REENGINEERING HR

1. REENGINEERING HR FUAD W. AWAD HUMAN RESOURCE INSTITUTE LEBANESE AMERICAN UNIVERSITY

2. QUESTIONS • Why HR is so important? • How can an organization move from a traditional personnel management to strategic HRM? • What should be the deliverables of HRM? • What are HRM future challenges? • How to increase employee results ? Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

3. WHY MANAGING HR IS SO IMPORTANT? • Rapid change • High levels of uncertainty • Technological change • Rising costs • Attracting and retaining human capital • Globalization Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

4. HR planning Recruiting staff Job analysis Performance review Wage + benefits administration Employee training Record Keeping Legislative compliance Labor relations TRADITIONAL PERSONNEL MANAGEMENT Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

5. TRADITIONAL PERSONNEL MANAGEMENT • The traditional personnel department is often both physically and psychologically separated from the “real work” of the organization. • Traditional personnel management involves a limited number of functional tasks, with personnel activities and staff being relatively isolated from the ‘profit-making heart’ of the organization. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

6. STRATEGIC HRM - DEFINITION • SHRM plays a central role in helping organizations reach their strategic objectives. • SHRM interacts fully with other functional areas within the organization. • SHRM helps managers maximize the contribution of employees in achieving competitive advantage. • SHRM is all about promoting efficiency and profitability. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

7. THE CHANGING NATURE OF HRM: A MODEL FOR MULTIPLE ROLES • HR professionals must create value and deliver results • Four key roles that HR professionals must fulfill: • Management of strategic HR • Management of transformation and change • Management of firm infrastructure • Management of employee contribution Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

8. HR Roles in Building a Competitive Organization Future/Strategic Focus Management of Strategic Human Resources Management of Transformation and Change Processes People Management of Employee Contribution Management of Firm Infrastructure Day to day/Operational Focus Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

9. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

10. BUSINESS PARTNERS PLAY MULTIPLE ROLES • Today HR professionals want to be labeled business partners. • Narrowly defined this means working with GMs to implement strategy, that is working as a strategic partner. • In fact a more dynamic equation should replace the simple concept of business partner: Bus. Partner = St.Part + Ad.Ex. + Emp.Ch + Ch. Ag. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

11. FUTURE CHALLENGES SIX challenges for the future will propel the HR community forward: • HR Theory • HR Tools • HR Capabilities • HR Value Proposition • HR Governance • HR Competencies Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

12. FUTURE CHALLENGES - HR THEORY • To make HR practices more than isolated acts, managers and HR professionals must master the theory behind HR: • Resource dependence (political science): HR practices help the firm acquire a stable supply of scarce resources that helps the firm to compete. • Transaction cost (institutional economics):HR practices reduce costs associated with accomplishing work. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

13. FUTURE CHALLENGES - HR THEORY • Contingency theory (business strategy):HR practices align with business strategy to provide a fit that leads to results. • Institutional theory (sociology):HR practices transfer knowledge and ideas from firm to firm making the best practices of an industry routine. • Cognitive psychology (psychology):HR practices help create a shared mindset or culture within the firm. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

14. FUTURE CHALLENGES - HR TOOLS • Leadership depth: HR professionals must establish systems that create or discover future leaders. In the future, HR professionals may be judged by the extent to which they develop future leaders. • Knowledge transfer: Creating systems that transfer knowledge throughout the organization will surely become a critical item in the HR toolkit  HR professionals are already called ‘Chief Learning Officers’. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

15. A DIGRESSION - THE LEADER OF THE FUTURE • Leadership will reside less at the top; it will, rather, be shared throughout the organization. • Charismatic leaders will be less important than the processes the leaders create. • Individual leadership will be replaced by team leadership. • The new leader will be more likely to ask questions than give answers. • Interest in questions and learning will replace focus on solutions and answers • Global thinking will replace domestic focus. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

16. FUTURE CHALLENGES - HR TOOLS • Culture Change: HR professionals must learn to build a case for culture change, must expose gaps between current and desired culture, prepare and implement culture action-plans, coordinate culture-change efforts, and measure results. • Customer-focused HR: HR practices will need to focus both on employees and on external customers. The latter group will be involved in staffing decisions, employee evaluations, training sessions etc. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

