Strategic human resources management

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Strategic human resources management

  1. 1. Dr Sorab SadriDr Sorab SadriDr Sorab SadriDr Sorab SadriStrategic HumanStrategic HumanResourceResourceManagementManagementC
  2. 2. Learning Objectives22––22After you have read this PPT, you should be able to:Discuss why human resources can be a core competency fororganizations.Define HR planning, and outline the HR planning process.Specify four important HR benchmarking measures.Identify factors to be considered in forecasting the supply anddemand for human resources in an organization.
  3. 3. Learning Objectives (cont’d)22––33Discuss several ways to manage a surplus of human resources.Identify what a human resource information system (HRIS) isand why it is useful when doing HR planning.
  4. 4. Human Resources as a CoreCompetency22––44Strategic Human Resources ManagementOrganizational use of employees to gain or keep a competitiveadvantage against competitors.Core CompetencyA unique capability in the organization that creates high valueand that differentiates the organization from its competition.
  5. 5. Possible HR Areas for Core Competencies22––55 Figure 2–1
  6. 6. HR-Based Core Competencies22––66Organizational CultureThe shared values and beliefs of the workforce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 addedby an organization.Quality Products and ServicesHigh quality products and services are the results of HR-enhancements to organizational performance.
  7. 7. Customer Service Dimensions22––77 Figure 2–2
  8. 8. Factors That Determine HR Plans22––88 Figure 2–3
  9. 9. Linkage of Organizational and HR Strategies22––99 Figure 2–4
  10. 10. Human Resource Planning22––1010Human Resource (HR) PlanningThe process of analyzing and identifying the need for andavailability of human resources so that the organization canmeet its objectives.HR Planning ResponsibilitiesTop HR executive and subordinates gather information fromother managers to use in the development of HR projectionsfor top management to use in strategic planning and settingorganizational goals
  11. 11. Typical Division of HR Responsibilitiesin HR Planning22––1111 Figure 2–5
  12. 12. Human Resource Planning (cont’d)22––1212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
  13. 13. HR Planning Process22––1313 Figure 2–6
  14. 14. HR Planning Process22––1414HR StrategiesThe means used to anticipate and manage the supply of anddemand for human resources.Provide overall direction for the way in which HR activities will bedeveloped and managed.OverallOverallStrategic PlanStrategic PlanHuman ResourcesHuman ResourcesStrategic PlanStrategic PlanHR ActivitiesHR Activities
  15. 15. Benefits of HR Planning22––1515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 inworkforce diversity.Better development of managerial talent
  16. 16. Scanning the External Environment22––1616Environmental ScanningThe process of studying the environment of the organization topinpoint opportunities and threats.Environment Changes Impacting HRGovernmental regulationsEconomic conditionsGeographic and competitive concernsWorkforce composition
  17. 17. Employers’ Use of Part-Time Workers22––1717 Figure 2–7Source: Adapted from “”Part-Time Employment,”(NY: The Conference Board, n.d.) vol. 6 #1.
  18. 18. Internal Assessment of theOrganizational Workforce22––1818Auditing Jobs and SkillsWhat jobs exist now?How many individuals are performing each job?How essential is each job?What jobs will be needed to implement future organizationalstrategies?What are the characteristics of anticipated jobs?
  19. 19. Internal Assessment of theOrganizational Workforce22––1919Organizational Capabilities InventoryHRIS databases—sources of information about employees’knowledge, skills, and abilities (KSAs)Components of an organizational capabilities inventoryWorkforce and individual demographicsIndividual employee career progressionIndividual job performance data
  20. 20. Forecasting HR Supply and Demand22––2020ForecastingThe use of information from the past and present to identifyexpected 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
  21. 21. Forecasting HR Supply and Demand22––2121Forecasting Methods (cont’d)MathematicalStatistical regression 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
  22. 22. ForecastingMethods22––2222 Figure 2–8
  23. 23. Forecasting HR Supply and Demand22––2323Forecasting the Demand for Human ResourcesOrganization-wide estimate for total demandUnit breakdown for specific skill needs by number and type ofemployeeDevelop decision rules (“fill rates”) for positions to be filled internally andexternally.Develop additional decision rules for positions impacted by the chaineffects of internal promotions and transfers.Forecasting the Supply for Human ResourcesExternal SupplyInternal Supply
  24. 24. Forecasting HR Supply and Demand22––2424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 factors affecting the workforce
  25. 25. Forecasting HR Supply andDemand22––2525Forecasting Internal HR SupplyEffects of promotions, lateral moves, and terminationsSuccession analysisReplacement chartsTransition matrix (Markov matrix)Exit Manager Supervisor Line WorkerManager .15 .85 .00 .00.Supervisor .10 .15 .70 .05Line Worker .20 .00 .15 .65
  26. 26. Estimating Internal Labor Supply for a Given Unit22––2626 Figure 2–9
