Chapter 1 An Investment Perspective of Human Resource Managemen.docx

Chapter 1: An Investment Perspective of Human Resource
Management
© 2019 Cengage. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
The Strategic View of Human Resources
Employees are human assets
Increase in value to organization and marketplace when
investments of appropriate policies and programs are applied
Effective organizations recognize that employees have value
Much as organization’s physical and capital assets have value
Employees are valuable source of sustainable competitive
advantage
Exhibit 1.1: Sources of Employee Value
Sources of Employee Value
Technical Knowledge
Markets, processes, customers, environment
Ability to Learn and Grow
Openness to new ideas
Acquisition of knowledge and skills
Decision Making Capabilities
Motivation
Commitment

Teamwork
Interpersonal skills, leadership ability
Adopting an Investment Perspective
Determines how to best invest in people
Costs
Out-of-pocket
Opportunity
Human assets become competitive advantage
Required skills become less manual, more knowledge-based
Appropriate, integrated, strategy-consistent approach is needed
A Dilemma
Failure to invest in employees causes
Inefficiency
Weakening of organization’s competitive position
Human assets are risky investment
Require extra effort to ensure that they are not lost
Exhibit 1.2: Types of Organization Assets/Capital
Research Findings
HR practices directly related to profitability and market value

Primary reason for profitability:
Effective management of human capital
Integrated management of human capital can result in 47%
increase in market value
Top 10% of organizations studied experienced 391% return on
investment in management of human capital
Exhibit 1.3: The HR Value Chain
Human Resource Metrics
Wall Street analysts still generally fail to acknowledge human
capital in assessing the value of an organization and the effect
that human resources can have on stock price
This is rooted in the fact that there are no “standard” metrics or
measures of human capital, much as there are for other
organizational assets
Exhibit 1.4 lists some Common HR Metrics while Exhibit 1.5
displays the means of calculating five common metrics.
However, the appropriate metrics for any given organization
will be dependant on that organization’s strategy.
Exhibit 1.4: Common HR Metrics

Exhibit 1.5: Calculation of Human Capital Measures
HR Metrics Are Complex
90% of Fortune 500 organizations evaluate HR operations on
basis of three metrics:
Employee retention and turnover
Corporate morale
Employee satisfaction
These metrics do not necessarily illustrate how HR impacts
Profits
Shareholder value
Mercer Model of Measuring HR Impact
Identify problem HR can impact
Calculate actual cost of problem
Choose HR solution that addresses problem
Calculate cost of solution
Calculate value of improvement 6 to 24 months after
implementation
Calculate specific return on investment
ROI in human assets often not realized until some time in future
HR Analytics
Analytics is the systematic collection, reporting and analysis of

various metrics which are critical to effective performance
Analytics often involve the process of benchmarking where the
organization compares actual performance to goals and/or to the
performance on a similar metric by competing organizations
Exhibit 1.6 shows some examples of the types of relationships
which HR analytics can document and analyze
Exhibit 1.6: Using Analytics to Understand Relationships
Investment-Oriented Organization
Sees people as central to mission and strategy
Mission statement and strategic objectives espouse value of
human assets in achieving goals
Management philosophy encouraging development and
retention of human assets
Does not treat human assets in same ways as physical assets
Investment Orientation Factors (1)
Senior Management Values and Actions
Managers need “investment orientation” toward people
Attitude Toward Risk
Investment in human resources inherently riskier
Human assets never absolutely “owned”
Nature of Skills Needed by Employees
The more marketable employee skills, the riskier the firm’s
investment in skill development

Investment Orientation Factors (2)
Utilitarian (“Bottom Line”) Mentality
Attempt made to quantify employee worth through cost-benefit
analysis
“Soft” benefits of HR programs difficult to objectively quantify
Availability of Outsourcing
Given availability of cost-effective outsourcing, investments in
HR should produce highest returns and sustainable competitive
advantages.
Exhibit 1.7: Factors Influencing an Organization’s Investment
Orientation
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QP • www.qualityprogress.com2
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In 50 Words
Or Less
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less is Vectora Roman

9 on 11 with hanging
indents.
indents.
indents.
indents.
AT A TIME when fuel prices have skyrocketed
and companies across the board are doing their part to
be greener, a team of individuals from CSX Corp. came
together to reduce the large amount of fuel wasted
while locomotives sat idling.
The locomotive shutdown team used a variety of
quality tools and methods and ultimately came up with
a solution to increase shutdown time and decrease the
temperature at which locomotives could be shut down.

The project saved millions of dollars in the form of mil-
lions of gallons of diesel fuel.
In 50 Words
Or Less
• A team from the rail
company CSX Corp.
found idling locomotives
wasted 30 million gallons
of diesel per year.
• Team members used
quality tools, such as
Six Sigma and FMEA, to
reveal root causes and
develop fuel conserving
solutions.
• The result: a savings of
more than $28 million
over three years.
May 2008 • QP 21
TEAMS
It All Ties
Together
fuel
consumption,
It All Ties
Together

CSX team’s project curtails fuel
consumption, saves company millions
by Nicole Adrian, contributing editor
The team’s work earned it a bronze medal at the 2007
International Team Excellence Competition, sponsored
by ASQ’s Team and Workplace Excellence Forum. The
team presentations are judged annually at ASQ’s World
Conference on Quality and Improvement.
War on waste
CSX locomotives were typically left idling when not in
use, even for relatively short periods of time. Idling lo-
comotives wasted four gallons of fuel per hour. But if
the shutdown occurred for too long a period, gaskets
would dry out, causing engine leaks.
In 2004, the locomotive shutdown project was cre-
ated out of a CSX Six Sigma process improvement
team (PIT+) that focused on fuel. PIT+ teams created

at this time were to look at all business processes and
major cost areas. The project arose out of organiza-
tional needs, using a top-down approach that focused
on waste elimination based on data and broad stake-
holder involvement.
Fuel made up nearly 10% of total operating expens-
es, and fuel prices were expected to increase in the
coming years. The fuel PIT+ developed a value driver
tree to focus in on high impact areas that could be rap-
idly implemented.
To fi gure out if a fuel conservation project was
worth attacking, the team tapped into data that was
used for exception reporting on locomotive dwell
times (see Figure 1). The median time a locomotive
didn’t move was 12 hours on a weekday and 14 to 16
hours on the weekend. About 3,600 locomotives were
in transit at any given time.
The team found that the idling locomotives wasted

30 million gallons per year. Armed with these num-
bers and data, the team decided the project was worth
tackling.
Getting involved
Potential stakeholders in the locomotive shutdown
project participated in the effort to defi ne and launch
the project, each bringing valuable perspectives, in-
sights and concerns. The team validated the project
stakeholder perspective by using suppliers, inputs,
process step, outputs and customers (SIPOC), and in-
cluded the suppliers and customers as stakeholders.
Ultimately, the project involved stakeholders
across various work areas (see Table 1). This included
employees and people from:
• The senior leadership team (SLT).
• Locomotive management and shop.
• Transportation management, and train and engine
departments.
• Finance and purchasing.

