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Strategic Human Resource

Development
K. Peter Kuchinke
Professor, Human Resource Development
University of Illinois at Urbana-Champaign
Yuan-Ze University, April 2008
Outline
• Strategic HRD
– Context, models, and definition
• Applications
– Human Capital Formation, Organizational Learning,
and Implications for Life-long Learning Policies
• Case Examples
The “New” HRD
• Employees as org. assets
• Driving business strategy
• Spanning organizational functions
• HRD Deliverables:
– Performance
– Capacity Building
– Problem solving/consulting
– Org. change and development
The “New” HRD
• Employees as org. assets
• Driving business strategy
• Spanning organizational functions
• HRD Deliverables:
– Performance
– Capacity Building
– Problem solving/consulting
– Org. change and development
Strategic HRD
• Integration of HRD with strategy formulation and
implementation
• Long-term view of HR policy
• Horizontal integration among HR functions
• Vertical integration with corporate strategy
• SHR as core competitive advantage
Firm Capitals
• Human Capital
– Knowledge, skills, abilities of individuals
• Social Capital
– Relationships in social networks
• Structural, cognitive, relational dimensions
• Intellectual capital
– Knowledge and knowing capability of social
collectivities
• Procedural/declarative; tacit/explicit; individual/social
• Value and Uniqueness of capitals
Multiple Roles for HR (Ulrich,
1997)

Future/Strategic Focus

Mgmt of SHR Mgmt of Trans-


Formation/Change
Processes People
Mgmt of Firm Mgmt of Employee
Infrastructure Contributions

Day-to-day/Operational Focus
Definition of HR Roles

Role/Cell Deliverable/ Metaphor Core Activity


Outcome

Mgmt of SHR Executing corp. Strategic Partner Aligning HR and


strategy bus. Strategy

Mgmt of Firm Building an efficient Administrative Reengineering org.


Infrastructure infrastructure Expert Processes

Mgmt of Employee Increasing employee Employee ChampionProviding resources


Contributions commitment and to employees
capability

Mgmt of Organizational Change Agent Managing


Transformation/Cha renewal transformation and
nge change,
Universal/Best Practice Models

• TQM
– Corporate culture, communications, voice/involvement, job design,
training, performance measurement/evaluation, rewards, health/safety,
selection/promotion, career development
• Peters and Waterman “In search of excellence”
– Org. culture, leadership, customer focus, core competency
• High involvement management (Lawler)
– Developing skills and knowledge, pay for performance, investment in
HR, flexible operations, self-designing work systems, autonomous work-
teams
Universal HR Models
• Pfeffer (1998)
– Employment security
– Selective hiring
– Self-managed teams/decentralization of decision-making
– Comparatively high pay linked to firm performance
– Extensive training
– Reduction of status differentials
– Shared information
• Quality Awards (M. Baldrige, State Awards, etc.)
– HR Focus (work systems, education/training, well-being and
satisfaction)
Human Capital Architecture

Uniqueness of HC: High

Quadrant 4: Quadrant 1:
Empl’t Mode: Internal development

HC Value: High
Empl’t Mode: Alliance
HC Value: Low

Empl’t Rel.: Partnership Empl’t Rel.: Organization focused


HR Configuration: HR Configuration: Commitment
Collaborative

Quadrant 3: Quadrant 2:
Empl’t Mode: Contracting Empl’t Mode: Acquisition
Empl’t Rel.: Transactional Empl’t Rel.: Symbiotic
HR Configuration: Compliance HR Configuration: Market-based

Uniqueness of HC: Low


Architecture of Intellectual Capital

Uniqueness of IC: High

Idiosyncratic Core Knowledge


Knowledge

IC Value: High
IC Value: Low

Ancillary Knowledge Compulsory Knowledge

Uniqueness of IC: Low


Contingent HRD (Kuchinke, 2004)
• Propositions
– HRD Structure and Staffing Industry Specific
– HRD Investments conservative (System
Maintenance vs. change)
– HRD Core Processes Determined based on
Perceived Utility
Strategic HRD Roles
• Swanson/Toracco (1995):