  27. 27. Managing Human ResourceSurplus or Shortage22––2727Workforce Reductions and the WARN ActIdentifies employer requirements for layoff advance notice.60-day notice to employees and the local community before a layoff orfacility closing involving more than 50 people.Does not cover part-time or seasonal workers.Imposes fines for not following notification procedure.Has hardship clauses for unanticipated closures or lack of businesscontinuance capabilities.
  28. 28. Managing Human ResourceSurplus or Shortage22––2828Workforce Realignment“Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) allmean 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
  29. 29. Managing Human ResourceSurplus or Shortage22––2929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
  30. 30. Managing Human ResourceSurplus or Shortage22––3030Downsizing approachesAttrition and hiring freezesNot replacing departing employees and not hiring new employees/Early retirement buyoutsOffering incentives that encourage senior employees to leave theorganization early.LayoffsEmployees are placed on unpaid leave until called back to work whenbusiness conditions improve.Employees are selected for layoff on the basis of their seniority orperformance or a combination of both.
  31. 31. Managing Human ResourceSurplus or Shortage22––3131Downsizing approaches (cont’d)Outplacement services provided to displaced employees to givethem support and assistance:Personal career counselingResume preparation and typing servicesInterviewing workshopsReferral assistanceSeverance paymentsContinuance of medical benefitsJob retraining
  32. 32. Dealing with Downsizing22––3232Investigate alternatives to downsizingInvolve those people necessary for success in the planning fordownsizingDevelop comprehensive communications plansNurture the survivorsOutplacement pays off
  33. 33. Assessing HR Effectiveness22––3333Diagnostic Measures of HR EffectivenessHR expense per employeeCompensation as a percent of expensesHR department expense as a percent of total expensesCost of hiresTurnover ratesAbsenteeism ratesWorker’s compensation per employee
  34. 34. Overview of the HREvaluation Process22––3434 Figure 2–10
  35. 35. Assessing HR Effectiveness22––3535HR AuditA formal research effort that evaluates the current state of HRmanagement 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
  36. 36. Using HR Research for Assessment22––3636HR ResearchThe analysis of data from HR records to determine theeffectiveness of past and present HR practices.Primary ResearchResearch method in which data are gathered first-hand for thespecific project being conducted.Secondary ResearchResearch method using data already gathered by others andreported in books, articles in professional journals, or othersources.
  37. 37. HR Performance andBenchmarking22––3737BenchmarkingComparing specific measures of performance against data onthose 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
  38. 38. Doing the Benchmarking Analysis22––3838Return on Investment (ROI)Calculation showing the value of expenditures for HRactivities.A = Operating costs for a new or enhance system for the time periodA = Operating costs for a new or enhance system for the time periodB = One-time cost of acquisition and implementationB = One-time cost of acquisition and implementationC = Value of gains from productivity improvements for the time periodC = Value of gains from productivity improvements for the time periodBACROI+=
  39. 39. HR Business Performance Calculations22––3939 Figure 2–11aSource: Adapted from Jac Fitz-Enz, “Top 10 Calculations for Your HRIS,” HR Focus, April 1998, S-3.
  40. 40. HR Business Performance Calculations22––4040 Figure 2–11bSource: Adapted from Jac Fitz-Enz, “Top 10 Calculations for Your HRIS,” HR Focus, April 1998, S-3.
  41. 41. Doing the Benchmarking Analysis22––4141Economic Value Added (EVA)A firm’s net operating profit after the cost of capital (minimumrate of return demanded by the shareholders) is deducted.Cost of capital is the benchmark for returns for all HRactivities.Utility analysisAnalysis in which economic or other statistical models are builtto identify the costs and benefits associated with specific HRactivities
  42. 42. Human Resource InformationSystems22––4242Human resource information systems (HRIS)An integrated system of hardware, software, and databasesdesigned to provide information used in HR decision making.Benefits of HRISAdministrative and operational efficiency in compiling HR dataAvailability of data for effective HR strategic planningUses of HRISAutomation of payroll and benefit activitiesEEO/affirmative action tracking
  43. 43. Uses of an HRInformation System(HRIS)22––4343 Figure 2–12
  44. 44. Designing and Implementing anHRIS22––4444HRIS Design IssuesWhat information available and what is information needed?To what uses will the information be put?What output format compatibility with other systems isrequired?Who will be allowed to access to the information?When and how often will the information be needed?
  45. 45. Accessing the HRIS22––4545IntranetAn organizational (internal) network that operates over theInternet.ExtranetAn Internet-linked network that allows employees access toinformation provided by external entities.Web-based HRIS UsesBulletin boardsData accessEmployee self-serviceExtended linkage

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