• Environmental group.
• Communities served.
In the beginning, the SLT and
project champion addressed re-
sistance, allocated resources and
ensured project goals cascaded
through the organization. The fi -
nance and purchasing stakehold-
ers tracked and validated savings,
ensuring that budgeting activity re-
fl ected the project’s success. Tying
in the budget process further com-
mitted functional departments to
the project.
Employees who managed and
worked in locomotive shops and ser-
vice centers agreed with the project’s
aim but had concerns. Employees

reasoned that if the locomotives did
not restart easily and needed as-
sistance, it could hurt their facility
throughput and pull resources away
Reasons this project was selected / FIGURE 1
Fuel cost is a function of these key drivers:
volume, productivity, engine idling, price and logistics costs.
Total
fuel
costs
Gallons
Cost/gallon
Base price/gallon
(including taxes)
Distribution
cost/gallon
Nonproductive
use (sitting)
Productive use
(pulling freight)
Gallons/hour Engine idle efficiency

Largely exogenous,
reflects purchasing,
tax efficiency and
physical facility locations
Gallons/KGTM Diesel engine productivity
KGTM Measure of volume
Idle Time
Waste = 30 million gallons
(~6% of total usage)
(KGTM = thousand gross ton miles)
May 2008 • QP 23
from their primary tasks.
The transportation management and train and en-
gine employees also had concerns. These included:
• Yard delays caused by restarting locomotives.
• Initial start-up taking more time than it would have
with idling locomotive waiting.
• Locomotives shut down for a short period of time.
• Lack of locomotive maintenance assistance at out-

lying areas.
• A lapse in production.
• Poor service to customers.
To be successful, the team needed to maintain and
leverage the support of the SLT while increasing sup-
port from the locomotive shop and service center
employees, and the train and engine personnel. The
team also needed them to change their behavior. To
understand the degree of impact the project would
have on stakeholders and the reasons behind potential
resistance, the team used failure mode effects analysis
(FMEA).
The environmental group was an obvious project
supporter. The group envisioned fewer noise and
air pollution complaints from the communities CSX
serves. The environmental group had received com-
plaints from residents, who said the idling locomotives
disturbed their sleep. The residents also had concerns

about diesel fumes. The group also saw the opportu-
nity to gain emission reduction credits.
Choosing the mission
To select the project, the team used familiar tools: Six
Sigma and defi ne, measure, analyze, improve and con-
trol (DMAIC).
Project selection also included some consider-
ations and measures:
• Data availability and quality.
• Projected benefi ts and savings.
• Impact on internal and external customers.
• Impact on existing initiatives.
• Locomotive idle time in hours.
• Gallons per hour consumed while idling.
• Historical total idle time.
The team used various tools to assess the type of
impact the project could have on stakeholders and all
units involved. These tools included:
• Subject matter expert (SME) input.

• FMEA.
• Change acceleration process tools.
TEAMS
Stakeholder involvement / TABLE 1
Stakeholder roles, involvement and impact of contribution to
root cause analysis
Who: Role: Responsibility: Impact:
SLT and Champion Secure resources. Monthly champion
reviews and oversight. Low
Locomotive management Locomotive Engineering support.
Validate improper shutdowns. High
and shop employees
Transportation manage- Advise on issues perceived by Evaluate
failures. High
ment and T&E employees end users. Identify exceptions for
missed opportunities.
Finance and purchasing Finance/budget analysis. Not process
owners. Medium
Provide cost per gallon.
Environment/ Help identify “other”occasions Support through
idea generation. Low
communities served of shutdown opportunity.
Black Belt support Data analysis. Perception on process
variation. High

Effectiveness of current controls.
Levels of Impact:
Low = support role
Medium = validation
High = SMEs
• Driver trees.
• Analytical tools.
The team found that 78% of the locomotive fl eet is
equipped with a global positioning system (GPS), which
generates an automated transmission each hour, provid-
ing information about the status of the locomotive and
whether it has moved since the last transmission.
To gauge the shutdown performance and to measure
the project’s impact and value, team members used infor-
mation about the locomotive’s identifi cation, latitude and
longitude of reporting, hours since last movement and if
the locomotive was running or shut down.
SMEs provided insights into the potential root causes

that stemmed from the FMEA. These ideas included:
• Employee knowledge and attitude.
• Current and expected ambient temperature.
• Dwell or sitting time of locomotive.
• Actionable opportunities.
• Applicable rules regarding when to shut down.
• Health of locomotive.
A questionnaire was then sent to all engineers to serve
as a fuel shutdown reminder and affi rmation, and to gain
their feedback and ideas. For the project to succeed, it
had to affect the behavior of more than 8,000 employees
in hundreds of locations throughout the eastern half of
the country.
Root cause analysis
The team again used FMEA to identify issues of critical
importance to the stakeholders and to view the issues in
context with all stakeholder involvement. Additionally,
the team worked through a cause and effect matrix to

validate the insights from FMEA, relate the inputs to cus-
tomer requirements and prioritize potential root causes.
While team members developed SME insights from cause
and effect diagrams and FMEA, they also investigated
hard data, the GPS data from the locomotive fl eet and
other sources to confi rm SME insights.
The identifi cation and analysis of root causes started
with subjective insights followed by data collection and
analysis. The facts led to team agreement. The process in-
volved a wide variety of tools based on the type of infor-
mation and data available, which also created a common
perspective and commitment within the team.
These tools included:
• Process maps.
• FMEA.
• Cause and effect diagrams.
AN INSIDER’S VIEW
I’ve worked for CSX Corp. for 34 years, and my father
and brother worked on the railroad. Railroading is in

my blood, and I know this industry very well. I realize
because of its 180-year history, there is a lot of tradi-
tion that can sometimes mean slow-moving processes
and resistance to change.
This changed at CSX when the company got in-
volved with Six Sigma and ASQ. From the start, I could
easily see how the Six Sigma process tore down the
walls that prevented our growth. Being involved with
the locomotive shutdown project is a perfect example
of how this process works at CSX and how it made me
see that we were changing for the better.
As one of the 32 fi nalists, our team was fi lled with
pride. To be included with some of the world’s cor-
porate leaders—companies such as Boeing, Siemens
and Genentech—was mind-boggling. This was the fi rst
time CSX was in the fi nals. When we marched into the
meeting with the other fi nalists, and as the streamers
were fl ying and the cheering crowd was using noise-

