Strategically Managing the HRM Function McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved

Introduction  HRM practices can help companies gain a competitive advantage.  Virtually every HR function in top companies is going through a transformation process to create a function that can play this new strategic role while fulfilling its other roles. 16-2

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 16-3

Categories of HRM Activities  Transactional activities - day-to-day transactions - Low strategic value  Traditional activities - nuts and bolts of HR such as performance management, training, recruiting, selection, compensation and employee relations - Moderate strategic value  Transformational activities create long-term capability and adaptability. Activities include knowledge management, management development, cultural change and strategic redirection and renewal. - Greatest strategic value 16-4

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. 16-5

Customer-Oriented Perspective 16-6

Basic Process for HR Strategy Scan external environment Identify strategic business issues Identify people issues Develop HR strategy Communicate HR strategy 16-7

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. 16-8

Characterizing HR Strategies HR-Focused People-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 16-9

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 16-11

Restructuring to Improve HRM  3 Divisions of HRM: 1. 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. 2. Field Generalists - HRM generalists assigned to a business unit. 3. Service Center - ensure that transactional activities are delivered throughout the organization

Outsourcing  Outsourcing - Contracting with an outside vendor to provide a product or service to the firm.  2 Reasons to Outsource:  Outsourcing partner can provide the service more cheaply.  Outsourcing partner can provide it more effectively. Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration

Reengineering  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 16-14

I mproving HRM Effectiveness through New Technologies  New technologies - Applications of knowledge, procedures, and equipment that have not previously been used.  Transaction Processing—Computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses and training course enrollments.  Decision Support Systems—Systems designed to help managers solve problems.  usually include a "what if" feature.  Expert systems - Computer systems incorporating decision rules of people deemed to have expertise in a certain area

Network and Client Server Architecture  A Network is a combination of desktop computers, computer terminals and mainframes or minicomputers that share access to databases and a means to transmit information throughout the system. Client-server architecture is a common form of network that provides the means of consolidating data and applications into a single system

Relational Database, Imaging and Groupware  Relational database – Information is stored in separate files that look like tables and can be linked by common elements such as name.  Imaging – Process for scanning documents, storing them electronically and retrieving them.  Groupware (or electronic meeting software) – software application that enables multiple users to track, share and organize information and to work on same document simultaneously

Software Applications for HRM  Improving HRM Effectiveness through New Technologies– E-HRM – Speed requirements of e-business force HRM managers to explore how to leverage technology for delivery of traditional and transformational HRM activities.  Recruitment and Selection - Technology monitors hiring processes to minimize potential for discriminatory hiring decisions.  Compensation and Rewards - Leveraging technology may allow firms to better achieve compensation goals with less effort.  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 leaders need knowledge of the following: - business, change processes, integration competence and people’s role in competitive advantage - HR issues, tools, processes and technologies, policies and programs - HR practices in areas such as staffing, development, rewards, communication and organizational design 16-19

Summary  HRM functions must consist of individuals who view themselves as businesspeople who work in HRM.  With the opportunity to impact the way organizations compete through people comes serious responsibility and accountability.  Firms need balance attracting, motivating and retaining the best talent and keeping costs low.  HR leaders need knowledge of the business combined with knowledge of HR issues, tools, processes and technology