17. FUTURE CHALLENGES - HR CAPABILITIES • Effectiveness of the HR functions was measured in terms of accuracy, and administrative efficiency. • Today, new capabilities must be added: • Speed: how quickly can HR work be done without sacrificing quality? • Implementation: How well can new ideas be turned into actions with visible results? • Innovation: How able is the HR community to think creatively about solving old problems and finding solutions to problems not encountered before? • Integration: How well does HR integrate with strategic plans, customer goals, and employee needs? Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

18. FUTURE CHALLENGES: HR VALUE PROPOSTION • Every HR professional should be able to pass this one question exam: How does your work add value to your business in economic terms? Employees:How does HR affect commitment, competence? HR practicesCustomers: How does HR affect retention,satisfaction, Investors: How does HR affect profitability, growth, cost, cash flow? Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

19. FUTURE CHALLENGES: HR GOVERNANCE - How work is coordinated. New organizational forms are emerging:  away from pyramids toward networks  new thinking about management processes  careers may become more horizontal than vertical  compensation systems may be tied less to position than to competence  cultures will cut across internal boundaries  Learning to join together and produce as teams may become as critical to career success as having clear areas of power or control once was. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

20. FUTURE CHALLENGES - HR COMPETENCIES HR competence is conceptualized using a three domain framework: • Knowledge of Business • Knowledge of HR Practices • Management of Change Processes Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

21. FUTURE CHALLENGES - Knowledge of Business • It explains 18% of the performance of HR professionals. • It refers to the ability of understanding business functions not doing them. • It encompasses: • Financial capability • Strategic capability • Technological capability Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

22. FUTURE CHALLENGES - Delivery of HR Practices • It explains 23% of the overall performance of HR professionals. • It refers to the ability of the HR professional delivering sate-of-the-art, innovative HR practices  credibility and respect for HR professionals  • It encompasses: • Staffing - Development • Appraisal - Rewards • Communication - Organizational Planning Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

23. FUTURE CHALLENGES - Management of Change • It explains 41% of the overall performance of HR professionals. • It refers to the creation of an overall organizational capacity for change. • It encompasses: • Diagnosing problems • Build relationships with clients • Articulate visions • Set leadership agendas • Solve problems • Implement goals Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

24. FUTURE CHALLENGES - Credibility HR professionals must be credible. The behaviors that enhance credibility are: 1- Accuracy: Being accurate in all HR work 2- Consistency: Being predictable 3- Meeting commitments:Doing what you say you will do on time and within budget. 4- Chemistry: Being personally comfortable with peers, subordinates, and supervisors. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

25. FUTURE CHALLENGES - Credibility • Confronting appropriately: being able to disagree and challenge at the appropriate time, in the appropriate setting, and in the appropriate manner. • Integrity: behaving ethically. • Thinking outside the box: offering alternative perspectives, having a point of view willing to express it. • Confidentiality. • Understanding all HR actions in light of the needs of the business. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

26. Leaders Matter • The HRI, Eckerd College, Fla. “Major Issues Impacting People Management” (1997): found leadership to be the #1 issue for effective people management. • Mckinsey consulting firm, “War for Talents” (1998), found that firms with leadership depth were much more profitable that those without it. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

27. What is Effective Leadership? Effective Leadership = Attributes Results • Terms of the equation are not cumulative, they multiply each other. • Some have predisposition for one side: • Focus on ‘results’  leaders do whatever it takes to accomplish short term objectives  leaders care more about what they accomplish than about how it is accomplished  lack the risk of sustainable results. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

28. What is Effective Leadership? • Focus on ‘attributes’ not paying enough attention to results  development of leadership through attributes. However without appropriate attributes leaders cannot be effective over time. Attributes and Results matter; they are the DNA of leadership.Together they create a road map for improving leaders Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

29. Balanced Outcomes A Model of Balanced Outcomes Process - Centric Organization Results Investor Results External Focus Internal Focus Employee Results Customer Results People - Centric Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

30. Balanced Outcomes • Balanced does not mean equal. • Balance requires constant juggling, the goal being not let any of the four results areas fall from neglect. • A consulting firm may focus on customers first, employees second, and investors third. • A supermarket favors employees first, customers second and investors third, linear correlation leading from employee satisfaction to customer satisfaction to investor results. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

31. Employee Results: Investing in Human Capital • How can leaders get more out of their employees? • As business becomes increasingly knowledge and service driven, employee results will continue to become more, not less, important. • How can leaders build Human Capital? Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

32. Employee Results: Investing in Human Capital H C = Employee Employee capability X Commitment Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

