative and easily understood by all participants.
• Accepted by those responsible for implementing the plan.
) Figure 10 depicts the common elements of a staffing plan.
Statement of purpose Establishes the goals and targets for the staffing
plan
Stakeholders Identifies key decision makers and others who

should be involved in the development of the plan
the activities and tasks that need to be

carried out and the time line for completion; notes
relationships between activities, tasks, and
deliverables
Team members Identifies all the people who have been assigned or
) who have volunteered to work on specific activities,
tasks, and deliverables
)
) Resources Documents financial and nonfinancial resources
required for implementation
)
Communication plan Notes specific tactics and responsibilities for
) communicating initial details about the plan as well
I as monitoring ihe plan and soliciting ongoing
feedback
'J
) Continuous Sets up a process to review the extent to which
improvement tactical objectives are achieved; identifies ways to
continuously improve the plan
.
Figure 10: Elements of a Staffing Plan
·------ __
.... ._ '
© 2015 SHAM 159

)
Statement of Purpose
This clearly describes the link between the tactical plan and the HR strategic
objectives. It documents the staffing gaps that were derived from comparing the
future vision with the current state and becomes the basis for the tactical objectives.
The statement of purpose reminds people of the significance of the plan and serves
as a benchmark to compare subsequent aspects of the plan.
Stakeholders
These are the people that will be affected by the implementation of the staffing plan
or whose support will be needed for its success.
Let's revisit the previous MNE example of the gap in attrition rates, as shown in
Figure 11.
Global attrition rates for the top 10% Current attrition rates A gap of 7% must be
of scientists and sales are at 14%. closed.
representatives will be 7% or less.
Tactical objective: By the end of year 2, attrition rates for the top 10% of scientists and sales
representatives will be reduced to 11%, based on year 2 data only. By the end of year 3, the
attrition rate will be 7%, based on year 3daia only. (Note: Country X will be exempted from
this objective to avoid interference with their country-wide attrition reduction program.)
Figure 11: Example of Tactical Staffing Objective for an MNE
There are several stakeholders in this example:
$ Scientists and sales representatives. These employees will remain with the
organization only if their personal and professional needs are served better
than they were in the past.
e Sales managers in each affected country. Some sales managers may prefer
to maintain a high attrition rate to remove low performers.
• Managers of research and development. They may wish to have some

latitude in defining the criteria and processes used to identify the top 10% of
scientists to ensure that the right people arc the ones persuaded to remain
with the organization.
' !
160 © 2015 SHRM

i) )
)' • Head of HR. This manager will want to influence how the salary budget will
be balanced if the tactics include increasing salaries.
I ) • Heads of the different local-country operations. They may have vc1y

different ideas about what sorts of attrition reduction techniques will be
approp1iate for their individual cultures.
) I
) Success of the staffing plan will require the support of those expected to cany
) out its implementation. Therefore, it is best lo involve a variety of people in the
) plauning process.
) Consider the following stakeholders and their potential issues when developing
the staffing plan:
• Organizational management:
• Are they convinced of the strategic value ofthe staffing plan?
" Will they publicly endorse the staffing plan and encourage the supp01i of
)
others?
li
I
i
)
• HR management:
• Is there agreement that the staffing plan will support HR's goals?
iI )
. .. -------e·iJOe:,ft1leSiilfhng plan mtegrate w1th plans ot .
• Une management:
• Are they convinced that the staffing plan will help meet their business
objectives?
) • Will they actively and publicly suppori the staffing plan?
)
o Other organizational units:
J
• Have the implications of the staffing plan been discussed with them?
) • Has the creation ofthe staffing plan been synchronized with their
planning functions?
• Union leadership:
" Have their concerns been identified in advance to avoid unexpected
conflict?
• Can the staffing plan be devised to support union goals while still
meeting organizational goals?
© 2015 SHAM 161

Activities and Tasks

These are focused on the objectives of the plan. They are traditionally
categorized in terms of the following functions:
e Talent acquisition. The process by which the organization generates a pool
of qualified candidates.
• Selection. The process followed to interview and evaluate candidates to
select those best qualified for a targeted position.
• Relocation. The process of moving people throughout the organization.
• Orientation and onboarding. The processes through which employees
become familiar with a new location, job, or culture and, longer-term,
become a committed member of the organizational team.
• Redeployment. The process by which an organization moves an employee
out of a position.
Many activities and tasks cut across some or all of these functions, depending on
the nature of the objectives they are to address.
The activities required to achieve the tactical objectives should be specified in

detail. This avoids ambiguities about what is intended to be accomplished and
how, and it will increase individual accountability for each activity.
Returning to the example of the attrition gap of the MNE used earlier, the
tactical objective is:
By the end of year 2, attrition rates for the top 10% of scientists and
sales representatives will be reduced to 11%, based on year 2 data
only. By the end of year 3, the attrition rate will be 7%, based on
year 3 data only. (Note: Country X will be exempted from this
objective to avoid interference with their country-wide attrition
reduction program.)
The retention of valued employees is complex, and there is rarely a single

solution or simple answer. Activities and tasks that could be developed to achieve
this tactical objective include the following:
• Interview managers of all top performers who have departed within the past
12 months to determine the primary reasons for leaving the company. These
interviews should be conducted within 12 weeks.
• Interview coileagues of all the top performers who have depmied within the
past 12 months. These interviews should be completed within 15 weeks.
l
162 © 2015 SHRM
' )
)
)
f e Review research on why people leave companies, and write a report on key
findings within four weeks.
e Hire a leading H R expert to prepare an independent report on reasons for
attrition in industries, fimctional groups, and locations. A special
presentation should be scheduled within eight weeks.
) • Attempt to survey top performers who have left the company to solicit their
) ideas and recommendations. This survey should he completed in four months.
This .information helps to better understand the nature of the attrition problem.
)
Another series of activities and tasks could be targeted to the current top
performers who are still employees:
) • Interview current top performers to assess their satisfaction levels and
) recommendations for improvement Complete these interviews within eight
\ weeks.
)
" Survey the managers of current top perfom1ers within 12 weeks.
)
\ Once more information is known about the reasons for attrition and retention,
) more tactical objectives--with corresponding activities and tasks-could be
) generated. If, for example, limited career development and growth opportunities
)_____.-------------o:rnoneompeti ti ve are IsSUes, speclftc
) studies could be commissioned to explore each of these factors.
·;
After all of the activities and tasks are identified, a schedule can be developed so
it is clear when each activity and task must begin and tlnish to achieve the
) objectives. This schedule should also illustrate the relationships among
) dependent tasks. Resources required for each should be identified, and at least
one individual should be made accountable for each.
This includes all those who will participate in the planning, implementation, and
evaluation of the staffing plan. They may be employees who are fonnally
assigned to develop the plan, or they may be employees who provide their time
as part of their normal work assignment
It is one thing to obtain a general agreement in support of a staffing plan. Jt is

quite another to obtain a commitment from team members and stakeholders over
© 2015 SHRM 163

a period of two or three years. For this reason, people who are expected to
contribute to the implementation of the plan must understand exactly what is
required of them and for what they will be held accountable.
Being accountable means:

• Understanding what is expected.
• Understanding the definition and measures of success.
• Making a commitment to ensure that the desired results are achieved.
• Taking responsibility for the consequences of not achieving desired results.
Resources
Some resource requirements included in a staffing plan are obvious, such as
budgetmy funds and the time frame for completion. Others are not as obvious
but are just as imp01iant for staffing success. For example:
• The nonbudgeted time requirements of those who must implement or support
the plan.
• The knowledge required to shape the plan to specific stakeholder
circumstances.
• Equipment, facilities, and materials.
- - - ---·•----lntemal and extemal knowledge -
• Logistical support.
These should be addressed during stafiing plan development so they do not

surface as a surprise during implementation.
Communication Plan
Communication requires particular attention in the design of a staffing plan.
Often neglected, it is essential for the plan's long-tenn success. Communication
of the plan begins during the development of the specific tactics, continues as the
plan is finalized, and is used to support the plan's implementation. Ongoing
encouragement and support arc required because the tactics are implemented by
and require the continuous insight and commitment of the affected departments.
In addition, ongoing feedback from those implementing the plan is crucial to
those responsible for developing and monitoring the staffing plan.
Figure 12 lists the components of a communication plan.
--------------------
__ , ________
164 © 2015 SHRM
.I) )
I
I >
Audience Who requires information about the plan or its implementation for it to
be successful by country and function?
Objectives What specific outcomes are to be achieved through communication,
) and how will these ensure the success of the staffing plan?
) Required Exactly what information must be communicated to the various

information audiences?
Who wi!l provide the information?
How does the required information vary by country?
Modes of What type of communication will be most effective (e.g., face-to-face,

communication formal announcements, training programs, frequent e-mail updates)?
What variations in the communication mode are required for specific
countries and cultures?
Resources What financial and nonfinancial resources must be committed to

communications for the plan to be successful?
Are these resources available in the required countries, or must
headquarters provide them?
\
Timing What schedule is required to achieve the objectives of the
) communication plan?
I I 1 req
accountability Who is accountable for the achievement of the goals of the
communication plan at the global and country levels?
)
Figure 12: Components of a Communication Plan in Support of a Staffing Plan
) Continuous Improvement
)
The purpose of continuous improvement is to identify opportunities for
improvement as soon as possible, to document lessons learned from the experience,
and to ensure that they are used to enhance ongoing and future staffing initiatives.
Figure 13 on the next page is a checklist for continuously improving the slal11ng
) plan.
As the staffing plan is implemented, those involved will observe the process and
look for ways to improve it.
.I
)
© 2015 SHRM 165

y
0 Have criteria and standards been 0 Have problem-identification and

defined for all outcomes and problem-solving processes been built
processes described in the staffing into the plans? Are these consistent
plan? with specific operations?
0 Have these criteria and standards 0 Have arrangements been made to
been adjusted, when necessary, to collect lessons learned during the
account for specific conditions? implementation of the plan and
0 Have the processes outlined in the shared across the organization?
pian been analyzed for efficiency 0 Is an ongoing measurement function
and for integration with other in place to monitor the quality of the
organizational processes? plan implementation?
0 Are the related processes within 0 Are open-ended dialogues, such as
other departments equally well milestone meetings, a key part of the
defined and implemented, or do project plan?
contingencies need to be
developed?
) Figure 13: Continuous Improvement Checklist tor Staffing Plans
Due to exponential growth, the HR benefits manager of a large commercial

bakery is being overwhelmed with questions and issues. Working with the
vice president of HR, he conducts an analysis to look at possible solutions.
Critical mm After conducting a SWDT analysis and evaTua:lrng the future requirements,
Eva!uaUon he meets with the VP of HR and the president of the bakery. It is determined
Competency that outsourcing of the bakery's benefits administration is the best action to
in Action
take. Using the results of his evaluation, the HR benefits manager generates
an RFP and sends it to six potential vendors he has identified. He reviews
the proposals and schedules presentations from three finalists.
Ultimately, one vendor is selected for their focus and emphasis on building a
strong relationship with the bakery at transition and, more importantly,
following implementation, and then being held accountable throughout the
year to the contract scope. The result is heightened customer service,
including quicker responsiveness and more favorable attitudes toward the
benefits and service providers offered as well as more effective use of the
HR benefit manager's role and time.
166 © 2015 SHAM

)
Progress Check
)
) 1. What is the process of analyzing the organization's workforce and determining steps required
) to prepare for future needs?
) ( ) a. Workforce analysis
) ( ) b. Workforce planning
) ( ) c. Workforce management
) ( ) d. Workforce detem1ination
2. What is "KSA" short for?

( ) a. Knowledge, skills, and abilities
( ) b. Kinetic, social, and arbitrary
( ) c. Key, secondary, and altemative
( ) d. Known, secret, and absolute
\
3. In workfOrce analysis, what does gap analysis compare?

)
( ) a. Management and employees
-
> ( ) c. Supply and demand
( ) d. Size and function
4. What does "build, buy, or borrow" refer to?

( ) a. Personal finance
( ) b. Acquiring company vehicles
( ) c. Restructuring
)
( ) d. Methods for acquiring talent
)
5. What describes people who will be affected by the implementation of a staffing plan or
whose support will be needed for its success?
( ) a. Job holders
( ) b. Shareholders
)
( ) c. Stakeholders
)
( d. Key employees
© 2015 SHRM 167

I

l.b(p.141)
2. a (p. 141)
3. c (p. 153)
4. d (p. 158)
5. c (p. 160)
----------
© 2015 SHRM
168
Section 3:
Employee Development
',I
\.
exist to deliver on organizational goals and objectives .
.. Planning short-term strategies to build individual skills, knowledge, abilities, and
' competencies that support organizational bench strength.
1---------------.•nlmiliTl plme amn:<:sTrtoirrmopif!llrrrnlEizmmii g'fiolrirg'"aiilni l:zaiftimonmaiTI .----
> • Initiating and designing strategies (e.g., leadership development, succession planning,
) training) to address organizational gaps between current and future employees'
competencies, knowledge, skills, and abilities.

• Employee development techniques and approaches.
• Needs assessment techniques (e.g., organizational, training).
• Succession planning techniques.
Development of Employees
Employee development is almost universally recognized as a strategic tool for an
organization's continuing growth, productivity, and ability to retain valuable
employees. This section covers the key elements ofHR's role in developing
employees: talent management, perfom1ance management, and succession
planning.
Talent Manaaement
-
Talent management refers to the development and integration of HR processes
that attract, develop, engage, and retain the knowledge, skills, and abilities of
employees that will meet current and future business needs. The goal is to
increase workplace productivity by supporting the development, engagement,
and retention of high-value employees.
Organizations are realizing the importance of talent management and retention in

today's global marketplace, especially due to several key factors:
• Economy and job market
Demographic trends thal include a likely labor shortage
_ _ _ _•__ reliance on contingent \\'orkers
• Retirement of baby boomers
Increasingly diverse workforce
Technological growth and change
Demand for and shortage of knowledge workers
Low levels of workforce readiness in new high school and college graduates
Competition for talented resources at the local level
Talent management is a strategic approach to managing human capital and as

such must be aligned with the organization's strategy and strategic business
goals. It should be perceived as a long-term and continuous process that requires
effective alignment of business strategies and human capital objectives to
support long-term achievement of organizational goals.
EtTective talent management requires that an organization believe in its talent.

Talent management focuses on the talent of all employees, not just key leaders,
and, because it is a comprehensive process, it spans the eniire career of an
employee.
170 © 2015 SHRM

I; ORGANIZATION Workforce Management
Talent management strategy is most effective when it is an integrated effort and

\ implemented as a continual process, always evolving \Vith the business direction
of the organization.
An effective talent management strategy is shaped by an organization's:

) e Expectations regarding the differentiation of talent.
) • Overall philosophy regarding integration versus local differentiation.
e View of the role that line leaders have in the development of people.
o Philosophy regarding the movement of people across borders, businesses,
and functions.
• View of the role of diversity in staffing strategy.
e Beliefs about hiring for potential versus hiring for position.
Pools
The creation and management of formal talent pools is a critical aspect of an
)
organization's talent management strategy. Members of a specific talent pool
)
arc employees who meet a set of formal identification criteria. Members of an
identified talent pool (e.g., high-potential employees or potential global
)
assignees) typically receive specialized development and enrichment
l-----···--------·· experiences above those with traditionalemployee <:{evelqpment_._"_ _
In Bevond HR: The New Science ofHuman Capital, John W. Boudreau and
Peter M. Ramstad recommend that organizations focus on improving their talent
) pool performance, both in quality and in quantity. They suggest that
organizations must make wise choices about allocating resources such as time,
attention, and money to those talent pools that represent the highest value to the
) organization.
)
Tim Gichll and Sara Moss argue in Human Capital Supply Chains that HR
managers should develop a strategic workforce plan that uses technology to
integrate data from all phases of the employee life cycle--hom recruitment
through exit---to allow better supply forecasting and fulfillment and more
accurate development of the organization's human assets.
A growing number of organizations are investing in the development of

sophisticated applications, such as applicant tracking systems and talent
I
© 2015 SHRM 171
I
management suites, to help them stay in touch with and develop strong
relationshins with both internal and external members of essential talent pools.
Examples of talent pools used by both global and domestic organizations include:
" High-potential employees.
• Leadership development candidates.
o Functional experts.
o Solid performers.
e Potential assignees.
Talent pools:
• Represent an essential component of strategic business planning. When talent
management is carefully aligned with Iong-te1m business and strategic
planning, the organization can develop a well-planned approach to giving
employees with specific skill sets the developmental experiences they need to
prepare them for the future.
" Allow the organization to maximize and more effectively target employee and
career development efforts.
• Can be a useful tool for identifying and cataloging the developmental
experiences of employees who are candidates for future international
assignments.
• Represent a valuable resource during crisis management. When an organization
makes the effort to identify and catalog critical skills sets and experiences, they
can quickly draw on these resources to fill in or supplement workforce gaps in
times of organizational crisis.
Some additional uses for talent pools include the following:
* Talent pools can he used to help organizations identifY and recognize the value
of solid performers-those individuals who keep the organization running on a
daily basis but arc not typically singled out for recognition or special
development experiences because they are not part of or have not expressed
interest in specialized talent pools.
Defined talent pools may aid in clarifying or guiding compensation decisions

to be sure you are rewarding and motivating key talent, including high
potentials, leadership candidates, etc.
I
I
172 © 2015 SHRM
• Talent pools represent an additional contributor to effective knowledge

management, especially in global organizations. Talent pools of functional
! ) experts and historians serve a vital function in preserving essential knowledge
and proprietary information.
)
)
)
)
)
Talent Management Strategies
) There arc many ways that organizations can develop and support successful
) talent management programs, such as:
• Anticipate future staffing needs via workforce planning.
) o Develop a positive workplace culture.
1----····--·---·-o-----Bevise-effective and ·-
programs.
) * Create systems to attract talent (e.g., advertising, career fairs).
• Study retention through turnover data, attitude surveys, exit interviews, and
other relevant HR data.
• Put a f01mal retention plan in place.
• Support employee engagement and reward programs.
)
• Identify and develop future leaders and other critical talent.
)
• Offer professional advancement opportunities such as international
assignments.
" Create succession and replacement plans.
• Develop core competencies and corresponding development opportunities.
)
e Stipport managers in development of their teams.
) e Support training and career development programs, including those in
communities from which you recruit.
• Sponsor effective perf01mance management programs.
• Collect and analyze metrics regularly to assess talentprograms.
© 2015 SHAM 173
' )
An important element of talent management is an organization's employee

development program, vthich provides employees with opportunities to learn
new ideas and skills, thus preparing them for future positions and challenges.
Types of employee development programs include:
.. Col!ege/uni versity and continuing education.
4 Committee/team participation.
e Apprenticeships.
• .
Job rotation (movement between different jobs), .
job enlargement (doing
different tasks within the same job), and job enrichment (the depth of a job is
increased by adding responsibilities).
• Internal mobility (promotions, demotions, relocations, transfers).
• Dual career ladders, which provide meaningful career paths for professional
and technical people whose preferences may be outside traditional
management roles.
• Fast-track programs to rapidly increase the development of potential future
leaders.
More information about employee development strategies can be found in the

"Learning and Development" Functional Area in the People module.
Recommendations for effective talent management are shown in Figure 14.
• Develop an integrated, proactive • Keep various retention factors

talent management strategy. in balance.
View "employer of choice" status
as an outcome of a coherent
• Track turnover .
corporate culture rather than ad • Track successful talent

management situations and
hoc programs.
then capture and repeat best
• Share accountability for recruit- practices.
ment and retention with the
organization's line managers. • Market the organization and its
brand to current employees as
• Know the organization's business vigorously as to the outside
environment, plans, and talent pool.
competitive climate.
• Align compensation practices to
• Know what factors contribute to support talent retention and
difficulties in attraction and commitment.
retention.
Fir;;ure 14: Checklist for Effective Talent Management
174 © 2015 SHRM

. I
) Addressing the Changing Needs of Employees

)
As employees progress through their careers, their needs may change.
Effective talent management means addressing these needs in order to retain
valuable employees.
Flexible Staffing
I) Recent job satisfaction reports indicate that employee demand for flexible
J J work schedules and other staffing accommodations will continue to increase.
) Flexible staffing may include:
) • Flextime (vmying stinting and ending times).
)
• Compressed workweeks (workweek compressed into fewer than five
I days).
I • Regular part-time (less than full-time status).
)
• Job sharing (two part-time employees sharing one full-time job).
\
• Phased retirement (gradually reducing hours before full retirement).
)
• Telecommuting (regularly working at a site other than the office).
)
)
To cllcctively implement llexible .sta!llng, HR professinnals should:

.....- - - - -
·.. their work styles and skillleyels. ·
) ·. • • Dclivt:r clear ciirmi1unicatiun regarding' rcjl0!1i1ig, and .
pedbm1ance <1Wcomes.
• Coi1tact rt to obtain technical resources for tclccominuting and. virtual
communication,
•• perfonmmce t that cover flexible ·
arrangements: ·
)
• Evaluate the arrangcmcrits 01i an ongoing basis to determine job·.
) . tis faction and employee contribittion to the organizati(i;\. ..
" Evaluate the cost:ef!ectlvcness and other c!!cds of !lcxlblc work pn>gmn1s · ·
··.based on the strategic goals oftheorgmJizatim1: •·
)
Alternative Staffing
Altemative staffing arrangements are used by many organizations in response to
staffing shortages, business cycle demands, special expertise required, and other
© 2015 SHRM 175

circumstances. The temporary, contract, on-call, part-time, seasonal, and other

nontraditional workers engaged also have needs in an organization.
To cftcctiveiy inlplement alternative. staffirig; should:

• llndcrstand organizational needs and the bcstarrallgcn1cn!s to fill those.·
needs.
competitive pricing; •
• Be aware of any legal risks liabilities.
· . ._ Select appi·opriate candidates and structure clearagrcements.betwccil the
. organi;ation mid the lndivlduals. . ' \ :.
• . ·Ensure support for alternative stafi'so that they the
.organization's cultllrc and have access to necessary resources.
• · Communicate the roles and responsibilities internally to create a
' . - environment for the individuals.
.. . welcoming
Work/Life Balance
----------w.ur.l!/life bl!lance (WI.B) is an umbrella te1m used to
benefit-related initiatives to help employees effectively manage work, family, and
personal life without extreme stress or negative impact. Many organizations
report that balancing work and family has overtaken other benefit and
compensation items as a key factor in employee satisfaction surveys.
Organizations are increasingly using WLB as a recruitment and retention strategy.
Work/life balance programs are covered in the "Employee Engagement"

Functional Area in the People module.
Measuring Talent Management Effectiveness

All talent management programs should be evaluated on a regular basis to ensure
the effectiveness of each program in helping to maintain a high-performance
workforce.
Methods tor measuring talent management etfectiveness include:

• Evaluating the percentage of positions tor which there are internal successors.
• Comparing the number of external hires to internal promotions.
©
a Evaluating the differentiation of pay between performance levels.

• Identifying high-potentia! employees and reviewing their corresponding
retention rates.
Q Tracking retention and turnover rates at all levels of the organization.
Performance Management
)
Performance management is the process of maintaining or improving
J
) employee job performance. It involves the use of performance assessment tools,
coaching, and counseling as well as providing continuous feedback and
communication between the individual employee and the perfonnance manager.
) Organizations are interested in performance management systems because
) individual contribution drives business results that accomplish the goals of the
) organization.
! \ \
) When skill gaps are identified by an employee's manager, that infom1ation is

) provided to HR for a gap analysis.
The performance management process provides an opportunity for the employee

) and the perfonnance manager to discuss development goals and jointly create a
)- ""planli:lrJJcbieving those goals In nun, those development plaus and individual------
actions contribute to organizational goals and the professional growth of the
) employee.
)
) This section presents the elements of a performance management system and the
relationship between organizational strategy, individual contribution, and
business results, which ultimately impact the organizational goals.
Figure 15 on the next page illustrates a performance management system;

elements of the system arc described below.
Organizationai Values and Goals

An organization's values and goals reflect its structure and philosophy. When
organizations establish and communicate clear values and goals, employees have
a sense of purpose and know how to prioritize their activities. A considerable
amount of executive attention may be required to anivc at a consensus regarding
the organizational values and goals.
© 2015 SHRM 177

Organizational values and goals
Performance management standards
Employee performance/behaviors
Measurement and feedback
I
! /
'---j Business results and employee growth
Figure 15: Performance Management System
Vahies are principles, standards, or qualities cmisidcrcd inhcnmtty wortlllvhilc

..••.... ·7·c·.•·
orgmiization.docs business. Highly regnrdcd values include: · ·

• the customer first.
.• Treating
. .
cmplovec!i
. as .well
.
a8
.
the customers
.
arc treated. ..
·• Conducting business fairly and honestly. ·
• Det1Jonslrating creativity and i!lliovati6n.
• Utilizing tcainworkto achieve goals..
Values are usually expressed in the organization's mission statement and

displayed through the behavior of the organization's employees and
management. For this reason, it is essential that management throughout the
organization display behavior that adheres to the organizational values.
Management must also be specific about the organization's strategic goals.

Goals are the guideposts that reflect the success of the organization. By
comparing organizational goals with levels of achievement, management can
178 © 2015 SHAM

gain an accurate idea of whether the organization is progressing at the rate

desired.
Performance standards are the expectations of management translated into

) two key elements that employees can deliver:
:I • Behaviors. What the organization wants the employees to do. These
behaviors have to be translated into performance standards.
)
$ Results. What the organization wants the employees to produce or
deliver.
I
) Performance standards tell employees both what they have to do and how
well they have to do it.
)
)
With executive-level support, these performance standards should be

communicated throughout the organization. Employees should be told what
\
management expects relative to perfmmance. This can be accomplished in a
'
number of ways, including orientation, employee handbooks, organization or
department meetings, newsletters, etc.
© 2015 SHRM 179

When performance standards are communicated, they should also be adequately

defined so all employees understand the expected behavior. If customer service
is a high priority, for example. then it should be measured, and employees should
be given clear examples of what represents superior service and what service
goals ihey are expected to achieve.
Employee Performance
Because individual contribution drives the business results of the organization,
managers need to help translate the organization's business goals, objectives,
and performance standards to individual employee goals.
There should be a direct relationship betweei1 the employee's job description,

the job competencies required, and performance plan goals and objectives.
Employees should understand what aspects of their job are most important as
well as the job criteria. Clear expectations should be set for employee
outcomes and employee development plans.
Additional factors that affect employee performance include:

• Interaction and feedback from managers.
• Whether employees feel personally connected to the work.
• The culture of the orgamzatron .
. •· Organizations can foster workplace by:

. ·• ·.· DeniO!lstratlng cxccutive-lcvel support tor pcrlbnmmcc management:
" Providing a positive and challenging work envirorunenL
.• • Attending to employee engagement activities.
• training managers in pcrtbnnance management, including legal issues: .
· • . Holding managers accountable for thdr role in pcrfortnll!lcc
mtrnagcmenL
Providing <.:ontinunlleedback from managers, peers,
.··others,... not just at performance appn1isal meetings.
Providing ilie proper resources and tools .. ···
Maintaining .
180 © 2015 SHRM

)
il ORGANIZATION Workforce Management
' )
j
)
. I
A manager for a retail clothing chain regularly gives "meets expectations"
ratings on all employees' performance evaluations, regardless of actual
performance. This way the manager makes sure that all employees receive a
Ethical raise in pay.
Practice An HR practitioner notices this pattern and looks into the case more closely.
Competency
) in Action
The practitioner explains to the manager that it would be very unusual if none of
I\ the store's employees was a high achiever or an underperformer. While the
I, manager's ratings might be understandable-rating everyone the same is
I probably faster and may help the manager avoid difficult situations with the
I) store's employees-the situation is basically unethical. The company's
performance management system is clear, and the manager is ethically bound
to apply the company's policies and protect the company's interests. By not
)
recognizing and taking action to correct specific performance shortcomings, the
) manager is not acting in the company's interest. In addition, by not providing
) accurate performance assessments, the manager is depriving high-performing
employees of the recognition they deserve. One could also say that this is unfair
)
to lower-performing employees since it deprives them of opportunities to
improve.
)
)
This description of the situation leads to a more-open discussion about the
manager's reluctance to cause dissent in the store. The manager agrees thai
)
this is a problem, and the HR practitioner and the manager plan some
) development interventions to improve the manager's confidence in working with
employees.
} - - - - · - - - ---""T"'I,e·HR p1actitiollel slluws the ethical pracliC·e competency by tocusuig
on the---···----
ethical aspects of what could be viewed solely as a policy issue. The outcome
benefits the company, the manager, and the store's employees.
Measurement and Feedback

The typical method of measuring employees' adherence to performance standards
and providing feedback is the performance appraisal. This process measures the
degree to which an employee accomplishes work requirements.
Performance appraisals accomplish three purposes:

• Provide feedback and counseling.
• Help in allocating rewards and opportunities.
) e Help in determining employees' aspirations and planning developmental needs.
)
Administered on an individual or group basis, effective perfonnance appraisals can:
)
• Improve productivity through constructive feedback.
)
• Identify training and developmental needs.
I
)
}
© 2015 SHRM 181
}
• Communicate expectations.
• Foster commitment and mutual understanding.
In some countries performance appraisals can have legal implications. HR

professionals should be aware of employment laws that may affect this process and
discuss good practices with legal advisers.
Individual appraisals include the steps illustrated in Figure I 6.
1. Observe employee periorming

the job.
/
5. Set goals for performance 2. Identify and record strengths and
improvement. { arJs for improvement.
4. Provide reinforcing and 3. Rate employee on progress toward

corrective feedback on previously stated objectives.
employee
Figure 16: Individual Appraisals
Group appraisals use standards that are applied evenly across the group rather
than appraisals for individuals. Such a system can be beneficial for selt:directed
work teams.
While performance appraisals are a formal method of evaluating and giving

feedback, managers can also give feedback informally on the results of more
casual observation. Good perf01mance should be rewarded, but rewards are nol
limited to salary increases or bonuses. Well-phrased praise is often an effective
reward for good perfonriance.
I To ensure effectiveness, evaluations of performance-whether individual or

group--should be communicated continuously, not just conducted as an mmual
appraisal. That allows managers to regularly monitor their employees' progress
and coach employees in areas for improvement. Ideally, information that
employees receive during performance appraisals should never be a surprise to
the employee,
182 © 2015 SHRM

Appraisal Methods
A common approach to performance appraisal involves the employee and the
direct supervisor. In some organizational cultures and environments, peers and
subordinates may be asked to provide input on an individual's performance. This
may be done with a 360-degrec approach to performance appraisal.
.) There are several methods available for conducting an appraisal:

)
) • Category rating methods. The least complex means of appraising

) performance, in category rating methods the appraiser marks an employee's
) level of performance on a designated fonn. Examples include:
o Graphic scale: The appraiser checks the appropriate place on the scale
for each task listed. A typical example is a five-point rating scale where 1
is significantly below standard, 3 is standard, and 5 is significantly above
) standard. Frequently, a "Comments" section is included in which the
) appraiser can provide more detail about the employee's performance. The
) limitation of this method is that sometimes separate activities may be
grouped together and rated as a unit rather than individually.
· checks the items on the list that describe the characteristics and
performance of an employee. Sometimes the items are weighted and then
tabulated to arrive at a quantifiable result. This system is limited in that
different words or statements may be interpreted differently by each
appraiser.
• Forced choice. This is a variation on the checklist method. The appraiser

is required to check two of four statements: one that the employee is most
like and one that the employee is least like. The items are generally a
)· combination of positive and negative statements. One limitation of this
rating method is that constmcting valid statements is difficult.
* Comparative methods. The appraiser directly compares the performance of

each employee with that of the others. Examples include:
• Ranking. The appraiser lists all employees from highest to lowest. If

there are 20 employees, the appraiser ranks them in order from I to 2Q .........
best to poorest in pcrtimnance. This system is limited in that the amount
© 2015 SHRM 183

of difference between the varying numbers is not prescribed. There may

be little difference between numbers 2 and 3 and a big difference
between 10 and 11. Appraiser bias and/or varying performance standards
may also limit this method's effectiveness.
" Paired comparison. Each of the employees is paired with every other
employee and compared, one at a time, using the same scale for
perfonnance. This method provides more infmmation about individual
employees than ranking. A limitation of this technique is the time
required to evaluate each possible pair of employees.
w Forced distl'ibution. Employees are rated and placed at different

percentage points along a bell-shaped curve, as shown in Figure 17.
Below Above
Poor Standard Excellent
Standard Standard
v
10% 40% 10%
20% 20%
v . ··--
Figure 17: Forced Distribution Bell Curve
The limitation with the forced distribution method is that some

employees must be placed in the lowest section and some must be placed
in the highest section regardless of their ability. It can be difficult for the
manager to explain the employee's position on the curve.
• Narrative methods. The appraiser submits written nmTative performance

appraisals. Examples include:
• Essay. The appraiser writes a short essay describing the performance of

each employee during the rating period. Ordinarily, the appraiser is given
several topic areas for comment. One limitation of this method is that
appraisers have varying writing abilities that may influence the quality of
the rating. Another limitation is that the method is time-consuming and
difficult to quantify for administrative purposes.
184 © 2015 SHRM

" Critical incidents. A record of employee actions is kept in addition to

actual ratings. Both positive and negative actions are recorded for the
entire rating period. A limitation of this method is that critical incidents
may be identified and defined differently by each supervisor.
Additionally, cataloging these incidents for each employee on a daily or
weekly basis may be time-consuming.
) Field review. The supervisor or manager and a human resource

) professional cooperate in this method. The HR professional interviews
) the supervisor and takes notes concerning the perfonnance of each
) employee. After the interview, the notes are compiled by the HR
) department and comparison ratings are arrived at for each employee.
) Then the ratings are submitted to the supervisor for approval or changes.
The effectiveness of this method may be limited by the amount of control
the HR department has in establishing the rating, and it may also be time-
) consuming if a supervisor is responsible for a large number of
) employees.
There are two special appraisal methods that cnn be used to overcome some of
the difficulties associated with appraisal.
In management by objectives (M_BO), the employees help set objectives for

I themselves, defining what they intend to achieve within a specified time
)
period. The objectives are based on overall goals and objectives for the
)
organization.
When the employee has set goals and objectives, there is a dialog between
the employee and the manager, so mutual agreement may be used to finalize
the goals and objectives. In this way, the goals and objectives are not
imposed upon the employee but still reflect the goals of the organization.
)
Assumptions that form the foundation for JV!BO include the following:
)
• A strategic plan is in place.
)
• A higher level of commitment and perf01mance results from employees
)
who plan and set their own goals.
)
• The employee will better accomplish objectives that are clearly defined.
• Performance objectives are measurable and specify desired results.
© 2015 SHRM 185

• Another special appraisal method is the behaviorally anchored rating

scale (BARS). The BARS method was designed to overcome the
problems of category rating by describing examples of desirable and
undesirable behavior. Examples arc then measured against a scale of
performance levels.
Clearly indicating the behavior associated with each level of performance

helps reduce some of the-Hin1tations inherent in other appra1sal methods.
Figure 18 on the next page is an example of BARS for a receptionist

position.
The BARS method offers several advantages, including:

More accurate gauge.
" Clearer standards.
" Feedback.
" Independent dimensions.
The BARS method works best in situations where many employees are
performing the same tasks. This method requires extensive time and energy
to develop and maintain. Additionally, different BARS must be developed to
measure employee performance for different jobs. For example, in a printing
company, keyliners, plate-burners, printers, and quality control workers
would each need their own BARS.
186 © 2015 SHRM

Positive and cheerful with visitors; shows them to the

refreshment area" Lets visitors know when there is a delay.
Keeps desk area as well as entire reception area neat and
Outstanding 5 organized. Very responsive to callers. Is able to handle
some requests directly. Efficiently prioritizes and completes
project work independently. Seeks additional project work
in less busy times.
'j
) Cheerfully greets visitors, points out refreshment area.
) 4 e Desk area is neat and organized" Responsive to callers and

takes extra steps if the matter seems urgent. Completes
most project work efficiently and independently.
Greets the public in a pleasant manner, keeps desk
organized and neat, answers and transfers telephone calls
Satisfactory 3 <: correctly. Completes some project work with direction
needed"
Proficient with the telephone system, but some mistakes in
2 <: transferring calls correctly. Desk area is usually neat.
)
Attempts project work but needs much direction"
) I Uncomfortable with telephone system features and

I frequent mistakes when transferring calls. Desk area is
)
Unsatisfactory 1 <: disorganized and cluttered. Trouble focusing on and
completing work projects in less busy times, even with
direction. Often fails to greet visitors positively.
--··---"-- ------
Figure tB:BARS Example for Receptionist Position
)
}
Developing BARS typically requires an organization to:
I
)
• Generate critical incidents.
• . Develop performance dimensions.
• Reallocate incidents.
• Scale the incidents.
• Develop the final instrument.
In order lo select the best appraisal method tor an organization, the advantages
and disadvantages of each method should be weighed.
Figure 19 provides some advantages and disadvantages for a selection of the

appraisal tools discussed above, as identified by Gary Dcssler in Human
Resource A1anagemenl.
© 2015 SHRM 187

Graphic scales Scales are simple to use and Standards may be unclear.
provide a quantitative rating for
each employee.
Ranking Ranking is simple to use but not Ranking can cause disagreements
as simple as graphic scales. among employees and may be
unfair if all employees are excellent.
Forced Distribution forces a Appraisal results depend on the
distribution predetermined number of people adequacy of the original choice of
into each group. I cutoff points.
Critical Tool helps specify what is "right" It may be difficult to rate or rank
II incidents and "wrong" about the employees relative to one another.
I
employee's performance; it
forces supervisor to evaluate
j•
subordinates on an ongoing
basis.
"I
I MBO Tool is tied to jointly agreed-upon Tool may be time-consuming to
I
,.
11
BARS
performance objectives.
Behavioral "anchors" are very
implement.
BARS may be difficult to develop.
accurate.
I
r Figure 19: Advantages and Disadvantages of Selected Appraisal Tools
I
in Performance.AppraisaL . .
Any appraisal rating method is subject to common errors; none is entirely
foolproof. The following are some common errors that may be seen when an
appraiser is conducting an appraisal of employees and assigning a rating.
• Halo/hom effect. The halo effect may occur when an employee is extremely
competent in one area and is therefore rated high in all categories.
Conversely, the horn effect may occur when one weakness results in an
overall low rating.
• Recency. The recency enor occurs when an appraiser gives more weight to
recent occurrences and discounts or minimizes the employee's earlier
performance during the appraisal period. It may occur because of the
inability of the appraiser to remember employee pertonnance of 8 or 12
months ago. Additionally, as a performance review draws near, many
employees may improve their performance in anticipation of a higher
evaluation.
188 © 2015SHRM
• Primacy. The primacy error occurs when an appraiser gives more weight to
the employee's earlier performance and discounts or minimizes recent
occurrences. This may be due to the primacy effect, where individuals tend
to pay more attention at first and then lose attention.
• Bias. When an appraiser's values, beliefs, or prejudices distmt ratings (either

1
) consciously or tmconsciously), t.he error is due to bias.
e Strictness. Some appraisers may be reluctant to give high ratings. In the case
of strictness, appraisers who believe that standards are too low may inflate
the standards in an effort to make the standards meaningful in their eyes.
These appraisers have higher expectations than appraisers of the same
performance in other depmtments. So although the employees of the strict
appraiser may be performing better than employees in other departments,
) their ratings may be lower.
)
) o Leniency. Leniency errors are the result of appraisers who do not want to give
low scores. All employees in this case are given high scores. If an employee is
discharged after being the beneficiary of such "overevaluation," the appraisal
may belie the legitimacy of the reason articulated for the discharge. In other
J----_,,,, _ _ ______w"'"Qrds, overev!lluation may, give rise"to_a_flnding of pretext in Jitui-gg,aautiuoun_ __
Additionally, employees who have not received clear, honest feedback have
limited opportunity for improvement and thus future success.
e Central tendency. Central tendency errors occur when an appraiser rates all
employees within a narrow range, regardless of differences in actual
performance.
• Contrast. The contrast e!Tor occurs when an employee's rating is based on

how his or her perfom1ance compares to that of another employee instead of
on objective perfom1ance standards. However, it is legitimate for an
employer to rank employees and compare them with one another as long as
their performance is judged initially against objective standards.
Appraisal Meeting
)
The effective performance appraisal is a job-related planning activity that is
shared by the employee and the supervisor. Input from both is essential for a
)
successful outcome. The perfonnance appraisal process can provide both the
© 2015 SHRM 189

appraiser and the employee with a sense of accomplishment, direction in

priorities, and commitment to a specific career path.
Employees need to know how they have been rated so they have a ciear
understanding of how they fared in the eyes of their appraiser and the
organization. The appraisal meeting gives the appraiser an opportunity to discuss
the rating, the rationale, and future development.
After the discussion about performance, the appraiser and the employee work
together to create a performance improvement plan, a plan of actions that will
help the employee meet or exceed organizational, departmental, and/or
individual goals.
At this point in the appraisal meeting, the appraiser and the employee must:
• Gain agreement on the appraisal ratings.
e Set specific objectives that the employee is to achieve before the next
appraisal period.
• Create an implementation plan for how the employee will meet the
objectives.
• Discuss how the appraiser will follow up with the employee to see that the
objectives are oe!ng-mef___
• Discuss what must be accomplished before the next review period.
In addition to evaluating past performance against agreed-upon objectives, the

performance appraisal should offer the opportunity for the supervisor and the
employee to jointly discuss the employee's training and other developmental
needs. The employee's interests and aspirations should also be considered so that
longer-tem1 development can be planned and arrangements can be made to test
the potential for such career growth.
Documenting Employee Performance

The performance appraisal is not complete without documentation. From a
legal perspective, performance documentation may be among the most
important items in an employee's personnel file. Good documentation can
prevent legal challenges as well as be the difference between winning and
losing a lawsuit.
190 © 2015 SHRM

If I
! I
I All perfonnance documentation must be developed as close in time to the
I incident as possible and must also be specific, objective, accurate, and

consistent. It is often more challenging when an organization has documentation
that is pooriy drafted versus having no documentation at all. Many employee
lawsuits are won by plaintiffs not because of lack of documentation but because
of poorly written chronicles.
)
Documentation is not only valuable in sheltering an organization from litigation;

it can be used to improve employee performance by influencing training and
career development activities.
Business Results and Employee Growth

Business Results
As discussed previously, the performance management system cascades
organizational values and goals through the performance standards, employee
petformance plans, and employee outcomes. The business results then loop
back to impact the overall goals and strategy of the organization.
Business results ultimately provide value to stakeholders and may affect

financial earnings, business processes, quality outcomes, customer products or
----sei·vices, or othei:areas ofimpmiance to the -
.I
As business goals and strategies change, so too should the nature of the
perfonnance management system. Organizations will want to track the
effectiveness of the perfonnance management system and make adjustments as
needed.
One approach to evaluation that integrates business results is the balanced

scorecard. The balanced scorecard provides an overall picture of an
organization's perfotmance as measured against goals in finance, customers,
internal business processes, and learning and growth. Each scorecard is
designed individually to reflect the unique goals of the organization. The
perfonnance of individual employees is appraised against departmental
objectives that support these same goals, which in turn yield information about
)
the effectiveness of the performance management system itself.
)
© 2015 SHRM 191

For more information on balanced scorecards, refer to the "Structure of the HR

Function" Functional Area in this Organization module.
Employee Growth and Rewards

Pe1fom1ance improvement plans and organizational support help the employee
meet organizational, departmental, and/or individual goals. The employee brings
certain knowledge, skills, and attributes to the job but will also have grown
professionally through the work and development activities.
The performance management system should include careful attention to fair and
meaningful recognition and rewards. Job satisfaction and retention surveys
indicate that while monetary rewards are valued, it is often appreciation,
recognition, career growth opportunities, manager relationships, and other
intangible rewards that keep employees with an organization.
Additional information regarding performance management can be found in the

"Employee Engagement" Functional Area in the People module.
Succession Planning
______,S,ul!ccession planniJ.!g is an impor!f!!lt talent manageJJ.l()f.lt strategy to he!pidentify
and foster the development of high-potential employees. Succession plans focus
on positions that are the most critical to the future needs of the organization. The
goal is to "keep talent in the pipeline" and have people in place for future roles in
the organization.
It is important to recognize that succession planning, like other aspects of talent

management, applies to employees at all levels of the organization. It should not
be applied exclusively to senior management.
Succession planning must be closeiy tied to and aligned with several other
human resource management functions, including the following:
$ Career management. Succession plans help to ensure that individuals in

specific talent pools obtain the insights, awareness, and field experience
necessary to make ongoing contributions to the organization.
192 © 2015 SHRM
I
• Training and learning. Structured training experiences provide the

knowledge and skills necessary for success in various positions on the career
advancement ladder.
o Performance management. Succession planning must also be carefully

aligned with the organization's performance management process to ensure
that futttre managers and functional experts receive the ongoing
developmental feedback, critical evaluation, and mentoring required to
maintain their professional development.
Succession planning is a strategy that targets long-range needs and focuses on

the cultivation of talent to satisfy those needs. Replacement planning
concentrates on immediate needs and a "snapshot" assessment of the availability
of qualified backups for individuals in key positions. Replacement planning is an
)
impmiant element in business continuity planning in the event of an emergency
or business interruption.
)
)
Figure 20 compares succession planning and replacement planning.
Planning focus Pool of talented candidates with Vertical lines of succession witl1in
capabilities for several assignments units or functions
-------j---------------+---------------------
Planning Specific plans and goals set for the Usually informal, status report on
development 1 individual strengths and weaknesses
) Flexibility Flexible plans th;tare Limited by plan structure; however,
promote development and thinking in practice has a great deal of
) I1 about alternatives flexibility
Plan basis of input and ----- I Each manager's best judgment
among multiple managers based on observation and
I
Evaluation Multiple evaluations by of pertormance on the-
managers on different assignments; jOb over time; demonstrated
I testmg and broadening early in coi.llpetence; progress through the
)
-----·-----------l career __ ______uni_t_______
Figure 20: Succession vs. Replacement Planning
© 2015 SHRM 193

An important aspect of retention is to retain high performers in the

organization. Succession planning demonstrates to employees that the
organization has an interest in their knowledge and skills and is committed to
their career development. By identifying crucial job skills, knowledge, social
relationships, and organizational practices and passing those on through
succession planning, employers help to ensure the seamless movement of
talent within the organization.
Succession planning also has the potential to help organizations withstand

times of demographic changes and talent scarcity. Succession planning enables
organizations to harvest critical organizational knowledge so it can be shared
with subsequent generations of workers.
Succession Planning Process

An effective succession plan process incorporates seven components, as shown
in Figure 21.
• Visible support from senior leadership • The use of succession planning to

and all members of top management reinforce organizational culture
• Clearly defined leadership cntena • A process that focuses· heavily but·
not exclusively on leadership
• A defined plan to find, retain, and
development
motivate future leaders and high-
potential employees • A process that is a real
organizational priority
• A simple, easy-to-follow, measurable
process
Figure 21: Components of Successful Succession Plans
Careful thought should be given to selecting candidates for succession planning

so that individuals with development potential are chosen. Although succession
plans typically identify current management employees, nonmanagemenl
employees who show promise should not be overlooked.
Once candidates have been selected, well-conceived training and development

arc critical to preparing candidates to step in and take charge of the targeted
positions. HR has an important role in determining the most efficient and cost-
effective method(s) to develop employees for the future.
194 © 2015 SHAM

Developing future leaders may include in-house training, mentoring, coursework

from outside sources, or special projects specifically designed for the employee.
Whichever techniques are chosen, the training should he aligned with the
succession plan and the overall organizational strategy.
Common mistakes made in succession planning include:

l • Basing future staffing needs on only past or current experiences.
) • Developing succession plans in isolation.
) • Making it a once-a-year event instead of an ongoing management activity.
Evaluating Succession Planning

As with all planning activities, succession planning must be evaluated to
detennine its effectiveness.
)
At the onset of succession planning, standards should be established about what
)
success looks like and metrics identified as to how program success will be
)
measured. Standards and metrics used to evaluate succession planning will vary
but should generally attempt to assess:
)
• Employee satisfaction with personal development initiatives .
)-.. .--···-----···--"-.. Management .satisfaction with employee perfonnance . .---···--····-
• The extent of goals achieved and the time to full-function attainment.
Changes in organizational management are inevitable. Positions become vacant

due to retirement, resignation, death, new business opportunities, or other
reasons. Succession planning helps to provide continuity in leadership and avoid
extended and costly vacancies in key positions.
Additional infonnation on succession planning is available through SHRM's

"Engaging in Succession Planning" Toolkit at www.slu111.org/TemplatesTools/
Toolkits/Pages/EngaginginSuccessionPlanning.aspx. (This resource is available
to SHRM members only.)
)
)
© 2015 SHRM 195
)
ProgrGss
Directions: Choose lhe best answer to each question.
1. What is the goal of talent management?

