Bohlander15e ch02

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Bohlander15e ch02

  1. 1. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–1
  2. 2. 2© 2010 South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie CookAll rights reserved. The University of West Alabama
  3. 3. Chapter ObjectivesAfter studying this chapter, you should be able to Identify the advantages of integrating human resources planning and strategic planning. Understand how an organization’s competitive environment influences its strategic planning. Understand why it is important for an organization to do an internal resource analysis. Describe the basic tools used for human resources forecasting. Explain the linkages between competitive strategies and HR.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–3
  4. 4. Chapter Objectives (cont’d)After studying this chapter, you should be able to Understand what is required for a firm to successfully implement a strategy. Recognize the methods for assessing and measuring the effectiveness of a firm’s strategy.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–4
  5. 5. Strategic Planning and Human Resources • Strategic Planning  Procedures for making decisions about the organization’s long-term goals and strategies • Human Resources Planning (HRP)  Process of anticipating and making provision for the movement (flow) of people into, within, and out of an organization.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–5
  6. 6. Strategic Planning and HR Planning • Strategic Human Resources Management (SHRM)  The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals  Strategy formulation—providing input as to what is possible given the types and numbers of people available.  Strategy implementation—making primary resource allocation decisions about structure, processes, and human resources.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–6
  7. 7. Linking Strategic Planning and HRP • Strategic Analysis  What human resources are needed and what are available? • Strategic Formulation  What is required and necessary in support of human resources? • Strategic Implementation  How will the human resources be allocated? Human Resources Human Resources Strategic Strategic Planning Planning Planning Planning© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–7
  8. 8. FIGURE Linking Strategic Planning and Human Resources2.1 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–8
  9. 9. Step One: Mission, Vision, and Values • Mission  The basic purpose of the organization as well as its scope of operations • Strategic Vision  A statement about where the company is going and what it can become in the future; clarifies the long- term direction of the company and its strategic intent • Core Values  The strong and enduring beliefs and principles that the company uses as a foundation for its decisions© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–9
  10. 10. Step Two: Environmental Scanning • Environmental Scanning  The systematic monitoring of the major external forces influencing the organization. 1. Economic factors: general, regional, and global conditions 2. Industry and competitive trends: new processes, services, and innovations 3. Technological changes: robotics and office automation 4. Government and legislative issues: laws and administrative rulings 5. Social concerns: child care and educational priorities 6. Demographic and labor market trends: age, composition, literacy, and immigration© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–10
  11. 11. FIGURE Five Forces Framework2.2 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–11
  12. 12. Step Three: Internal Analysis Culture Culture Capabilities Capabilities Internal Analysis Internal Analysis Composition Composition© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–12
  13. 13. Culture: Auditing Values, Beliefs, and Attitudes • Cultural Audits  Audits of the culture and quality of work life in an organization.  How do employees spend their time?  How do they interact with each other?  Are employees empowered?  What is the predominant leadership style of managers?  How do employees advance within the organization?© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–13
  14. 14. Capabilities: People as a Strategic Resource • Core Capabilities  Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers. • Sustained competitive advantage through people is achieved if these human resources: 1. Are valuable. 2. Are rare and unavailable to competitors. 3. Are difficult to imitate. 4. Are organized for teamwork and cooperation.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–14
  15. 15. Composition: The Human Capital Architecture • Strategic Knowledge Workers  Employees who have unique skills that are directly linked to the company’s strategy.  Example: R&D scientists • Core Employees  Employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace.  Example: salespeople© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–15
  16. 16. Composition: The Human Capital Architecture (cont’d) • Supporting Labor  Employees whose skills are of less strategic value and generally available in the labor market.  Example: clerical workers • Alliance Partners  Individuals and groups with unique skills, but those skills are not directly related to a company’s core strategy.  Example: consultants© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–16
  17. 17. FIGURE Mapping Human Capital2.3 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–17
  18. 18. Forecasting: A Critical Element of Planning • Forecasting involves: a. forecasting the demand for labor b. forecasting the supply of labor c. balancing supply and demand considerations.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–18
  19. 19. FIGURE Model of HR Forecasting2.4 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–19
  20. 20. Forecasting Demand for Employees Quantitative Methods Quantitative Methods Forecasting Demand Forecasting Demand Qualitative Methods Qualitative Methods© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–20
