Chapter 2 Strategic HR Management and Planning

1. Chapter 2 Strategic HR Management and Planning Strategic Planning Process Links to organizational strategies Internal and external factors effects Technology Measure effectiveness of HR

2. The strategy an organization follows is its proposition for how to compete successfully and thereby survive and grow • Strategic planning is the process of defining an organizational strategy, or direction, and making decisions on allocating the resources of the organization (capital and people) to pursue this strategy. • Roadmap that gives the organization direction and aligns resources • ongoing

3. Strategic Planning Cycle

4. Organizational mission – what makes the organization unique • Sets the direction • Considers internal and external conditions

5. Traditional vs. strategic HR, page 40 • Identify one traditional and one strategic HR within an existing organization? • SHR refers to the use of human resource management (HRM) practices to gain or keep a competitive advantage. • Talent!!!!! Deployment, development, and rewarding talent • Align employee performance with the organizational strategic objectives • Employees need to understand the “big picture”

6. High performance work practices • Incentive compensation • Training • Employee participation • Selectivity • Flexible work arrangements

7. Effectiveness and efficiency • Effectiveness is a measure of the ability of a program, project, or task to produce a specific desired effect or result that can be measured • Efficiency is the degree to which operations are done in a economical manner. • Compares inputs and costs to outputs and benefits

8. Environmental analysis • Environmental scanning – pinpoints strengths(S), weaknesses(W), opportunities(O), and threats(T) that the organization will face during the planning horizon/SWOT • Internal environment: quality and quantity of talent, org culture, talent pipeline • External environment: economic, political, and competitive forces

9. Internal environmental analysis • Succession planning: Identify a plan for the orderly replacement of key employees

10. External environment analysis • Economic conditions • Legislative and political • Demographic • Geographic and competitive

11. Global competitiveness and strategic HR • Legal and regulatory factors – complying with multiple countries laws • Offshoring – sending jobs elsewhere • Global staffing – expertise of local employees with headquarters • Expatriate and repatriation for their benefit • Multinational companies

12. Mergers and acquisitions • Before the deal: Due diligence is a comprehensive assessment of all aspects of the business being acquired • During Integration: identify key staff to retain, deal with cultural differences • Changing the culture: Define the desired behaviors, Deploy role models, Provide meaningful incentives, Provide clear and consistent messages • Post integration: talent management, combining compensation, move beyond us and them into “one organization” mentality. DOW Chemical as an example

13. Strategic challenges • Talent supply imbalance: surplus or shortage • Surplus: reduce hours or compensation, attrition, freeze hiring, voluntary separation programs, downsizing/reduction in force RIF with Severance benefits • Shortage: increase work hours thru overtime, outsource to 3rd party, implement alternative work arrangements, use contingent workers (temporaries/independent contractors), reduce employee turnover

14. Legal considerations for workforce reductions • Title VII of the Civil Rights Act • Age Discrimination in Employment Act • ADA Act • No legal requirement for severance • Consolidated Omnibus Budget Reconciliation Act (COBRA): employee for 18 months and 36 months for dependents if premiums paid by employee • Older Workers Benefit Protection Act (OWBPA): 40 or above.. 45 days to consider, “something of value” instead of suing..severance • Worker Adjustment and Retraining Notification Act (WARN): 60 days notice before a layoff with 1100 or more full time employees

15. Talent shortage • Overtime • Outsource • Alternate work arrangements • Bring back recent retirees • Contingent workers • Reduce turnover

16. Technology challenges • Computers • Phones • Facebook, LinkedIn • Email • Internet use • Monitoring access is good and bad • E-HRM systems track employee records, etc • Web based job boards, online applications • Training podcast, webinars

17. Measuring the effectiveness of HR performance • Human capital is the most expensive section of org • HR decisions are key to key performance indicators (KPIs) • Accounting practices treat expenditures on human capital and talent development as expenses rather than capital investments • Metrics, benchmarking, balanced scorecards, and audits

18. HR Metrics • HR staff to expenses, staffing, compensation, training, retention and quality, and development, page 62 • Line Managers • Accurate data • Measures linked to strategic and operational objectives • Calculations can be understood • Information is valued by executives • External and inter results can be compared • Data drives HR management efforts

19. HR Benchmarking • Process of comparing the business processes and outcomes to an industry standard or best practice • Comparing itself to “best in class” organizations

20. HR and the balanced scorecard • Measurement of strategic performance beyond just financial bottom line • Financial measures: profit and loss • Internal business processes: product and service quality, efficiency, standards • Customer relations: satisfaction, loyalty, and retention • Learning and growth activities: employee training and development, succession planning, knowledge creation human capital pool • P. 64 visual

21. Human capital effectiveness measures • Return on investment (ROI): calculation showing the value of investments in human resources…or how long it will take for them to pay for themselves • Human capital value added (HVVA): an adjusted operating profitability figure calculated by subtracting all operating expenses except for labor expenses from revenue and dividing by the total full time head count (FTE) • Human capital return on investment (HCROI): directly show the amount of profit derived from investments in labor, the leverage on labor cost • Human economic value added (HEVA): shows the wealth created per employee • Wealth is the net operating profit of a firm after the cost of capital is deducted • Cost of capital is the minimum rate of return demanded by shareholders.

22. HR Audit • Effort to assess the current state of HR practices in an organization. • Staffing, compensation, health and safety, etc. have been performing