© 2003 Prentice Hall, Inc. 1-1 Instructor presentation questions: ` The Strategic Role of Human Resource Management

© 2003 Prentice Hall, Inc. 1-2 Outline of Chapter 1 I.The Manager’s Human Resource Management Jobs Why is HR Management Important to All Managers? Line and Staff Aspects of HRM Cooperative Line and Staff HR Management

© 2003 Prentice Hall, Inc. 1-3 Outline of Chapter 1 II.Strategic Planning and Strategic Trends The Basics of Strategic Planning The Strategic Planning Process Basic Strategic Trends Managerial Consequences of the Basic Trends

© 2003 Prentice Hall, Inc. 1-4 Outline of Chapter 1 III.HR’s Strategic Role HR’s Evolving Role Strategic Human Resource Management HR’s Role as a Strategic Partner HR and Technology HR and Employee Performance and Commitment Is there a “One Best HR Way?” Research Insight

© 2003 Prentice Hall, Inc. 1-5 The Management Process  Planning  Organizing  Staffing  Leading  Controlling

© 2003 Prentice Hall, Inc. 1-6 Management Process  Planning Goals and standards Rules and procedures Plans and forecasting.  Organizing Tasks Departments Delegating Authority and communication Coordinating

© 2003 Prentice Hall, Inc. 1-7 Management Process  Staffing Hiring Recruiting Selecting Performance standards Compensation Evaluating performance Counseling Training and developing

© 2003 Prentice Hall, Inc. 1-8 Management Process  Leading Getting the job done Morale Motivation  Controlling Setting standards Comparing actual performance to standards Corrective action

© 2003 Prentice Hall, Inc. 1-9 HRM Function Human Resource Management is the process of acquiring, training, appraising, and compensating employees and attending to their labor relations, health and safety, and fairness concerns. Definition

© 2003 Prentice Hall, Inc HRM People Functions Include:  Job analyses  Labor needs  Recruit  Select candidates  Orient and train  Wages and salaries  Incentives and benefits  Performance  Communicate  Train and develop  Employee commitment  Equal opportunity  Health and safety  Grievances/labor relations

© 2003 Prentice Hall, Inc HRM is Important to all Managers. Don’t Let These Happen to You!  The wrong person  High turnover  Poor results  Useless interviews  Court actions  Salaries appear unfair  Poor training  Unfair labor practices

© 2003 Prentice Hall, Inc HRM – It’s All About Results “For many years it has been said that capital is the bottleneck for a developing industry. I don’t think this any longer holds true. I think it’s the work force and a company’s inability to recruit and maintain a good work force that does constitute the bottleneck….” F. K. Foulkes

© 2003 Prentice Hall, Inc Line and Staff Aspects of HRM  Authority Making decisions Directing work Giving orders  Line Managers Accomplishing goals  Staff Managers Assisting and advising line managers Definition

© 2003 Prentice Hall, Inc Line Manager’s HRM Jobs  The right person  Orientation  Training  Performance  Creativity  Working relationships  Policies and procedures  Labor costs  Development  Morale  Protecting

© 2003 Prentice Hall, Inc Staff Manager’s HRM Jobs  Line authority  Implied authority  Functional control  Employee advocacy

© 2003 Prentice Hall, Inc HR Department Organizational Chart

© 2003 Prentice Hall, Inc Strategic Planning and Trends  Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage. Definition

© 2003 Prentice Hall, Inc Strategic Planning 101 There are three levels of strategic planning as shown below Corporate Strategy Business Strategy Business Strategy Business Strategy Business Strategy Functional Strategies

© 2003 Prentice Hall, Inc The Strategic Planning Process  SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats  Best strategic plans balance a company’s Strengths and Weaknesses with the Opportunities and Threats the firm faces  Basic strategic trends Globalization Technological advances The nature of work The workforce

© 2003 Prentice Hall, Inc Globalization

© 2003 Prentice Hall, Inc Technological Advances and the Nature of Work  Technology mandates and enables companies to be more competitive  Knowledge intensive jobs in industries such as computers, telecommunications, and biotechnology are replacing factory jobs in steel, auto, rubber and textiles Carrier

© 2003 Prentice Hall, Inc The Workforce Itself is Diverse US Department of Labor website

© 2003 Prentice Hall, Inc Consequences of these basic trends Technology Global expansion Strengths and Weaknesses Uncertainty, Turbulence, Rapid Change, Changing power bases Companies must be Fast, Responsive, and Cost- effective Improved competition

