25-08-2017, 09:32 PM
HR PLANNING AND STRTAEGY
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Learning Objectives
After you have read this chapter, you should be able to:
Explain strategic HR management and how it is linked to organizational strategies.
Describe how legal, political, cultural, and economic factors affect global HR management.
Discuss four dimensions of organizational effectiveness and how HR contributes to each.
Define HR planning and outline the HR planning process.
Discuss several ways of managing a surplus of human resources.
Identify why HR metrics must consider both strategic and operational HR measures.
Human Resources as a Core Competency
Strategic Human Resources Management
The use of employees to gain or keep a competitive advantage, resulting in greater organizational effectiveness.
Core Competencies
The unique capabilities of employees in an organization that create high value and that differentiate the organization from its competition
The source of an organization’s sustainable competitive advantage.
Linkage of Organizational and HR Strategies
Cost Leadership
Competition on the basis of low price and high quality of product or service
Relies on “building” employees to fit specialized needs
Requires a longer HR planning horizon approach
Differentiation
Competition on the basis of either offering distinctively different products or services or establishing an exclusive image for quality products and services
Relies on hiring needed skills.
Needs a shorter planning time frame in order to be responsive to dynamic environments
Focus
Global Cultural Factors
Culture
Societal forces affecting the values, beliefs, and actions of a distinct group of people.
Geert Hofstede’s Culture Dimensions
Power Distance: the inequality among the people of a nation.
Individualism: the extent to which people prefer to act as individuals instead of members of groups.
Masculinity/Femininity: the degree to which “masculine” values prevail over “feminine” values.
Uncertainty Avoidance: the preference of people in a country for structured rather than unstructured situations.
Long-Term Orientation: the preference for long-term values emphasizing the future as opposed to short-term values focusing on the present.
Global Economic Factors
Sources of Economic Factors
Differences in economic, political, legal, and cultural systems
Global Economic Interdependence
Regional trade and political alliances
NAFTA, EU, WTO
Global Productivity and Strategic HR Management
Issue: How to increase organizational effectiveness and performance (productivity) in the face of global influences and foreign competition.
Organizational Effectiveness and Strategic HR Management
Effectiveness
The extent to which goals have been met.
Efficiency
The degree to which operations are done in an economical manner.
Dimensions of Organizational Effectiveness
Organizational productivity
Financial contributions
Service and quality
Organizational culture
Organizational Productivity and HR Efforts
Productivity
A measure of the quantity and quality of work done, considering the cost of the resources used.
A ratio of the inputs and outputs that indicates the value added by an organization.
Unit labor cost: computed by dividing the average cost of workers by their average levels of output.
Improving Organizational Productivity
Organizational restructuring
Re-designing work
Aligning HR Activities
Outsourcing analyses and assistance
Organizational Effectiveness and FinancialContributions of HR
Return on Investment (ROI)
Difficult to determine returns for HR contributions which affect many facets of the business
Former view of HR as a “cost center”
Customer Service and Quality Products Linked to HR Strategies
High quality products and services are the results of HR-enhancements to organizational performance.
Staffing
Customer service
Organizational Culture and Organizational Effectiveness
Organizational Culture
The shared values and beliefs in an organization
Strategy and culture must be compatible and aligned for the organization to be effective.
Culture affects recruitment and retention of employees.
Culture can enhance or constrain organizational performance.
Culture is the “climate” of an organization.
Human Resource Planning
Human Resource (HR) Planning
The process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives.
HR Planning Responsibilities
Top HR executive and subordinates gather information from other managers to use in the development of HR projections for top management to use in strategic planning and setting organizational goals
HR Planning Process
HR Strategies
The means used to anticipate and manage the supply of and demand for human resources.
Provide overall direction for the way in which HR activities will be developed and managed.
Benefits of HR Planning
Better view of the HR dimensions of business decisions
Lower HR costs through better HR management.
More timely recruitment for anticipate HR needs
More inclusion of protected groups through planned increases in workforce diversity.
Better development of managerial talent
Scanning the External Environment
Environmental Scanning
The process of studying the environment of the organization to pinpoint opportunities and threats.
Environmental Changes Impacting HR
Governmental Influences
Economic conditions
Geographic and competitive concerns
Workforce composition
Assessing the Internal Workforce
Jobs and Skills Audit
What jobs exist now?
How many individuals are performing each job?
What are the reporting relationships of jobs?
How essential is each job?
What jobs will be needed to implement future organizational strategies?
What are the characteristics of anticipated jobs?
