Human resources hosie

Business Capstone Capsim Human Resources Business Fundamentals CRICOS Provider Code 00301J Business Capstone These slides are in Blackboard > ‘Seminars’ CRICOS Provider Code 00301J Business Capstone Introduction 1) Overview and background Human Resource Management (HRM) 2) How HRM impacts on Capstone® decisions 3) Conclusion CRICOS Provider Code 00301J Business Capstone “Many performance management systems are plagued with rater errors For example, as long as about 1,700 years ago, the Wei dynasty in China implemented a performance management system for its household members The philosopher Sin Yu has been quoted as saying that “an Imperial Rater of Nine Grades seldom rates men according to their merits, but always according to his likes and dislikes.” (Boxall, P & Purcell, J 2011, Strategy and Human Resource Management, (3rd ed), Palgrave Macmillan, New York ISBN 978-0-230-57935-4, p 162) CRICOS Provider Code 00301J Business Capstone Porter's Five Forces Driving Industry Competition (http://en.wikipedia.org/wiki/Porter_five_forces_analysis) CRICOS Provider Code 00301J Business Capstone A Comprehensive Strategic Management Model (Adapted from Fred David, Strategic Management Upper Saddle River, NJ: Prentice-Hall, 2001, p 77) CRICOS Provider Code 00301J Business Capstone Human Resource Management (Dessler, G 2011 (11th Ed) Human Resource Management 12e Prentice Hall, New Jersey, USA Prentice Hall ISBN-10: 013608995X | ISBN-13: 9780136089957) • Strategic Management Process of identifying and executing organization’s mission by matching its capabilities with the demands of its environment • Vision A general statement of an organization’s intended direction that evokes emotional feelings in organization members • Mission Spells out who company is, what it does, and where it’s headed CRICOS Provider Code 00301J Business Capstone Broad Schools of Human Resource Management • External Market Orientated Approach Human Resources practice choices need to be made to fit external market, societal and organisational contexts Human Resources policies to achieve organisational strategy, goals and outcomes while accounting for external and internal influences • Resource Based View (RBV) Success of firms depend on building resources— people, culture, knowledge—that are difficult to copy and obtain Competitive advantage by building and developing internal capabilities CRICOS Provider Code 00301J Business Capstone Achieving Strategic Fit (Dessler, G 2011 (11th Ed) Human Resource Management 12e Prentice Hall, New Jersey, USA Prentice Hall ISBN-10: 013608995X | ISBN-13: 9780136089957) • The “Fit” Point of View (Porter) All of the firm’s activities must be tailored to fit a chosen strategy such that the firm’s functional strategies support its corporate and competitive strategies • Leveraging (Hamel and Prahalad) “Stretch” in leveraging resources—supplementing what have and doing more with what you have—can be more important than just fitting the strategic plan to current resources CRICOS Provider Code 00301J Business Capstone Human Resource Management • Linking of Human Resources with strategic goals and objectives in order to improve business performance and develop organizational cultures to foster innovation and flexibility • Involves formulating and executing Human Resources systems—Human Resources policies and activities— produce employee competencies and behaviors companies needs to achieve strategic aims Mission Statement, Vision and Strategy crucial to success with Capsim CRICOS Provider Code 00301J Business Capstone Human Resources in Production area CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.1 2nd Shift and Overtime • Each production line has a 1st Shift Capacity - number of units that can be produced each year by running a single eight hour shift Companies can produce up to twice the 1st Shift Capacity by running a 2nd Shift and/or Overtime 2nd Shift means workers arrive at the end of 1st Shift and work hours • Overtime means workers stay on past the first hours of their shift Overtime can erode a company's Productivity Index • Production area's Workforce Complement row, the This Year (%) cell conveys the percentage of Needed Complement hired this year 100% means that every job slot will be filled A percentage in excess of 100, can be entered into system will reject this entry and only hire Needed Complement CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.1 2nd Shift and Overtime • Buying automation - will become operational the following year Hire fewer than Needed Complement Next year the company will not need as many workers Can save recruitment costs this year and separation costs next year if ask 1st Shift employees to work on Overtime versus hiring 2nd Shift workers who will be retrenched in 12 months Example: • Workforce Complement Percentage Entered in Production: 98% of