makers, it was hard to contain our excitement.
I remember that when it was announced that our
team was the bronze winner, we launched from our
seats and ran onto the stage, leaping and screaming
with excitement. I think my teammates would agree
that we didn’t feel this excitement just for ourselves.
We were accepting this coveted award for the entire
CSX Corp., and the employees who embraced this new
way of working. After generations of doing things the
same way, this was quite an amazing accomplishment.
Railroaders are full of a sense of pride in their work
because for nearly two centuries we’ve run trains.
Now, with this sort of process improvement, we don’t
just run trains—we run them well. This is the sort of
forward thinking that future generations of railroaders
will use to ensure that, indeed, CSX is how tomorrow
moves. — Dennis Merrell, core team member
After generations of doing things

the same way, this was quite an
amazing accomplishment. Rail-
roaders are full of a sense of pride
in their work because for nearly
two centuries we’ve run trains.
“
”
May 2008 • QP 25
• Questionnaire/survey.
• Measurement system analysis.
• Statistical tests.
• Team agreement on results.
Following the rules
The team found that locomotives were often left idling
because operators were simply following the compa-
ny’s rules. Before this project began, the CSX trans-
portation fuel conversation rule was to shut down die-
sel locomotive engines when they were not being used
for at least 30 minutes, and the ambient temperature
was above 40° F.

To develop possible solutions, the team benchmarked
other railroad shutdown practices—including those of
Burlington North Santa Fe Corp. and Canadian Nation-
al—to determine what risk levels railroad operators ac-
cepted. They discovered these other railroads supported
lower temperatures and time thresholds.
The team’s solution tree identifi ed several factors
that had statistical signifi cance to shutdown perfor-
mance—most were constrained by the fuel conserva-
tion rule. The data showed clear differences in per-
formance by location. It was also clear that shutdown
performance was impacted by temperature. Regres-
sion results on a fi tted line plot gave the team clues
that individuals had different interpretations of the
temperature.
A fi nal solution
The team considered changing the
rule’s time and temperature limits,

which would result in increased em-
ployee awareness, rule adherence and
standardization of the delivery system
of temperature information. The team
used an improved FMEA to gauge the
solution’s potential value.
To understand the risk of increasing
shutdown opportunities by adjusting
the parameters of the rule, the team col-
lected data from temperature gages in-
stalled in the water system on a sample
of units in colder weather. Each of the
units had a dump valve installed so the
engine cooling water would automati-
cally drain when it reached 40° F, pre-
venting any possible freeze damage.
These samples indicated:
• At 28° F ambient temperature, it should take 32

hours for water temperature to reach 40° F.
• At 28° F ambient temperature, it should take 52
hours for the water temperature to reach freezing.
However, each locomotive had a different heat
transfer rate—the data on two of the units indicated
the water would reach 40° F in as little as 14 hours
TEAMS
TEAM MEMBERS WHO represented the CSX group at the 2007
International Team
Competition were (from left) Andy John, Herb Schubert, Wayne
Sequin, Dean Mene-
fee, John Murphy and Dennis Merrell.
Final solution validation / FIGURE 2
Final solution opportunities
Cumulative % of locomotive idle time by temperature
35º - 30.44%
28º - 19.91%
32º - 24.80%
40º - 37.63%
100%
90%

80%
70%
60%
50%
40%
30%
20%
10%
0%
-3
1º
-2
0º
-1
3º -5
º 3º 10
º
17
º
23
º

29
º
35
º
42
º
48
º
55
º
62
º
69
º
77
º
84
º
Outside temperature at start of not-moving period
%
o
f t
ot
al

n
ot
m
ov
in
g
tim
e
at
or
b
el
ow
t
hi
s
te
m
pe
ra
tu
re
3,800 locomotives subject
to temperature variation

and begin freezing at 25 hours. The data showed that
CSX can tolerate risk at 35° F for shutdown without
unusual risk of locomotive engine and components
damage. At 35° F ambient temperature, locomotive
cooling water will never reach freezing.
After analyzing the data, the team concluded it
would support two rule changes (see Figure 2, p. 25).
First, at selected locomotive shops and service centers
that were manned 24/7, the shutdown temperature
threshold would be decreased from 40° to 28° F. Sec-
ond, the temperature in the rule would be decreased
from 40° to 35° F, and the time would be decreased
from 30 minutes to 15. These changes were based on
benchmarking and validated by temperature decay re-
gressions. The rules were applied in September 2004.
Making changes

After the rules were put into practice, large, obvi-
ous signs were built at locomotive shops to reinforce
when to shut down locomotives and when to leave
them running. Daily scorecards for each location and
division were and continue to be used to provide re-
sponsible fi eld offi cers with current, relevant and ac-
tionable data.
Each 1% change in shutdown performance gener-
ates more than a half million gallons of fuel annually,
The team found idling locomotives wasted
30 million gallons of fuel per year.
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May 2008 • QP 27
TEAMS
equaling more than $1 million in savings for each per-
centage point.
Some of the tangible and intangible results realized
include:
• Improvements to shutdown performance numbers
without collateral damage for operations’ mechani-
cal and transportation management.
• A savings of $3.6 million in 2004.
• Additional savings at specifi c shop locations.
• Train origins that were not impacted.
• Improved fuel effi ciency at a time when fuel costs
were escalating.
• An invitation to join the Environmental Protection
Agency’s greenhouse gas initiative.
• A savings of more than 14 million gallons of fuel and
more than $28 million over the three-year span of

the project.
• Better stewardship with regard to the environment
resources by reducing emissions and noise, which
has led to happier neighbors and recognition for the
achievements.
• A savings of more than 650,000 barrels of a non-
renewable fuel resource.
Beyond these results for CSX, the locomotive shut-
down team had results of its own. Over the course
of the project, the team members increased their fa-
miliarity and understanding of process improvement
tools and the workforce developed more disciplined
behavior. Several key members were identifi ed for per-
formance and received awards.
READ MORE TEAM COMPETITION ARTICLES
Look for case studies on other winning projects from the 2007
International
Team Competition on www.qualityprogress.com.

