Chapter 2: Strategic HR Management and Planning

1. Chapter 2: Strategic HR Management and Planning • Introduction • A no-entrenchment policy may provide job security to employees at the expense of strategic flexibility to adjust a company’s workforce size • A retrenchment-as-a-first-resort policy may create job insecurity and generate resentment in employees, resulting in a company’s inability to attract or retain talented employees for long-term survival

2. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management

3. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management (Contd.) • Involving HR in strategic planning seems clear but is not widely practiced • Best HR Practices • Employment Security • Selective Recruitment • High Wages/Incentives • Information Sharing/Participation • Training/Cross-training • Promotion from Within • Measurement

4. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management (Contd.) • Operationalizing HR Strategy • Some examples where HR strategies are needed • Understand the business • Focus on key business goals • Know what to measure • Prepare for the future

5. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management (Contd.) • Using Human Resources as a Core Competency

6. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management (Contd.) • Using Human Resources as a Core Competency • HR can add value to a company’s core competency via creating the following people quality: • Innovation • Outstanding service • Productivity • Special skills • Unusual quality

7. Chapter 2: Strategic HR Management and Planning • The Nature of Strategy and HR Management (Contd.) • Organizational Culture and HR • HR must keep in mind the climate experienced by employees and managers in the day-to-day and longer-term activities

8. Chapter 2: Strategic HR Management and Planning • HR as an Organizational Contributor

9. Chapter 2: Strategic HR Management and Planning • HR as an Organizational Contributor (Contd.) • HR-related competencies can be seen in the following three areas: • Organizational Productivity • Unit labor costs refers to the ratio between average cost of workers and their average levels of output,which can be managed via: • Organizational restructuring • Re-designing work • Aligning HR activities with organizational efforts • Outsourcing analyses

10. Chapter 2: Strategic HR Management and Planning • HR as an Organizational Contributor (Contd.) • HR-related competencies can be seen in the following three areas: (Contd.) • Customer Service and Quality Linked to HR Strategies • HR needs to consider what customers are looking for • HR Effectiveness and Financial Performance • HR needs to consider the ROI (return on investment) of its programs

11. Chapter 2: Strategic HR Management and Planning • Global Competitiveness and Strategic HR • Types of Global Organizations • Importing and Exporting (travel policy to a foreign country) • Multi-National Enterprises (adapting to foreign practices) • Global Organization (integrating to create a global mindset) • Global Legal and Political Factors • Political and legal landscape change at a different pace from one country to another

12. Chapter 2: Strategic HR Management and Planning • Global Competitiveness and Strategic HR (Contd.) • Global Cultural Factors • Hofstede’s 5 dimensions of cross-cultural differences: • Power inequality • Individualism/group orientation • Masculinity/femininity • Uncertainty avoidance

13. Chapter 2: Strategic HR Management and Planning • Global Competitiveness and Strategic HR (Contd.) • Global Economic Factors • Wage rates differ across countries but a lower wage rate in a country may not mean employees do not enjoy good working conditions and living standards

14. Chapter 2: Strategic HR Management and Planning • Human Resource Planning

15. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Identifying HR needs and availability so that organizational objectives are met • Line managers and HR staff must work together to make HR planning work • In family-owned businesses, incorporating key non-family members in HR planning efforts plays an important part in succession planning • The HR Planning Process: Figure 2-7 shows a logical flow chart to guide decision makers through a systematic HR planning process

16. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Scanning the External Environment

17. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Scanning the External Environment • Government Influences • Economic Conditions • Geographical and Competition Concerns • Workforce Composition • Assessing the Internal Workforce • Jobs and Skills Audit • Organizational Capabilities Inventory • Using a Skills Database • 3 types of information about individual employees, namely, • Demographics • Career progression • Performance data

18. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Forecasting HR Supply and Demand • Judgmental or mathematical • Quantitative + subjective judgment • Three Planning Periods • Short range (within 1 year) • Intermediate range (1-3 years) • Long range (beyond 3 years)

19. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Forecasting the Demand for Human Resources • Entire organization and individual units • Chain effects must be considered if internal promotions and transfers are used to fill job openings • Forecasting the Supply of Human Resources • External supply • Migration • New labor market entrants • Output from schools and colleges • Workforce composition changes • Economic outlook • Technological changes • Competing employers’ actions • Government regulations and pressures

20. Chapter 2: Strategic HR Management and Planning • Human Resource Planning (Contd.) • Forecasting the Supply of Human Resources (Contd.) • Internal supply: Please see Figure 2-8

21. Chapter 2: Strategic HR Management and Planning • Workforce Realignment

22. Chapter 2: Strategic HR Management and Planning • Workforce Realignment (Contd.) • Managing a Human Resources Surplus • Workforce Reductions and the Law • Workforce Downsizing • Attrition and hiring freezes • Voluntary separation programs • Layoffs • Outplacement Services • Managing a Shortage of Employees • Overtime • Contingent Workers • Recent Retirees • Outsourcing • Reduce Turnover

23. Chapter 2: Strategic HR Management and Planning • HR Planning in Mergers and Acquisitions • Organizational cultures must mesh before a merger and acquisition can succeed • Decision Making Styles • Levels of Teamwork • Information Sharing Philosophies • Formality • Revising the Structure • Morale may decline due to redundancies

24. Chapter 2: Strategic HR Management and Planning • HR Planning in Mergers and Acquisitions (Contd.) • Key Factors in Cultural Fit • Internal Integration • Autonomy • Adaptability • Employees’ Trust • Diversity • Merging HR Activities • Compensation • Benefits • Performance Appraisal • Employee Relations • Databases and Information Systems

25. Chapter 2: Strategic HR Management and Planning • Measuring Effectiveness Using HR Metrics

26. Chapter 2: Strategic HR Management and Planning • Measuring Effectiveness Using HR Metrics (Contd.) • Developing and Using HR Metrics • Specific measures tied to HR performance indicators • Costs • Quantity • Quality • Timeliness • Examples • Cost of Turnover • Average Time Taken to Fill a Job Opening • Employee Satisfaction Scores • Ratio of Payroll Expenses to Revenues • Strategic versus Operational HR Metrics

27. Chapter 2: Strategic HR Management and Planning • Measuring Effectiveness Using HR Metrics (Contd.) • Measures of Strategic HR Effectiveness • Return on Investment • Economic Value Added • HR and the Balanced Scorecard • Financial • Internal business process • Customer • Learning and growth

28. Chapter 2: Strategic HR Management and Planning • Measuring Effectiveness Using HR Metrics (Contd.) • Measures of Strategic HR Effectiveness • Compare specific measures of performance against data on those measures in other organizations • HR Audit • Formal research effort that evaluates the current state of HR management in an organization