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TRANSCRIPT
ROBERT L. MATHIS
JOHN H. JACKSON
Strategic HR Management
and Planning
Strategic HR Management
and Planning
Chapter 2
SECTION 1Nature of
Human ResourceManagement
Presented by:Prof. Dr. Deden Mulyana, SE.,M,Si.
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Learning Objectives
• After you have read this chapter, you should be able to:
� Explain strategic HR management and how it is linked to organizational strategies.
� Describe how legal, political, cultural, and economic factors affect global HR management.
� Discuss four dimensions of organizational effectiveness and how HR contributes to each.
� Define HR planning and outline the HR planning process.
� Discuss several ways of managing a surplus of human resources.
� Identify why HR metrics must consider both strategic and operational HR measures.
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Human Resources as a Core Competency
• Strategic Human Resources Management
�The use of employees to gain or keep a competitive
advantage, resulting in greater organizational
effectiveness.
• Core Competencies
�The unique capabilities of employees in an
organization that create high value and that
differentiate the organization from its competition
�The source of an organization’s sustainable
competitive advantage.
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Strategic HR Management Process
Figure 2–1
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Linkage of Organizational and HR Strategies
• Cost Leadership
� Competition on the basis of low price and high quality of product or service
� Relies on “building” employees to fit specialized needs
� Requires a longer HR planning horizon approach
• Differentiation
� Competition on the basis of either offering distinctively different products or services or establishing an exclusive image for quality products and services
� Relies on hiring needed skills.
� Needs a shorter planning time frame in order to be responsive to dynamic environments
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Globalization of Business and HR
Global Communications
Global Population
Changes
Global Economic Interdependence
Regional AlliancesNAFTA, EU
Globalization Forces
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Types of Global Organizations
• Importing and Exporting
�Buying and selling goods and services with
organizations in other countries
• Multinational Enterprise (MNE)
�An organization with operating units located in foreign
countries.
• Global Organization
�An organization having corporate units in a number of
countries that are integrated to operate worldwide.
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Transition to Global Organizations
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Transition to Global Organizations
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Global Employment
Global Employee
Relations Issues
Global Labor-Management
Relations
Global Health, Safety, and
Security
Discrimination Regulations
Globally
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Factors Affecting Global HR Management
Political Economic
CulturalLegal
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Global Cultural Factors
• Culture
� Societal forces affecting the values, beliefs, and actions of a distinct group of people.
• Geert Hofstede’s Culture Dimensions
� Power Distance: the inequality among the people of a nation.
� Individualism: the extent to which people prefer to act as individuals instead of members of groups.
� Masculinity/Femininity: the degree to which “masculine” values prevail over “feminine” values.
� Uncertainty Avoidance: the preference of people in a country for structured rather than unstructured situations.
� Long-Term Orientation: the preference for long-term values emphasizing the future as opposed to short-term values focusing on the present.
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Hourly Compensation Costs
for ManufacturingProduction Workers
Figure 2–2
Hourly Costs (in U.S. Dollars)
Source: U.S. Bureau of Labor
Statistics, www.bls.gov; and
www.uschinabiz.com, 2004.
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Global Economic Factors
• Sources of Economic Factors
�Differences in economic, political, legal, and cultural
systems
• Global Economic Interdependence
�Regional trade and political alliances
� NAFTA, EU, WTO
• Global Productivity and Strategic HR
Management
� Issue: How to increase organizational effectiveness
and performance (productivity) in the face of global
influences and foreign competition.
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Organizational Effectiveness and Strategic HR Management
• Effectiveness
�The extent to which goals have been met.
• Efficiency
�The degree to which operations are done in an
economical manner.
• Dimensions of Organizational Effectiveness
�Organizational productivity
�Financial contributions
�Service and quality
�Organizational culture
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Organizational Productivity and HR Efforts
• Productivity
�A measure of the quantity and quality of work done,
considering the cost of the resources used.
�A ratio of the inputs and outputs that indicates the
value added by an organization.
� Unit labor cost: computed by dividing the average cost of workers by their average levels of output.
• Improving Organizational Productivity
�Organizational restructuring
�Re-designing work
�Aligning HR Activities
�Outsourcing analyses and assistance
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Approaches to Improving Organizational Productivity
Figure 2–3
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Organizational Effectiveness and FinancialContributions of HR
• Return on Investment (ROI)
�Difficult to determine returns for
HR contributions which affect
many facets of the business
�Former view of HR as a “cost
center”
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Customer Service and Quality Products Linked to HR Strategies
• High quality products and services are the
results of HR-enhancements to organizational
performance.
