Evolving Role of HR 1

Possible Roles of the HR Function Strategic Focus Change Agent Strategic Partner Systems People Administrative Expert Employee Champion Operational Focus

Traditional vs. Strategic HR Traditional HR Strategic HR Responsibility for HR Staff Specialists Line Managers Focus Employee Relations Partnerships Role of HR Transactional Transformational Initiatives Reactive & Fragmented Proactive & Integrated Control Bureaucratic Organic Key Investments Capital & Products People & Knowledge Accountability Cost Center Investment Center

A New Mandate for HR Become a partner with senior and line managers in strategy execution. Become an expert in the way work is organized, delivering administrative efficiency to ensure that costs are reduced while quality is maintained. Become a champion for employees, representing their concerns to senior management and working to increase employee contributions. Become an agent of continuous transformation by shaping processes and organizational culture.

Barriers to Strategic HR Short-term mentality Lack of HR skills and strategic mentality Lack of appreciation for what HR can contribute Difficulty in quantifying HR outcomes Changing responsibility for line managers

Ensuring Fit Internal fit External fit The situation in which all the internal elements of the work system complement and reinforce one another. External fit The situation in which the work system supports the organization’s goals and strategies.

Human Resource Management

HR Alignment Strategy INTERNAL FIT

High-Performance Work System A specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment, and flexibility. Systems composed of many interrelated parts that complement one another to reach the goals of an organization, large or small.

Underlying Principles Shared Information Underlying Principles Shared Decision-Making Knowledge Development HPWS HPWS Performance-Reward Linkage HPWS HPWS

Employee Involvement Power Information Knowledge Rewards Authority to change job processes? Self-managed teams Information Is business information shared? Does the job involve performance feedback? Knowledge Does the employee have proper training for the job? Rewards Are rewards contingent on individual performance?

Employee Involvement Locating work decisions at the lowest level possible. Power Information Rewards Knowledge and skills EI in the Fortune 1000 150 Companies 1999 Survey Low EI Med EI High EI ROA 9.3 9.7 11.2 ROI 14.2 15.7 17.1 ROE 23.4 20.7 26.6 Market Return -.7 2.8 11.9 Market/ Book .7 1.3 1.8 Lawler, Mohrman & Benson, 2000