33. Human Capital - Principles and Cautions • Human Capital is underutilized • Human Capital is one of the few assets that can appreciate • Human Capital is portable • Human Capital requires a different way of thinking about careers • Human Capital within a firm correlates with customer perception of the firm Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

34. Human Capital - Principles and Cautions • Human Capital draws everything else together investments in physical plant, technology, new products, distribution systems, and marketing collectively function thanks to an organization’s Human Capital Human Capital is the business of the day. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

35. What is Employee Capability? • Employee capability = Knowledge, skill, ability and motives of each individual employee in his/her position. • Two levels of capability: • Technical know how skill needed to get the work done. • Social know how  how employees work together  interpersonal skills and sensitivity to how workers work together. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

36. What is Employee Capability? • A leader’s job is to clarify: • what employees need to know and do, • then figure out how to make sure employees do what is needed. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

37. What is Employee Commitment? • Commitment represents how people in an organization will behave rather than how they could behave (their capability) • Competitive demands - be more global, more customer responsive, more flexible,more learning oriented, more team driven, more productive - require more committed employees who give their emotional, human, and physical energy to firm success. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

38. What is Employee Commitment? • The only way firms can recapture commitment is by treating workers in ways that respect their individuality i.e avoid “one-size-fits-all” management practices. They create apathy. • To create commitment, a complementary management style,  “mass-customizing the employee deal” must be fostered. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

39. How to Measure Employee Commitment • Three “large gauges” help leaders measure employee commitment: • work force productivity • organizational structure • employee retention. • Productivity = output per unit of input. • Firm revenues/direct employee costs (salaries&benefits) Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

40. How to Measure Employee Commitment • Profits/employee costs • Total $ spent for sales force compensation/total revenues. • $ Volume of units produced /$ costs of manufacturing employees. • Cost per hire. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

41. How to measure Employee Commitment: Organizational Climate • Organizational Climate = Culture • Organizational culture includes : • Perceived quality of management & supervision • Fairness of compensation and benefits • Employees’ relationships with coworkers • Quality of communication within the organization Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

42. How to Measure Employee Commitment : Organizational Climate • The way decision-making processes used • Quality of facilities and equipment provided • Mechanisms of feedback to higher management • Conduct periodic audits of workforce practices and employee attitudes. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

43. How to Measure Employee Commitment: Employee Retention • Companies that constantly loose good people in large numbers may have a leadership problem. • The ideal number is not zero; some turnover is healthy. • Leaders should be aware of turnover trends over time. • There is a high positive correlation between productivity and reduced turnover. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

44. How to Build Employee Commitment • The idea is to customizing employee relationship, so that employee commitment increases. • Employee commitment will demand utmost flexibility from every organization. • Five dimensions can help organizations move toward productive flexibility: • work arrangements rewards • work impact community • growth opportunities Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

45. How to Build Employee Commitment : Work Arrangement • Flexibility may be built into where, when, and how work is done. • “At-Home” call center representatives, flexible hours, changing policies around uniforms, campus like physical settings, on-site child care centers etc…. • These arrangements allow for the work/life balance that is crucial to many employees. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

46. How to Build Employee Commitment : Work Impact • Employees prefer work that requires creativity and welcomes innovative solutions. • By creating work settings where employees can see and feel the impact of their work, leaders increase employee commitment. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

47. How to Build Employee Commitment: Growth Opportunities • Commitment increase when employees do work that they can learn from. • These opportunities come when leaders provide employees with skill training, job assignments requiring new skills, feedback on performance etc… • Allowing employees to customize their growth opportunities provides them with further opportunities to learn and shifts responsibility for that learning to the employees themselves. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

48. How to Build Employee Commitment : Rewards • Commitment increases when employees receive public affirmation of a job well done  recognition + compensation & benefits. • Giving employees choices about the form of their compensation helps create commitment. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

49. How to Build Employee Commitment : Community • A worker’s relationship with peers, supervisors, and executives is one of the biggest predictors of commitment. • When community replaces hierarchy, employees feel they work for people who care about, respect them as individuals, and they reciprocate with increased commitment. • Community can be fostered by : Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D

50. How to Build Employee Commitment : Community • Giving employees the luxury of helping to select their teammates • connecting with customers • forming relationship of trust with supervisors. Fuad W. Awad - HRI- 8th Annual Meeting of the Arab Network for HRM/D