Subject Name : Human Resource Management

Code : HRM501
Credit Hours : 3

LECTURE 2: STRATEGIC HRMANAGEMENT & PLANNING

Dr.William @ Sui Reng Liana

 Environmental Scanning

The process of studying the environment of the organization to pinpoint

opportunities and threats.

External Environment
 Economic Conditions
 Government Influence
 Geographic and Competitive Concerns
 Workforce Composition
Internal environment
 Quality and quantity of talent
 Organizational culture
 Talent pipeline and leadership bench strength
Helps identify strengths, weaknesses, opportunities, and
threats
HR Factors in the SWOT Analysis
Strategy and Strategic Planning
Strategic Planning Process
 Organizational Mission

The guiding force and core reason for existence

of the organization and what makes it unique
 Human Resources as a Core
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.
Operationalizing HR Management
Strategies
Areas Where HR Can Develop
Strategies
Strategic HR Management Process
 H R Strategies for Global Competitiveness

Multinational corporation (MNC)

• A corporation that has facilities and other assets in at least one
country other than its home country

Offshoring
• Relocation of a business process or operation by a company
from one country to another
• Should consider
• Reliability - Ability of the offshore vendor to deliver
• Responsiveness - Offshore vendor’s ability to make changes
when necessary
Strategic HR Approaches to
International Staffing
 Human Resource Planning

• Analyzes and identifies the need for and

availability of people so that the organization
can meet its strategic objectives
• Ensures right number of human resources
with the right capabilities, at the right times,
and in the right places
HR Planning Process
 Environmental Scanning

Assessment of internal and external environmental

conditions affecting organization
• External environment - Economic, political and competitive forces
• Internal environment
• Quality and quantity of talent
• Organizational culture
• Talent pipeline and leadership bench strength

Helps identify strengths, weaknesses, opportunities, and

threats
HR Factors in the SWOT Analysis
 Succession Planning

Process of identifying a plan for the orderly

replacement of key employees
 Factors Affecting External Pool of
Employees

Economic and Governmental Factors - Impact HR Planning

• Government regulations affect labor supply
• Tax legislation at local, state, and federal levels
Geographic/Competitive Evaluations
• Net migration
• Direct competitors
• International competition
Changing Workforce Considerations
• Aging of the workforce
• Growing diversity of workers
• Female workers and work-life balancing concerns
• Availability of contingent workers
• Outsourcing possibilities
 Planning for Internal Workforce Audit

Current and Future Job Audits

• Existing jobs
• Number of individuals performing each job
• Reporting relationships
• Vital KSAs (knowledge, skills, abilities)
• Jobs needed to implement future organizational strategies
• Characteristics of anticipated jobs

Employee and Organizational Capabilities Inventory

• Employee demographics
• Career progression
• Performance data
 Forecasting

Using information from the past and the

present to identify expected future conditions
 HR Forecasting Methods

Judgmental Methods
• Estimates
• The rule of thumb
• The Delphi technique
• Nominal groups

Mathematical Methods
• Statistical regression
• Simulation models
• Productivity ratio
• Staffing ratios
 HR Forecasting Planning Periods

Short-range plans - Forecast for the immediate

HR needs of an organization

Intermediate-range plans - Project one to

three years into the future

Long-range plans - Extend beyond three years

 Forecasting External Supply of
Employees

Net migration into and out of the area

Individuals entering and leaving the workforce

Individuals graduating from schools and colleges

Changing workforce composition and patterns

Economic forecasts for the next few years

Technological developments and shifts

Actions of competing employers

Government regulations and pressures

 Developing and Using a Strategic HR 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
 Managing a Human Resources Surplus

• Workforce Realignment
– “Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) all
mean reducing the number of employees in an organization.
– Causes
• Economic—weak product demand, loss of market share to
competitors
• Structural—technological change, mergers and acquisitions
 Managing a Human Resource Surplus

• Workforce Realignment (cont’d)

– Positive consequences
• Increase competitiveness
• Increased productivity
– Negative consequences
• Cannibalization of HR resources
• Loss of specialized skills and experience
• Loss of growth and innovation skills
– Managing survivors
• Provide explanations for actions and the future
• Involve survivors in transition/regrouping activities
 Managing a Human Resource Surplus

• Downsizing Approaches
– Attrition and hiring freezes
• Not replacing departing employees and not hiring new
employees
– Voluntary Separation Programs
• Early retirement buyouts offer incentives to encourage senior
employees to leave the organization early.
– Layoffs
• Employees are placed on unpaid leave until called back to
work when business conditions improve.
• Employees are selected for layoff on the basis of their
seniority or performance or a combination of both.
 Managing a Human Resource Surplus

• Downsizing Approaches (cont’d)

– Outplacement services provided to displaced employees to give
them support and assistance:
• Personal career counseling
• Resume preparation and typing services
• Interviewing workshops
• Referral assistance
• Severance payments
• Continuance of medical benefits
• Job retraining
Estimating Internal Labor Supply for a
Given Unit
Managing Talent Supply Imbalance
 Best Practices to Carry Out Layoffs

Identify the work that is core to sustaining a profitable business

Identify the knowledge, skills, and competencies needed to

execute the business strategy

Protect the bottom line and the corporate brand

Constantly communicate with employees

Pay attention to the survivors

 Severance Benefits and Outplacement
Services

• Temporary payments made to laid-off employees to ease the

financial burden of unemployment
• Outplacement services - Give displaced employees support and
assistance
– Personal career counselling
– Résumé-preparation services
– Interviewing workshops
– Referral assistance
Managing a Talent Shortage
Ways to Manage a Talent Shortage
HR Activities During Mergers and
Acquisitions
Changing the Organizational Culture
 Measuring Effectiveness of Human
Resources and Human Capital

Effectiveness: Ability to produce a specific

desired effect or result that can be measured

Efficiency: Degree to which operations are done

in an economical manner
 HR Metrics and Analytics

HR Metrics: Specific measures tied to HR

performance indicators

HR analytics: An evidence-based approach to

making HR decisions on the basis of quantitative
tools and models
Key HR Metrics
 Characteristics of HR metrics and
Analytics

Accurate data

Measures linked to strategic and operational objectives

Clearly understood calculations

Measures provide information valued by executives

Results can be compared both internally and externally

Measurement data drive HR management efforts

 Human Capital Effectiveness
Measures

Return on investment (ROI): Shows the value of investments in HR

activities

Human capital value added (HCVA): Shows the operating profit per
full-time employee

Human capital return on investment (HCROI): Shows the operating

profit derived from investments in human capital

Human economic value added (HEVA): Wealth created per

employee
 Human Capital Effectiveness
Measures

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
 Human Capital Effectiveness
Measures

Human capital value

added (HCVA)

Human capital return on

investment (HCROI)

Human economic value

added (HEVA)
 HR Audit Levels

Compliance Audit
• Checks record keeping on state and federal paperwork requirements

Benefit Program Audit

• Reviews regulatory compliance, benefits administration and reporting

Specific Program Audit

• Reviews specific HR subareas such as compensation, EEO, or training

Full HR Audit

• Reviews all of the above plus any and all other HR functions
 Human Resources Audit

• Formal research effort to assess the current state of HR practices

• Audit areas
– Staffing and compensation
– Health and safety
– Legal compliance
– Administrative processes and recordkeeping
– Employee retention and benefits