Hr ppt chp 2 (1)

© 2011 Cengage Learning. All rights reserved. May not be
scanned, copied or duplicated, or posted to a publicly
accessible Web site, in whole or in part.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
SECTION 1 Environment for Human Resource Management
CHAPTERCHAPTER 22
Strategic HR ManagementStrategic HR Management
and Planningand Planning

© 2011 Cengage Learning. All
rights reserved. May not be
scanned, copied or duplicated, or
posted to a publicly accessible
Web site, in whole or in part. 2–2
Chapter Objectives
• Summarize the strategic planning process and how it drivesSummarize the strategic planning process and how it drives
the organizational activities.the organizational activities.
• Outline how strategic HR management is linkedOutline how strategic HR management is linked
to the organizational strategies.to the organizational strategies.
• Discuss how internal and external environmental factorsDiscuss how internal and external environmental factors
affect HR strategies.affect HR strategies.
• List HR strategic challenges faced by modern organizations.List HR strategic challenges faced by modern organizations.
• Explain how technology is affecting HR managementExplain how technology is affecting HR management
practices and employees.practices and employees.
• Identify how organizations can measure and assessIdentify how organizations can measure and assess
the effectiveness of HR management practices.the effectiveness of HR management practices.
After you have read this chapter, you should be able to:After you have read this chapter, you should be able to:

Strategy and Strategic PlanningStrategy and Strategic Planning
Strategy
The proposition an
organization follows for how
to compete successfully and
thereby survive and grow.
Strategic Planning
The process of defining
organizational strategy and
allocating resources toward
its achievement.

FIGURE 2–1
Strategic Planning
Process

Strategy FormulationStrategy Formulation
Organizational Mission
The guiding force and core
reason for the existence of
the organization and what
makes it unique.
Strategic HR Management
The use of employees to gain
or keep a competitive
advantage, resulting in
greater organizational
effectiveness.

FIGURE 2–2
Traditional HR
versus
Strategic HR

Strategic Competencies for HR ProfessionalsStrategic Competencies for HR Professionals
Credible Activist
Talent Manager/Org Designer
Operational Executor
Culture and Change Steward
Strategy Architect
Business Ally
Challenges assumptions and
offers a point of view
Shapes the organizational
culture, makes changes
happen
Acquires and deploys talent,
embeds capabilities into the
organizational structure
Recognizes trends, forecasts
obstacles to business success,
and builds overall strategy
Efficiently and effectively
carries out tactical HR
activities
Understands the business
value chain, and establishes
internal partnerships with line
managers

Operationalizing HR Management StrategiesOperationalizing HR Management Strategies
Thinking
Strategically
Understand
the business
Focus on key
business goals
Know what
to measure
Prepare for
the future

FIGURE 2–3
Strategic Human
Resource Management

HR As Organizational ContributorHR As Organizational Contributor
HR Contributions to
Organization Effectiveness
Organization
productivity
Customer service
and quality
Financial
contributions

High-Performance Work PracticesHigh-Performance Work Practices
Incentive Compensation
Training and Development
Employee participation
Selectivity in Hiring
Flexible Work Arrangements
High
Performance
Organization

HR Effectiveness and FinancialHR Effectiveness and Financial
PerformancePerformance• EffectivenessEffectiveness
 The extent to which goals have been met.The extent to which goals have been met.
• EfficiencyEfficiency
 The degree to which operations are doneThe degree to which operations are done
in an economical manner.in an economical manner.

Environmental AnalysisEnvironmental Analysis
• Environmental ScanningEnvironmental Scanning
 The assessment of internal and externalThe assessment of internal and external
environmental conditions that affect the organizationenvironmental conditions that affect the organization
HR
Planning
Legislative/Political
Influences
Economic
Conditions
Geographic and
Competitive Concerns
Demographic
Changes

FIGURE 2–4 HR Factors in the SWOT Analysis

Internal Environmental AnalysisInternal Environmental Analysis
• Succession PlanningSuccession Planning
 The process of identifying a plan for the orderlyThe process of identifying a plan for the orderly
replacement of key employees.replacement of key employees.

FIGURE 2–5 Areas of External Environmental Scan

Global Competitiveness and Strategic HRGlobal Competitiveness and Strategic HR
Global Framework
Global Legal
and Regulatory
Factors
Offshoring
Operations
Global
Staffing

FIGURE 2–6 Strategic Approaches to International Staffing

HR Planning in Mergers and AcquisitionsHR Planning in Mergers and Acquisitions
• Cultural CompatibilityCultural Compatibility
 The extent to which such factors as decision-makingThe extent to which such factors as decision-making
styles, levels of teamwork, information-sharingstyles, levels of teamwork, information-sharing
philosophies, and the formality of the twophilosophies, and the formality of the two
organizations are similar.organizations are similar.
• HR’s Role in Mergers and AcquisitionsHR’s Role in Mergers and Acquisitions
 Communicating decisionsCommunicating decisions
 Revising the organization structureRevising the organization structure
 Merging HR activitiesMerging HR activities