�Staffing
�Customer service
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Organizational Culture and Organizational Effectiveness
• Organizational Culture
�The shared values and beliefs in an organization
�Strategy and culture must be compatible and aligned
for the organization to be effective.
�Culture affects recruitment and retention of
employees.
�Culture can enhance or constrain organizational
performance.
�Culture is the “climate” of an organization.
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Human Resource Planning
• Human Resource (HR) Planning
�The process of analyzing and identifying the need for
and availability of human resources so that the
organization can meet its objectives.
• HR Planning Responsibilities
�Top HR executive and subordinates gather
information from other managers to use in the
development of HR projections for top management
to use in strategic planning and setting organizational
goals
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Purpose of HR Planning
Figure 2–4
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Typical Division of HR Responsibilities:
HR Planning
Figure 2–5
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HR Planning Process
Figure 2–6
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Human Resource Planning (cont’d)
• Small Business and HR Planning Issues
�Attracting and retaining qualified outsiders
�Management succession between generations of
owners
�Evolution of HR activities as business grows
�Family relationships and HR policies
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HR Planning Process
• HR Strategies
�The means used to anticipate and manage the supply
of and demand for human resources.
� Provide overall direction for the way in which HR activities will be developed and managed.
Overall Strategic Plan
Human Resources Strategic Plan
HR Activities
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Benefits of HR Planning
• Better view of the HR dimensions of business
decisions
• Lower HR costs through better HR
management.
• More timely recruitment for anticipate HR needs
• More inclusion of protected groups through
planned increases in workforce diversity.
• Better development of managerial talent
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Scanning the External Environment
• Environmental Scanning
�The process of studying the environment of the
organization to pinpoint opportunities and threats.
• Environmental Changes Impacting HR
�Governmental Influences
�Economic conditions
�Geographic and competitive concerns
�Workforce composition
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Assessing the Internal Workforce
• Jobs and Skills Audit
�What jobs exist now?
�How many individuals are performing each job?
�What are the reporting relationships of jobs?
�How essential is each job?
�What jobs will be needed to implement future
organizational strategies?
�What are the characteristics of anticipated jobs?
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Assessing the Internal Workforce (cont’d)
• Organizational Capabilities Inventory
�HRIS databases—sources of information about
employees’ knowledge, skills, and abilities (KSAs)
�Components of an organizational capabilities
inventory
� Individual employee demographics
� Individual employee career progression
� Individual job performance data
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Forecasting HR Supply and Demand
• Forecasting
�The use of information from the past and present to
identify expected future conditions.
• Forecasting Methods
�Judgmental
� Estimates—asking managers’ opinions, top-down or bottom-up
� Rules of thumb—using general guidelines
� Delphi technique—asking a group of experts
� Nominal groups—reaching a group consensus in open discussion
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HR Forecasting
Figure 2–7
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Forecasting HR Supply and Demand (cont’d)
• Forecasting Methods (cont’d)
�Mathematical
� Statistical regression analysis
� Simulation models
� Productivity ratios—units produced per employee
� Staffing ratios—estimates of indirect labor needs
• Forecasting Periods
�Short-term—less than one year
� Intermediate—up to five years
�Long-range—more than five years
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Forecasting HR Supply and Demand (cont’d)
• Forecasting the Demand for Human Resources
�Organization-wide estimate for total demand
�Unit breakdown for specific skill needs by number and
type of employee
� Develop decision rules (“fill rates”) for positions to be filled internally and externally.
� Develop additional decision rules for positions impacted by the chain effects of internal promotions and transfers.
• Forecasting the Supply for Human Resources
�External Supply
� Internal Supply
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Forecasting HR Supply (cont’d)
• Forecasting External HR Supply
�Factors affecting external
� Net migration for an area
� Individuals entering and leaving the workforce
� Individuals graduating from schools and colleges
� Changing workforce composition and patterns
� Economic forecasts
� Technological developments and shifts
� Actions of competing employers
� Government regulations and pressures
� Other circumstances affecting the workforce
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Forecasting HR Supply
• Forecasting Internal HR Supply
�Effects of promotions, lateral moves, and terminations
• Succession analysis
�Replacement charts
�Succession planning
� The process of identifying a longer-term plan for the orderly replacement of key employees.
Source: U.S. Office of Personnel Management, www.opm.gov.
