Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Learning Objectives 1. Discuss HRM roles and categories of HRM activities. 2. Discuss how HRM function can define its mission and market. 3. Explain approaches to evaluating the effectiveness of HRM practices. 4. Describe new structures for HRM function. 16-2

Learning Objectives, continued 5. Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness. 6. Relate how process reengineering is used to review and redesign HR practices. 7. Discuss new technologies that can improve HR efficiency and effectiveness. 8. List competencies HRM executives need to become a strategic partner in the company. 16-3

Introduction  HRM practices can help companies gain a competitive advantage.  Virtually every HR function in top companies is going through a transformation process to play a new strategic role while fulfilling its other roles. 16-4

16-5 Categories of HRM Activities Transformational Transactional Traditional

Categories of HRM Activities Transformational Knowledge Management Cultural Change Strategic Redirection & Renewal Management Development Traditional Recruitment and Selection Training Performance Management Compensation Employee Relations Transactional Benefits Administration Record Keeping Employee Services Figure

Strategic Management of HRM  For HR to become truly strategic in its orientation, it must view itself as a separate business entity.  Customer orientation is one of the most important changes in HR's attempt to become strategic.  Products of HR must be identified.  Technologies through which HR meets customer needs vary depending on the need being satisfied. 16-7

Customer-Oriented Perspective Figure

Basic Process for HR Strategy Scan external environment Identify strategic business issues Identify people issues Develop HR strategy Communicate HR strategy Figure

Involving Line Executives  Involving those in charge of running the business can increase quality of information from which HR strategy is created.  Involvement occurs 4 ways: 1. Line executives could provide input. 2. Line executives could be members of a team that develops HR strategy. 3. Once strategy is developed, line managers could receive communications with HR strategy information. 4. Line managers could formally approve a strategy

Characterizing HR Strategies Approaches to Developing an HR Strategy HR-Focused People-Linked Business Linked Business-Linked Business-Driven People issues/ outcomes HR strategy People issues/ outcomes Business issues/ outcomes People issues/ outcomes Business issues/ outcomes People issues/ outcomes HR strategy Figure

Measuring HRM Effectiveness  Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions.  Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget

Audit & Analytic Approaches Evaluating HRM Effectiveness 16-13

16-14 Types of Cost–Benefit Analyses HR Accounting capitalization of salary net present value of expected wage payments returns on human assets and human investments Utility Analysis turnover costs absenteeism and sick leave costs gains from selection and training programs impact of positive employee attitudes

Restructuring to Improve HRM 3 Divisions of HRM: Centers for Expertise – functional specialists in traditional areas of HR who act as consultants in development of state-of- the-art systems and processes for use in the organization. Field Generalists – HRM generalists assigned to a business unit. Service Centers – ensure transactional activities are delivered throughout the organization

Outsourcing  Outsourcing - Contracting with an outside vendor to provide a product or service to the firm. Outsourcing partner can provide the service more cheaply, efficiently and effectively. Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration

Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality. 4 Steps of The Reengineering Process : Identify process to be reengineered Understand process Implement process Feedback Reengineering 16-17

16-18 When Evaluating A Process, Consider: 1. What is the value of the process? 2. Can employees be given more autonomy? 3. Can jobs be combined? 4. Can decision making and control be built into the process by streamlining it? 5. Are all the steps and tasks in the process necessary? 6. Are data redundancy, unnecessary checks, and controls built into the process? 7. How many special cases and exceptions have to be dealt with? 8. Are the steps in the process arranged in their natural order? 9. Are all of the tasks necessary? 10. What is the desired outcome?

16-19 Improving HRM Effectiveness through New Technologies - E-HRM New Technologies Transaction Processing Decision Support Systems Expert systems

16-20 Changes in Delivery

Software Applications for HRM HRM Effectiveness Through New Technologies–E-HRM – Speed requirements of e-business force HRM managers to leverage technology for delivery of traditional and transformational HRM activities. Recruitment and Selection - Technology monitors hiring processes achieve compensation goals with less effort. Compensation and Rewards - Leveraging technology may allow firms to better achieve compensation Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively

The Future for HR Professionals  The future for HRM careers brighter than ever.  HR professionals need knowledge of four competencies: 1. business 2. change process 3. integration competence and 4. people’s role in competitive advantage  HR professionals need to understand social and ethical issues, tools, management of change and other processes and HR technologies, policies, programs and practices such as staffing, development, rewards, communication and organizational design 16-22

16-23 Seven Roles of Chief HRO Strategic advisor to the executive team Counselor/confidante/coach to the executive team Liaison to the board of directors Talent architect Leader of the HR function Workforce sensor Representative of the firm Table 16.5

Summary HRM functions have transformed from solely transactional activities to strategic activities. HRM roles include administrative expert, employee advocate, change agent, and strategic partner to deliver transactional, traditional, and transformational services and activities efficiently and effectively. HRM must develop measures of the function’s performance through customer surveys and analytical methods to improve performance. Reengineering and information technology, and outsourcing can improve HRM performance