Human Resource Management Jeeshan Mirza Lecture 2 HRM STRATEGY & ANALYSIS
Topic Overview 1. HRM Strategy & Analysis 2. Job Analysis 3. Personal Planning & Recruiting 4. Selecting Employees 5. Training & Developing Employees 6. Performance Management & Appraisal 7. Managing Employee Retention, Engagement, and Careers 8. Developing Compensation Plans 9. Pay For Performance & Employee Benefits 10. Ethics, Employee Relations, Fair Treatment At Work 11. Working With Unions/Improving Occupational Safety, Health, and Risk Management
Lecture Overview Strategic HRM HR As Organizational Contributor Environmental Analysis Global Competitiveness & Strategic HR HR Planning In Mergers & Acquisitions Strategic Challenges Measuring Effectiveness Of HR Initiatives Technology & HRM Impact Of Legal & Regulatory Framework
Strategic Human Resource Management Strategic Planning Process & Link To HR Strategy
Strategic HRM Strategic planning-defining organizational strategy, direction Decisions on allocation of organizational resources (capital and people) to pursue strategy Typically 5-year time frame Management considers internal and external forces in formulating strategic plan
Strategic HRM Strategic Planning Process Source: Mathis
Strategic HRM Types Of Strategy Corporate Strategy-How many and what kind of businesses should we be in? Competitive Strategy- How to build, strengthen the business s long-term competitive position in marketplace Functional Strategy- What departments must do in terms of policies and practices to help the business accomplish its competitive goals
Emerald International Local Brands Export Corporate Sales Retail International Brand Licensing/Franchising
Strategic HRM Types Of Strategy Corporate Strategy-How many and what kind of businesses should we be in? RETAIL Expand retail presence by 200% by 5 years; from 10 to 30 stores In this period, through increase in same stores sales, plus 20 new stores target 500% growth in retail business sales
Strategic HRM Types Of Strategy Competitive Strategy- How to build, strengthen the business s long-term competitive position in marketplace This strategy defines how Emerald Retail Store must compete against other shirt stores, departmental chains Develop retail brand through international standard visual merchandising and service delivery Retail wide portfolio of local and imported products, full wardrobe solution
Strategic HRM Types Of Strategy Competitive Strategy
Strategic HRM Types Of Strategy Functional Strategy- What departments must do in terms of policies and practices to help the business accomplish its competitive goals Expand retail presence by 200% by 5 years; from 10 to 30 stores Corporate Strategy In this period, through increase in same stores sales, plus 20 new stores target 500% growth in retail business sales Competitive Strategy Develop retail brand through international standard visual merchandising and service delivery To achieve the above corporate and competitive strategy, what functional HR strategy must Emerald develop?
Strategic HRM Types Of Strategy Functional Strategy HR Strategy Develop sound recruitment system to ensure steady supply of sales and customer service staff for 20 extra stores Develop service delivery policies, invest in training, incentive systems, grooming of sales staff to meet international service standards
Strategic HRM Types Of Strategy Functional Strategy HR Strategy
Strategic HRM Strategic Planning Process HR Strategy is a functional strategy Source: Mathis
Strategic HRM Strategic Planning Process Emerald Retail Local Brands Export Source: Dessler
Strategic HRM Strategic HRM-formulating and executing HR policies and practices to produce employee competencies and behaviors required to achieve strategic aims Use of HRM practices to gain or keep a competitive advantage Managers call the specific HRM policies and practices- human resource strategies
Emerald Retail Expansion International Standard Service & VM World Class Service The HR Strategy Model Product Knowledge Communication Professionalism Source: Dessler
Strategic HRM Source: Mathis
Strategy Map For Southwest Airlines Source: Dessler
Strategic HRM In Action Ritz-Carlton Company took over managing the Portman Hotel in Shanghai China in 1998 Ordinary five-star property, employee and guest satisfaction ranged between 70 and 80 percent, and finances were unspectacular To be more competitive, they had to improve the hotel s level of service Strategically, they set the goal of making the Shanghai Portman outstanding by offering superior customer service To achieve this, Shanghai Portman employees would have to exhibit new skills and behaviors, for instance, in terms of how they treated and responded to guests
Strategic HRM In Action To produce these employee skills and behaviors, management formulated new human resource management plans, policies, and procedures Best Employer in Asia by Hewitt Associates, Overall Best Business Hotel in Asia by Bloomberg TV. Best Business Hotel in China by Business Asia Magazine Annual employee satisfaction rate highest among all of the Ritz-Carlton s 59 hotels worldwide, reaching 98 percent last year. Turnover rate for Asia s hotel industry is 29 percent, the rate at the Portman Ritz-Carlton is a modest 15 to 16 percent.
