Human Resource Management: Gaining a Competitive Advantage Chapter 16 Strategically Managing the HRM Function McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc All rights reserved Learning Objectives Discuss roles that HRM plays and categories of HRM activities Discuss how HRM function can define its mission and market Explain approaches to evaluating the effectiveness of HRM practices Describe new structures for HRM function Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness Relate how process reengineering is used to review and redesign HR practices Discuss types of new technologies that can improve HR efficiency and effectiveness List competencies HRM executive needs to become a strategic partner in the company 16-2 Introduction HRM practices can help companies gain a competitive advantage Virtually every HR function in top companies is going through a transformation process to create a function that can play this new strategic role while fulfilling its other roles 16-3 Categories of HRM Activities Transformational Knowledge Management Cultural Change Strategic Redirection & Renewal Management development Traditional Recruitment and Selection Training Performance Management Compensation Employee Relations Transactional Benefits Administration Record Keeping Employee Services 16-4 Categories of HRM Activities Transactional activities - day-to-day transactions - Low strategic value Traditional activities - nuts and bolts of HR such as performance management, training, recruiting, selection, compensation and employee relations - Moderate strategic value Transformational activities create long-term capability and adaptability Activities include knowledge management, management development, cultural change and strategic redirection and renewal - Greatest strategic value 16-5 Strategic Management of HRM For HR to become truly strategic in its orientation, it must view itself as a separate business entity Customer orientation is one of the most important changes in HR's attempt to become strategic Products of HR must be identified Technologies through which HR meets customer needs vary depending on the need being satisfied 16-6 Customer-Oriented Perspective Customers Line managers Strategic planners Employees H R M Technology Customers’ Needs Staffing Performance Management Committed Employees Rewards Competent Employees Training & Development 16-7 Basic Process for HR Strategy Scan external environment Identify strategic business issues Identify people issues Develop HR strategy Communicate HR strategy 16-8 Involving Line Executives Involving those in charge of running the business can increase quality of information from which HR strategy is created Involvement can occur ways: Line executives could provide input Line executives could be members of a team that develops HR strategy Once strategy is developed, line managers could receive communications with HR strategy information Line managers could formally approve a strategy 16-9 Characterizing HR Strategies HR-Focused People issues/ outcomes HR strategy People-Linked People issues/ outcomes HR strategy Business-Linked Business issues/ outcomes People issues/ outcomes HR strategy People issues/ outcomes HR strategy Business-Driven Business issues/ outcomes 16-10 Measuring HRM Effectiveness Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget 16-11 Audit & Analytic Approaches Evaluating HRM Effectiveness Audit Approach • Focuses on reviewing various outcomes of HR functional areas • Both key indicators and customer satisfaction measures are collected • Employee assessment • Surveys of top executives Analytic Approach • Focuses on either: (1) determine whether introduction of a program or practice has intended effect or (2) estimate financial costs and benefits resulting from HR practice • More demanding than the audit approach because it requires detailed use of statistics and finance 16-12 Restructuring to Improve HRM Divisions of HRM: Centers for Expertise - functional specialists in traditional areas of HR who act as consultants in development of state-of-the-art systems and processes for use in the organization Field Generalists - HRM generalists assigned to a business unit Service Center - ensure that transactional activities are delivered throughout the organization 16-13 Outsourcing Outsourcing - Contracting with an outside vendor to provide a product or service to the firm Reasons to Outsource: Outsourcing partner can provide the service more cheaply Outsourcing partner can provide it more effectively • Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration 16-14 Reengineering Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality Steps of The Reengineering Process : Identify process to be reengineered Understand process Redesign process Implement process Feedback 16-15 Improving HRM Effectiveness through New Technologies New technologies - Applications of knowledge, procedures, and equipment that have not previously been used Transaction Processing—Computations and calculations used to review and document HRM decisions and practices These include documenting employee relocation, payroll expenses and training course enrollments Decision Support Systems—Systems designed to help managers solve problems usually include a "what if" feature Expert systems - Computer systems incorporating decision rules of people deemed to have expertise in a certain area 16-16 Network and Client Server Architecture A Network is a combination of desktop computers, computer terminals and mainframes or minicomputers that share access to databases and a means to transmit information throughout the