Human Resource Management

ELEVENTH EDITON Robert L. Mathis  John H. Jackson Chapter 2

Strategic HR Management and planning

SECTION 1 Nature of Human Resource Management PowerPoint Presentation by Dr. Zahi Yaseen

Strategic HR Management and planning After you have read this chapter, you should be able to: - Explain strategic HR management and how it is linked to organizational strategies.

- Describe how legal, political, cultural, and economic factors affect global HR management - Discuss four dimensions of organizational effectiveness and how HR contributes to each.

- Define HR planning and outline the HR planning process - Discuss several ways of managing a surplus of human resources - Identify why HR metrics must consider both strategic and operational HR measures.

Strategic HR Management and planning Strategic HR management: Organizational use of employees to gain or keep a competitive advantage against competitors. figure 1 Global competitiveness and strategic HR - Types of global organization: Importing and exporting ( import & export goods and services. Multinational enterprises (operating in foreign countries) and global organization ( operate separately in many foreign countries). HR affected in the last two types of enterprises in terms of external environment ( legal, laws, political, culture…).

Strategic HR management process Organizational strategies Organizational culture Competitive Financial environment figure 1 current Organizational situation Need for human Resources quantity And skill levels Available financial resources HR Activities •Equal employment •Recruiting and selecting •Hr development •Compensation •Performance management •Employee relations

Linkage of Organizational and HR Strategies

Strategic HR Management and planning Global cultural factors - Culture is composed of societal factors affecting the values, beliefs, and actions of people. According to Hofstede Studies: countries are different in terms of - Power distance: equality among people of a nation.

- Individualism: people like to act individual or group.

- Masculinity/femininity: Success versus quality of life.

- Uncertainty avoidance: resistant to change/ flexibility - Long-term orientation: long term values/short term

Strategic HR Management and planning Global economic factors Economic factors are linked to political , laws, culture. Countries differ in their economic systems. Critics of globalization cite extremely low wage paid by international firms. Global economic interdependence : international trade agreements like NAFTA, EU Global productivity and strategic HR management: increases in national wage level without increases in national productivity leads to inflation.

Strategic HR Management and planning Organizational effectiveness & Strategic HRM HR management plays a significant role in several dimensions of organizational effectiveness: 1- organizational productivity 2- Financial contribution: return on investment (ROI).

3- service and quality: service quality affected by workers who interacts with customers.

4- organizational culture: should be viewed as climate.

Strategic HR Management and planning organizational productivity: is the measuring of quality and quantity of work done, considering the cost.

How to improve organizational productivity?

1- organizational restructuring: right-size, layoff 2- redesigning work: job analysis 3- aligning HR activities: training…for effectiveness 4- outsourcing analysis: contractors, part-time.

Strategic HR Management and 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.

• Purpose of strategic HR planning The focus of HR planning is to have the right number of employees with the right capabilities , at the right times, and the right places. Figure 2

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Strategic HR Management and planning Effective HR planning Figure 2 Right people Right capabilities Right time Right place

Strategic HR Management and planning • 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 planning and setting organizational goals • HR planning process The means used to anticipate and manage the supply of and demand for human resources.

Figure 3

Typical Division of HR Responsibilities in HR Planning

HR Planning Process

Figure 3

Strategic HR Management and planning • Environmental Scanning The process of studying the environment of the organization to pinpoint opportunities and threats.

Environment Changes Impacting HR – Governmental regulations: legislation – Economic conditions: Inflation, interest rate..

– Geographic and competitive concerns: relocation – Workforce composition: women, diversity, part-time

Strategic HR Management and planning • Internal assessment of the organizational workforce

Auditing Jobs and Skills

– What jobs exist now?

– How many individuals are performing each job?

– How essential is each job?

– What jobs will be needed to implement future organizational strategies?

– What are the characteristics of anticipated jobs?

Strategic HR Management and planning • Internal assessment of the organizational workforce

Organizational Capabilities Inventory

– HRIS databases—sources of information about employees’ knowledge, skills, and abilities (KSAs) – Components of an organizational capabilities inventory • Workforce and individual demographics • Individual employee career progression • Individual job performance data

• Strategic HR Management and planning Forecasting HR Supply and Demand - External Supply - Internal Supply Factors affecting external supply • Net migration for an area • • • • Individuals entering and leaving the workforce Individuals graduating from schools and colleges Changing workforce composition and patterns Economic forecasts • • • • Technological developments and shifts Actions of competing employers Government regulations and pressures Other factors affecting the workforce

Strategic HR Management and planning • Forecasting HR Supply and Demand Factors affecting internal supply . Figure 4 – Effects of promotions, lateral moves, and terminations – Succession analysis: replacement charts, personnel changes, backup candidates, track retirements… – Succession planning: long-term plan for the orderly replacement.

Estimating Internal Labor Supply for a Given Unit

Figure 4

Strategic HR Management and planning • managing a human resource surplus 1- Workforce Reductions and the WARN Act Identifies employer requirements for layoff advance notice.

2- Workforce Realignment “Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) all mean reducing the number of employees in an organization.

– Causes • Economic—weak product demand, loss of market share to competitors. Results in increasing productivity • Structural—technological change, mergers and acquisitions

Strategic HR Management and planning • managing a human resource surplus Downsizing approaches – • Attrition and hiring freezes Not replacing departing employees and not hiring new employees/ – • Early retirement buyouts Offering incentives that encourage senior employees to leave the organization early. – • • Layoffs Employees are placed on unpaid leave until called back to work when business conditions improve.

Employees are selected for layoff on the basis of their seniority or performance or a combination of both.

Strategic HR Management and planning • Measures of strategic HR effectiveness Return on Investment (ROI) – Calculation showing the value of expenditures for HR activities.

ROI  C 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

Strategic HR Management and planning •

• •

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