Transcript Slide 1
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.
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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.
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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
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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
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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.
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Customer-Oriented Perspective
Customers
Line managers
Strategic planners
Employees
HRM
Technology
Staffing
Performance Management
Rewards
Training & Development
Customers’ Needs
Committed Employees
Competent Employees
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Basic Process for HR Strategy
Scan
external
environment
Identify
strategic
business
issues
Identify
people
issues
Develop
HR
strategy
Communicate
HR
strategy
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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 4 ways:
1. Line executives could provide input.
2. Line executives could be members of a team
that develops HR strategy.
3. Once strategy is developed, line managers
could receive communications with HR
strategy information.
4. Line managers could formally approve a
strategy.
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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
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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.
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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
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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 delivered throughout the
organization.
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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.
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Reengineering
Reengineering is a complete review of critical
work processes and redesign to make them
more efficient and able to deliver higher quality
4 Steps of The Reengineering Process :
Identify
process
to be
reengineered
Understand
process
Redesign
process
Implement
process
Feedback
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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.
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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.
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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.
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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.
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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
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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.
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