1
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Project Duration: Aug 03 - Aug 04
2
3
• Joint Venture between Partners
Tata Auto Components (TACO): 51%
Toyo of Japan: 40.25%
Mitsubishi Non Ferrous of Japan: 8.75%
• Equity Base
US $ 6.95 million
• Initial Project Cost
US $ 11.3 million
• Integrated Plant Facility
• Equivalent Capacity
625,000 Heat Exchangers
• No. of Employees: 221
• Land : 7 Acres
• Plant : 100,000 sq.ft.
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Tata Toyo Radiators today is one
of the largest manufacturers of
Heat Exchangers in India.
4
• Integrated Plant Facility
Press, Tube Mill, Fin Forming, Degreasing,
Core Assembly, Brazing Oven, Tank Clinching &
Leak Testing
• Products
Aluminum Brazed Radiator, Intercooler,
Heater Core, Condenser
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5
Acknowledgements
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This report presents the work done by the team for reducing
energy
consumption and improving brazing oven productivity.
Energy conservation has been an integral effort for Tata Toyo
Radiators
(TTR) since its inception in 1998. This Six Sigma project,
undertaken in
2003-04, assisted in channeling the efforts of team members
through a
structured and systematic data driven approach for enhancing
productivity, planning, and energy planning.
We would like thank our management champion, Mr. R. Sundar,
CEO,
for providing us guidance and support for moving this project
forward.
We would also like to express our thanks to Mr. A. Alur & Mr.
R. Shete.
Our special thanks to the technical advisors of Toyo Radiators,
Japan,
and also to the management and the board members of Tata
Auto Comp
Systems (TACO), the parent company of TTR, for supporting
the Six
Sigma movement in TTR.
6
Summary of Project Achievements
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28 % reduction in energy consumption levels. Energy levels
were reduced from about 9.87 kwh / equivalent heat exchanger
between April 02 and July 03 (16 months data) to about 7.05
kwh / equivalent heat exchanger between Jan 04 and Aug 04 (8
months data).
Hard savings of Rs 5.5 million / year or US $ 122,200 / year
are achieved based on 2004 - 05 actual volumes.
The “Actual” energy cost per equivalent heat exchanger paid by
TTR’s finance department to the electric power company
dropped from about Rs 48 per heat exchanger between April 02
and July 03 (16 month data) to about Rs 30 per heat exchanger
between Jan 04 and Aug 04 (8 months data) - tremendous
achievement.
7
Summary of Project Achievements
Productivity Improvement:
Brazing oven productivity increased 42 % from 76
equivalent heat exchangers in July / Aug 03 to 108
equivalent heat exchangers in Jan to Aug 04.
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Project Statement :
– The present energy consumption for “Entire
TTR Factory” is about 4577318 kilo watt hour
(kwh) while producing 463729 equivalent heat
exchangers. This gives us an energy
consumption level per radiator of 9.87 kwh /
heat exchanger.
This is based on 16 months of data
(April 02 to July 03)
Note
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• Project Objective:
– To reduce the plant energy consumption level by about 2 kwh
/
equivalent heat exchanger, i.e., reduce current levels from
about 9.87 to 7.9 kwh / rad by 31 Dec 03. This will result in
hard recurring energy savings of about Rs 4 Million / year (US
$ 88,800) based on 2004 annual volumes.
Equivalent Heat Exchangers = 1*Radiator volumes + 1.5 *
Intercooler volumes + 1/6 *
Heat Core Volumes
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Concept of Equivalent Heat Exchanger: Intercoolers are
about 1.5 times the size of radiators and heater cores are about
1/6 times the size of radiators. The following equivalent heat
exchanger formula was used for this project:
10
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02-03 Apr-Jul 03
9.82
9.9

Kwh /eq heat exchanger
9.0
9.5
10.0
8.5
8.0
7.5
Aug Sept Oct Nov Dec Jan 04 Feb Mar
Target: 7.9 Target: 7.9 KwhKwh / / radrad
Expected
Savings of
RsRs. 4 . 4
Million / yrMillion / yr
Before Project Data
Energy Consumption between Apr 02
to Jul 03 is 9.87 Kwh / rad
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•• Expected Date to complete DMAI Phases: Expected Date to
complete DMAI Phases:
On / before 30 Nov 2003 On / before 30 Nov 2003
•• Expected Date to complete Control Phase: Expected Date to
complete Control Phase:
On / before 31 March 2004On / before 31 March 2004
A Team Commitment
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Tube Mill Machine
Press 1 Press 2 Press 3
Fin Forming Machine
Plastic Tank & O Ring
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Testing
Tube weld Tube mill Cut to size

Degrease
Clinching
Fitment of drain
plug, pressure
cap etc
Packaging
and Dispatch
Leak
Testing
Fin
Forming Cut to size
Core
Assembly
Brazing
Area
Header Plate
Core Support
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Brazing FDV
612000
123000
Kwh
600,000
Air
Comp
Others
500,000
400,000
300,000
200,000
100,000
119700
Tube
Mill
70320
Pump

House
48180
Admin
Bldg
27820
Fin
Forming
26240
Press
20000
Pareto Analysis
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Main Focus Area:
Brazing Area
Secondary Focus Areas:
FDV (Ventilation System), Air
Comp (Air Compressor), and
Pump House
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14
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Tata Toyo Radiators (TTR)
Brazing
Area
Force Draft
Ventilation
(FDV)
Air
Compressor
(Air Comp)
Tube

Mill
Pump House
Admin Bldg Fin Forming Press
Tank Clinching
and Leak Testing
IC
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Based on Pareto Analysis, project will focus primarily on
‘Brazing Area’ and secondarily on areas like FDV,
Air Comp, Tube Mill and Pump House
15
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16

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Plant Energy
Levels
July – Aug 03
76
90
100
110
80
70
60
Target = 90
Brazing Area
Productivity Levels
Productivity figures
include change over
times, however, exclude
planned shut downs
02-03 Apr to July 03
9.82

Kwh / Equivalent Heat Exchangers
8.5
9.0
9.5
8.0
7.5
7.0
Target = 7.9
10.0 9.9
Kwh / Equivalent Heat Exchangers
17
=�!3
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Burn Off Fluxing Dry Off 1 Dry Off 2
Brazing Oven Cooling Section
7.5 kw blower motor
12 heater, 10 kw each.

Total = 120 kw load (t
Deg C)
7.5 kw blower motor 7.5 kw blower motor
Total = 120 kw load
Total = 81 kw load
8 top and bottom zones. 8 Heaters = 360 kw.
Varying from t1 to t2 Deg C
Product must reach T +/- T1 Deg C for minimum ‘x’ minutes
7.5 kw blower motor
7.5 kw exhaust
system blower
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The ‘Brazing Oven’ is the biggest source of energy consumption
in the Brazing Area.
18
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Temp Zone 1
Temp Zone 2
Temp Zone 3
Brazing Oven Cooling Section
Burn Off, Fluxing and Dry Off
Start to Finish Length of the
Brazing Area: 46 meters
19
�
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%�%��@ %�
• After many brainstorming sessions the team identified the
following causes for “High Energy Consumption” for the
areas highlighted in the Pareto Analysis. Causes for “Lower
Productivity in Brazing Area” were also brainstormed.
Wherever possible, the team attempted to
quantify financial losses per individual causes.
Simultaneously, counteractions for the causes
were also brainstormed. Approximate costs for
implementing counteractions were also discussed
for management to take immediate decision.
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20
�
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Area Causes & Losses in Rs
Million per yr
Counteractions
Burnoff • Burnoff ‘ON’ during heater
core brazing (Rs 0.314 M/yr)
• Inadequate utilization due to
frequent temp / speed changes
(Rs 0.214 M/yr)
• Shut off burnoff as last radiator exits
before HC starts
• See “Brazing Oven” section
Fluxer • Fluxer ‘ON’ during heater core
brazing (Rs 0.011 M/yr)
• Inadequate utilization due to
frequent temp / speed changes
(Rs 0.015 M/yr)
• Fluxer Breakdown (Rs 0.2
M/yr)