( ) a. To ensure consistent training
( ) b. To reduce costs
( ) c. To develop skills
( ) d. To increase workplace productivity
2. What is an example of flexible staffing?

( ) a. Freelancing
( ) b. Reductions in force
( ) c. Outplacement
( ) d. Compressed workweeks
3. What are the two key elements of performance standards?

( ) a. Words and actions
( ) b. Personality and character
( ) ·e:. Behavior and results - - - - - - - - -
I
i
( ) d. Knowledge and skills
I 4. What is measured by a performance appraisal?

( ) a. The degree to which an employee accomplishes work requirements
( ) b. The degree to which an employee is developing
( ) c. How well an employee follows directions
( ) d. Alignment between employee actions and organizational strategy
5. What is MBO short for?

{
\ ) a. Master of business operations
( ) b. lv!anagement by objectives
( ) c. Missing back orders
( ) d. Main business office
196 © 2015 SHAM

I
I ) ORGANIZATION Workforce Management
Q)
6. What is the process of identifying and fostering the development of high-potential
'
I'
employees?
(
(
)
)
a. High value recruitment
b. Talent management
!
I
I
) (
(
)
)
c. Succession planning
d. IFD
J
)
)
)
)
- - --- .--- --- ---
© 2015 SHRM 197


i. d (p. 170)
2. d (p. 175)
3. c (p. 179)
4. a (p. 181)
5. b (p. 185)
6. c (p. 192)
I
I i
l
II
198
© 2015 SHRM
. I. )
I
Section 4:
Knov:ledge Management
)

• Designing and implementing programs and solutions for management and retention of
organizational knowledge.
• Designing and implementing strategies to retain organizational knowledge.
) ------------flThrwiss-sseotien is -------------
) • Knowledge management, retention, and transfer techniques.
)
)
)
.)
)
)
)
Managing Organizational Knowledge

In today's complex and highly competitive global environment, an organization
must capture, house, and share its knowledge, information, practices, and
policies. It is equally impmtant to prevent the knowledge loss that can occur
through layoffs, retirements, reassignments, and voluntary resignations.
For the HR professional, this effort is focused in two areas: knowledge

management (KM) and HR information technology.
Knowledge Management Systems

Knowledge management (KM) is the process of creating, acquiring,
sharing, and managing knowledge to augment individual and organizational
perfonnance. KM programs typically focus on two key elements:
• Expe1tise sharing and organizational learning
e Knowledge retention and the reduction of knowledge loss due to
employee attrition
HR professionals play a key role in fostering KJvL They instill a knowledge-

sharing attitude in new employees and use training and performance
systems toencourage creativity, innovation, and
transfer.
There are many types of information that can be the focus of organizational KM
efforts, such as:
• Leadership characteristics and behaviors.
• Supplier management information and techniqnes.
Process control in operations.
• Infmmation management practices, techniques, and specifications.
o Problem-solving techniques.
* Innovation best practices.
o People commitment procedures, policies, and practices.
• Customer satisfaction practices, programs, skills, and techniques.
a New product, service, or technology launch and introduction practices.
• Change management practices and capabilities.
l
I
200 © 2015 SHRM
The HR practitioner for a large marketing firm has a problem to resolve.

There has been friction between two employees: one in the iT department
and the other in production. The IT department employee is permitted to
work a flexible schedule with extended iunchf's, while the production
Belationship employee is not.
Management
Competency The HR practitioner helps manage the relationship between the employees
in t\ction as well as between each employee and their immediate supervisor and
)
between the two supervisors. He meets with the supervisors and the senior
) leaders of both departments to understand the differing work requirements
) and demands of both departments, and he agrees that it is acceptable for
the IT department to allow more flexibility while production demands require
less flexibility.
Because he has a good working relationship with all of the parties, the HR
practitioner is able to reduce tile friction between the employees and clarify
the requirements for both departments. In addition, he helps the employees
understand that a flexible work policy and practice are not rights but rather
opportunities that can be used when a particular situation permits.
Knowledge Management Process

Knowledge management systems in organizations tend to be either informal or
formaL
• Informal systems at ise as employees and teams gain expenence arid develop
the ability to recognize and identify critical information, best practices, and
experiences. While informal systems are very inf1ucntial and important to
organizations, they tend to be based on personal networks and consist heavily of
) personal contact information.
• Formal systems are characterized by a structured, fonnal procedure for

capturing information and a specific repository for the information that is
gathered.
Figure 22 on the next page describes the steps to a formal KM system.
Uses of Knowledge Management Systems

Organizations adopt and use KM systems in a variety of ways:
• KM systems have been implemented by law enforcement agencies to manage

large volumes of information while streamlining and systematizing each step of
crin1ina1 investigations.
© 2015 SHAM 201

1. Inventory This step involves cataloging the organization's collection of

knowledge tangible assets. Collections often include white papers,
assets. proposals, presentations, business and marketing plans, and
growth and expansion plans. Some components of information
systems (e.g., connections and lists of employees with specific
skills, experiences, and assignment responsibilities) are also
commonly added to the inventory.
2. Create a Typically, an organization's library or knowledge repository is

knowledge available over its Intranet or through a dedicated application. The
repository and access tool must be quick and easy to use and have a powerful
directory. search capability. More sophisticated systems, such as human ·
capital management systems, may oiler the ability to forecast
information for new projects and assign team members based on
skill and experience matches.
3. Encourage This step involves implementing communication, training, and
system use. other processes designed to ensure cultural applicability and
overall acceptance of the system. If the system is not perceived
as essential to the successful operation of the organization, its
success is uncertain.
4. While keeping the database up-to-date often represents a

system. challenge for the organization, continuous updates are essential
to ensure the integrity and credibility of the system.
Figw e 22: SffJ{Js loFormai KAowledge System.__ _ _
• A growing number of retailers such as Wal-Mart are mining their knowledge

databases to identify consumer buying trends. By identifYing items that
consumers frequently purchase at the same time, retailers can create point-of-
purchase and other product promotions to spur sales of multiple products.
• Pharmaceutical companies such as Eli Lilly often use knowledge management

systems to help them manage the exceptionally long product development and
approval cycles that are typical in this industry. A knowledge management
system can help ensure that critical information gathered dming the early years
of an investigational compound's development flows through the organization
and is accessible at the lime of regulatory approval and eventual product launch.
Consulting firms such as McKinsey and Bain & Company have created
knowledge databases to capture experiences and organizational learning from
every assignment.
202 © 2015 SHRM

f
L
II
• The Accenture Delivery Suite benefits from Accenture's collective experience
and translates that knowledge into a set of proven methods, tools, metrics, and
architectures. The model is global and collaborative. It establishes a common
language and environment that helps Accenture's professionals to begin
contributing immediately and to continually improve the organization's
practices.
l
1
• A Willamette University case study on the Intemational Federation of Red
Cross and Crescent Societies (fFRC) notes that the 185 societies that comprise
the international association derive their value from a deep knowledge of areas
I J
and their stakeholders, a knowledge that allows the organizations to respond
quickly during disasters. Every engagement is a chance to acquire and distribute
additional infmmation. To capture this infom1ation, teams file "after action
reports" that focus on lessons leamed and best practices. Details from
operations are compiled in a Disaster Management lnforn1ation System, which
provides access to data in real time to all IFRC members. Having this
information allows local societies to use previous reports to prepare for cyclical
disasters.
J Critical Success Factors for Knowledge Management Systems

--·--·
)··---···--·--·· Organizatitms that excel at knowl:edge·management focus ori seveniT key tiictors:
)
J
• Creating an environment and structure that encourage the capture of best
) practices and facilitate sharing and cross-fertilization
) ® Recognizing that information must travel within and be retained in the
) organization
• Appreciating the role and importance of personal networks in knowledge
and infonnation transfer
) • Establishing a knowledge-friendly, data-sharing culture (Individuals across
) cultures and across hierarchical levels must feel encouraged to share their
knowledge and ideas.)
• Seeing where knowledge exists and where it is liable to be lost or underutilized
• Helping people develop information management and data access skills
• Addressing the "What is in it for meT' question (Those who "borrow"

knowledge from the system should also "deposit" knowledge. In other words,
J
© 2015 SHAM 203
employees should be both givers and takers of knowledge. Seeing the process
as reciprocal and mutually rewarding encourages its use and vitaliiy.)
® Developing criteria to define and measure successful KM projects
Q Identifying and addressing multicultural challenges, such as multiple languages

within the organization and different preferences for screen design
Social Sharing of Kno1Niedge

Most employees recognize that much of what they need to perform better,
improve their skills, and gain more knowledge is around them all the time:
leaming by observing colleagues, receiving coaching from a supervisor, and
having access to proven ideas and best practices as well as simply getting on-the-
job experience every day.
Knowledge transfer is especially impotiant and attractive in a global

organization. In The Global Challenge: International Human Resource
Management, Evans, Pucik, and Bjorkman note that "the transfer of personnel is
one of the most important levers of knowledge sharing that firms have at their
disposal." Knowledge moves throughout the organization in a social manner as
_______ employees into 11ew positions or l()Cations an_d form new work
relationships. Their experiences may increase the organization's understanding
oflocal laws and business practices, local market needs and competitive
dynamics, and the strengths and development needs of local workers. Many
organizations use some type of human resource information system (described
below) to manage assignments and track assignees. Organizations that have
these systems in place may be able to expand or modify them so they can be
used to capture and manage the knowledge gained.
The challenge for companies is to transfonn the inherently ad hoc nature of this
social learning and knowledge transfer into something with more structure and
rigor. Social networking and collaboration technologies can be used to create
learning and knowledge management opportunities.
Social media has great potential to hamess the experiential dimension of the
workplace. The question is how to do it in a way that advances the business and
also contains the risks. Organizations need to provide more robust tools that
make collaboration even more accessible to and efficient for the broader intemal
204 © 2015 SHRM

I and external ecosystem while also educating users on how to be effective and
more accountable social media users.
Social learning doesn't necessarily require technology-based tools. Coaching and

mentoring programs are social learning opportunities that require planning and
time from supervisors but little capital investment. They can also support
employees who don't fit the typical knowledge worker prot!le.
By building social learning solutions, an organization can leverage the biggest

database of all-the collective experience of people both within and outside their
)
own organization. Social learning can tum an entire organization into a
) corporate-wide teaming team.
t-Uilnformation Technoloav
._"'
Technology has allowed HR to eliminate or simplifY some administrative tasks
(e.g., benefits administration and record keeping) and increase its attention on
more strategic tasks (e.g., knowledge and talent management and strategy
' ) development). In recent years, HR professionals have experienced a greater need
for broad-based employee infonnation to help them make effective decisions and
maintain necessary infonnation, especially for compliance purposes.
)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
HR professionals must develop and use new tools-new technologies, processes,
)
and techniques-if they are to improve their efficiency and fulfill their strategic
and transformational roles.
)
In addition to KM systems, there are two other impmiant types of HR
infonnation technology:
e Hutnan resource infom1ation systen1s
e Communication platforms
t1uman Besource !nforrnation Systerns

A human resource information system (HRIS), also known as a human
resource management system (HRMS), is a systematic tool for gathering,
storing, maintaining, retrieving, and revising HR data. HR!S applications are
technological tools for performing basic HR functions, such as payroll,
) compliance, employee life-cydc management, or managing training or
) knowledge libraries. Application suites are available from multiple sources;
© 2015 SHAM 205

)
some may be part of a broader enterprise resource planning (ERP) system

used by the entire organization.
I-IRIS tools are now often one component of an enterprise-wide infonnation

system. If the organization is investing in an enterprise system, HR should
ensure that it addresses HR needs.
HRIS is covered in more detail in the "Technology and Data" Functional Area in
this Organization module.
I Conununication Platforms
I ,,
il
'
Employees want to be kept informed, but most companies do a poor job of
communicating and keeping employees involved, especially over distances,
across lime zones, and in different languages. Employees in most organizations
continue to state that they are not aware of the company's strategies, direction, or
key initiatives. Furthetmore, people leaving the organization often cite lack of
communication and feeling cut off from the company as primary reasons for
their departure.
I,_ HR should play a crucial role in providing better access to relevant infonnation
' ---and in niore regular commuiucatJOn wJth employees, partners, and
Technology has played a valuable role in facilitating this communication:
• Intranet and extranet platfot·ms. An intranel is for internal company

information; an extranei links an organization with its suppliers, vendors, and
partners. Both of these communication portals are accessed through a browser,
and they often contain links for the company mission statement and goals,
products, divisional information, HR policies, company financial reports,
FAQs (frequently asked questions), press repmts, and the latest news. Tn a
global organization, the enterprise's portal can be customized to a location---
retaining the organization's identity but placing it in a local work and cultural
context
• Virtual meetings. Voice over Internet Protocol (YelP) and increased

transmission bandwidths have made it easier to combine voice, data, and video
in a single even from a desktop, laptop, or mobile device. These
applications have facilitated distance communication because meetings can be
206 © 2015 SHRM

held without travel requirements. Various software applications have been

developed to implement these capabilities. They can range from a simple VoiP
service, such as Skypc. to sophisticated vi1iual rooms that can be entered
through web pages and allow audio, video, texting, and document/application
sharing. These sessions can also be saved or archived for replay at a later time.
There are still scheduling, time zone, and language issues to contend with, but
these tools can at least be used at regional levels and previous sessions can be
archived for continued use at any time from anywhere.
• Corporate blogs. Blogs arc wcbsites used to communicate news and share
comments. Employees can post brief contributions to a discussion topic. Blogs
)
can be used, for example, to share information or ideas among members of a
)
project team. Blogs might also allow specific groups to express their own
cultures and in this way increase the organization's cultural awareness.
• Podcasting. Members of the organization can download digital media files

J (examples include speeches, PowerPoint presentations, or video
i demonstrations) at any time of day, anywhere in the organization, at a desktop.
Or content could be streamed (delivered live over the Internet).
Using Social Media

HR mttSt-also-find-ways-tointegratethe newsociati11ed!1fthat have
) dominant force in social and workplace communication. The Society for Human
Resource Management defines social media as "web-based tools and
technologies used to share information and tum communication into interactive
dialogues with internal or external audiences."
) Social media channels change the nature of communication. When statements

are made by a spokesperson, for example, there is often no feedback loop to the
) speaker. Instead, the statement unleashes a storm of commentary among
) pmticipants in various social networks, such as Twitter, Facebook, or lnstagmm.
The process of communication has become more complex and time-consuming,
and tbe possibility of contrplling one's message is more challenging.
The rather quick emergence of social media has caught many enterprises
unprepared. A survey by SHRM found that over 70% of organizations do not
have a social media strategy or policy. A clear policy is essential if
organizations-and HR··--are to realize the opportunities that social media create
and manage the risks they pose.
J
© 2015 SHAM 207
)
The SHRM report on social media dissected the benefits and risks associated
with an organization's use of this technology. These potential benefits and risks
are listed in Figure 23.
Recruitment and • Improved sourcing • Discrimination

selection • Better candidate quality • Inequitable impact
• Increased efficiency
Socialization and • Strengthened organizational • Impact of disgruntled workers
onboarding identity • Creation of cliques
• Reduced turnover
• Improved job satisfaction
. Training and • Reduced training costs • No impact of metrics
development • Increased training effectiveness • Inequitable access
• Continuous and self-directed
learning
Knowledge • Fast and inexpensive spread of • Inequitable access
sharing and access to information • Too much information
• Easy sharing • Rapid spread of incorrect, private,
or damaging information
Branding and • Access to new customers • No impact on metrics
marketing • Easier support of customer loyalty • Costs of maintaining/monitoring
• Efficiency media
Creativity and • Faster and more accurate • Slow ccinsensus-buildkig process
problem solving solutions • "Groupthink"
• Easier spread of new ideas
Influencing • Reinforcing culture • Coalescing of employees to resist
organizational • More effective means of change
culture/change communication • Establishment of undesirable
counterculture
Figure 23: Social Media-Benefits and Risks
The potential benefits of these HR applications of social media are fairly

of access and breadth of reach that support effectiveness
and efficiency. The potential risks may be less evident. Inappropriate use of
social media during recmitment and hiring can lead to violations of
antidiscrimination laws. By checking social media sites, employers may learn
things about candidates that they are proscribed from requesting during the
application process, such as gender, marital/family status, race, age,
origin, or presence of disabilities. Candidates and employees who do not have
access tosocial media may be excluded from recruiting campaigns or online
208 © 2015 SHRM

training and socialization. Speed of communication can lead to careless thinking

I and communicating.
I.
I And, like any technology, social media can be used for good or bad. Here are
some examples of how it can cause damage to an organization and its employees
and customers:
• An employee's complaints about an employer on social media can tarnish the
I )
employer's brand. HR professionals are advised that if employees are using
'I their own devices and tools on their own time, their comments constitute
'
protected speech in some countries.
• An employee can maliciously or inadvertently reveal infonnation about a
customer, harming the customer and exposing the organization to
reputational damage and possibly legal problems.
) e Unedited, off-the-record comments by a leader to a small group can quickly
) reach a large audience and necessitate rapid damage control.
)
For these reasons, organizations should develop social media policies and ensure
I I that employees, including managers, are aware of potential risks and the
organization's rules. The policy should be reviewed by siakeholders and legal
counsel and communicated to employees. Subsequent behavior should be
)-····-- ···---·----regularly miimtored aiid infracilons dealt with --- ---
)
accordance with relevant policies.
Knowledge management and HR information technology are also discussed in

the "Technology and Data" Functional Area in this Organization module.
© 2015 SHRM 209

Progress Check
I. How does knowledge management augment individual and organizational performance?

( ) a. By creating, acquiring, sharing, and managing knowledge
( ) b. By documenting HR value
( ) c. By controlling Intemet access
( ) d. By improving the accuracy of information
2. What activity is necessary for successfully implementing a knowledge management system?

( ) a. Establishing a 24-hour help line
( ) b. Identifying situations in which knowledge is lost or underutilized
( ) c. Deleting unnecessary knowledge from the database
( ) d. Writing ar1 article for the company newsletter
3. What does the acronym HRIS represent?

( ) a. Human resource integration supplier
( ) b. Human resource incident status
' .. _.... ·····--·--·---
c. Human resource .integrity siim ar s
.;._
( )
( ) d. Human resource information system
4. What is a benefit of using social media for knowledge sharing?

( ) a. Fast and inexpensive spread of and access to information
( ) b. No need for training programs
( ) c. Ability to prevent access when appropriate
( ) d. Decenh·alization of KSAs
210 © 2015 SHAM

) Progress Check Answers

I. a (p. 200)
2. b (p. 203)
3. d (p. 205)
4. a (p. 208)
)
)
)
)
)
)
)
)
')
I
' )
)
..· - - - - - - ...... .. ..- - · · - - · · - - --
' )
© 2015 SHAM 211

Employee Relations refers to any dealings between the organization and its
employees regarding the terms and conditions of employment. HR demonstrates
va!ue by ensuring that the appropriate framework, mindset, and practices are in
place to embrace or react or respond to the employment relationship, including
Responsibility Statements: Knowledge Topics:
Key responsibilities for ail HR professionals
include:
• Alternative dispute resolution techniques
• Causes of strikes, boycotts, and work
• Managing union/employee representative stoppages
interactions. • Child labor
• Engaging in appropriate and lawful union- • Collective bargaining process
management practices. • Communication approaches
• Representing the organization's interests in • Contract administration techniques
union-management activities. • Contract negotiation approaches
• Managing the collective bargaining process, • Disciplinary techniques
when appropriate. • Employee engagement approaches
• Governmental labor parties and party
• Resolving workplace labor disputes relations by nation
internally.
• Grievance, complaint, and conflict resolution
• Managing arbitration and mediation techniques
processes. • Industrial relations
• Participating in or facilitating alternate • International Labor Organization (ILO) core
) dispute resolution processes. labor standards
) • Understanding and making • International labor practices

recommendations to respond to other types • Investigation techniques
) of employee representation (e.g., • Labor economics
I government, legal). • Labor environments (e.g., pluralism,
radicalism, unitarianism)
,)
Key responsibilities for advanced HR • Labor rights
professionals include: • Living and fair wage concepts
• Consulting on and developing an effective • People-management techniques
...__l_ab_or stratf)_gy (i.e.,avoidance or • Positive union/management relations
}- apptoacltes----· ..- - - - - - - - - - - - , ---····-
acceptance) with the desired impacfon the
organization and its workforce. • Recognition approaches
• Educating employees, managers, and • Service award approaches
) leaders at all levels about the organization's • Social movement unionism, new unionism
labor strategy (i.e., avoidance or proletariat
) acceptance) and its impact on the • Socialism, syndicalism, anarcho-syndicalism
) achievement of goals and objectives. • Standard workday
• Strike actions, secondary actions, general
Sample Application of Competencies: strikes, sit-down strikes, work-to-rule
• Survey techniques
• Ethical Practice--The ability to maintain
• Trade unions by nation
I confidentiality and appropriate levels of
transparency in ways that balance the
• Trade union federations
needs of employees and the organization.
• Unfair labor practices
• Union acceptance and avoidance
• Relationship The ability approaches
to manage interactions that balance • Union attractiveness
) organizational and employee needs. • Union membership
• Critical Evaluation-The ability to • Union structures
interpret labor activity information and data • Unionized labor history
for making appropriate decisions about • Works councils structures and approaches
the organization's response to employee • World Trade Organization
concerns or third-party representation.
Introduction
Employees are often described as an organization's most valuable resource.
They also offer the most risk. Risk is defined as the effect of uncertainty on
one's objectives, and that effect can be both positive and negative-presenting
employers with opportunities or threats. An involved and engaged workforce
that communicates and interacts well and has developed trust is more productive
and creates more value for the organization in the long nm. Weak employee
relationships, however, can lead to complaints, disciplinary problems, work
stoppages, and litigation-all of which damage cohesiveness, detract from the
organization's public image, and steal time that could have been used
productively. A poorly managed relationship with the third parties who are
sometimes involved-unions, works councils, governments, and other
agencies-can decrease an organization's strategic flexibility and increase costs.
HR plays a critical role in developing and implementing this relationship---a

relationship that is, to vmying degrees, legal, practical, and ethical in nature.
. . .
.. reJatiortsliip with empldyces; While }llanagem<.>nt ami employee
cngagc.rncnt focus on tile organizatlmi's nilationshlp wilh individual emp!oyt:cs, ...
employee relations focuses on building a culture that promotes , .
productive relationship and employees as a ·
Functional Area Overview

Area covers the lui lowing topics:
• Section l, "The Employment Relationship," examines the way in which

human resource management has been applied to the employment
rel3tionship and the c;mployec relations strategies that HR helps develop and
implement. It includes a discussion of employer rights and basic employee
rights that have been det!ned by international bodies and have become
214 © 2015 SHRM

ORGANIZATION Employee Relations
ethical expectations of the relationship. It also includes an overview of topics

often addressed in employment law, including employment contracts and
dismissal.
* Section 2, "Sustainable Employee Relations," discusses approaches HR can

take to create a more sustainable workplace, one characterized by employee
) involvement and effective communication.
)
) • Section 3, "Third-Party Influences on Employee Relations," examines the

way in which unions, works councils, and governments can shape employee
relationships.
)
• Section 4, "When the Employee Relationship Falters," looks at what happens

when communication and cooperation are not effective. These outcomes
could include issues with organized labor that can damage the organization
economically and weaken the employee relationship. They can also include
disciplinary issues and complaints. This section reviews some actions HR
can take to mitigate these risks.
.1
.I
' .I
)
)
)
© 2015 SHAM 215

Section 1:
The Employment Relationship

• Consulting on and developing an effective labor strategy (i.e., avoidance or acceptance)
with the desired impact on the organization and its workforce.
• Educating employees, managers, and leaders at all levels about the organization's !abor
strategy (i.e., avoidance or acceptance) and its impact on the achievement of goals and
------------------------------------

• Child labor.
• Industrial relations.
• International Labor Organization (ILO) core labor standards.
• Labor environments (e.g., pluralism, radicalism, unitarianism).
• Labor rights.
• Living and fair wage concepts.
• Socialism, syndicalism, anarcho-syndicalism.
• Standard workday.
• World Trade Organization.
) ORGANIZATION Employee Relations
)
In an article titled "The Theoretical Foundation of Industrial Relations and Its
Implications," Bruce Kaufman reviews the development of the workplace
relationship in Western economies. The history of the employer-employee
relationship varies among countries, often depending on a variety of factors and
conditions, such as when a country moved from an agrarian to an industrialized
)
economy. Kaufman's history, however, helps explain why this Functional Area is
titled "Employee Relations" and not "Labor Relations" or "Industrial Relations."
The term "employee relations" is connected with a trend associated with human
)
resource management-a movement toward an employer-employee relationship that
)
is marked by trust, respect, and employee empowennent.
The history of employee relations statts with changes introduced by the Industrial
Revolution. As economies moved away from the paternalism of agrarian societies,
social change failed to keep pace with technological change. New capital-intensive
firms needed higher productivity, and this often led to treating labor as a commodity,
like coal or cotton, that was controlled only by the laws of supply and demand.
! Labor differs from raw materials, however. When demand is high, production and
)--·---····-----shipments of raw maictials can be incteased anti!
production falls and the use of raw materials declines. The labor supply, however, is
finite and not as elastic as commodities. Periods of high demand usually led to long
hours, and because of inequalities in the positions of employers and employees,
wages usually did not keep up with the costs of living. Social disruptions caused by
the periodic displacement of workers were not considered the concern of employers.
The social movements of the 19th centnry protested that labor is about human
beings, not commodities. The employment relationship has economic components
but is also highly political, social, and ethical. The labor situation drew criticism
from groups such as socialists, syndicalists, and anarcho-syndicalists who sought to
) revise-to varying degrees, as the groups' names rei1ect-·the social and economic
) structure and eliminate "wage slavery."
)
Historical/social economics gave rise to trade unionism. Trade unions attempted to
equalize the power structure between employers and employees while maintaining
the advantages of a competitive capitalist system. This perspective on the labor
relationship is referred to as radicalism,a belief that management-labor coni1ict is
)
© 2015 SHRM 217
an inherent characteristic of capitalism and can be resolved only with a change in the
economic system. This perspective persists today in political movements that
influence government regulations and actions. Nations' employment climates and
laws are influenced to varying degrees by this perspective.
The term "industrial relations" came into use at the beginning of the 20th century
and marks a shift from a perception oflabor as a commodity managed in a one-sided
manner to labor as a complex relationship, as Kaufinan says, "embedded in
imperfect markets and hierarchical fitms and surrounded by an institutional
infrastructure oflaws, cultures, social/ethical norms, and historical traditions." In
other words, society in some countries realized that the "invisible hand" of the free
market must be "guided, regulated, and supplemented" by the "visible hand" of the
state. This period was characterized by an adversarial relationship between
employers and employees and their representatives, significant government
involvement, and a great amount of strife. The perspective of the labor relationship
at this time can be described as pluralist: There are multiple forces at work in the
labor relationship, each with its own agenda. Employers who must coordinate their
business strategies with unions, employee groups, and government bodies are
operating in a pluralist framework. Conflict can be overcome in a pluralist structure
through negotiation.
The mid-20th century saw the birth of human resource management (HRM) and the
belief that structuring the organization and designing its policies and processes to be
more progressive created an employee relationship that was more cooperative and
collaborative and ultimately more profitable for the firm. At its most optimistic, this
perspective is described as unitarist, a belief that employers and employees can act
together for their common good. HRM aims at a more individualist relationship with
employees-the employee relationship and the range ofHR activities that develop
and support that relationship.
As the 20th century proceeded, globalization, technology and industry changes, and
changes in society's attitude toward employee rights shaped the employee
relationship further. Recognizing the impact of competitive forces on firms, some
unions chose a more collaborative relationship with management, sometimes called
a "new realism." More highly skilled workers were Jess likely to be unionized but
were more valuable to employers. Many of the basic rights that initiated labor strife
were gradually adopted as ethical standards and national laws.
218 © 2015 SHAM

And this is why this Functional Area is titled "Employee Relations." Because of
I ) economic, social, and legal developments, the focus of employee relations has
expanded to creating a more positive and productive employer-employee
relationship. This relationship will be explored in Section 2. The terms "labor
relations" and "industrial relations" have become more associated with one
aspect of the employee relationship-a firm's relations with organized employee
groups (i.e., trade unions). These third-party relations are discussed in Section 3
in this Functional Area.
Employer and Employee Rights

Fundamental to the employee relationship of the 21st century are basic employee
)
and employer rights that have been described in a large body of intemational
standards and agreements. In some cases these ethical principles have influenced
employment laws and regulations. Even if these standards are not reflected in a
nation's employment laws, they set a recognized bar that ethical employers strive
to reach. International standards are especially significant to global organizations
developing or trying to apply standards across their organizations.
HR professionals must be aware of their organizations' view of the employee

al14 their cmn.rnitment to ethical fair etpployme_l1,.t_______
practices and basic human rights.
Before we proceed, we want to reinforce the need for HR practitioners to be aware

) of the legal environments in the countries in which they operate. ln some countries
there may be little interaction between HR and legal counsel, while in others it is a
critical part of risk management. In countries of the latter type, the relationship
between HR practitioners and the legal counsel of the employer is critical. HR
professionals must not act in a legal capacity unless they are in fact licensed as
lawyers in the geographical areas in question and are acting in the capacity of an
attorney for the employer. They can, however, work closely with attorneys to
make sure that they are prepared to respond to common and risky employee
situations. HR practitioners should establish with the counsel what preliminary and
follow-up actions should be taken in different situations and what actions the
employer should avoid. All HR staff, managers and supervisors, and senior
) management should be trained to contact legal counsel as soon as possible when
specific situations arise and to follow the prescribed protocol.
© 2015 SHRM 219

)
ORGANIZATiON Employee Relations
Employer Rights Under the Law

Employer rights have not received as much attention on the international stage as
employee rights. There have been international treaties on intellectual property and
copyrighUpatent protection, but employer rights are more often defined in local
laws and individual and group employment contracts.
In general, employers are allowed to direct the work of employees and conduct
their organizations as long as they comply with relevant laws and contracts
(individual or group). They have the right to protect the organization's assets from
damage (e.g., from theft or Joss of reputation), and they have the right to benefit
fi·om work performed by employees, unless contracts define other arrangements.
Intellectual property (IP) is the ownership of innovation by an individual or

business enterprise. In an enterprise, IP is the product of employee creativity and
enterprise resources. It can represent a considerable part of the value of a
commercial enterprise, particularly in technology and communication companies.
IP includes patented, trademarked, or copyrighted property, such as inventions and
processes, graphical images and logos, names, indications of geographic origin
(such as the appellation d'oris;ine controlt?e system in France), architectural
designs, and literary and artistic works.
IP also includes trade secrets and proprietary or confidential information that arc
not specifically protected under patent, trademark, and copyright law. This type of
IP could include statements of strategy, secret recipes, lists of customers or prices,
employee work product, and financial information.
Protecting their rights can cause employers to become involved in physical and
logical security (e.g., restricted access to or use of data) and surveillance practices
(through video cameras, restricted Internet traffic, or searches of social media
sites). Although they have the right to protect their assets and secure work for
which they have paid, employers should be aware that these rights may
depending on applicable law-conflict with employees' rights to privacy and
freedom of expression. Therefore, employer practices have been limited by laws or
legal decisions in many countries.
HR plays a direct role in protecting employer rights by making sure that work
obligations arc communicated through employee handbooks, policies, and
practices and understood by employees. HR professionals must be aware ofthe
220 © 2015 SHRM

different communication challenges in different cultures and be prepared to use

other means to communicate eftectively with employees. H R also plays a pivotal
II .
I I role in developing and executing employment contracts and in tenninating
employee relationships, topics that will be discussed turther later in this section.
Employee Rights Under the Law

'l A discussion of employee rights begins not with the law but with the ethical
principles that underlie our laws. In the past century, essential human and worker
rights have been defined in international agreements and treaties. In some cases,
these agreements have led to the adoption of country or regional employment laws.
) International Human Rights and Labor Standards

The definition and recognition of basic worker rights has been an issue for more
than a century, but globalization has made the issue more important. While low
wages, child labor, and "sweatshops" often make headlines, global HR
professionals must also be aware of--and monitor the assurance of---·other basic
rights, such as freedom of association, collective bargaining, and a safe and
healthy work environment.
Efforts have been made by international institutions, such as the United Nations,
l----··---·-·---··--·tfie..ffitemational-LillmrGrganizatioo fur Econolfiie..Go---·---·-
) operation and Development, and the World Trade Organization to establish
recognized expectations of employee rights and employers' responsibilities. The
ILO standards, in particular, serve as the foundation for the vast majority of
employment laws and acceptable management practices throughout the world,
and they should, therefore, play a key role in business decision making. It is
important for global HR professionals to understand the evolution of these labor
) principles and, more importantly, their impact throughout an enterprise's
) worldwide operations.
UN Global Compact. Adopted by the UN General Assembly in 2000, the UN

Global Compact is a policy framework designed to help businesses develop,
implement, and disclose policies and practices that meet sustainable goals in the
areas of human rights, labor, environment, and anticorruption. Over I 0,000
corporations and stakeholders from over 130 countries patticipate in the
Compact.
© 2015 SHRM 221

The Compact's framework is built around ten principles, three of which relate to
environmental initiatives. The remaining seven have direct relevance to global
HR and direct businesses to:
• Support and respect the protection of internationally proclaimed human rights.
s Make sure that they are not complicit in human rights abuses.
• Uphold the freedom of association and the effective recognition of the right to
collective bargaining.
• Uphold the elimination of all fom1s of forced and compulsory labor.
• Uphold the effective abolition of child labor.
• Uphold the elimination of discrimination in respect of employment and
occupation.
• Work against corruption in all its fonns, including extortion and bribery.
The Compact offers various tools to businesses to support initiatives upholding

these principles.
More information and tools are available at www.unglobalcompact.org.
International Labor Organization. The Commission on International Labor

Legislation was formed in 1919 as a result of the Treaty of Versailles following
- - -..·-werld--War+.-It- evolved -into-what-is-now the ILO;-a specialized agency of the----
United Nations headquartered in Geneva. Human rights standards promulgated
by the ILO, many of which relate directly to worker rights, provide the
foundation of many of the employment-related laws with which global HR
organizations must comply. The ILO grants representation to governments,
employers, and worker groups. Together, these constituents shape policies and
programs related to four strategic objectives: fundamental principles and rights
at work, greater opportunities for men and women to decent employment and
income, effectiveness of social protection for all, and social dialogue.
The ILO has identified eight core labor standards:

• Freedom of association and the tight to organize without interference
from public authorities or authorization by employers
• The right of employees to organize and bargain collectively without
retaliation and the obligation of employers to negotiate with unions
• Prohibiting forced and compulsory labor, except for military service,
prison, and emergencies (e.g., war, natural disaster)
222 © 2015 SHRM

• Prohibiting forced labor as a means of political coercion or punishment,

retaliation for strikes, workforce mobilization, labor discipline, and
discrimination
• Prohibiting the hiring of children too young to have completed
compulsory schooling and limiting employment in hazardous work to
those 18 and over
• Prohibiting any work likely to be ham1ful to the health, safety, and
morals of children
I
• Requiring equal pay and benefits for men and women
)
• Prohibiting discrimination in hiring, training, and working conditions and
requiring employers to promote equality of opportunity and treatment
)
These standards have become the foundation of employment laws in many
countries.
Organisation for Economic Co-operation and Development (OECD). The

objective of the OECD is to help both member and nonmember countries address
)
globalization issues by researching and promoting changes in environmental,
social, ami economic policy. In addition to providing a forum for governments to
collaborate and strategize, the OECD develops a wide range of information,
interpretation, and forecasts to support their efforts.
The OECD's membership includes highly industrialized nations, "emerging

giants," such as China, India, and Brazil, and developing economies in Africa,
Asia, Latin America, and the Caribbean.
. . . . . . . .. . .
) thCOECD its tor Enterprises":. they .

have been amended (most recently in 2011}. While not binding,
· thc.y arc widely recognized as ar1 intcmatlona! code of conduct for glnbul ..·
enterprises. They address various areas, !hml science and technology m1d
combating bribery to employment and workforce relations. Each chapter Is·
preceded by what is referred t.o as a "chapeau statcrncnt or agreemcmt," which
thafthc OECrJ'srecorrimendations be \vithin the . .
. lhm!CWork of local
© 2015 SHRM 223

World Trade Organization (WTO). The WTO's mission is to open trade

opportunities and to facilitate resolution of trade disputes. Its work is issued in
the form of negotiated agreements. The WTO looks to the ILO as the competent
body to negotiate labor standards with member countries. However, the
organization's members do commit to four core standards:
e Freedom of association
$ No forced labor
• No child labor
• No discrimination at work
The website for the ILO, www.ilo.org, provides access to extensive statistics
databases and reports. The website for the OECD, www.oecd.org, offers country-
specific data for its member nations on a number of topics, including employment.
The WTO website, www.wto.org, offers data related to trade relations.
A firm is expanding into another country. It is critical to the firm's expansion

strategy that its facility is constructed as quickly as possible. The attitude of
the government and the business community in this new country is generally
Ethical pro-employer, There are some laws but little oversight of actual conditions at
Practice work sites. A local labor source has advised the project team-which
Compe!e11cy inch 1des high-level managers from HR, operations, and finance-not tQ _ _ __
in Action worry too much about this. The HR manager points out to the other team
members that the firm must take the initiative in making sure that workers,
whether they are hired directly by the firm or indirectly through contractors,
are paid appropriate wages and provided safe and healthful conditions at the
work site. The firm would not condone substandard conditions in its own
country and should not here. In addition, this would put the firm's reputation
at risk. The HR manager is persuasive. The other project members
acknowledge that their own interests in completing the project quickly and
inexpensively have to be subordinated to the firm's core values and ethical
considerations about basic worker rights. They turn their attention to how
best to communicate this to local labor contractors and make sure that
workers are accorded their basic human rights.
Treaties and Trade Agreements

Regional treaties and trade agreements include human rights in their areas of
focus. ASEAN, the Association of Southeast Asian Nations, created the
Intergovernmental Commission on Human Rights, which has been developing
the group's own Human Rights Declaration. CAR! COM, the Caribbean
224 © 2015 SHRM

Community and Common Market, works toward improving standards of living

and work, as does CAFT A (the Central America Free Trade Agreement). The
European Union has issued many directives regarding workers' rights that have
I been transposed into member nations' laws.
) Relevant Employment Laws

Rights and responsibilities related to employment have been addressed at the
constitutional level, in statutes, and in regulations implementing statutes.
Workforce laws and regulations address many facets of the workplace
relationship, including individual and collective rights. Since employment laws
may vary significantly in detail as weli as philosophy, HR professionals should
be familiar with those in the geographical areas in which their organizations
operate. They may note different legal requirements in the following areas:
• Equal treatment and opportunity (e.g., wages, access to training, and
consideration for promotion)
• Data privacy (discussed further below)
e Right to organize and bargain collectively
\
• Minimum wages, rates for overtime work, payment schedules, and
documentation of deductions from pay
) e Rules regarding termination of employment (discussed further below)
0 Maximum daily or weekly average of working hours and paid leave for
holidays and vacations
• Minimum working age and the use of child labor
• Working conditions for women and women who are pregnant (e.g., special
facilities available, rules regarding whether pregnant women or women of
childbearing age may or may not be prohibited from ce1iain types of jobs)
• Demographic restrictions and diversity requirements (e.g., requirements to
hire a celtain percentage oflocal or indigenous citizens, disabled persons,
minorities, or economically disadvantaged groups)
• Restrictions on use ofpmi-time and temporary workers (e.g., length of
temporary employment, purpose, access to benefits)
) • Use of independent contractors (discussed further below)
.. J • Provision of information and consultation regarding events that may affect
the workforce, such as mergers or transfers of ownership
• Layoffs and redundancies (e.g., whether a finn is allowed to lay off workers
to improve profitability)
© 2015 SHRM 225
J
• Required use of alternative dispute resolution for workplace conflicts

(discussed further in Sections 3 and 4)
• Workplace health and safety (Note that this can also include workplace
violence, intimidation, or bullying.)
Data privacy. As more processes have become automated and the collection,
storage, and exchange of data has increased, maintaining the privacy of that
personal data has become a workplace issue and the subject of regulations. On a
country basis, views differ dramatically. While in the United States privacy is
largely one's own responsibility, in Europe privacy is considered a basic right
that the government is expected to protect. The principles applied in the
European Union Directive 95/46/EC on the protection of personal data have
influenced many data privacy laws. These principles include:
• Legitimacy (i.e., necessity of data collection and employee consent to its
collection).
• Prop01tionality (i.e., collection of only relevant and sufficient data).
• Finality (i.e., used only for stated purpose).
• Notice to employees of collection and use of data.
• Accuracy and retention (i.e., currency ufinfonnation ami maintained only a'
long as needed).
• Security of collected data.
• Access by employees to their own data.
. _· . - .. ·.. · .·.· . . . .· .. ·.· . . . . . . . . :· .. · .
.. . HR practitioners should note key difference anwng data prcitcction laws ....
. ·Some nations, including Eur(Jpcan Union iuembernations, require employees:
.· to "op(in': or consent to the use of their personal data .. ln. other countries; such.
·· · as the United States, individuals must."opt out" or express unwillingness to ·.
. share P<ersonal data for a giVen use orb)' a specific pllrty.'
Separation of employment. Separation of employment includes tcm1ination of

the employment relationship due to voluntary reasons (e.g., resignation, job
abandonment, retirement) and involuntary reasons (e.g., dismissal, layoff, death
of the empioyee, closure of the employer;.
226 © 2015 SHAM

Separation of employment is considered a potentially high-risk activity by HR.

