1-1
Module 01
The Strategic Role of Human Resource Development
Outline Strategic Planning and Strategic Trends
The Basics of Strategic Planning The Strategic Planning Process Basic Strategic Trends Managerial Consequences of the Basic Trends
Outline HR’s Strategic Role
HR’s Evolving Role Strategic Human Resource Management HR’s Role as a Strategic Partner HR and Technology HR and Employee Performance and Commitment Research Insight
After Studying This Chapter, You Should Be Able To: Utilize your understanding of Human Resources Management to better understand human resources development. Explain what human resource development is and how it relates to Human Resources Management. Explain how human resources development relates to the management process. Give at least eight examples of how HR management concepts and techniques can be of use to all managers. Illustrate the HR management responsibilities of line managers and staff (HR) managers.
The Management Process
Planning Organizing Staffing Leading Controlling
Management Process Planning
Goals and standards Rules and procedures Plans and forecasting.
Organizing
Tasks Departments Delegating Authority and communication Coordinating
Management Process Staffing
Hiring Recruiting Selecting Performance standards Compensation Evaluating performance Counseling Training and developing
Management Process Leading
Getting the job done Morale Motivation
Controlling
Setting standards Comparing actual performance to standards Corrective action
HRM Function
Human Resource Management is the process of acquiring, training, appraising, and compensating employees and attending to their labor relations, health and safety, and fairness concerns.
HRM People Functions Include:
Job analyses Labor needs Recruit Select candidates Orient and train Wages and salaries Incentives and benefits
Performance Communicate Train and develop Employee commitment Equal opportunity Health and safety Grievances/labor relations
HRM is Important to all Managers. Don’t Let These Happen to You!
The wrong person High turnover Poor results Useless interviews Court actions Safety citations Salaries appear unfair Poor training Unfair labor practices
HR – It’s All About Results “For many years it has been said that capital is the bottleneck for a developing industry. I don’t think this any longer holds true. I think it’s the work force and a company’s inability to recruit train and maintain a good work force that does constitute the bottleneck….” F. K. Foulkes
Line and Staff Aspects of HR Authority
Making decisions Directing work Giving orders
Line Managers
Accomplishing goals
Staff Managers
Assisting and advising line managers
Line Manager’s HR Jobs
The right person Orientation Training Performance Creativity Working relationships
Policies and procedures Labor costs Development Morale Protecting
Staff Manager’s HR Jobs Line authority Implied authority Functional control Employee advocacy
HR Department Organizational Chart
Strategic Planning and Trends Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.
Recall Strategic Planning There are three levels of strategic planning as shown below Corporate Strategy
Business Strategy
Business Strategy
Functional Strategies
Business Strategy
Business Strategy
The Strategic Planning Process SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats Best strategic plans balance a company’s Strengths and Weaknesses with the Opportunities and Threats the firm faces Basic strategic trends Globalization Technological advances The nature of work The workforce
Recall Importance of Globalization
80 70 60 50 40
% fortune 500 with a global presence
30 20 10 0 1920
1950
1970
2000
Technological Advances and the Nature of Work Technology mandates and enables companies to be more competitive Knowledge intensive jobs in industries such as aerospace, computers, telecommunications, and biotechnology are replacing factory jobs in steel, auto, rubber and textiles
Carrier
The Workforce Itself is Diverse
Asian Black Hispanic Men Women
US Department of Labor website
Consequences of these basic trends Global expansion Technology Strengths and Weaknesses Improved competition
Uncertainty, Turbulence, Rapid Change, Changing power bases
Companies must be Fast, Responsive, and Costeffective
HR’s evolving role
Protector and Screener
Change Agent
Strategic Partner
Strategic HRM Strategic human resource management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility.
Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine
HR’s evolving role as strategic partner Corporate strategy HR operations Corporate strategy HR programs Corporate strategy
FedEx
HR programs
How HR helps strategy execution Functional strategies should support competitive strategies Value chain analysis Outsourcing Strategy Formulation
How HR helps form strategy Formation of a company’s strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses Environmental scanning
The Value Chain Approach
HR and technology- End User Technology can be the Human Resources engine of change Basic HR systems demand paperwork
70% of HR’s employees time = paperwork
Off the shelf forms from Office Depot/Office max
Online forms
Human Resource Information Systems (HRIS) HR on the Internet
Trends: Increased Use of Internet 60%
54% 48% 42% 34%
33% 27% 22% 16%
18% 18%
21% 16% 9%
10%
9% 8%
0% Telephone Sep/Oct 00*
Internet Sep/Oct 01*
Mail Jun 02*
In-person
Two years from now**
* Thinking now of your most recent contact with the federal government, what was the method of contact? ** Thinking about two years from now, what do you think will be your main method of contact with governments? (June, 2002)
HR portals Employees can answer their own questions HR moves from reactive to proactive
Training and Development translates into performance Can HR have a measurable impact on a company’s bottom line? Better HR Training translates into improved employee attitudes and motivation (e.g., working at home) Well run HR training programs drive employee commitment
TOYOTA
Factors affecting the training structure: Management Philosophy Organizational Strategy Organizational Structure Size Technology Requirements Industry demands
Role of Training in Organizations Regardless of where training lies in an organization, its role is to improve the organization’s effectiveness by: Providing employees w/ necessary KSAs Provide personal enrichment Increase competitive advantage Respond to specific organizational needs Increase organizational strategic capability Improve quality While staying within the budget!
Implications of of Business Business Strategy Strategy for for Training Training Implications
Strategy Concentration
How Achieved - improve quality
Key Issues - current skills - develop work force
Training Implications - team building - cross-training - people skills - on-the-job
Implications of of Business Business Strategy Strategy for for Training Training Implications
Strategy Concentration
Internal Growth
How Achieved - improve quality
- global expansion - new products - joint ventures
Key Issues
Training Implications
- current skills - develop work force
- team building - cross-training - people skills - on-the-job
- innovation - creating new jobs & tasks
- cultural training - creativity training - communication - technical skills - conflict resolution
Implications of of Business Business Strategy Strategy for for Training Training Implications
Strategy Concentration
How Achieved - improve quality
Key Issues
Training Implications
- current skills - develop work force
- team building - cross-training - people skills - on-the-job
Internal Growth
- global expansion - new products - joint ventures
- innovation - creating new jobs & tasks
- cultural training - creativity training - communication - technical skills - conflict resolution
External Growth (acquisition)
- acquire firms
- integration - redundancy - restructuring
- integrate training systems - team building - identify capabilities
Implications of of Business Business Strategy Strategy for for Training Training Implications Strategy Concentration
How Achieved - improve quality
Key Issues
Training Implications
- current skills - develop work force
- team building - cross-training - people skills - on-the-job
Internal Growth
- global expansion - new products - joint ventures
- innovation - creating new jobs & tasks
- cultural training - creativity training - communication - technical skills - conflict resolution
External Growth (acquisition)
- acquire firms
- integration - redundancy - restructuring
- integrate training systems - team building - identify capabilities
Disinvestment
- cost reduction - redefine goals - sell assets
- efficiency
- stress management - time management - cross-training - outplacement
Key Training Roles
Researcher Needs Analyst Evaluator Program Designer Materials Developer Manager Marketer Counselor Change Agent Instructor Communicator
TRAINING COMPETENCIES
Computer and data analysis skill Research skills Understanding of Adult Learning Oral and Written Communication Skills Goal setting Understanding how careers develop Ability to coach and give feedback Cost/benefit analysis Project Management/Records Management Delegation skills Logistics Strategic Planning Negotiation General business and industry understanding
A Training Process Model Utilizing Input-Process-Output Model
Needs Analysis/Assessment Design Development Implementation Evaluation Follow-up
Ultimate Goal of Training: To provide and facilitate effective and efficient organizational learning that improves organizational performance
KSAs…. Knowledge - Info. we acquire & place into memory, how it’s organized into our structure & to our understanding of how/when it’s used Skills - Capacities needed to perform a set of tasks developed from a training experience Attitudes - Reflections of employee beliefs/opinions that support/inhibit behavior Abilities - General capacities related to performing a set of tasks developed over time as a result of heredity and experience
A Case Study Dell’s dual HR roles OPERATIONS Deals with staff - benefits - compensation - call center
MANAGEMENT Deals with management - education - recruitment - planning - training - personnel needs
Is There a “One Best HR Way”? Follow a company’s operating and strategic initiatives All companies can benefit from
Profit sharing programs Results oriented appraisals Employment security Foster informal relationships- promote worldwide communications Develop global executives
Societal Trends, Work Place Changes, and Human Resource Challenges Societal trends • Rapid Change • Globalization • Rise of Internet
• Legislation • Hyper competitiveness • Rise of the service sector
Work place changes • Competitive Position: Cost, Quality, Distinctive Capabilities • Decentralization • Downsizing • Organizational Restructuring
• • • • •
Self-Managed Work Teams Small Businesses Organizational Culture Technology Outsourcing
Human Resource Challenges • • • • •
Ethical Dilemmas and Social Responsibility Staffing, Development, and Productivity Job Design and Empowerment Brain Drain and Talent Shortage Safety Net and Job Insecurity
Human Resource Challenges in HK and China Hong Kong
Declining growth, a stagnant economy Primarily service economy Influx of talents from mainland Unclear competitive edge in global market
Chinese mainland
Rapidly growth, especially private sector Competitive skilled & professional labor markets Evolving business and labor laws WTO and increasing competitiveness Business ethics
A Hong Kong Company: Computime
28 years old 30% annual sales growth in past 3 years 5% profit margin Production plant in Shenzhen Administrative and HQ offices in HK 7 divisions – 4 functions and 3 business units About 500 staff employees and 3000 production workers ISO objective but defective products due to rush
Computime (VMV) Vision
Mission
Value
To become a global leader in electronics supply chain services through establishing long-term partnerships based on integrity and ethical business practices.