1 Ritz-Carlton: Motto, Employee Promise, and Credo
Strategic HR as Organizational Contributor Significant strategic role HR plays in enhancing organizational effectiveness
Strategic HR as Organizational Contributor High Performance Work Practices Organizational Productivity-Compensation, Rewards, Pay For Performance, Training, Selectivity, Workplace Customer Service Quality Reduced Turnover High-performance work system-set of HRM policies and practices that together produce superior employee performance
Source: Dessler
Strategic HR as Organizational Contributor HR Effectiveness & Financial Performance Effectiveness- Ability to produce specific desired effect or result that can be measured Efficiency-Degree to which operations are done in an economical manner Benefits of HR programs not always immediately visible-measuring HR s impact such a challenge Efforts should be made to financially assess HR practices
Environmental Analysis How internal and external environmental factors affect HR strategies
Environmental Analysis Pinpoint strengths, weaknesses, opportunities, and threats that the organization will face during the planning horizon Environmental Analysis Internal Environmental Analysis External Environmental Analysis
Environmental Analysis Internal Source: Mathis
Environmental Analysis External Economic Conditions High economic growth, labor and material shortages are more likely Economic downturns, resources are underutilized and organizations seek to increase productivity and to lower costs Interest rate, inflation, unemployment Legislative Legislation regarding taxes, labor unions, compensation, benefits, employment, and safety and health affect the HR practices in all organizations
Environmental Analysis External Demographic Changes Population shifts and demographic changes can affect organizational strategy Consumer demographics influences the demand for products and services. Workforce demographics will also affect the quality and quantity of labor available to the organization Workforce diversity; one size fit all strategy wont work
Environmental Analysis External Geographic & Competitive Concerns Local industrial base and economic conditions. Eg: Locating in Silicon Valley is advantageous for IT firm over setting up in a sparsely populated location with no labor supply Competition. Can drive up the cost for talent if competition is very high
Global Competitiveness & Strategic HR Impact of Globalization of Business on Organizations
Global Competitiveness & Strategic HR Globalization of business-organizations operate across borders, foreign operations, international suppliers, vendors, employees, business partners Import Export Multinational corporation (MNC) Transnational corporation Offshoring Foreign Employees
Global Competitiveness & Strategic HR Global companies must deliver basic HR services overcoming various operational, cultural, and organizational obstacles Domestic based organizations face pressure from foreign competitors, suppliers, partners Supply chain increasingly internationally dispersed, foreign business practices influence operations Technology advances eliminated barriers to operating on global scale
Global Competitiveness & Strategic HR Global HR mindset- HR issues from an international perspective, using ideas, resources throughout the world, ensuring openness to other cultures and ideas Policies and practices should be established to address the unique demands for operating in a global context Determine which policies to standardize which to tailor for each locale Strike balance between home-country and host-country policies that utilizes the best practices within the organization
Global Competitiveness & Strategic HR International Staffing Policy Source: Mathis
HR Planning In Mergers & Acquisitions Maximizing Chance Of Successful Integration With HRM
HR Planning In Mergers & Acquisitions Purpose-generate shareholder value, creating competitive, cost-efficient company by combining two existing companies Most M&As fail to deliver expected financial, marketing, or product gains, one-third achieve their goals Many failed ventures trace their roots to HR issues- loss of key staff, culture clashes, and poor communication HRM can contribute to the success of mergers and acquisitions (M&As)
HR Planning In Mergers & Acquisitions HR Activities During M&A Source: Mathis
Strategic Challenges Being Attentive To Impact Of Environmental Forces On Organizations
Strategic Challenges Managing Talent Surplus Abundant or adequate workforce with right qualifications but declining sales revenue in tough market conditions Reduction in work hours or compensation Attrition and hiring freezes Voluntary separation programs Workforce downsizing Legal consideration for workforce reduction-sl Labor Law
Strategic Challenges Managing Shortage Demand outgrowing capacity, mismatch between qualifications required and skills of workers Overtime Outsource Alternate work arrangements-flexible work system, job sharing, transportation, accommodation Retirees/contingent workers Reduce turnover In SL, bringing labor from abroad not encouraged by government, unless specific skillset not present in market
Class Discussion If you owned a hotel down south, how would you handle talent surplus in off peak season?