Voluntary separation can create succession issues. Loss of key talent may be a
strategic Joss. Involuntary separation requires careful compliance with internal
processes and external laws to avoid penalties and judgments. Many employers
are often reluctant to discharge an employee because of these uncertainties, even
when a dismissal is obviously necessary and merited. Basic risk management
practices can help manage some of this uncertainty.
)
) HR professionals should make sure that a clear process for separation of

employment is in place and has been communicated to all personnel who might
be involved in these actions. This process should be reviewed by legal counsel to
make sure that it complies with requirements in employment or union contracts
) and employment laws-which will vary significantly among countries.
The process for a voluntary separation may include requests for notice, the
conditions that indicate when a job has been abandoned, and tasks required for
proper out-processing. Out-processing may include the return of company
property, calculation of pay or benefits owed, review ofpost-terminatiot1benefits
status, and an exit interview.
)
In some coun1l'ies, special review by manageil1ent and1egal may be.advtsable tri.

cases of involuntary separation to avoid the 1isk of dispute and possible
litigation. This review considers the case to determine, for example, whether:
e The employee is a member of a protected class.
" All relevant laws are being followed (such as providing reasonable
accommodation to temporarily disabled workers).
• The employee received due process and was treated according to policy and
)
in a manner consistent with similar cases.
)
)
Dismissals of groups of employees may include:
e Reductions in force (RIFs)hvorkforce reductions (\VFRs), -which are
permanent reductions in employee headcount, necessitated perhaps by loss of
customers or contracts or a change in business conditions.
= Layoffs, which are intended as a temporary employment separation.
Employees may be recalled to work, or the separation may become
permanent. The criteria for return to work (e.g., by senimity) are usually
defined in collective bargaining agreements or legislation.
© 2015 SHAM 227

Such dismissals should be conducted with considerable planning and circumspection.
• Before the decision is made, management, legal counsel, and HR should

confirm that the RIF complies with applicable laws. Evidence should be
gathered to support the number of employees being dismissed and the
specific employees chosen. Leaders should consider the impact of the RTF on
the organization's future. Loss of institutional knowledge and talent can
affect the organization's ability to meet its strategic objectives. Layoffs may
have a lasting effect on the organization's culture and employer brand. The
curr-ent action may deter recruitment and retention and damage productivity
and collaboration in the future.
e Once the decision is made, it should be communicated concisely, honestly,

and clearly. Any applicable laws requiring the employer to provide
employees with advance notice of a mass layoff must be followed.
@ After the decision is made, the organization must follow through with
required and voluntary support to the discharged employees-e.g.,
reemployment counseling, benefits, retraining.
The SHRM website offers additional guidance on conducting dismissals; see

"m'' " w.shrm. org/hrdisctplines/emjl!oyeerelati
228 © 2015 SHRM

Independent contractors. Employers often use independent contractors (also

known as consultants or free lancers) rather than employees to gain greater
workplace flexibility or manage uncertainty associated with entering a new
market This practice may create a risk of noncompliance with a country's
employment, business, and tax laws. The penalties can be significant Employers
may have to pay benefits retroactively to individuals found to be de facto
employees. Companies that use contractors to work in another country without
) properly registering the firm as a business may be heavily fined, and prospects
) for future operation in the country may become more uncertain.
To avoid these issues in some countries, HR and legal counsel should develop a
process and guidelines/definitions for using independent contractors and should
communicate that infonnation clearly throughout the organization. Contracts
should avoid requirements commonly associated with actual such
) as dictating the contractor's hours of work.
HR professionals should be wary about the protection that a contract provides in

the eyes of governments. Govemments are more likely to use the appearance of
) the working relationship rather than the formal terms of a contract to determine
) whether a worker is a regular employee or an independent contractor-·in other
)--··---- _ __,.wuoRrds, does the .conirac1ru:.look and act like a de facto employee? To reinforce
the nature of the independent relationship, the contractor should retain control
(for the most part) over when, where, and how the work is done. Payment should
I be tied to dclivcrables rather than a schedule. When possible, employers should
) hire employees outright or lease them from another employer who takes
responsibility for compliance with employment regulations.
Regular audits of HR practices should include inspection of the use of

)
independent contractors.
Employment Contracts
Employer and employee rights and responsibilities arc defined and agreements may
) be documented through employment contracts. Employment contracts are the norm
in many countries, although their fom1s and requirements may vary. Some
countries penalize employers for not providing written contracts within a certain
length of time; others accept a paycheck stub as recognition of employment.
) -
© 2015 SHRM 229

In some cases, depending on applicable law, the absence of a written contract may
give rise to an implied contract. It is often to the employer's benefit to avoid an
implied contract since implied contracts may include more generous dismissal
compensation.
Employments contracts must be fonnally amended. An employer seeking

to change employment tenus for workers after a purchase or merger may
be restricted by acquired rights laws-unless the employer can prove
economic hardship. For example, in the United Kingdom, both national law
and the EU Acquired Rights Directive (2001/23/EC) require an employer
to demonstrate "economic, technical, or organizational" reasons for
changes in employment or termination; an employer faces penalties if the
reasons given are proven to be false. The strategy of amending contracts by
tiring and rehiring under new terms may not be legally defensible and may
be considered unfair dismissal.
Contracts with international assignees and global etnployecs sliuuld specil:V

which country's laws will apply to !he and what jurisdiction will be
applied in the event oflitigation.
, ___________ ·-·-------------------
At-Will Employment
HR professionals should be aware that in the United States, unlike other
countries, most employees work on an at-will basis. The common-law principle
of at-will employment means that employers have the right at any time, with or
without prior notice, to hire, tire, demote, or promote whomever they choose for
no reason or any reason-unless there is a law or contract to the contrmy and
provided that it does not violate antidiscrimination laws. Similarly, employees
have the right to quit a job at any time for any reason, with or without prior
notice. Because of this principle, individual employment contracts in the United
States are the exception rather than the rule. Exceptions include high-level and
key personnel (e.g., those involved in creating strategy and products). The
concept of at-will employment is usually reinforced in employee handbooks and
is also included in other employment documents such as offer and acceptance
letters as well as performance management documents. This includes documents
related to disciplinary matters.
II 230 © 2015 SHRM

HR professionals should not assume that the at-will doctrine is impregnable.

Numerous exceptions have been created through litigation over the years, and
tem1ination may also be challenged under antidiscrimination laws.
l:mplovee Relationshio Strate11v

"' "' ;;jl"" !I
An organization's employee relations (ER) strategy can be developed in the

same manner as the organizational strategy-a process discussed in the
)
"Business and HR Strategy" Functional Area in the Strategy module. The ER
)
strategy includes:
J
• Alignment with the organizational strategy, showing how the ER strategy
will help the organization achieve its long-term goals.
• Alignment with employment laws and business practices. In some areas and
industries, organizations cannot choose to avoid working with works
councils and labor unions. Consulting with these third-pmiy representatives
may be required by law or be a traditional feature of an industry's or nation's
employee relations.
• A vision describing the type of workplace culture the leaders hope to create.
)_...--·---···--••---"fhevalues uj'fon wh1ch the strategy 1s· bullt-Tor example, respect, ··--····--···---·--
teamwork, mindfulness of strategically defined issues such as customer
focus, quality improvement, or safety.
• Strategic goals, for example:

J Develop a constructive and compliant relationship with labor
organizations in the workplace.
• Implement communications plans that enable timely sharing of critical
) information or facilitate early resolution of ER issues.
Strategic initiatives (a set of action plans to achieve the organization's goals),

for exan1ple:
)
Implementing an audit program to make management's actions more
)
transparent and to increase responsibility for decisions.
I
)
• Assembling a joint management-employee task force to define vehicles
and events to improve communication belween leadership and
employees.
)
)
}-
© 2015 SHRM 231
In the same way that organizational business strategies must be in alignment

with the organization's culture, the ER strategy must be one that fits the
organization's values and beliefs ... or the organization must commit to the
process of changing its culture to one that is consistent with the ER strategy.
The organization must also communicate this strategy to employees, and

management must commit to the values implied in the strategy. The strategy
may be presented through new-hire materials, employee handbooks, or annual
and functional meetings. Commitment can be demonstrated by the behavior of
managers and by the implementation of policies and processes that reflect the
values behind the strategy and are aligned with the strategy's goals.
Union Acceptance/Avoidance Strategies

The ER strategy generally addresses the organization's approach to third-parly
workforce representation. Some firms will choose a union acceptance position,
while others will make union avoidance a driving force behind their ER strategies.
There are good reasons why some firms choose to accept unions. First, unions may
be a fact of life in some countties, something over which employers have little
control. Their positions supported by law, unions are necessary participants at the
EK1a01e.llome firms·, however, also find that unions me a useful··wayto organt>iz"<el----
tbeir relationship with employees, especially with large and complex bodies of
employees. By involving unions, employers may lower employees' resistance to
necessary changes and implement change initiatives more easily. A union structure
may also provide an acceptable way to resolve grievances and conflicts.
If an ER strategy includes union participation, then the employer must define the
type of relationship they want: collaborative or confrontational. Collaboration may
mean less conl1ict, but it will also mean that management has Jess flexibility in its
decisions, that labor costs may be higher, and that the decision-making process
may take longer. A confrontational relationship might offer the possibility of
greater control over labor decisions, but it also means that management may be
distracted from its primary mission of creating value for its stakeholders and that
the organization may suffer from losses related to employee discontent.
Union avoidance strategies arc generally adopted when there is no union in the
workplace. So the strategy must focus on removing the appeal of unions to
ernployeesor aggressivclyflghting union-organizing tactics, a strategy that can be
232 © 2015 SHRM

expensive and distracting. Firms should carefully analyze and compare the direct
and indirect costs of accepting or avoiding unionization.
Under a union avoidance strategy, removing the appeal of unions requires the
employer to make a convincing case why unionization is not in the best interests
of the firm or the employees and educating employees about union-organizing
I tactics. (Again, this is best done before a unionizing campaign is under way.
II ) Once the process has formally begun, employers may be restricted about what
) they can say about the drawbacks of unions and the impact on the firm's
) business.) The main task, though, will be making the finn's employee
relationship more sustainable. Employers will need to commit to the practices
described in the next section.
Global ER Strategies
)
The ER strategy in a multinational enterprise is more complex, since labor laws,
local cultures, and the characteristics ofworkforces may vary in different areas of
operation. Peter Dowling, Marion Fcsting, and Allen Engle (in International
Human Resource Management) note that multinational enterprises often adopt a
decentralized approach to employee relations, delegating the creation and
implementation of strategies to their local subsidiaries. ln cetiain cases, however,
l - - - - - - - · · - - · · · - - - · - the home country may a;;ert a centralized may
benchmarks in one location that are then used for negotiating agreements in other
locations. These may be to save labor costs, but they may also be to create greater
synergy and efficiency in critical globally integrated processes.
)
The organization's strategy is also shaped by key differences in its operations
)
and culture, including the following:
)
) • The extent to which the enterprise's production is integrated among its

subsidiaries. Some global enterprises are structured to be interdependent.
For example, a Japanese electronics manufacturer relies on components
(such as circuit boards, power supplies, or LED displays) that are
manufactured by subsidiaries in other countries. Subassembly and final
assembly are done by separate subsidiaries located regionally. It is to the
enterprise's benefit to consider the interrelationship of workforce relations al
each subsidiary, because a breakdown in one area can disrupt the en lire
) production chain. Management may assume a more centralized strategy.
)
© 2015 SHRM 233

• An enterprise's cultural attitude toward workforce relations, experience

with labor/trade unions, and orientation toward its subsidiaries
(ethnocentric or geocentric). Some studies have suggested that national
origin can affect the global enterprise's default position on working with
unions and works councils. These positions may be on a spectrum of
"adversarial" at one end, "jointness" at the other end, and "arm's length" in
the middle. The employee relations strategy of a global enterprise originating
in the United States, where an or arm's-length union relationship
often prevails, will probably vary greatly from one originating in a European
country, in which management and HR have more experience with the
participative model of works councils and codetermination. The U.S.
multinational Wal-Matt maintains a nonunion stance as a corporate policy.
However, it has had to adapt to new markets where unions are the norm,
such as China.
• The relationship between the originating company and its subsidiaries.

A locally responsive global enterprise may allow each subsidiary to develop
its own strategy, while a standardized global enterprise may develop a more
uniform industrial relations strategy. For example, imagine an Indian holding
company that has a Thailand subsidiary specializing in resort property
management and a Singaporean substillary spectahzmg tin1tgh-tech,
sophisticated agricultural commodities brokering. The first subsidiary deals
primarily with service industry unions, while the second works with a variety
of unions representing more skilled workers. The two finns have different
sector profit levels and different labor pool conditions. The global enterprise
may opt, for good reasons, to allow each snbsidiaty to craft its own labor
strategy. In addition, the maturity and significance of the subsidiary can
affect the relationship. A finn is more likely to be involved in workforce
relations with a newly acquired or poorly performing subsidiary. It is more
likely to impose its home-country approach to workforce relations on
subsidiaries if the subsidiaries represent a small part of its revenue.
Briscoe, Schuler, and Tarique describe seven different approaches to managing

the workforce relationship that global enterprises may develop based on these
differences. Like the enterprise's global strategy, the options lie on a continuum
between two points: locally responsive (in this case, hands-off) and centralized
or standardized (in this case, managing local conditions with headquarters-
234 © 2015 SHRM

ORGANIZATION Employee Relaiions
derived policy). Most global organizations will craft a global HR strategy for
workforce relationships that falls somewhere between these two positions.
The seven options are:
• Hands-off. In this locally responsive strategy, the workforce relationship is

entirely locally managed.
• Monitor. Headquarters tracks local management decisions and demonstrates

its interest and concerns, but it leaves decisions to be made locally.
• Guide and advise. Headqum1ers offers more advice and tries to apply global
policies to local practices, but it still leaves decisions at the local leveL
• Strategic planning. The employee relations strategy is developed with an

understanding of variation among workforces throughout the enterprise.
Policies are set globally, but practices are developed locally. Practices must
conform to the global policies.
o Set iimits and approve exceptions. Some local adaptations may be made
________ b_u_t_o1_1l_y_aft_e_r_re_vr_·ew_an_d_a_pp_ro_v_a_lb_y_hc_a_d_qu_a_rt_ers_H_R.__.________ ·-----·-
)
e Integration of headquarters and line management in field. Labor
decisions are made jointly.
o Manage locally from headquat·ters. In the centralized or standardized

alternative, local HR staff simply implement, without change, headquarters-
developed HR policies and practices.
These strategies require different levels of headquarters familiarity with local

labor conditions and practices. HR practitioners who have global responsibilities
should rely on the expertise of labor relations specialists in the countries in
which they operate.
)
)
)
) --··---..
© 2015 SHRM 235
1. How did the discipline of human resource management change industrial relations?
( ) a. Greater emphasis on measuring effect of human resource actions
( ) b. Transition to a more collaborative employer-employee relationship
( ) c. Decrease in occurrence of strikes
( ) d. Greater involvement of third parties in the labor relationship
2. What is a generally recognized employer right?

( ) a. Setting of wages without interference
( ) b. Routine physical searches of employees
( ) c. Setting of work hours and workday length
( ) d. Control of intellectual property
3. What is one of the core labor standards of the International Labor Organization (JLO)?
(
\
\
I a. Minimum working age
( ) b. Management respect for employees
( ) c. Prov1s10n of trammg anildevelopment
( ) d. Prohibition of hiring quotas
4. What is a common characteristic of the employment laws of individual nations?

( ) a. Tendency to cede the task oflabor protection to international bodies, such as the WTO
( ) b. Country-specific criteria for antidiscrimination regulations
( ) c. Protection of a union's right to strike
( ) d. Immunity of foreign-·owned firms from local laws
5. A global firm requests employees' consent to gather and store a broad range of personal data.
It explains that the data will be used only for certain purposes, will not be shared, will be
securely stored, and will be destroyed after the employee leaves the firm. What fundamental
data protection principle has the finn missed?
(
\ ) a. Legitimacy
( ) b. Proportionality
( ) c. Finality
( ) d. Notice
236 © 2015 SHRM

6. How are employment contracts globally viewed?

( ) a. Used only for high-level or highly skilled employees
( ) b. As general agteements to abide by international and local labor standards
( ) c. As an exception to employment-at-will
( ) d. As a more attractive alternative to implied employment contracts
7. What would be good advice to an organization developing an employee relations strategy?

) ( ) a. Ensme alignment with the organization's values.
) ( ) b. Keep the strategy at a high level and aim for an inspirational tone.
) ( ) c. Engage organized labor groups representing parts of the workforce to participate
) in creating the strategy.
( ) d. Fit the strategy to the existing organizational culture.
8. What is the surest tactic in a union avoidance policy?

( ) a. Seeking government support for maintaining a union-free workplace
( ) b. Establishing cooperation agreements with unions
( ) c. Removing the appeal of unionization
( ) d. Training supervisors in persuading employees not to join unions
9. A global firm has created a highly integrated development and delivery process that requires
) ofaHits national:mbsidiaries. Whar apprmrch to ER strategy-would 15e most
effective for them?
( ) a. Hands-otT
( ) b. Monitor
I \
\ 1 '-'• .... J.llUUUUJ.,O
( ) d. Setting limits and approving exceptions
)
)-
© 2015 SHRM 237
Progress Checl< Answers

1. b(p.218)
2. d (p. 220)
3. a (p. 223)
4. b (p. 225)
5. b (p. 226)
6. d (p. 230)
7. a(p.231)
8. c (p. 232)
9. c (p. 235)
238 © 2015 SHRM

)
)
)
Section 2:
Sustainable Employee Relations

• Consulting on and developing an effective labor strategy (i.e., avoidance or acceptance)
)
with the desired impact on the organization and its workforce.
)
• Educating employees, managers, and leaders at all levels about the organization's labor
) strategy (i.e., avoidance or acceptance) and its impact on the achievement of goals and

• Communication approaches.
) • Employee engagement approaches.
) • People-management techniques.
• Recognition approaches.
• Service award approaches.
• Survey techniques.
• Union attractiveness.
Sustainable Employee Relationships

The "Corporate Social Responsibility" Functional Area in the Workplace module
discusses the concept of sustainability as a principle that guides policies and
processes to suppmi the continuation of economic and social activities, the
creation of a mode! that "meets the needs of the present without compromising
the ability of future generations to meet their needs." Andrew Savitz notes in The
Triple Bottom Line, "a sustainable corporation is one that creates profit for its
shareholders while protecting the environment and improving the lives of those
with whom it interacts." This is where the sustainable employee relationship
comes m.
Employee relations is an important part of the intersection between society and

economy. In fact, the Global Reporting Initiative, an organization that publishes
metrics that organizations can use to score their sustainable policies and
practices, includes a subcategory entitled "Labor Practices and Decent Work."
The recommended key performance areas include the following:

• Employment rate and workforce demographics
• lnfon11ation and consultation provided to employees and their representatives
before "signifu:anUJperatio_nal changes" that coyJQ. affect the __
• Use of joint management-worker health and safety committees and rates of
work-related injmy and illness
e Training and development
• Grievance processes
• Basic human rights related to discrimination, child labor, and forced labor.
Sustainable employee relations balances the needs of employees and their

families and communities with the needs of the employers, so that employees can
continue to work productively over time and employers can continue to operate in
1 i
an economically feasible manner. For example, organizations that use

performance management systems to guide employee development during their
employment create more skilled and motivated employees who will contribute to
the employer's economic health in the long to the health of the entire
society, including fiJture employers and customers. Organizations that enforce
long hours and poor working conditions and rely on short-term employment to
meet economic goals wili see decreased workforce productivity over the long run
-------·
240 © 2015 SHRM

) as well as unstable communities and decreased acceptance of the organization by

key social stakeholders.
l
) Figure 1 lists some characteristics of a sustainable workforce.
)
)
Trust • Employers fulfill commitments and apply policies consistently.
)
• The organization complies with legal requirements and is
) sensitive to community practices.
• Leaders are good role models for the organization's values.
• Opportunities and promotions are distributed fairly.
) Respect • Employers treat employees with dignity.

) • Conflict is handled in a positive and constructive manner.
• There is an expectation that all workplace relationships will
)
be conducted respectfully.
)
Well-being • Employees feel sale at work.
)
• Workplace physical conditions support productivity.
) • Policies and processes support employee health-by, lor
example, reducing stress or offering flexible schedules.
Communication • There is an active system of communication in both
directions.
l-------·--···--··------ enjoy freg_uent, constructive feedbl:l.Qk.__ _________________ _
• There is a clear process for raising and resolving grievances.
Rewarding • Employees are rewarded for their efforts in ways that are
meaningful to different employees. Meaningful rewards
include monetary rewards, challenging work, and public
recognition.
• Individual and group accomplishments are celebrated.
• Employees may advance within the organization.
Focused on I. Performance management approaches use correction as part
improvement of a continuous improvement process.
• Employees have lair access to the means to improve their
present and future skills.
------------- --- I
Employee involvement • Employee input is sought and heeded when possible.
• Employees are included in cross-functional task forces
addressing workplace issues.
• Leaders regularly advise employees on issues that involve
the organization's and the employees' futures.
----------
) Figure 1: Characteristics of Sustainable Workplaces
)·-
© 2015 SHRM 241
Some of these topics have been discussed in other Functional Areas. Building
trust depends on the ethical underpinnings of leadership, as discussed in the
"Corporate Social Responsibility" Functional Area in the Workpface module and
the "Business and HR Strategy" Functional Area in the Strategy module.
Workplace risks are discussed in the "Risk Management" Functional Area in the
Workpface module, and performance management is discussed in the "Employee
Engagement" Functional Area in the People module. Discipline and conflict
resolution are discussed later in this Functional Area, in Section 4.
In this section we will focus on the ways in which HR can help their organizations
develop policies and practices to create more sustainable workplaces by:
e Increasing employee involvement.
• Ensuring employee recognition and reward.
• Improving communication with employees.
• Training managers and supervisors in sustainable employee management
practices.
The Challenge of Sustainable HR Practices in a Global Context

Before we proceed to consider HR strategies for creating a more sustainable
workplace, we must acknowledge the difficulties faced by HR practitioners in
------gcc-lobal organizations-. The challenge of creating a positive, remforcmg wcii'kp"'l"'a'"c"'e_____
is significant in itself, but HR must work with separate and differing legal and
cultural environments to create a positive global workplace. The details of
collective bargaining agreements may determine whether certain dispute
resolution techniques can be used. Works councils may influence the
communication flow between management and the workforce. Reward programs
that are meaningful in one country may have no impact in another because of
differences in cultural values and taxation systems.
Global HRM emphasizes the need for policies that are consistent, fair, and
transparent throughout the organization. However, the realities of a global
organization--with its global workforce, globally mobile employees, and
j i diilerent locations around the world-challenge the notions of consistency and
fairness. Fully standardized policies and procedures are not always possible
because of the need for legal compliance and cultural adaptation. If
standardization is achieved, the policies may not be fair for all. ', 1
--
242 © 2015 SHRM

) At the same time, lack of consistency and fairness in a global organization can
) be problematic. If global assignees find different expectations and treatment in
) their assignments, the discrepancies can lead to conflicts that harm retention of
) valuable employees. And in a global electronic environment, stories of personal
) experiences can spread quickly and undennine the organization's image with its
) employees.
)
l
ll=mployee Involvement
l
In High Involvement A1anagemenl, E. E. Lawler defines employee involvement
as "a set of management practices that extend decision-making power, business
infmmation, technical and social skills, and rewards for performance to the
lowest levels of the organization." Based on this definition, Gerald Ledford
notes in The Talent Management Handbook that employee involvement is
necessarily part of a system, not a transaction with an individual employee. It
requires delegation of decision-making power and the sharing of information
and skills needed to make decisions. When employee involvement practices
are diligently implemented in an organization, employees are more involved
and engaged in their work and workplace.
,,
'
• Suggestion involvement allows employees to suggest but not enact

changes. This is the most commonly used form of employee involvement
) and is seen in organizational structures such as quality circles, safety
committees, or employee participation groups that make recommendations
for action to management. It is also the principle behind suggestion
systems, in which employees use their more detailed and accurate
) knowledge of work conditions and processes to suggest improvements that
) can reduce waste, improve efficiency or safety, or increase customer
satisfaction.
e .Job involvement allows employees control over their daily work. This
type of involvement is seen in organizations using teams.
Teams are empowered to decide priorities, schedules, assignments, and
solutions.
J
'! © 2015 SHRM 243
• High involvement allows employees to participate in managing the

organization. This requires that employees have the power to make decisions,
but it also requires more transparency---through sharing more information
about the firm's plans and finances--and a more substantial employer
investment in employee development focusing on higher-level skills such as
analytical thinking, decision making, and leadership. This type of
involvement is the least common form of employee involvement, but it may
be seen in firms that include union and works council representatives in
management committees.
The benefits of employee involvement are difficult to quantify or prove

conclusively since organizations that involve employees are usually high-
pcrfOlming and use other types of sustainable HR strategies. Some studies point
to increased economic performance, quality, productivity, and engagement (as
measured by levels of tmst, attendance, job satisfaction, and stress).
Figure 2 lists some recognized benefits of employee involvement.
Fosters consensus decision Produces better decisions

--,r"'na"'k17;h 19 Encourages seiF!fa1mng for Wo"'r"'t<___ - - - -
Fosters employee commitment to group members
decisions Improves quality of work life by
Improves commitment to meeting employee needs for
organizational goals and involvement
objectives Provides a constructive orientation
Provides greater team and to employee criticism
organizational identity
Figure 2: Benefits of Employee Involvement Programs
HR's Hole in Ernployee Involvement

In order for employee involvement to happen, organizational goals must be
communicated to employees and employees must be involved in aligning
employee behaviors to these goals and the organization's values. HR plays a
critical role in communicating goals and developing and maintaining
employee involvement programs while ensuring compliance with laws and
regulations and recognizing the influence of local cultures.
244 © 2015 SHRM

.)
Since upper management may be unaware of the benefits that can be gained
from employing these strategies, and employees may be even less aware of
the possibilities or too insecure to suggest helpful changes, HR may have to
educate these groups and describe possible programs.
)
Most importantly, since almost all the concepts related to employee
involvement rest on the principle that management must trust its employees,
HR's involvement in helping the organization tmst its employees is critical.
}··--··--···----·--· - - - - - - - - - - - - - - - - - - - - - - - - - - - - · - - - - - - - · - - - ·
Employee involvement strategies must be appropriate for their organizations--
for the organization's culture and the type of employees it hires and the tasks
they perform. There is no single recipe for an effective program. In general,
however, an employee involvement strategy could include:
• Designing jobs to include more autonomy and purposeful work-work for

which employees can see results that align to their own success and that of
the organization.
• Using flexible work arrangements that allow employees more control over
) their work and time. This could include telecommuting, tlexible schedules,
) and job sharing.
)
o Creating an effective structure and policies for employee suggestions
systems. This includes designing appropriate rewards, making sure tbat
feedback is pwvided to all employees submitting suggestions, and tracking
and reporting to management and employees the results of suggestions that
)-
'1 © 2015 SHRM 245
are implemented. Most important is that HR secures management support

and willingness to receive and act on employee suggestions.
" Providing the skills development needed for employees to participate in

teams, committees, and cross-functional task forces and projects.
Employee Recognition and Reward

A necessary part of employee involvement policies is expressing appreciation for
what employees have conllibuted. The financial rewards offered in suggestion
systems are an example. Employee recognition and reward programs acknowledge
the value of employees' contributions to an organization in some outward manner.
Having recognition and reward programs increases employees' identification with
an organization, builds tmst, and motivates fmiher effort because such programs
acknowledge employees' (or teams') unique capabilities and convey respect.
The title of this topic reflects the dual nature of these programs and the complex
way in which individuals arc motivated. Recognition addresses employees'
psychological needs-the desire for approval and distinction, a desire for growth
and advancement. Nancy Adler, in international Dimensions of Organizational
Reward may be seen as more transactional-the various financial and nonfinancial

benefits for which superior performance can be exchanged. The two aspects are
deeply intertwined in these programs, but one must remember that both aspects are
needed in an effective program.
Forms of Rewards
Rewards can be financial (in addition to wages or promotions) and nonfinancial,
such as public praise or private feedback, greater involvement in workplace
activity and decisions, or privileged access to training or career development tools.
The major questions regarding financial rewards are what performance merits
reward and how it should be rewarded. It is more effective strategically to reward
activities that dircctiy contribute to creating value. Management must decide
what amounts and what forms (such as cash, stock options, loans) will be
meaningful in each geographical location and for each type of employee.
246 © 2015 SHRM

I ORGANIZATION Employee Relations
I 'l
Management should also consider carefully the type of negative behaviors
reward programs could encourage (such as fraud) and the possible effects of
rewards for one function on the work of other functions. For example, incentives
for increased sales should consider the effect on operations, which must deliver
the increased amount of goods or services, or on customer service, which must
deal with purchasers who may feel that they have been oversold by sales.
Financial rewards are discussed in more detail in the "Employee Engagement"

and "Total Rewards" Functional Areas in the People module.
)
) Compared to financial rewards, nonfinancial rewards are much more varied,
offer more oppmtunities for strategic alignment and increasing a sustainable
workforce, and require cultural sensitivity. What is considered a reward in one
) culture might be distasteful in another. For example, in Japanese and
Scandinavian cultures, selecting an individual employee for recognition is
problematic and may result in demotivation.
With cultural guidelines in mind, global HR might choose from a variety of types
of nonfinancial recognition, including:
• Assignment to project teams or global task forces that provide opportunities
)-·---·····- for greater VJSJbi!Jty Wftlun the c·ompani exposure to other paiis of the
company, and skill development.
e Allowing employees more autonomy and in their work
assignments.
• Opportunities to supervise other employees or try different jobs.
e Access to a "high-performer" development program.
e Enhanced job tools or resources (e.g., subscriptions to professiona!joumals).
" Awards (e.g., lellers, plaques, ceremonies).
The rewards can demonstrate appreciation, but they can also help build the
employee's competencies. They can be customized to an individual employee's
personality, interests, or needs (e.g., offering a more flexible work schedule or
letting a worker with an elderly parent work from home occasionally). They can
also reflect the distinctive values of host countries. In a collectivist culture, for
example, rewards might focus on ceremonies including family and colleagues.
Figure 3 presents some advice on implementing rewards programs.
)-
) © 2015 SHRM 247
!
II
! .·
II
• Gather employee input to ensure that rewards (both monetary
I and nonmonetary) have meaning and value for recipients and
are appropriate to the value of the employee contribution.
!
I
•
•
Develop clear criteria that are significant and achievable and
communicate them to the entire workforce.
Train supervisors and managers on how to administer
i programs effectively, fairly, and consistently.
Figure 3: Guidelines for Employee Reward Programs
Recognition Systems
Two criteria may be applied when designing recognition systems:
• Recognition should be tied to perfmmance that helps the organization

meet its strategic goals-or at least not conflict with the goals. For
example, an HR department that bas a goal of increasing its talent pool
may reward HR personnel who uncover new recruiting sources or
achieve high rates of successful new hires. In this way, rewarding
performance accomplishes two goals:
----- -----. • It helps align employee efforts with the. organization's
• By demonstrating the organization's awareness of its employees and
appreciation of their value, the system creates a more positive work
environment that aids in the retention of high performers and creates
a strong employment brand.
• The form of the recognition should have significance for the recipient.
Significance may have legal and cultural dimensions. For example, a
monetary award that means tax liabilities for an employee will not be as
significant as nonmonetary rewards, such as training opportunities or
enrollment in a mentoring program. From a cultural perspective, a team
in a collectivist culture will be more motivated by group rewards than
individual rewards. In ascription cultures (cultures valuing external
validation of one's status through visible signs), a dinner at an exclusive
restaurant may be highly effective recognition. Company cars also may
be effective recognition, and their specific model may carry additional
significance.
r-
- - - - - - - - - - - - - - - - - - :.._··-.-
.....
248 © 2015 SHAM
1
)
) ORGANIZATION Employee Relations
)
Recognition and Rewards in Global Organizations

The challenge in a global organization is identifying how to recognize and
reward employees in a culturally effective manner. The systems the global
organization develops will reflect its own approach to globalization-
standardized, localized, or glocalized.
)
)
e Standardized: Develop policies at headquat'ters for implementation in
)
the field. This occurs in organizations pursuing standardization or
)
centralization. One issue these organizations face with recognition and
reward systems is the possibility that the policies they issue are ethnocentric
and may not align with the values and perceptions of employees in the host
countries. It should not be assumed that corporate values can override
national values.
e Localized: Issue budgets and allow local HR personnel to develop local

systems. This addresses the issue of cultural fit, but it creates other issues. Will
the local recognition and reward systems be aligned with the organization's
strategic goals? Does the reward recognize value created locally rather than the
value created for the entire organization and its stakeholders? Will the
1
)--···--· ··--···--··· phil()_sopbyofvaiue be cm1sistent tln·oughout the organization?···--·--···--····--···-
$ Glocalized: Develop goals and standards centmlly and allow countries to

develop country-specific mechanisms. The middle road allows strategic focus
while accommodating legal and cultural fit. Programs link rewards to the
desired results, but the nature of rewards can be localized.
Feedback as Reward and Recognition

Providing feedback is one of the many skills demonstrated in the
Communication competency, and it is discussed as part of the performance
management process in the "Employee Engagement" Functional Area in the
People module. Positive and constructive feedback can also be seen as a type
of reward, however. It confirms the value of an employee's eflorts and also
) contributes to the employee's desire for growth.
)
) Giving feedback presents ce1tain challenges. In virtual work settings,
employees and leaders may be separated physically. Opportunities for seeking
feedback maybe fewer, and misunderstandings (due to the limited nature .of
© 2015 SHRM 249

communication over a distance) may be greater. In complex and technical

organizations, leaders may not have sufficient expertise to deliver meaningfhl
feedback. Consequently, they must devise ways to secure third-party feedback
from a respected source.
One of the most significant challenges for an organization, however, is

diversity. Employee diversity--including age, education, experience, cognitive
style, or ethnic background-can affect the desire for feedback, inhibit
employees from seeking necessary feedback, and determine the most effective
form of feedback. Generational researchers, for example, have noted that
employees from the Millennia! generation prefer more frequent and immediate
feedback on job perfom1ance.
Susan Ashford, Ruth Blatt, and Don VandeWalle cite research in two areas that
may be particularly significant for global organizations:
A. K. Gupta, V. Govindarajan, and A. Malhotra note that the cultural

distance between an organization's leaders and subsidiary leaders increases
the value of feedback, as the subsidiary manager tries to leam more about
how headquarters sets priorities and defines success.
1!----- • M. F. Sully de Luque·and S.M. "Sommer propose that seekiTig"annrld----
providing feedback are int1uenced by four "dimensions of cultural
1
variability":
• High/low status. A superior may find it difficult to elevate a
subordinate's position through praise.
• Specific/holistic. Holistic cultures will focus rewarding feedback on
general performance rather than compartmentalizing job performance.
High/low tolerance for ambiguity. Employees in a culture with low
tolerance for ambiguity value feedback because it allays anxiety about
performance. it can have an especially powerful emotional and
motivating effect.
Individualism/collectivism. This dimension of cultural dilTerence
affects whether the individual or the entire group will be singled out for
feedback. Some researchers also believe that individualist cultures
prefer positive feedback while collective cultures prefer information
about mistakes.
- --- ------- _ _ -_ _
-- _
--- _
-·- - __--_--_-_-_-·_···_-_··-----'-=·· - - -
----------------------------
250 © 2015 SHRM
L
I) The reward programs developed by global HR should accommodate these
special needs and allow local operations to adapt their practices. Global
j
) employees-including assignees, managers working with subordinates from
different cultures, and leaders of cross-cultural teams---should be trained in
these principles.
)
Employee Communication
In sustainable workplaces, communication must occur in both directions:
e The organization communicates information about its goals, values,
strategies, and progress on a regular basis and as needed.
)
) e The organization ensures that employees are able to communicate back to
management through feedback channels.
Effective organizations use a variety of communications channels to relay

infonnation to employees-including newsletters, e-mails, and regular meetings.
Keeping employees in the communication loop gives them a greater sense of
control over their work lives. It also prevents the problems created by "grapevine
communication" and rumor mills, which usually offer only inaccurate and
incomplete infommtion.
) - · - - --·----------···--·····--·--·---------·---···----·------·-----·----·--·----·----·--···-
In a workplace with unions or works councils, there will be defined mechanisms
to provide feedback to management. Without these structures----and even
) sometimes when they do exist-management must deveiop some way to gain
) direct, nonhierarchical information about employees' views of organizational
effectiveness as well as of specific policies and practices. Most organizations
develop feedback mechanisms to provide a reality check on management's
beliefs about the perceptions of employees.
) Feedback mechanisms can:

• Serve as devices to learn of and respond constmctively to employee problems.
• Seek to create a climate of openness in which the employees do not fear
directing their questions, suggestions, or complaints to the attention of
) management.
) $ Attempt to remove the ba!Tiers to upward communication created by lower-
level management reporting only what it thinks top management wants to
hear.
)
J ---- =="-=cc=====c..==.::.c=========-------------
© 2015 SHRM 251
Employee Relations
• Communicate facts and infonnation about the future, growth, and barriers to
profitability that the organization is experiencing.
• Supplement and validate overall supervisor/employee relationships and take
corrective action where necessary.
e Help employees with job-related and sometimes personal problems because
personal problems are often barriers to employee productivity.
Organizations have a variety of feedback and communication mechanisms they

can use, but for these mechanisms to be effective, they must be backed with
commitment by top management and they must be compliant with local labor
regulations.
Examples of feedback/communication mechanisms include the following.
• Attitude (climate) and opinion surveys. Attitude surveys (also known as

climate surveys) and opinion surveys solicit employee feedback on fair
treatment, recognition and appreciation, quality of supervision, working
conditions, job demands, job security, adequacy of communication, and
satisfaction with compensation, benefits, and other conditions of
employment. Many organizations use norms from other organizations to
---.b"'enchrilark the results froni1liese surveys and then focus- on intema
continuous improvement from survey to survey. Employee surveys are
discussed further in the "Employee Engagement" Functional Area in the
People module.
• Skip-level interviews. With skip-level interviews, managers spend time

with each employee two levels below them on an annual basis. This
method reduces the perception of "we/they" in the organization and
facilitates upward communication. It also encourages management to
resolve issues and employee problems promptly. However, this feedback
communication strategy requires the support of and a significant time
commitment from top management.
• Open-door/person-to-person meetings. These meetings can be initiated

by the employer or the employee and can be held in locations other than the
superior's office. It is important to remember, however, that simply
remaining open to receiving employee complaints is not enough to create a
252 © 2015 SHRM

I sustainable workplace. Employers should also use more active ways to

solicit feedback about employee attitudes and complaints or grievances.
For example, one organization requires all senior managers to make weekly
visits to work areas on a rotating basis and to bring back from the visits
specific "learning points." And HR should not forget the importance of
responding to feedback and taking appropriate actions. Soliciting feedback
without responding to it signals to employees a lack of genuine interest in
employee concerns.
)
• Department/unit communication meetings. These are often used as a

J means of regular upward communication. Employees within a particular
unit are asked to meet with the manager to discuss current developments
and seek areas for improvement.
Including Managers and Supervisors

To an employee, the organization is really no better or no worse than his or
her immediate supervisor. This is why sustainable employee relations
practices must also focus on ways in which manager and supervisor
performance can be aligned with the ER strategy.
)-·--··--·"-·--··--··--···----·----··---· ···--·····--·--··--· ------··--··--·--···--··-
Managers and supervisors must understand the organizational ER strategy and

how that strategy is aligned with specific management practices-for
) example, how creating trust requires that managers and supervisors behave in
an open, fair, and consistent manner. They should be able to explain the
organization's labor strategy and posture, whether it is acceptance or
avoidance.
)
) Selection and promotion criteria for these positions should include competent
communication skills, emotional intelligence, and ethical behavior (e.g.,
avoiding discriminatory and harassing behaviors). Managers and supervisors
should receive training on the organization's policies and procedures,
especially regarding the handling of conflict and discipline and development
opportunities--perhaps by being mentored by experienced managers and
supervisors. Most importantly, their performance evaluations should include
) rnetrics that demonstrate an ability to fulfill the ER strategy in daily work with
employees.
© 2015 SHAM 253

A firm is pursuing a growth strategy through merger and acquisition (M&A).

