Professional Documents
Culture Documents
Chapter 22
Strategic HR Management & Planning
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Human
Human Resources
Resources as
as aa Core
Core Competency
Competency
• Strategic Human Resources Management
The use of employees to gain or keep a competitive
advantage, resulting in greater organizational
effectiveness.
• Core Competencies
The unique capabilities of employees in an
organization that create high value and that
differentiate the organization from its competition
The source of an organization’s sustainable
competitive advantage.
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Strategic
Strategic HR
HR Management
Management Process
Process
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Global
Global Factors
Factors
• Types of organizations
Import/export
Multinational Enterprises (MNEs)
Global organizations
• Legal, Political & Economic Factors
Unstable environments, unions, compliance issues
• Cultural Factors
Hofstede’s five dimensions
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Organizational
Organizational Effectiveness
Effectiveness and
and
Strategic
Strategic HR
HR Management
Management
• Effectiveness
The extent to which goals have been met.
• Efficiency
The degree to which operations are done in an
economical manner.
• Dimensions of Organizational Effectiveness
Organizational productivity
Financial contributions
Service and quality
Organizational culture
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Organizational
Organizational Productivity
Productivity and
and HR
HR Efforts
Efforts
• Productivity
A measure of the quantity and quality of work done,
considering the cost of the resources used.
A ratio of the inputs and outputs that indicates the value
added by an organization.
Unit labor cost: computed by dividing the average cost of
workers by their average levels of output.
• Improving Organizational Productivity
Organizational restructuring
Re-designing work
Aligning HR Activities
Outsourcing analyses and assistance
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Approaches
Approachesto
toImproving
ImprovingOrganizational
OrganizationalProductivity
Productivity
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Organizational
Organizational Effectiveness
Effectiveness and
and Financial
Financial
Contributions
Contributions of
of HR
HR
• Return on Investment (ROI)
Difficult to determine returns for
HR contributions which affect
many facets of the business
Former view of HR as a “cost
center”
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Customer
Customer Service
Service and
and Quality
Quality Products
Products
Linked
Linked to
to HR
HR Strategies
Strategies
• High quality products and services are the
results of HR-enhancements to organizational
performance.
Staffing
Customer service
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Organizational
Organizational Culture
Culture and
and
Organizational
Organizational Effectiveness
Effectiveness
• Organizational Culture
The shared values and beliefs in an organization
Strategy and culture must be compatible and aligned
for the organization to be effective.
Culture affects recruitment and retention of
employees.
Culture can enhance or constrain organizational
performance.
Culture is the “climate” of an organization.
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HR
HR Planning
Planning
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HR
HR Planning
Planning Process
Process
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Human
Human Resource
Resource Planning
Planning (cont’d)
(cont’d)
• Small Business and HR Planning Issues
Attracting and retaining qualified outsiders
Management succession between generations of
owners
Evolution of HR activities as business grows
Family relationships and HR policies
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HR
HR Planning
Planning Process
Process
• HR Strategies
The means used to anticipate and manage the supply
of and demand for human resources.
Provide overall direction for the way in which HR activities
will be developed and managed.
Overall
Strategic Plan
Human Resources
Strategic Plan
HR Activities
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Benefits
Benefits of
of HR
HR Planning
Planning
• Better view of the HR dimensions of business
decisions
• Lower HR costs through better HR
management.
• More timely recruitment for anticipate HR needs
• More inclusion of protected groups through
planned increases in workforce diversity.
• Better development of managerial talent
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Scanning
Scanning the
the External
External Environment
Environment
• Environmental Scanning
The process of studying the environment of the
organization to pinpoint opportunities and threats.
• Environmental Changes Impacting HR
Governmental Influences
Economic conditions
Geographic and competitive concerns
Workforce composition
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Assessing
Assessing the
the Internal
Internal Workforce
Workforce
• Jobs and Skills Audit
What jobs exist now?
How many individuals are performing each job?
What are the reporting relationships of jobs?
How essential is each job?
What jobs will be needed to implement future
organizational strategies?
What are the characteristics of anticipated jobs?
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Assessing
Assessing the
the Internal
Internal Workforce
Workforce (cont’d)
(cont’d)
• Organizational Capabilities Inventory
HRIS databases—sources of information about
employees’ knowledge, skills, and abilities (KSAs)
Components of an organizational capabilities
inventory
Individual employee demographics
Individual employee career progression
Individual job performance data
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Forecasting
Forecasting HR
HR Supply
Supply and
and Demand
Demand
• Forecasting
The use of information from the past and present to
identify expected future conditions.
