Transcript HR AS A STRATEGIC PARTNER Becker, Huselid, & Ulrich The HR

MSMHR
Summary of Chapters 2 & 3
Becker, Huselid, & Ulrich’s The HR Scorecard
Inadequacy of Traditional Measurement Systems
1.
2.
3.
Financial measures as lagging indicators, not leading indicators of
value creation.
Sole reliance on lagging indicators is short-sighted, because it
focuses on the “distant” past.
Need to uncover the firm’s value-creation chain (story): “business
model.”
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
1
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BALANCING COST CONTROL AND VALUE CREATION:
THE HR SCORECARD
1. Do you want HR to be perceived as a “cost control” or as a
“value creation unit?
2. What gets measured gets managed: if you measure only
HR costs, your unit will be treated as a commodity without
strategic value.
3. HR must control costs, but also create value.
4. Can you think of an example where value was lost due to
cost-control efforts? (“throw the baby with the bath water”)
Describe it for us.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
2
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CONTINGENCY THEORIES OF STRATEGIC HR
1. Not all HR practices fit all organizational strategies.
2. Organizations should pick and choose the HR practices that
best fit their organizational strategy (i.e., strategic alignment
of HR practices)
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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Competency Models by Strategy Exercise
Identify a series of relevant competencies or attributes that organizations should
possess to pursue each one of the following strategies (see some examples of
competencies a few slides further).
Cost-driven organization
Relevant Performance Drivers (Competencies)
•Vigorous pursuit of
production/delivery efficiencies.
•Tight control over cost of
materials, resources, & overhead.
•Minimal expenditure in R&D,
marketing, sales, & service.
•Emphasis on large accounts &
economies of scale.
•Low-cost distribution system
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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Competency Models by Strategy Exercise
Value-driven organization
Relevant Performance Drivers (Competencies)
•Focus on developing best-inclass capabilities in selected
activities.
•Promote reputation for
technological leadership & brand
image.
•Emphasize product engineering
or service integration.
•Maintain an active basic research
contingent.
•Partner with industry, universities,
& research organizations for
mutual benefit.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Competency Models by Strategy Exercise
Quality-driven organization
Relevant Performance Drivers (Competencies)
•Aggressive pursuit of information
on customer careabouts, including
customer involvement in
product/service design.
•Efforts to instill a continuous
improvement orientation.
•Strict monitoring & screening of
subcontractors, franchises, and
suppliers.
•Some investment in R&D,
marketing, service, & training.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Competency Models by Strategy Exercise
Service-driven organization Relevant Performance Drivers (Competencies)
•Value investments in people.
•Close monitoring of metrics
tracking service responsiveness.
•Cultivate good working
relationships among associates,
subcontractors, and suppliers.
•Creative involvement of R&D and
manufacturing groups in aftersales support.
•Emphasis on customer service
and sales ranks’ contact with
customers.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Competency Models by Strategy Exercise
Speed-driven organization
Relevant Performance Drivers (Competencies)
•Willingness to accept risks
associated with delivering
product/service to market ahead of
competitors.
•Analysis of market trends.
•Aggressive management of new
product development cycles.
•Engage in joint ventures to speed
entry in emerging markets.
•Create geographical &
technological partnerships to
augment organizational
capabilities.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Competency Models by Strategy Exercise
Focus-driven organization
Relevant Performance Drivers (Competencies)
•Emphasis on market research &
micromarket proclivities.
•Risk averse & focus on customer
careabouts.
•Intense management of
product/service modifications to
match profiled customer needs.
•Active involvement of targeted
customers in product/service
development.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Competency Models by Strategy Exercise
Examples of Performance Drivers/Competency Definitions
•Informing: Disseminating relevant information about decisions, plans,
and activities to people who need the info to do their job.
•Clarifying: Assigning work, providing direction on how to do the work,
and communicating a clear understanding of job responsibilities, task
objectives, priorities, deadlines, and expectations.
•Monitoring: Gathering info about work activities and external conditions
affecting the work, checking on the progress and quality of work, and
evaluating the performance of individuals and the effectiveness of the
organizational unit.
•Planning: Determining long-term objectives and strategies, allocating
resources according to priorities, determining how to use resources
effectively.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
VALUE CREATION EXAMPLE
Nordstrom
Financial
ROI
CUSTOMER RETENTION
Customer
SUPERIOR CUSTOMER SERVICE
Internal/business process
Learning and growth
UNIQUE INVENTORY
KNOWLEDGEABLE AND
CUSTOMER-ORIENTED EMPLOYEES
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
VALUE CREATION EXAMPLE
Wal-Mart
Financial
ROI
Customer
CUSTOMER SATISFACTION
CONVENIENCE
Internal/business process
Learning and growth
SUPPLY-CHAIN MGMT.
PRICING
RELIABLE EMPLOYEES
TRUSTWORTHY SUPPLIERS
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Ph.D., All Rights Reserved
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MSMHR
VALUE CREATION EXERCISE
Outline the value chain of an organization you are familiar with
Financial
Customer
Internal/business process
Learning and growth
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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INTEGRATING HR INTO THE VALUE CREATION STORY
1.
2.
3.
4.
5.
Is the HR function providing the company with the employee
competencies and behaviors necessary to achieve the
organization’s strategic objectives?
HR deliverables: Outcomes of the HR architecture that serve to
execute the firm’s strategy.
HR doables: HR efficiency & activity counts.
HR performance drivers: core people-related capabilities or assets.
HR enablers reinforce performance drivers (moderators whose
presence activates the HR performance drivers).
HR enablers
HR performance drivers
HR Doables
HR Deliverables
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
Impact
Strategy
implementation
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EXERCISE:
DISTINGUSHING AMONG HR PERFORMANCE DRIVERS (PD),
DELIVERABLES (DE), DOABLES (DO), ENABLERS (EN)
SURVEY SAYS…
PD DE DO EN
Measure
Average time for dispute resolution
Cost per trainee hour
Cost per hire
Time spent on new employee orientation
Troubleshooting skills
Ability to think out-of-the-box
Knowledge of sexual harassment legislation
Number of sexual harassment complaints
Sexual harassment-free environment
Risk-taking culture
Number of customer complaints
Performance ratings on teamwork
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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An example of HR Value Creation Story…
Honesty testing
Random drug testing
Honest workforce
Cost per quarter (efficiency)
Employee theft
Inventory
Pricing
shrinkage
What percent of your
coworkers are honest?
Cost per hire (efficiency)
Cost of missing items
What percent of the
items missing in the
inventory are stolen
by employees?
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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MSMHR
Your own HR Value Creation Story…
Now, build your own example of HR value creation story
based on an organization you are familiar with!
Define a series of scorecard measures that can speak to
how effectively each link of the value chain is working.
Define a series of HR efficiency measures that speak to the
cost-effectiveness of the HR function.
Copyright 2004 Juan I. Sanchez,
Ph.D., All Rights Reserved
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WRITE THREE HR PERFORMANCE DRIVERS (PD), THREE DELIVERABLES
(DE), THREE DOABLES (DO), AND THREE ENABLERS (EN) FOR YOUR HR
VALUE CREATION “STORY”
Type No.
PD
Measure
1
2
3
DE
4
5
6
DO
7
8
9
EN
10
11
12
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Ph.D., All Rights Reserved
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