1. Human Resource Strategy and Planning
CHAPTER 2
Human Resource Strategy and Planning

2. Learning Objectives
Summarize the organization’s strategic planning process
Explain the key differences between effective and ineffective strategies and suggest ways to implement strategic asset reallocation
Outline how HR’s strategies are merged with organizational strategies and give two examples

3. Learning Objectives
Discuss how to forecast the supply and demand of Human Resources
List options for handling a shortage and surplus of employees
Identify how organizations can measure and analyze the effectiveness of HR management practices

4. Strategy and Strategic Planning
A plan an organization follows for how to compete successfully, survive, and grow
Defining organizational strategy, or direction, and allocating resources toward its achievement

5. Figure 2-1: Strategic Planning Process for the Organization
Evaluate and Reassess

6. Organizational Mission
Organizational mission: The core reason for the existence of the organization and what makes it unique

7. Strategy Formulation Covers 3-5 years
Consider internal and external forces
Analyze strengths, weaknesses, opportunities, threats
Determine objectives
Formulate strategies to meet objectives
Managers must focus on strategy

8. Strategic HR Management
Provides input for strategic planning and develops specific HR initiatives to help achieve organizational goals
The appropriate use of HR management practices to gain or keep a competitive advantage

9. Strategic HR Management
HR can support organizational strategy by:
Hiring good employees
Placing employees in the right jobs
Rewarding employees fairly
Providing proper training
Fostering good employer–employee communication
Focusing employee efforts and rewards toward the company’s bottom line

10. Figure 2-2: Positioning HR to Be a Strategic Partner
Source: Adapted from Torben Juul Anderson and Dana Minbaeva, “The Role of Human Resource Management in Strategy Making,” Human Resource Management 52 (2013), 809–827.

11. HR Contributions to Strategy
Provide perspective and expertise by:
Having a seat at the strategic table
Being knowledgeable about business operations
Focusing on the future
Prioritizing business goals
Understanding what to measure

12. Figure 2-3: HR Department’s Contri-bution to Organizational Sustainability
Source: Adapted from Cathy L. Z. Dubois and David A. Dubois, “Strategic HRM as Social Design for Environmental Sustainability in Organization,” Human Resource Management 51 (2012), 799–826.

13. HR Strategies for Global Competitiveness
Multinational corporation (MNC)
An organization that has facilities and other assets in at least one country other than its home country
Staffing Strategies
Offshoring: Relocation of a business process or operation from one country to another
Expatriate: Citizen of one country employed in a second country by a company in the first country
Leadership development is critical. Leading in different cultures requires skill.

14. Figure 2-4: Strategic HR Approaches to International Staffing

15. Human Resource Planning
Analyzes and identifies the need for, and availability of, people so that the organization can meet its strategic objectives
Ensures right number of people with the right capabilities at the right times and in the right places

16. Figure 2-5: HR Planning Process
Assess External and Internal Workforce
• External conditions and influences
• Internal workforce capabilities and KSAs
Compile HR Planning Forecasts
• Demands for Human Resources
• Supply of Human Resources
Develop HR Staffing Plans and Actions
• Employee retention and turnover
• Recruiting sources and means
• Selection process and actions
Review Organizations Environmental Analysis/Strategic Plans

17. Environmental Scanning
Environmental scanning: Assessment of external and internal environmental conditions that affect the organization
External environment
Economic, political, and competitive forces
Internal environment
Quality and quantity of talent
Organizational culture
Talent pipeline and leadership bench strength
Helps identify strengths, weaknesses, opportunities, and threats

18. Figure 2-6: HR Factors in the SWOT Analysis

19. Succession Planning
Succession planning: Process of identifying a plan for the orderly replacement of key employees

20. Factors Affecting External Workforce Availability
Economic and Governmental Factors – Impact HR Planning
Government regulations affect labor supply
Tax legislation at local, state, and federal levels
Geographic/Competitive Evaluations
Net migration
Direct competitors
International competition
Changing Workforce Considerations
Aging of the workforce
Growing diversity of workers
Female workers and work–life balancing concerns
Availability of contingent workers
Outsourcing possibilities

21. Factors Affecting Internal Workforce Availability
Current and Future Job Audit
Existing jobs
Number of individuals performing each job
Reporting relationships
Vital KSAs (knowledge, skills, abilities)
Jobs needed to implement future organizational strategies
Characteristics of anticipated jobs
Employee and Organizational Capabilities Inventory
Employee demographics
Career progression
Performance data

22. Forecasting
Forecasting: Using information from the past and present to predict future conditions

23. HR Forecasting Methods
Judgmental Methods
Estimates
The rule of thumb
The Delphi technique
Nominal groups
Mathematical Methods
Statistical regression
Simulation models
Productivity ratio
Staffing ratios