HR has been actively involved in performing due diligence for a proposed
M&A target. Senior management is very committed to acquiring the
operation because it would advance their planned vertical strategy. The chief
Critical
human resources officer (CHRO) is reviewing data gathered by an HR task
Evaluation
Competency force. Much of the data is financial, assessing the financial implications of the
in Action target's workforce demographics and existing contracts. A few lines in a
report catch the CHAO's attention. They suggest that the CHRO's firm differs
in its approach to employee relations from the firm targeted for acquisition.
The CHRO's firm has implemented many processes designed to promote
individual initiative and innovation. The target company is very hierarchical,
and this is reflected in the many layers of approvals that must be obtained to
make decisions, the intricate dispute resolution path, and the formal
communication channels its employees must follow. The differences suggest
entirely different employee relations strategies, probably different cultures,
and possibly different employee skill sets, which could have strategic
implications. The CHRO presents HR's findings as a whole, emphasizing the
cultural and strategic challenges that this M&A poses.
··---··· -----------
254 © 2015 SHRM

r ORGANIZATION Employee Relations
l
)
l. What is the best definition of a sustainable employee relationship?
I
( ) a. Employees exhibit high levels of job satisfaction.
( ) b. Employers are able to operate profitably and offer full employment for the
j
foreseeable future.
l )
( ) c. Economic benefits to the employer and the employee are in balance.
)
( ) d. Employees, society, and employers can expect to achieve their goals well into the
future.
2. What is the major challenge for global organizations in establishing sustainable employee
)
relationships?
( ) a. Developing standardized policies
( ) b. Balancing standardization and localization
( ) c. Understanding the demands of local law and culture
( ) d. Understanding differing employee expectations
)---··--·-···-····---·--·---·--··--··--···--·----··----·-··-··-·--·--------·--····--·--·--···-
3. What ER tactic is based on the suggestion involvement model?

( ) a. A quality circle identifies ways to improve a service process.
,) ( ) b. Employees are allowed to design their own schedules as long as daily objectives
) are met.
) ( ) c. Employees and supervisors engage in stmctured conflict resolution.
( ) d. Employee representatives are included on boards of directors.
4. What ER tactic is based on the principle of high employee involvement?

:l ( ) a. Employees arc regularly rotated into supervisory roles on a shop floor.
) b. Management makes significant workplace changes based on employee
J suggestions in an annual survey.
) ( ) c. Employee representatives vote on outsourcing a production function.
( ) d. A software development team determines how it will manage a project.
)
---- --- ----- -·
"
© 2015 SHRM 255
5. An employee at one plant in a large manufacturing company submits an idea to management

that results in streamlining a distribution process. The suggestion saves the company about
$500,000 in transportation costs and ensures a continuous supply of product to customers. To
recognize the employee contribution, senior management at headquarters immediately
decides to give lhc employee a $100 bonus and to repoti the story in the next company
newsletter. Why may this reward action prove problematic?
( ) a. The reward may not be aligned with the value of the suggestion to the company.
( ) b. Financial rewards don't affect employee engagement and motivation.
( ) c. Management should have waited for an end-of-year recognition program for all
employee suggestions.
) d. Management may recognize the employee in private but should not provide
details about the reward to the rest of the workforce.
6. A young accountant is a good performer and is highly skilled in a very specialized field. The
older depmtment manager does not have this level of expe1iise but seeks frequent
opportunities to praise the young accountant in public. The accountant announces that she is
leaving for a different job, and no financial incentives can change her mind. The manager is
disappointed, having focused so much energy on making the accountant feel valued. What
might have gone wrong here?
( ) a. The accountant might have valued challenge more than feedback in this situation.
- - - - --+---') b. Public fuedbaek is net a comfortable experience for ·--- ----
( ) c. The manager may have been condescending in giving feedback.
( ) d. The feedback came too 1ate.
7. An organization is concerned about whether it is spending its resources for recognition in a

manner that is most meaningful to its employees. What communication mechanism is most
appropriate for this situation?
( ) a. Survey of all employees
( ) b. One-on-one interviews
( ) c. Focus group with department heads
( ) d. Survey of what other comparable iim1s are doing
256 © 2015 SHRM

Progress Check Answen;

1. b (p. 240)
2. b (p. 242)
3. a (p. 243)
4. c(p. 244)
5. a (p. 248)
I 6. a (p. 249)
7. a (p. 252)
lI I '
'
')
)
)
?--·-- --·--
)
. )
)
) .
© 2015 SHRM 257

Section 3:
Third-Party Influences on Employee

Relations

• Managing union/employee representative interactions.
• Representing the organization's interests in union-management activities.
• Managing the collective bargaining process, when appropriate.
• Managing arbitration and mediation processes.
• Understanding and making recommendations to respond to other types of employee
representation (e.g., government, legal).

• Collective bargaining process.
• Contract administration techniques.
• Contract negotiation approaches.
• Governmental labor parties and party relations by nation.
• International labor practices.
• Labor economics.
• Labor rights.
• Positive union/management relations approaches.
• Social movement unionism, new unionism proletariat.
• Trade unions by nation.
• Trade union federations.
• Union membership.
• Union structures.
• Unionized labor history.
• Works councils structures and approaches.
·=
Complex labor Environments

One of the reasons employers resist third-party labor organizations is that they
can make the employee relationship more complex. In a global workplace,
I 1
"complex" may be understating the situation. Consider the following actual
incident.
)'
In March 2012 the United Auto Workers (UAW) union began organizing at a
Volkswagen plant in Chattanooga, Tennessee, in the U.S., operated by the
Volkswagen Group of America (VGA). The union began speaking with VGA's
parent company in Germany, the Volkswagen Aktiengese!lschaft Group (VAG)
J
about serving as a vehicle for the establishment of a German-style works council
)
in the American plant. VAG had been looking for a way to do this, since it was
comfmtable with the works council system and found that this structure
contributed to labor peace and productivity.
';
)
The problem was that structures like works councils would probably be found to
be illegal in the U.S., where they would be seen as employer-dominated
"company unions." Ifthe plant workers voted to be represented by the UAW, the
plant could then send representatives to join Gennan union and works councils
representatives on VAG's global management committee. VAG was in favor of
l --- ····--···--·--··--···--··--··--··--··-----··--·----
.-----··---·-- ----ui1s arri\ngenient and even suggested that the plant was more likely to win a new
\
1
assembly line if the UA W was voted in.
The plan ran into heavy resistance from workers at the Chattanooga plant who
did not want to join any union and from state politicians who were opposed to
} the presence of the UAW in their right-to-work state. (In a right-to-work state, a
union or an employer is prohibited from requiring union membership or the
payment of union dues as a prerequisite for hiring or as a requisite for retaining a
job.) The workers filed charges of unfair labor practices against the UAW and
the VGA, claiming that the UA W had not been elected to represent Chattanooga
workers, the VGA scheme constituted a "company union," the American holding
company was responsible for its German parent negotiating with an
)
unrecognized union, and VGA was threatening workers against the UA W with
)
the talk about the new manufactnring line.
)
In January 2014 the Office of the General Cow1sel of the U.S. National Labor
Relations Board recommended dismissing the charges, but in February the UA W
© 2015 SHRM 259

lost a recognition vote at the plant. It immediately appealed the vote, claiming
that lawmakers bad prevented a fair vote, but in April it decided that it did not
wanllo spend its resources on this fight. And there was some suggestion that a
re-vote could be held sooner ifthe complaint was withdrawn.
What does this stmy tell us? Primarily that HR professionals working on issnes
involving third-party representatives-unions, works councils, and, in some
cases, governments and other organizations-should have the advice of legal
representatives and experts. Laws regarding third-party representatives are
exceedingly complex, and they arc surrounded by deep culturally rooted
attitudes and different political agendas. Navigating these environments can be
challenging for a domestic company and treacherous for a global one.
li This section will not make you an expert on labor relations, but it will acquaint
you with the role of third parties in shaping the employee relationship. We look
here at the roles of labor or trade unions, works councils, and governments and
social groups.
! However, HR professionals working for global organizations should be aware
I that other types of employee-employer intermediary bodies have evolved in

______ ___clifferent countries, often b_e_ca_u_sc oflcgal restrictions. Their goaiis often the
samc as unions··-·to bargain about working conditions or to collaborate with
c---
management. France has employee delegates who monitor compliance with

labor laws, facilitate grievances, and consult on health and safety. In Azerbaijan
labor collectives perform the tasks of a union when no union exists. Many
countries allow health and safety committees or ad hoc committees to advise on
redundancies or the effects of mergers and acquisitions.
Labor or Trade Unions
If
260 © 2015 SHAM

Dennis Briscoe, Randall Schuler, and Ibraiz Tarique describe the evolution of
I the trade union movement in International Human Resource Management:
) • European labor or trade unions have their historical roots in the Industrial
Revolution of the 18th century. The movement spread throughout Europe
and, later, to other parts of the world.
)
• At first, unions saw their identities as intemational, embracing universal

worker rights and goals. However, the two world wars of the 20th century
and different levels of industrialization redefined union identities
according to nationality. As a result, there was no significant cooperation
between unions in various countries and little sense of solidarity with
workers in undeveloped or developing economies. The Cold War further
divided labor groups according to pro-Western or Communist ideologies.
• Today there is interest among trade unions in collaborating across borders

) to accomplish their objectives. This interest comes in part li"om the growth
of multinational enterprises and the increased need for labor groups to
agree on common interests and cooperate on strategies. The New
Unionism movement, which is actually a rebirth of a 19th-century labor
focuses on gt'<iss-roots organizing,"" increasing workphlce
democracy, and internationalizing the focus of traditional unions.
In the same way that businesses in saturated markets have pursued new
oppo1tunities abroad, labor unions have turned their attention to emerging
•!
economies. Having achieved most of the rights unions historically pressed for in
the developed world, unions have experienced steady declines in membership in
developed countries. During this same period, however, union membership has
been stable or rising in many developing economies (examples include China,
·' India, and South Africa). Unions have focused on basic issues of sustainable
wages, benefits, and working conditions in developing economies where these
rights have not yet been established. Unionizing activities in developing
)
countries where unions have already addressed their basic industlialization
)
concerns have recently focused on customer service representatives and low-
level technicians.
1-- _ _:-=·---
© 2015 SHRM 261
/
LaborfTrade Union Strategies

As multinational enterprises define their strategies as global employers, trade
unions have expressed fears that the result of coordinated employer activity would
be a relentless downward pressure on wages and working conditions. Union
responses are limited, however, by the fact that union activity in a specii!c locale
is ultimately controlled by national laws. For example, a work action by the
Confederation of Japan Automobile Workers' Unions could probably not iegaily
be supp01ted by a work action in the United States staged by the United Auto
Workers. In addition, union collaboration may be difficult as national unions are
driven to compete with unions in other countries to preserve or win jobs.
··-··-Increasing Fermallntematicmalization of Unions

According to Briscoe, Schuler, and Tarique, international confederations allow
national unions to exchange information and coordinate strategies. Major
international unions and labor associations include the following:
• The World Federation of Trade Unions (WFTU) was previously composed

of unions from Communist countries but now focuses on unionization in
developing countries. The WFTU holds a consultative status with the
OECD.
The International Trade Union Confederation (ITLJC) is the world's largest

union federation. It focuses on promoting international cooperation among
trade unions and global campaigning and advocacy within global
institutions.
• The UNI Global Union was founded in 2000 to represent service-sector

employees around the world. It includes 900 affiliated unions located in 150
cmmtries. lt has negotiated directly with global employers to secure
workers' rights in Afi-ica, the Americas, Asia-Pacific, and Europe.
262 © 2015 SHRM

I ORGANIZATION
Pressing for National and International Compliance

Employee Relations
Trade unions are working with national and international bodies to implement
I the ILO's core labor standards and enforce compliance. The World Bank now
requires borrowers to commit to the ILO's core labor standards.
J Implementing international Framework Agreements

) International framework agreements (IF As) are negotiated between unions,
global union federations (GUFs ), and multinational enterprises. The enterprises
commit to core labor standards, and the GUFs (examples include the
lntemational Textile, Garment and Leather Workers' Federation and the
Transpmt Workers' Federation) can help maintain the agreement by negotiating
proactively or calling public attention to the violation-an obviously
undesirable form of publicity for a multinational enterplise.
Forming Networks and Alliances

'
I') The ILO has expressed interest in promoting organizing efforts directed along
the supply chain rather than in discrete locations.
l Individual Labor or Trade Unions

Unions in different countries often appear to have little in common.
. ...
)-·--
Understanding how a specific union operates doesn't yield an understanding of
how unions in general function. What employees in Belgium and what employees
in China expect from their unions differ vastly. Similarly, being familiar with the
laws and regulations of one country may not help predict the legal environment in
another. For example, company unions, nm by the enterprises, are illegal in the
United States but a common feature of labor relations in Japan.
Peter Dowling, Marion Festing, and Allen Engle (in International Human
Resource Management) attribute this variation among unions to various factors,
including:
• The moment at which the union movement occmTed in the country's

industrial and technological development. German unions are among the
oldest labor organizations, and the cmployer·union relationship there reflects a
mature accord that hr.s been worked out through an array of legal mechanisms
and social expectations.
j--
© 2015 SHAM 263

• The national government's attitude toward business and labor and its
tendency to become involved. As we will discuss later in this section, in
some countries, such as France, the government has a seat at contract
negotiation tables and consults with union leaders on social and economic
issues. In the U.S. attitudes toward organized labor are highly divided along
political lines, and the government becomes involved in work actions in the
nongovernmental sector only when they threaten national security. The
website for the Federation of European Employers (www.fedee.com/
labour-relations/industrial-relations-across-europe/) offers summaries of
labor environments across Europe. These summmies provide a good picture
of what variations exist and how great they can be.
e The union's own ideology and the presence of ideological divisions. The
Austrian Trade Union Federation is a centralized trade union association
that comprises multiple unions that historically have associations with
political factions, such as the Social Democrat Party.
e The alignment of the union with the country's religious institutions or

poiitical pat-ties. For example, the Catholic Church has played an historical
role in the development of human and employee rights in Latin America.
• The attitudes ofthe employers. The attitudes of the employers against

whom a union organizes (in other words, an atmosphere of hostility or of
cooperation) also play a role in the variation among unions.
Briscoe, Schuler, and Lisbeth Claus (in the 2008 edition of International Human
Resource Management) identifY six characteristics that HR professionals should
try to identify in labor groups with whom their organizations interact:
• Level at which bargaining Who is on either side of negotiations?

Bargaining between employers and unions can occur at the trade level, by
industry, by employer, and by specific workplace.
• Focus of bargaining topics. What is considered a fair topic ti.1r labor

negotiations? In some countries bargaining will be restricted to wages and
benefits, while bargaining in other countries will focus on broader social
issues. Some unions in developing economies have focused on social topics,
264 © 2015 SHRM

such as antidiscrimination, environmental actions, and HIV I AIDS treatment

) and prevention. These unions are seen as part of social movement unionism.
)
) • Union penetration or density. These terms refer to the percentage of workers

) that belong to a union. The rates differ widely among countries, especially in
countries where union members retain membership after retiring. One must be
,r careful here when considering union density. There is not always a direct
), relationship between the number of members a union has and its ability to
shape agreements, since employees who are not members of a union may still
) be covered by a collective bargaining agreement.
I
!! I
) • Membership. Is membership in a union compulsory? Do employees join a
union as individual members, as in a trade union for skilled workers? Or is
membership aligned with employment by a specific firm? (In other words, if
you work for Company A, do you have to join Union Y?) Are managers
allowed to be members? In terms of membership, unions can represent low-
skilled workers and highly skilled professionals. This can affect negotiating
topics and style.
)
\ • Relationship with management. Is the relationship historically stormy or
)--··--·--·-·-··---·xnore c.ooperative? ·····---···--···--··---··--··--···--·---··--··---·--··--···-
\
e Role government will play. How likely is the government to become
involved in the labor relationship? What may t1igger its intervention? What
concerns will it bring to the table?
)
)
Briscoe, Schuler, and Tarique counsel that, in addition to learning abont labor and
trade unions in their countries of operation, global HR professionals should
monitor changes in economies and workforces that could affect workforce
relations strategies, such as changing political climates and the types of jobs in the
economy.
Managing the Union Relationship

Creating a positive organizational culture can promote a positive relationship
with union representatives, avoid problems, and improve grievance resolutions
and collective bargaining outcomes.
}-
© 2015 SHRM 265

A more cooperative labor-management relationship is generally characterized

by:
• A greater acceptance of labor-management partnerships.
" An increased willingness to share power.
e More open and candid sharing of infmmation.
o Joint decision making on issues of common concem.
• "Win-win" bargaining techniques.
• Shared responsibility and accountability for results.
HR can help create and promote an organizational perspective that values

positive and productive relations between management and union
representatives. This may mean winning management support for this
! approach and educating management about the costs and benefits of a
cooperative relationship. HR can develop policies that reflect this
II perspective, work with local HR to implement these policies, and manage

conflicts with local Jaws and cultural practices.
Figure 4 presents several possible strategies for accomplishing this.
Avoid 11nreaso_nable restrictions on

standards and local laws governing union communications and access
unionization and other worker rights. to meeting space.
0 Comply with local regulations 0 Refrain from expressing negative
regarding informing and involving views about unions and the
workers. workers who join them. Treat union
0 Develop fair grievance and alternate members equitably and
dispute resolution procedures with respectfully.
built-in appeals mechanisms. These 0 Demonstrate genuine appreciation
should be regionally appropriate and for employees' interest and
available to all employees, involvement in workplace issues.
regardless of union membership. 0 Consult with union leaders to
0 Implement joint study groups to defuse probierns before they
solve common problems. become grievances.
0 Actively monitor the workplace lor
political pressures, and help
employees independently choose
the organization(s) with which to
affiliate.
------·--
Figure 4: Strategies for Improving Employer-Union Relations
266 © 2015 SHRM

Works Councils
Works councils are pennanent bodies comppscd of workforce members that

. represent employees, generally Hrm or Thei; primary . .
purpose iii intonnalion and wnsultalirin-'-to receive frmn l!mploycrs and to
l convey to employees information that might allec.t the workf(lfce and the
l· health of the entcrpi:isc. 'rhey arc not involycdin contract negotiation; v{hich
) .. is conducted by unions. The closeness ofthi: relationship between a >i.wks
I .. and,; tdatcd llliion can vary by c(nintry. l.Jnions may port the
.1 . election of certain members lo councils.
.· .. -:
Works councils evolved primarily in Gennany during the 20th century. The
councils were intended to cooperate with management to increase efficiency,
promote harmony in the workplace, provide a means of addressing grievances,
) supervise compensation, promote safety and health, and help administer welfare
.I programs. They have become a common feature of the European workplace,
institutionalized by local regulations that require employers of certain sizes to
\ establish councils. Other countries have works councils as well, including
1-----------Ani BB:aarrngrrlllla:ddesesh, Japan, lhailand, and Sou til nca.
·There arc no works councils in the U.S. because ihcy arc sc<:n;ts violations of ·
)
.. section &(a)(2) of the National Relations Act, which prohibits
c;ompany·dominatcdunions. Whcu carefully managed, employee
)
participation progmms canpcrfbmt some management ftlnctions,such as
handling grievances or recommending safety
)
The icvci of involvement in the business ·salTa irs and cooperation with management
by the works councils varies business by business and country by country. In some
)
cases, works councils may actually participate in a business's employment-related
)
decisions. On a national level (for example, Ge1many), works councils may fonn
constituencies to elect representatives to national legislatures. Works councils abo
may be associated with an entire industry or occupational group.
..
© 2015 SHRM 267
Eurofound, a tripartite agency of the European Union focusing on social and

issues, offers a country-by-country review oftbe ditferences among
works councils at www.eurofound.europa.eu/eiro/otherreports/
works%20councils_t1nal. pdf
Works councils might be seen as complementary to unions, barred from

negotiating but empowered to apply contracts at a workplace level and to
contribute to a workplace's cultural and social life. Members of a works council
are not necessarily union members, and the relationship between a works council
and a union operating in the same workplace may vary. In one instance a works
council may be an extension of a union presence, while in another workplace the
works council may operate independently of the union. Often, however,
information gathered through the works council is used during union-employer
negotiations. European expert Milan Jetic has noted that many unions see works
councils as competitors, a force contributing to the weakening oflabor unions.
Works Councils Structures

Works counciis are distinguished by their composition, which can include:
Both management and worker representatives.
Only worker who by a member
---
Only worker representatives with no management oversight.
The number of works council members generally varies with the number of local
employees. These positions are filled through an election process, and worker
representatives typically are afforded significant employment protections.
Employers generally must advise works councils of proposed management
decisions, actively seek their input, and carefully consider their views before
taking any action. Those in Germany and the Netherlands are required not only to
consult with works councils in this way but also to obtain their agreement before
implementation. In some countries, such as Germany, works councils also must be
kept apprised of the general conditions, financial status, and future plans oflhe
enterprise.
Codetermi nation
In some counilies, the role of the works council extends beyond information and
consultation.
268 © 2015 SHAM

I,
I,
I
' '
'
) Codetennination topics include anything that affects workers, such as the company's
i! I
)
1
organization, working conditions, employee relations, economic decisions
concerning company development, working hours, occupational safety and health,
I HR policies and practices, and compensation.
}
There are three models of codetermination:
); e Dual system. In addition to the typical management board, there is a supervisory
)
board. Depending on the size of the company, as many as half of the supervisory
) board members may be workers, Because this supervisory board has the authority
I
)
to accept or reject the management board's decisions, firms are essentially
)
prohibited fi'Om implementing workplace changes without employee consent.
'------- - - - - - • Single-tier system There is

I representatives are included as members.
)
* Mixed system. Employee representatives are included, but they are only advisors
(i.e., in a nonvoting capacity).
HR and Works Councils

HR professionals must consider the finn's responsibilities with respect to works
)
councils in each country in which the finn operates. Because requirements and
practices vary from one location to another, it is impmiant to understand:
e Whether a works council is mandated by statute and, if so, under what
circumstances.
) o The procedures for forming a works council.
) e The scope ofthe employer's obligations with respect to works councils (e.g., the
types of issues about which a works council must be consulted, whether
agreement is required, and the timing of such consultation in relation to planned
implementation).
,1 -
© 2015 SHRM 269
As with unions, works councils offer an avenue for addressing difficult

organizational challenges and finding solutions that avoid workforce dismptions.
Organizations should also consider the potential for engaging with works councils
proactively when issues and business decisions address the future welfare ofbolh
the t!rm and the employees, such as the need for expansion, downsizing, transfer, or
outsourcing. Works councils can be ways to develop options, to gather reactions
fi·om employee representatives to plans, and to use their input to adjust solutions and
evaluate outcomes. HR professionals can work toward establishing collaborative ' i
and trusting relationships with works councils that may be needed in the future.
Govermnents and Other Groups

Complicating the employment relationship further is the potential presence of
groups beyond the employer and employees' elected representatives. For
example, there may be:
• Employer or industry associations. In some countries, contracts may be

II
negotiated at a multi-employer level. The contracts may be at an industry
level (e.g., steel manufacturers) or at a national level.
l
o National governments and agencies. To a certain extent, national
---------1¥J'¥·@'11IDents are always a part of the labor relationship in that
and regulate aspects of the employee relationship and the employers'
relationship with unions and works councils. Jn the Philippines, for example,
the Department of Labor deals with issues related to working conditions but
also to overseas work, workforce training and technical skills development,
and voluntary arbitration. Tripartism-a collaboration of governments,
employers, and unions-is a norm in Singapore. Particularly during economic
crises, govemments may step in to protect employees' social welfare, taking
steps to increase hiring, encourage employers to provide some levels of
employment during retrenchments, or invest in skills development.
" Intemationai groups. In response to the global recession stmiing in 2008 to

2009, the ILO--with governments, employers, and employee groups---
created a Global Jobs Pact which issued recommendations for steps that all
pmiies could take to meet the economic crisis. Governments could invest in
jobs and provide social protections, while employers could recommit to lLO
labor standards and apply flexible work arrangements, such as rotating
workers into jobs.
270 © 2015 SHAM

. r )
i ) ORGANIZATION Employee Relations
• Local governments, nongovernmental organizations (NGOs), religious

institutions, and community groups. These groups are usually more active
at a local level, applying pressure on social justice issues and helping to
support social programs during economic crises. In the Philippines the
national government includes such groups as social partners in its efforts to
address employment levels. These organizations may also provide
) representatives to national-level task forces and arbitration groups on
) employee relations issues.
)
Collective Bargaining
) Collective bargaining is the process by which management and union
) representatives negotiate the employment conditions for a particular bargaining
unit. Collective bargaining covers items such as wages, benefits, and working
I
j
conditions and may include other matters deemed important by the members.
As has been mentioned previously, bargaining may occur between individttal

I ) employers and unions or multi-employer groups and trade union associations. The
) process may be centralized at the national level, with government participation.
I.
___________..Ihe_c.omhined
categorized as:
@ Legal and regulatory factors regulations that make collective
bargaining agreements compulsory for employers or enforceable.
• Bargaining precedents-factors during the bargaining process that led to
) previous agreements and/or the existing agreement.
) e Public and employee opinion-public sentiments about the organization and
) the union and what employees deem to be pe1iinent.
• Economic conditions--the state of the local and national economy.
Figure 5 visualizes how these various factors impact the collective bargaining
process. Collective bargaining subjects refer to topics that will be addressed in the
contract. In the U.S. some topics are mandatory (e.g., vacations, grievance
I procedures), others are discretionary (e.g., benefits for retired workers), and some
are illegal (e.g., practices that would violate the law, such as discrimination or
requirements to hire only union members). Brazil has no mandatory subjects, only
customary ones. These topics are usually defined in national labor regulations.
I
) -
) © 2015 SHRM 271

Legal and regulatory factors
Bargaining
subjects:
Economic Management Union Bargaining
topics,
representation representation precedents
issues, and
goals
Public and employee opinion
Figure 5: Factors Affecting the Collective Bargaining Process
Contract Negotiation Process

The negotiating process is designed to balance the rights and interests of
________ employees, the unign, and through a two-way flow of
communication. Most employees, supervisors, and managers are not directly
involved in negotiating the collective bargaining agreement. The negotiating
team for collective bargaining is usually composed of a small group of
management and union officials.
The general process followed is that the union submits a contract proposal to the
employer. The employer then has a certain amount of time to respond to the
proposal and to negotiate its terms. In Chile if an employer does not respond to
the proposal within a certain time frame, the proposed contract is automatically
enacted. In the U.S. the failure of either side to negotiate in good faith (i.e.,
actively work toward agreement) is considered an unfair labor practice.
The goal of contract negotiations between the union and management is to an-ive
at a workable contract that is mul1mlly acceptable to both the union and the
organization. Both parties have a responsibility to establish a contract that will
contribute to an ongoing constmctive relationship that fosters effective resolution
of issues. The first contract is generally the most diftlcult to negotiate, as the
272 © 2015 SHRM

II ORGANIZATION Employee Relations
parties work together to develop the collective bargaining agreement. In

subsequent years, they revise and build upon the contract, attempting to clarify
ambiguous issues and address new issues of interest to the parties.
If the sides cannot agree, outside mediation and arbitration may be used. In
some countries these dispute mechanisms are mandatory. Mediators and
) arbitrators may be neutral parties or, in some countries, government panels or
) labor tribunes.
)
Mediation (also known as conciliation) is a method of nonbinding dispute

resolution involving a third party who tries to help the disputing pmties reach
a mutually agreeable decision. It is aimed at keeping labor and management
) negotiators talking so they can voluntm·ily reach a settlement. Mediators have
} no power to compel the two parties to reach an agreement. Instead, they seck
) to find common ground and persuade the pmties that it is in their best interest
I to reach an agreement without resorting to a strike.
' )
Arbitration is a negotiated procedure in which labor and management agree
to submit disputes to an impartial third pariy and abide by lhe arbitrator's
decision. The arbitration process is more informal than court proceedings. As
>-··--··--··--·--mit, it can usmrtly concentrate on keylsSues and resoTVedisputes tasfe-r--···----·---
J than litigation. Arbitration is the dominant third-party method of settling
j
labor disputes. It is designed to permit uninterrupted operations during the
existence of a contract and to substitute for the historical remedy-a union
,,\ strike or an employer lockout.
)
lf negotiations are successful, the result is a contract or collective

bargaining agreement (CBA). The CBA governs the day-to-day
relationship of the employer and the employees in the bargaining unit for the
period oftime it specifies. Contract provisions are enforceable through
internal grievance and arbitration procedures. labor tribunals. or, in some
countries, the courts.
I
HR's Role in Contract Negotiations
HR professionals will probably not be directly involved in contract
negotiations, but they play a valuable role in improving the quality of the
contract.
© 2015 SHRM 273

Based on their experience and metrics, they can:

o Suggest work processes that are most cost-effective and identify
management proposals that may be ineffective in terms of creating a
productive workplace (e.g., job restructuring that increases stress).
o Contribute suggestions based on HR 's understanding of employee needs.
In some cases, nonmonetary concessions can be as significant to
employee groups as wages and benefits.
o Analyze contract language to identify potential misunderstandings or
difficulties in administration that could result in grievances later.
• Provide negotiators with data about employee demographics and payroll and
benefit costs that can be used to analyze cost implications of proposals and
concessions.
e Identify unintended consequences of contract provisions so that they can be
more fully considered. For example, an employer's offer might not be
economically sustainable over the life of the contract, or it might be too low,
encouraging other employers who are not locked into multiyear contracts to
lure employees away with higher wages once the contract has been approved.
o Identify clauses from preceding contracts that may be in conflict with new
empioymeni laws.
I--------:=========================================----
A firm is entering negotiations with the union that represents 70% of the
company's employee population. The union has historically been
adversarial toward the firm, and the firm has not always been very
forthcoming with economic information. In this contract the firm needs to get
Relationship the union to agree to a new compensation structure in order for the firm to
Management remain competitive. The HR director and the firm's president begin meeting
Competency with the lead union representative several months before the official
in Action beginning of contract renegotiation. The purpose is to share information in a
more candid setting, explore what they each need and want to get from the
negotiations, and establish mutual respect and some degree of trust. Before
negotiations commence, the HR director talks separately with the president
and explains that it seems clear that the union leader understands the firm's
economic position and business needs and thinks ii is in the employees·
best interests to accept this new wage structure. At the same time, because
of the previous negotiation experiences and because the union leader
needs to maintain credibility with union members, the firm needs to offer
some concession that will be meaningful to the union but that the firm can
accept. The two analyze their position and identify several options that they
will bring to the negotiations.
------ -------
274 © 2015 SHRM

Contract Administration and Enforcement

HR is directly involved in contract administration and enforcement, as the
)
abstractions of the legal document are applied to the complicated situations that
can arise in the workplace. HR does what it can to make sure that the contract
provisions are met. This may include educating managers and supervisors about
the new contract provisions, specific ways in which their actions should
)
reinforce the contract, and how to proceed if questions or problems arise.
)
Effective education may prevent many grievances from occurring.
)
Handling Grievances
A contract almost always includes a formal grievance procedure. This process
provides an orderly way to resolve the inevitable differences of opinion in
regard to the union contract that develop during the life of the agreement.
)
Keep in mind that many union grievances arise from unanswered questions or
misunderstood or miscommunicated policies. To avoid grievances of this sort,
both management and union representatives should evaluate the workplace for
potential problems and address these issues before they become problems, know
J the labor agreement in its entirety, including past practices and local
l--·-··-··-·-= d-know-tlHHmip!By{le5-11W-their-prehlems:---·---
Some grievances address possible violations of the terms of the contract, but
many grievances result from perceived unfair treatment of an employee by
management with regard to disciplinary actions, privileges associated with
seniority, or unfair and discriminatory treatment (e.g., bullying by a supervisor).
The employee grievance process involves several steps. Although the process
may vary somewhat from contract to contract and from country to country, the
following represents the general steps.
$ Immediate supervisor. Employees who feel mistreated or think that their

contract rights have been violated file a grievance with the irmnediate
supervisor. At this point, the filing ofthe grievance may be written or oral.
Most grievances are written out. The supervisor must attempt to accurately
determine the reason for the grievance and try to solve the problem.
Supervisors and union representatives or stewards can work together to
© 2015 SHRM 275

solve the problem. lf the union representative agrees that no valid grievance
has occurred, the process ends.
e Next level. lfthe employee, supervisor, and union representative

cannot solve the problem together, the formal written grievance
proceeds to the next level in the hierarchy-the intermediate
supervisor, department head, or unit manager and a higher-level
union official.
To promote free discussion, the employee with the grievance is

usually not present and is represented by the union. lt is, therefore,
important for both sides to fully document their facts and their
positions.
e Higher-level management. If the grievance is not resolved within

the time period set under the union contract, it usually goes to the
next level, where, on the union side, a member of the grievance
committee or a representative from the union structure is involved. In
some companies, the complaint can go only as high as the local plant
manager; in others, it can go all the way to top corporate officials. If
the gt{evance l:s- not resolved wttlim tlie tm1e penod set under tlle.---- --····--
union contract, it usually moves to the final stage.
• Third-party determination. If the grievance is still not settled, a

neutral outside arbitrator may be called in to settle the issue. At
this stage, the highest levels of each side are usually represented.
For the employer, this may include the corporate vice president for
HR (or equivalent) and/or legal counseL For the union, this may
include the local union president, a national union representative,
or legal counseL
Figure 6 on the next page provides some helpful guidelines for

employers in handling grievances.
276 © 2015 SHRM

•
though it may eventually result in an employees that are inconsistent with the
arbitration hearing. labor agreement or that exclude the
• Do require the union to identify specific participation of a union representative .
contractual provisions allegedly violated. • Don't hold back the remedy if the
I • Do comply with the contractual time limits company is wrong .
) for handling the grievance. • Don't admit to the binding effect of a past
) • Do visit the work area related to the practice .
grievance. • Don't relinquish to the union your rights as
)
• Do determine whether there were any a manager.
! ) witnesses. • Don't settle grievances on the basis of
• Do examine the employee's personnel what is "fair." (Use the labor agreement as
record. your only standard.)
• Do fully examine prior grievance records. • Don't bargain over items not covered by
• Do comply with regulations regarding the the contract.
presence and involvement of union • Don't give long, written grievance
representatives in meetings with answers.
)
employees. • Don't trade a grievance settlement for a
• Do treat the union representative as your grievance withdrawal (or try to make up for
equal. a bad decision in one grievance by
bending over backward in another).
• Do l1old your grievance discussions
privately. • Don't deny grievances on the premise that
your "hands have been tied by
• Do fully inform your own supervisor of
grievance matters. management."
•. Dol}'t agr§le to informaJ amer!dment.s in
. L - ..- _.
the contract.
) representatives present.
• Don't establish a pattern of practices that
• Do document all grievance meetings; take
have the effect of creating a right not
copious notes.
_______________________ specifically included in the contract.
Figure 6: Guidelines on Handling Grievances

I
)
)
)
)-
© 2015 SHRM 277
1. What is a critical characteristic of a labor union?

( ) a. Authority to negotiate for working tenns and conditions
( ) b. Sole representation of employees in a workplace
( ) c. Ability to suffer an unfair labor practice
( ) d. Responsibility to provide advice and consent to management
2. How have trade unions reacted to the trend of globalization?

( ) a. Increasing the number of strikes called against intemational employers
( ) b. Networking with unions in other countries
( ) c. Appealing to international courts to judge conflicts
( ) d. Relying more heavily on local works councils
3. What does the term "union density" mean?

( ) a. Percentage of workers that belong to a union
( ) b. Vertical integration of a union in an industry
( ) c. Union's historicafsuccess in directing concetteiriictwns
( ) d. Number of employees in a country covered by union agreements
4. Which action best suppmts labor-management cooperation?

( ) a. Preserving the traditional "us-them" environment
( ) b. Promoting high expectations for success
I
• ( ) c . Allowing committee members to defend their positions
I ( ) d. Setting common goals on a united front
5. \Vhat is the primary function of a works council?

( a. Facilitating contract negotiations
( ) b. Resolving local workplace grievances
( ) c. Protecting local workforces from loss of jobs
( ) d. Facilitating exchange of information and consultation
I- 278 © 2015 SHRM

I
.
. ORGANIZATION Employee Relations

I
I
6. What is codetennination?
( ) a. Participation of employee representatives in setting business strategy
l
( ) b. Alliance of works councils and unions in setting demands for working conditions
( ) c. Joint owner-employee management of operations
( ) d. Principle under which management regularly consults with employees
) 7. What is tripartism?
) ( ) 0
u. Alliance of management, unions, and works councils
) ( ) b. Extemal resolution of employer-employee decisions
( ) c. Collaboration of govemment, employers, and unions in labor negotiations
( \
} d. Representation of employee interests to employers by elected union
representatives
8. How is collective bargaining conducted?

) ( ) a. Contract negotiations focus on wages and benefits only.
( ) b. Bargaining may occur at a national level with groups of employers and groups of
umons.
( ) c. Legally, any employee must be allowed to participate in contract talks.
( ) d. Contracts may not be influenced by precedents created under previous labor
contracts.
)-------------·-- --·--- ·--- --·--·--··---
9. An employer and its union are at an impasse on a new contract. What form of contract
resolution will use a third party to make a decision thai both sides must agree to?
( ) a. Win-lose negotiation
( ) b. Win-win negotiation
) ( ) c. Mediation
) ( ) d. Arbitration
10. An employee complains to a supervisor that a recent promotion violated the union contract's
seniority guidelines. What will happen under the contract's fcmnal grievance process?
( ) a. The matter will be decided according to the contract.
( ) b. The complaint will be brought before a joint employer-employee panel.
( ) c. An impmtial third party will resolve the conflict.
( ) d. The supervisor's action will be automatically nullil!ed.
© 2015 SHRM 279


I. a (p. 260)
2. b (p. 263)
3. a (p. 265)
4. d (p. 266)
5. d (p. 267)
6. a (p. 269)
7. c (p. 270)
8. b(p.271)
9. d (p. 273)
10. a (p. 275)
i' - - - - - - - - - - - - - - - - - -
© 2015 SHRM
280
)
Section 4:
VVhen the Employee Relationship Faitea'S

• Engaging in appropriate and lawful union-management practices.
• Resolving workplace labor disputes internally.
• Managing arbitration and mediation processes.
• Participating in or facilitating alternate dispute resolution processes.