We act as one responsive, flexible and innovative team with full commitment and dedication to exceed our customers’ expectations in quality, cost, delivery and service.
Customer First Zero Defect Innovations One Team Business Ethics Social Responsibility
Discussion Questions What are the HR challenges facing Computime? What information do we need to identify the HRM challenges of Computime? How can Computime use HRM to stay competitive and sustain its rapid growth?
An HRM Framework for analyzing HRM challenges of a company
Business Business Strategies Strategies
Fit Consistency
Consistency
Fit
Organizational Organizational Characteristics Characteristics
Environment Environment
Consistency
HR Strategies And choices Fit
Improved Improved Firm Firm Performance Performance
Fit Consistency
Organizational Organizational Capabilities Capabilities
Influence of Business Strategies on HRM Business Strategy
Common Organizational Characteristics
HR Strategies
Overall cost leadership
• Sustained capital investment • Tight cost control • Low-cost distribution system • Structured organization and responsibilities
• Explicit job descriptions • Detailed work planning • Emphasis on technical qualifications and skills • Emphasis on job-specific training • Emphasis on job-based pay
Differentiation
• Product engineering • Strong capability in basic research • Reputation for quality or technological leadership
• • • • •
Focus
• Combination of business strategies above.
Broad job classes Loose work planning External recruitment Individual-based pay performance appraisal as development tool • Combination of HR strategies above.
The Importance of Organizational Characteristics on HRM
Overall management philosophy Structure Culture
Influence of Environment on HRM Environmental Dimension
Low
High
Degree of Uncertainty
• Detailed work planning • Job-specific training • Fixed pay • High dependence on superior
• Loose work planning • Generic training • Variable pay • Multiple inputs for appraisals
Volatility
• Control emphasis • Efficient production • Job-specific training • Fixed pay
• Flexibility • Innovation • Generic training • Variable pay
Influence Environment on HRM (cont.) Environmental Low Dimension Magnitude of Change
Complexity
• Explicit job descriptions • Formal hiring and socialization of new employees • “make” skills • Uniform appraisal procedures • Control emphasis • Internal recruitment • Centralized pay decisions • High dependence on superior
High • Broad job classes • Informal hiring and socialization of new employees • “buy” skills • Customized appraisals • Flexibility • External recruitment • Decentralized pay decisions • Multiple inputs for appraisals
Importance of Organizational Capabilities on HRM
Leadership – at all levels Technology – process and product Management Systems – information and control Quality – reliability and timeliness Distinctive competences?
Human Resource Strategies and Choices 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Determining HR needs– HR planning and job analysis (chapter 2) Importing HR – recruiting and selection (chapter 5) Preparing HR – socialization and training (chapter 8) Compensating HR – setting compensation (chapter 10) Evaluating HR – appraising and managing performance (chapter 7, 14) Incentives HR – rewarding performance (chapter 11) Appreciating HR differences – managing diversity (chapter 4) Developing HR – career development (chapter 9) Protecting HR – designing and administering benefits (12) Positive HR relations – developing employee relations (chapter 13) HR in global companies – international HRM (chapter 17) Exporting HR – separation, downsizing and outplacement (chapter 6)
Questions to consider 1. 2. 3.