• Fluxer nozzle setting problem
(Rs 0.15 M/yr)
• Shut off burnoff as last radiator exits
before HC starts
• See “Brazing Oven” section
• Keep spare fluxer balls. Spare kit for
fluxer pump
• Procure and install video camera in
the fluxer area to assist the loading
operator
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Detailed calculations for ‘financial losses’ are available
Note
21
Area Causes & Losses in

Rs Million per yr
Counteractions
Dry Off • Inadequate utilization
due to frequent temp /
speed changes (Rs 0.4
M/yr)
• Air Blower not
functioning properly
(Rs 0.075 M/yr)
See “Brazing Oven” section
• Procure bearing and other motor spares
Cooling
Section
• Muffle between oven
and cooling section
has no insulation,
causing heat loss
• Air blower remains
‘on’ during idle
condition changes (Rs
0.03 M/yr)
• Insulate muffle

• Modify current circuit
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22
Area Causes & Losses
in Rs Million per
yr
Counteractions
Brazing
Oven

Production
Schedule
• Inadequate
utilization of
brazing oven due
to frequent speed
and temperature
changes (~ Rs 2
M / yr)
• Pitch not
optimized, leading
to lower radiator
output per hour

• No systematic
plan for feeding
the clinching line,
leading to higher
number of
changes for the
brazing oven
• Commonization of temp for at least 80 % of all products.
• Commonization of s1 brazing conveyor speed and speed
increase for double row cores up to truck model
• Commonization of conveyor speed for 43 mm and 65 mm
intercoolers at s2 mm/min
• Zig zag loading of Sumo / Safari intercoolers, hereby
increasing
output for different mm radiator cores
• Increase conveyor speed for18 mm cores from s3 to s4
mm/min
and heater core speed from s5 to s6 mm/min
• Decrease product pitch on conveyor for Sumo and Indica type
radiators. Decrease Sumo pitch from p1 to p2 mm and Indica
pitch from p3 to p4 mm; helped increase output by about ‘x’ eq
heat exchangers / hr
• Daily production schedule indicating sequence of production

was developed by the team
• Adhering to the scheduled plan would lead to reduction in
number of changes in the brazing oven, leading to better
utilization of the brazing oven
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23
Area Causes & Losses in Rs
Million per yr
Counteractions
Brazing
Area
• Brazing conveyor running at
Sx mm/min during idle
condition
• Core Band Shortages (Rs

0.49 M / yr)
• Reduced conveyor speed to Sy for idle condition
reducing heat loss and switched off blower
during non-brazing time (by introducing new
electrical logic)
• Procured new core bands
Force
Draft
Ventilation
System
(FDV)
• FDV does not have a cut off
timer, thus many times FDV
keeps running during the
night also (when not actually
needed) (Rs 0.16 M / yr)
• Exhaust fans do not start
automatically after power
failure
• Install 6 timers on FDV
• Circuit modification
Employees • Employees’ involvement and

awareness for energy
conversation
• Generated operator awareness for energy /
utility cost. Mr. Purandhare, an energy
conservation expert, conducted “Energy
Conservation Awareness” program for the
factory on 15 Nov 03.
• Also the team initiated a poster campaign in
TTR.
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24
Area Causes & Losses in Rs Million
per yr
Counteractions
Air Comp • Press drop due to leakages in air
comp line
• Due to inadequate brazing oven
utilization, more use of comp air

• Fix leakages
• Reduced brazing oven running hours. This
reduced load on air compressor,
saving money
Core Assy &
Clinching
Admin
Building
• Hydraulic power packs remain
“ON” during lunch and
changeovers (Rs 0.17 M / yr)
• Electrical heating elements are
used to heat food in cafeteria
• Completed work instructions and conduct
operator awareness session for shutting
power packs during lunch, tea breaks, and
dinner
• Install solar heating system
(payback period is about 8 months)

Pump House • Pumps operate continuously
during no-production time as the
pump switches are located far
away from production area (for
example tube mill area)
• Provided remote switches for tube mill
pumps (near machine control board)
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25
For improving brazing oven utilization, around 25 planned
experiments
were conducted over a period of about a month. Heat Exchanger
cores
with temperature loggers (profilers) connected to cores were
passed
through the brazing oven for recording the temperatures that the
cores
were actually attaining when the cores were actually passing
through the
various heating and cooling zones in the brazing oven. Brazing
zone
temperatures, speeds, and pitch were systematically varied and
the

actual core temperatures (on three places on the radiator core)
were
measured and analyzed.
Through these experiments, we successfully commonized
temperatures,
speeds, and optimized pitch for about 80 % of heat exchangers
manufactured by us. This, along with other improvement
actions, led to
a 42 % improvement in brazing oven output, thereby reducing
energy
cost per heat exchanger core.
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Radiator cores moving on the brazing oven conveyor just before
entering the brazing oven
Speed of ConveyorRadiator Core
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Pitch
27
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Experimental Radiator core (with data logger) moving on the
brazing oven conveyor just
before entering the brazing oven
Speed of ConveyorRadiator Core
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Pitch
Data Logger
Insulation Box

Thermocouples attached
to radiator core for
recording brazing temp
profile
Data Logger
Radiator Core
Temperature
Profile Analysis
28
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Radiator Temperature Profile (through Brazing Oven)
Temp Ramp Up
Temp Ramp Down
Temp Stabilization
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05
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06
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06
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TIME (MM:SS)
TE
M

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E
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A
TU
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Channel 1
Channel 2
Channel 3
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Specifications:
T +/- t temp to be maintained for
‘x’ minutes in the brazing oven
29
The progress of the project action items was tracked
through a detailed action item worksheet.
This action item work sheet was reviewed in the “Six
Sigma CEO Review Meeting” held every 15 days
during the course of the project. This meeting was
very instrumental in giving direction to the project
and helped the project move forward.