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Estimating Internal Labor Supply for a Given Unit
Figure 2–8
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Developing and Using a Strategic HR Plan
• Issues in Matching the Supply of Labor with the
Demand for Labor
�Succession Planning
�Managing a Human Resources Surplus
�Outplacement Services
�HR Planning in Mergers and Acquisitions
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Managing a Human Resources Surplus
• Workforce Reductions and the Worker
Adjustment and Retraining Notification (WARN
Act)
�Sets out employer requirements for advance notice of
a layoff or facility closing.
� 60-day notice to employees and the local community before a layoff or facility closing involving more than 50 people.
� Does not cover part-time or seasonal workers.
� Imposes fines for not following notification procedure.
� Has hardship clauses for unanticipated closures or lack of business continuance capabilities.
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Managing a Human Resources Surplus (cont’d)
• Workforce Realignment
� “Downsizing”, “Rightsizing”, and “Reduction in Force”
(RIF) all mean reducing the number of employees in
an organization.
�Causes
� Economic—weak product demand, loss of market share to competitors
� Structural—technological change, mergers and acquisitions
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Managing a Human Resource Surplus (cont’d)
• Workforce Realignment (cont’d)
�Positive consequences
� Increase competitiveness
� Increased productivity
�Negative consequences
� Cannibalization of HR resources
� Loss of specialized skills and experience
� Loss of growth and innovation skills
�Managing survivors
� Provide explanations for actions and the future
� Involve survivors in transition/regrouping activities
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Managing a Human Resource Surplus (cont’d)
• Downsizing Approaches
�Attrition and hiring freezes
� Not replacing departing employees and not hiring new employees
�Voluntary Separation Programs
� Early retirement buyouts offer incentives to encourage senior employees to leave the organization early.
�Layoffs
� Employees are placed on unpaid leave until called back to work when business conditions improve.
� Employees are selected for layoff on the basis of their seniority or performance or a combination of both.
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Managing a Human Resource Surplus (cont’d)
• Downsizing Approaches (cont’d)
�Outplacement services provided to displaced
employees to give them support and assistance:
� Personal career counseling
� Resume preparation and typing services
� Interviewing workshops
� Referral assistance
� Severance payments
� Continuance of medical benefits
� Job retraining
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Making Downsizing More Effective
Figure 2–9
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HR Planning in Mergers and Acquisitions
• Cultural Compatibility
�The extent to which such factors as decision-making
styles, levels of teamwork, information-sharing
philosophies, and the formality of the two
organizations are similar.
• HR’s Role in Mergers and Acquisitions
�Communicating decisions
�Revising the organization structure
�Merging HR activities
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Measuring HR Effectiveness Using HR Metrics
• HR Metrics
�Specific measures tied to HR performance indicators.
� Development and use of metrics that can better demonstrate HR’s value and track its performance.
�Characteristics of good HR metrics:
� Accurate data can be collected.
� Measures are linked to strategic and operational objectives.
� Calculations can be clearly understood.
� Measures provide information expected by executives.
� Results can be compared both externally and internally.
� Measurement data drives HR management efforts.
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Examples of Strategic and Operational
HR Metrics
Figure 2–10
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Measures of Strategic HR Effectiveness
• Return on Investment (ROI)
�Calculation showing the value of expenditures for HR
activities.
A = Operating costs for a new or enhance system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period
B A
C
+
= ROI
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Measures of Strategic HR Effectiveness (cont’d)
• Economic Value Added (EVA)
�A firm’s net operating profit after the cost of capital
(required return) is deducted.
�Cost of capital is the benchmark for returns for all HR
activities.
• HR and the Balanced Scorecard
�Financial
� Internal business processes
�Customer
�Learning and growth
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HR Measurement and Benchmarking
• Benchmarking
�Comparing specific measures of performance against
data on those measures in other “best practice”
organizations
• Common Benchmarks
�Total compensation as a percentage of net income
before taxes
�Percent of management positions filled internally
�Dollar sales per employee
�Benefits as a percentage of payroll cost
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Costs per Employee of the HR Function
Figure 2–11Source: Adapted from HR Department Benchmarks and Analysis (Washington, DC: Bureau of National Affairs, 131, 140. 2004) To purchase
this publication and find out more about other BNA HR solutions visit http://hrcenter.bna.com or call 800-372-1033. Used with permission.
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Assessing HR Effectiveness
• HR Audit
�A formal research effort that evaluates the current
state of HR management in an organization
�Audit areas:
� Legal compliance (e.g., EEO, OSHA, ERISA, and FMLA)
� Current job specifications and descriptions
� Valid recruiting and selection process
� Formal wage and salary system � Benefits
� Employee handbook
� Absenteeism and turnover control
� Grievance resolution process
� Orientation program � Training and development
� Performance management system