24. HR Forecasting Planning Periods
Short-range plans: Forecast for the immediate HR needs of an organization
Intermediate-range plans: Project one to three years into the future
Long-range plans: Extend beyond three years

25. Forecasting External Supply of Employees
Net migration into and out of the area
Individuals entering/leaving the workforce
Individuals graduating from schools/colleges
Changing workforce composition/patterns
Economic forecasts for the next few years
Technological developments and shifts
Actions of competing employers
Government regulations and pressures
Circumstances affecting persons entering/leaving the workforce

26. Figure 2-8: Estimating Internal Labor Supply for a Given Unit

27. Figure 2-9: Managing Talent Supply Imbalances

28. Best Practices to Carry Out Layoffs
Identify the work that is core to sustaining a profitable business
Identify the knowledge, skills, and competencies needed to execute the business strategy
Protect the bottom line and the corporate brand
Constantly communicate with employees
Pay attention to the survivors

29. Severance Benefits and Outplacement Services
Severance benefits: Temporary payments made to laid-off employees to ease the financial burden of unemployment
Outplacement services: give displaced employees support and assistance
Personal career counselling
Résumé-preparation services
Interviewing workshops
Referral assistance

30. Legal Considerations for Workforce Reductions
Selection Criteria for Laying Off
Title VII of the Civil Rights Act
Age Discrimination in Employment Act
Americans with Disabilities Act
Other Regulations
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Older Workers Benefit Protection Act (OWBPA)
Worker Adjustment and Retraining Notification (WARN) Act

31. Managing a Talent Shortage
Alternate Work Arrangements
Outsourcing
Nontraditional schedules that provide flexibility to employees
Transferring the management and performance of a business function to an external service provider

32. Figure 2-10: Ways to Manage a Talent Shortage

33. Figure 2-11: HR Activities during Mergers and Acquisitions

34. Due Diligence
Due diligence: Comprehensive assessment of all aspects of the business being acquired
HR professionals review issues related to:
Legal compliance
Compensation and benefits programs
Quality of talent
Labor contract obligations
Is complex when merger and acquisition involves companies in different countries

35. Changing the Organizational Culture
Define the desired behaviors
Deploy role models
Provide meaningful incentives
Provide clear and consistent messages

36. Measuring Effectiveness of Human Resources and Human Capital
Effectiveness: Ability of a program, project, or task to produce a specific desired effect or result that can be measured
Efficiency: Degree to which operations are carried out in an economical manner

37. HR Metrics and Analytics
HR Metrics: Specific measures of HR practices
HR Analytics: An evidence-based approach to making HR decisions on the basis of quantitative tools and models

38. Figure 2-12: Key HR Metrics

39. Characteristics of HR Metrics and Analytics
Accurate data can be collected
Measures are linked to strategic and operational objectives
Calculations can be clearly understood
Measures provide information valued by executives
Results can be compared both externally and internally
Measurement data drive HRM efforts

40. HR Benchmarking and Balanced Scorecard
Process of comparing an organization’s business results to industry standards or best practices
A framework organizations use to report on a diverse set of performance measures

41. Figure 2-13: Balanced Scorecard Framework

42. Human Capital Effectiveness Measures
Return on investment (ROI): Calculation of the value of investments in human capital
Human capital value added (HCVA): Adjusted operating profitability figure
Human capital return on investment (HCROI): Calculation of the amount of profit derived from investment in labor
Human economic value added (HEVA): Wealth created per employee

43. Human Capital Effectiveness Measures
ROI = C/A+B
A = Operating costs for a new or enhanced system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period

44. Human Capital Effectiveness Measures
Human capital value added (HCVA)
revenue – (operating expenses [compensation + benefit costs])
full-time head count
Human capital return on investment (HCROI)
revenue (operating expenses – [compensation + benefit costs])
(compensation + benefit costs)
Human economic value added (HEVA)
net profit after taxes – cost of capital

45. Human Resources Audit
HR audit: Formal research effort to assess the current state of an organization’s HR practices
Audit areas
Staffing and compensation
Health and safety
Legal compliance
Administrative processes and record keeping
Employee retention and benefits

46. HR Audit Levels Compliance Audit Benefit Programs Audit I-9 Audit
Checks record keeping on state and federal documentation requirements
Benefit Programs Audit
Reviews regulatory compliance, benefits administration, and reporting
I-9 Audit
Reviews compliance with immigration regulations and the I-9 form requirement
Specific Program Audit
Reviews specific HR subareas such as compensation, EEO, or training
Full HR Audit
Reviews all of the above plus all other HR functions