Strategic Human Resource Management

• Strategic Human Resource Management is about managing people in a way that will enable the organization to outperform competitors.

Strategy

• Strategy involves proposing success and growth through a way that enables outperforming of competitors.
• A competitive advantage is gained by delivering high-quality products and services.
• The chosen strategy determines the number, nature and capabilities of the people needed.
• Strategic HR management provides input into an organizations strategic planning and develops specific HR initiatives to help achieve organizational goals.
• Strategic HR adds value by improving performance.

Strategic Planning

• Strategic planning includes defining an organizational strategy or direction and making decisions on allocating resources of the organization to pursue this strategy.
• Serves as a roadmap for organizational direction and aligning resources.
• A guiding force in strategy formulation is organizational mission which involves sequential steps.

Strategic Planning Process

• The steps involved in strategy planning are:
• Organizational mission
• SWOT Analysis
• Establish goals and objectives
• Formulate organizational strategy
• Formulate supporting functional strategies
• Implement
• Evaluate and reassess

Strategic HR Management

• Involves the use of human resource management practices to gain or keep a competitive advantage.
• This includes talent acquisition, talent deployment, talent development, and rewarding talent.
• HR strategies are used to achieve organizational effectiveness and competitive advantage.
• Designed to affect and be influenced by people.
• Aligns individual employee performance with organizational strategic objectives.

Traditional Vs. Strategic HR

• Traditional HR typically has a micro view of the organization with a narrow skill application, while Strategic HR has a macro view with broad skill application.
• Traditional HR is focused on the organization administration, compliance, and tactical and strategic planning, diagnostic, analytical, and consultative methods are used in strategic HR.
• Traditional HR views employees as headcount that is cost-based and an exploitable resource.
• Strategic HR views employees as contributors who are asset-based and a critical resource.
• Traditional HR has a short-term, low-risk planning outlook, while Strategic HR has a long-term, high risk planning outlook.
• Traditional HR systems and practices are routine and reactive, while Strategic HR is adaptive, innovative, and proactive.
• Traditional HR education and training focuses on HRM generalists and specialists, while Strategic HR focuses on business acumen, comprehensive HRM knowledge, and organizational development.

Strategic Competencies for HR Professionals

• Credible activist
• Culture and change steward
• Talent manager/Organization designer
• Strategy architect
• Operational executor
• Business ally

Strategic HR

• Strategic HR integrates organizational direction from senior management with human resources at both the operational and strategic levels.

Strategic HR elements

• Strategy of the Organization to determine needed human resources based on quantity and skill levels.
• Company culture
• Competitive and financial enviroment to determine available financial resources.
• The need for HR plans and policies for:
• Recruiting
• Selection
• HR development
• Compensation
• Performance management
• Staffing adjustments

HR Professionals

• HR Professionals contribute to the strategic planning process by providing perspective and expertise in the following functions:
• Understanding the business
• Focusing on the key business goal
• Knowing what to measure
• Preparing for the future

High-Performance Work Practices

• HR strategies that foster high-performance work practices can result in increased return on assets and reduced turnover.
• Examples are:
• Incentive compensation
• Training
• Employee participation
• Selectivity
• Flexible work arrangements
• Effectiveness in organizations measures the ability of a program, project, or task to produce a specific desired effect that can be measured.
• Efficiency is the degree to which operations are done in an economical manner.

Environmental Analysis

• Environmental scanning involves assessing internal and external environmental conditions that affect an organization.
• Aims to pinpoint strengths, weaknesses, opportunities, and threats.

Internal Environmental Analysis

• Includes quantity and quality of human resources, HR practices, and organizational culture.
• Strength of the talent pipeline is important for future planning.
• Leadership development and succession planning are impossible without talent.
• Succession planning identifies a plan for the orderly replacement of key employees.
• Succession planning is a blueprint for managing the internal talent pipeline.

External Environmental Analysis

• Encompasses economic conditions and prevailing business climates like high growth and economic downturns.
• Involves Legislative/Political influences, such as government regulations, taxes, labor unions, compensation, benefits, and safety and health.
• Analyzes demographic changes such as aging of the population.
• Takes into account geographic and competitive concerns like industry hubs and sparsely populated areas.

Strategic Challenges

• Attracting and retaining the right talent is essential for achieving strategic plans.
• There's also a shift from a manufacturing to service economy.
• Need to deal with surplus or shortage of workers.

Managing Talent Supply Imbalances

• Talent surpluses can be managed by:

• Reducing employee work hours or compensation

• Attrition

• Freezing hiring.

• Talent shortages can be managed by:

• Increased employee work hours through overtime.

• Outsourcing to a third party.

• Implementing alternative work arrangements

• Use contingent workers.

Managing a Talent Surplus

• Can be done through reduction in work hours or compensation, while monitoring situation to reinstate pay and benefit levels when the economy improves.
• Attrition and freeze hiring can be implemented, since employees understand this downsizing method better than any other.
• Voluntary separation programs offer a more humane way to downsize, with some employees taking advantage.
• Workforce downsizing may result in layoffs, disruption, and demoralization.

Managing Layoffs

• Requires identifying work core to sustaining profitable business.
• Involves identifying the knowledge, skills, and competencies needed to execute the business strategy.
• Protects the bottom line and corporate brand.
• Requires constant communication with employees, and attention to the survivors.