• Alternative dispute resolution techniques.
• Causes of strikes, boycotts, and work stoppages.
• Disciplinary techniques.
• Grievance, complaint, and conflict resolution techniques.
• Investigation techniques.
• Strike actions, secondary actions, general strikes, sit-down strikes, work-to-rule.
I
• Unfair labor practices.
)
I
I
)
)
)
Preserving the Relationship at Difficult Times

It would be very unrealistic to state that following the recommended regimen for
creating a positive and productive workplace will guarantee smooth sailing in
employee relationships. The relationship may be strained, for example, by
economic conditions outside the organization's control. Recessions and
increased global competition can lead to retrenchments. Recoveries from
recessions can be just as problematic, since employee expectations of increased
wages can be overly optimistic. Individuals' personalities and attitudes can strain
the relationship as welL
While HR's primary contribution is to assist in creating a workplace

environment that prevents problems from arising, HR also helps create an
environment in which damage to the relationship Can be controlled and mitigated
and the relationship repaired as quickly as possible.
This section focuses on what happens when the employee relationship falters---
from a collective perspective and the prospect of strikes and other actions and on
an individual employee level and the development of grievances and
complaints-and what HR does to contain the damage.
Industrial Actions and Unfair Labm· Practices

Let's start our discussion of poor outcomes in the employee relationship by
examining what happens when collective relationships-relationships with
organized or unorganized groups of workers--deteriorate and when attempts at
negotiation have failed and either side or both sides demonstrate lack of respect
for employer and employee rights and the law. Industrial actions are a form of
economic coercion-and, in some types of actions, ethical coercion. Unfair labor
practices involve legal recourse for statutory infractions by either employers or
Ull10llS.
Industria!
The term industrial action is from British usage and includes various forms of
collective employee actions (or "concerted activities" in U.S. parlance) taken to
protest work conditions or employer actions. Industrial actions intend to interfere
with an employer's ability to fulfill its commercial interests.
282 © 2015 SHRM

Actions can be called by unions (or labor groups in the absence of a recognized
union) for a number of reasons:
• Pressuring an employer to negotiate a contract
• Resisting a proposed contract perceived as unfair (perhaps because it
)
contains "c1awback" provisions that will result in economic loss to
)
employees)
I • Calling attention to unfair labor practices or poor working conditions
• Competing with other unions tor the right to represent workers
Various forms of industrial actions are listed in Figure 7. The legality of these
I
actions can vary globally, and the conditions under which an action may be taken
)
may be very precisely regulated. In some countries strikes may not be allowed as
long as a contract is in force. Certain types of actions may not be allowed at all.
Employers may or may not be able to hire replacement workers.
)
General strike Work stoppage. Wildcat strikes are work

stoppages at union contract operations that
have not been sanctioned by the union.
)
Sit-down strike Refusal by workers to work or leave their
) - - - - - - - - - - - - - - - - - - - - ----- ---f-workstalions;-makingitinlpossible fo1 t11e ----··--------····-
) employer to use replacement workers.
> Sympathy strike Action taken in support of another union that is

striking the employer. Contracts may include
provisions prohibiting sympathy strikes.
Secondary action or boycott Attempt by a union to influence an employer by
) putting pressure on another employer-for
) example, a supplier.
Work-to-rule Situation in which workers slow processes by
performing tasks exactly to specifications or
according to job or task descriptions.
Picketing 1 Positioning of employees at the place o! work
targeted for the action tor the purpose of
I protest. Picketing can be used for similar
) purposes as strikes, but there is no work
I stoppage. In some cases, picketers may
! legally interfere with commerce at the
I employer's site.
-·····-- - - - - - · · . · - - · - - - - ··--·---···--·· . . --·------
I
Figure 7: Examples of Industrial Actions
)-
© 2015 SHRM 283
Unfair Labor Practices

An unfair labor practice (ULP) is a violation of employer or employee (or
union) rights under labor law. ULPs can occur with or without the presence of a
llllion. For example, in the U.S. interfering with an employee's speech about
organizing is a ULP. Charges of unfair labor practices are commonly heard by
labor boards, commissions, or tribunals. Employers can be fined, ordered to
negotiate, refrain from the practices in questions, or make public admission of
wrongful actions. It is worth noting that many strikes are in reaction to
employers' unfair labor practices.
Figure 8 provides examples of commonly recognized types of ULPs by

employers and employees/unions.
• Interfering with an employee's right • Conspiring with employers to

to join a union. This could include discriminate against employees
bribing employees not to vote for or on the basis of union
join a union or eliminating or membership.
threatening to eliminate jobs in some
manner.
• Interfering with freedom of
speech or coercing or fining
• Discriminating among workers employees.
based on union membership, either
to discourage or require membership
• Failing to respond to member
complaints.
or based on employee complaints.
• Refusing to bargain in good faith .
• Refusing to bargain with a
recognized union or provide • Requiring unreasonable or
information material to negotiations. discriminatory membership fees.
• Refusing to enforce contract • Directing prohibited work actions .

provisions.
• Controlling or intervening in the
operations of a union.
Figure 8: Employer and Employee/Union ULPs
----
284 © 2015 SHRM
I: ORGANIZATION Employee Relations
II
! )
HR's Role
Ideally, HR can help avert work actions and charges of unfair labor practices
through its counsel to management, communicating the perspective of employees
and the importance of compliance. Because the tenor of the management-employee
relationship contributes to industrial actions, HR trains managers and supervisors to
avoid bullying, to communicate, and to engage in constructive conflict resolution.
HR can help avoid employer unfair labor practices by educating managers and
supervisors about prohibited behavior and constructive altematives.
)
However, finns must be prepared for industrial actions, and HR works with
management and other functions to prepare strategies in the event of a strike.
Preparations can involve:
Organizing and training managers to take the place of workers.
• Identifying and arranging for contingent workers if using replacement workers
)
is legal.
)
• Educating managers and supervisors about what they can and cannot do, thus
)
helping avoid unfair labor practices.
When a strike occurs, HR must implement contingency plans, deliver training, and
)
L____ .. arrange payment to replacement workers. If and when employees return to work,
' ---·---·---·--HR monitors the in the workplace intervenes help
lingering conflicts associated with the strike.
fvianaging Conflicts with and between Employees

We use the term "managing" here consciously. Conflict is an inevitable, and not
necessarily negative, feature of the workplace. Some conflict arises from
disagreements in viewpoints, opinions, and ideas. These conflicts can be positive
because they promote discussion and exchange of perspectives and solutions. Paul
) Evans, Vladimir Pucik, and lngmar Bjorkman find this type of conflict essential.
)
Without a certain amount of it, a team may become apathetic and unoriginal.
)
Certain types and levels of conflict, however, do not strengthen an organization.

Conflicts driven by differences in personalities can weaken cohesiveness in
working groups, damage trust, and distract employees and their managers. Ignored
conflicts with subordinates can weaken a manager's or supervisor's authority and
ability to lead. When serious conf1icts between employees are ignored by
)--
© 2015 SHRM 285
managers, this can be seen as employer negligence and can lead to workplace
harassment. Conflict managed unfairly can lead to employee complaints and
possibly litigation.
Many of these situations eventually arrive in HR, and HR professionals are

expected to assist in resolving these conflicts by using their various
competencies and the tools of conflict resolution. Conflict resolution is a high-
risk activity, and the following information is not intended to make HR
professionals expert in this skill. Practitioners are advised to seek
opportunities to deepen their understanding of conflict management
techniques and to practice them in low-risk settings.
HR's Role in Managing Conflict

Evan, Pucik, and Bjorkman describe an internal approach to conflict
management that includes:
e Agreeing on goals.
e Listening.
e Focusing on issues rather than personalities.
• Using facts.
e Making sure perspectives are in the discussion.
e Using humor.
• Exploring alternatives.
The authors emphasize, however, that this procedural approach is characteristic

of Western cultures and may not work in all cultural settings. It is impmtant,
therefore, that HR practitioners are aware of the cultural differences in their
organizations and the cultural misunderstandings or biases that may drive
conflicts in a global organization and complicate the resolution of conflicts.
Different cultural norms can prevent managers and employees from recognizing
when conflict is occurring, and different tolerances for coni1icl and approaches
to handling it can undermine resolution.
Intercultural conflict can be triggered by prejudices and by differences in values

and perceptions. The implications of cultural differences in organizations are
discussed more fully in the "I-JR in the Global Context" Functional Area in the
Workplace module. For example, intenupting a coworker can be seen as
286 © 2015 SHRM

) enthusiastic and participative communication in one culture and as rude and

challenging to authority in another.
Cultural differences also affect the way in which the existence of conflict is
acknowledged and then resolved. For example, in very hierarchical cultures
employees who perceive themselves as having little power may be reluctant to
bring a conflict to management's attention. Resolution of a conflict in some
culh1res must be done privately, to save the disputants' dignity or "face."
Cultural rules will also affect the choice of a third-patty judge. In some cultures,
a well-respected elder with ties to both sides is most effective, while in other
cultures an effective mediator must be perceived as powerful and asse1tive.
Michele Gelfand, Miriam Erez, and Zeynep Aycan report that research points to
three distinct models in conflict resolution:
• Direct confrontation, which involves forcing resolution, appeals more to
individualistic cultures.
• Regulative, which appeals to cultures that value rules, is prefened, for
example, in Germany.
• Harmony, which avoids direct confrontation either from passivity or
concern for others, is a common approach to conflict resolution in
)--··· ___________.,collectivisLsocieties. _ _ _ - - - · · - ···--- ___________ . - - · · -
It is impmtant to note, however, that conflict resolution systems that incorporate

)
fairness and transparency appear to be associated with greater satisfaction, even
)
)
in very hierarchical cultures.
Conflict Resolution Techniques

Conflicts are generally managed in a direct, one-on-one manner or with the use
of a neutral third party acting as intermediary or judge.
One-on-One Resolution
This technique focuses on training employees to resolve their own conflicts and
) managers/supervisors to listen and focus on problem solving. To usc the
)
technique, employees must be trained in ceJtain necessary skills:
) " Behaving professionally
Being sclt:awarc
• Managing one's own emotions
)-
© 2015 SHRM 287
• Preparing for the conversation

e Approaching the other person in a noncombative, effective manner
• Listening
• Problem solving
• Following up on resolutions
Employee assistance programs may also provide suppmi in some solutions to

conflict---through, for example, anger or stress management programs or
cultural transition programs.
Third-Party Resolution
Th(rd-party resolution, also refeJTed to as alternative dispute resolution
(ADR) in some countries, uses an intetmediary to create solutions and
dispel conflict. This method can have varying degrees of neutrality and
formality as well as complexity. In some Asian cultures, an intermediary
may be chosen who knows both parties well, can hear both sides, and can
gain agreement on a solution, while in other cultures the intermediary is not
familiar with either party. The simplest forms of ADR could include an
open-door policy (in which a superior helps resolve a conflict without
potential repercussions for the employee), a panel of tmsted and respected
--------- ---------
superiors, or a panel of peers. An ombudsperson system can help start the
process: A designated person gathers evidence and brings the complaint to
management for action. More complex processes are formal mediation,
which uses an outside expert in negotiation to help sides find common
ground, and arbitration, in which both sides agree to abide by the decision of
an arbitrator. (These methods were discussed in relation to negotiating labor
contracts in the last section.)
Figure 9 lists the range of ADR options that are available to organizations,
depending on their cultures and legal environments. HR practitioners should
note that not all of the J\DR options listed arc legal or culturally acceptable
in every country. It may be helpful in some instances to work with legal
counsel and local experts to develop dispute resolution policies.
288 © 2015 SHRM

Open-door policy Encourages employees to meet with an immediate supervisor or

manager to discuss workplace problems; in some environments, it
allows employees to approach anyone in the chain of command. An
I
. open-door policy might be seen as preemptive or preventive ADR.
I • • ----
Ombudsperson DesignateS a neutral third party (from either inside or outside the
company) to investigate employee complaints confidentially and help
mediate disputes. The ombudsperson may draw an opinion and may
bring the dispute before management but is usually not empowered to
settle grievances. The ombudsperson may advance unresolved
disputes to other forms of ADR.
- - - - - - - - c..____.
Single designated Identifies a specific individual chosen by senior management to conduct
officer investigations and dispute resolution. The credibility of this individual
may depend on the credibility of management.
Chosen officer Permits the employee to select an arbitrator from a group of individuals.
This allows employees to feel some control over their futures.
Peer review Establishes a panel of employees (or employees and managers) trained
to work together to hear and resolve employee complaints. The panel
may be led by an HR professional. It may not change company policy
but sometimes may recommend changes to policy. Peer review is
sometimes limited to suspensions and discharges.
Mediation*' Uses a neutral third person trained in mediation techniques to help both
sides assess the strengths and weaknesses of their positions. The goal
is to negotiate a mutually acceptable, voluntary settlement. The
mediator acts more as a facilitator of agreement than as a judge making
a uecision. A sememeTit cannot be unposed on e1ther s1de. ...................... ·
Arbitration" Submits disputes to one or more impartial persons who listen to both
sides and then make a final determination. Arbitration may be binding
(parties agree to be bound to the arbitrator's decision) or nonbinding
(parties are not bound and may seek other means of resolution,
including litigation).
' Not all forms of ADR are legal in every country. Confer with legal counsel.
.. Some employers require that employees agree in writing to using mediation or arbitration as a condition of
employment, before the need for ADR arises.
Figure 9: Forms of ADR
)
)-
© 2015 SHRM 289
1
)
Agency Cornplaints and Litigation

If employee conflicts are not identified and resolved satisfactorily through
intemal ADR techniques, employee and union complaints may be taken to
governmental or statutory agencies.
A survey by attomeys for the global law finn Proskauer Rose LLP found some
similarities among the nations surveyed-Brazil, China, France, Ge1many,
South Africa, Spain, and the U.K., as shown in Figure 10. Generally, the process
begins with conciliation and proceeds to litigation if necessary. Conciliation
effmis may continue during litigation.
• There is a trend toward an increase in • Arbitration is permitted only in China

the number of disputes handled and South Africa.
externally. • Countries have varying degrees of
• There is a trend toward mediation. discovery requirements (in which
• There is increased use of specialist tl1e employer is required to produce
employment courts (although their complaint-related material) .
••
_1 forms can vary). • The attitude of the law toward
1 • Punitive awards are used only in employers and employees can vary.
1
i recover legal costs. • Damages are usually determined by

financial loss, but in France,
Germany, and Spain, courts can
reverse terminations and award
back pay to the date ol termination.
Figure 10: Global Practices in External Resolution of Employee Disputes
As noted in Figure 10, employment comis can vary in form. In Australia

complaints are referred to the nongovemmental Human Rights and Equal
Opportunity Commission for conciliation or mediation. French employment
courts are equaily divided between members representing employer interests
and those representing employee interests, and split decisions arc common. In
the U.K. employment tribunals to hear statutory cases and civil courts resolve
contract disputes. In the U.S. employees submit disputes that involve violations
of civil rights to federal or state agencies, which may take cases to jury trials on
behalf of employees, although ADR is also a possibility.
290 © 2015 SHRM

I HR's Role in Complaints and Litigation
Depending on the organization and other legal or cultural factors, I-lR's role in
responding to complaints and litigation may be more active or passive.
HR may play a lead role in resolving issues such as representing the company in
mediation or grievances or may influence or decide resolution strategies and
\ settlement activities. Alternatively, HR may be asked to play a more passive
roJe.-Jor example, by providing records and access to witnesses.
HR practitioners need to work closely with their organization's leaders and

perhaps legal counsel before issues arise so that they understand the complaint
processes in their countries of operation, the firm's obligations and rights, and
what should be done once a complaint has been made.
Workplace Retaliation
Retaliation in the workplace may be defined as when an employer, employment
agency, or labor organization takes an adverse action against an employee-"oftcn
as a result of a conflict or complaint. ln some cases, retaliation may be a form of
unlawful discrimination. So, good follow-through in managing coni1icts and
)
complaints involves taking steps to prevent or reduce the likelihood of a
)
retaliation charge or lawsuit.
To prevent retaliation, employers should take the following steps:
• Adopt and disseminate a strong antil"etaliation policy. While this policy

can be referenced in the organization's antidiscrimination and antiharassment
)
policies, a separate anti retaliation policy may be more effective. Tt should
)
make clear that the organization will not tolerate retaliatory conduct,
including such conduct based on an employee's opposition to job
discrimination or harassment or participation in discrimination complaint
proceedings.
• Inform employees about tbe process for reporting alleged retaliation. The
organization's anti retaliation policy should state to whom employees report
retaliation. For example, employees could be instructed to go to anyone in
their chain of command or the organization's HR office.
© 2015 SHRM 291

)
)
• Train managers on retaliation. Individuals accused of discrimination or

other unlawful behavior may lash out at the accuser or witnesses. Managers
should be trained on acceptable and unacceptable responses to protected
activity under the antidiscrimination laws. J
)
• Remind supervisors of the organization's policy. Make sure that
supervisors who are accused of discrimination understand the organization's
policy prohibiting retaliation against complainants or witnesses. Inform
supervisors that they will be subject to disciplinary action if they retaliate
against individuals who complain of discrimination or other unlaw fill
behavior or who provide information related to a discJimination complaint.
e Monitor the treatment of employees. Monitor the treatment of employees

who have made complaints or provided information related to complaints to
ensure that they are not subjected to retaliation. Carefully scrutinize any
proposed adverse action against a discrimination complainant or witness to
ensure that it is based on a legitimate and not retaliatory reason.
• Investigate allegations and take corrective action if necessary. Investigate

allegations of retaliation and take prompt corrective action when retaliation
occnrs Retaliation should be stopped even if it significant enough to
violate federal law to prevent it from escalating to that level.
-
Conductlna lnvestiaations
HR may be responsible for conducting investigations of employee complaints that
\
may result in discipline or discharge, or HR may be responsible for making sure J
that investigations are fair, thorough, and culturally appropriate.
To conduct effective investigations, HR professionals should consider the steps

described in Figure 11 on the next page.
The effectiveness of investigations may help protect the organization from costly
employee litigation or actions by local governments but also contributes to a more
positive workplace and a stronger employee brand.
Further information can be found at the SHRl'v! website; see www.shrm.org/

templatestools/howtoguides/pages/howtoconductaninvestigation.aspx.
292 © 2015 SHAM

1 Ensure confidentiality. The employer should explain to those involved in the

complaint that all information will be kept confidential to the extent possible in an
i.
I I
investigation.
-------· - - - - - - · - - - - - - - - - - - - - - - - - - - - ·
2 Provide protection. Provide interim protection against continued harassment or
I' retaliation. This may require voluntary changes of schedule, leaves, or transfers.
3 Select the investigator. This individual should be able to work objectively and
should have experience in investigation and knowledge of the law in this area.
They should communicate well, be observant and discreet, and pay attention to
details. Investigators may be internal or external to the organization. A team with
diverse skills and background may be used if their activities are well
coordinated.
4 Create a plan. Develop a plan for gathering evidence and conducting
interviews.
5 Develop interview questions. Questions should be designed to encourage
communication and focus on critical points.
-------------
)
6 Conduct interviews. The investigator should never offer opinions and should
maintain objectivity. Observations should be recorded. Follow-up questions will
be important in gathering evidence.
7 Make a decision. After a thorough gathering of evidence, the investigator
recommends action based on the evidence and the organization's policies and
processes.
8 Close the investigation. Communicate the decision to the complainant and the
---taocm>ect:-Make sme that the complainanTTEiels comtortabTe about returmng!o··----
work. Take necessary steps, which may include correcting the behavior and
making sure that it does not recur, providing damages to the complainant if
appropriate, and changing policies and training as needed to prevent
recurrence.
9 Develop written summary investigation results. The report should document
both what investigatory actions were taken and what information was collected.
) Relevant policies should be cited. Conclusions should be described as well as
employer actions taken as a result of the investigation.
Figure 11: Conducting an Investigation
uiSC!punmg tmployees
il"' """""'
Disciplinary action may target violations of the organization's values (examples

include sexual harassment, discrimination, or threatening behavior) but also
) violations of local nom1s and practices that threaten the bannony of the
) workplace. The word "discipline" comes from the word "disciple" or "to teach."
The emphasis in discipline, therefore, should be corrective rather than punitive --
---------
)- -----
© 2015 SHRM 293
focused on changing behavior rather than simply punishing it. However,

employees must be clear about how they have failed to confonn to the rules, why
the rules are meaningful, what behavior will be expected in the future, and what
consequences will occur if they repeat the behavior.
Disciplinary systems in global organizations must produce prompt, focused, and

consistent discipline that is delivered in a manner that is legally compliant and
culturally sensitive. Few employers enjoy potentially confrontational situations,
and, in ceriain cultures, managers may prefer to avoid these conflicts entirely.
However, managers and supervisors must remember that:
• Failure to apply mles consistently to all employees may be grounds for a
legal finding of unjust dismissal and trigger financial penalties.
e Infractions such as tardiness and absenteeism or disrespectful behavior to
I
!I •
superiors and coworkers damage the work environment for all employees and
harm the employer brand and workplace productivity.
Lack of consistency in discipline will become quickly apparent in a
!
i 11
multinational organization with its global teams and assignees.
II Whether or not employees have a defined legal rights guaranteed by a union

!I 1'
1 contract, organizations should treat all their employees equitably and fairly.
II enip1oyces1iilVe the
II explain and defend their actions against charges of violation or misconduct.
I
It is a good business practice for an employer to do the following:
• Produce persuasive evidence of the employee's culpability or negligence .
• Give the employee a fair oppmtunity to present his or her side of the story .
I
• Detem1ine a penalty appropriate for the given offense.
l •
v
Impose discipline that is consistent with the treatment that others have
received for similar infractions.
Incorporate HR review of all material/serious disciplinary actions to make
II'
II
sure that discipline is consistent with similar historical cases and that it does
I not violate union contracts, employment or other laws, or cultural norms.
Preventive Measures
The goal in disciplining employees is to avoid having to discipline employees in
the first place. Tt makes more sense to shape behavior in the desired manner
from the. beginning and thus minimize the need for disciplinary action.
1- 294 © 2015 SHAM

II ORGANIZATION
The organization can take preventive measures such as the following:

Employee Relations
• Review codes of conduct before implementing them. HR may be able to

identify obstacles to compliance and adjust the work environment or the
) code/expectations in a proactive manner. This is especially important when
) applying a headquarters code to global operations.
I
• Set clear expectations. Employees and managers need to have the same
expectations. Job descriptions need to contain enough detail so that the
employee knows what he or she is supposed to do and the level at which he or
she needs to perform.
e Behave consistently. Actions and decisions should be based on policies,

procedures, and work rules. These may be written or expressed in other ways-··
for example, through management example or training. Managers and
supervisors can review records of similar situations in the past.
) • Establish a climate of communication. Establishing and supp01iing an

) ongoing climate of two-way communication between employee and
supervisor is critical. Sometimes communication can lead to solutions. For
!----- . - - - - a manager may Jearn that a has---
unusually heavy family obligations.
)
0 Maintain an open-door policy. Bottom-to-top communication can be fmther
) enhanced through an open-door policy.
Again, managers should be aware that cultural differences will affect the degree
to which employees seek communication with superiors. In addition,
)
employment law may inf1uence practices. In the United States, for example,
because of the employment-at-will principle, managers and supervisors may be
encouraged to usc discretion (and consistent treatment) rather than rely on a
highly specific and written policy. In the absence of at-will employment
statements, policies dictating that all infractions will be dealt with in an identical
manner could create the appearance of an implied contract and constitute an
exception to at-will employment. In other countries, past practices may a±rect
) future agreen1ents.
)-
© 2015 SHRM 295
Providing Due Process

A disciplinary action is intended to protect the organization's resources from risks
posed by an employee's action--which can be lost productivity, low quality of
products or services, higher equipment costs or workers' compensation rates, or
claims from other employees of illegal or risky behavior-but to do so in a way
I
II
that provides due process to the employee being disciplined. Providing due process
is an issue of justice and consistency (and is therefore affected by the
organization's culture), but it may also be a legal issue.
II
! II
Failure to provide due process in any termination that does not involve a summary
offense can be used in legal complaints by employees who charge that they have
!I been unjustly tenninated. A summaty offense is not preceded by any usual
"warning steps" in the discipline process. If the employee is found, after
I
investigation and hearing, to have committed the offense, the employee is subject
II
to immediate termination or sanction.
Iij Figure 12 lists seven basic tests often used in judicial hearings to determine if an
]! employee has been wrongfully disciplined or tenninated.
jl
I
11··---------"'Z=
II An employee is informed of the The employee has a ·
11· employer's expectations and the evidence and defend hirr""'"' or herself.
1, process and consequences attached • The employee has a right to appeal the
to failure to meet those expectations.
! • The employer's disciplinary actions
are consistent and predictable.
•
disciplinary decision.
A constructive discipline process is used.
• The employee is considered as an
• The employer's decision is based on individual.
factual evidence.
Figure 12: Providing Due Process in Employee Discipline
Constructive Discipline
The type and severity of disciplinmy action depend on the type and frequency of
the offense. Some actions are significantly egregious and merit inm1ediate
dismissaL For example, if an employee were to threaten a supervisor physically
or intimidate the supervisor with a weapon, the employee would most likely be
immediately suspended and possibly terminated, pending investigation. Other
actions call for conective discipline.
--------------------- ------
296 © 2015 SHRM
I
Constructive discipline (also called progressive discipline) is a form of

corrective discipline that implements increasingly severe penalties each time an
employee is disciplined for any of the following during a defined period, such as
a rolling calendar year:
• The same work rule violation
• A similar work rule violation
• A serious work tule violation
)
e A series of frequent but dissimilar work rule violations
)
) In some countries, employers may be legally obligated to use constructive
' ) discipline. However, this approach to discipline offers benefits beyond legal
) compliance. It can help defend the employer against costly civil suits charging
) unfair and capricious behavior. It can also give employees who offer value to the
) organization a second chance to align their behavior with the organization's
expectations. In this case, both the employer and the employee win.
The constructive disciplinary action generally begins with the least severe
response and moves to a more severe response. Systems may vary, however, in
the number of steps or chances the employee receives, the use of written or
) verbal warnings (written documentation is valued in litigious cultures), and the
!----------- time frame used to-eafettlate-the-nurnbm oflep-cated infl-actions. For exatiiple,
some organizations will set a time limit for a repeated infraction. If the employee
does not commit an infraction again within this time period, the process is
) considered ended. Some systems count only a repetition of the same infraction,
) while others may add any infraction against work mles to the disciplinary
) situation. Systems may also include some mechanism for employee appeal-for
example, through a panel of peers.
In an environment that does not legally stipulate a set procedure for discipline,
the typical sequence of constructive disciplinary actions is as follows:
1. Problem-solving session and open dialogue. The mildest type of

disciplinary action can increase understanding among everyone involved,
reduce workplace tension, and open up communication. It is advisable to
have the discussion as soon as possible after becoming aware of the problem.
) Tbe goal is to resolve the problem before it worsens.
)--
© 2015 SHRM 297
2. First formal warning. An official, formal warning should first be made-orally

or in writing, according to local business practices and legal requirements.
Managers should set clear expectations for the employee's behavior. Discussions
should be held in private. A public reptimand, especially in certain cultures,
embarrasses the employee and his or her coworkers. The manager often loses the
trust and respect of all who observe the public reprimand. Managers need to be
specific about the performance issue and what needs to be done to correct it.
3. Second warning. If the employee tails to correct the problematic behavior or

commits another infraction, another warning may be issued. This is optional;
some systems do not include a second warning. If the first warning was oral,
the second warning may be in writing to document the disciplinary process.
Both the problem and the needed correction shonld be described in specific,
objective terms. The tone should be professional. If warranted, an employee
may be put on probation. A copy of this written waming with the employee's
signature should be kept in the personnel files.
4. Final warning. The final written warning shonld include a deadline for
improvement and time off, if warranted. Disciplinary time off or suspension
may be with or without pay. (Note that local law and collective bargaining
----------:agreements may restrict-employers' disciplinary options.) This final writt<et_1_
waming should clearly state that continuation of the documented issue(s) will
lead to termination. The employee should sign a form acknowledging that she
or he has read and understands the terms of the written warning (even if she
or he does not agree with them).
5. Discharge or termination. Discharge is the last resort, used for repeated

occurrences or severe violations.
HR must ensure that policies on discipline are legally compliant, defensible, and
culturally sensitive. Jn addition, HR professionals can take steps to ensure that
employees understand work rules and expectations and that managers and
supervisors are properly trained to deliver discipline in a manner that is
organizationally and individually effective.
HR must also be aware of certain workplace behavims that are protected from
disciplinary action by local law and make sure managers and supervisors are
298 © 2015 SHRM

aware of these exceptions. For example, many occupational health and safety laws
specify that employees may not be disciplined for refusing to work under unsafe
I >
) conditions or for reporting these conditions. Whistleblowing, or reporting an
) employer's illegal activity to authorities, may be seen as disloyalty meriting
) discharge in some cultures, but in others whistleblowcrs are protected against
dismissal that is directly related to the whistleblowing activity.
) To fulfill this responsibility, HR can:

) e Ensure that the organization's code of conduct reflects the organization's
) values and complies with applicable laws and that the code is publicized
) adequately throughout the organization.
) o Involve local HR in identifying other local issues to be addressed in the code
because of local Jaws or customs.
) & Ensure training of all managers and key players in ensuring
) effective, appropriate, fair, and consistent discipline.
) • Monitor compliance with global policy and local practices.
)
)..
© 2015 SHRM 299

)
)
)
Progress Check
I. What happens during a sympathy strike?

( ) a. Unions call on consumers to refuse to purchase the struck employer's products/
services.
( ) b. Union employees refuse to work on components to be used by another company
whose employees are currently on strike.
( 'I c. Employees in a nonorganized workplace refuse to work in suppo1t of striking
workers in nearby businesses.
( ) d. Employees refuse to work because of the employer's wrongful treatment of
another employee.
2. An employee is punished by the union for very vocally disagreeing with the union's position
in a contract dispute with an employer. What can the employee do to remedy this case?
( ) a. Ask the employer to take action against the union.
( ) b. Resign from the union.
( ) c. Nothing if the cmp loyee is in a minority.
( ) d. File a complaint o'fan unfair tabor-practice against the union.
3. What is an unfair labor practice (lJLP)?

( ) a. Violation of a labor law
( ) b. Employer practice in conflict with local business and cultural practices
( ) c. Action by employer or employee in violation of a contract provision
( ) d. Violation of worker rights as defined by international organizations
4. Why is it important for organizations to manage conflicts with employees?

( ) a. To help employees who, because of culhu·al nom1s, will not resolve conflicts on
their own
( ) b. To sustain trust among all employees
( ) c. To decrease the amount of interpersonal conflicts that occur in the organization
( ) d. To increase respect among employees for managers and supervisors
300 © 2015 SHRM

5. An organization refers cases of serious employee infractions to a group of employees who

are trained in due process. What alternative dispute resolution technique is the organization
using?
\' ) a. One-on-one resolution
( ) b. Open-door policy
( ) c. Peer review
( ) d. Mediation
)
J 6. What is the current state of resolution of employee complaints through third parties, such as
J labor tribunals and agencies?
) ( ) a. Progressive practices have ied to a global decrease in employee complaints
) brought for external resolution.
) ( ) b. Punitive awards are widely used to conect employer behavior.
) ( ) c. Attitudes of third parties can be pro-employer in some countries and pro-
) employee in others.
( ) d. Conciliation is not effective in most countries.
7. A supervisor disciplines an employee for being more than 15 minutes late for two shifts a
week, a violation of the union contract. The employee complains to the union that other
) employees are late in this manner just as often but are not disciplined. How could HR help
)-------this situationi.f'.'--- - - -
) ( ) a. Ask supervisors to clear all cases of discipline with HR first.
) ( b. Make sure the employee understands the employer's expectations regarding
tardiness.
) ( ) c. Gather evidence from other employees about discipline for past tardiness.
) ( ) d. Since this is a contract issue, it does not involve HR.
)
8. What is the best detinition of constructive discipline?

) ( ) a. Based on feedback from peers
( ) b. imposes increasingly severe penalties for each violation
( ) c. Based on the alternative dispute resolution process
( ) d. Improves two· way communication between manager and subordinate
)-
© 2015 SHRM 301
9. A home health-care agency hires only expetienced nursing assistants and because of this has
not found it necessary to publish explicit work rules. A supervisor conduciing a routine
inspection finds that a new employee is not wearing the company-provided unif01m and
recommends that the employee be disciplined. The employee is told about the infraction at a
meeting with management and explains that the uniform is uncomfortably tight and inhibits
the employee's ability to lift patients. The employee is suspended for one day without pay.
The employee protests that she has not received due process. What part of due process was
violated here?
( ) a. The requirement is unreasonable.
( ) b. The penalty was inconsistently applied.
( ) c. The employee was not given an opportunity to defend herself.
( ) d. The employee was not informed of the requirement.
-----------
- - - -- - - - - - - - - -_ _:c·=-=-=-=.--cc-
302 © 2015 SHRM
r
!lv )\
h J ORGANIZATION Employee Relations
, I
. l>
I ) Progress Check Answers
l
r I
'
I)
1. b (p. 283)
2. d (p. 283)
I; 3. a (p. 284)
4. b (p. 285)
1 l )
5. c (p. 289)
6. c (p. 290)
7. c (p. 295)
)
8. b (p. 297)
)
9. d (p. 296)
I )
)
)
)
>---------··--- - - - -
)
) -
----=·=----·------·--:==-----------------
© 2015 SHRM 303
Technology and Data deals with the use of tools, technologies, and systems
that support the gathering, analysis, and reporting of workforce information, as
well as effective and efficient collaboration and communication throughout the
organization. HR demonstrates value by developing knowledge about technology
-uses,-trends;-atTitinnovatioo;applieable te HR's strategisgoals... --
Key responsibilities for all HR • Human Resource Expertise-The ability
professionals include: to maintain up·to·date knowledge about
• Consu!!ing on effective policies and core business and HR technologies to
approaches to address technology use solve business challenges.
in the workplace (e.g., collaboration, • Business Acumen-The ability to
communication, networking, social understand and apply technology solutions
media). that support the achievement of the
• Identifying, analyzing, and implementing organization's strategic plan.
appropriate technology solutions for the • Critical Evaluation-The ability to
delivery of effective H R services. efficiently access information and data to
) • Implementing appropriate HR make business decisions and
information systems (HRIS) that recommendations.
i )
integrate with enterprise systems to • Communication-The ability to develop
provide efficient and effective reporting technology solutions that promote the
and metrics. effective exchange of information among
• Accessing appropriate data and key stakeholders, regardless of location.
information to analyze specific business
)
challenges and recommend solutions. Knowledge Topics:
• Leveraging technology to gain
•
Business process integration approaches
efficiencies within the HR function.
•
Data analytic techniques
·b·l·t· f
Key resp OnSI I I !eS or advanced HR • Data management protection approaches
professionals include: • Electronic recordkeeping approaches
• Electronic signature acceptance
• Identifying and implementing technology • HR information systems and source""s.___
l--··--···solutioos that support achiellement of ··--:.-· HR marJagement and information system
organizational strategies, goals, and
) objectives. design
• Information management theory
) • Using technology for data analytics that • Procurement approaches
) optimize each HR Functional Area. • Product development
• Developing and implementing a • Project management theories
technology-driven self-service approach • Social media practices and usage
enabling managers and employees to • Systems integration approaches
perform basic people-related • Technology use policies and practices
transactions (e.g., benefit enrollment,
compensation administration,
information changes, scheduling,
timekeeping).
)
)-
)
Introduction
Unf01tunately, far too many people working in HR believe that technology and
data are workplace tools that are making HR less humane and more mechanical
(like fmance and accounting). Yet few of these same people would expect
health-care professionals to stop using the latest advances in medical technology
or ask their doctor to make a diagnosis without the necessary medical tests.
Technologies are tools used by people to achieve human goals and objectives.
When used appropriately, technologies coupled with data analysis can enhance
achieving those goals; when used inappropriately, they can inhibit or harm those
goals. The English language is an example of a technology that humans use, for
better and worse, to communicate.
Rather than making a decision to use or not to use technology, the fundamental
challenge for HR is more about ptiorities. A reasonable question then arises:
Which should come first-technology (numbers and data) or people? In this
respect, there should be no mistake: People always come first for HR.
Neve1theless, in order to achieve organizational goals and objectives, and
improve performance in tile future (much1ike medwme and ot!rerprofu"'s'<fiurrJmmol)r-,- - -
HR needs strong proficiency with technology. It is understanding and applying
the numbers and the data in a relevant and respectful manner that helps HR to
better allocate time and resources to an organization's most valuable asset-its
people.
Consider related research from Accenture. Their 2014 publication "Trends

Reshaping the Future of HR: Digital Radical! y Disrupts HR" forecasts how
technology advances will continue to impact HR.
• Efficiencies may result in HR becoming smaller. Consumer-like

applications will allow line managers and employees to handle many HR
processes themselves. In tum, HR may become more project-oriented and
focused on improving organizational effectiveness. New organizational
structures may evolve as functional silos are VJJocked down. HR will most
likely have the ability to collaborate closely with other business functions.
306 © 2015 SHRM

ORGANIZATION Technology and Data
• Core HR activities will change, and HR may begin to behave mm·e like a
marketing organization. Through analysis of employee data, HR will be
able to create customized talent offerings. Marketing and branding activities
will help to educate employees about talent and HR processes. HR may
assume more of a coaching role and help to design organizational culture,
incentives, and educational programs to support employees as they engage in
teclmology-enabled talent processes.
• HR may play a bigger role in evaluating and implementing external

technology applications. Rather than a focus on internal applications, HR
may be more involved with evaluating extemal applications (for example,
cloud-based software) and building interfaces between them and the
)
organization's data and systems.
)
)
Suffice it to say that HR will face many challenges in capturing the full value of
technology and data. While many practitioners may have entered the profession
"not being good with numbers," understanding technology and data concepts is
now imperative. Stakeholders expect that HR practitioners become not just
"better with numbers"; they must become highly proficient.
}-- u-"n-ctional Area OverV-iew

Subsequent content examines various ways HR professionals can leverage
technology to increase HR efficiency and transform data into sources of value
) for all stakeholders. In line with the SHRM Body of Competency and
) Knowledge, this Functional Area covers the following topics:
• Section I, "HR and Technology," looks at how teclmology supports HR and
at information and knowledge management and technological advances.
• Section 2, "HR in the Era of Big Data," examines the alignment of analytics
with business and HR strategies and leveraging data to improve
) organizational results.
• Section 3, "HR lnt(mnation Systems (!IRIS)," describes a key HR
technology, the human resource infonnation system.
)
• Section 4, "Policies for Technology Use in the Workplace," examines
I technology policies and approaches related to collaboration, social media,
networking, and communications.
)
)- .
) © 2015 SHRM 307

Section 1:

• Identifying, analyzing, and implementing appropriate technology solutions for the deliveJy
of effective HR services.
• Leveraging technology to gain efficiencies within the llR function.
• Identifying and implementing technology solutions that support achievement of
organizational strategies, goals, and ob]ec 1ves.

• Electronic recordkeeping approaches.
• Electronic signature acceptance.
• Information management theory.
• Procurement approaches.
I ORGANIZATION Technology and Data
In the past, HR professionals' use oftechnology was largely confined to

administrative tasks such as time aud attendance and payrolL Today, nearly
all HR functions involve the use of sophisticated technology tools.
Consider, for example, how the use of mainframe computers to run a human
resource infonnation system (HRIS) in large organizations has given way to
SaaS (software as a service), cloud computing, and mobile apps
(applications), Even in small organizations, the traditional use of intranet
computer databases and spreadsheets is yielding to web-based technologies,
')
In a SHRM Foundation publication, "Transforming HR Through
Technology," Richard D. Johnson and Hal G. Gueutal use the tem1 "e-HR"
)
to describe the transformation of HR service delivery using web-based
technology (any software that uses a web browser). The authors note that
implementing e-HR requires a fundamental change in the way HR
professionals view their roles, HR professionals must not only master
traditional HR skills and knowledge but also have the ability to apply that
knowledge via technology,
I ___ __ , ,, - - --- --
!I -
lj This section examines how technology has transformed HR. Content looks at
j, >
I bow technology generally supports multiple HR functions and the influence of
I information management and knowledge management. Technological advances
are overviewed.
It may be said that the world is in the midst of a digital revolution. In

developed countries, ownership of cell phones and smartphones and the use of
the fntcn1et are cotnn1onplacc. Recent research conducted by a variety of
nonpartisan think tanks and agencies conf]Ims that developing nations arc
catching up,
' )
)
Consider, for example, projections from the International Telecommunication
Union (ITU), a UN agency for information and communication technologies
(ICTs), ITU is the otlicial source for global ICT statistics; it collects ICT
statistics for 200 economies and over l 00 indicators,
© 2015 SHRM 309

Internet use:
• Almost 40% of the world's population use the internet, and, by the
end of 2014, the number of Internet users globally will have reached
almost 3 billion.
• Two-thirds of global Internet users are from the developing world. In
these countries, the number of Internet users will have doubled in
five years, from 974 million in 2009 to 1 .9 billion in 2014.
Mobile-cellular use:
• By the end of 2014, there will be almost seven billion mobile-cellular
subscriptions worldwide.
• In developing countries, mobile-cellular penetration will reach 90%
by the end of 2014, compared with 121% in developed countries.
The take-away from these statistics:

• While h1ternet access and use in developing countries is less common than
in developed countries, the populations in developing nations are following
a similar trend, joining in the digital revolution and adopting these new
technologies at a rapid pace.
• The number of mobile-cellular subscriptions worldwide ,is approaching the
number of people on earth as the world shifts from computers to mobile
devices.
I,I As thewur!d embmces teelmology, U1ere is H1e

and to expand and improve technology capabilities. There are many advantages
to doing so, including the ability to:
• Streamline HR processes and reduce administrative burdens through
improved efficiencies with which data on employees and HR activities is
compiled.
• Reduce HR administration and compliance costs.
• Provide real-time mctrics to help spot trends and facilitate HR planning and
managerial decision making.
@ Improve service and self-service access to data for employees and managers.
@ Enable shared-service delivery models/outsourcing.
* Compete more eHectively for global talent.
In practice, technology can be used to support nearly every HR functional area.