A Sample of the Action Item Work
Sheet is shown on the next page...
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30
ENERGY PROJECT
Main task/sub task Responsibility Support Start date End date
I.) Minimize Converyor Speed and Temp Changes Kiran
SSK/MMK/SH 1-Oct 31-Oct
a.) Study different combinations of speed and temp settings for
1512 & Indica D. 1-Oct 31-Oct
b.) Validate study for other models also at the optimised
settings 15-Nov
c.) Quantify benefits of the optimization study Kiran
SSK/MMK/SH 15-Oct 31-Oct
d.) Standardize set up. Modify process sheets and work
instructions 15-Oct 31-Oct
2.) Burnoff / Fluxer Shut Off
a.) Shut Burn Off & Fluxer as last radiator exits before HC
starts Sanjay AG 1-Oct 15-Oct
b.) Visual Control and Work Instructions Sanjay AG 1-Oct 31-
Oct

3.) Order Spare Fluxer Balls
a.) PO to be released Alur KPK / RS 15-Oct 1-Nov
4.) Spare Kit for Fluxer Pump
a.) PO to be released Alur KPK / RS 15-Oct 1-Nov
5.) Install TV / Camera for Fluxer Monitoring Sanjay RNS 15-
Oct 31-Oct
6.) Spares for 'Dry Off' Air Blower
a.) Bearing, Air Blower, Motor Alur KPK / RS 15-Oct 5-Nov
7.) Procure Core Bands
a.) Finalize quantity required Alur KPK / RS 15-Oct 30-Nov
b.) PO release
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31
New Circuit Breaker installed for
switching off air blower during non-
production hours of brazing oven.
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Cooling Section
Remote switch installed for the cooling
water pumps (at tube mill control panel).
Now the tube mill operator can shut the
pumps during non-production hours due to
this remote arrangement, saving energy.
Pump House
32
Solar water heating system installed
for cafeteria (replacing the existing
electrical heating system ) leading to
energy savings (pay back period was
only 8 months).
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Fluxer Solar Heating System

TV monitor and video camera in fluxing area
installed for assisting the brazing oven
operator in real-time monitoring of the
fluxing area. This helped reduce breakdown
time thereby reducing energy during brazing
oven ‘ON’ time.
33
Posters displayed on the shop floor and office area to increase
energy saving awareness
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34
C� ��!)6��' ��$)�� !%$+�!�
02-03 Apr-
Jul 03
9.82
9.9
Kwh / heat
exchanger

9.0
9.5
8.5
8.0
7.5
Aug Sept Oct Nov Dec Jan 04
8.79
Project Start
Feb Mar
8.32 8.34
7.50
7.72
7.0
7.14
10.0
6.5
6.42
6.92
Apr
7.54

May
7.43
Jun
7.26
Jul
7.20
Aug 04
6.7
Target = 7.9 kwh / Eq Heat Exchanger
Control Phase
Before: 9.87 kwh / eq heat exchanger (Apr
02 through July 03 - 16 month data)
After: 7.05 kwh / eq heat exchanger (Jan 04
through Aug 04 - 8 month data)
28 % Reduction in Energy Levels
RESULTS
35
02-03 Apr-

Jul 03
48.56
47.17
Rs / heat
exchanger
42
45
39
36
33
40.48
Project Start
Feb Mar
37.02
47.19
33.9
28.0530
27.07

48
27
29.44 28.9
Apr
34.67
May
31.5
Jun
31.2
Jul
27.63
Aug 04
27.62
Control Phase
Before: ~ Rs 48 / equivalent heat exchanger
(Apr 02 through July 03 - 16 month data)
After: ~ Rs 30 / equivalent heat exchanger (Jan
04 through Aug 04 - 8 month data)
37.5 % Reduction in Actual Energy Bills per
heat exchanger manufactured by TTR.

Note: Figures include actual payments made by
TTR to the electric power company
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RESULTS
36
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02-03 Apr-
Jul 03
4.45
4.64
Kwh / heat
exchanger
4.3
4.5
4.1
3.9
3.7

4.37
Project Start
Feb Mar
4.28
4.16
3.98
3.5
3.81
4.7
3.3 3.24
3.32
Apr
3.45
May
3.58
Jun
3.56
Jul

3.51
Aug 04
3.37
RESULTS
4.10
37
02 - 03 Apr - Jul 03
0.82
0.92
0.7
0.9
1.1
0.5

0.3
0.1
Project start up
C�
�� ,��%%��6��$!��Kwh / heat
exchanger
Jan – Apr 04
0.41
May – Aug 04
0.39
RESULTS
38
02 - 03 Apr - Jul 03
0.54

0.94
0.7
0.9
1.1
0.5
0.3
0.1
Project start up
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exchanger
Jan – Apr 04
0.39
May – Aug 04
0.49

RESULTS
39
02 - 03 Apr - Jul 03
0.34
0.37
0.3
0.35
0.4
0.25
0.2
0.15
Project start up
C�
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%�6��$!��Kwh / heat
exchanger
Jan – Apr 04
0.19

May – Aug 04
0.20
RESULTS
40
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0
��$!��
Aug 03
76
90
Heat Exchanger / Hour
90
100

110
80
70
60
Project start up
79
Sept Oct Nov Jan 04 Feb
86
98
Dec
104
Mar
106
120
108
106
Apr
111

May
109
Jun
112
July
112
Aug
RESULTS
41
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Energy Conservation Cell Created
(Monitor and Hold on to the Gains)
Chief Executive Officer
(Six Sigma Management Champion)
Manager – PPC &
Logistics
MR – ISO / QS

Vice President Operations
(Project Champion)
Manager – HR
Safety, Health, Environment
& Water Conservation
Managers – Manufacturing
& Maintenance
(Green Belts)
Energy Coordinator
(Process Owner)
General Manager – Quality
Engineering
(Corporate Six Sigma Master
Black Belt)
(Energy Conservation Facilitator)
42
�
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• Promote energy saving and conservation of resources
• Use non-conventional sources of energy
• Comply with the energy legislation and other regulations
• Promote use of energy efficient alternatives and use of
alternate fuels
• Communicate energy management policy to all employees and
encourage their involvement through training and participation
• Create awareness among all employees for innovative ideas
towards
conservation of energy
• Minimize waste generation and promote disposal, reuse, and
recycling
in an environmentally friendly manner
• Make an effort to reduce the cost continuously every year by
adopting
effective “Energy Management Systems”
43
‘Shop Work Instructions’ posted on the brazing oven control
panel (for operator reference)
for the new optimized temperatures, conveyor speeds, and
pitches (model wise)
These instructions are now part of the Quality System
Documentation !
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44
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Daily Energy Dashboard (Brazing Area)
3.39
3.13
3.31
3.14
3.5
3.67
3.36 3.33
3.2
2.82
3.56 3.5
3.98
3.39
3.73

3.35 3.36
3.5
3.68
3.19
3.37
4.03
3.18 3.21
3.02
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2 3 4 5 6 7 8 9 11 12 13 14 16 17 18 19 22 23 24 25 26 27 28 29
30
Days

%
V
ar
ia
n
ce
Daily monitoring of energy levels has been started in the
brazing area as part
of the control phase. Total number of heat exchangers produced
along with
total kwh consumed during the day is used to calculate kwh /
equivalent heat
exchangers for brazing. This chart is maintained by the process
owner and
shop personnel. This chart gives real time signals to shop if the
energy levels
go beyond set norms. Also, we are monitoring energy levels for
FDV, Air
Comp, Tube Mill, and Pump House on a daily basis.
45
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Productivity levels are now being measured shift wise to make
sure that
the gains obtained from this project are sustained over time.
This chart is also maintained by the process owner and shop
personnel.