Measuring Effectiveness Of HR Initiatives Evaluating Performance of HRM
Measuring Effectiveness Of HR Initiatives Long-standing myth- cannot really measure the value of HR practices Has hurt HR s credibility, suggests that HR efforts do not add value, are too far removed from business results HR, like other functions, must be evaluated by considering results of its actions and value it adds to organization People-related costs-largest controllable expense in organizations, effective management of these costs can make big difference
Measuring Effectiveness Of HR Initiatives HR Metrics HR metrics-specific measures tied to HR performance indicators, assess the HR function and results within the organization over time Using costs, quantity, quality, timeliness, and other designated goals. Metrics can be developed to track both HR s efficiency and effectiveness HR and line managers collect, analyze and interpret metrics-improve human capacity utilization
Source: Mathis
Measuring Effectiveness Of HR Initiatives HR Benchmarking Benchmarking is the process of comparing the business processes and outcomes to an industry standard or best practice External practices that the organization can use to improve its own processes and practice Careful to find organizations with similar contexts, cultures, operations, and size Starting point, not the end point, for improving the organizational HR function
Measuring Effectiveness Of HR Initiatives HR Audit An analysis by which an organization measures where it currently stands and determines what it has to accomplish to improve its HR function Reviewing company s HR function (recruiting, testing, training, and so on), using a checklist, ensuring firm is adhering to regulations, laws, and company policies
Measuring Effectiveness Of HR Initiatives Evidence-based HRM means using data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support HRM proposals, decisions, practices, and conclusions Being scientific-be objective, use experimentation for prediction
Class Discussion It is important to evaluate effectiveness of target based incentive systems
Technology & HRM Impact of Information Technology On HRM
Technology & HRM Human resource management system (HRMS) is an integrated system providing information used by HR management in decision making Two Main Benefits 1. Administrative and operational efficiency- data compilation, automation, communication 2. Effectiveness- strategic HR planning, accessible data enables HR planning and managerial decision making to be based to a greater degree on information rather than relying on managerial perceptions and intuition
Watch the Day In Life Of HR Video and identify how technology is changing they way organizations practice HRM Recruitment Interviews Engagement Administrational Survey Performance Management Strategy Talent Management E-Learning Succession Planning Communication & Coordination Induction, Training Metrics & Analytics
Impact Of Legal & Regulatory Framework Impact Of Law On HRM
Impact Of Legal & Regulatory Framework Purpose Of Employment Law Employment law exists to protect employees from unjust exploitation or unfair treatment by employers Necessary employment relationship is very unequal in terms of the power that each side is able to exercise over the other
Impact Of Legal & Regulatory Framework Purpose Of Employment Law Employers vastly more powerful Easy for them to abuse power by treating, employees poorly, dismissing or discriminating against them for no good reason Underpaying and overworking them, causing them to risk their heath, safety and welfare while at work
Impact Of Legal & Regulatory Framework Terms & Conditions Of Work Wages Board Ordinance Shop & Office Employees Act Social Security Employees Provident Fund Act Employees Trust Fund Act Payment Of Gratuity Act
Impact Of Legal & Regulatory Framework Occupational Safety & Health Factories Ordinance Workmen s Compensation Ordinance Employment of Women, Young Persons & Children Maternity Benefits Ordinance Employment of Women, Young Persons and Children Act
Impact Of Legal & Regulatory Framework Industrial Relations Trade Union Ordinance Industrial Dispute Act Termination of Employment of Workmen (Special Provision )Act Others Sri Lanka Bureau of Foreign Employment Act Estate Quarters Act Estate Labour Ordinance
Impact Of Legal & Regulatory Framework Legal and regulatory framework governing employment is thorough Employee is fairly well protected and shielded from exploitation, unfair practices Employers are fairly complaint with legislation Employers would prefer a more capitalist market driven framework Vs socialist system Well ahead compared to other regional nations
Impact Of Legal & Regulatory Framework Employer Employee Advantages Fair treatment Ethical Employee has rights and power Quality of life Disadvantages Lack of competitiveness Work rate, work culture, work ethic HR Challenges
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