Assessing the Internal Workforce (cont’d)
Organizational Capabilities Inventory
HRIS databases—sources of information about employees’ knowledge, skills, and abilities (KSAs)
Components of an organizational capabilities inventory
Individual employee demographics
Individual employee career progression
Individual job performance data
Forecasting HR Supply and Demand
Forecasting
The use of information from the past and present to identify expected future conditions.
Forecasting Methods
Judgmental
Estimates—asking managers’ opinions, top-down or bottom-up
Rules of thumb—using general guidelines
Delphi technique—asking a group of experts
Nominal groups—reaching a group consensus in open discussion
Forecasting HR Supply and Demand (cont’d)
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
Forecasting HR Supply and Demand (cont’d)
Forecasting the Demand for Human Resources
Organization-wide estimate for total demand
Unit breakdown for specific skill needs by number and type of employee
Develop decision rules (“fill rates”) for positions to be filled internally and externally.
Develop additional decision rules for positions impacted by the chain effects of internal promotions and transfers.
Forecasting the Supply for Human Resources
External Supply
Internal Supply
Forecasting HR Supply (cont’d)
Forecasting External HR Supply
Factors affecting external
Net migration for an area
Individuals entering and leaving the workforce
Individuals graduating from schools and colleges
Changing workforce composition and patterns
Economic forecasts
Technological developments and shifts
Actions of competing employers
Government regulations and pressures
Other circumstances affecting the workforce
Forecasting HR Supply
Forecasting Internal HR Supply
Effects of promotions, lateral moves, and terminations
Succession analysis
Replacement charts
Succession planning
The process of identifying a longer-term plan for the orderly replacement of key employees.
Developing and Using a Strategic HR Plan
Issues in Matching the Supply of Labor with the Demand for Labor
Succession Planning
Managing a Human Resources Surplus
Outplacement Services
HR Planning in Mergers and Acquisitions
Managing a Human Resources Surplus
Workforce Reductions and the Worker Adjustment and Retraining Notification
Sets out employer requirements for advance notice of a layoff or facility closing.
60-day notice to employees and the local community before a layoff or facility closing involving more than 50 people.
This is an example of involuntary layoff
Imposes fines for not following notification procedure.
Has hardship clauses for unanticipated closures or lack of business continuance capabilities. Some kind of compensation is prescribed during the layoff period
Managing a Human Resources Surplus (cont’d)
Workforce Realignment
“Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) all mean reducing the number of employees in an organization.
Causes
Economic—weak product demand, loss of market share to competitors
Structural—technological change, mergers and acquisitions
Managing a Human Resource Surplus (cont’d)
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
Downsizing Approaches
Attrition and hiring freezes
Not replacing departing employees and not hiring new employees
Voluntary Separation Programs
Early retirement buyouts offer incentives to encourage senior employees to leave the organization early.
Layoffs
Employees are placed on unpaid leave until called back to work when business conditions improve.
Employees are selected for layoff on the basis of their seniority or performance or a combination of both.
Downsizing Approaches (cont’d)
Outplacement services provided to displaced employees to give them support and assistance:
Personal career counseling
Resume preparation and typing services
Interviewing workshops
Referral assistance
Severance payments
Continuance of medical benefits
Job retraining
HR Planning in Mergers and Acquisitions
Cultural Compatibility
The extent to which such factors as decision-making styles, levels of teamwork, information-sharing philosophies, and the formality of the two organizations are similar.
HR’s Role in Mergers and Acquisitions
Communicating decisions
Revising the organization structure
Merging HR activities
Measuring HR Effectiveness Using HR Metrics HR Metrics
Specific measures tied to HR performance indicators.
Development and use of metrics that can better demonstrate HR’s value and track its performance.
Characteristics of good HR metrics:
Accurate data can be collected.
Measures are linked to strategic and operational objectives.
Calculations can be clearly understood.
Measures provide information expected by executives.
Results can be compared both externally and internally.
Measurement data drives HR management efforts.
Measures of Strategic HR Effectiveness
Return on Investment (ROI)
Calculation showing the value of expenditures for HR activities.
Measures of Strategic HR Effectiveness (cont’d)
Economic Value Added (EVA)
A firm’s net operating profit after the cost of capital (required return) is deducted.
Cost of capital is the benchmark for returns for all HR activities.
HR and the Balanced Scorecard
Financial
Internal business processes
Customer
Learning and growth
HR Measurement and Benchmarking
Benchmarking
Comparing specific measures of performance against data on those measures in other “best practice” organizations
Common Benchmarks
Total compensation as a percentage of net income before taxes
Percent of management positions filled internally
Rupee sales per employee
Benefits as a percentage of payroll cost
Assessing HR Effectiveness
HR Audit
A formal research effort that evaluates the current state of HR management in an organization
Audit areas:
Legal compliance
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