this year's Needed complement (729 workers) • Company will have 666 1st Shift workers and 48 2nd Shift workers = 714 • Some Overtime hours worked, accounts for 2.2% of the production schedule CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.2 Productivity Index • Decisions project his year's Productivity Index displays on Human Resources page Higher the index, lower the company's per unit labor cost Example: • Training Hours and Recruiting Spend Entered in Human Resources Company gives each worker 80 hours training in the upcoming year Training is projected to increase Productivity Index 0.5% Investing in Recruiting Spend, which are bonuses to hire a better caliber worker, would also raise the Productivity Index CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • • If Labor Negotiations are scheduled, increases in Productivity Index can be lost if company uses a low wage/benefit tactic Productivity Index can never fall below 100% Results Human Resources investments page 12 of Capstone Courier in the HR/TQM Report CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • • • Needed Complement: The number of workers needed this year if the company is to avoid overtime Complement: The number of workers in your workforce this year This year's complement percentage is entered on the Production spreadsheet in the This Year (%) column It also appears in the second row of the Human Resource spreadsheet Suppose you enter a percentage that is less than 100 Employees must work overtime to complete the work schedule Excessive overtime drags down productivity and increases turnover 2nd Shift and overtime workers cost 50% more per hour than workers on 1st Shift 1st Shift Complement: For each product, if your schedules are less than or equal to the 1st Shift Capacity, your workers will only be used on a 1st Shift 2nd Shift Complement: If for any product your schedule is greater than your 1st Shift Capacity, and if the This Year (%) is at or near 100%, workers will be added to a 2nd Shift 2nd Shift workers are paid 50% more per hour than 1st Shift workers 2nd Shift scheduling has no impact upon the Productivity Index CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • • • Overtime Percent: The percentage of work performed on overtime 100% means that every 1st Shift worker is doing a double shift 15% means that, on average, workers perform 15% overtime Overtime increases turnover and drags down productivity Turnover Rate: The percentage of workers who left the company last year, excluding downsizing About 5% is rooted in unavoidable factors like retirement, relocation and weeding out poor workers Remaining turnover is a function of employee dissatisfaction The best workers leave first Turnover is driven down by Recruiting Spend and Training Hours Turnover also goes up as a result of overtime and a substandard compensation package from the Labor Negotiation The Turnover Rate ignores downsizing factors It reflects the turnover in the population of workers that you keep after downsizing (that is, reducing production schedules or increasing automation) New Employees: Employees recruited this year At a minimum, New Employees reflects replacement of workers lost during the course of the year to turnover It also includes workers hired in January to increase the Complement from last year New employees incur a Recruiting Cost As a simplifying assumption, the simulation does not rehire fired or separated workers CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • • Separated Employees: Employees lost because of downsizing or increases in Automation Specifically, Separated Employees is Last Year's Complement minus This Year's Complement All separations occur in January and incur a Separation Cost Recruiting Spend: Recruiting Spend is the extra amount budgeted per worker to recruit high caliber workers The higher the budget, the better the worker, resulting in a higher Productivity Index and lower Turnover Your entry is added to a base amount of $1,000 per new employee $0 means no extraordinary effort is spent recruiting new people Diminishing returns apply after $5,000 per worker Training Hours: Training Hours is the number of hours each year that each individual worker is taken off-line for training and development For example, 40 means that each worker will spend 40 hours in training this year Training produces a higher Productivity Index and a lower Turnover Rate The more time off-line, the higher the needed Complement Each training hour costs $20.00 per worker in training costs CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • Productivity Index: The Productivity Index indicates how the general workforce compares with the workers employed in Round 100% means that current workers are just as good as original workers 110% means that, on average, you only need 91% (100 / 110 = 91) of the Complement to the same