Meeting Present and Emerging Strategic Human Resource Challenges CHAPTER ONE Meeting Present and Emerging Strategic Human Resource Challenges

Chapter Objectives Review Key Environmental Challenges (external) Review Key Organizational Challenges (internal) Review Individual Challenges Discuss Planning and Implementing HR Policies – from a Strategic Prospective Link HR Strategies and Firm’s Performance Briefly Look at Best HR Practices Review Key Terms Brain Drain Decentralization Downsizing Environmental Challenges Exempt Employees (salaried) Human Resource Strategies (HRS) Human Resource Tactic Human Resources (HR) Line Employees Managers Nonexempt Employees Outsourcing Staff Employees

Key Terms Human Resources (HR) - people who work in an organization (personal/associates/employees) Human Resource Strategies (HRS) – the deliberate use a company’s human resources to gain a competitive advantage in the marketplace Human Resource Tactics – policies or procedures put in place to gain that advantage

More Terms Managers – person who is in charge of others and is responsible for the timely and correct execution of actions that promote his or hers unit’s success Line Employees – employees that directly produces a company’s goods or delivers a company’s services Staff Employees - employees that support the line employees Exempt Employees (salaried) – employees that do not receive extra pay for overtime (work beyond 40-hours per week) Nonexempt Employees – workers that do receive overtime compensation

Environmental Challenges Environmental Challenges: forces external to a firm – influence behavior but largely beyond management’s control Rapid Change The Internet Revolution Workforce Diversity Globalization Legislation Work/Life Balance Skill Shortages & the Rise of the Service Sector Natural Disasters

Organizational Challenges Organizational Challenges – concerns that are internal to a company – effective mangers identify these issues and deal with them before they become a major issue for the company. This requires a company be proactive rather than reactive when dealing with HR issues Competitive Position Decentralization Downsizing Organizational Restructuring Self-Managed Work Teams The Growth of Small Businesses Organizational Culture Technology Data Security Outsourcing

Individual Challenges Individual Challenges – address the issues relevant to individual employees Matching People and Organizations Ethics and Social Responsibility Productivity Empowerment Brain Drain Job Insecurity

Strategic Human Resource Planning To be successful firms must align their HR strategies with: Their organization’s overall strategies The environment Their organization’s characteristics Their organization’s capabilities

Strategic Human Resource Planning - The Benefits Encouragement of Proactive Rather Than Reactive Behavior Explicit Communication of Company Goals Stimulation of Critical Thinking and Ongoing Examination of Assumptions Identification of Gaps Between Current Situation and Future Vision Encouragement of Line Managers’ Participation Identification of HR Constraints and Opportunities Creation of Common Bonds

Strategic HR Planning - The Challenges Maintaining a Competitive Advantage Reinforce Overall Business Support Avoiding Excessive Concentration on Day-to-Day Problems Developing HR Strategies Suited to Unique Organizational Features Coping with the Environment Securing Management Commitment Translating the Strategic Plan into Action Combining Intended and Emergent Strategies Accommodating Change

HR Strategies & Company Strategies Best Fit Fit - refers to the compatibly between the HR strategies and other important aspect the organization Evolutionary Business Strategy (flexibility, quick response, entrepreneurship, risk-sharing, decentralization) vs. Steady-State Strategy (efficiency, detailed work planning, internal grooming of employees for promotion, long-term career development, centralization)

Defender Strategy (conservative businesses operating in a stable environment) Work Flows Detailed work planning Explicit job descriptions Staffing Internal recruitment HR department makes selection decision Formal hiring process Employees Separations Hiring Freeze Concern for terminated workers Preferential rehiring policy Performance Appraisal Uniform appraisal procedure Used as a control devise High dependence on superior Training Individual training On-the job training Job-specific training “Make” Skills Compensation Fixed pay Seniority based pay Centralized pay decisions

Prospector Strategy (growth firms emphasizing innovation, new products and first to market) Work Flows Innovation Flexibility Broad job classes Staffing External recruitment Coworkers makes selection decision Emphasis on ‘fit’ of coworkers with culture Informal hiring and socialization of new employees Employees Separations Layoffs Recruit as needed Individuals are on their own Performance Appraisal Customized appraisals Used as departmental tool Multiple inputs for appraisals Training Team-based or cross-functional training External training “Buy” skills Compensation Individual-based pay Performance-based pay Decentralized pay decisions

HR Strategies & the Environment - Best Fit Degree of Uncertainty How much accurate information you have to make decisions Volatility How often does your environment changes Magnitude of Change How drastic are the changes when they occur Complexity Sheer number of elements in the environment that effect the company and the industry (individually or together)

HR Strategies & Organizational Characteristics Best Fit The Production Process for Converting Inputs into Output Routine vs. non-routine product production The Firm’s Market Posture Low-rate of growth/narrow market vs. wide market segment and high sales growth The Firm’s Overall Managerial Philosophy Autocratic leadership style/formal hiring procedures vs. risking taking and supervisors having a major role in hiring procedures The Firm’s Organizational Structure Highly formalized HR systems vs. less regimented The Firm’s Organizational Culture Moral commitment vs. entrepreneurial climate

HR Strategies & Organizational Capabilities Best Fit Leveraging your firms distinctive competencies to give your company a competitive advantage: Technical abilities Management Systems Reputation

HR Best Practices Employment Security Selectivity in Recruiting High Wages Incentive Pay Employee Ownership Information Sharing Participation & Empowerment Self-managed Teams Training & Skills Development Cross-Utilization and Cross-training Promotion from Within