  21. 21. Quantitative Approach: Trend Analysis • Forecasting labor demand based on an organizational index such as sales: 1. Select a business factor that best predicts human resources needs. 2. Plot the business factor in relation to the number of employees to determine the labor productivity ratio. 3. Compute the productivity ratio for the past five years. 4. Calculate human resources demand by multiplying the business factor by the productivity ratio. 5. Project human resources demand out to the target year(s).© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–21
  22. 22. FIGURE Example of Trend Analysis of HR Demand2.5 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–22
  23. 23. Qualitative Approaches • Management Forecasts  The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization’s future employment needs. • Delphi Technique  An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals.  The final forecast represents a composite group judgment.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–23
  24. 24. 1 HR Planning and Strategy Questions to Ask Business Managers Workforce planning requires that HR leaders periodically interview their managers to gauge future workforce needs. Here are some sample questions to ask. • What are your mission, vision, and values? • What are your current pressing business issues? • What are our organizational strengths? • Who are our competitors’ organizational strengths? How do we compare? • What core capabilities do we need to win in our markets?• • What are the required knowledge, skills, and abilities we need to execute the winning strategy? • What are the barriers to optimally achieving the strategy? • What types of skills and positions will be required or no longer required? • Which skills should we have internally versus contract with outside providers? • What actions need to be taken to align our resources with strategy priorities? • What recognition and rewards are needed to attract, motivate, and retain the employees we need? • How will we know if we are effectively executing our workforce plan and staying on track?© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–24
  25. 25. Forecasting the Supply of Employees: Internal Labor Supply • Staffing Tables • Markov Analysis • Skill Inventories • Replacement Charts • Succession Planning© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–25
  26. 26. Forecasting Internal Labor Supply • Staffing Tables  Graphic representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements. • Markov Analysis  A method for tracking the pattern of employee movements through various jobs.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–26
  27. 27. FIGURE Hypothetical Markov Analysis for a Retail Company2.6 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–27
  28. 28. Internal Demand Forecasting Tools • Skill Inventories  Files of personnel education, experience, interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds. • Replacement Charts  Listings of current jobholders and persons who are potential replacements if an opening occurs. • Succession Planning  The process of identifying, developing, and tracking key individuals for executive positions.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–28
  29. 29. FIGURE An Executive Replacement Chart2.7 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–29
  30. 30. 2 Succession-Planning Checklist RATE THE SUCCESS OF YOUR SUCCESSION PLANNING For each characteristic of a best-practice succession- planning and management program appearing in the left column below, enter a number to the right to indicate how well you believe your organization manages that characteristic. Ask other decision makers in your organization to complete this form individually, compile the scores, and compare notes.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–30
  31. 31. FIGURE Assessing a Firm’s Human Capital2.8 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–31
  32. 32. Step Four: Formulating Strategy • Strategy Formulation  Moving from simple analysis to devising a coherent course of action. • SWOT analysis  A comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes.  Use the strengths of the organization to capitalize on opportunities, counteract threats, and alleviate internal weaknesses.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–32
  33. 33. FIGURE An Example of a SWOT Analysis2.9Valero Energy Corporation (Valero) is one of the largest refiners in North America.Its core activities include refining and marketing of petroleum products. With acombined throughput capacity of approximately 3.3 million bpd, Valero is the 15thlargest company on the Fortune 500 list. Valero’s large refining capacity gives it asignificant competitive advantage. However, rising material and labor costs couldaffect the company’s margins. Strengths Weaknesses Large refining system Weak performance in Canada Leader in conversion capacity and Litigations feedstock flexibility High dependence on the United States Strong revenue growth and capital expenditure Opportunities Threats Growing diesel demand Material and labor cost Strategic refocus Stringent regulations Rising petrochemical capacity in the Middle East © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–33
  34. 34. Corporate Strategy Growth and Growth and Mergers and Mergers and Diversification Diversification Acquisitions Acquisitions Corporate Corporate Strategy Strategy Strategic Alliances Strategic Alliances and Joint Ventures and Joint Ventures© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–34
  35. 35. Business Strategy • Value Creation  What the firm adds to a product or service by virtue of making it; the amount of benefits provided by the product or service once the costs of making it are subtracted (value = benefits — costs).  Low-cost strategy: competing on productivity and efficiency  Keeping costs low to offer an attractive price to customers (relative to competitors).  Differentiation strategy: compete on added value  Involves providing something unique and distinctive to customers that they value.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–35