4. 5.
How much responsibility does an organization have to shield its employees from the effects of rapid changes in the environment? Does an employer have an ethical responsibility to train employees who lack basic literary and numerical skills? Why yes or why no? In today’s increasing chaotic business and economic environment, does an employer have a responsibility to help employees prepare for these changes that may affect their jobs and careers? All civil servants in HK will face a pay reduction of 1 to 5% this October. Is this fair to the employees? Why yes or why no? Some European countries have laws barring organizations form using computer technology that invades employee privacy. Do you believe that similar laws should be developed in Hong Kong? Why yes or no?
HRM and the Bottom Line Research has shown consistently a clear link between progressive HR practices (e.g., High involvement HR systems) and Sales Productivity Retention
An Exceptional Company: Southwest Airline 31 years old Post 9/11, SWA had no layoff, posted profits and did not reduce flights What account for the success of SWA? Can or how can SWA sustain its success? Can other companies imitate SWA’s approach to HRM? If not, why not? What can Computime learn from SWA?
Continuum of Resources Sustainability Level of Resource Sustainability Low (Easy to Imitate) Slow-Cycle Resources • Strongly shielded • Patents, brand name • Gillette: Sensor razor
Standard-Cycle Resources
Fast-Cycle Resources
• Standardized mass production
• Easily duplicated
• Economies of scale Complicated processes
• Sony: Walkman
• Idea driven
• Chrysler: Mini-van
Source: Suggested by J. R. Wiliams, “How Sustainable Is Your Competitive Advantage?” California Management Review (Spring 1992), p. 33.
Typical Value Chain for a Manufactured Product
Raw Materials
Primary Manufacturing
Fabrication
Product Producer
Distributor
Retailer
Source: Suggested by J. R. Galbraith, “Strategy and Organization Planning,” in The Strategy Process: Concepts, Contexts, Cases, 2nd ed., edited by H. Mintzberg and J. B. Quinn (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 316.
Corporate Value Chain Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Support Activities
Technology Development (R&D, product and process improvement) Procurement (purchasing of raw materials, machines, supplies)
Inbound Logistics (raw materials handling and warehousing)
Operations (machining, assembling, testing)
Outbound Logistics (warehousing and distribution of finished product)
Marketing and Sales (advertising, promotion, pricing, channel relations)
Primary Activities
Service (installation, repair, parts)
Profit Margin Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.
Basic Structures of Corporations: Simple and Functional I. Simple Structure Owner-Manager
Workers
II. Functional Structure Top Management
Manufacturing
Sales
Finance
Personnel
Basic Structures of Corporations: Divisional
III. Divisional Structure* Top Management
Product Division A
Manufacturing
Product Division B
Finance
Sales
Manufacturing
Personnel
*Conglomerate structure is a variant of the division structure.
Finance
Sales
Personnel
Engineering Perspective on Quality
Product Design Life Cycle Idea Generation
Prototype Iterations Preliminary Design Prototype Development Final Definition Product Design & Evaluation Implementation
Operations Perspective on Quality The Systems View of Operation Management
Planning
Inputs
Organizing
Conversion Process
Outputs
Feedback Controlling
Customers
Operations Perspective on Quality An Operations Management Competence Model The Sand Cone Model Cost Efficiency Speed
Dependability
Quality
Strategic Management Perspective on Quality A Generic Strategic Planning Process Firm Mission and Goals External Analysis
Strategic Options
Internal Analysis
Business Level Strategy Corporate Level Strategy Operational Subplans Organizational Design
Conflict Politics and Change Strategic Alignment Between Structure and Goals
Org. Reward Systems
Marketing Perspective on Quality A Marketing System
Organization Offering
Payment
Intermediary
Offering Offering
Payment Payment
Customer
Financial Perspective on Quality The Deming Value Chain
Improve Quality
Cost decrease because of less rework, fewer mistakes, fewer delays, snags; better use of machine-time and materials
Capture the Market
Stay in Business
Productivity Improves
Provide Jobs and More Jobs
Financial Perspective on Quality Basic Economic Quality Level Model Cost
Total Quality Costs = Sum of Losses and Gains
Costs of Improving Quality
Minimum Cost Losses due to poor quality Optimum Quality Level
Quality
The Three Spheres of Quality
Quality Management
Quality Assurance
Quality Control