• Helping implement strategy


• Helping determine strategy
• Setting strategy
Human Capital Formation
• Acceleration in changing organizational forms,
roles, and processes
– External:
• Globalization
• Technology
• Demography
• Competition
– Internal:
• Cycle time
• Product innovation and introduction
• Process innovation and improvement
• Change as constant; ‘permanent white water’ (P.
Vaill)
• Shortened half-life of knowledge
Nature of Work
• Robert Reich: The work of nations (1991)
– Routine production
– Personal Service
– Symbolic Analyst
• Normative and rational models of management (Barley & Kunda,
1992)
– Industrial betterment (1870 - 1900)
– Scientific management (- 1923)
– Welfare capitalism/human relations (- 1955)
– Systems rationalism (- 1980)
– Organizational culture (- present)
– Correlates with economic expansion/contraction, environmental and
technical certainty/uncertainty: Kondratieff longwaves)
HR Capitals
• Human Capital
– Individual level store of knowledge, skills, abilities
(e.g., Becker)
• Social Capital
– Group level, network characteristics, density,
centrality, marginality (e.g., Adler and Kwon, 2002)
• Intellectual Capital
– Firm-level, formal (e.g., patents), informal (e.g.,
process knowledge (e.g., Nahapiet & Ghoshal, 1999)
Organizational Learning
• Information processing perspective
– Environmental scanning, information
acquisition, interpretation (Daft and Weick,
1984)
– Information acquisition, storage,
dissemination, interpretation (Huber, 1991)
– Tacit -- explicit knowledge (Polyani, 1967)
– Org. Knowledge creation spiral (Nonaka,
1995)
Learning Organization
• Senge (1991)
– Systems thinking
– Personal mastery
– Mental models
– Building shared vision
– Team learning
• Marsick and Watkins (1998)
– Continuous learning at individual, group, and system levels
– Knowledge generation, sharing, and evaluation
– Systems thinking capacity
– Employee participation and accountability
– Supportive culture and structure
Human Capital Formation
• Firm-level
– Corporate classrooms (Eurich, 1984)
– US: $65 b/2006 direct cost, $220b total
– 45% of firms provide formal training
– 90+ hours per year
– External training
– Corporate universities
– Non-US examples
– Informal training, on-the-job training, action learning
OECD Human Capital Research
• OECD (1999)
– Formal education,
– Non-formal/enterprise-based training and labor
market initiatives
– Experiential learning
– Learning in informal environments
• HC Measurement:
– Educational attainment, i. e.: years of schooling etc.
– Adult skills (i.e.: reading, math)
OECD Human Capital Research
• Measures of investment
– Expenditures on education and training
– Time investment
• Returns on investment
– Employment patterns
– Earnings
– Firm-level outcomes
– National level outcomes
– Social benefits
– Health outcomes
– Crime, teen pregnancy
OECD Human Capital Research
• Policy issues
– Adequate levels of HC investment
– Appropriate sharing of investment costs
– Optimal allocation of scarce resources
– Equitable distribution of investments
– Monitoring, measuring, and accounting
Firm-level HC formation
• Accountability and measurement
• Business/education partnerships
• Life-long learning
• Burden-sharing
• Technology and innovative learning
strategies
Johnson Diversey Case
Current vs. Future State of HR
Strategic Partner Change Agent

35
20

25
40

Administrative Expert Employee Advocate


Current vs. Future State of HR
Strategic Partner Change Agent

35
20

25
40

Administrative Expert Employee Advocate


OD Responsibility

Level & Process Owner

Global - OD Team

Regional - Head HRBP

Client - HRBP Manager


Organization Development
Roles & Responsibilities
• The OD COE has a dual responsibility
o Global implementation of strategic interventions
 Cultural assessment and alignment
 Performance Management
 Succession Planning
 Leadership Bench strength
o Support to HRBPs on regional and client interventions
 Process improvement tools
 Intervention design
 Knowledge transfer of OD skills
Global OD Model