Figure 1 highlights some of the most common HR technology applications by
area.
·------- ·------
---·----=---..-....-.. ,·::::··· .
310 © 2015 SHAM
'! ORGANIZATION Technology and Data
II
) Strategy Workforce management
• Environmental scanning • Workforce assessment
• Scenario comparisons based on input • Issues identification
from environmental scanning • Action planning
• Measures of critical key performance • Applicanttracking
indicators defined in business plan • Skill banks and skiH tracking
• Analytics and reports for management • Workplace of the future
)
Talent acquisition and retention Labor relations
) • Candidate sourcing • Employee discipline records
) • Social recruiting • Labor distribution data
• Recruiting intelligence • Union service data
• Job documentation
• Orientation and onboarding Diversity and inclusion
• Customized talent management • Recruitment from a broader talent pool
(treating each employee as "a • Assistive technologies
workforce of one")
Sustainability
Employee engagement • Compliance with environmental and
• Online employee survey administration social codes of conduct and regulations
and results • Managing sustainability project efforts
• Automated performance management and opportunities throughout the
processes employee life cycle
• Increased opportunities for flexible • Managing supplier procurement costs
staffing (for example, virtual teams) and supplier compliance with social
• Collaborative tools codes of conduct
)-----.---tmmificatiull ··--·---------.-using comrnumcation technology to ----·------···
reduce the carbon footprint
learning and development
• Employee life-cycle data Risk management
• Training administration (for example, • Biometrics
,, learning management systems and • Safety records
!
knowledge management) • Records and identification of trends in
• Career path development accidents and illnesses
• Mobile learning • Identification of high-risk conditions
• Social media, social networking, and • Insurance and workers' compensation
collaboration data
Total rewards Empioyment law and reguiations

• Job analysis • Legal and regulatory compliance
• Salary survey data
• Employee salary data
• Time and attendance records
) • Payroll
I • Benefits administration
)
Figure 1: Common HR Technology Applications
)
)--
© 2015 SHRM 311
The global mobility department of a large corporation usually manages

between six and ten international transfers a month to their headquarters.
Due to business reorganization, one of the corporate functions currently
' based in another country will now be relocated to headquarters. The
I Competency
in !\cHon
involves the transfer of more than 80 mid-level executives; they
are expected to move to headquarters within the next three months.
These executives are highly experienced in industry-specific skills not readily

available on the market. A successful transfer experience is crucial and
I'
I brings a lot of visibility both to the project and this HR department. The
relocation project will have unique communication requirements and greatly
exceed the capacity of current approaches and processes. The global
mobility manager, !T, and marketing are all part of the project team to help
ensure a smooth transition.
In regular operations, any questions received from international transferees

are handled individually. The global mobility manager quickly realizes that
the department will not be able to handle a much larger volume of requests
with the same level of speed and quality. Working with IT and marketing,
several new initiatives are designed for this project:
• A common e-mail ID to address questions related to the project
• A mini-site with logo and information about the project (in multiple
languages)
• A frequently asked questions (FAQs) section to address questions
received via the common e-mail ID
··--·--.-A rolling scheaule onegular conference cattswith tax, 11ealtli care, a11d
l benefits advisors
Through this project, the global mobility manager develops technology

solutions that address the needs of a large volume of permanent
international transfers and provide them with timely and relevant information.
The channel created to receive their questions and concerns maintains the
level of quality and support expected of the department.
i Applied across the various functional areas in an organization, technology

enables HR to provide more effective value-added services and allows HR to
engage in more strategic activities. Information management (discussed next) is
I one such area where HR can demonstrate value and accountability.
Information management (IM) is the use of technology to collect, process, and

condense infonnation with a goal of efficient management of infmmation as an
r-·- 312 © 2015 SHRM

II
!
organizational resource. IM evaluates the kinds of data/information an

organization requires in order to function and progress effectively.
I
At first glance, mechanisms for information management in HR may appear to
be driven by compliance and regulations governing the
requirements for records retention. However, many types of infonnation fall
outside the scope of compliance. Organizational activities (such as innovation
) and intellectual capital management) imply that data and information are assets
I .\ that need to be managed by the company.
)
J In Intellectual Capital: The New Wealth of Organizations, Thomas A. Stewart

) describes information and knowledge as the "thermonuclear weapons of our
) time" and intellectual capital as the "collective brainpower" or the sum of
everything everybody in a company knows that gives it a competitive edge.
Stewart notes that while intellectual capital may be hard to identify and still
harder to deploy effectively, the successful organizations are the ones who find it
and exploit it. Information and knowledge are the primary raw materials in the
global economy and its most important products.
Yet there are challenges for organizations in how they manage information and
koow!OOg&.-A+the-oore,-fflganizatiens-needthe-righrinformatiurnrt the 1ight
) for decision making and optimizing business processes. But how employees
) interact with that information is rapidly changing. Information management
) strategies need to keep current with business realities.
)
An Accenture publication, "InfOimation2015: Ref01ming the Paradigm,"
J identifies the following future drivers of organizational information:
Driver Examples
Complexity Generating insights from the abundance of data,

much of it unstructured, from many different
sources, and user-generated
Openness Balancing openness and transparency with
security and the need to support open innovation
and collaborative value creation
Real-time Facilitating customer-centric real-time
processes, communication, virtual collaboration,
and expedited thinking and decision-making
processes
) -
© 2015 SHRM 313

While there are many evolving scenarios for information management, making
sense of the data and finding the appropriate balance between openness and
transparency are key considerations. As the drivers noted above indicate,
communication and collaboration techniques will be critical components to do so.
Information Management and Knowledge Management

Information management theories place enormous emphasis on knowledge assets
and capturing value from them. Knowledge management (KM) is the process of
creating, acquiring, sharing, and managing knowledge to improve individual and
organizational performance. Learning management systems (LMS) are a specific
subset of KM that tend to use IT to help enhance and develop competencies in
specific domains.
The convergence of HR and knowledge management can trace its roots to the book
The Fifth Discipline by Peter Senge. In this classic book, Senge defined a leaming
organization as:
" ... a place where people continually expand their capacity to create results
they truly desire, where new and expansive patterns of thinking are nurtured,
where collective aspiration is set free and where people are continually
learning how to learn."
senge learning disciplines as the core"<.Jf a learning organizaiio'""nc:-:---" - -

systems thinking, personal mastery, mental models, building a shared vision, and
team !earning.
Senge made the central case that leaming organizations--organizations that can
deliberately and strategically create their markets through self-development-will
rise to become the best in their class.
Over time, the proposition oflearning organizations was reinforced by several other
sources. For example, the McKinsey 7-S Framework provides a systems view for
describing the major differences between a traditional view of an organization and a
learning organization. In the Harvard Business Review, C. K. Prahalad and Gary
Hamel described the process of how organizations Jearn and identified the
outcomes of the process as the development of core competencies that are " ... the
collective leaming in the organization." The balanced scorecard introduced by
Robert Kaplan and David Norton in a Harvard Business Review article further
promoted the strategic importance of HR in an organization's success"
)
-----------
314 © 2015 SHRM

Knowledge management systems are part of the brick and mortar of a learning
organization. Knowledge management typically focuses on two key elements:
• Expertise sharing and organizational learning (e.g., preserving "lessons

learned" as talent moves from location to location or allowing talent in one
location to ieam from the successes and failures of other locations)
• Knowledge retention and recovery of knowledge lost due to employee

attrition (e.g., the transfer of knowledge from the aging workforce to· the younger
individuals who will replace them or the prevention of knowledge loss that can
occur through layoffs, retirements, reassignments, and voluntary resignations)
There are two distinct behaviors with respect to knowledge management systems:
)
) • Knowledge-contributing. The willingness of employees to contribute

knowledge to the system and share it with others.
}
• Knowledge-seeking. The willingness of employees to seek information from the
)
system.
)
As a discipline and a tool, knowledge management is meant to provide an integrated

way to identify, capture, reshape, and share the organization's information assets.
HR can effectively support an organization's knowledge management initiatives
clm:mglr1lle10tloWing practtces:
:
; • Articulating the purpose of knowledge management and how KM can be
employed for the benefit of employees and the organization as a whole
w Ensuring the alignment ofKM with the organization's strategies, goals, and
)
objectives
)
o Helping to create a culture of sharing and using knowledge to its optimum
)
potential
J
)
In order for KM to be optimized, HR-related considerations must be fully assessed.
As Johnson and Gueutal note in "Transforming HR Through Technology":
The automation ofHR processes can no longer assure an organization a
competitive advantage.
• Organizations must determine hmv to use technology to transform their HR
practices.
I
• Organizations must go beyond simply automating existing manual and paper
processes and leverage HR technologies that supp01t the organization's
achievement of its strategy, goals, and objectives.
)
)
)-- -'-==-=c..:==--...==c
© 2015 SHRM 315
I
Many organizations have deployed knowledge management systems but are

disappointed with the investment because the systems are not being actively used
by employees for knowledge sharing. The premise for a knowledge management
system is logical and compelling, but as companies get bigger and more
geographically dispersed, knowledge management becomes more challenging.
The following are some common KM challenges that organizations face:
• Volume. For larger organizations, there are difficulties associated with the
physical task of inventorying, cataloging, and later updating the vast amount
of infonnation resources in the organization.
'
.. Best practices. Organizations must carefully examine best practices to
ensure relevance across business units, geographic locations, and cultures.
• Cultural implications for information sharing. Some individuals and

cultures may not feel comfortable sharing infmmation with others. If the
individual believes that information gives them authority or influence over
others, then the organization may have difficulty convincing the individual to
share this valuable asset.
Despite challenges, developing workable knowledge management solutions is a

endeavm::K11owledge management can allow the organization to bcce____
smarter, more agile, and efficient.
Organizations that find ways to enhance relevant collaboration accelerate

knowledge creation and have major strategic advantages.
Additional aspects of knowledge management are discussed in the "Workforce

Management" Functional Area in this Organization module.
No two organizations are the same, so there is no one-size-fits-all blueprint for

success in HR technology. For example, the technology needs of a small company
with few employees and solely domestic operations would be markedly different
than those of a large global enterprise.
I Even when using the same leclmological platforms, applications will difter across
individual organizations. The initial blueprint may have the same process flow
i
I 316 © 2015 SHRM
r
i ORGANIZATION Technology and Data
I guidelines, but each organization's actual implementation will be different. Think

of Lego, the popular construction toy consisting of interlocking plastic building
blocks. The pieces (and rules) are exactly the same but the outcomes can be
profoundly different.
Technology changes quickly; new tools are being constantly introduced. Small or
large, domestic or global, changes in technology can alter both the structure of jobs
and the structure of an organization.
As Kathy Gurchick writes in SHRM's "HR News," CareerCast's Most

Endangered Jobs of2014 report (and other similar research) indicates that several
types of jobs are likely to disappear by 2022 as casualties of technology that:
) • Allows more work to be accomplished with fewer resources (such as with
) farming, where large corporations are buying up smaller family farms and
) employing technologies that reduce the number of fann workers needed to
work larger-scale operations).
• Automates jobs (such as utility meter reading).
e Changes how a product is produced and consumed (such as news and
correspondence) .
)--- ..
Resource Management website, at www.shrm.org/publications/hrnews/pages/
some-jobs-disappearing-going-way-of-dodo-bird.aspx.
) As technology changes the way organizations do business, HR professionals

) must be aware of technology trends, capabilities, and issues in order to lead their
organizations, be effective strategic partners, and ensure that their organizations
remain viable and competitive.
© 2015 SHRM 317

The following discussion identifies several examples of recent innovations in the

ever-changing technology landscape. Keep in mind that the rapid pace of
technology innovations often results in so-called "advances" quickly becoming
mainstream practices.
$ Business process integration. Business-to-business (B2B) e-comrnerce is

any activity or program conducted between businesses through the use of a
computer network connection instead of an intermediary. B2B will become
the dominant model as organizations fully develop enterprise application
integration.
• e-procurement. e-procurement refers to the use of electronic

communications and transaction processing when buying (or contracting for/
tendering) supplies and services. Increasing the use of c-procurement is of
strategic importance for achieving an organization's smmi and sustainable
growth objectives. The numerous flexible features of e-procurement web-
based technologies streamline the processes and increase efficiency and
compliance by using intuitive pages and powerful search capabilities to guide
requesters through the steps of procurement.
Eleetrenie The-Electronic Signature in Global and National

Commerce Act of 2000 (ESIGN) facilitates the legal use of electronic signatures
or e-signaturcs in the United States. In general, this act enables organizations to
legally use e-signaturcs on electronic documents including applications,
contracts, and verification procedures.
• Electronic record keeping. HR practitioners face numerous challenges in

complying with the legal requirements for employer record keeping and the
retention of employee files and other employment-related records. Challenges
often result from the complexity and variety of record-keeping requirements.
Examples:
Employer record-keeping obligations arise under many different laws.
• Some requirements depend on the number of employees or the purposes
of record keeping.
Some requirements depend on the industry, the location, and/or the
customers.
]. • The same or similar records are often required by more than one law, but
the periods of retention may vary.
318 © 2015 SHRM

In general, employers are free to maintain their employment records either on

paper or electronically. However, technological advances have greatly
facilitated maintaining employment records in an electronic format. Electronic
document retention relieves the employer of having to provide physical storage
space for employment records that span many years.
An electronic storage system should have appropriate secutity features, such as

) tircwalls and passwords that will protect the data and allow access only to
) those who have a need to know. The system should also be backed up often to
ensure that data is not lost in the event that the original system and files are
destroyed. Backup is extremely important to ensure that an organization has
access to records and is able to respond to any employment-related litigation.
If a third-pmiy vendor is chosen for document storage, the vendor should have
a proven track record of providing reliable safety and security for employment
records.
Software as a service (SaaS). SaaS is software that is owned, delivered, and

managed remotely by one or more providers. Software is delivered over the
h1ternet, rather than installed on a computer, to contracted customers at any
l - - · - - - - · - - · - - · · time; on a pay-fo!'-use basisoY as a subscl'ipllori basedOnuse metncs. Saalr--·--··--·
)
applications typically run within the web, which means that users only need a
compatible browser in order to access the software. Because the software is
hosted on the lntemet, or the "cloud," SaaS is considered part of cloud
computing. SaaS can save organizations--especially small- and medium-size
organizations-time, money, and resources.
Application service providers (ASPs) are generally considered the precursor of

SaaS. Both ASP and SaaS providers offer customers application hosting
options; the SaaS model essentially extends the idea of the ASP model There
are also some variations in their implementation.
The ASP model became popular in the late 1990s with the emergence of the
first wave ofinternet-enabled applications. ASP companies licensed a
commercial software application, or assumed another company's license as its
own, and then hosted the application from its secure centrally located servers. In
turn, ASPs licensed lhe application to muitiple customers and sometimes
© 2015 SHRM 319

I customized the application for the different customers. ASPs provided the
II application as a hosted service to the customer at a lower cost of ownership.
I However, the cost of customizing and maintaining modified versions of
commercial applications was challenging because the ASPs did not have control
over the features and development of the commercial applications they were
deploying. Early on, many customers (who moved critical applications to the
ASP model) experienced issues with their applications and/or had to pay the
ASP significant money for customization. Although some savvy ASPs
innovated and remain as viable service providers today, many vendors exited
the market.
With the advent of the SaaS model, many of the cost and innovation issues
historically associated with ASPs were addressed. An SaaS application is made
up of a single, integrated code base that is delivered as a service to multiple
customers simultaneously and securely via the Internet. A customer can order
additional capacity, add-on components, or features. These needs are fulfilled
without the technical or licensing barriers common to installed software.
As noted previously, SaaS customers contract access to an application; they pay

only for the users and quantity of data and bandwidth they use. A true SaaS
model manages umltiple clients from_ a single code_base. Regular software
updates can be applied relatively seamlessly by the SaaS provider, helping to
ensure that customers have the most recent version with the most current
maintenance and latest enhancements. In an ASP environment, the provider
updates each customer's application, one at a time.
• Cloud computing. Cloud computing is a style of computing in which scalable

IT -enabled capabilities are delivered as a service using Internet technologies.
Applications and services are offered over the Internet from data centers all
over the world (which collectively are referred to as the "cloud").
Oracle founder Larry Eilison was at first quite critical of the notion of cloud
computing, claiming that it represented nothing more than frivolous IT
marketing. He later clarified that cloud computing is better thought of as a
utility-based revenue model applied on the Internet. The importance of this
clarification is that the undisciplined usc of the term "cloud" makes no
meaningful distinction between the Internet itself and the cloud. (The Internet is
the cloud.)
320 © 2015 SHRM

Ellison's clarification also outlines a more practical example of howe-commerce

is changing via the cloud with historical points of reference (e.g., how electricity
is consumed and then the client is invoiced based upon actual usage). In practice,
software is migrating away from being sold or licensed as a more complete
) singular product and moving more toward being utilized or subscribed as a pay-
per-use or pay-as-you-go service. In short, the cloud repositions software as a
service to be consumed, not a product to be managed.
The cloud service model is made possible primarily because of increased

bandwidth coupled with more computational work being centralized and then
subsequently shared via the Internet One of the key benefits of cloud modeling
is that the sharing of resources enables communities of service providers to
facilitate a more diversified yet customized end-user experience (for example,
through mobile apps).
As summarized in Figure 2 on the next page, the cloud also introduces new and
significant business and legal issues that HR must consider relating to IT service,
support, integration, security, and data privacy. The ownership of data is a key
one as it relates to cloud computing and SaaS models.
)
) Related to ownership, the company should ensure that there is a procedure in
!--·--··--·--···-- --pl:aceturetrieve-n:m:Jdelete the information froti1111e·provtder's syskms d-tt-·--··--·-
) decides to stop using the service or switch to a new provider. Issues related to
) business continuity and disaster recovery should be considered as well.
)
The migration from the licensing of a product to subscribing for a service
requires clarification on just how and where to demarcate the user's pay-per-
use. Often this is done through a service-level agreement (SLA), the part of a
service contract where the service expectations are formally defined. SLAs are
terms negotiated between the service provider and the customer or client
representative (such as HR). The service provider may be internal staff or
outside vendors who perform any delivered service (e.g., payroll, mobile phone
) data, document storage).
)
) SLAs usually start by defining who is the customer or client and who is the
service provider or vendor. Then SLA management involves two distinct
periods. The original service contract is negotiated, f(>Jiowed by the real-time
monitoring of service levels.
)-
© 2015 SHRM 321
License Client buys a license and Client

implements and
customizes software;
pays vendor for ongoing
support.
License Considerations: Typically, software can be implemented on premises by client IT staff or
a third party, although off-premises hosting is becoming more common as companies look to ·
reduce costs
SaaS Built for multitenancy-all Client Vendor Two to three times per
clients share one year.
instance of software.
Vendor owns or leases
hardware and manages
security and upgrades;
client owns business
process and accesses
app via Internet or
subscription.
SaaS Considerations: Data security is a key concern. Some vendors claim to /Je multitenant but
have different software instances for each client-a cost burden that may get passed on.
- I Entire Client Vendor I To be specified.
1s managed by vendor.
Outsourcing Considerations: Requires high level of trust. Has become more complex as vendors
partnerwitlr8f1A"S-provideJs, coAtract to spe/1-eut-wRe'sresponsible fGr
what.
Source: "Negotiating a Tech Contract," Bill Roberts
Figure 2: Technology Service Delivery Options
Some organizations use the term "SLA" instead of metrics or KPis in an

attempt to maintain the rnindset and attitude of being an intemal service
provider rather than just an employee or organizational function. In any case,
SLAs tend to focus on outcomes and clarify mutual expectations.
SLAs are often grouped in three categories based upon:

• The aggregation of a function (e.g., payroll).
The allocation and partitioning of more specific services (e.g., slabs or
tier rates for mobile phone data plans).
e Different service levels within the same organization (e.g., most common
for outsourcing).
I
r 322 © 2015 SHRM
The move to the cloud is a significant trend in HR technology. Based

on its global "2014 HR Service Delivery and Technology Survey" data,
Towers Watson reports that streamlining business processes is the top-
ranked HR initiative and organizations' technology spending is strong.
Towers Watson attributes this to technology being recognized as a
large and increasingly impmiant driver of HR effectiveness and
) efficiency. The survey data shows that investments are directed mostly
) toward the implementation of new technology and new functionality, of
which cloud-based SaaS is a large part.
An organization's learning and development (L&D) manager is quite

enthusiastic about potentially implementing a new application that is based
on cloud technology. The product demo and the quality of the materials are
Ethical great, and the application would integrate well with the current LMS. As is
Practice the case with most cloud services, arguments for adoption resonate well
Competency with the business, due to lower initial costs and easy ability to upgrade in
in Action the future.
As the HR director reviews the business case from L&D, it becomes
apparent that the application was first recommended by the IT manager
(who introduced the technology to the L&D manager). The developer of this
cloud-based application is the owner of the technology company; he is also
J- ..-------------lheJI.mAaggA;-brother ecto1 is not COIIIfOI ·-----
this relationship and realizes it could be constructed as a conflict of interest.
The HR director discusses the relationship with the L&D manager. Per the
organization's code of ethics, any conflict of interest must be fully disclosed
and the party at risk should remove itself from all decision making. Up to
)
this point, there has not been any violation of the code. The L&D manager
) and the IT manager have been honest and clear in disclosing the
) relationship.
) The situation is then promptly discussed with procurement. In turn,
) procurement solicits and receives proposals from several other vendors.
Those vendors subsequently present their products to L&D. The IT
manager is not involved in the selection and recommendations about
security, bandwidth, compatibility, and other technical aspects of the
application. This information is provided by a regional IT manager.
The HR director, the L&D manager, and the IT manager have upheld the
organization's ethical standards by acting according to the code of ethics
and disclosing a potential conflict of interest. These actions help to maintain
appropriate levels of transparency in organizational practices.
)
)-
© 2015 SHRM 323
)
• Mobile learning. Mobile leaming is digitized instructional content delivered

to wireless mobile devices (e.g., smartphones, tablet computers, notebooks,
and digital readers). It facilitates leaming with materials and resources that
learners can access wherever and whenever they choose. Mobile leaming is
also refen·ed to as m-learning.
As mobile devices proliferate and as telecommuting and hoteling (providing

services and workspace to employees on an occasional basis only) increase,
organizations' technology functions and systems must find ways to integrate
mobile computing devices. The growing capability and reliability of cloud
computing systems supports the use of mobile computing, providing access
to data and applications for mobile employees.
• Bring your own device (BYOD). "Bring your own device" refers to the
policy of permitting employees to bring their own computing devices (e.g.,
smartphones, laptops, tablets, and other mobile devices) to the workplace and
to use those devices for connectivity on the organization's secure network.
• Carnification. Derived from the premise that doing (and playing) enhances
learning, gamification is the selective use of game design and game
- - - - ----·--Jmilli!e>Gchllaanics to drive employee engagement in non:gaming bu§iness sce11arios.
Gamification may utilize game mechanics such as points, challenges,
leaderboards, rules, and incentives to engage employees and make game
playing enjoyable.
• Workplace of the future. The "workplace of the future" refers to the impact
technology will have over the actual space where people work. Jeanne
Meister and Karie Willyerd describe this trend in their book The 2020
Workplace. The authors describe how the corporate office ("the first place")
is becoming passe. So is working at home ("the second place"). By 2020,
I workers will increasingly wish to be in "the third place," which is any
'.
location where people work. This could be a cotTee bar, a client's office, a
hoteling workspace, and even a hotel lobby.
• Tools for collaboration and information sharing. The workplace trend
I toward greater collaboration among employees and the use of teams means
that organizations' technologies must support information sharing, virtual
meeting technology, and wikis. A wiki is a website at which visitors can
324 © 2015 SHRM

collaborate in the distribution of information by sharing expertise and

experiences. Organizations can host their own private wikis.
@ Biogs. Blogs (short for "web log") are broadcast-style communications that
enable authors to publish articles, opinions, product or service reviews, etc.,
(known as posts) on a web page. Blogs can be delivered through stand-alone
websites, e-mail, feed syndications systems, and social networks. Blogging
) platforms enable direct reader patticipation with the host blogger or with
) other blog participants by allowing user comments.
) • Social media. Social media is the overly generalized tenn for an online
environment in which content is created, promoted, distributed, or shared for
purposes that are primarily related to communities and social activities (rather
than functional, task-oriented objectives). "Media" in this context refers to the
storage and transmission environment, while "social" describes the way that
these messages spread in a one-to-many or many-to-many fashion.
* Social networking. Social networking enables individuals to connect to their

) social communities (often with a mobile device through one or more
) available mobile channels). Members share experiences, interests, opinions,
-----
1- ·--··--·· --···-- ---etc:;>mdlTil!Ypresellt infom1at10n and personal content. Companies are
) trying to replicate this model using corporate networks; many have adopted
networking functionalities such as commenting, following, tagging, rating,
liking, and so forth.
)
Section 4 in this Functional Area discusses social media, social networking,
) blogs, and collaboration tools in more detail.
)
• Self-service human resource systems. Employee self-service (ESS) allows
) employees to handle many job-related tasks (such as updates to their personnel
data) using technology. Manager self-service (MSS) is a technology system that
) allows leaders to access data and complete administrative HR tasks online
without the help of HR. Portals often serve as the gateways to self-service
systems.
Note: ESS, MSS, and portals are discussed in more detail in Section 3 in this
Functional Area.
J
)
)-
© 2015 SHRM 325
e Wearable technology. Perhaps the next big issue relating to the converging of
HR and technology relates to wearable devices. Current devices tend to be
prefaced with "smart" (e.g., smartglasses, smmiclothing, smartwatches). All of
these are likely to facilitate a wide range of 2417, nanosecond-by-nanosecond,
life-logging activity tracking. Some oftbis technology, such as GPS, wellness
bio-data, and face recognition, is already in the public domain, but challenges
like biohacking and DNA privacy are likely to emerge.
In a sense, all these not-if-but-when technologies are converging upon a concept

called the "quantified self' (discussed in more detail below). The monitoring of
oneself, however, is far from new (e.g., think of how individuals monitor their
own blood sugar and deliver insulin).
The moral and ethical implications of the more holistic self-monitoring, real-
time devices are only entering their infancy. Workplace issues to anticipate
include privacy, security, and the duty to accommodate, not to mention the
arguments relating to the further commodification oflabor. One thing is certain:
The pace of technological change suggests that organizations that are aware of
these emerging technologies will have an advantage over those who choose to
lag, even if that advantage is simply learning how to turn the technologies off.
---·
I
lI
I
$ Sustainability. Sustainability has multiple aspects. For example, more

organizations are issuing purchasing guidelines requiring that new hardware
meet sustainable goals. These goals can include more efficient energy use but
also address the use oftoxic products in production of the device, the
326 © 2015 SHRM
I
percentage of recycled material used in production, and the degree to which the
product can be disassembled and its parts recycled.
Organizations are also more conscious of the considerable amount of power

used by electronic devices in their facilities and decrease that use by educating
employees about powering down computers when idle, using hibemation
modes in computers and printers, and installing smmt power strips at
) workstations that make it easier to power down peripheral devices. Some strips
) may also do this automatically through occupancy sensors.
Lastly, aspects of sustainability are evident in communication technologies

which help to reduce the carbon footprint by facilitating virtual collaboration,
eliminating unnecessary business travel, and reducing the p1inting of
documentation.
From an HR perspective, technology trends mean more opp01tunities to gather and

use infonnation, to communicate and promote teamwork, and to implement more
flexible work schedules. The workplace can become more accessible to persons with
disabilities. Training and development opportunities can be made available through
such tools as podcasting or streaming to a larger group of employees at a fi·action of
the cost. Employees can usc web-based self-service centers to access CU!Tcnt
.I
lnforn1ation about their benefits whenever they choose and to make changes
)
themselves.
However, on the negative side, technology can mean losses of productivity when
systems are down, when employees are not fully proficient, or when employees
misuse their time visiting social networking sites for personal or nonbusiness
use. Employee blog posts can damage an organization's reputation or impair its
1-
© 2015 SHRM 327
security. Employees may feel overworked, since they can now work at home, on
weekends, or on the road. They may feel so accessible that they sense a loss of
privacy. There may be legal risks as well when employees use company e-mail
systems to harass or slander other employees or nonemployees as well as other
legal entities. The Internet makes it more difficult to draw a line between private
and public communication. Organizations can be accused of violating privacy or
of retaliation when they act against an employee after seeing damaging content
on an employee's social media page or in a blog.
Another caution in adopting technology innovations is that they can increase the
vnlnerability of organizational systems to hacking, vimses, and other cybercrimes.
The newest twist in such malicious exploits is to gain access to web hosting servers,
name servers (specialized servers on the Internet that handle queries or questions
from a local computer about the location of a domain name's various services), and
data centers. Cisco's "2014 Annual Security Report" describes how hackers take
advantage of the tremendous processing power and bandwidth these organizational
IT sources provide. Through this approach, exploits can reach many more
unsuspecting computer users and have a far greater impact on the organizations
I/--------.
II
targeted-whether the goal is to make a political statement, undermine an adversary,
or generate revenue.
Hacking is discussed in more detail in Section 4 in this Functional Area.
In a Gmtner "Predicts 2014" special report devoted to cloud computing, key findings
repmt that many organizations are taking inappropriately high levels of risk by
placing sensitive data in cloud services that are not designed for it. Gartner also notes
that best practices for the use of sensitive data in the cloud remain a work in progress,
with evolving standards, regulatory expectations, and service provider offerings.
Organizations need appropriate controls in place to prevent the widespread use of
unevaluated personal cloud services to store sensitive or regulated data.
ln closing this discussion of technology advances, it should be noted that looking

back at innovations can be an empowering exercise. And looking ahead at future
trends can offer great insights about potential challenges and oppo1tunities. For
example, analytics, "big data," collaboration technologies, and mobile
accessibility are fast becoming business imperatives. These topics are the subject
of upcoming content.
328 © 2015 SHRM

) Directions: Choose the best answer to each question.
1. As part of the ongoing digital revolution, mobile proliferation around the world is
demonstrated by
I ( ) a. decreasing lntemet adoption and increasing smartphone adoption.
( ) b. growing subscription numbers that are close to exceeding the global population.
( ) c. social networking being used in a majority of countries.
( ) d. free messaging services otiered by social networks replacing e-mail.
2. A potential benefit of formal knowledge storage for a project team is that they can
( ) a. promote coilaborative learning.
( ) b. find and deliver infonnation quickly and correctly.
( ) c. have easy access to groupware presentation software.
( ) d. preserve "lessons learned."
3. How does SaaS improve upon ASP capabilities?

( ) a. Application updates typically cost less.
1 - - · - - --c-----r----o.-mus:Kmg threats are reduced ..- - ·
( ) c. An organization's competitive advantage is strengthened.
( ) d. The potential of talent analytics is improved.
4. An impmtant characteristic of cloud computing is that software is

( ) a. sold and licensed as a singular product.
( ) b. more secure from cyber attacks than static databases
) ( ) c. utilized or subscribed as a pay-per-use or pay-as-you-go service.
) ( ) d. managed entirely by an organization instead of an external vendor.
I
5. An organization hosts an application on its website that allows prospective job candidates to
)
interact with current employees. This BEST describes an example of
)
( ) a. a blog.
)
( ) b. a dashboard.
)
( ) c. gamification.
I ( ) d. a portal.
)--
© 2015 SHRM 329

I. b (p. 31 0)
2. d(p.315)
3. a (p. 320)
4. c (p. 32i)
5. a (p. 325)
l
II
!____ --- --- --- --- ------- --- ---··---- ---
1
II
II
I
© 2015 SHAM
330
Section 2:
)_ HR in the Era of Big Data

• Accessing appropriate data and information to analyze specific business challenges and
recommend solutions.
o Using technology for dala analyiics that optimize each HR Functional Area.
- -·- - - - - - - -
)..•... -------flris-sectionis11esiglred toirrcrrne your "nowledge or:-----
• Data analyiic techniques.
)
Business Case for HR Metrics, and
HR's challenge with metrics and analytics is to provide business leaders with
actionable infonnation that helps them make decisions about people with the
same kind of rigor, logic, and facts they use to make decisions about
investments, marketing strategies, and new products. HR should support
evidence-based talent decisions with HR metrics and workforce analytics. Stated
another way, HR needs to be able to communicate compelling data-based
naJTatives that can inspire appropriate action.
Content in this section examines how to properly align analytics with business
and HR strategies and leverage the data to build and deliver workforce
efficiencies that improve organizational results.
Measures, Metrics, and Analytics

As a strategic business partner, HR professionals have the opportunity to provide
increased value to the organization through the establislunent and administration
of measunos, metrics, and analytics. As such, it is critical for practitioners to
understand these terms and how they are interconnected.
---
• Measures. Measuring is the process of collecting and tabulating data. The

products of measurement are numerical, such as head count, the cost of
employee benefits, or sales revenue. To engage in measurement, HR needs
access to certain data in order to organize that data into metrics.
o Metrics. Metrics involve performance parameters based on the relationship

between two or more measures. /',metric can describe past outcomes, such as
turnover, and process perfom1ance, such as time and cost. An example is
revenue per employee, which is derived from total revenue and employee head
count.
• Analytics. Analytics convert a metric into a decision-support tool by adding

additional context (e.g., PESTLE trends) or by further subclassifying
comparison groups (e.g., benchmarking internally, externally, or world-class).
Figure 3 provides a side-by-side comparison of measure, metrics, and analytics.
332 © 2015 SHRM

'
'
)
)
)
I I
' ) : Fundamental : Employee head count
Measure 1constructs based on I
1tabulation of data I
I I
I I
I 1··.·.····· >·.···.
1Turnover of high'
:·. c?nvE)ning rnetric, into
I potential employees in
1·. tool
)
I by
I ..•..
adding context
1businessunits
) I I
Figure 3: Measure, Metrics, and Analytics
).
Whv Measures
__' ___
-----
and Metrics !\i1atter
--·----·------··----------
___
Without measurement infom1ation and HR metrics, it is dit1icult for an
organization to know which talent management initiatives have worked and
)
which ones have not.
)
Jac Fitz-enz is often credited with bringing HR metrics to the forefront of the
)
profession. Fitz-enz proposed that HR activities and their impact on the bottom
line could-and should-be measured. During the 1970s he carried out the
)
original research that led to the first human resources metrics in 1978. (Fitz-enz
is acknowledged as the father of human capital strategic analysis and
measurement. Tn addition to publishing the first human resources metrics, he
founded the Saratoga Institute in 1980 and developed the first international HR
benchmarking service.)
For the past three decades, Fitz-enz (along with other like-minded individuals
such as Wayne Casio and John Boudreau) have campaigned tirelessly to improve
) the state of HR measurement and to help both HR professionals and senior
executives understand its importance. Fitz .. enz started out by creating definitions
© 2015 SHRM 333

for basic HR metrics for compensation, staffing, hiring, and retention. This work
laid the foundation for gathering comparable data across organizations, which, in
turn, enabled the benchmarking of HR metrics. Over the years, other scholars
and practitioners expanded the benchmarking of HR metrics to include
investments in training and developing employees as well as in a broad array of
other HR policies and practices.
Fast-fmward to today. HR rnetrics now allow practitioners to make decisions

based on objective information rather than simply guessing or going by instinct.
A measurement system that tracks HR metrics is integrally linked with an
organization's success.
HR professionals typically have several areas of responsibility with respect to

the use of measurement information and metrics. HR professionals must:
• Provide organization-wide and appropriate training on the purpose and use of
key metrics and measurement tools.
• Provide measurement reports and supply data required for organization-wide
assessment.
• Assist the organization in analyzing and interpreting measurement
information.
·--·
o · Create and implement specific programs t11at
measurcmcnt and evaluation of HR-specific programs and initiatives.
How to Select Aporon,,

. '
riate HR Metrics
HR metrics can be broadly categorized as either activity-based or outcomes-
based. While there are many experts who strongly advocate that HR should
focus more on outcomes than on activities in order to be more strategic, a more
balanced and holistic approach is to propose that both categories of metrics are
necessary.
334 © 2015 SHAM

A more prudent approach is to start with a few core, generally accepted

(standardized) activity-based metrics followed by outcomes-based metrics.
The advantage of this approach is to first ensure that the more objective
activity metrics have validity and reliability before attempting to introduce
outcomes-based metrics, which tend to be unique to each organization or
)· business unit's competitive advantage. Thereafter, the outcomes should be
) used to help fiuther focus or refine the activity-based metrics all toward
) mutually reinforcing alignment with the organization's broader strategic
) goals. In doing so, the entire process and feedback loop is closed to create a
perfommnce management system similar to what happens in quality control
management. Quality control techniques tend to emphasize activities, while
transformational HR change interventions tend to emphasize outcomes.
Success in either necessarily involves the use of both types ofmetrics in a
) mutually reinforcing manner.
)
HR metrics simply mean measuring something related to HR. However, not
all mctrics are important. (Think about the 80/20 rule.) HR key performance
indicators (KPls) emphasize what is most important to HR or the
organization as a whole. KPis can be either activity- or outcomes-based
metrics. In both cases, KPls should be fundamentally related (causative) to
'----·-··-----<Werganirat-iotTBr-stfategie-bttsi:ness-urrit-('Sffi:f)MTCcesslillhertiian --·
loosely co-related with more generalized objectives.
In Investing in People, Casio and Boudreau reinforce that the demand for
) accountability in business requires that HR be able to articulate the logical
) connections between progressive HR practices and organizational
) performance. HR must demonstrate those connections with evidence-based
) data. In evidence-based management, organizations incorporate more
objective criteria in their decision making.
When senior (C-suite) executives ask for perfmmance information, HR

professionals need to evaluate the information they share and ensure that it adds
value to strategic decision making. A sound approach is to focus on the mctrics
that impact progress toward business goals.
Figure 4 provides guidelines to consider when choosing what HR metrics to

focus on.
)-·
© 2015 SHRM 335
)
I • Review business strategy and goals • Be sure to get accurate data.
I with C-suite executives.

Determine how HR can best support
these strategies.
A metric will be useless if it's not
accurate, because it won't be credible
and the message will be lost (even if
the trend is accurate).
• Identify the HR functions to be
measured that align with strategy, • Decide how often HR metrics
!I' goals, and objectives. information wili be collected and
I Show how these HR metrics would reported.

provide the most relevant information Will it be monthly, quarterly, or
! about how those functions impact annually?
•
business strategies, goals, and
I objectives. • Choose what format will be used to
report the data and who will receive
• Define each HR metric and its formula. the report .
Not all organizations define metrics the Will it be part of a regular operations
same way or use the same formulas. For report or scorecard? Will it be a stand-
example, some companies measure the alone document? Who will receive the
cost for each new hire without including report? Find ways to effectively
payment for recruiters as a related communicate the metrics to the
expense. Be sure to use a consistent people who can use them in decision
formula in your organization and when making.
benchmarking.
• Review the metrics used on a
• Decide what data must be collected regular basis.
m.ethods are
available. • Talk to the stakE;>holders!o ensure"
that they're getting the information
--··--
For instance, will all data for cost per hire they need. Update the HR metrics as
be captured in human resource needed to reflect changing business
information systems? Or will some data realities and goals.
need to be obtained from anotller
department?
··-------
Figure 4: Guidelines tor HR Metrics Selection
336 © 2015 SHRM

In addition to showing the benefit of HR practices and how HR professionals

contribute to the organization, HR metrics can be used to:
• Compare to metrics from previous years to evaluate whether organizational
)
performance has improved or declined.
)
• Compare to the metrics of other organizations (benchmarking) to identify
best practices, areas of excellence, and areas requiring improvement.
Below are some references to consult for more inform,ation about HR

metrics:
e How io l<ieasure Human Resources Management by Jac Fitz-enz and
Barbara Davison
)---------·--··-- -·--------·------------------------ - - - - -
)
• IJR Metrics the World-Class Way:
. How to Build the Business Case for
Human Resources by John Sullivan
• Investing in People: Financial impact ofHuman Resource Initiatives
Wayne Casio and John Boudreau
)
HR mctrics calculators with sample spreadsheet templates and other information

regarding HR measurements and metrics can be found at the Society for Human
Resource Management website, at www.shnn.org/TemplatesTools/Samples/
lvletrics/Pages/default.aspx
While many aspects oflmman capital are hard to measure, there arc some useful
I metrics that can help. The human capital metrics shown in Figure 5 are
foundational, akin to first principles. These analytical measures reflect the value
of human capilal and are consistent with those currently used and commonly
respected in finance, accounting, and other business communications to an
)
)-
© 2015 SHRM 337
organization's investors and stakeholders. Consider these metrics as

recommended professional practices that could, over time, add value to your
organization.
Spending on human capital Leadership quality

Total amount spent on employees (salaries, Index of relevant questions from employee
benefits, taxes) survey
Total amount spent in support of employees Information on response rate and
Total amount spent in lieu of employees methodology/tool
Total amount invested in training and Employee engagement
development Index of relev<Jnt questions from employee
Total head count and total FTE (full-time survey
equivalents) at end of period Information on response rate and
Ability to retain talent methodology/tool
Voluntary and total turnover Human capital discussion and analysis
II Industry standard formula (number of (HD&A)
I terminations during period +average active

head count during period)
Narrative to provide context and discussion
of reported metrics
Leadership depth Disclosure of any material risks or any
other material information related to human
' Percentage of key-person defined positions
capital
, __
thai have identified successor
defin.,edu__ _ _ _ _ _ _ _ _ _ _ _ _ _ __
positions filled internally during period
I
i
i'
Figure 5: Human Capital Metrics
Specific examples ofHR metrics are included in several other Functional Areas
in this SHRM Learning System® for SHRM-CP/SHRM-SCP.
Why Analytics Matter

I
,I
j I
HR meh"ics can provide useful data, but they also have limitations. Metrics
provide raw information about what has happened or is currently happening;
they focus on the past and the present (for example, turnover or time to hire).
However, they are less mature or certain when it comes to being used for
predictions (leading indicators). Metrics measure single data points in relative
comparisons and provide tabular outputs of counts and rates. In that regard,
mctrics provide information that guides tactics and operations though
quantitative analysis.
338 © 2015 SHAM

What metrics do not provide are insights regarding the "why" behind the data.
l Assessing the "why" is what allows HR and organizational leaders to make
important competitively differentiating business decisions. This is where HR
professionals have a genuine opportunity to use analytics and impact the
organization's strategy.
Together, metrics and analytics move beyond unbounded words and force both
the source and the receiver of information to help ensure that they have a
common understanding of both content and context. When this common ground
is absent in communication, people often think they are agreeing on terms and
conditions and speaking the same language when in fact the latter is not the case.
l In short, these tools help both parties in communication make better decisions
) because they force better communication and mutual understanding of the
subject and the context. By graduating from metrics to analytics, HR
professionals and organizational leaders can better understand the contributing
factors that are impacting their organizations and take the appropriate actions to
implement programs that will provide a true competitive advantage.
Analytics can expose the important connections and patterns in data to make
')
) better workforce decisions because they:
_ past and Qresent and forecasUhe
) • Connect multiple data items.
8 Provide computational analysis of data or statistics.
) • Provide visual outputs of patterns and trends.
) • Provide insights that can drive strategy.
To illustrate these points, consider common recmitment and turnover metrics

and analytics. Recruitment can have a tremendous impact on organizational
profitability. Common metrics used to assess recruiting effectiveness (such as
time to fill and cost per hire) do not answer strategic questions about the quality
and value of the people being hired. Analytics provide greater insight.
[n the case of a new hire, analytics go beyond the measures ofthe number of
days to fill the position and the costs involved. For example, an analyst assessing
new-hire performance could evaluate if the new hire meets expected
) perf(mnancc levels. lfthe perfonnancc results are unsatisfactory, HR could adapt
the recruiting process to improve recruiti11g effectiveness.
© 2015 SHRM 339

Similarly, analytics can enhance turnover metrics to shed light on retention

practices. Analytics related to tumover could be used to predict the "risk of ex if"
or "resignation drivers" by assessing compensation ratio, promotion wait time,
and training opportunities among other factors.
Leveraging Analytics
Technology helps HR to drive down costs and become more efficient. While that
is important, it is akin to a surface-level change. HR must dig well below the
surface to the next level and transform data into new sources of value and
revenue. Stated another way: HR must do more than use technology and data to
report on past perfonnance, process administrative tasks, and generate
compliance reports. Analytics help HR translate that into practice.
An Accenture Institute for High Performance research repOii, "The New

Generation of Human Capital Analytics," examines how a more analytical HR
can successfi.Illy use analytics to link HR to business results. The report
describes a process of connecting talent management perfonnancc to business
performance as "a ladder of analytical capabilities" that build on each other,
starting with a foundation of accurate, consistent, integrated, accessible, and
relevant data.
The following points overview the progressive build of human capital analytical
applications; it begins with an employee database and ends with an adaptable
and scalable talent supply chain.
• A comprehensive employee database-to track skills and performance
e Critical talent management-the use of analytics to identify key

segments of employees (e.g., high performers, high potentials, pivotal
work forces)
• Differentiated actions to focus HR investments-to manage critical

workforce segments accordingly
• A customized employee value use of anaiytics to

predict employee preferences and behaviors and taiior HR practices to
attract and retain valuable talent
340 © 2015 SHAM

'
I ) • Sophisticated workforce planning--causal models and the identification
of leading indicators to anticipate talent requirements and align them with
,l business requirements
§ A real-time talent supply chain--where processes rapidly adapt to meet

changing business conditions, objectives, and competitive threats and
provide the best possible mix of skills and talent supply
In a special issue of HR People and Strategy, "Using Human Capital Analytics

to Make Excellent Business Decisions," various articles discuss how
organizations can benefit from leveraging analytics. In addition to providing an
evidence-based approach to management, analytics have the potential to improve
individual and organizational performance because they:
• Embed workforce intelligence as a cornerstone in management decision
making.
o Improve workforce planning and forecasting.
e Shorten recruiting cycles.
.. Reduce recruiting and separation costs.
• Retain critical talent.- - - - · · · · - - · · · - - · - - · - - · · - - · - - - - - - · · - - ·
)-·
)
• Drive succession planning.
• Use on-demand insights lo avoid costly mistakes regarding the workforce .
)
• Redirect money spent on wrong employee initiatives to more beneficial
)
programs (e.g., initiatives that impact critical business metrics and outcomes
instead of unquantified HR activities that promise to make employees
)
happier, more engaged, and satisfied).
J
Standards in HR.
) Any general discussion regarding the topic of HR metrics and analyiics is
)
incomplete without mentioning the HR standards project. In 2009, SHRM
began an intensive eftort to sponsor the development of HR-rclatcd
standards. Working with the American National Standards
Institute (ANSI), this project was advanced globally in 2011 with the
formation of an HR Technical Committee (TC 260) of the !ntcmationa!
)
Organization for Standardization (ISO).
© 2015 SHRM 341

