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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