Organizational Strategy & HRM Effectiveness

1. Organizational Strategy & HRM Effectiveness • Competitive strategies and HRM effectiveness • Behavioral costing and HRM effectiveness • High performance work practices • Continuing issues in HRM

2. Innovation • Workforce KSAs: Need highly skilled workers, who like to learn, who are creative and willing to experiment • Worker control: loose control of workers, workers are self-starters, need discretion • Reward system: reward trying, tolerate some failure, reward long term results. • Special needs,: keep turnover low since loss of workers with special knowledge are tough to replace. Incentives for retention

3. Cost • Workforce KSAs: work is repetitive and predictable so workers need to be reliable but not necessarily highly skilled. • Worker control: short term focus, reward productivity with incentives for minimizing scrappage. Might consider behavior modification or a least feedback to keep workers focused on goals. • Rewards: Incentives and goal setting, short term focus

4. Quality • Workforce KSAs: repetitive, predicable, behaviors. High concern with how product is produced. Some needs for cooperation and interdependent behavior. Groups needs to pick up for anyone who is lacking to maintain quality. Need highly committed workforce to company goals. • Worker controls: need strong socialization program via training and development. • Rewards: Long term rewards, tie in via pension systems, • Special issues: need to reduce absenteeism, turnover, tardiness

5. Speed • Worker KSAs: Highly skilled workers committed to speed strategy. Embrace change. Use of cross functional teams, interdependency, team skills, cooperation • Worker controls: via corporate culture which supports attitudes toward speed strategy, fluid, organic organization which builds on work commitment. • Worker rewards. Reward performance, performance, performance. Allow discretion to come up with more effective way to do things, autonomy. • Special issues: Need well aligned systems to support speed strategy

6. Costing Absenteeism(from Cascio, 1998) • Plant X has 1,800 employees and an absenteeism rate of 2.1% a month. • Step 1. 2,080 hrs of work per year per employee • - 80 hrs (2 weeks vacation) • - 40 hrs. (5 days paid vacation) • 1, 960 scheduled hrs of worktime per employee x 1, 800 employees • 3, 528, 000 total scheduled work hours per year. • @ 2.1% absentee rate = 74, 088 hrs lost.

7. Costing Absenteeism, Cont.(from Cascio, 1998) • Step 2. Average weighted salary per employee = $10.159/hr. (average salary x % of total absenteeism to take into account that some job categories have higher rates than others) • Step 3. Cost of employee benefits per hr. per absent employee. Benefits as a % of base pay x average weighted salary. 35% x $10.159= $3.556/ hr • Step 4. Total compensation lost per absent employee Steps 2 + 3 = $13.715/hr.

8. Costing Absenteeism, Cont.(from Cascio, 1998) • Step 5. Total compensation lost to absent employees, Total lost hrs x total compensation lost/hr=74,088 x $13.715=$1,016,116.92 • Step 6. Total supervisory hrs lost in dealing with employee absenteeism=AxBxC • A=estimated average # of hrs. lost per supervisor per day managing absenteeism problems. = .5 hr. per day • B=Total # of supervisors who deal with this=72 supervisors • C= Total # of working days in the period for which absenteeism costs are being analyzed= 245 days/yr.. =8820 supervisory hours

9. Costing Absenteeism, Cont.(from Cascio, 1998) • Step 7. Average hourly supervisory wage, including benefits $13.50 + $4.725 (35% benefits) = $18.225/hr • Step. 8 Total cost of supervisory salaries lost to managing problems of absenteeism. Step 6 x Step 7 = 8820 x $18.225 = $160,744.50 • Step 9. All other absenteeism related cost not included in 1-8. (Overtime premium, temporary help, machine downtime, production losses, etc.) = $50,000.

10. Costing Absenteeism, Cont.(from Cascio, 1998) • Step 10. Total cost of employee absenteeism = Step 5 + Step 8 + Step 9 = $1, 226, 861.42. • Step 11. Per Employee cost of absenteeism = Step 10 /1800 = $681.59 per year.

11. Costing Turnover(from Cascio, 1998) • Separation costs: exit interviews, administrative time, separation pay, increased unemployment tax • Replacement costs: advertising job, pre-employment administrative functions, interviews, testing, meeting time for decisions, travel and moving expenses, more administrative costs getting new hire into information system, medical exam

12. High Performance Work Practices • Valid personnel selection • Job design • Information sharing • Performance appraisal • Promotion systems • Attitude assessment • Incentive systems • Grievance procedures • Labor - management participation

13. Summing up the Semester • The external environment, legal contexts • HRM functions • selections & staffing • training & development • performance management • compensation • labor relations • safety & health • international issues

14. Continuing Issues • Line managers & HRM • Knowledge workers & intellectual capital • The graying of the workforce • Legal & social issues

15. The Learning Organization • Organizations that acquiring and applying knowledge to help cope with and adapt to change. • Knowledge acquisition • Information distribution • Information interpretation • Organizational memorization