HR Planning for Alignment and Change Chapter 4 HR Planning for Alignment and Change

Chapter Outline THE STRATEGIC IMPORTANCE OF HR PLANNING FOR ALIGNMENT AND CHANGE Alignment Types of Organizational Change Learning Organizations OVERVIEW OF THE HR PLANNING AND CHANGE PROCESS The Elements of Human Resource Planning Aligning Business Planning and HR Planning The HR Triad THE HR TRIAD: Roles and Responsibilities for HR Planning, Alignment, and Change SCANNING AND ASSESSING THE EXTERNAL AND ORGANIZATIONAL ENVIRONMENTS Organizational Analysis MANAGING CHANGE: Organizational Analysis at Procter & Gamble HR Forecasts Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Chapter Outline (cont’d) SCANNING AND ASSESSING THE EXTERNAL AND ORGANIZATIONAL ENVIRONMENTS (cont’d) Employees’ Opinions Behavioral Cause-and-Effect Models MANAGING GLOBALIZATION: Building Global Leaders at Unilever Best Foods DETERMINING HR OBJECTIVES AND METRICS Linking HR Objectives to Strategic Business Objectives MANAGING CHANGE: Flying High at Continental Developing Metrics to Match the Objectives DEVELOPING HR PLANS AND TIMETABLES Considering Alternatives Building a Complete HR Plan Timetables IMPLEMENTING THE HR ACTION PLANS FOR ALIGNMENT: FACILITATING CHANGE Involving Employees Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Chapter Outline (cont’d) IMPLEMENTING THE HR ACTION PLANS FOR ALIGNMENT: FACILITATING CHANGE (cont’d) Involving Employees Establishing Accountability Change Has Already Started Managing Resistance to Change Showing Respect in Difficult Times REVIEW, REVISE, AND REFOCUS Projects to Extend Your Learning CASE STUDY: Aligning HR with the Business at SBC Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Strategic Importance of HR Planning for Alignment and Change To succeed under new competitive conditions, companies must change vision, values, structure, strategy and corporate culture. Changes in HR policies and practices encourage and support behaviors needed for organizational change. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Alignment Vertical alignment Horizontal alignment Exists when the HRM system fits with all other elements of the organizational environment—the culture, strategy, structure, and so on. Horizontal alignment Exists when all the HR policies and practices that comprise the HRM system are consistent with each other so that they present a coherent message to employees concerning how employees should behave while at work. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Types of Organizational Change Major transformations in the structure, size, or functioning of an organization for the purpose of achieving strategic objectives. Degree of Change: Radical change Major adjustments in the ways a firm does business Incremental change: Evolves over time from many small routine changes Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Timing of Change Reactive Change: Anticipatory Change Occurs when an organization is forced to change in response to some event in the external or organizational environment. Radical or incremental Anticipatory Change When an organization takes action in anticipation of upcoming events or early in the cycle of a new trend. Often incremental R Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Learning Organizations Continually finds new ways to satisfy customers and other stakeholders by integrating information resources, technology, and people to produce and then effectively use new knowledge. Constantly changing through experimentation and learning from others. Planning ensures the HRM system provides learning opportunities to build competencies and keeps employees motivated and interested in learning. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Aligning Human Resource Management in Learning Organizations EX 4.1 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Phases in Strategic Business and HR Planning for Alignment and Change CHANGES IN EXTERNAL AND ORGANIZATIONAL ENVIRONMENTS EX 4.2 © S. E. Jackson and R. S. Schuler, 2005. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Elements of HR Planning Human Resource Planning Activities Scanning and assessing the external and organizational environments. Specifying the objectives to be achieved by HR activities along with the measures to be used to assess the achievement of those objectives. Developing specific plans for HR policies and practices, along with timetables for implementing those plans. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Most Common Objectives When Changing HR Practices EX 4.3 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

How Well Is HR Planning Linked to Strategic Business Planning How Well Is HR Planning Linked to Strategic Business Planning? (Responses from 1,277 HR Professionals) EX 4.4 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Who Participates in the Development, Review, and Approval of Strategic Business Plans? EX 4.5 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Scanning and Assessing the External and Organizational Environment Economic conditions Political landscape Regional Trade Zones Technology Industry Dynamics Labor Markets Country Cultures Laws and Regulations Unions and Labor Relations Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Changing Age Demographics of the U.S. Population EX 4.6 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Organizational Analysis An assessment of the external and internal environments Organizational Analysis Methods HR forecasts Employee opinions HR cause-and-effect models Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Organizational Analysis (cont’d) HR Forecasts Estimates of the firm’s future human resource needs Judgmental forecasts Informed experts predict business trends Statistical forecasts Rely on objective data and formal models Use historical data to predict the future Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Asking about problems and potential solutions: Employee Opinions Asking about problems and potential solutions: Employee surveys Focus groups Involving employees in developing HR plans Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Behavioral Cause-and-Effect Models Provide insight into why employees behave as they do Identify the business consequences of employee behaviors Models show: Cause-effect Connection between HRM and strategic success Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Example of a Behavioral Cause-and-Effect Model Developed by P&G Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Determining HR Objectives and Metrics Linking HR Objectives to Strategic Business Objectives Business objectives focus attention on: The number of employees needed for growth or decline of the firm New required competencies and behaviors for higher performance Higher levels of productivity Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Specifying the Strategic Objectives of a Change Effort Mergers and Acquisitions: Soft due diligence Activities used to assess the compatibility of potential new partners, taking into consideration the corporate cultures and HR policies and practices in the organizations being combined. Successful strategic changes are guided by clear objectives that flow from corporate and business strategies. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Developing Metrics to Match the Objectives Accepted as Legitimate Relatively Easy to Use Best HR Metrics Connected to Business and HR Objectives Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