Managing a Talent Shortage

• Overtime is not a long-term strategy.
• Includes alternate work arrangements to attract and retain skilled employees with flexibility offering support and planning.
• Bringing back recent retirees and contingent workers with effort is a strategy to avoid an "us and them" mentality.
• Outsourcing involves transferring management to an external service provider.

Technology Challenges

• Improvements in technology often mean adaptation.
• Technology enables improvement in work flow and process through automation and robotics.
• Also requires new knowledge and skills.
• Scheduling, tracking time and attendance, and monitoring employee productivity are easier with technology.
• Technology increases expectations regarding the speed and frequency of communication through things like intranet portals and social media.
• Results in easier monitoring of employee actions and performance.

Factors Involved in Proper Monitoring of Employee Email

• Organizations are legally responsible for employees' conduct and must limit exposure to liability.
• Protection of intellectual property to ensure that proprietary information is not disclosed to outside parties.
• Monitoring can ensure that employees are productive using computer and internet access to perform their jobs.
• US laws may require monitoring for financial reporting compliance, such as with Sarbanes-Oxley.
• Poorly implemented or excessive monitoring can reduce trust and openness.
• Employers should not monitor employee's external email accounts, but only those hosted by the organization.
• Personal and professional lines are blurred.
• Legal standards vary around the world with global companies needing to comply with requirements.

Effects of Technology on HR Activities

• Electronic human resource management systems (e-HRM) is the planning, implementation, and application of information technology to perform HR activities
• Can increase the efficiency of administrative HR functions and reduce costs.
• Should be integrated into overall IT plan.
• It provides support to every function of the HR.
• Can collect and analyze HR data and identify trends and modeling future conditions to help managers plan.

Measuring Effectiveness of HR Initiatives

• HR, like all other functions, must be evaluated.
• People-related costs are typically the largest controllable expense in organizations.
• Collecting and analyzing HR information can pinpoint waste and improper allocation of human resources.

HR Metrics

• HR Metrics are specific measures tied to HR performance indicators.
• HR staff and expenses include HR-to-employee ratio, total HR staff, and HR expenses per FTE.
• Staffing includes the number of positions filled, time to fill, cost per hire, and annual turnover rate.
• Compensation includes annual wage and salary increases, payroll as a percentage of operating expenses, and benefit costs.
• Training includes hours of training per employee, total costs for training, and percentage of employees participating in tuition reimbursement.
• Retention and quality include average tenure of employees, percentage of new hires retained for 90 days, and performance quality of employees in the first year.
• Development includes positions filled internally and percentage of employees with a career plan.

MR Metrics

• Metrics can track both efficiency and effectiveness.
• The value of HR metrics is in analysis and interpretation of data.
• Improvements in human capital utilization.
• There's no standard for implementation and reporting of HR measures.
• Characteristics to consider when formulating HR metrics:
• Accurate data can be collected
• Measures are linked to strategic and operational objectives
• Calculations can be clearly understood
• Measures provide information valued by executives
• Results can be compared both externally and internally
• Measurement data drive HR management efforts

HR and Benchmarking

• Benchmarking is the process of comparing business processes and outcomes to an industry related standard or best practice.
• Focuses on internal improvement by looking at external practices.
• Major obstacles include uncertainty about how to collect the information.
• Comparing ratios and results from year to year is important.
• It doesn't provide the cause for the performance and relative standing of the organization.

Balanced Scorecard

• Balances financial and non-financial measures to help understand long term drivers of performance.
• Measures cover four areas, which include financial, internal business processes, customer relations, as well as learning and growth activities.
• It is attentive to find HR measures that tie with organizational success.
• Aligns with company's goals and focusing on results.

Balanced Scorecard Framework

• The balanced scorecard framework can be broken down to 4 elements:
• Internal Processes – Operational effectiveness and Conformance to standards.
• Customer Relations – Customer satisfaction and Customer loyalty.
• Vision and Strategy
• Financial – Profit and loss and Utilisation of capital.
• Learning and Growth – Employee capabilities and Institutional knowledge.

Human Capital Effectiveness Measures

• Measuring the value, not just the cost of employees is valuable and challenging.
• Human capital refers to the collective value (competencies, knowledge, and skills) of the employees in the organization.
• Revenue per employee can be calculated by Revenue / Headcount, showing revenue generated per full-time employee.
• Return on Investment (ROI) is calculated by C / A+B, where:
• A is operating costs for a new or enhanced system
• B is one-time cost of acquisition and implementation
• C is the value of gains from productivity improvements
• Human Capital Value Added shows the operating profit per full-time employee and is calculated by subtracting Operating Expenses and Compensation and Benefit Costs, from Revenue, and dividing by full-time headcount.
• Human Capital Return on Investment shows the amount of profit derived from investments in labor: and is calculated by subtracting Operating Expenses and Compensation and Benefits Costs, from Revenue, divided by Compensation and Benefits Costs.
• Human Economic Value Added is the wealth created by employee and is calculated as: Net Profit after Taxes - Cost of Capital / Full-Time Head Count

HR Audit

• A formal research effort to assess the current state of HR practices.
• Assesses how well activities in each of the HR areas are performed.
• Helps in identifying areas of improvement.