work as a workforce comprised of original workers In short, higher productivity means fewer workers are required, and that drives down per unit labor cost Recruiting Spend and Training Hours drive up the Productivity Index Overtime drags down the Productivity Index This Year actually means by the end of this year Last year's Productivity is the driver behind your Complement requirements this year because it indicates your productivity level on January Recruiting Cost: The amount spent to recruit new workers It equals the number of workers recruited times ($1,000 + Recruiting Spend) CRICOS Provider Code 00301J Business Capstone 7.0 Additional Modules 7.2.3 Human Resource Definitions • • • Separation Cost: The cost to separate (fire) workers If you downsize your workforce (by reducing production schedules or increasing automation), each worker is given a separation package worth $5,000 Training Cost: Training costs are driven by Training Hours Each worker-training hour costs $20.00 and pays for such things as educational materials, instructors, etc Training costs not include time off the job Total Human Resources Admin Costs: Total Human Resources Administrative Costs are incorporated into the income statement's admin line item Costs are allocated to products based upon their Complement For example, if Able has 10 workers and Acre has 20, then the Human Resources Admin costs (training, recruiting, etc.) would be twice as much for Acre as for Able CRICOS Provider Code 00301J Business Capstone Differentiation Strategies Competitive advantage • Organisation able create value in production process Either by reducing costs or by differentiating a product or service to allow an organisation to charge a premium price Different strategies require different types of employees with different types of behaviours and attitudes Cost Strategies • Organisations tend to specifically define the skills they require and invest in training employees in these skill areas because of focus on efficiency • Rely on behavioural performance management systems with a large performance based remuneration component Organisations promote internally and develop internally consistent pay systems with high pay differentials between superiors and subordinates • Seek efficiency through worker participation and soliciting employees’ ideas on how to achieve more efficiency CRICOS Provider Code 00301J Business Capstone Conclusion • Approach organisation takes in making decisions will result in either successfully achieving its short and long term goals or ceasing to exist • Organisations need to develop sets of Human Resources practices that maximise performance and productivity • Need make decisions about terms on which engage people who its work • Value and the uniqueness of human capital, or people can be considered extent the capabilities of people specific to organisation • Managing talent becomes particularly important when talent has capabilities that are unique and valuable CRICOS Provider Code 00301J Business Capstone Acknowledgements and Sources Mr Adolph De Sousa, Curtin University Fellow Boxall, P., and J, Purcell, 2011 Strategy and Human Resource Management, (3rd), Palgrave Macmillan, New York ISBN 978-1-403992-109 Budhwar, P., and Aryees, S 2008 An Introduction to Strategic Human Resource Management, Strategic Human Resource Management, CIPD Dessler, G 2011 (11th Ed) Human Resource Management 12e Prentice Hall, New Jersey, USA Prentice Hall ISBN-10: 013608995X | ISBN13: 9780136089957 _Capstone Team Member Guide 2012 Capsim Management Simulation Inc® Kanter, R.M, Stein, B.A, and Jick, T.D, (1992) Challenges of Organisational change: How Companies experience it and leaders guide it, New York: Free Press Hamel, G., and Prahalad, C.K 1993 Strategy as stretch and leverage Harvard Business Review, 71(2):75-84 Porter's Five Forces Driving Industry Competition Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Porter_five_forces_analysis (accessed August 2012) Porter, M.E 1996 What Is strategy? Harvard Business Review 74(6): 61-78 Porter, M.E 2008 The five competitive forces that shape strategy Harvard Business Review 86(1): 78-93 Wright, P., and G Machan 1992 Theoretical perspectives for strategic human resource management Journal of Management,18: 295320 CRICOS Provider Code 00301J Business Capstone References and Acknowledgement © Capsim Management Simulations, Inc 2012 All Rights Reserved 55 E Monroe, Suite 3210, Chicago, IL 60603 USA and Canada 877-477-8787 Others 1-312-477-7200 Capstone®, Capstone® Simulation, Capstone® Business Simulation, Foundation®, Foundation® Simulation, Foundation® Business Simulation, Capsim®, Comp-XM®, Management Simulations, Inc.® and MSI® are among the many trademarks of Capsim Management Simulations, Inc.® CRICOS Provider Code 00301J Business Capstone Thank you for your attention! CRICOS Provider Code 00301J