R OBERT L. M ATHIS J OHN H. J ACKSON PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. Strategic HR Management and Planning Chapter 2 SECTION 1 Nature of Human Resource Management

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–22–2 Learning Objectives After you have read this chapter, you should be able to:  Explain strategic HR management and how it is linked to organizational strategies.  Describe how legal, political, cultural, and economic factors affect global HR management.  Discuss four dimensions of organizational effectiveness and how HR contributes to each.  Define HR planning and outline the HR planning process.  Discuss several ways of managing a surplus of human resources.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–32–3 Human Resources as a Core Competency Strategic Human Resources Management  The use of employees to gain or keep a competitive advantage, resulting in greater organizational effectiveness. Core Competencies  The unique capabilities of employees in an organization that create high value and that differentiate the organization from its competition  The source of an organization’s sustainable competitive advantage.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–42–4 Linkage of Organizational and HR Strategies Cost Leadership  Competition on the basis of low price and high quality of product or service  Relies on “building” employees to fit specialized needs  Requires a longer HR planning horizon approach Differentiation  Competition on the basis of either offering distinctively different products or services or establishing an exclusive image for quality products and services  Relies on hiring needed skills.  Needs a shorter planning time frame in order to be responsive to dynamic environments

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–52–5 Types of Global Organizations Importing and Exporting  Buying and selling goods and services with organizations in other countries Multinational Enterprise (MNE)  An organization with operating units located in foreign countries. Global Organization  An organization having corporate units in a number of countries that are integrated to operate worldwide.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–62–6 Factors Affecting Global HR Management PoliticalPoliticalEconomicEconomic CulturalCulturalLegalLegal

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–72–7 Global Cultural Factors Culture  Shared values and beliefs of a group of people. Geert Hofstede’s Culture Dimensions  Power Distance: the inequality among the people of a nation.  Individualism: the extent to which people prefer to act as individuals instead of members of groups.  Masculinity/Femininity: the degree to which “masculine” values prevail over “feminine” values.  Uncertainty Avoidance: the preference of people in a country for structured rather than unstructured situations.  Long-Term Orientation: the preference for long-term values emphasizing the future as opposed to short-term values focusing on the present.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–82–8 Organizational Effectiveness and Strategic HR Management Effectiveness  The extent to which goals have been met. Efficiency  The degree to which operations are done in an economical manner. Dimensions of Organizational Effectiveness  Organizational productivity  Financial contributions  Service quality  Organizational culture

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–92–9 1.Organizational Productivity Productivity  A measure of the quantity and quality of work done, considering the cost of the resources used.  A ratio of the inputs and outputs that indicates the value added by an organization. Improving Organizational Productivity  Organizational restructuring  Re-designing work  Aligning HR Activities  Outsourcing analyses and assistance

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–10 Approaches to Improving Organizational Productivity Figure 2–3

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–11 2. Financial Contributions Return on Investment (ROI)  Difficult to determine returns for HR contributions which affect many facets of the business  Former view of HR as a “cost center”

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–12 3. Service Quality High quality products and services are the results of HR-enhancements to organizational performance.  Staffing  Customer service

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–13 4. Organizational Culture Organizational Culture  The shared values and beliefs in an organization  Strategy and culture must be compatible and aligned for the organization to be effective.  Culture affects recruitment and retention of employees.  Culture can enhance or constrain organizational performance.  Culture is the “climate” of an organization.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–14 Human Resource Planning Human Resource (HR) Planning  The process of analyzing and identifying the need for and availability of human resources so that the organization can meet its objectives.

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–15 HR Planning Process Figure 2–6

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–16 Benefits of HR Planning Lower HR costs More timely recruitment More inclusion of protected groups Better talent management

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–17 Scanning the External Environment Environmental Scanning  The process of studying the environment of the organization to pinpoint opportunities and threats. Environmental Changes Impacting HR  Governmental Influences  Economic conditions  Geographic and competitive concerns  Workforce composition

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–18 Assessing the Internal Workforce Jobs and Skills Audit Organizational Capabilities Inventory  HRIS databases—sources of information about employees’ knowledge, skills, and abilities (KSAs)  Components of an organizational capabilities inventory  Individual employee demographics  Individual employee career progression  Individual job performance data

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–19 Forecasting HR Supply and Demand Forecasting  The use of information from the past and present to identify expected future conditions. Forecasting Periods  Short-term—less than one year  Intermediate—up to five years  Long-range—more than five years

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–20 Forecasting HR Supply and Demand (cont’d) Forecasting Methods  Judgmental  Estimates—asking managers’ opinions, top-down or bottom- up  Rules of thumb—using general guidelines  Delphi technique—asking a group of experts  Nominal groups—reaching a group consensus in open discussion  Mathematical  Regression analysis  Simulation models  Productivity ratios—units produced per employee  Staffing ratios—estimates of indirect labor needs

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–21 Forecasting HR Supply and Demand (cont’d) Forecasting the Demand for Human Resources  Organization-wide estimate for total demand  Unit breakdown for specific skill needs by number and type of employee  Develop decision rules (“fill rates”) for positions to be filled internally and externally.  Develop additional decision rules for positions impacted by the chain effects of internal promotions and transfers. Forecasting the Supply for Human Resources  External Supply  Internal Supply

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–22 Forecasting HR Supply (cont’d) Forecasting External HR Supply  Factors affecting external  Net migration for an area  Individuals entering and leaving the workforce  Individuals graduating from schools and colleges  Changing workforce composition and patterns  Economic forecasts  Technological developments and shifts  Actions of competing employers  Government regulations and pressures  Other circumstances affecting the workforce

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–23 Forecasting HR Supply Forecasting Internal HR Supply  Effects of promotions, lateral moves, and terminations Succession analysis  Replacement charts  Succession planning  The process of identifying a longer-term plan for the orderly replacement of key employees. Source: U.S. Office of Personnel Management,

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–24 Estimating Internal Labor Supply for a Given Unit Figure 2–8

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–25 Developing and Using a Strategic HR Plan Issues in Matching the Supply of Labor with the Demand for Labor  Succession Planning  Managing a Human Resources Surplus  Outplacement Services  HR Planning in Mergers and Acquisitions

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–26 Managing a Human Resources Surplus Workforce Reductions  Worker Adjustment and Retraining Notification (WARN Act)  Sets out employer requirements for advance notice of a layoff or facility closing. –60-day notice to employees and the local community before a layoff or facility closing involving more than 50 people. –vWorkforce Realignment  “Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) all mean reducing the number of employees in an organization.  Positive and negative consequences  Managing survivors

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.2–27 Managing a Human Resource Surplus (cont’d) Downsizing Approaches  Attrition and hiring freezes  Voluntary Separation Programs  Layoffs  Outplacement services