© 2003 Prentice Hall, Inc HR’s evolving role Protector and Screener Strategic Partner Change Agent

© 2003 Prentice Hall, Inc Strategic HRM  Strategic human resource management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility. Definition Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine

© 2003 Prentice Hall, Inc HR’s evolving role as strategic partner HR operations Corporate strategy HR programs Corporate strategy HR programs FedEx

© 2003 Prentice Hall, Inc How HR helps form strategy  Formation of a company’s strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses  Environmental scanning

© 2003 Prentice Hall, Inc HR and technology  Basic HR systems demand paperwork 70% of HR’s employees time = paperwork Off the shelf forms Online forms  Human Resource Information Systems (HRIS)  HR on the Internet

© 2003 Prentice Hall, Inc HR portals Employees can answer their own questions HR moves from reactive to proactive

© 2003 Prentice Hall, Inc HR means performance  Can HR have a measurable impact on a company’s bottom line?  Better HRM translates into improved employee attitudes and motivation (e.g., working at home)  Well run HR programs drive employee commitment TOYOTA

© 2003 Prentice Hall, Inc Measuring HR’s contribution  The emphasis should be on performance  The need to know your employment Law  Ethics and HR  HR certification ( The Society for Human Resource Management (SHRM)  HR and Technology.

© 2003 Prentice Hall, Inc Measuring HR’s contribution  Strategy: The co. long term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.

© 2003 Prentice Hall, Inc Measuring HR’s contribution  Metrics: A set of quantitative performance measures HR managers use to assess their operations.  For ex: Absence; cost per hire; workers’ compensation cost per employee…..etc

© 2003 Prentice Hall, Inc. 1-34

© 2003 Prentice Hall, Inc HR Metrics  Absence Rate [(Number of days absent in month) ÷ (Average number of employees during mo.) × (number of workdays)] × 100  Cost per Hire (Advertising + Agency Fees + Employee Referrals + Travel cost of applicants and staff + Relocation costs + Recruiter pay and benefits) ÷ Number of Hires Figure 1–5 Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13– 20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey;

© 2003 Prentice Hall, Inc  Health Care Costs per Employee Total cost of health care ÷ Total Employees  HR Expense Factor HR expense ÷ Total operating expense

© 2003 Prentice Hall, Inc  Human Capital ROI Revenue − (Operating Expense − [Compensation cost + Benefit cost]) ÷ (Compensation cost + Benefit cost)  Human Capital Value Added Revenue − (Operating Expense − ([Compensation cost + Benefit Cost]) ÷ Total Number of FTE

© 2003 Prentice Hall, Inc  Revenue Factor Revenue ÷ Total Number of FTE  Time to fill Total days elapsed to fill requisitions ÷ Number hired

© 2003 Prentice Hall, Inc Measuring HR’s contribution  The HR scorecard: Measures the HR function’s effectiveness and efficiency in producing employee behaviors needed to achieve the company’s strategic goals.

© 2003 Prentice Hall, Inc The HR Department and Managers: An Important Partnership Key Competencies Required of HR Department to Become a Full Strategic Partner  Leadership  Knowledge of Business  HR Strategic Thinking  Process Skills  HR Technologies

© 2003 Prentice Hall, Inc LEADERSHIP  Understand styles of leadership  Display appropriate leadership  Demonstrate leadership at all levels of performance – team, individual, unit, or organization

© 2003 Prentice Hall, Inc KNOWLEDGE OF BUSINESS HR must understand…  internal / external customers  key business disciplines  business structure, vision, values, goals, strategies, finances goals, strategies, finances  competitors, products, technology, and sources of competitive advantage and sources of competitive advantage

© 2003 Prentice Hall, Inc STRATEGIC THINKING  Understand strategic business planning  Apply a systematic HR planning process  Integrate HR systems to build capability and competitive advantage for the firm  Develop and integrate department strategies within corporate framework

© 2003 Prentice Hall, Inc PROCESS SKILLS  Know management processes  Know process skills: consulting, problem solving, evaluation, and communication  Understand organizational development  Facilitate and manage change  Manage under uncertainty and instability

© 2003 Prentice Hall, Inc TECHNOLOGY  Maintain HR documentation using knowledge management and technology  Build firm’s capability using info systems  Provide training in use of technology

© 2003 Prentice Hall, Inc HR Strategy Leads to Improved Organizational Performance HR Strategies Organizational Strategies Organizational Characteristics Environments Organizational Capabilities