One of the biggest challenges that arises when proposing to create and adopt
generally accepted standards starts with a fundamental question: What is meant
by a standard? According to JSO:
A standard is a document that provides requirements, specifications,

guidelines or characteristics that can be used consistently to ensure that
materials, products, processes and services are fit for their purpose.
Standards in professional services represent the minimum requirements to be

considered effective as a profession and as a professional, not just effective as a
general workplace activity or job. Minimum effective standards in a professional
service do not represent the lowest common denominator; they represent a
threshold that needs to be surpassed in order to ensure that the services being
provided are in fact "fit for their purpose." If any activity or minimum threshold
cannot be achieved or agreed upon as being universally applicable, it cannot, by
definition, be adopted as an international standard.
TI1e core value that comes from standardizing professional services is usually
derived from being able to benchmark activities or outcomes against quality
control objectives. Benchmarking on quality then allows for more-objective
IJ assessments of the service's relative performance as well as becoming a basis for
- - - - - - - - - - --Altur@ Jn.the absence of generally accepted ______
standards, metrics and analytics in any domain of service are oflen limited to
II intemal benchmarking and guesstimates as to what are appropriate professional
1 practices, in sum providing less analytical value to stakeholders, shareholders,
I and even corporate governance.
Implementing standards in any professional practice is a long-term, ongoing

process of continuous improvement, with many recurring obstacles and lessons
to be learned. To date, some of the key lessons learned regarding the
international HR standards project include:
Professional standards in HR represent change. An ongoing, evidence-based

corporate social responsibility (CSR) campaign directed toward key
stakeholders is required to elicit and maintain support for such a change.
;; Professional standards are not meant to be best practices. However, if an HR

practitioner, organization, or nation is not delivering HR services at the
342 © 2015 SHRM

.
I
.
.
,
Ii threshold as defined by intemational standards, then those standards may in

fact be perceived as aspirational.
Established professional service standards have a reputation of being too

) focused on activities and not focused enough on outcomes or values.
) Knowing this, a concerted effort by the HR community must be made to
develop standards that are more balanced.
• Diversity and inclusion on a global scale are imperative to ensure that the
standards developed are as universally applicable as possible.
• Standards are developed by the majority who choose to participate; abstaining

effectively translates to acceptance of the outcome.
More infonnation can be found at www.iso.org/iso/home/standards_

development/list_ of_iso_technical_committees/iso_teclmicai_committee.htm?
)
)
The lmvact of Big Data
)_.____._ _ ·-
assets that require innovative f01ms of information processing for enhanced
insight and decision making, The phrase "big data'' docs not refer to a specific
amount of data but rather a data set that cannot be stored or processed using
traditional database software.
The IT indnstry's given name of"big data" is a bit misleading. Strictly

speaking, data has no size; there is no "end" or last number, and data cannot be
finite. Data is a collection of facts, and facts are inert and infinite.
Thomas Friedman (a renowned New York Times columnist) and many others
concur about the confusion of the "big data" name. Friedman considers big
data as part of a larger global trend---what he calls the "hyper-connected"
world. As Friedman tells us, what is important about big data is not the volume
of data that businesses are able to access (as that has been growing at
) incredible rates since the dawn of the Internet) but instead the speed at which
businesses should be able to access it. Organizations want to see important data
© 2015 SHAM 343

in near real-time, quickly adjust how they respond, and speed their time to
action.
Freidman maintains that big data, treated as a continuous feedback loop, will
radically change industries. To put it simply, data as a continuous feedback
loop means accessing it fast, all the time, from internal and external sources,
making insights intuitive, and then taking the numbers and feeding them right
back into the process for continuous business improvement.
It is the unprecedented nature of this scale and scope of"natural" human activity
that is exposing patterns in human behavior that were not previously measurable.
This includes pattems at the organizational leveL Over time, analytics have
evolved from more contained business intelligence information to big data and
using large amounts of enriched data to report, analyze, and predict.
Thomas Davenport discusses the evolution of analytics use in terms of the three
eras shown in Figure 6. Some of Davenport's defining characteristics for each of
these eras are listed after the figures.
• The era of • TfHHlr£1 'big · • The era of data-

business . data". enriched offerings .
intelligence (before (after "big data")
"big data").
Source: "Analytics 3.0," Thomas Davenport
Figure 6: The Evolution of Analytics
Analytics 1,0 Era

Born in t11e 1950s and predominate until the
Computing technologies facilitated "fact-based comprehension" to go beyond
intuition when making decisions.
While not perceived as "competing on analytics." greater operational
efficiencies facilitated making better decisions on certain key points to
improve performance.
344 © 2015 SHRM

1: Analytics 2.0 Era

'
Began when Internet-based and social network firms (primarily in Silicon
1 Valley, e.g., Google and eBay) began to amass and analyze new kinds of
I information.
Distinguished from small data because it was not generated purely by a firm's
internal transaction systems; it was externally sourced, too, coming from the
Internet, sensors of various types, public data initiatives, and captures of audio
and video recordings.
)
Necessitated innovative technologies because big data could not fit or be
I analyzed fast enough on a single server.
) Much information was stored and analyzed in public or private cloud
computing environments.
Data did not remain in "back offices" and was used to help shape businesses
! \
through new product offerings and so forth.
) Pioneering big data firms began investing in analytics to support customer-
facing products, services, and features; viewers were attracted to their
websites through better search algorithms, recommendations from friends and
colleagues, suggestions for products to buy, and highly targeted ads, all driven
by analytics rooted in enormous amounts of data.
Analytics 3.0 Era

Other large organizations will get on board with big data (e.g., firms in every
industry) and capture increasing amounts of data on myriad activities.
Every device, shipment, and consumer will "leave a trail" and firms wili have
the ability to analyze those data sets for the benefit of customers and markets.
)- aAel optimiz:atiorl'into-everyfrmlt-lille
business decision made.
)
Davenport notes that the Analytics 3.0 era will bring new challenges and
)
opportunities, both for organizations that want to compete on analytics and for
)
vendors that supply the data and tools to do so.
Big data aggregates information in ways never before possible and allows
companies to vastly improve their understanding of their customers and markets.
For example, big data provides companies with incredibly detailed descriptions of
)
consumer preferences and how people purchase goods and services. Using big
data, companies can also monitor supply chains, sales, and equipment functioning
24/7 across the globe. The applications do not end there, and much potential
) remains untapped. But what exactly does big data mean for HR? Jn "The Promise
of Big Data for HR," published in HR People and Strategy, Alec Levenson writes
about the likely paths for HR.
© 2015 SHRM 345

I Levenson says that a pivotal requirement is for HR to ask the right questions. Fancy
analysis alone, for example, does not translate to improved insights. Asking the
right questions means "being clear about what causes what" so that statistical
conelation and causation arc distinct. Causal models arc critical and must be tested
so that the analyses truly provide insights to improve performance. Challenging, but
certainly not unachievable. Therein is the great potential of big data for HR.
____ ·------'Tcchooetake-awayhere is that big data is here to stay. According to Davenport, there
---
may be some faddish elements that will come and go, but to ignore it would
potentially put HR managers at risk. The point of big data is not to be dazzled by the
volume of data but rather to convert it into insights, innovations, and business value.
Davenport cautions that too many people (vendors, in particular) erroneously use
the tenn "big data" interchangeably with "analytics" or to be synonymous with
the reporting of conventional business intelligence. Some vendors and
consultants have even applied the tenn to their existing business offerings. As
Davenport tells us, "big data" should not be confused with rep01ting, data-driven
decision making, or conventional analytics.
ln some organizations, big data may necessitate more specialized jobs in the HR
depattment, such as statisticians to gather data and project managers to bring it
all together. In any organizaiion, HR professionals who arc well versed in
analytics and at least understand the fcmdamentals of big data will be enormous
assets to their organization.
More information about big data can be ;;asily found by searching the Internet.
346 © 2015 SHRM

) Using Technology for HR Measurement, Metrics, and

Analytics
)
The ability of HR to collect, measure, and analyze data is affected by several
factors. For some organizations, the most notable factor relates to the level of
technology access in different locations.
As we read in Section I, the use of technology and the Intemet are widespread
(and continuing to grow) around the globe. Additional ITO statistics show that
)
fixed (wired) broadband Internet access continues to grow, albeit slowly,
whereas mobile broadband uptake is growing at a double-digit rate. !TU reports
that by the end of 2014, the number of mobile broadband subscriptions will
reach 2.3 billion globally, almost five times as many just six years earlier (in
2008). The growing popularity of smmtphones and tablet computers will
)
continue to drive growth in mobile broadband.
In some locales, however, a "digital divide" exists-a gap between those

)
organizations and economies with to technology and those without access
or with marginal access. This gap can impede the collecting and sharing of
infonnation in organizations with subsidiaries that operate in regions or
communities without high-speed lntemet access. _________________ _
)
Selecting and Integrating Technology
'I
The type of technology an organization selects depends greatly on the size of the
)
)
organization. In "Transforming HR Through Technology," Johnson and Gueutal
write:
)
• Collection of data for HR measurement may be relatively simple for small
organizations and can be easily done on a spreadsheet, while larger
organizations will need more robust systems.
• Smaller organizations may require support for only basic personnel
information (typically related to payroll and time and attendance). These
organizations may not require a special HR system.
• Large, complex, and geographically dispersed organizations have a greater
need for broad-based employee information to help leaders make etiective
decisions. A special HR system will be required.
There are many variations of technology for organizations that fit between these
extren1cs.
)---
© 2015 SHRM 347
When selecting and integrating technology for the purpose of measurement,

metrics, and analytics, HR professionais should seek answers to the following
key questions:
G What are the technological requirements and effects regarding the tools needed
to support the organization's measurement, metrics, and analytic needs?
• How are the technological requirements different for each stakeholder or critical
user?
e How will these technologies affect existing technologies inside and outside HR?
(Owners of existing technologies need to be fully involved in the
implementation of any new HR tools.)
In "Realizing the Full Potential of Workforce Analyties," Joanne Bintliff-Ritchie

outlines the following criteria as particularly impmtant to the choice of
technology:
• Flexibility. The solution should be flexible enough to integrate with an

organization's existing technology and anticipated fi.1ture technology.
@ Scalability. The solution should grow efficiently and economically along

with the organization.
------------------------------------ - -
• Security. The solution should be secure and integrate seamlessly with the
security implemented for existing technology.
• Usability. Users should find the technology easy and intuitive.
@ Extensibility. The solution should be easily extended to incorporate data

from existing technology and anticipated additional new technology in the
future.
One type of system that supports the HR function is the organization-wide

enterprise resource planning (ERP) system. Many large organizations have
implemented such systems. Enterprise resource planning is an integrated
information system that serves all departments in an organization. Figure 7
shows a typical ERP system, including software for functions such as customer
relationship management, manufacturing resource planning, finance, supply
chain, and human resources.
II 348 © 2015 SHRM

I FRM
) Finance Resource
Management
.I
MRP . .SCM
I Manufacturing Resource Supply Chain

) Planning Management
J
I
)
.. CRM . HRM
Customer Relationship Human Resource

Management Management (HRIS)
Figure 7: Enterprise Resource Planning (ERP) System
.I
More information about ERP systems can be easily_t_'otmd by searching the

).
lntcmet.
)
As shown in the figure, a human resource inf(mnation system (HR!S) may be

)
part of an ERP system. HRIS systems arc the focus of our next section.
)
.!
© 2015 SHAM 349

Progress Check
1. Which characteristics distinguish measures and metrics?

( ) a. Measures are qualitative; metrics are quantitative.
( ) b. Metrics require a base line of two or more measures.
( ) c. Metrics convert measures into decision-supporting insights.
( ) d. Measures help evaluate success against established objectives; metrics
demonstrate workloads and activity.
2. The prudent approach to select HR metrics

( ) a. relies on activity-based metrics.
( ) b. relies on outcome-based metrics.
( ) c. stmts with activity-based metrics followed by outcomes-based metrics.
( ) d. relies on key perfonnance indicators (KPis) to identify underlying measures.
3. Which characteristic distinguishes metrics from ana!ytics?

( ) a. Metrics state the past; analytics state the present.
( ) b. Metncs provide iniomiat10n; analyl!cs pfov1de insigh'"ts".-- - - - - - - - - - - -
( ) c. Metrics drive strategy; analytics gnide operations.
( ) d. Metrics cannot be bcnchmarked; analytics drive benchmarking.
4. A potential benefit of big data for HR is

( ) a. less reliance on analytics.
( ) b. better-quality lessons learned t!·om technology projects.
( ) c. superior data security and scalability.
( ) d. improved strategic analysis.
------··
350 © 2015 SHRM


l. b (p. 333)
. )
2. c (p. 335)
.)
3. b (p. 339)
4. d (p. 346)
J
)
I
)
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\ '
)
)
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1--
© 2015 SHRM 351
Section 3:
BR Information Systems CHRIS}

• Implementing appropriate HR information systems (HRIS) that integrate with enterprise
systems to provide efficient and effective reporting and metrics.
• Developing and implementing a technology-driven self-ser"ice approach enabling
managers and employees to perform basic people-related transactions (e.g., benefit
enrollment, cu111 perrsation ad 111 illistratron;-information ellafiges,

• Data management protection approaches.
• HR information systems and sources.
• HR management and information system design.
• Product development.
• Project management theories.
• Systems integration approaches.
I
Human Resource Information Systems

Routine administration of day-to-day workforce activities-processing employee
information, answering questions, etc.--can monopolize vast amounts ofHR's
time. A human resource information system (HRIS) is a type of technology that
suppmts HR functions and enables HR to gather, store, maintain, retrieve, and
revise HR data. An HRIS offers great potential to increase efficiency, improve
I
results, and lower costs.
As noted earlier, an HRIS may be part of an ERP system; it may also be a stand-
alone software application.
While the trend is moving away from in-house, legacy HR!S, the procuring and
implementation of an employee database can still be considered a staple of effective
human resource management. Setting up an HRIS, however, is a complicated
endeavor, and mistakes or errors almost always have a profound and costly impact.
HRIS Selection
.1 Personnel departments started with file cabinets for document storage. In many
) ways, the only thing that has changed with the evolution ofHR and the storing of
!-----·--···--·--· locatea:----·--"-
Most jurisdictions require certain employee documents to be created and maintained

as miginal hard (physical) copies. Examples include employment contracts and
verified right-to-work documentation. Many jurisdictions also require that these key
)
documents be physically located at the organization's legally incorporated domicile.
)
In more recent years, with the advent and increasing usc of knowledge management
systems, more traditional uses of employee information are seeing a separation f\-om
the static database to more dynamic systems that provide employees and managers
with access to basic employee infonnation. Overriding the end result is the
acknowledgment oflegal considerations, including the protection of personal and
private information.
Many I-IRIS configurations arc available, providing different levels of functionality.

Increasingly, an HRlS has become a virtual version of a file cabinet an application
supplied by a cloud-based vendor, requiring no in-house HRIS.
© 2015 SHRM 353

Dming selection, all appropriate stakeholders should be involved in a

collaborative decision-making process. In practice, the first step is to evaluate
the need and determine if the organization should invest in an HRTS. An HR IS is
a valid consideration if there are organizational needs to:
• Free HR time for more strategic work.
• Have employees take charge of their own HR activities.
• Formalize knowledge management.
o Replace a legacy system.
When evaluating the need, organizational strategic plans should also be

considered so the system selected will be the right choice for the organization
beyond the short term. Regardless of the physical or virtual structure, the HRIS
configuration an organization selects should meet cmTent organizational needs
and have the flexibility to grow and expand with the organization into the
foreseeable future.
Once an organization determines that it needs to invest in an HRIS, several

decisions must be made regarding:
o Building, customizing, or outsourcing development.
_________ ------"·-·· Choosing an integrated solution or a "best of breed" option.
- - -
• Detetmining levels and methods of data access.

• Choosing a database stmcture.
o Incorporating data protection methods.
Build, Customize, or Outsource Development

When procuring an HRIS, the choices arc to develop the technology in-bouse
(internal development), purchase a customized system, or outsource lo
an external vendor.
• Build. Two primary conditions that favor in-house development are:

• The organization has a unique business need.
0 Functional and technical skills are available in-house to develop the
technology.
Internal development requires HR collaboration with several stakeholders,

I including line management, information technology (IT), finance, and marketing.
l
I 354 © 2015 SHRM
• Customize. A customized off-the-shelf system (COTS) is a practical selection

when the business requirements are standard and there is functional expertise in-
house. A variety of pre-packaged commercial products arc available that provide
tested and stable features.
Some initial customization (either working with the vendor or done in-house) is
required to ensure compatibility with the organization's business processes.
Additional ongoing customization may be required as upgrades become available.
• Outsource. Procuring a system from an external vendor is a consideration ifthere

are organizational requirements for a robust solution and functional and technical
skills are not available in-house. As with COTS, there are a variety of
marketplace vendors from which to choose.
A potential concern when outsourcing is having to share proprietary information

with a vendor so that organizational requirements can be addressed. However, a
.I well-designed and well-managed outsourcing initiative can be a feature-rich and
cost-effective solution.
Integrated Solution or "Best of Breed" Option

Another decision involves whether to usc a single platform, or integrated solution, to
L-----------·---··----SllppGl'l-m<fl#pl&#R-ftmffioits---Bl'-to-use-ttlttltipleomatler-systems;:rometimesimuwrr-·-·---
as "best of breed" (BoB) solutions, each suppo1ting a different HR function. Figure
8 on the next page compares general advantages and disadvantages of each option.
J When choosing between an integrated or best-of-breed solution, it is also important

} to decide how to deliver the technology. Three approaches are:
• On-premise. With the on-premise approach, the organization purchases and

installs hardware and software on intemalmachines, supported by internal IT
staff
• Hosted. In the hosted approach, applications are purchased and installed for the
organization, but they are located at the vendor's site and supported by external
IT stall
)
) • Software as a service. With SaaS, the linn does not purchase or install any
softv·n1re. lnsteaJ, the organization subscribes to software that is devdnpcd and
deployed remote! y over the Internet and accessed via a web browser.
J-
© 2015 SHRM 355
1
• Feature a common interface "look • Offer minimal customization options;

and feel" across appiications, because of the large scale and
making learning and transitions for integrated nature of such solutions,
users easier. they can be prohibitively expensive
• Use integrated data and to customize, or maintain
technological infrastructure, customizations, as new versions of
reducing the need to manage the underlying package are released.
multiple technological architectures. • Do not necessarily offer the best
• Provide greater ease of integrating solutions in each functional area.
data from multiple HR functions. • Are challenging to upgrade, because
• Reduce the complexity of vendor a change to one function may have
management, because there is only dramatic impacts on others.
one vendor. • Slow down the introduction of new
• Can be less expensive per features and upgrades due to
application to implement than BoB. complexity.
• Can develop a "best fit" solution for • Pose difficulties in integrating data
each functional area. across applications.
• Provide quicker implementation, • Present increased learning curves
because the system is simpler and for each application because of the
affects fewer employees. lack of consistent interface.
all needs. relationships with multiple vendors,

• Allow vendors to be more which can be challenging.
responsive to user needs. • Demand interoperability among
• Make it possible to purchase only different applications, which may
the functionality needed. not be easy.
Source: Johnson and Gueutal, "Transforming HR Through Technology"
Figure 8: Advantages and Disadvantages of Integrated vs. Best of Breed Solutions
Data f:,.ccess
In most organi;wtions, HR data is no longer restricted to HR staff. Sometimes
referred to as the "dernocratization of HR data," organizations provide internal
and external groups access to the information. Executives, employees, managers,
job applicants, and others have access.
!. Each of these stakeholders have different data needs.
356 © 2015 SHRM

'
I .1.
!
'
I
I
Examples:
• Executives-for strategic deCision making, forecasting and budgeting,
and succession planning
I) • Employees-for benefits enrollment, personal and dependent
I •
profiles, and retirement planning
Managers-for metrics and analytics
• Applicants-for organizational brand information, job openings, and
online applications
) • External groups-for organizational information, compliance data,
) and payroll information
I
In addition to meeting the needs of different stakeholders, an HRJS also should
)
be designed to accommodate several different methods of access such as HR
portals, employee self-service (ESS), manager self-service (MSS), and decision-
maker access.
• HR portals. HR portals provide a single, targeted, and often customized

')
entry point via the Internet for each employee (and increasingly, each job
applicant) to access resources, applications, and data relevant to his or her
own personal sitnation.
Many design features can increase the functionality and value of a portal for
users. Some of the typical ones are described below.
)_ --··-----·--·------ --·--··----- --·--··--·----
• Easy navigation. Enables seamless movement from one feature to another,

y often with video clips and graphics to engage users and hold their attention.
o Personalization. Allows users to personalize settings for the delivery of

appropriate infonnation so that each user gets only the information that is
specifically tailored to his/her needs (based on user roles as well as user
preferences). Personalization may provide shortcuts to specific information
(e.g., bookmarks or favorites), specific data/content (e.g., which stocks to
display in the user's stock ticker), and a specific layout (e.g., what
information appears where on the screen, in which format, color, or size).
• Notification (push technology). Describes when users receive information

on their desktop automatically from a network server without the user
)
actively requesting it. Thus, the user has the opportunity to subscribe to
active information sources (such as news feeds and periodically updated
reports) and ask to be alerted when documents are updated.
© 2015 SHAM 357
)
• Online decision support. Delivers decision-support tools that, as the name

implies, guide users through the process of making a choice (e.g., the
ability for an employee to answer a question that then streamlines the
experience).
Efficient search feature. Provides the ability to efficiently search for

contents.
• Really Simple Syndication (RSS) feeds. Makes available web feed

fmmats used to publish frequently updated digital content.
e Employee self-service (ESS). ESS websites (often enabled through an HR

portal) provide employees access to their personal HR data and the ability to
handle many questions and job-related transactions (such as expense reports,
updates to personal information, and access to company infmmation) that
othetwise would fall to management or administrative staff.
For employees, this means increased convenience; for organizations, this

translates to significant cost savings and efficiencies. HR head count is often
reduced.
--· - - - - - - - - - - - - ---·---·-
o Manager self-service (MSS). MSS applications are tools that are also largely
accessed via a pmial. These tools allow supervisors to handle many HR
transactions online and receive HR repmis in real time.
Organizations can choose the amount and complexity of HR tasks to be

delegated to managers via MSS. Managers may have the ability to:
• View information and create reports on the employees working for them.
For example, a manager might use MSS to prepare for and complete
performance appraisal documentation for subordinates, to authorize leaves,
or to create a report summarizing information about his or her staff.
• Complete transactions previously handled by HR, such as authorizing pay
raises, promoting, approving leave requests, or changing an employee's
classification.
'tl Manage functions such as performance n1anagetnent, succession planning,
and onboarding.
358 © 2015 SHRM

I
) As with ESS, when managers handle transactions, there are cost savings and
improved efflciencics.
e Decision-maker access. A key capability of an HRIS is to create reports

and to support managerial decision making. For example, HR!S can be
extremely valuable for compliance reporting requirements.
As pmt ofHRIS functionality, data warehouses and data mining tools also
provide capabilities to support strategic decision making. Johnson and
Gueutal note that analyses previously impossible hecause of a lack of data
or because they were not cost-effective can now be completed and
complex questions answered.
Data warehouses provide a centralized repository of selected HR data that

is managed separately from live data. Data mining tools with advanced
statistical data analysis techniques help to uncover relationships among
policies, procedures, practices, and organizational outcomes that may not
)
be readily apparent.
)
Dashboards are reporting mechanisms that aggregate and display metrics

and key performance indicators (KP!s), providing a quick overview befol1'__ _ _ _ _ _
1--··---
- fmther investigation using additional business analytics tools. An HR
dashboard, for example, provides high-level, real-time data regarding
critical measures ofHR success. Managers can exarnine information in
varying levels of specificity. Potential problem areas that warrant further
I
analysis are quickly identified. By linking the data on the dashboard to the
KPis, managers can see the ties between HR outcomes and corporate
goals.
Database Structure
HR!S relies upon a database. A database is a data structure that stores organized
information (numeric information as well as sound clips, pictures, and videos).
Most databases contain multiple tables, which may each include several dit1erenl
fields. Early flat-file databases, limited to simple rows and columns (like a
I
spreadsheet), have evolved to relational (object-oriented) databases that allow
)
)
users to access, update, and search information based on the relationship of da!a
stored in different tables.
1-
© 2015 SHRM 359
A hierarchy of knowledge helps to estabiish what data is captured and stored. A

database management system (DBMS) encompasses a variety of software
applications and electronically manages the stored data. Core DBMS
functionality includes updates, deletions, data integrity, security, backup and
recovery capabilities, user queries, and report generation.
The relational database structure eliminates redundant data and facilitates

infonnation sharing across an organization's management levels, between
functional units, and across geographically dispersed locations.
Data Protection
Security ranks as a top priority for any HRIS. Security needs to be addressed to
handle:
$ Exposure of electronically stored sensitive data (e.g., personal or benefits
information) among employees.
• Loss of sensitive personnel data outside the organization.
• Unauthorized updates of key data.
While data security is a complex task that is perpetual and unending, general
security protections involve:
• Limiting physicaJ access to tlie DBMS ahd applicatiorlserver.
o Limiting Intemet browser access to specific components (segregation of
users into different security categories).
• Encryption and encoding.
EnCI'yption is the conversion of data into a fonnat that protects or hides its
natural presentation or intended meaning. HTTP stands for Hypertext Transfer
Protocol; it is tbe computer formatting language used by most web browsers to
I connect the user's application to the other layers of communication software.
!I
i
One of the most basic forms of online security is https, standing for http-secure.
This feature of web browsers encodes the transmission of data to avoid

I
unintended interception. While there are more sophisticated and secure methods
of protecting user data, https is the most common and has proven to be very
effective in securing the most basic forms of online communication (e.g., online
personal banking).
360 © 2015 SHRM

Two small start-up companies (one with 15 employees, the .other with 27)
recently merged. The smaller company bought out the larger company and is
now responsible for the workforce of 42, with plans to reach 55 by year-end.
Over time, the responsibilities of the office manager at the smaller company
Human
Resource have multiplied. By default, the office manager is now assigned with sourcing
Competency and setting up the new company's first HRIS, even though the individual has
in Action no formal education or mentorship in HR. Previously, all employee information
in both companies was maintained in spreadsheets.
,)
The office manager contacts four outside IT consultants to make presentations
)
on their HRIS software and services. Not really knowing anything about HRIS,
) the office manager understands very little during the product demos about the
I I terminology or tool. In particular, the office manager struggles to recognize the
differences between what IT features are necessary, nice-to-have, or frivolous.
In order to better understand the essential needs for an HRIS, the office
manager enrolls in a three-day HR generalist program at a local university and
learns about the core functional domains of HR and what HR activities and
outcomes are most likely to be impacted when using an HRIS. After the
program, the office manager joins a local SHRM chapter and attends two
chapter meetings, where three HR practitioners who had recently carried out
) similar projects make helpful resource recommendations (including using the
SHRM members-only website to find additional online resources such as an
HRIS checklist).
Many people working in HR have no formal education or mentorshipJnHB.. ___.. - - -
!--- - - - "HR-departments-of-one" may b,;- most likely to benefit when the person
) experiences some formal HR training. The technical learning is often
enhanced when it can be applied to real-world situations.
HRIS lmolementation
'
Many authors, consultants, academics, and others have discussed systematic
approaches to HRIS implementation. Some organizations have proprietary
processes. Others may use the Project Management Institute (PM!) approach to
project management, which is widely accepted as good practice. According to
Bedell, Canniff; and Wyrick in "Systems Considerations in the Design of an HRlS:
Planning for Implementation," the overarching points to keep in mind about HRIS
design and implementation are:
e It is a process that will take a team of individuals substantial time to complete
(anywhere from weeks to years).
w VVh!Ie there arc a variety of\-vays to n1anage the initiative:. the one chosen 1nust
examine the key issues and achieve organizational goals for the implementation.
© 2015 SHRM 361

)
Thus, there is no single definitive approach to be used in all situations. Following a

systematic framework facilitates making the best choice possible for your
organization.
Generally, the steps in HRIS implementation involve:

e Assessing organizational needs-to determine requirements.
e Assessing the project parameters-to identify constraints such as budget,
technology (the organization's technological limitations), and time.
• Evaluating available packages against needs and parameters.
• Selecting a project committee and implementation team-to gather
stakeholder input beyond HR.
o Identifying vendor requirements.
• Soliciting vendors.
• Screening qualified vendors.
• Inviting vendors to present their capabilities.
• Choosing between the finalists.
Additional infom1ation on HRIS selections, design, and implementation is

available through two SHRM toolkits:
• "How to Select an HRIS," www.shrm.org/TemplatesTools/HowtoGuides/
• "Designing and Managing a Human Resource Information System,"

www. shrm. org/Temp latesToo Is/Toolkits/Pages/Mana gi ngaHu man Resource
InformationSystem.aspx
(Both resources are available to SHRM members only.)
The Importance of Systems Integration

Because of the complexity, length, and expense of an HRIS prQject, it is wise to
understand the overall systems integration strategy before the development work
begins. Systems integration generally refers to the practice of combining individually
tested software components into an integrated whole. Two common approaches are
continuous integration (a "waterfall" approach) or a "big bang" approach.
Continuous Integration Approach

In continuous integration, H RJS components are integrated as they are developed
into multiple mini-versions of the HRlS system. (Hence the nickname ofu
362 © 2015 SHRM
I
II ORGANIZATION Technology and Data
"waterfall" approach.) HRJS developers split the product into several builds
(chunks) that can be individuaiiy integrated. Integration is iterative as the
!I' sequence of incremental builds yields results successively closer to the final
HRIS.
Using continuous integration, an organization gains an advantage in seeing the

working HRIS early on and throughout the development process. Developers can
verify performance and other quality factors in a working environment rather
) than relying on models or simulations. Continuous integration also decreases
) integration risk, because developers can identify and troubleshoot most problems
as they arise.
"Big Bang" Approach

) In big bang integration, individual HRlS components are not integrated until
'J everything is ready. In other words, all components are integrated
simultaneously, after which everything is tested as a whole.
The advantage of the big bang approach is that everything is finished before
integration testing stmts. The major disadvantages are that testing is typically
time-consuming and the cause of problems or system failures is difficnlt to trace
,L _ __ because of the late integration:----- - - -
)
) Between these two integration approaches, continuous integration is generally

perceived as Jess risky than a big bang approach.
J
)
)-
© 2015 SHRM 363
1. An organization works with multiple vendors to supply its HRIS functionality. For example,
recruiting, time and attendance, and payroll applications come from three different vendors.
This scenario describes which I-IRIS solution?
( ) a. Customized off-the-shelf system (COTS)
( ) b. Integrated
( ) c. Best of breed (BoB)
( ) d. Software as a service (SaaS)
2. Which statement BEST describes a portal?

( ) a. Entrance to web-based content
( ) b. Personalized intranet
( ) c. Front end for business applications
( ) d. Sophisticated search engine
3. An organization examines historical tumover data stored in the h'RIS along with statistical
- - - - - 'fuodels to pred1cl which high performers are-most the mganization-fur aBotfler ------
opportunity. The organization targets those individuals for retention programs and incentives.
This use of the HRJS is an example of
I
\ ) a. c-leaming.
( ) b. a relational database.
( ) c. e-perfonnance management
( ) d. data mining.
l
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364 © 2015 SHRM
t
i ,. .

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I. c (p. 355)
2. a (p. 357)
3. d (p. 359)
L ....- ·- ... --·· --·· -··--·
)
)
J
)
)
)
)
)
© 2015 SHRM 365

Il
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Section 4:
Poiicies for Technology Use in the

Workplace
I
'I

• Consulting on effective policies and approaches to address technology use in the workplace
(e.g., collaboration, communication, networking, social media).

--.----s-owlmec!Ja pract1ces and usage.
II
• Technology use policies and practices.
Ii
I
r
t1
;;
'i
I
II A policy is a formal statement of a principle or rule that members of an
organization must follow. HR policies supp01i the way an organization
I defines roles and rules, explain consequences of actions and behavior, and
provide employees with tools necessary to do their work.
)
I
)
In Smart Policies for Workplace Technologies, Lisa Guerin notes that many
lj organizations do not recognize the need for workplace technology policies or
)
! erroneously think that existing policies address new technologies. She advises
that procrastinating on drafting or updating technology policies puts an
organization at risk, exposing organizational assets and creating the potential
for legal issues.
Content in this section examines effective technology workplace policies and

)1
approaches in four areas:
9 Collaboration
)
• Social media
) o Networking
o Communications
- - ···-----··-- ---· - -
J----··---
Collaboration describes the strategy of enabling highly diversified teams to

work together-inside and outside an physically and
)
vitiually to create value. Organizations have grown increasingly diverse and
dispersed as a result of new ways of working, generational and cultural
differences in the workforce, and multiple locations. Many technology vendors
have rolled out platforms that allow employees to collaborate more efficiently.
Organizations are adopting collaboration tools to facilitate communication,
productivity, engagement, and ITIOl-e.
Ciroupvvare
Groupwat·e is an umbrella term for specialized collaborative software
applications. The goal in using groupware is to facilitate interaction between
') individuals or groups who are not col!ocated···-to support person-to-person
communication and collaboration and help people to work together more
efficiently.
)-
© 2015 SHRM 367
There are numerous groupware products, and the level of sophistication

varies. The range of groupware options includes:
• Teleconferencing. A simple application of groupware that delivers a

simultaneous presentation to multiple sites distributed via audio (phone
or other audio) or satellite. A teleconference requires only a telephone
and a telephone connection.
• Videoconferencing. Uses interactive telecommunications technologies

(e.g., cameras and software) to simulate a face-to-face communication or
meeting without having to be in the same location. Two or more
locations interact via two-way video and audio transmissions
simultaneously.
• Web conferencing. Facilitates real-time interactions that take place over

the lntemet using integrated audio and video, chat tools, and application
sharing. It includes the ability to centrally .control the simultaneous
presentation of text, graphics, images, and video on every participant's
screen from one location. In the simplest form of a web conference, the
presentation is not interactive; participants view infonnation on the
screen but cannot make any changes.
• Multifaceted groupmli·e. A form o±· groupware that relies on "\CY'-'ocrJrrp--- - - - - -

(Voice over Internet Protocol) and has other suppotiing features such as
the inclusion of presentation software and social media. For example, a
presenter may usc a whiteboard (to draw or write infonnation), text-
based chat, voice interaction (using a microphone), or video (using a
webcam). Participants may respond using a polling feature, and they may
also use a microphone or webcam.
• Telepresence. Highly integrated, multi-monitor, multi-microphone, and

multi-channel speaker systems that present interactive video and audio
between locations with near life-like audio quality and with near life-size
video images. This sophisticated technology provides a conferencing
experience that is closest to an in-person experience.
Typically, companies do not issue policies on "collaboration" per se. It is more

common for an organization to issue a genera! umbrella policy that addresses the
368 © 2015 SHAM

)
acceptable use of infonnation, devices, and technology topics such as (but not
limited to):
o Use of personal devices for company business (BYOD).
• Personal use of company-provided devices and technology.
• Use of passwords and company-provided credentials.
• Physical protection of devices.
• Use of company, client, and other third-party information.
• Use of company e-mail addresses and systems.
o Tnfmmation rights management.
Effective communication and collaboration is a challenge goal even when the

people involved are all from the same background, share similar life experiences,
and are meeting face-to-face. Add virtual meetings, globalization, and
demographic and cultural diversity to this mix, and this challenge is
exponentially more difficult.
To address these challenges, many organizations have introduced

)
communication practices designed to maintain structure while, as much as
)
reasonably possible, allowing for the natural aspects of human interaction to
come out. Some of these effective practices inglude: ·--··
l----···
• Setting meetings at times that can accommodate the most participants
globally.
• Creating outlines of meeting agendas and estimates of time allocated to each
topic.
e Providing the host of the meeting with full control over the technological
tools being used.
# Using overlapping technologies (groupware, VoiP, a web browser,
smartphones, etc.) concurrently to help ensure multiple means of participant
access.
• Recording discussions/meetings to allow stakeholders unable to participate in
real time to access and review the outcomes.
• Using passcodes to ensure that only invitees arc able to gain access and
) pmiicipate.
) • Including hierarchies of authority access (read/write) to source documents to
) protect the source's integrity while tracking any changes rnade or proposed.
© 2015 SHRM 369

(
\
• Including legal disclaimers in all documents/projects that outline the rights (
and responsibilities of the participants. (
• Balancing the need for secwity and rights protection with user-friendly (
accessibility.
The head of HR is concerned that the organization's IT department will be

unable to support the execution of a large, critical, time-sensitive project.
Several employees are to be sent on a long-term international assignment at (
a subsidiary for a special project. The project requirements appear to greatly I
Evaluation exceed current IT processes and resources.
(
Competency The HR head meets with the iT lead to review the project requirements.
in Action
Following their due diligence and assessment, they mutually reach the same
conclusion: If they follow the current approach, the project will indeed exceed
the capacity of the IT department and could result in significant delays
(potentially up to two weeks) for the assignees' laptops, information, and (
accesses to be ready at the subsidiary destination.
Working toget11er, HR and IT design new streamlined processes to gather all
details that IT needs to configure the assignees' user IDs, create the new (
employee numbers, grant access to systems, and transfer the information on
their current laptops before they arrive at the subsidiary. These actions
eliminate the constraints that wouid have caused the bottleneck and delays.
- - - - - - - --VIl,_,q,derstanding the IT processesand working with the stakeholders, HR is
able to recommend and help implement the new approach. Th.e result: bett'-=eccr___ ... _ \
business decisions that minimize the potential negative impact on employee
productivity and avoid any disruption to the project and the organization's
operations.
Sf>cial Media
Numerous experts have suggested that the use of the word "social" in social
media is unfottunate as it discounts the business and other more-practical, value-
added uses of the technology. In any case it carmot be emphasized enough just
how much social media has changed the world and, in the process, also changed
HR.
Many employers are creating socialmedia·-enabled wcbsites to better connect

with their customers and advertise for talent; at the same time many are
restricting access to their employees while at work. Hand-delivered hard-copy
n:sumes and curricula vitae are being replaced with multimedia online personal
profiles accessible for review 24/7. Recruiters are not only finding passive
370 © 2015 SHRM

candidates directly online but are able to find and connect with the passive
candidate's network of key connections.
I
Many employees are learning the hard way that what is posted on the Internet
stays on the Internet. In 2013, for example, there was a movement (particularly
in the United States) of employers asking job candidates to supply their social
media passwords so that the employer could review their online profile without
) restrictions. In hindsight while the actual number of employers asking candidates
) for their social media passwords was quite small, it created a global discussion
) about the legality and ethics of such practices. Since that time many jurisdictions
have introduced laws protecting candidates and employees from being forced to
provide such infonnation.
For all the flux in the social media space, it is clear that HR and HR issues will
remain at the center of this revolution in communication and employee relations.
Social media use by employees (even dming the workday) is here to stay. In the
) workplace, a comprehensive social media policy coupled with appropriate IT
) usage role-modeling by leadership (no double standards) may help to leverage
the robust positive aspects of social media and reduce risks associated with
-----,e"'ll"'lPn1llt;ocvyeemi:suse. Genetally, effective wo,kplace-suciai media policies and- - - - - - - -
practices:
• Are aligned with the organizational culture.
e Focus on smart and ethical use.
)
• Reflect the organization's key legal and reputational risks (e.g., p1ivacy for a
)
health-care provider).
)
Organizations need to consider employees' personal posting on the Internet as

well as posting on organizationcsponsored social media.
Effective Social Po!icies and Approaches for Personal Posting

Employers face a dilemma restricting employees' personal posts without being
considered an organization that stitles personal expression or violating legal
protections for employees who post online. The types of personal posts that are
of concern include:
) • Disgruntled employee comments.