system • Client-server architecture is a common form of network that provides the means of consolidating data and applications into a single system 16-17 Relational Database, Imaging and Groupware Relational database – Information is stored in separate files that look like tables and can be linked by common elements such as name Imaging – Process for scanning documents, storing them electronically and retrieving them Groupware (or electronic meeting software) – software application that enables multiple users to track, share and organize information and to work on same document simultaneously 16-18 Software Applications for HRM Improving HRM Effectiveness through New Technologies–E-HRM – Speed requirements of e-business force HRM managers to explore how to leverage technology for delivery of traditional and transformational HRM activities Recruitment and Selection - Technology monitors hiring processes to minimize potential for discriminatory hiring decisions Compensation and Rewards - Leveraging technology may allow firms to better achive compensation goals with less effort Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively 16-19 The Future for HR Professionals The future for HRM careers brighter than ever HR leaders need knowledge of the following: - business, change processes, integration competence and people’s role in competitive advantage - HR issues, tools, processes and technologies, policies and programs - HR practices in areas such as staffing, development, rewards, communication and organizational design 16-20 Summary HRM functions must consist of individuals who view themselves as businesspeople who work in HRM With the opportunity to impact the way organizations compete through people, comes serious responsibility and accountability Firms need balance attracting, motivating and retaining the best talent and keeping costs low HR leaders need knowledge of the business combined with knowledge of HR issues, tools, processes and technology 16-21 [...]... Relational Database, Imaging and Groupware Relational database – Information is stored in separate files that look like tables and can be linked by common elements such as name Imaging – Process for scanning documents, storing them electronically and retrieving them Groupware (or electronic meeting software) – software application that enables multiple users to track, share and organize information... to have expertise in a certain area 16-16 Network and Client Server Architecture A Network is a combination of desktop computers, computer terminals and mainframes or minicomputers that share access to databases and a means to transmit information throughout the system • Client-server architecture is a common form of network that provides the means of consolidating data and applications into a single...Measuring HRM Effectiveness Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget 16-11 Audit & Analytic Approaches Evaluating HRM Effectiveness Audit Approach... detailed use of statistics and finance 16-12 Restructuring to Improve HRM 3 Divisions of HRM: 1 Centers for Expertise - functional specialists in traditional areas of HR who act as consultants in development of state-of-the-art systems and processes for use in the organization 2 Field Generalists - HRM generalists assigned to a business unit 3 Service Center - ensure that transactional activities are... reviewing various outcomes of HR functional areas • Both key indicators and customer satisfaction measures are collected • Employee assessment • Surveys of top executives Analytic Approach • Focuses on either: (1) determine whether introduction of a program or practice has intended effect or (2) estimate financial costs and benefits resulting from HR practice • More demanding than the audit approach because... change processes, integration competence and people’s role in competitive advantage - HR issues, tools, processes and technologies, policies and programs - HR practices in areas such as staffing, development, rewards, communication and organizational design 16-20 Summary HRM functions must consist of individuals who view themselves as businesspeople who work in HRM With the opportunity to impact... information and to work on same document simultaneously 16-18 Software Applications for HRM Improving HRM Effectiveness through New Technologies–E -HRM – Speed requirements of e-business force HRM managers to explore how to leverage technology for delivery of traditional and transformational HRM activities Recruitment and Selection - Technology monitors hiring processes to minimize potential for discriminatory... throughout the organization 16-13 Outsourcing Outsourcing - Contracting with an outside vendor to provide a product or service to the firm 2 Reasons to Outsource: Outsourcing partner can provide the service more cheaply Outsourcing partner can provide it more effectively • Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration 16-14... decisions Compensation and Rewards - Leveraging technology may allow firms to better achive compensation goals with less effort Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively 16-19 The Future for HR Professionals The future for HRM careers brighter than ever HR leaders need knowledge... previously been used Transaction Processing—Computations and calculations used to review and document HRM decisions and practices These include documenting employee relocation, payroll expenses and training course enrollments Decision Support Systems—Systems designed to help managers solve problems usually include a "what if" feature Expert systems - Computer systems incorporating decision rules