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80.898.1122.2105.949.3101.471.9118.6106.60.00.0106.9105.19
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Breakdown
time/Planned
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available Time
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46
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Chapter 2: Social Responsibility and Human Resource
Management
Societal Factors Affecting HRM
Factors affecting Strategic HRM include:
Sustainability
Demographics and diversity
Ethics

Diversity
Demographic changes in society have greatly impacted the
composition of the workforce. In addition, numerous laws
protect diverse groups in our society from discrimination in
employment Most organizations have developed some kind of
diversity management program in response to one of both of
these factors.
Diversity initiatives can be designed to ensure legal compliance
or to truly promote and encourage respect for others and
differences. There is a marked difference between these
motivations, as illustrated in Exhibit 2.1.
Diversity is a strategic business issue for an overwhelming
majority of organizations/employers.
Exhibit 2.1
Generational Diversity
Generational diversity is becoming increasingly prevalent as
individuals live and remain in the workplace longer than in
previous years.
Different generations need to be able to work alongside each
other in contemporary organizations. Exhibit 2.2 illustrates
some of the characteristics of different generations found in the
workplace.

Exhibit 2.2
Workforce Demographic Changes:
“Graying” of Workforce
Negative aspects of older workers
Perceived resistance to change by older workers
Increased health-care costs for senior workers
Blocking advancement opportunities for younger workers
Higher wage & salary costs for senior workers
Positive aspects of older workers
As productive or more productive than younger workers
Have more organizational loyalty than younger workers
Possess broader industry knowledge & professional networks
Workforce Demographic Changes (1)
Baby Boomers (1945–1962)
In excess supply in middle management ranks
HR challenge is to manage “plateaued” workers
Baby Busters (1963–mid-1970s)
Are career bottlenecked by Boomers
Have skills in high demand and frustrated
Also entrepreneurial opportunities
Generation “X” (mid 1970s–early 1980s)
Have life-long exposure to technology & constant change

Seek self-control, independence, personal growth, creativity
Not focused on job security or long-term employment
Generation “Y” / “Baby Boom Echo” (mid 1980s 1999)
High comfort level with technology
Global & tolerant outlook on life
Highly entrepreneurial
Shorter attention span
Opting for more transient & variable project work
Generation Z (2000 - )
Many traits on common with Generation Y, including desire for
flexibility and work/life balance, preference for less control
Distinctive with greater aspirations for self- employment or
working for smaller organizations as well as being more
socially progressive
Less loyal than predecessors to their employer
Sexual orientation and gender identity/expression
89% of Fortune 500 employers prohibit discrimination based on
sexual orientation; 66% prohibit discrimination based on gender
identity / expression with this number rapidly increasing
State laws presented in Exhibit 2.3
Can have significant impact on “bottom line”
Disabilities
54 million Americans with disabilities
Often not included in diversity initiatives
Many supervisors do not understand needs of employees with
disabilities

Stereotypes
New Employee/Workplace Dynamics (1)
Emphasis on management of professionals
Establishment of separate career tracks
Technical/Professional, Managerial/Administrative
Use of project teams
Less employee loyalty, more loyal to self
Staying with employers for shorter periods; demanding more
meaningful work & involvement in organizational decisions
New Employee/Workplace Dynamics (2)
Increased personal & family dynamic effects
More single-parent families, dual-career couples, & domestic
partners
Increased nontraditional work relationships
Part-time, consulting, & temporary employment flexibility
Outsourcing & entrepreneurial opportunities
Ethnicity
2010
Ethnic minority share of workforce exceeds 30%
Up from 22% in 1990 & 18% in 1980
By 2050
Close to 50% of US population will be non-Caucasian
By 2025
African-Americans will represent 14% of population

Up from 12% in 1994
Hispanics will represent 17% of population
Up from 10% in 1994
Asians & Pacific Islanders will represent 8% of population
More than double from 1994
Managing Workplace Diversity
Understanding & appreciating diversity
Critical to effectively marketing to ethnic & minority groups
Promoted by having diverse workforce at all levels
Helps ensure hiring & promotion decisions are unbiased by
personal differences
Diversity management programs or initiatives
Must be integrated with organization’s mission & objectives
Help key decision makers identify diversity’s benefits to
organization
Make critical decisions about implementing optimal
program/initiative contingent on organization & its people,
mission & culture.
Exhibit 2.4
Strategic Management of Diversity
Determine why diversity is important
Articulate how diversity relates to mission & strategic
objectives

Define diversity & determine how inclusive its efforts will be
Make a decision as to whether special efforts should be
extended to attract diverse workforce
Assess how existing employees, customers & other
constituencies feel about diversity
Determine specific types of diversity initiatives that will be
undertaken
Ethical Behavior
Many employers are now considering ethics and ethical
behavior in light of major bankruptcies, scandals and business
meltdowns. However, ethics are subject to personal values and
convictions.
Common ethical concerns for HR include
off-duty behavior, especially use of medical marijuana
ownership of work
non-compete clauses
Sarbanes-Oxley Act of 2002
Provides sweeping measures to control deception in accounting
and management practices by
increasing government oversight of financial reporting
holding senior executives more responsible that previously
protecting whistle blowers
Codes of Ethics
Many organizations and some industries have developed their

own code of ethics. The Society of Human Resource
Management (SHRM) has developed such a code for HR
professionals. This code presents core principles, intent and
guidelines in a number of areas, including: Professional
Responsibility; Professional Development; Ethical Leadership;
Fairness and Justice; Conflicts of Interest; and Use of
Information.
Exhibit 2.6 provides some guides for developing a code of
ethics or code of conduct.
Exhibit 2.7
Sustainability
Sustainability (and social responsibility in general) take a more
macro approach to managing an organization’s relationship with
its external environment.
Organizations are being increasingly expected to consider the
effects of their operations, decision and business on the social
and natural environment.
General Electric has developed a model program related to
sustainability and Gap, Inc. has set standards for offshoring of
its manufacturing operations.
Exhibit 2.8

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Chapter 3: Strategic Management
Strategic Management
Strategic Human Resource Management
Involves aligning initiatives involving how people are managed
with organizational mission and objectives
Strategic Management Process
Determining what needs to be done to achieve corporate
objectives over 3 - 5 years
Examining organization and competitive environment
Establishing optimal fit between organization and its
environment
Reviewing and revising strategic plan
Models of Strategy (1)
Industrial Organization (I/O) Model
External environment is primary determinant of organizational
strategy rather than internal decisions of managers
Environment presents threats and opportunities

