Human Resource Management Robert L. Mathis | John H. Jackson | Sean R. Valentine © 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Strategic HR Management and Planning CHAPTER 2 14e

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Learning Objectives  Summarize the organization’s strategic planning process  Explain the key differences between good and bad strategy and suggest a way to force strategic asset reallocation  Outline how HR’s Strategies are merged with organizational strategies and give two examples

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Learning Objectives  Discuss how one forecasts for supply and demand of Human Resources  List options for handling a shortage and surplus of employees  Identify how organizations can measure and analyze the effectiveness of HR management practices

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Strategy and Strategic Planning

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure 2.1- Strategic Planning Process

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Organizational Mission The guiding force and core reason for existence of the organization and what makes it unique

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Strategic HR Management Entails providing input into organizational strategic planning and developing specific HR initiatives to help achieve the organizational goals Develops processes that help align individual employee performance with the organizational strategic objectives

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Operationalizing HR Management Strategies

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Areas Where HR Can Develop Strategies

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. H R Strategies for Global Competitiveness Multinational corporation (MNC) A corporation that has facilities and other assets in at least one country other than its home country Offshoring Relocation of a business process or operation by a company from one country to another Should consider Reliability - Ability of the offshore vendor to deliver Responsiveness - Offshore vendor’s ability to make changes when necessary

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Strategic HR Approaches to International Staffing

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Human Resource Planning  Analyzes and identifies the need for and availability of people so that the organization can meet its strategic objectives  Ensures right number of human resources with the right capabilities, at the right times, and in the right places

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure 2.4 – HR Planning Process

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Environmental Scanning Assessment of internal and external environmental conditions affecting organization External environment - Economic, political and competitive forces Internal environment Quality and quantity of talent Organizational culture Talent pipeline and leadership bench strength Helps identify strengths, weaknesses, opportunities, and threats

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure HR Factors in the SWOT Analysis

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Succession Planning Process of identifying a plan for the orderly replacement of key employees

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Factors Affecting External Pool of Employees Economic and Governmental Factors - Impact HR Planning Government regulations affect labor supply Tax legislation at local, state, and federal levels Geographic/Competitive Evaluations Net migration Direct competitors International competition Changing Workforce Considerations Aging of the workforce Growing diversity of workers Female workers and work-life balancing concerns Availability of contingent workers Outsourcing possibilities

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Planning for Internal Workforce Audit Current and Future Job Audits Existing jobs Number of individuals performing each job Reporting relationships Vital KSAs (knowledge, skills, abilities) Jobs needed to implement future organizational strategies Characteristics of anticipated jobs Employee and Organizational Capabilities Inventory Employee demographics Career progression Performance data

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Forecasting Using information from the past and the present to identify expected future conditions

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. HR Forecasting Methods Estimates The rule of thumb The Delphi technique Nominal groups Judgmental Methods Statistical regression Simulation models Productivity ratio Staffing ratios Mathematical Methods

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. HR Forecasting Planning Periods Short-range plans - Forecast for the immediate HR needs of an organization Intermediate-range plans - Project one to three years into the future Long-range plans - Extend beyond three years

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Forecasting External Supply of Employees Net migration into and out of the area Individuals entering and leaving the workforce Individuals graduating from schools and colleges Changing workforce composition and patterns Economic forecasts for the next few years Technological developments and shifts Actions of competing employers Government regulations and pressures

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Estimating Internal Labor Supply for a Given Unit

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Managing Talent Supply Imbalance

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Best Practices to Carry Out Layoffs Identify the work that is core to sustaining a profitable business Identify the knowledge, skills, and competencies needed to execute the business strategy Protect the bottom line and the corporate brand Constantly communicate with employees Pay attention to the survivors

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Severance Benefits and Outplacement Services  Temporary payments made to laid-off employees to ease the financial burden of unemployment  Outplacement services - Give displaced employees support and assistance  Personal career counselling  Résumé-preparation services  Interviewing workshops  Referral assistance

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Legal Considerations for Workforce Reductions Selection Criteria for Laying Off Title VII of the Civil Rights Act Age Discrimination in Employment Act Americans with Disabilities Act Other Regulations Consolidated Omnibus Budget Reconciliation Act (COBRA) Older Workers Benefit Protection Act (OWBPA) Worker Adjustment and Retraining Notification (WARN) Act

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Managing a Talent Shortage

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Ways to Manage a Talent Shortage

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure HR Activities During Mergers and Acquisitions

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Due Diligence  Comprehensive assessment of all aspects of the business being acquired  HR professionals review issues related to:  Legal compliance  Compensation and benefits programs  Quality of talent  Labor contract obligations  Is complex when merger and acquisition involves companies in different countries

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Changing the Organizational Culture

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Measuring Effectiveness of Human Resources and Human Capital Effectiveness : Ability to produce a specific desired effect or result that can be measured Efficiency : Degree to which operations are done in an economical manner

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. HR Metrics and Analytics HR Metrics : Specific measures tied to HR performance indicators HR analytics : An evidence-based approach to making HR decisions on the basis of quantitative tools and models

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Key HR Metrics

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Characteristics of HR metrics and Analytics Accurate data Measures linked to strategic and operational objectives Clearly understood calculations Measures provide information valued by executives Results can be compared both internally and externally Measurement data drive HR management efforts

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. HR Benchmarking and Balanced Score Card

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Figure Balanced Scorecard Framework

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Human Capital Effectiveness Measures Return on investment (ROI) : Shows the value of investments in HR activities Human capital value added (HCVA) : Shows the operating profit per full-time employee Human capital return on investment (HCROI) : Shows the operating profit derived from investments in human capital Human economic value added (HEVA) : Wealth created per employee

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Human Capital Effectiveness Measures A = Operating costs for a new or enhance system for the time period B = One-time cost of acquisition and implementation C = Value of gains from productivity improvements for the time period

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Human Capital Effectiveness Measures Human capital value added (HCVA) Human capital return on investment (HCROI) Human economic value added (HEVA)

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. Human Resources Audit  Formal research effort to assess the current state of HR practices  Audit areas  Staffing and compensation  Health and safety  Legal compliance  Administrative processes and recordkeeping  Employee retention and benefits

© 2014 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part. HR Audit Levels Compliance Audit Checks record keeping on state and federal paperwork requirements Benefit Program Audit Reviews regulatory compliance, benefits administration and reporting 1-9 Audit Reviews compliance with immigration regulation and the 1-9 form requirement Specific Program Audit Reviews specific HR subareas such as compensation, EEO, or training Full HR Audit Reviews all of the above plus any and all other HR functions