FIGURE 2–7 HR Activities during Mergers and Acquisitions

Key Factors in Cultural FitKey Factors in Cultural Fit
Degree of internal
integration
Autonomy
Adaptability
Employee trust
Diversity
Cultural Fit
in Mergers and
Acquisitions

Changing the Organizational CultureChanging the Organizational Culture
Culture
Define the desired
behaviors
Deploy role
models
Provide clear and
consistent messages
Provide meaningful
incentives

Managing a Talent SurplusManaging a Talent Surplus
Reduction in Work Hours
or Compensation
Attrition and Hiring
Freezes
Voluntary Separation
Programs
Workforce Downsizing
Workforce
Reductions

Legal ConsiderationsLegal Considerations
for Workforce Reductionsfor Workforce Reductions
Workforce
Adjustments
Severance
benefits
COBRA
coverage
OWBPA
Warn
Act

Managing a Talent ShortageManaging a Talent Shortage
Use
overtime
Implement
alternative work
arrangements
Outsource
work
Bring back
recent retirees
Use contingent
workers
Reduce
turnover
Tactics to
Reduce
a Talent
Shortage

FIGURE 2–8 Managing Talent Supply Imbalances

Technology ChallengesTechnology Challenges
Effects on Work and
Organizations
Effects on
Communication
Effects on Work
Processes
Effects on
HR Activities
Technology

FIGURE 2–9 Factors Involved in Proper Monitoring of Employee E-Mail

Measuring Effectiveness of HR InitiativesMeasuring Effectiveness of HR Initiatives
• HR MetricsHR Metrics
 Specific measures tied to HR performance indicators.Specific measures tied to HR performance indicators.
 Development and use of metrics that can betterDevelopment and use of metrics that can better
demonstrate HR’s value and track its performance.demonstrate HR’s value and track its performance.
 Characteristics of good HR metrics:Characteristics of good HR metrics:
 Are accurate.Are accurate.
 Are linked to strategic and operational objectives.Are linked to strategic and operational objectives.
 Have clearly understood calculations.Have clearly understood calculations.
 Meet information needs.Meet information needs.
 Can be compared internally and internally.Can be compared internally and internally.
 Can be used to drive HR management efforts.Can be used to drive HR management efforts.

FIGURE 2–10 Key HR Metrics

HR and BenchmarkingHR and Benchmarking
• BenchmarkingBenchmarking
 Comparing specific measures of performance to anComparing specific measures of performance to an
industry standard or best practices in other “best-in-industry standard or best practices in other “best-in-
class” organizations.class” organizations.
• Common BenchmarksCommon Benchmarks
 Total compensation as a percentage of net incomeTotal compensation as a percentage of net income
before taxesbefore taxes
 Percent of management positions filled internallyPercent of management positions filled internally
 Dollar sales per employeeDollar sales per employee
 Benefits as a percentage of payroll costBenefits as a percentage of payroll cost

HR and the Balanced ScorecardHR and the Balanced Scorecard
• The Balanced ScorecardThe Balanced Scorecard
 Uses a diverse set of performance measures to alignUses a diverse set of performance measures to align
performance efforts with organizational strategy.performance efforts with organizational strategy.
 Avoids a limited focus on financial measures byAvoids a limited focus on financial measures by
focusing on long-term drivers of performance andfocusing on long-term drivers of performance and
organizational sustainability.organizational sustainability.
 Requires spending considerable time and effort toRequires spending considerable time and effort to
identify the appropriate HR measures and how theyidentify the appropriate HR measures and how they
tie to strategic organizational success.tie to strategic organizational success.
 Address three elements—accountability, validity, andAddress three elements—accountability, validity, and
actionable results.actionable results.

FIGURE 2–11 Balanced Scorecard Framework

Human Capital Effectiveness MeasuresHuman Capital Effectiveness Measures
• Return on Investment (ROI)Return on Investment (ROI)
 Shows the value of investments in HR activities.Shows the value of investments in HR activities.
AA = Operating costs for a new or enhance system for the time period= Operating costs for a new or enhance system for the time period
BB = One-time cost of acquisition and implementation= One-time cost of acquisition and implementation
CC = Value of gains from productivity improvements for the time period= Value of gains from productivity improvements for the time period
BA
C
+
=ROI

Other Effectiveness MeasuresOther Effectiveness Measures
Human capital value
added (HCVA)
Human capital return on
investment (HCROI)
Human economic value
added (HEVA)

Assessing HR EffectivenessAssessing HR Effectiveness
• HR AuditHR Audit
 A formal research effort that evaluates the currentA formal research effort that evaluates the current
state of HR management in an organizationstate of HR management in an organization
 Audit areas:Audit areas:
 StaffingStaffing
 CompensationCompensation
 Health and safetyHealth and safety
 Legal complianceLegal compliance
 Administrative processes and recordkeepingAdministrative processes and recordkeeping
 Employee retentionEmployee retention
 BenefitsBenefits

Hr ppt chp 2 (1)

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