All competing organizations control or have equal access to
resources
Resources are highly mobile between firms
Organizational success is achieved by
Offering goods and services at lower costs than competitors
Differentiating products to bring premium prices
Models of Strategy (2)
Resource-Based View (RBV)
An organization’s resources and capabilities, not external
environmental conditions, should be basis for strategic
decisions
Competitive advantage is gained through acquisition and value
of organizational resources
Organizations can identify, locate and acquire key valuable
resources
Resources are not highly mobile across organizations and once
acquired are retained
Valuable resources are costly to imitate and non-substitutable
Contrasting the Two Approaches
Research provides support for both positions
What drives strategy?
I/O: External considerations
RBV: Internal considerations
I/O: Strategy drives resource acquisition
RBV: Strategy determined by resources

The Process of Strategic Management
Mission statement
Environmental analysis
Organizational self-assessment
Establishing goals and objectives
Setting Strategy
Identify Assumptions
Exhibit 3.1: The Process of Strategic Management
Mission Statement
Explains purpose and reason for existence
Usually very broad
No more than a couple of sentences
Serves as foundation for everything organization does
Amica Mission Statement
Microsoft Mission Statement

Analysis of Environment
Critical components of external environment
Competition
Industry structure
Government regulations
Technology
Market trends
Economic tends
Organization Self-Assessment (1)
Identify primary strengths and weaknesses
Find ways to capitalize on strengths
Find ways to improve or minimize weaknesses
Examine resources
Physical
Human
Technological
Capital
Organization Self-Assessment (2)
Examine internal management systems
Culture
Organization structure
Power dynamics and policy
Decision-making processes
Past strategy and performance
Work systems

Establishing Goals and Objectives
Goals should be:
Specific
Measurable
Flexible
Exhibit 3.4: The Stages of Strategic Planning and
Corresponding Roles of HR
Corporate Strategies: Growth
Benefits
Gaining economies of scale in operations and functions
Enhancing competitive position vis-à-vis industry competitors
Providing opportunities for employee professional development
and advancement
HR Issues
Planning for new hiring
Alerting current employees
Ensuring quality and performance standards are maintained
Internal Methods
Penetration of existing markets
Developing new markets
Developing new products or services for existing or new
markets
External Methods

Acquiring other organizations
Vertical integration
HR Issues in MandA
Merging organizations
Dismissing redundant employees
Corporate Strategies: Stability
Maintaining status quo due to limited environmental
opportunities for gaining competitive advantage
Few employees will have opportunities for advancement
Critical that management identify key employees and develop
specific HR retention strategies to keep them
Corporate Strategies:
Turnaround or Retrenchment
Downsizing or streamlining organization in cost-cutting attempt
to adjust to competitive environment
Few opportunities and many environmental threats
Important to develop HR practices to manage “survivors”
Business Unit Strategies: Cost Leadership
Increases in efficiency and cutting of costs, then passing
savings to consumer
Assumes price elasticity in demand for products or services is
high
Assumes that customers are more price sensitive than brand
loyal

HR strategy focuses on short-term performance measures of
results and promoting efficiency through job specialization and
cross-training
Business Unit Strategies: Differentiation
In order to demand a premium price from consumers
Attempting to distinguish organizational products or services
from other competitors or
Creating perception of difference
Organization offers employees incentives and compensation for
creativity
HR strategy focuses on external hiring of unique individuals
and on retaining creative employees
Business Unit Strategies: Focus
Business attempts to satisfy needs of only a particular group or
narrow market segment
Strategic intent is to gain consumer loyalty of neglected groups
of consumers
Strategic HR issue is ensuring employee awareness of
uniqueness of market segment
Thorough employee training and focus on customer satisfaction
are critical factors
Hiring members of target segment who are empathetic to
customer in target segment
Exhibit 3.5: Dyer and Holder’s Typology of Strategies

Benefits of a Strategic Approach to HR
Facilitates development of high-quality workforce through focus
on types of people and skills needed
Facilitates cost-effective utilization of labor, particularly in
service industries where labor is generally greatest cost
Facilitates planning and assessment of environmental
uncertainty and adaptation of organization to external forces
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Chapter 4: The Evolving/ Strategic Role of Human Resource
Management
Strategic Human Resource Management
Involves development of consistent, aligned collection of
practices, programs, and policies to facilitate achievement of
strategic objectives
Requires abandoning mindset and practices of “personnel
management” and focusing on strategic issues rather than

operational issues
Integration of all HR programs within larger framework,
facilitating mission and objectives
Writing down strategy facilitates involvement and buy-in of
senior executives and other employees
Exhibit 4.1: Possible Roles Assumed by the HR Function
HR Roles in Knowledge-Based Economy (1)
Human capital steward
Creates an environment and culture in which employees
voluntarily contribute skills, ideas, and energy
Human capital is not “owned” by organization
Knowledge facilitator
Procures necessary employee knowledge and skill sets that
allow information to be acquired, developed, and disseminated
Provides a competitive advantage
Must be part of strategically designed employee development
plan
HR Roles in Knowledge-Based Economy (2)
Relationship builder
Develops structure, work practices, and culture that allow
individuals to work together
Develops networks that focus on strategic objectives
Rapid deployment specialist

Creates fluid and adaptable structure and systems
Global, knowledge-based economy mandates flexibility and
culture that embraces change
SHRM Critical Competencies
Business acumen – ability to understand of the business and
industry and the ability to apply information to strategic goals
Communication – ability to share information with both internal
and external stakeholders
Consultation – ability to coach and guide key stakeholders
Critical evaluation – ability to analyze and interpret information
to make decision and solve problems
Ethical practice – ability to infuse values, integrity,
accountability and responsibility throughout all business
practices and decisions
Global and cultural effectiveness – ability to understand and
value multiple perspectives both inside of the organization and
globally
Leadership and navigation – ability to shepherd and direct
individual initiatives and change processes within an
organization
Relationship management – ability to support and work
effectively with stakeholders
HR expertise – knowledge of and best practices associated with
the various functions of HR management
Exhibit 4.4: Lepak and Snell’s Employment Models

Exhibit 4.5: Traditional HR Versus Strategic HR
Exhibit 4.6: Antecedents and Consequences of Employee
Engagement
Barriers to Strategic HR
Strategic contribution
Business knowledge
Personal credibility
HR delivery
HR technology
Exhibit 4.10: Outcomes of Strategic HR
Exhibit 4.11: A Model of Strategic Human Resource
Management

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1. Upload an image of an object that represents you and why
you are taking this course.
2. Discuss a topic from the course you found most interesting,
or discuss a topic from the course you were surprised to
learn about.
Look at chapter 2
Discuss any new skills or knowledge acquired after taking this
course.
Look at chapter 1
3. Discuss how the course helped achieve your objectives.
Must have 4 sentences for each question

Chapter 1 An Investment Perspective of Human Resource Managemen.docx

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