  36. 36. 3 Key HR Activities Associated with Merger or Acquisition Phases© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–36
  37. 37. 3 Key HR Activities Associated with Merger or Acquisition Phases (cont’d)© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–37
  38. 38. Business Strategy (cont’d) • Functional Strategy: Ensuring Alignment  External Fit/Alignment  Focuses on the connection between the business objectives and the major initiatives in HR.  Internal Fit/Alignment  Aligning HR practices with one another to establish a configuration that is mutually reinforcing.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–38
  39. 39. Step Five: Strategy Implementation • Taking Action: Reconciling Supply and Demand  Balancing demand and supply considerations Forecasting business activities (trends)   Locating applicants  Organizational downsizing, outsourcing, offshoring  Reducing “headcount”  Making layoff decisions  Seniority or performance?  Labor agreements© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–39
  40. 40. FIGURE The 7-S Model2.10 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–40
  41. 41. Step Six: Evaluation and Assessment • Evaluation and Assessment Issues  Benchmarking: The process of comparing the organization’s processes and practices with those of other companies  Human capital metrics  Assess aspects of the workforce  HR metrics  Assess the performance of the HR function itself© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–41
  42. 42. 4 Ten Measures of Human Capital 1. Your most important issues 2. Human capital value added 3. Human capital ROI 4. Separation cost 5. Voluntary separation rate 6. Total labor-cost/revenue percentage 7. Total compensation/revenue percentage 8. Training investment factor 9. Time to start 10. Revenue factor© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–42
  43. 43. Measuring a Firm’s Strategic Alignment • Strategy Mapping and the Balanced Scorecard  Balanced Scorecard (BSC)  A measurement framework that helps managers translate strategic goals into operational objectives – financial – customer – processes – learning© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–43
  44. 44. FIGURE Building the Metrics Model2.11 © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–44
  45. 45. FIGURE Assessing Internal Fit2.12 5 = Strongly supports the priority, 0= Neutral, –5 = Strongly counterproductive © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–45
  46. 46. Ensuring Strategic Flexibility for the Future • Organizational Capability  Capacity of the organization to act and change in pursuit of sustainable competitive advantage.  Coordination flexibility  The ability to rapidly reallocate resources to new or changing needs.  Resource flexibility  Having human resources who can do many different things in different ways.© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–46
  47. 47. Balanced Scorecard (BSC) replacement charts benchmarking skill inventories core capabilities staffing tables core values strategic human cultural audits resources management (SHRM) environmental scanning strategic planning human capital readiness strategic vision human resources planning (HRP) succession planning management forecasts SWOT analysis Markov analysis trend analysis mission value creation organizational capability© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–47
  48. 48. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–48
  49. 49. Employee Turnover Rates • Computing Turnover Rates:  The U.S. Department of Labor suggests the following formula for computing turnover rates:  Thus, if there were 25 separations during a month and the total number of employees at mid month was 500, the turnover rate would be:© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–49
  50. 50. Employee Turnover Rates (cont’d) • Computing Turnover Rates (cont’d):  Another method of computing the turnover rate is one that reflects only the avoidable separations (S). This rate is computed by subtracting unavoidable separations (US) from all separations. The formula for this method is as follows:  where M represents the total number of employees at mid month. For example, if there were 25 separations during a month, 5 of which were US, and the total number of employees at mid month (M) was 500, the turnover rate would be:© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–50
  51. 51. Employee Absenteeism Rates • Computing Absenteeism Rates© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–51
  52. 52. 5 Costs Associated with the Turnover of One Computer Programmer (Turnover costs = Separation costs + Replacement costs + Training costs) Separation costs 1. Exit interview cost for salary and benefits of both interviewer and departing employee during the exit interview = $30+$30 = $60 2. Administrative and record-keeping action = $30 Total separation costs = $60 + $30 = $90 Replacement costs 1. Advertising for job opening = $2,500 2. Preemployment administrative functions and record-keeping action = $100 3. Selection interview = $250 4. Employment tests = $40 5. Meetings to discuss candidates (salary and benefits of managers while participating in meetings)= $250 Total replacement costs = $2,500 + $100 + $250 + $40 + $250 = $3,140 Training costs 1. Booklets, manuals, and reports = $50 2. Education = $240/day for new employee’s salary and benefits x 10 days of workshops, seminars, or courses = $2,400 3. One-to-one coaching = ($240/day/new employee + $240/day/staff coach or job expert) x 20 days of one-to- one coaching = $9,600 4. Salary and benefits of new employee until he or she gets “up to par” = $240/day for salary and benefits x 20 days = $4,800 Training costs = $50 + $2,400 + $9,600 + $4,800 = $16,850 Total turnover costs= $90 + $3,140 + $16,850 = $20,080© 2010 South-Western, a part of Cengage Learning. All rights reserved. 2–52

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