Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Activities of HR 16-2 Irwin/McGraw-Hill Transactional Traditional Transformational

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Customer-Oriented Perspective of the HRM Function 16-3 Irwin/McGraw-Hill Customers Line managers Strategic partners employees HR Function Technology Staffing Performance Management Rewards Training & Development Customer Needs committed employees competent employees

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Measuring Human Resource Effectiveness: Why Do It? 16-4 Irwin/McGraw-Hill Market the function Provides accountability Market the function Provides accountability

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Evaluating Human Resource Practices: Approaches 16-5 Irwin/McGraw-Hill Audit approach reviews outcomes of HR functions Analytic approach determines whether program had intended effect estimates costs / benefits of program human resource accounting utility analysis Audit approach reviews outcomes of HR functions Analytic approach determines whether program had intended effect estimates costs / benefits of program human resource accounting utility analysis

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Auditing Examples of Key Indicators and Customer Satisfaction Measures for HRM Functions 16-6 Irwin/McGraw-Hill Key Indicators Customer Satisfaction Measures Staffing - Average days to fill position - Ratio of acceptances to offers - Ratio of minority / women to representation in labor market - Treatment of applicants - Per capita recruitment costs - Average years of education per job family - Anticipation of personnel needs - Timeliness of referring qualified candidates to supervisors - Skill in handling terminations - Adaptability to changing labor market conditions Equal Employment Opportunity - Ratio of EEO grievances to employee population - Minority representation by EEO category - Minority turnover rate - Resolution of EEO grievances - Daily assistance provided by HR department in implementing AA - Aggressive recruitment to identify qualified women/minority applicants

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Auditing Examples of Key Indicators and Customer Satisfaction Measures for HRM Functions 16-7 Irwin/McGraw-Hill Key Indicators Customer Satisfaction Measures Compensation - Per capita merit increases - Ratio of reclassification to total employees - Competitiveness in labor market - Percentage of overtime hours to straight time - Ratio of average salary offers to other firms in community - Fairness of existing job evaluation systems in assigning grades & pay - Relationship between pay and performance - Employee satisfaction with pay Benefits - Average unemployment compen- sation payment - Average workers’ compensation payment - Benefit cost per payroll dollar - Promptness in handling claims - Fairness in application of policies - Communication of benefits - Assistance to line managers in controlling unnecessary claims

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Auditing Examples of Key Indicators and Customer Satisfaction measures for HRM Functions 16-8 Irwin/McGraw-Hill Key IndicatorsCustomer Satisfaction Measures Training - % of employees participating per job family - % receiving tuition refunds - Training dollars per employee - How well programs meet needs of employees and company - Communication about available training opportunities - Quality of orientation program Employee Appraisal and Development - Distribution of appraisal info. - Appropriate dimensions on appraisal forms - Ratio of promotions to employees - Ratio of openings filled internally to externally - Assistance in identifying potential - Organizational development activities provided by department - Number of promotions from within - Counseling provided to employees in career planning

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example of Cost-Benefit Approach for a Selection Test 16-9 Irwin/McGraw-Hill Cost-Benefit InformationTest Information Current employment 4,404 Number separating 618 Number selected 618 Average tenure 9.69 years Number of applicants 1,236 Testing cost per applicant $10 Total test cost $12,360 Average test score.80 SD Test validity.76 SD (per year) $10,413 Computation Quantity = Average tenure x Applicants selected = 9.69 years x 618 applicants = 5,988 person-years Quality = Average test score x test validity x SDy =.80 x.76 x $10,413 = $5,331 per year Utility = ( Quantity x quality ) - costs = (5,988 person-year x $5,331 per year) - $12,360 = $37.9 million

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Improving HRM Effectiveness Irwin/McGraw-Hill Restructuring Outsourcing Process Redesign Restructuring Outsourcing Process Redesign

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Reengineering Process Irwin/McGraw-Hill Identify the process to be reengineered STEP 1

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Reengineering Process Irwin/McGraw-Hill Understand the process STEP 1 STEP 2 - can jobs be combined? - can employees have more autonomy? - are all the steps needed? - is there redundancy? - how many exceptions are there? - are steps in proper order? - what is the desired outcome? Identify the process to be reengineered

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Reengineering Process Irwin/McGraw-Hill Identify the process to be reengineered Understand the process Redesign the process STEP 1 STEP 2 STEP 3 - develop models - test models - choose prototype - integrate prototype

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Reengineering Process Irwin/McGraw-Hill Identify the process to be reengineered Understand the process Redesign the process STEP 1 STEP 2 STEP 3 STEP 4 Implement the new process

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Reengineering Process Irwin/McGraw-Hill Identify the process to be reengineered Understand the process Redesign the process STEP 1 STEP 2 STEP 3 STEP 4 Implement the new process feedback

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Using New Technologies to Improve HRM Effectiveness Irwin/McGraw-Hill Interactive Voice Technology Internet Networks & Client-Server Architecture Relational Databases Imaging Expert Systems Groupware Interactive Voice Technology Internet Networks & Client-Server Architecture Relational Databases Imaging Expert Systems Groupware

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Software Applications for HRM Irwin/McGraw-Hill Staffing applicant recruiting & tracking EEO & AA reports Developing a master employee database Human Resource Planning succession planning forecasting work-force profile analysis work-force dynamics analysis Performance Management Training & Career Development Compensation & Benefits payroll job evaluation salary surveys & planning international compensation benefits management Staffing applicant recruiting & tracking EEO & AA reports Developing a master employee database Human Resource Planning succession planning forecasting work-force profile analysis work-force dynamics analysis Performance Management Training & Career Development Compensation & Benefits payroll job evaluation salary surveys & planning international compensation benefits management

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Improving HRM Effectiveness Through E-HRM E-HRM technology has freed HRM functions from transactional activities to focus on more strategic actions. Examples include: Recruitment and selection Compensation and rewards Training and development