Human resrouce management 12th mathis jacson chapter 002

CHAPTER Strategic HR Management and Planning © 2008 Thomson/South-Western All rights reserved PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter Chapter Objectives Objectives After you have read this chapter, you should be able to: ■ Explain strategic HR management and how it is linked to organizational strategies ■ Discuss two possible contributors to competitive advantage and how HR contributes to each ■ Describe how legal, political, cultural, and economic factors affect global HR management ■ Define HR planning and outline the HR planning process ■ Describe the means for assessing the external and internal environments of HR management © 2008 Thomson/SouthWestern All rights reserved 2–2 Chapter Chapter Objectives Objectives (cont’d) (cont’d) After you have read this chapter, you should be able to: ■ Discuss several ways of managing a surplus and a shortage of human resources ■ Identify why HR metrics must consider both strategic and operational HR measures © 2008 Thomson/SouthWestern All rights reserved 2–3 Nature of Strategy and HR Management Strategy Strategic HR Management The proposition an organization follows for how to compete successfully and thereby survive and grow The use of employees to gain or keep a competitive advantage, resulting in greater organizational effectiveness © 2008 Thomson/SouthWestern All rights reserved 2–4 FIGURE 2-1 Strategic HR Management Process © 2008 Thomson/SouthWestern All rights reserved 2–5 Strategic Success with HR Practices • Recognized HR Best Practices  Employment security  Selective recruiting  High wages/incentives  Information sharing/participation  Training/cross training  Promotion from within  Measurement © 2008 Thomson/SouthWestern All rights reserved 2–6 FIGURE 2-2 Common Areas for HR Strategies © 2008 Thomson/SouthWestern All rights reserved 2–7 Operationalizing HR Strategy Thinking Strategically Understand the business Focus on key business goals © 2008 Thomson/SouthWestern All rights reserved Know what to measure Prepare for the future 2–8 FIGURE 2-3 Possible HR Areas for Core Competencies © 2008 Thomson/SouthWestern All rights reserved 2–9 HR As Organizational Contributor HR Contributions to Organization Effectiveness Organization productivity Customer service and quality © 2008 Thomson/SouthWestern All rights reserved Financial contributions 2–10 Forecasting HR Supply (cont’d) • Succession Planning  The process of identifying a long-term plan for the orderly replacement of key employees © 2008 Thomson/SouthWestern All rights reserved 2–31 Workforce Realignment • Issues in Matching the Supply of Labor with the Demand for Labor  Managing a Human Resources Surplus  Outplacement Services  HR Planning in Mergers and Acquisitions © 2008 Thomson/SouthWestern All rights reserved 2–32 Managing a Human Resources Surplus Workforce Reductions and the WARN Act Workforce Downsizing Attrition and Hiring Freezes Human Resource Surplus Voluntary Separation Programs Layoffs © 2008 Thomson/SouthWestern All rights reserved 2–33 Managing a Human Resource Surplus (cont’d) • Outplacement services are 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 © 2008 Thomson/SouthWestern All rights reserved 2–34 FIGURE 2-9 Making Downsizing More Effective © 2008 Thomson/SouthWestern All rights reserved 2–35 Managing a Shortage of Employees Use overtime Add contingent workers Bring back recent retirees Human Resource Shortage Outsource work Reduce turnover © 2008 Thomson/SouthWestern All rights reserved 2–36 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 © 2008 Thomson/SouthWestern All rights reserved 2–37 Key Factors in Cultural Fit Degree of internal integration Autonomy Adaptability Cultural Fit in Mergers and Acquisitions Employee trust Diversity © 2008 Thomson/SouthWestern All rights reserved 2–38 Measuring 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:  Are accurate  Are linked to strategic and operational objectives  Have clearly understood calculations  Meet information needs  Can be compared internally and internally  Can be used to drive HR management efforts © 2008 Thomson/SouthWestern All rights reserved 2–39 FIGURE 2-10 Examples of Strategic and Operational HR Metrics Strategic Operational • Revenue generated per FTE • Annual turnover rate • Net income before taxes per FTE • Benefits costs as percentage of payroll • Ratio of managers to nonmanagers • Labor costs as percentage of total operating costs • ROI of human capital expenditures • HR department expenses as percentage of total expenses • Payroll/benefits costs as percentage of revenues • Training expenditures per FTE • Average time to fi ll openings • Workers’ compensation costs per FTE • Number of applicants per opening • Absenteeism by employee level/department ©Note: 2008 An FTE Thomson/Southis a measure equal to one employee working full-time for one year Western All rights reserved 2–40 Measures of Strategic HR Effectiveness • Return on Investment (ROI)  Calculation showing the value of expenditures for HR activities C ROI = A+ B 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 © 2008 Thomson/SouthWestern All rights reserved 2–41 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 © 2008 Thomson/SouthWestern All rights reserved 2–42 FIGURE 2-11 Revenue and Income per FTE *Data not reliable © 2008 Thomson/SouthWestern All rights reserved Source: Human Capital Benchmarking Study (Alexandria, VA: SHRM, 2006) 2–43 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 © 2008 Thomson/SouthWestern All rights reserved 2–44 Assessing HR Effectiveness • HR Audit  A formal research effort that evaluates the current state of HR management in an organization  Audit areas:  Legal compliance  Administrative processes  Recordkeeping  Employee retention  Benefits  Absenteeism and turnover control  Performance management system © 2008 Thomson/SouthWestern All rights reserved 2–45 [...]... Statistics, www.bls.gov 2–16 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... Managing a Human Resources Surplus  Outplacement Services  HR Planning in Mergers and Acquisitions © 2008 Thomson/SouthWestern All rights reserved 2–32 Managing a Human Resources Surplus Workforce Reductions and the WARN Act Workforce Downsizing Attrition and Hiring Freezes Human Resource Surplus Voluntary Separation Programs Layoffs © 2008 Thomson/SouthWestern All rights reserved 2–33 Managing a Human. .. 2–19 FIGURE 2-6 Typical Division of HR Responsibilities: HR Planning © 2008 Thomson/SouthWestern All rights reserved 2–20 Small Businesses and HR Planning Attracting and retaining qualified outsiders Management succession between generations of owners HR Planning Issues in Small Businesses Evolution of HR activities as the business grows © 2008 Thomson/SouthWestern All rights reserved Family relationships... reserved 2–34 FIGURE 2-9 Making Downsizing More Effective © 2008 Thomson/SouthWestern All rights reserved 2–35 Managing a Shortage of Employees Use overtime Add contingent workers Bring back recent retirees Human Resource Shortage Outsource work Reduce turnover © 2008 Thomson/SouthWestern All rights reserved 2–36