Leadership Team

Business Measures
Strategy Of
Effectiveness

HR/OD

Emerging
Solutions
Needs/
Feedback

HR Business Partners
Global OD Services
• Program Management of global initiatives -
– Core Employee Development
– ES&D
– Performance Management
– Leadership Development
– Consultation with senior leaders regarding -
– Customized interventions
– Assessment tools
• Services contracted with HRBPs (based on the
capacity of the OD COE) -
– Regional OD intervention design
HRD in Practice
3M Company: Industrial Markets Initiative
(IMI)
• 3M: 75,000 employees in 60 countries
• Sales: US$ 15 Billion, 303rd on Fortune
500 list
• IMI: Cross-Business Cooperative
Strategic Effort with 6 divisions
– Gap Analysis
HRD in Practice
East Central Minnesota Human Resource
Development Partnership
• 5 family-owned businesses/rural MN
• Total workforce: 300, range 12 - 123
• Pine Technical College
• WorkKeys assessment and training
– Problems Solving; Interpersonal Skills, Communication
Skills
HRD in Practice
Lucent Technologies
• Global Fortune 50 Telecommunication
Co, 140,000 employees, US$28 Billion
Revenue
• Leadership and Culture Audit for 2 US
and 1 German production sites
HRD in Practice
Parkland College, Champaign, Illinois
• Publicly funded community college in
East Central IL
• 17,000 Annual Students, 50% in
Occupational programs
• Business Training Center
• Workforce Preparation Center
HRD in Practice
HRD responds to
• Global Challenge
• Quality Challenge
• Social Challenge
• High Performance Work Systems
Challenge
Source: R. A. Noe (1999): Employee Training and Development
HRD Definitions
HRD is…
“the integrated use of training and
development, organization development,
and career development to improve
individual, group, and organizational
effectiveness.” (McLagan, 1989)
HRD Definitions
HRD is…
“a process of developing and/or
unleashing human expertise through
organization development and
personnel training and development for
the purpose of improving performance.”
(Swanson, 1995)
HRD Careers
• Classic Roles (McLagan, 1996)
– HR Strategic Advisor
– HR systems designer
– Org. Change Consultant
– Org. Design Consultant
– Learning Program Specialist
– Instructor/Facilitator
– Individual development and career consultant
– Performance Consultant
– Researcher
Roles and Job Titles in HRD
• Advertised as
– Instructional designer
– Trainer
– Training and development specialist
– HR specialist
– Learning systems architect
– Chief learning officer
– Education specialist
– …..
Example: HRD Consulting Firm
• Process Mgmt International
– Focus: Quality Management, ISO 9000, Org. Change
– Products: Seminars, consulting, assessments, books
– Size: 50 employees
• Instructional Design (5), Trainers (10), Consultants (25), Admin (10)
– Strategic Alliances in Europe
– Revenue (2005): $5,000,000
– Clients: Chevron, IRS, Zytec, Medtech, Graton Beverages
HRD in Practice
East Central Minnesota Human Resource
Development Partnership
• 5 family-owned businesses/rural MN
• Total workforce: 300, range 12 - 123
• Pine Technical College
• WorkKeys assessment and training
– Problems Solving; Interpersonal Skills, Communication
Skills
HRD in Practice
Lucent Technologies
• Global Fortune 50 Telecommunication
Co, 140,000 employees, US$28 Billion
Revenue
• Leadership and Culture Audit for 2 US
and 1 German production sites
HRD in Practice
Parkland College, Champaign, Illinois
• Publicly funded community college in
East Central IL
• 17,000 Annual Students, 50% in
Occupational programs
• Business Training Center
• Workforce Preparation Center
Example: Multinational Corporation

• Abbott Laboratories
• 60,000+ employees in 120 countries
• Five divisions
• Corporate and division level HRD
• Director of Training and Organizational Development, Ph.D. HRD
• Staff of 15 (instructional designers, trainers, OD consultants)
• Performance Management, Leadership Development, Quality
Management, Expatriate Training, New employee orientation,
regulatory/mandated training
• Diversity Initiatives
• Clients: Everybody!
• Divisional and corporate roles (committees, councils, strategic
planning)
HRD in Practice
3M Company: Industrial Markets Initiative
(IMI)
• 3M: 75,000 employees in 60 countries
• Sales: US$ 15 Billion, 303rd on Fortune
500 list
• IMI: Cross-Business Cooperative
Strategic Effort with 6 divisions
– Gap Analysis
Careers in HRD
• Faster than average growth (DOL) through 2014
www.bls.gov/oco/ocos021.htm
• Over 800,000 people employed in HR/HRD jobs (2005)
• About 600,000 people engaged in learning activities, organizational
HRD
• Trends:
– Better preparation of HRD professionals
– Focus on Strategic HR
– Technology, International, Diversity
– Broader career options and career paths
– Competition for good jobs
– Strong employment opportunities outside of US
Trends in Professional HRD Work
• Higher Visibility
• Higher Accountability
• Greater Cross-Functional Involvement
• Higher Performance Demands
• Multiple Projects
• Greater need for comprehensive business
knowledge
• Need for solid research and theory know-how