“Bottom-Line” HR Metrics. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

HR Metrics for Risk Management at Deutsche Bank EX 4.9 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Staffing Metrics Used by SunTrust Bank to Measure the Success of Its New Staffing Practices EX 4.10 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Considering Alternatives There are alternative ways to achieve strategic objectives. Layoffs and reductions in force (RIFS) Reducing turnover Outsourcing Offshoring Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Still More Alternatives! Internal transfers Restricting overtime Reducing the hours in a standard workweek Not renewing contracts for temporary and part-time workers Offering temporary leaves Job sharing Retraining Providing seed funds and entrepreneurship training and encouraging employees to start their own businesses Transferring staff to other companies (e.g., suppliers, customers) Giving early retirement with preferential conditions Reducing executive salaries and incentive pay Partnering with government agencies and professional societies to find jobs for displaced employees Managing an employee buyout of the company Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Considering Alternatives (cont’d) There are other alternatives to achieving strategic objectives. For example, possible solutions to a labor shortage include: Raise base wages to attract more applicants Offer more financial incentives to boost productivity Reduce turnover rates to lessen the need for new hires Hire people without the skills needed and train them Buy up other companies to acquire their workforce Buy new technologies that require fewer workers Utilize foreign labor markets Make decisions that reduce the need for skilled workers Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Building a Complete HR Plan A comprehensive HR plan for change is likely to have many components, just as a companywide plan for change has many components. Staffing Plans Talent Management Plans Training Plans Leadership Development Plans Plans for Changes in Benefits Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Staffing Plans: Ensuring Supply Matches Demand Succession Planning Ensures key positions can be filled when vacancies occur Talent Pool A list of employees with high potential for advancement Replacement Charts Lists of key jobs, incumbents and names from employee talent pool Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Best Practices in Succession Planning The process is simple, with minimal paperwork. Process is decentralized and owned by local managers. Information technology makes it easy to give employees feedback. The process fits with the corporate culture. Employees receive a variety of job assignments early in their careers. Bosses are trained to hold good career discussions. Bosses are held accountable for ensuring that developmental action plans are implemented. One-on-one mentoring and mentoring networks are supported by the company. EX 4.12 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Timetables Challenges Timelines for Developing Talent Building deadlines and scheduling checkpoints to keep change moving. Developing challenging but achievable deadlines. Developing realistic expectations about change. Timelines for Developing Talent Timelines for Layoffs and Plant Closings Worker Adjustment and Retraining Act of 1988 (WARN) 60 days’ advance notice of plant closings and layoffs covered under the act. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Implementing The HR Action Plans for Alignment: Facilitating Change Involving Employees Task forces Focus groups Surveys Hot lines Informal conversations Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Implementing The HR Action Plans for Alignment: Facilitating Change (cont’d) Establishing Accountability Specifying who is responsible for making needed changes Implications for holding people accountable for change efforts: Improved performance measurement systems Changes in incentive pay, promotion, and bonus systems Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Implementing The HR Action Plans for Alignment: Facilitating Change (cont’d) Change Has Already Started Employee involvement Two-way communication Empowerment Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Managing Resistance to Change Reasons for Resistance to Change Fear Misunderstandings Cynicism Forms of Resistance Criticism Malicious compliance Sabotage Silence Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Managing Resistance to Change: Showing Respect in Difficult Times Causes of Negative Reactions to Workforce Reductions Loss of attachment Lack of information Perception of managerial capriciousness Fear of future reductions Challenge Maintaining employee morale and regaining employee trust while the actions of the company seem to say, “You are not valuable.” Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Review, Revise, and Refocus The success of products and services offered in the internal marketplace should be monitored. Human resource information management system (HRIM) provides the means for collection and dissemination of evaluation data. Make sure there are “short-term wins” to celebrate. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

TERMS TO REMEMBER Anticipatory change Horizontal alignment HR forecasts HR metrics HR objectives HR plans Human resource planning Incremental change Judgmental forecasts Learning organization Offshoring Organizational analysis Outsourcing Radical change Reactive change Replacement chart Soft due diligence Statistical forecasts Succession planning Talent pool Timetables Vertical alignment Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.