• Forecasting Methods
Judgmental
Estimates—asking managers’ opinions, top-down or
bottom-up
Rules of thumb—using general guidelines
Delphi technique—asking a group of experts
Nominal groups—reaching a group consensus in open
discussion
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Forecasting
Forecasting HR
HR Supply
Supply and
and Demand
Demand
(cont’d)
(cont’d)
• Forecasting Methods (cont’d)
Mathematical
Statisticalregression analysis
Simulation models
Productivity ratios—units produced per employee
Staffing ratios—estimates of indirect labor needs
• Forecasting Periods
Short-term—less than one year
Intermediate—up to five years
Long-range—more than five years
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Forecasting
Forecasting HR
HR Supply
Supply and
and Demand
Demand
(cont’d)
(cont’d)
• Forecasting the Demand for Human Resources
Organization-wide estimate for total demand
Unit breakdown for specific skill needs by number and
type of employee
Develop decision rules (“fill rates”) for positions to be filled
internally and externally.
Develop additional decision rules for positions impacted by the
chain effects of internal promotions and transfers.
• Forecasting the Supply for Human Resources
External Supply
Internal Supply
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Forecasting
Forecasting HR
HR Supply
Supply (cont’d)
(cont’d)
• Forecasting External HR Supply
Factors affecting external
Net migration for an area
Individuals entering and leaving the workforce
Individuals graduating from schools and colleges
Changing workforce composition and patterns
Economic forecasts
Technological developments and shifts
Actions of competing employers
Government regulations and pressures
Other circumstances affecting the workforce
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Forecasting
Forecasting HR
HR Supply
Supply
• Forecasting Internal HR Supply
Effects of promotions, lateral moves, and terminations
• Succession analysis
Replacement charts
Succession planning
The process of identifying
a longer-term plan for the
orderly replacement of key
employees.
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Estimating
Estimating Internal
Internal Labor
Labor Supply
Supply for
for aa Given
Given Unit
Unit
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Developing
Developing and
and Using
Using aa Strategic
Strategic HR
HR Plan
Plan
• Issues in Matching the Supply of Labor with the
Demand for Labor
Succession Planning
Managing a Human Resources Surplus
Outplacement Services
HR Planning in Mergers and Acquisitions
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Making
Making Downsizing
Downsizing More
More Effective
Effective
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HR
HR Planning
Planning in
in Mergers
Mergers and
and Acquisitions
Acquisitions
• Cultural Compatibility
The extent to which such factors as decision-making
styles, levels of teamwork, information-sharing
philosophies, and the formality of the two
organizations are similar.
• HR’s Role in Mergers and Acquisitions
Communicating decisions
Revising the organization structure
Merging HR activities
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Measuring
Measuring HR
HR Effectiveness
Effectiveness
Using
Using HR
HR Metrics
Metrics
• HR Metrics
Specific measures tied to HR performance indicators.
Development and use of metrics that can better demonstrate
HR’s value and track its performance.
Characteristics of good HR metrics:
Accurate data can be collected.
Measures are linked to strategic and operational objectives.
Calculations can be clearly understood.
Measures provide information expected by executives.
Results can be compared both externally and internally.
Measurement data drives HR management efforts.
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Examples
Examples of
of Strategic
Strategic and
and Operational
Operational
HR
HR Metrics
Metrics
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Measures
Measures of
of Strategic
Strategic HR
HR Effectiveness
Effectiveness
• Return on Investment (ROI)
Calculation showing the value of expenditures for HR
activities.
C
ROI
A B
A = Operating costs for a new or enhance system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period
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Measures
Measures of
of Strategic
Strategic HR
HR Effectiveness
Effectiveness
(cont’d)
(cont’d)
• Economic Value Added (EVA)
A firm’s net operating profit after the cost of capital
(required return) is deducted.
Cost of capital is the benchmark for returns for all HR
activities.
• HR and the Balanced Scorecard
Financial
Internal business processes
Customer
Learning and growth
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HR
HR Measurement
Measurement and
and Benchmarking
Benchmarking
• Benchmarking
Comparing specific measures of performance against
data on those measures in other “best practice”
organizations
• Common Benchmarks
Total compensation as a percentage of net income
before taxes
Percent of management positions filled internally
Dollar sales per employee
Benefits as a percentage of payroll cost
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Assessing
Assessing HR
HR Effectiveness
Effectiveness
• HR Audit
A formal research effort that evaluates the current state
of HR management in an organization
Audit areas:
Legal compliance (e.g., EEO, OSHA, ERISA, and FMLA)
Current job specifications and descriptions
Valid recruiting and selection process
Formal wage and salary system Benefits
Employee handbook
Absenteeism and turnover control
Grievance resolution process
Orientation program Training and development
Performance management system
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