) ® Disclosure of proprietary information.
)
) ----
© 2015 SHRM 371

)
• Harassment of other employees.
• Inappropriate non-work-related comments (e.g., extremist views or racial
slurs). )
)
The challenge for an employer is to manage potential legal exposure and )
negative publicity from employee posts without going overboard in
restricting employees' expression. Complicating this matter is the fact that
the legal aspects of employer restrictions on employee posts continues to
change. Thus, a social media policy on personal posting involves a balance
of restrictive and permissive aspects.
An effective written policy establishes what types of personal postings

could get employees into professional trouble. According to Guerin,
characteristics of an effective policy include:
• No posting using the organization's resources.
e Guidelines about posting content about the organization.
• Rules about personal endorsement of the organization products or
services.
• Rules for personal posts about colleagues (e.g., zero tolerance of sexual
harassment, cyberbullying, or threats).
----------·--·-·-··--·-···
If an organization has a presence in social media, the employees who are

responsible for the content need clear guidelines. Guerin outlines the following
characteristics for an effective policy to include:
o Identification of who may post
• Guidelines for employees who post (e.g., be respectful and professional,
avoid inappropriate topics, respect intellectual property, protect the
company's trade secrets, maintain customer and employee privacy)
• Authorship and disclaimers (e.g., asking employees who post to identify
themselves by name and title)
@ Guidelines for handling comments (e.g., how to moderate comments and
when to share complaints and comments with the appropriate person or
department)
----- ---------
372 © 2015 SHRM

Due to a retirement, an organization has its first new chief executive officer
(CEO) in 37 years. The new female CEO was promoted from within and wants
to jump-start her tenure and legacy with an aggressive social media strategy. In
particular, she wants the organization to connect with an employee and
8us!ness
customer demographic that has been elusive: Millennials. As part of this plan,
Acumen
the CEO hires a new tech-sawy practitioner to be the senior vice president
in J\ction (SVP) of HR and sets an aggressive KPI to recruit no less than 75% of all new
) job applicants using only social media.
To date, the organization has had no direct social media presence. The
organization's legal and IT departments had convinced the leadership team
that there were too many risks associated with using social media. As a result
the organization's policy has been to prohibit all employees from using or
accessing social media while at work. The new HR SVP quickly realizes that
until the organization's leadership team understands the current online
candidate experience benchmarked against industry peers, they will not be
able to appreciate the lost business opportunity.
The HR SVP creates a workshop for the executive committee that goes
through, as a group, step-by-step, the actual online candidate experience of
four benchmarked organizations, plus their own. The executives are also
shown a public website that compiles data and ranks organizations (including
)
theirs) as employers of choice based upon information submitted by current
) and former employees. Lastly, the HR SVP presents a summary of information
sourced from the other organizations' annual reports, which include estimates
) _____________ofJil<Jir_employee and customer demographics and direct references to their
successes or challenges associated with using social media.
By tangibly demonstrating a real-life candidate experience using the social
media interface of competitors, the new SVP of HR is able to show tile
executive team what a successful social media experience is, the risks
associated with blocking employees' social media access, and the risks
) associated with not proactively utilizing social media.
)
I
)
When it comes to social media (as well as networking, which is the next topic),
protecting the integrity of personal information is an increasing concern.
)
Historically the term most commonly associated with iT threats deliberately
)
committed by people is hacking.
Hacking refers to the act of deliberately accessing another computer without

permission. !t is important to note that within the ·field of technology the word
) hacking (or hack) has evolved to hold a double meaning. Originally hacking was
) a reference to constructive IT problem solving or learning by way oftrial-and-
)
)--
© 2015 SHRM 373
)
enor exploring using technology. To this day, a leader in social media market )
still conducts intemal "hack-a-thons"-intensive problem-solving exercises )
designed to leverage the open-ended creativity that can emerge in a highly
challenging, time-bound, peer-prestige competition. However, over time, )
hacking has come to be associated with a more negative meaning as the
underlying intentions of some hackers started to reflect inappropriate, unethical,
or illegal problem solving for personal gain. This negative exploitation can take
many forms. Some of the most common tactics include:
Phishing. E-mails, phone calls, texts, or instant messages that appear to be

legitimate and from a trustworthy source and attempt to trick you into
revealing your password or other personal infonnation (e.g., in order to fix a
problem or verify an account). RSA, the Security Division of EMC 2 and a
very well-known provider of intelligence-driven security solutions, identified
more than 62,000 phishing attacks in October 2013, the highest ever
recorded hy RSA in a single month.
e Fake e-cards or job openings. E-mails pretending thai an attachment is an

electronic greeting card or job opening from a friend or some other
trustworthy source when the attachment actually contains a harmful program
that could infect your computer.
·----- \
j
e Phony security alerts. E-mails or pop-up windows claiming to be from a

trusted source and warning that your computer is at risk of being infected or
hacked. A link or attachment that is supposed to fix the problem will infect
your computer.
8 "Click this link" scams. E-mails or social networking sites enticing you to
click on a link in order to take advantage of a great offer, see a picture or
video, claim an award or reward, and so forth. While the links often look
legitimate, they take you to a hannful website and steal your information or
infect your computer.
The term "social engineering" is also being used to describe the mindset and
tactics of unethical hacking. Perhaps this tcm1 is emerging to avoid the confusion
associated with the dual meaning of hacking as well as to expand upon the forms
of manipulation being used. Somewhat ironically, the most common way
hackers gain access to sensitive IT information remains blatantly low tech and
highly unsophisticated: They simply find creative ways to ask for it.
374 © 2015 SHRM

II
>
To mitigate the threat of unethical hacking and social engineering, it is good

policy to:
o Never disclose a password to anyone, even if the source seems legitimate.
® Not give private infonnation to anyone you do not know or who does not
have a legitimate need for it (in person, over the phone, via e-mail or the
Internet).
\ • Click on links only from tn1sted sources. Never click on a link from a source
you are unfamiliar with unless you have a way to independently verify that it
is safe.
• Delete unsolicited e-mails; do not open, forward, reply to, or click on links or
attachments in them.
PricewaterhouseCoopers (PwC) reports that from 2013 to 2014 the number of

global cyber attacks increased 25%. The take-away message here is that
organizations and individuals must remain vigilant in efforts to fend off
unethical hacking and social engineering.
Netvvorking
Networks (or social networks) generally refer to the online clustering of
J---------indi¥iduah in groups-with ne!wtlr-kingset'Vie:,..-----
(SNSs) or social networking sites connect individuals with similar interests,
regardless of their geographic locations. The sites allow users to create profiles and
I interact with others in a variety of ways (such as the exchange of private or public
) messages). A variety of tools may be embedded in social network sites, including
) e-mail, blogs, instant messages, text, podcasts, photographs, and videos.
)
Types of social networks in the workplace may be grouped into categories such as:
• Informational-interactions with customers or other people seeking answers to
questions or problems.
) • that help pmticipants to advance within their career or
) industry.
) $ ability for academics to pursue interest with experts and other
) like-minded individuals.
) • Training and development-the ability for learners to access course content
online and/or share infonnation with other classmates.
J
)-
© 2015 SHAM 375
Social networks have a variety of business applications such as recruiting,

connecting employees, brainstonning, dialoging about common issues, sharing
project documents, and more. Many organizations use their portals to enable
social networks.
Effective Networldng Policies and J\pproaches

When establishing an organizational policy, Guerin recommends:
• Review the organization's employee handbook for related policies and
practices and to determine if they are working and whether employees have
to sign an acknowledgement.
e Consult with appropriate lT staff to establish what technologies the
organization supports and what it prohibits.
e Consult with the organization's legal counsel to detem1ine if there are
specific business or industry issues that need to be included in the policy.
s Determine the technology resources that management and employees use and
whether the organization or the individual owns the equipment or devices.
o Develop policies (draft, review, and revise) for each technology.
• Communicate the policies and require acknowledgement signatures for them.
• Enforce the policies consistently.
- - - - - - - ----..· ·Keep thC"pclieies-tip-to date and·revise as ne€@££al')'.-------
Communications
As we have learned throughout this Ftmctional Area, technology has great
potential to increase workplace efficiencies and productivity and promote
employee engagement. While many workplace technology tools support
communication internally and externally, they can also have unintended
conscqnences. Policies and practices related to communications can help to
provide a balance between a congenial workplace where talent is prized and
one that protects the organization's proprietary information, secmity, and legal
interests.
Effective Communications Policies and Approaches

Situations can and do arise that require an organization to read or monitor
employee c-mails, Internet browsing histories, blogs, and so fmth. The best
strategy here is to tell employees ahead of time that their communications may
be read or tracked. Notifying employees about potential monitoring may serve as
376 © 2015 SHRM

a deterrent for inappropriate communications. As Guerin notes, employees' legal

right to communication privacy is partially determined by how much privacy
they expect to have. If an organization tells employees that their communications
are not private, it may be problematic for them to contest confidentiality.
Characteristics of et1ective communications policies include clear statements

that:
e Indicate that the organization reserves the right to monitor all technology use
' ) and communications made, accessed, sent, or received on the organization's
equipment, from office-based hardware to employer-provided devices (such
as cell phones and portable computing devices).
• Explain monitoring policies to remove the expectations of privacy.
• Clarify situations in which an employee must obtain approval for Internet
postings regarding the employer's facilities, products, or services.
• Specify that employees are prohibited from posting or disclosing any
confidential, proprietary, or intellectual property information.
e Establish that employees will be held accountable for any violation of laws
and policies (including anonymous postings).
Once developed, organizational policies should not be treated as fixed or static ,

------c"'ocuments. In the past, hard-copy versions of policies and procedures were
considered the definitive source (in fact and law). Today, to be in compliance
with ISO 9000, many organizations maintain their content as online, "1 iving"
documents, which, in turn, are deemed to be the definitive source. One reason
for this shift is because policies and procedures in many organizations can and
)
do change quite frequently. This is especially true in the technology arena, as
new technology-related concerns are always fluctuating. The only way to
guarantee that any reference to a specific policy and procedure io up-to-date and
factual is to direct employees to the online living document as a reference. Hard
copies are deemed "unofficial" because they are, by definition, disconnected.
There are many areas of workplace technology where, depending on organizational

specifics, policies may be necessary. SHRM offers several sample technology
)
policies that may be downloaded and modified for use in your organization. See
)
www.shrm.org/TemplatesTools/Samples/Policies/Pages/TechnologyTOC.aspx.
)
© 2015 SHRM 377

l
)
)
)
Directions: Choose the best answer to each question. )

)
1. HRuses a web conference to deliver a presentation about a policy change to geographically
dispersed participants. This web conference BEST describes an application of
( ) a. cloud computing.
( ) b. groupware.
( ) c. knowledge management (KM).
( ) d. service-oriented architecture (SOA).
2. Which form of groupware best simulates the human experience of being fully present at a
meeting remotely?
( ) a. Teleconferencing
I ( ) b. Web conferencing
( ) c. Multifaceted groupware
I
I
1-·
( ) d. Teieprcsence
3. What is the potential ramification of an employee using company equipment to post an

- - - - anonymous com-ment to a news blog and slate a personal opinion about a cm1 cntever·lf'l'---
'
( ) a. Nothing, since the nature of the comment is personaL
( ) b. The opinion could be mistakenly attributed as the employer's view.
( ) c. Nothing, as long as the comment does not reference the company's operations.
( ) d. The personal opinion will lead to the blog becoming a blocked site.
4. A primary reason for maintaining organizational policies online is to

( ) a. signal the importance of policies.
( ) b. restrict policy access to employees.
I ) c. display only the approved, current versions.
' \
( I d. promote diversity and fairness.
378 © 2015 SHRM

Progress Check AnswEH's

1. b (p. 367)
2. d (p. 368)
3. b(p.371)
4. c (p. 377)
\
)
. )
!-----
.)
)-
© 2015 SHRM 379
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)
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)
)
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.. ..
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388 © 2015 SHRM

Aiternative dispute resolution (ADR)- in tenns of time, cost efficiency, and
Umbrella term used to describe a number of probability of success,
problem-solving and grievance resolution
Cause-and-effect diagram-Diagram that
approaches.
maps out a list of tactors that are thought to
Analytics--Tools that convert metrics to be affect a problem or a desired outcome.
used for decision support by adding context
Center of exceilence (COE)-HR
or further subclassifying comparison groups.
structural alternative established as an
Arbitration-Procedure in which disputes independent department that provides
are submitted to one or more impartial services within a focused area to intemal
persons for final determination. clients.
At-will employment---Common-law Central tendency error-Error that occurs
principle stating that employers have the when an appraiser rates all employees within
right to hire, fire, demote, and promote a narrow range, regardless of differences in
whomever they choose for any reason unless actual performance.
there is a law or contract to the contrary and
Chain of command-Line of authority
employees have the right to quit a job at any
) within an organization.
time.
Check sheets-Simple visual tools used to
Balanced scorecard-Measurement
collect and a11alyze da""ta.._._
!---·· -----apprBae!H:OOtprovides an overall pictUJe of
an organization's performance as measured Cloud computing-Style of computing in
against goals in finance, customers, internal which scalable IT-enabled capabilities are
business processes, and learning and growth. delivered as a service using Internet
technologies.
Bias--Occurs when an appraiser's values,
beliefs, or prejudices distort performance Codetermination--Form of corporate
) ratings. governance that requires a typical
management board and a supervisory board
"Big data"-High-volume, high-velocity,
and that allows management and employees
and high-variety information assets that
to participate in strategic decision making.
require innovative forms of information
processing for enhanced insight and decision CoHective bargaining-Process by which
making. management and union representatives
)
negotiate the en1ployn1ent conditions for a
) _Biogs-------Broadcast-style communications
particular bargaining unit for a designated
that enable authors to publish articles,
period of lime.
opinions, product or service etc., on
a web page. Collective bargaining agreement--
Agreement or contract negotiated through
Business case--Presentation to
collective bargaining proces:-;,
manage:nent that establishes that a spccitlc
problem exists and argues that the proposed of nonbinding
solution is the best way to solve the problem dispute resoiution invoiving a third party
-------···-----------
©. 2015 SHAM 389
ORGANIZATION Glossary
who tries to help disputing parties reach a Departmentalization-Way an

mutually agreeable decision; also known as organization groups jobs to coordinate work.
mediation.
Divestiture---Sale by a company of an asset
Constructive discipline--Form of that is not performing well, that is not core
corrective discipline that implements to the company's business, or that is worth
increasingly severe penalties for employees; more as a separate entity.
also called progressive discipline.
Due diligence-Necessary level of care and
Contrast error-Error that occurs when an attention that is taken to investigate an
employee's rating is based on how his or her action before it is taken.
performance compares to that of another
Encryption-Conversion of data into a
employee rather than objective standards.
format that protects or hides its natural
Control chart-Chart that illustrates presentation or intended meaning.
variations from normal in a situation over
Enterprise resource planning (ERP)-
time.
Business management software, usually a
Cosourcing-Arrangement in which an suite of integrated applications, that a
I
j, enterprise and a vendor share different tasks company can use to collect, store, manage
I within a larger complex, often strategic and interpret data from many business
responsibility. activities.
II
II Cost-benefit analysis---Ratio of value Environmental scanning---Process that
I created to cost of creating that value; allows involves a systematic survey and
management to detennine the financial interpretation of relevant data to identify
impact particular activities and programs external opportunities and threats and to
have on an organization's profitability. assess how these factors affect the
currently and how they are -
Dashboards-Reporting mechanisms that
likely to affect the organization in the future.
aggregate and display metrics and key
performance indicators (KPis). e-procurement-Use of electronic
communications and transaction processing
Database--Data structure that stores
when buying (or contracting for/tendering)
organized information (numeric information
supplies and services.
as well as sound clips, pictures, and videos).
Force-field analysis-Type of analysis in
Database management system (DBMS)-
which factors that can influence an outcome
Varicty of software applications that
in either a negative or positive manner are
electronically manage stored data.
listed and thetl assigned weights to indicate
Dedicated HR--HR struchn·al alternative their relative strengths.
that allows businesses with different
Formalization-Refers to the extent to
strategies in multiple units to apply HR
which mles, policies, and procedures govern
expertise to each unit's specific strategic
the behavior of employees in an
needs.
organization.
Delphi technique-Forecasting technique
Front-back structure--Organizational
that progressively collects infonnation from
structure that divides an organization into
a group without physically assembling the
"front" functions, which focus on customers
contributors.
or market groups, and "back" functions,
390 © 2015 SHRM

I,I ORGANIZATION Glossary
I
I
I )
which design and develop products and
services.
HR audit-Process to measure the
effectivt:ness and efficiency ofHR programs
and positions.
) Functional HR-HR structural alternative
in which headquarters HR specialists craft Human resource information system
policies and HR generalists located within (HRIS)-Systematic tool for gathering,
divisions or other locales implement the storing, maintaining, retrieving, and revising
policies, adapt them as needed, and interact HR data; also known as a human resource
with employees. management system (HRMS).
,) Functional structure--Organizational Hybrid structure--Organizational structnrc
) structure in which departments are defined that mixes elements of the functional,
by the services they contribute to the product, and geographic structures.
organization's overall mission, such as Industrial Various fonns of
marketing and sales, operations, and HR. collective employee actions taken to protest
)
Gamification-Selective use of game work conditions or employer action.
design and game mechanics to drive Information management (IM)-Use of
employee engagement in non-gaming technology to collect, process, and condense
business scenarios. information with a goal of efficient
Geographic structure-Organizational management of information as an
) structure in which geographic regions define organizational resource.
the organizational chart. Intellectual property (IP)--Creations of
Globalization---Growing the mind such as inventions, literary and
interconnectedness and interdependency of artistic works, symbols, names, images, and
countries, people, and companies. designs used in commerce; as much an asset
--- as 1s physical p1;operty. · ·- - -
Grievance procedure--Provides an orderly
way to resolve differences of opinion in ISO 9000 standards--Series of standards,
regard to a union contract. developed/published by the Intemational
Organization for Standardization (ISO), that
Groupware--Umbrella tenn for specialized
define, establish, and maintain a quality
collaborative software applications.
assurance system for manufacturing and
Hacking-Act of deliberately accessing service industries.
another computer without permission.
Judgmental forecasts-Use of information
Halo effect-Occurs when an employee is from past and present to predict future
extremely competent in one area and is conditions.
therefore rated bjghly in all categories.
Key perforntance indicators (KPis)--
Histogram-Graphic representation of the Quantifiable measures of performance used
distribution of a single type of measurement; to gauge progress toward strategic
data is represented by a series of rectangles objectives or agreed standards of
)
of varying heights. performance.
)
Horn effect-Occurs when an employee Knowledge management (K.M)-Process
receives an overall low rating because of of creating, acquiring, sharing, and
)
one weakness. managing knowledge to augment individual
and organizational performance.
;-
© 2015 SHRM 391
}
KSAs-Knowledge, skills, and abilities (e.g., smartphones, tablet computers,

needed to effectively perform a job. notebooks, and digital readers).
Labor unions-Group of workers who Multi-criteria decision analysis
coordinate their activities to achieve (MCDA)-Decision-making tool in which a
common goals (e.g., better wages, hours, team determines critical characteristics of a
and working conditions; job security; successful decision; a matrix is used to score
training) in their relationship with an each altemative and compare results.
employer or group of employers; also called
Multinational enterprise (MNE)--
trade union.
Organization that owns or controls
Layoffs--Temporary employment production or services facilities in one or
separations; employees may be recalled to more countries other than the home country.
work, or the separation may become
Multiple linear regression-Statistical
permanent.
method that can be used to project futnre
Leniency errors- -Errors that are the result demand; more than one variable is utilized.
of appraisers who don't want to give low
Nominal group technique--Group of
scores.
individuals who meet face-to-face to
Line units-Work groups that conduct the forecast ideas and assumptions and prioritize
major business of an organization. lSSUeS.
Lockout-Occurs when management shuts Oflboanling--Process of managing the

down operations to prevent union employees way employees leave the organization.
from working.
Onboarding-Programs that help
Matrix structure--Organizational structure employees develop positive working
that C6mbines- relationshipswith coworkers; encomp_ass _ _ _ __
division and function to gain the benefits of orientation as well as the first months of an
both. employee's tenure in a position.
Measuring-----Process of collecting and Organizational development-Process of
tabulating data. enhancing the effectiveness and efficiency
of an organization and the well-being of its
Mediation-Method of nonbinding dispute
members through planned interventions.
resolution involving a third party who helps
disputing patties reach a mutually agreeable Organizational exit-Process of managing
decision; also known as conciliation. the way employees leave the organization.
Mergers and acquisitions (M&A)-- Outsourcing---Buying services externally
Combination of two separate finns either by rather than producing them internally.
their joining together as relative equals
Pareto chart-Vertical bar graph on which
(merger) or by one acquiring the other
bar height reflects frequency or impact of
(acquisition).
causes.
Metrics--Performance parameters based on
Performance appraisal-Process of
the relationship between two or more
measuring employees' adherence to
n1easures. performance standards and providing
Mobile learning-Digitized instructional feedback.
content delivered to wireless mobile devices
--- -----------
392 © 2015 SHRM

Performance management--Process of Scatter diagram-Tllustration that depicts

tnalntaining!in1proving employee job possible relationships between two
performance. variables.
Performance measnres·-Comparison of Service-level agreement (SLA)---Part of a
cuJTent performance against key service contract where the service
performance indicators (KPls). expectations are formally defined.
Performance standards--Expectations of Shared services HR rnodel-HR structural
management translated into behaviors and alternative in which centers with specific
) results that employees can deliver. aTeas of expertise develop HR policies in
) those areas; each unit can then select what it
Pluralism-· Type of labor environment in
needs from a menu of these services.
which multiple forces are at work, each with
its own agenda, and conflict is overcome Simple linear regression-Projection of
through negotiation. future demand based on a past relationship;
involves a single variable.
Primacy error-.Occurs when an appraiser
gives more weight to an employee's earlier Simulations-·Representations of real
performance and discounts recent situations; give organizations the
occurrences. oppmtunity to speculate as to what would
)
r " -
t1oVI' analys • u· 13m oft'ne
• 1s···· Jag·
happen if certain courses of action were
steps involved in a process. pursued.
Six Sigma·-A set ofteclmiques and tools
Product structure--Organizational
structure m · h fiunction a! departments
· wh1c for quality process improvement
) are grouped under major product divisions. Social media-Variety of online Internet
!----· Ralliealimn Beliefthat wanagemetrtit;:'l-Jaa'koo"'I"'- - .. tedmology.platfonnsand communities thatc-----
conflict is an inherent characteristic of people use to communicate and share
information and resources.
capitalism and can be resolved only with a
change in the economic system. Social movement unionism--Twe of
union activity that focuses on social topics
Recency error--Error that occurs when an
I such as antidiscrimination, environmental
appraiser gives more weight to recent
I actions, and HIVI AIDS treatment and
occurrences and discounts an employee's
prevention.
earlier performance during the appraisal
period. Software as a service (SaaS)-..·Software
that is oW11ed, delivered, and managed
I Regression analysis-Statistical method
remotely and delivered over the Internet to
) used to predict a variable from one or more
contracted customers on a pay-for-use basis
predictor variables.
or as a subscription based on 11se
Hepiacement planning· "Snapshot"
Span of conko!-Refers to the number of
assessment of the availability of qualified
individuals who report to a supervisor.
backup for key positions.
Staff units-Work groups that assist line
Restructuring-Act of reorganizing legal,
units by providing specialized services, such
ownership, operational. or other
as HR.
organizational structures.
I.
© 2015 SHRM 393
Strategy-A plan of action tor employer or group of employers; also called

accomplishing an organization's long-range trade nnion.
goals. Trend and ratio analyses-·-Use of statistics
Strictness-·Error that occurs when an to determine whether relationships exist
appraiser believes standards are too low and between two variables.
inflates the standards in an effort to make Turnover--Annualized formula that tracks
them meaningful. number of separations and total number of
Succession planning-A talent workforce employees per month.
management strategy to help identify and Unfair labor practice (ULP)-Violation of
foster the development of high-potential rights nnder labor-relations statutes.
employees.
Unitarianism-Belief that employers and
Supply chain-Network that delivers employees can act together for their
products and services from raw materials to common good.
end customers through an engineered flow
Workforce analysis-Systematic approach
of information, physical distribution, and
to anticipate human capital needs and data
cash.
HR professionals can use to ensure that
SWOT analysis-Process for assessing an appropriate knowledge, skills, and abilities
organization's strategic capabilities in will be available when needed to accomplish
comparison to threats and oppmtunities organizational goals and objectives.
identified during environmental scanning.
Workforce management-All activities
Talent management-Development and needed to ensure that the skills, knowledge,
integration of HR processes that attract, abilities, and performance of the workforce
develop, engage, and retain the knowledge, meet cun·ent and future organizational and
skills, and abilities of employees that w1li individual needs.
meet cunent and fntnre business needs.
Workforce planning-Process of analyzing
Theory of constraints (TOC)-·Systems the organization's workforce and
management philosophy that states that determining steps required to prepare for
every organization is hindered by constraints future needs.
that come from its internal policies.
Worldlife balance (WLB)-Umbrella term
Total quality management (TQM)- used to describe a variety of benefit-related
Strategic, integrated management system for initiatives to help employees effectively
achieving customer satisfaction that involves manage work, family, andpersonallife .
all managers and employees and utilizes without extreme stress or negative Impact.
quantitative methods to continuously
Works councils---Groups that represent
improve an organization's processes.
employees, generally on a local or finn
Trade union.. --Group of workers who level; primary purpose is to receive from
coordinate their activities to achieve employers and to convey to employees
common goals (e.g., better wages, hours, infmmation that might affect the workforce
and working conditions; job security; and the health of the enterprise.
training) in their relationship with an
394
BoB ("best ofbreed") HR!S options, 355--
356
absence rate, 54 boycotts, 283
accountability, 16 "bring youi· own device," 324
accounting/finance business ti.mction, 22- budgeting, 23
24,28 business acumen competency, 61, 110--111,
accmals, 54
135,373
activities/tasks, in staffing plan, I 59, 162- business functions. See core business
163 functions
activity-based budgeting, 23 business iife cycle, 29
ADDIE model, 92 business process integration, 318
administrative human resources role, 8-9, business results, 191-1 92
10 BYOD ("bring your own device"), 324
ADR (alternative dispute resolution), 288-
)
)
299
altemative dispute resolution, 288-299
c
alternative staffing, 175-176 career management, 192
) category rating performance appraisal
analytics, 332--333,338--341,347 348
applicant yield ratio, 54 methods, 183
application service providers, 319-320 cause-and-effect diagrams, 106, 107
) arbitration, 273, 289 CBA (collective bargaining agreement),
ASPs (application service providers), 319- 274
J_______:mr------·--------- ·----- - - CBA(cost-bi.meht analysis), 102
J attitude surveys, 252 centers of excellence, 46
at-will employment, 230--231 central tendency error, 189
audits, human resources, 51- 53 centralized human resources structure, 43-
)
44
chain of command, 30
change readiness, 94
balanced scorecard, 49-51, 191 check sheets, 106, 107
)
Baldrige Performance Excellence Program, checklist performance appraisal method,
105 183
) BARS (behaviorally anchored rating scale) chosen officer, in alternative dispute
performance appraisal method, 186-188 resolution, 289
behaviorally anchored rating scale "click this link" scams, 374
perf(mnance appraisal method, 186-188 climate surveys, 252
) "best of breed" HRTS options, 355-356 cloud computing, 319, 320-323
best practices audits, 52 code of ethics, 7
) bias, 189 codetermination, 268-269
)
"big bang" approach to integration of human COEs (centers of excellence), 46
resource infom1ation sytems, 362---363 collaboration, 324 325, 367-370
)
"big 343-346 collective bargaining, 271-274
blogs, 207, 325 co11ective bargaining agreement, 274
)-
© 2015 SHAM 395
I
ORGANIZATION Index
communication Crosby, Philip B., I 04

competency, 312 culture, assessment. of, 95, 122--123
employee, 251-253 customized off-the-shelf HR!S systems,
plans, 159,164--165 355
platforms, 206-209
technology, 376-377 D
community groups, relation to labor unions
270-271 ' dashboards, 359
comparative performance appraisal methods, data
183--184 access, 356-359
compliance audits, 52 "big," 343--346
conciliation, 273 privacy, 226
conflict resolution, 285-292 security, 328, 360, 373-375
constructive discipline, 296-298 database management systems, 360
consultation competency, 47 databases, 359-360
continuous approach to integration of human DBMS (database management systems)
resource information sytems, 362-363 360 ,'
continuous improvement, in staffing plan, de centralized human resources stmcture,
44
159,165-166
contractors decision making
independent, 229 authority, 29, 132
tbird-party, 47-48 group, 101-102
contracts movement of, 15
administration/enforcement of, 275-276 decision-maker access, 359
employment, 229-231 dedicated human resources structure 45
46 ' '
1 negotiation of, 271-274 Delphi technique, 150-151 ----
'1 contrast error, 189 demand analysis, 143, 149-152
II
1 control chmts, I 05-106, 107 Deming, W- Edwards, ! 04
core business functions, 21-22 demographics, changes in, 12
finance/accounting, 22·-24, 28 depmtment communication meetings, 253
human resources, 27, 28 departmentalization, 31
information technology, 26-27, 28 development, HR technology applications
marketing and sales, 24, 28 · for, 311
operations, 25-26, 28 discipline of employees, 293-299
research and development, 28 diversity
cosourcing, 47-48 HR technology applications for, 311
cost per hire, 54 programs, J 03
cost-bcneiil analysis, 102 divestiture, 133
COTS (customized oft:the-sbell) I-IRIS DMADV process, 109
systems, 3 55 DMAIC process, 109
credentialing, 7 documentation of employee performance
critical evaluation competency, 37, 88, 166, 190-191 '
254, :no downsizing, 132, 133--135
critical incidents performance appraisal due diligence, 112--63
method, 185 due process, 296
© 2015 SHRM
396
ORGANIZATION Index
F
economic disruptions, 11 feedback, 249-253
electronic record keeping, 318-319 field review perfonnance appraisa1method,
electronic signatures, 318 185
employee communication, 251-253 finance/accounting business function, 22-
employee complaints, investigation of, 292- 24,28
293 Fitz-enz. Jac, 333-334
employee conflict, 285-292 flexible staffing, 175
employee discipline, 293-299 flow analysis, 148-149
employee engagement, 31 1, 338 forced choice perfonnance appraisal
employee growth and rewards, 192 method, 183
employee involvement, 243-246 forced distribution performance appraisal
employee performance, 180, 190-191 method, 184
employee recognition/reward, 246-251 force-field analysis, l 02
)
employee relations, 214,217-219 fon11alization, 31
global, 233-235 formula budgeting, 23
HR technology applications tor, 311 front-back structure, 34-35, 36, 131
role of managers/supervisors, 253 functional human resources structure, 44, 46
) strategies, 231-235 functional structure, 31, 32, 33, 36, 130
sustainable, 240-241 function-specific audits, 52
employee rights, 219, 221-229
employee seJt:servicc, 325, 358 G
employer associations, relation to lahor
gamification, 324
1 unions, 270-271
gap analysis/identification, 92-95, 143,
J- ----=employer rightsL219, 220-221 - - - - - 152 15 I - '----
employment contracts, 229-231
general strikes, 283
employment laws/regulations, 225--229, 311
generalists, human resources, 43
employment, separation of, 226-228
geographic structure, 32, 33-34, 36, 131
encryption, 360
globalization, 12-13,249
) enterprise resource planning, 348-349
glocalized approach to globalization, 249
environmental scanning, 149
! goals, 156, 177-179
e-procurement, 31 8
) Goldratt, Eliyahu M., 108
ERP (enterprise resource planning), 348-
govern1nents
349
relation to labor unions, 270-271
) errors, perfonnance appraisal, 188-189
role in employee/union complaints, 290
ESS (employee self-service), 325, 358
l graphic scale performance appraisal method,
essay pcrfonnancc appraisal method, 184
Jtl3
ethical practice competency, 14, 116-117,
grievances, 275-277
181,224,323
group decision making, l 0 J -l 02
ethics
group performance appraisals, I S2
code of, 7
groupware, 367--368
and human resources, 7, 13-14
expansion, 132
extended organizations, i 5, 132-133
external environment, 36-3 7 hacking. 328, 373-375
extranets, 206 halo effect, 1B8
)-
© 2015 SHRM 397
l
11
ORGANIZATION Index
I hierarchy, layers of, 30 human resources portals, 325, 357 358
I high involvement, 244

histograms, I 06, 107
horn effect, 188
human resources practices, global, 242-
243
human resources processes, 41-42
HRIS. See human resource infonnation human resources research, 7
systems human resources role, 4--5, 7-11
I human capital, 54, 64, 338

human resource competency, 361
human resource information systems, 205-
in conflict resolution, 286-287
in contract negotiations, 273-27 4
I
in employee discipline, 298-299
206,353 in employee involvement, 244-246
"best of breed" options, 355-356 in industrial actions, 285
customization of, 355 in litigation, 291
implementation of, 361-363 in organizational effectiveness/
in-house development of, 354 development, 86-87, 109-116
integrated, 355-356 in organizational strategy, 59-69
selection of, 353-360 in technology management, 317
systems integration, 362-363 in workforce management, 128
outsourcing development of, 355 human resources shared services model, 45,
human resources, 27-28, 41 46
human resources, alignment with strategic human resources standards, 341-343
plan, 63--66 human resources strategy, 67-69
human resources and "big data," 343- human resources structure, 43-46
346 human resources team, 42-43
human resources, and legal environment, human resources value, demonstrating, 48-
219 54
human resources and organizational --------h.
strategy, 59-69 human rights standards, 221-224
human resources, and works councils, 269- hybrid stmctures, 34-35, 36, 131
270
human resources as profession, 7-8
human resources audits, 51-53
ILO (International Labor Organization)
!
II
j
I
human resources centers of excellence,
46
human resources, centralized, 43--44
labor standards, 222-223
IM (infotmation management), 312-316
incremental budgeting, 23
human resources code of ethics, 7
independent contractors, 229
human resources credentialing, 7
individual performance appraisals, 182
human resources, decentralized, 44
industrial actions, 282-284
human resources, dedicated, 45, 46
industrial relations, 218
human resources, functional, 44, 46
industry associations, relation to labor
human resources infonnation technology,
unions, 270-271
205-209
influence, 61-62
human resources metrics, 53-54
infonnation management, 312-316
human resources mission statements, 68
information security. See data security
human resources national organization, 7
infonnation sharing, tools for, 324-325
human resources outline of knowledge/
information technology. See technology
competencies, 7
intellectual property, 220
398 © 2015 SHRM

ORGANIZATION Index
internal evironment, 35 managers, role in employee relations, 253

international framework agreements, 263 M&A (mergers/acquisitions), 133
international groups, relation to labor marketing and sales business function, 24,
' : unions, 270-271 28
international human rights standards, 221- matlix structure, 35, 36, 131
224 MBO (management by objectives)
International Labor Organization labor performance appraisal method, 185-186
standards, 222--223 MCDA (multi-criteria decision analysis),
intemationalization of unions, 262 102
interpersonal intervention strategies, 99 measures, 332-333, 347-348
intranets, 206 mediation, 273, 289
investigations of employee complaints, 292- mergers/acquisitions, 133
293 metrics, 53-54, 332-338, 347-348
involvement, employee, 243-246 mission statements, 68
IP (intellectual property), 220 mobile learning, 324
ISO 9000 standards, I 05 MSS (manager self-service), 325,358-
359
J,K,L multi-criteria decision analysis, l 02
multifaceted groupware, 368
job design, 83
multiple linear regression, !52
job involvement, 243
judgmental Jorecasts, 149-152
Juran, Joseph M., 104 N,O
key indicators, 49 narrative performance appraisal methods,
key talent retention, 54 184-185
,_____ _KM.(lmow]edge management),-200.205,. negotiati<m, 61--6k-------
314--316 networking, 375-376
knowledge management, 200-205, 314-316 NGOs (nongovernmental organizations),
KP[s (key performance indicators), 49 relation to labor unions, 270--271
labor supply, 11 nominal group technique, 151-152
labor unions, 259-266 nongovernmental organizations, relation to
layoffs, 227 labor unions, 270-271
leadership objectives
depth, 338 S.M.A.R.T., 156
quality, 338 tactical, 155-157
learning, 193, 311 OD (organizational development). See
leniency error, 189 organizational effectiveness/
line units, 33 development
localized approach to globalization, 249 OECD (Organisation for Economic Co-
lockouts, 284 operation and Development) Guidelines
for Multinational Enterprises, 223
M OED. See organizational effectiveness/
development
management by objectives performance
offboarding, 134
appraisal method, 185-186
ombudsperson, 289
n1anager self-service, 325, 35X--359
onboarding, 162
managerial estimates, 150
one-on-one cont1ict resolution, 287--288
© 2015 SHRM 399

ORGANIZATION Index
open-door meetings, 252-253 performance appraisal, 181-182

open-door policy, in alternative dispute errors in, 188- i 89
resolution, 289 meeting, 189-190
operational human resources role, 9, 10 -11 methods, 183-188.
operations business function, 25-26, 28 See also performance management
opinion surveys, 252 performance management, 81-82, 177, 178,
Organisation for Economic Co-operation 193
and Development Guidelines for business results and employee growth,
Multinational 223 19!-192
organizational design, 28-29 and employee performance, 180
organizational development. See measurement/feedback, 181-182
organizational effectiveness/ and organizational values/goals, 177-
development 179
organizational effectiveness/development, perfonnance standards, 179-180
74,77-78,85-86 performance standards, 179-180
benefits of, 83-85 person-to-person meetings, 252-253
communication of, I 11-114, 115-1 I 6 PEST (political, economic, social,
evaluation of, 12 I -123 technological) factors, 36-37
gap identification, 92-95 phishing, 374
human resources role, 86-87, l 09- picketing, 283
116 pluralism, 218
j
initiatives/interventions, 99-109, 135- podcasting, 207
137 policies, technology, 367-377
and job design, 83 p011als, 325, 357-358
I and organizational structure, 83 primacy error, 189
performance ii1m1agem:c:ec::ncct,'8ocl'-'8"'2.------- -pi'ivacy, data, 226
I process, 78-79 process- flow analysis, l 05
strategies, 79-83 product stmcture, 32, 33, 36, 130
and talent development, 79-8 I promotion pattern, 54
tools, 100-109
workforce support for, 99-100 O,R
organizational exit, 134
QS ("quantified self'), 326
organizational goals, 177--179
quality
organizational growth/retraction, 14-15
control tools, 105-107
organizational strategy, 59-69
initiatives, 103-109
organizational structure, 15, 29-35, 83, 85,
standards, I 05
130-131' 132
"quantified self;" 326
organizational values, 177--179
radicalism, 217-218
orientation, 162
R&D (research and development) business
outsourcing, 4 7-48
function, 24-25, 28
ranking performance appraisal method, i 83-
p 184
_paired-con1parison performance appraisal recency error, 188
method, 184 recognition/reward, of employees, 246--251
Pareto charts, 106, 107 record keeping, electronic, 318-319
peer review, 289 redepol yment, i 62
----------==
-- ----- ----------
400 © 2015 SHRM

ORGANIZATION Index
reductions in force, 227 single designated otllcer, in alternative

)
regression analysis, 152 dispute resolution, 289
relationship management competency, 114 sit-down strikes, 283
115,201,274 Six Sigma, 108-109
religious institutions, relation to labor skip-level interviews, 252
unions, 270-271 SLAs (service-level agreements), 321-322
relocation, 162 social engineering, 374--375
replacement planning, 193 social media, 207-209, 325, 370-375
research, 7 social networking, 325
research and development business function, social networks, 375-376
24-25,28 software as a service, 319-320, 355
resources, in staffing plan, 159, 164 solution analysis, 143, 158
restmcturing, 131--135 span of control, 30
retaliation in workplace, 291-292 specialists, human resources, 43
retum on investment, training, 54 staff units, 33
RlFs (reductions in force), 227 staffing
risk management, HR technology alternative, 175 176
applications for, 311 flexible, 175
plan, 159-166
)
s stakeholders, in staffing plan, 159, 160-161
SaaS (sol\ware as a service), 319-320,355 standardized approach to globalization, 249
sales and marketing business function, 24, standards
28 human resources, 341-343
scatter diagrams, 106, 107 human rights, 221-224
_ _ _ _ _ _ _ _ __ performance, 179--1 80
1_ _ _ _
selection, 162 -·sraternent of purpose, ni-staffing plan, 159, 160
self-service human resource systems, 325, statistical forecasts, 152
358359 strategic audits, 52
separation of employment, 226-228 strategic human resources role, 9" 11
service-level agreements, 321-322 strategic orientation, 29
shared services human resources model, 45, strategic plan, alignment of human resources
46 with, 63-66
SHRM Body of Competency and strategy
) Knowledge behavioral competencies as driver of restructuring, 131
business acumen, 61, 110-111, 135,373 HR technology applications for, 311
communication, 312 organizational, 59-69
consultation, 47 strictness error. 189
critical evaluation, 37, 88, 166, 254, 370 strikes, 283
ethical practice, 14, I 16--117, lSI, 224, structnra1 intervention strategies, 99
323 success ratio, 54
hun1an 361 succession planning, 192-! 95
relationship management, 114-115, 201, suggestion involvement, 243
274 supervisors, role in employee relations, 253
) simple linear regresslon, 152 supply analysis, !42, 143, 144-149
simulations, 152 sustainabi!ity, 31 1, 326-327
)
sustainable employee relationships, 240-241
© 2015 SHRM
401
ORGANIZATION Index
SWOT (strengths, weaknesses, oppmtunities,

threats) analysis, 37, 153
u' v
ULPs (unfair labor practices), 282, 284
sympathy strikes, 283 .
UN Global Compact, 221-222
systems theory, I 04··1 05
unfair labor practices, 282, 284
union acceptance/avoidance strategies, 232-
T 233
tactical objectives, 155-157 unit communication meetings, 253
talent acquisition, 162, 311 unitarism, 218
talent development, 79-81 vacancy costs, 54
talent management, 170-177 value
talent pools, 171 -173 of human resources, 48-54
talent retention, 54, 311, 338 of organizational effectiveness/
team building, development initatives, 121-123
team members, in staffing plan, 159, 163- values, organizational, 179
164 vidcoconferencing, 368
technology, 12 virtual meetings, 206-207
advancesin,316-328 vision statements, 68
business function, 26-27, 28 wearable technologies, 326
for human resources, 306-307, web conferencing, 368
309-312
policies, 367-377 H\f
'%1\f,
X" ,.Y,
u,
teleconferencing, 368
work/life balance, 12, 17 6
368
work process intervention strategies, 99
theory of constraints, l 08
workforce analysis, 141-142, 143
II --- - 288 289 demand analysts,
I third-party contractors, 47-4S
gap analysis, 143, 152--157
TOC (theory of constraints), 108
solution analysis, 143, !58
total quality management, l 03-104
supply analysis, 142, 143, 144-149
total rewards, HR technology applications
workforce, changes in, II 12
for, 311
workforce management, 128, 311
TQM (total quality management), 103-104
workforce planning, 141. See also
trade agreements, 224-225
workforce analysis
trade unions. See labor unions
workplace, changes in, 11-12
training, 193
"workplace of the future," 324
training return on investment, 54
workplace retaliation, 291-292
transfer, 54
works councils, 259-260,
treaties, 224-225
work -to-rule, 283
trend and ratio analysis, 145--146
World Trade Organization standards, 224
turnover
WTO (World Trade Organization)
analysis, 146-148
standards, 224
costs, 54
zero-based budgeting, 23
rate, 54
402 © 2015 SHRM

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SHRM Learning System 2015 - Organization

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Structure of the HR Function

Organizational Effectiveness & Development

ASSESS YOUF: CURRENT KNOWLEDGE

STUDY YOUR WAY TO SUCCESS

·D Read a learning module in print or on an e-reader.

PASS YOUR EXAM WITH CONFIDENCE

D Complete the post-test.

D Review the test-taking tips.

SDC!l-f \ FOR HUMP.,N

SubjeL·t matter experts

Func:tiona! Area #5: Structure of the HR Functicm .............................................................2

Section 1: The Strategic Role ofHR. ...................................................................................... 6

Section 2: Understanding the Organization ........................................................................ 20

l Section 3: The HR Organization ......................................................................................... .40

OED Strategies ................................................................................................................... 79

Section 2: Organizational Gap Identification ...................................................................... 91

Section 3: Implementing OED Initiatives ............................................................................ 98

Section 4: Measuring Organizational Effectiveness and Development .......................... 120

Functional Area #7: Workforce Management .................................................................. 126

Introduction .......................................................................................................................... 128

Section3: Employee Development ..................................................................................... 169

Section 4: Knowledge Management ................................................................................... 199

l Functional Area #8: Employee Relations .........................................................................212

Introduction .......................................................................................................................... 214

Section 1: The Employment Relationship ......................................................................... 216

Section 2: Sustainable Employee Relations ....................................................................... 239

Section 3: Third-Party Influences on Employee Relations .............................................. 258

Section 4: When the Employee Relationship Falters ........................................................ 281

Functionai Area #9: Technology and Data ...................................................................... .304

) .1 ntroduction .......................................................................................................... ,..... ,......... 306

) Section 1: HR and Technology ............................................................................................ 308

Information Management. ................................................................................................ 312

Section 2: HR in the Era of Big Data ................................................................................. 331

Section 3: HR Information Systems (HRIS) ...................................................................... 352

Section 4: Policies for Technology Use in the Workplace ................................................ 366

J Throughout the module, brief scenarios describe how the behavioral

While tli1s-inodule includes legal content, it should not be construed as legal

Vaill's foresight has proved prophetic, as organizations-and the humans within

HR now "plays merely administering policies and procedures but

Participation in creating the organization's business strategy, for

e Aligning the HR strategy with the organization's strategy, for example:

The necessity for strategic alignment requires that the HR professional

The Evolving Role of the HR Professional

• An established, comprehensive outline of necessary knowledge

As an increasing number of organizations operate in a worldwide environment,

HR in the 20th Century

As the business environment changed, HR changed as welL In the first half of

As their organizations changed, HR practitioners developed expertise in the

Figure 1: HR in the 20th Century

systems (HRTS) manage HR data (e.g., employee records) and create

HR in the 21st Century

These higher-level activities are sometimes referred to as "transformational,"

Strategic HR activities may include:

Figure 2: HR's Integrated Roles

The HR role as strategic partner has transformed the traditional administrative

Strategic Administrative Role

Strategic Operational Role

Changes That Impact the HR Profession

) o Economic disruptions, both short-term and long-term, force organizations to

• Fluctuations in labor availability (either a shmiage or oversupply of potential

• Employees are increasingly concerned with finding a balance between their

o The persistent march of technology will continue to transform the way

higher value. Globalization also presents opportunities for collaboration: