Table of Contents

List of Figures ............................................................................................................. 3

List of Tables .............................................................................................................. 4

Abbreviations ............................................................................................................. 5

1.0 BlackRock - Strategically Oriented HR Functions ................................................ 6

1.1 Introduction ....................................................................................................... 6

1.2 HR strategy models .......................................................................................... 7

1.2.1 The control-based model (CBM) ................................................................ 8

1.2.2 The resource-based model (RBM) ............................................................. 8

1.2.3 The integrative model ................................................................................. 8

1.3 Strategic planning / management process ...................................................... 12

1.4 Strategic role of HR ........................................................................................ 14

1.5 Reinforcing its HR alignment .......................................................................... 15

1.6 Conclusion ...................................................................................................... 15

2.0 Talent Management Approach and HRD at BlackRock...................................... 16

2.1 Introduction ..................................................................................................... 16

2.2 Talent Management at BlackRock .................................................................. 18

2.3 Four-step approach to talent management ..................................................... 20

2.4 HRD and Strategic HRD ................................................................................. 21

2.4.1 Garavan’s 9 characteristics of SHRD (Millmore et al., 2007:356-357) ..... 22

2.5 Conclusion ...................................................................................................... 24

3.0 Learning Organisation and Organisation Development ...................................... 25

3.1 Introduction ..................................................................................................... 25

3.2 Characteristics of the Learning Organisation (Robbins et al., 2001:495-497). 26

3.3 Characteristics of Organisation Development (Brown and Harvey, 2006:4) ... 29

3.4 Similarities and Relationship between LO and OD ......................................... 30

3.5 Conclusion ...................................................................................................... 30

1
4.0 HR Metrics ......................................................................................................... 31

4.1 HR metrics in recruitment ............................................................................... 34

4.2 HR Metrics in absenteeism ............................................................................. 34

4.3 HR metrics in labour turnover and retention ................................................... 35

4.4 Example of application of HR metrics in labour turnover and retention .......... 36

4.5 Conclusion ...................................................................................................... 38

References ............................................................................................................... 39

Appendix – Case Study ............................................................................................ 44

2
List of Figures

Figure 1.1 - HRM functions (Kumar, 2010:12)............................................................ 7

Figure 1.2 - Categorising HRM strategies (Bratton and Gold, 2012:60) ..................... 9
Figure 1.3 – The strategic management process (Noe et al., 2015:56).................... 12
Figure 2.1 – Talent management system (Elegbe, 2016)......................................... 16
Figure 2.2 Benefits of having talent management aligned with business strategy
(PMI, 2013:5) ........................................................................................................... 18
Figure 2.3 The four-step approach to talent management (Campbell and Hirsh,
2013:9-10) ................................................................................................................ 20
Figure 2.4 - A continuum of HRD strategic maturity (Millmore et al., 2007:356)....... 21
Figure 4.1 – Key HR Metrics (Mathis et al., 2016:70) ............................................... 32
Figure 4.2 – Metrics for primary HR responsibilities (Banks and CCH Inc., 2003:13)
................................................................................................................................. 33

3
List of Tables

Table 1.1 - Typology of Dominant HR Strategies – Ends (Bamberger, Biron and

Meshoulam, 2014:64)............................................................................................... 10
Table 1.2 - Typology of Dominant HR Strategies – Means (Bamberger, Biron and
Meshoulam, 2014:66-67) ......................................................................................... 11
Table 4.1 - Extract from Company spreadsheet showing details on leavers ............ 37

4
Abbreviations

Absence Frequency Rate - AFR

Control-Based Model - CBM

Gross Absence Rate - GAR

HR Information System - HRIS

HR outsourcing – HRO

Human Capital Committee – HCC

Human Resource Development – HRD

Human Resource Management – HRM

Human Resources - HR

Key Performance Indicators - KPIs

Labour Turnover - LTO

Learning Organisation – LO

Organisation Development – OD

PESTLE - Political, Economic, Sociological, Technological, Legal, Environmental

Resource-Based Model – RBM

Stability Index - SI

Strategic Human Resource Management – SHRM

Strategic Human Resources Development – SHRD

SWOT - Strengths, Weaknesses, Opportunities, Threats

5
1.0 BlackRock - Strategically Oriented HR Functions

1.1 Introduction

In our contemporary society, organisations are facing a lot of pressure in terms of

environmental changes, organisational changes and changes in workforce. To keep
up with these changes, there is a need for the human resource function to play a
critical role in helping organisations navigate through these transitions. However, in
order to assume this role, human resources (HR) will have to increase its real and
perceived value (May, 1998).

The role of HR has been evolving over the years. The shift from "personnel" to
"human resources," for example, was an approach to recognise people as the key
‘resource’ so as to achieve sustainable competitive advantage (Barney and Wright,
1998; Wright et al., 1994). This change in label was followed by a call for HR to
become a strategic partner with the leaders of the business – to have a seat at the
table and thus participate in decision-making (May, 1998).

Strategic orientation of human resource management (HRM) is essential for all

organisations regardless of its size and field. It establishes relationship between
HRM and strategic management of the organization and facilitates HRM to change
its image as a “cost centre” to that of a “strategic business partner”. Thus, strategic
human resource management (SHRM) can be defined as the organisation’s action
plan to align HRM with its strategic business objectives so that competitive
advantage can be achieved through its skilled, committed and well-motivated
workforce. This can only be possible if every HR function is strategically aligned
(Bagga and Srivastava, 2014).

The basic HR functions is summarised in Figure 1.1.

Strategic alignment implies that the HR team takes part in decision-making and
influences strategic people management choices in order to achieve the
organisation’s goals.

6
 Figure 1.1 - HRM functions (Kumar, 2010:12)

The strategic role of HR includes contributing information, ideas, and

recommendations during strategy formulation and ensuring that an organisation’s
HR strategy is consistent with its global strategy. (Werner and DeSimone, 2008:14).

1.2 HR strategy models

HR strategy refers to the patterns of decisions regarding the policies and practices
associated with the HR system, on an operational level (Bamberger, Biron and
Meshoulam, 2014:42).

To examine the link between corporate strategy and HR strategy, academics have
proposed three models, namely the control-based model, the resource-based model
and the integrative model, a mix of the first two typologies, to help us distinguish
between the ‘ideal’ types of HR strategy (Bratton and Gold, 2012:56).

7
1.2.1 The control-based model (CBM)

Bamberger, Biron and Meshoulam (2014:67-68) describes control-based typologies

as a means to differentiate between HR strategies in terms of the approach taken by
the organisation in its effort to manage the uncertainties inherent in the work
process, the process by which production inputs are turned into outputs. Bratton and
Gold (2012:56) further points out that this model focuses on the managerial action to
monitor and control employee performance in order to ensure a high level of labour
productivity and thus higher profitability.

1.2.2 The resource-based model (RBM)

From the resource-based view, employment relationship typologies differentiate

between HR strategies in terms of the degree to which the organisation view its
people as a key source of competitive advantage, and the logic underlying the
organisation’s effort to acquire, develop and retain its human assets (Bamberger,
Biron and Meshoulam, 2014:67).

1.2.3 The integrative model

Bamberger, Biron and Meshoulam (2014:59) have attempted to integrate the CBM
and the RBM, the former focusing on the strategy’s underlying logic of managerial
control, the latter focusing on the reward–effort exchange. They further argued that
this combined model, the integrative model, provides a framework to encompass the
key variants of HR strategy in a comprehensive yet parsimonious manner –
something that neither of the two can do individually.

By combining these two main dimensions of HR strategy, the integrative model

yields four ‘ideal’ types of dominant HR strategy as shown in Figure 1.2.

8
 Figure 1.2 - Categorising HRM strategies (Bratton and Gold, 2012:60)

The commitment HR strategy focuses on the internal development of employees’

competencies and outcome control. In contrast, the traditional HR strategy, which
parallels Bamberger and Meshoulam’s ‘secondary’ HR strategy, focuses on the
external recruitment of competencies and behavioural or process-based controls.
The collaborative HR strategy, which parallels Bamberger and Meshoulam’s ‘free
agent’ HR strategy, involves the organisation subcontracting work to external
independent experts (for example consultants or contractors), giving extensive
autonomy and evaluating their performance primarily in terms of the end results. The
paternalistic HR strategy offers learning opportunities and internal promotion to
employees for their compliance with process-based control mechanisms. Each HR
strategy represents a distinctive HR paradigm, or set of beliefs, values and
assumptions, that guide managers (Bratton and Gold, 2012:60-61).

These four HR strategies can also be distinguished from one another by considering
their respective ends and means (Bamberger, Biron and Meshoulam, 2014:63).
Figure 1.3 and 1.4 shows six key strategic ends and four main HR subsystems -
means to compare between the strategies.

9
Table 1.1 - Typology of Dominant HR Strategies – Ends (Bamberger, Biron and
Meshoulam, 2014:64)

With reference to the above HR strategy models, we can conclude that BlackRock
follows the integrative model which englobes four dominant HR strategies. To further
distinguish which among these four HR strategies BlackRock fits best, we can
consider these points about BlackRock: Leaders at BlackRock own the employee
engagement process. They also give value to targeted development and they have
developed an extensive process for talent reviews and promotions. Even managers
at BlackRock find themselves becoming more effective coaches, delegators and
drivers of high performance and they can take advantage of an array of programs as
they move up. In addition to these, BlackRock’s global Human Capital Committee
(HCC) helps to guide every aspect of talent management value chain across the
company by e.g. enhancing employees’ experience throughout the firm, identifying
and promoting high-potential talent (Ready, Hill and Thomas, 2014). It can thus be
deduced that BlackRock fits a combination of the commitment and paternalistic HR
strategy, engaged in promoting employees’ performance, growth and internal
promotion. This deduction can be backed up by relating the above-mentioned points
to the respective ends and means of each HR strategy presented in tables 1.1 and
1.2.

10
Table 1.2 - Typology of Dominant HR Strategies – Means (Bamberger, Biron and
Meshoulam, 2014:66-67)

11
1.3 Strategic planning / management process

Figure 1.3 – The strategic management process (Noe et al., 2015:56)

The strategic management process, as shown in figure 1.5, consists of 5 steps

(Goldman and Nieuwenhuizen, 2006):

i) Strategic direction – involves clearly stating the vision and purpose

statement of the organisation.
BlackRock’s mission and goals are clearly stated. It is clear about the
purpose for which it exists. And, to achieve its objectives, a committee,
HCC, was set up to help protect the firm’s culture and to enforce a set of
principles to shape the day-to-day operations.
ii) Situational analysis – involves analysing the organisation’s external
competitive environment and its internal operating environment for factors
that can affect the organisation’s sustainable growth. This is usually done
by a SWOT (Strengths, Weaknesses, Opportunities, Threats) or PESTLE
(Political, Economic, Sociological, Technological, Legal, Environmental)
analysis.

12
 This has surely been done effectively at BlackRock if we consider the fact
that BlackRock performed consistently in the aftermath of 2008 recession
while its competitors stumbled and retrenched.
iii) Strategy formulation – involves assessing the current resources, the need
for external resources and how to acquire them and prioritising issues
facing the company before the strategy is formulated.
BlackRock firmly believes that performance is the route to remaining
competitive. It follows the integrative model of HR strategy whereby HCC
guides its talent management policies and practices to ensure that the
right talent is put in the right role at the right time.
iv) Strategy implementation – involves putting into place the activities that
make up the strategy.
This falls within the purview of HCC at BlackRock. HCC has a set of
responsibilities which ensures the proper implementation of the strategy
formulated.
v) Strategy evaluation and control – involves measuring and evaluating
performance and making alterations where necessary. Situational analysis
is ongoing to foresee issues and tackle them in new emerging HR
strategies.
At BlackRock, executives measure everything - talent management,
development programs, engagement, rewards, and reputation. In this way,
they can ensure that the HR strategies are being properly implemented
and at the same time identify shortcomings which they can neutralise
when formulating new emerging strategies.

The above analysis shows that BlackRock follows the steps involved to develop its
HR strategy.

13
1.4 Strategic role of HR

Strategic HR constantly monitors the global market for future needs of customers
and offers proactive solutions and advice. It creates a favourable working
environment for employees to do things right the first time, with the aim to avoid
mistakes rather than to punish them. Strategic HR is output driven rather than input
oriented meaning that it analyses the end-results to measure the effectiveness of the
input. Strategic HR is mainly pre-occupied in moulding the employees of the future
today. It needs to acquire and develop employees with attributes that will allow them
to excel in this competitive society thus allowing the organisation to survive and
succeed in the future. Strategic HR aims to change employee behaviour and attitude
by directly connecting his appraisal (and eventually his pay) to activities pertaining to
corporate performance and customer satisfaction (Domingo, 2003).

The following facts about BlackRock relates to the above: BlackRock’s aim is to
create a better financial future for its clients. Thus, it ensures to never forget about
what it stands for. BlackRock’s line leaders own the employee engagement process
and its executives are committed at measuring everything - talent management,
development programs, engagement rewards and reputation. HCC believes that the
best talent policies respond to changing conditions on the ground and to cultural
differences across the globe. Thus, Donnell Green and HCC constructed a talent
review process that explicitly assesses employees on being collaborative leaders.

Hence, we can conclude that BlackRock is strategically oriented at a certain level

since it has put into play the HR strategies devised in its day-to-day operations so
that everyone shares the same vision.

14
1.5 Reinforcing its HR alignment

To reinforce its HR alignment, BlackRock can adopt the following measures:

i) It can become more technology-oriented in order to raise its innovative

side one step above its competitor (Gatignon and Xuereb, 1997:77).
ii) By turning to HR outsourcing (HRO), its HR can become free for more
strategic work (Walker, 2004:22).
iii) It can invest to upgrade its HR so that it can secure its position and keep
up with the pace of competitive market (Ulrich, 1998).

Some of the benefits of being strategically oriented are as follows:

(i) HR alignment with the organisation’s mission increases HR’s ability to

anticipate its customers’ needs, increases the firm’s ability to implement
strategic business goals, and provides decision-makers with critical
resource allocation information (USOPM, 1999).
(ii) Alignment with the workforce helps to enhance employee productivity and
engagement (Walker, 2004:51).
(iii) Alignment and connectivity helps managers better manage the work
(Walker, 2004:52).

1.6 Conclusion

In accordance with the above analysis, it can be said that BlackRock is strategically
oriented to a level that allows it to stay in front with its high performance culture and
attain sustainable competitive advantage. However, as stated previously, some
improvements can be incorporated into BlackRock. These are to upgrade its HR so
that they may react faster to environmental, organisational and workforce changes,
to turn more to technology in order to take its innovation to a new level. Also, by
resorting to HR outsourcing, BlackRock’s HR can concentrate more on its strategic
work. These can help it achieve even greater competitive edge.

15
2.0 Talent Management Approach and HRD at BlackRock

2.1 Introduction

Nowadays, we hear organisational leaders claiming that their employees are their
most important asset. Recognising the talent within an individual is one thing but
devising strategies to find the right niche for each employee in the organisation is no
simple task. Therefore, organisational leaders turn to talent management for an
effective solution (Paradise, 2009).

Paradise (2009) defines talent management as a holistic approach to optimising

human capital, which enables an organisation to drive short-term and long-term
results by building culture, engagement, capability, and capacity through integrated
talent acquisition, development, and deployment processes that are aligned to
business goals.

Figure 2.1 shows the different activities involved in the talent management process.

Figure 2.1 – Talent management system (Elegbe, 2016)

16
HR leaders are closely associated with higher management to attract, hire, develop
and retain talent. HR needs to pay close attention as to how the organisation’s
culture supports talent. HR also plays a role in change management. It addresses
four diverse talent management activities to drive this change: recruitment,
performance management, leadership development and organisational strategy. In
this role, HR manages four risks to the business namely vacancy risk, readiness risk,
transition risk and portfolio risk. Finally, proactive HR leaders take a holistic
approach to talent management (Agarwal, 2015:24-31).

Talent management helps to recruit good talent, grow and develop existing
employees, and retain them in an organisation. It also ensures that the key positions
in the organisation are planned for and that there is no shortage of skilled employees
(Murray, 2016).

Organisations that successfully align talent management to their organisational

strategy may create the competitive advantage required to sustain and grow. They
reap additional benefits as shown in Figure 2.2.

To develop a talent management approach for an organisation, the four steps that
need to be considered are (i) Definition (ii) Focus (iii) Process (iv) Action (Campbell
and Hirsh, 2013:9-10).

Werner and DeSimone (2011:4) defines human resource development (HRD) as a

set of systematic and planned activities designed by an organisation to provide its
members with the opportunities to learn necessary skills to meet current and future
job demands.

By investing in the talent management, an organisation ensures that its employees

get the opportunities to learn and develop the essential skills to achieve its short-
term and long-term goals. The organisation thus becomes mature in HRD.

17
Figure 2.2 Benefits of having talent management aligned with business strategy
(PMI, 2013:5)

2.2 Talent Management at BlackRock

At BlackRock, each of the activities involved in the talent management process, as

shown in Figure 2.1, are carried out as follows:

i) Recruitment
Leaders of various businesses are in charge of talent tracking and find the
right talent to fit BlackRock.

ii) On-boarding
HCC helps to enhance employees’ experience throughout the firm by
leading focus groups and hence allow them to become effective members
of the firm.

18
iii) Employee engagement
This process is performed by the line leaders at BlackRock to ensure that
the employees get the best working conditions so that they can give the
best of themselves to achieve organisational goals.

iv) Performance management

This is done by executives who are committed to measure everything, one
of which is talent management. In so doing, the employees’ performance
is measured and ensured that it is aligned with the organisation’s
objectives.

v) Succession planning
Donnell Green together with the HCC devised a talent review process that
explicitly assesses employees on being collaborative leaders. They
employees are thus presented with opportunities to grow.

vi) Learning and career development

The HCC manages a robust process of employee and managerial
development which gives importance to targeted development.

vii) Compensation
Executives are also in charge of measuring rewards. They can thus
guarantee that the employees are being rewarded in respect to their
contribution to the organisation. This will help the firm secure its talented
employees.

viii) Evaluation and report

HCC improved the firm’s approach to identifying and promoting high-
potential talent.

ix) Strategic business objectives

HCC is charged of protecting the firm’s one-company culture and ensures
that the four guiding principles shape day-to-day operations and
behaviours.
19
 x) Workforce planning
This is done by the leaders of the various businesses to ensure that
BlackRock has the right talent to achieve its immediate and long term
goals.

xi) Competency management

BlackRock’s HCC does this by prioritising leadership behaviours that
matter. BlackRock believes in their “leaders developing leaders” culture.

2.3 Four-step approach to talent management

Figure 2.3 The four-step approach to talent management (Campbell and Hirsh,
2013:9-10)

BlackRock believes that talent management is one of the differentiators that keep it
out in front. Talent management helps it put the right talent in the right roles at the
right time. Therefore, HCC was formed to guide its talent management policies and
practices. Various actions, as described in section 2.2, are being taken by BlackRock
to ensure that talent management is being done properly. Since BlackRock believes
more in performance rather than chance, its executives are committed to measure
everything - talent management, development programs, engagement, rewards or
reputation. Finally, it believes that a game-changing talent strategy will help attract
top talents.

20
2.4 HRD and Strategic HRD

Human resource development encompasses activities and processes which are

intended to have an impact on organisational and individual learning (Millmore et al.,
2007:354).

McCracken and Wallace (2000:281) defines strategic human resources development

(SHRD) as the creation of a learning culture, within which a range of training,
development and learning strategies both respond to corporate strategy and also
help to shape and influence it.

Figure 2.4 shows difference between training, HRD and SHRD whereby strategic
maturity decreases progressively when moving towards HRD and training.

Figure 2.4 - A continuum of HRD strategic maturity (Millmore et al., 2007:356)

21
2.4.1 Garavan’s 9 characteristics of SHRD (Millmore et al., 2007:356-357)

1. Integration with organisational missions and goals – where HRD is

systematically integrated with wider business planning in a supporting role so
that sight is not lost of organisational strategic objectives when developing
HRD interventions.
2. Top management support – where the strategic integration of HRD requires
the active support and participation of senior management in order to
become a reality.
3. Environmental scanning – where the HRD function has the capacity to
continuously analyse the external environment in order to identify both
opportunities and threats to business and HRD strategies and thereby
reinforce access to top table planning discussions.
4. HRD plans and policies – where systematic integration requires the
formulation of HRD plans and policies to support wider business needs. For
this planning to assume strategic status it must incorporate environmental
scanning and scenario planning which, when used to regularly and
systematically inform strategy formulation, can lead to HRD assuming a
proactive, shaping function rather than simply a reactionary one.
5. Line manager commitment and involvement – consistent with the
development of SHRM, the line manager takes centre stage in identifying
and addressing the HRD needs of subordinates. This requires his or her
active commitment and participation, where any relegation of their HRD roles
and responsibilities in their list of managerial priorities will jeopardise its
successful delivery.
6. Existence of complementary HRM activities – these cover such areas as
improving HRP, recruiting higher-calibre employees, more exacting
performance appraisal and identification of HRD needs, and individually and
organisationally focused career development plans.
7. Expanded trainer role – where to support a strategic orientation HRD
specialists need to develop their roles to become more proactive,
interventionist, central and influential. This is likely to be embodied in the
movement from training provider to a consultant, innovator role.

22
 8. Recognition of culture – where the onus is on the HRD function to develop its
activities in line not only with organisational strategy but also with
organisation culture. This includes the key role of shaping HRD activities to
maintain and change corporate culture.
9. Emphasis on evaluation – where, in order to develop its strategic relevance,
the HRD function must evaluate its activities so that its strategic contribution
and relevance can be assessed.

With reference to the Garavan’s 9 characteristics of SHRD described in section

2.4.1, it can be said that BlackRock fulfils some of them to some extent, namely: (i)
Integration of organisational missions and goals and recognition of culture by having
HCC protect its one-company culture and also ensuring the four guiding principles
shape day-to-day operations and behaviours, (ii) Top management support is
obtained by having BlackRock’s global head of human resources, Jeff Smith and its
vice chairman, Ken Wilson, as members of HCC, (iii) Environmental scanning and
HRD plans and policies which are catered by HCC which ensures the best talent
policies are devised so that they can respond to changing conditions on the ground
and to cultural differences across the globe, (iv) Line manager commitment and
involvement by HCC ensuring that leaders are assessed not only concentrate on
their technical performance but also on how live by and teach the firm’s guiding
principles, (v) Existence of complementary HRM activities. Although talent tracking
and workforce planning is performed by leaders of various businesses, HCC
presides over a robust process of employee and managerial development and give
importance to targeted development, and (vi) emphasis on evaluation is put by
executives who are committed to measuring everything which includes talent
management and development programs.

BlackRock should strive to become more strategically mature towards HRD so as to

better influence and shape its corporate strategy. In this way, it can maintain its
competitive advantage on the market or even take it to new levels.

By having a strategically mature HRD function, BlackRock can strengthen its

learning culture so that the employees can develop towards to their full potential so
that there is mutuality between individual and organisational growth (Millmore et al.,

23
2007:355). This will ease the talent management process hence making it more
effective.

2.5 Conclusion

Talent management plays a vital role in allowing a firm ascertain its competitive edge
on both the local and global market. It does so by attracting talented employees,
further training them and retaining them so that their high performance can reflect on
the organisation’s performance and in the process ensure return on investments in
training and development (Withers, 2014). BlackRock certainly knows that talent
management has got its back when it comes to staying in front. That is why it has set
up the HCC to manage its talent policies and practices. It also believes that its secret
weapon is in its superior talent strategies characterised by deep commitment from
the top executive team, broad-based engagement, and line accountability, with a
“leaders developing leaders” culture. BlackRock is involved in HRD through its global
HCC. It is mature in this regard but there is still room for some more improvement.
By becoming more strategically mature, BlackRock’s training and development
programs can escalate to become a potentially proactive activity directed at
improving corporate effectiveness (Millmore et al. 2007:354).

24
3.0 Learning Organisation and Organisation Development

3.1 Introduction

To compete in this information-saturated environment we are currently living in, it is

necessary to remain dynamic, competitive, and to continue to look for ways to
improve organisations (Mason, 2017). As Marquardt (2011) points out, continuous
improvement implies that every major leap becomes an opportunity to learn and
therefore prepare for the next major leap. If an organisation learns faster than its
competitors, the time span between leaps reduces and progress accelerates.

A learning organisation (LO) aims at achieving continuous improvement, an

“organisation wide process of focused and sustained incremental innovations”
(Bainbridge, 2000:12). Senge (1990) defined a learning organisation as an
organisation that is continuously expanding its capacity to create its future and
change in response to new realities (Chalofsky et al., 2014:xlv).

Organisation development (OD) is a planned effort, initiated by process specialists to

help an organisation develop its diagnostic skills, coping capabilities, and linkage
strategies in the form of temporary and semi-permanent systems, and a culture of
mutuality (Pareek and Rao, 1988).

Learning organisations are open systems and are therefore more accustomed to
planned developmental changes compared to non-learning organisations which
would show resistance to this process. Organisation development, if applied to key
areas of learning organisations, assists to further develop such organisation
(Theodore, 2013).

25
3.2 Characteristics of the Learning Organisation (Robbins et al., 2001:495-497)

The characteristics of the learning organisation are as follows:

1) Flat organisational structure

A LO has a greater level of interdependence in which people are required to
learn together irrespective of the hierarchy while traditional organisations
consist of a strong hierarchical structure.

2) Open communication
In traditional organisations, a top-down communication style is used most of
the time where the organisational culture discourages open communication. In
a LO, people openly communicate with each other (across vertical and
horizontal boundaries) without fear of criticism or punishment.

3) Teamwork
In most organisations people work as individuals to fulfil specialised functions.
Members of a LO channel their personal self-interest and fragmented
departmental interest to work together to achieve the organisation’s shared
vision.

4) Empowerment
For the greatest part of the development of management science it was
believed that it is the role of management to make decisions, and employees
to execute these decisions. In the LO, all employees are empowered to take
decisions and to learn from the successes and failures of these decisions.

5) Inspired leadership
In traditional organisations, there is a lack of leadership. A LO cannot exist
without its senior managers’ commitment and leadership. They must set the
example by becoming learners themselves and inspire others to learn.

6) Innovation and change

Whilst many organisations find it difficult to change and improve, learning
organisations thrive on change. A creative organisational culture encourages
innovation, change, and improvement.

26
7) Shared vision
In business today, it is often asserted that management has “a vision for the
future”. This is indeed the case – management has a vision, but this vision is
often not shared by all the members of the organisation. The LO, however,
has a collective sense of identity, a fundamental purpose of vision, which is
shared by each and every employee of the company.

8) Systems approach
The traditional system of fragmentation means that the collective intelligence
that could have been used is largely eroded by the organisation. Companies
are therefore, not performing at their optimum levels. In the LO, articulating
the total organisation from a systems approach represents an opportunity to
break this vicious cycle.

9) Job satisfaction and commitment

Lack of job satisfaction results in a low level of employee commitment to
performance and achievement of organisational goals. The symptoms of
these problems are low productivity, high absenteeism, labour unrest,
industrial action, and high labour turnover. The LO has an organisational
culture where employee pride is nurtured by instituting formal and informal
ways of improving job satisfaction and employee commitment.

10) People oriented

Traditional organisations focus on achieving production targets, often at the
expense of employees’ well-being and needs. The LO seeks to integrate task
and people factors.

11) External focus

Most companies are very internally focused. They only look at their own
problems and situations without considering the realities of the wider business
and global goal. Learning organisations, however, are highly externally
focused. They continuously study their competitors and other organisations,
both locally and abroad.

27
12) Technology driven
Many companies find it difficult to adapt to technological innovations. In the
learning organisation, a concerted effort is made to use the most advanced
technology to improve business processes, products, and services. Not only
is investment in technology very high but employees are continuously trained
to use the latest technology.

13) Learning Opportunities

In traditional organisations, learning is restricted to training courses offered to
some employees. The LO encourages learning at all levels of the company.

14) Action and result focus

In some companies, learning constitutes a particular event like a training
course with a clear beginning and end. There is very little transfer of training
and skills to the workplace. Learning organisations provide opportunities for
employees to apply skills immediately in order to achieve improvement in
performance.

15) Customer oriented

Whilst traditional organisations lack a customer focus, the LO is proactive in
ensuring that all employees are extremely customer oriented. In fact, most of
the learning that takes place revolves around learning more about customer
needs and implementing systems and methods to improve customer
satisfaction.

28
3.3 Characteristics of Organisation Development (Brown and Harvey, 2006:4)

The characteristics of organisation development are as follows:

1) Change
OD is a planned strategy to bring about organizational change. The change
effort aims at specific objectives and is based on a diagnosis of problem
areas.

2) Collaborative Approach
OD typically involves a collaborative approach to change that includes the
involvement and participation of the organisation members most affected by
the changes.

3) Performance Orientation
OD programs include an emphasis on ways to improve and enhance
performance and quality.

4) Humanistic Orientation
OD relies on a set of humanistic values about people and organisations that
aims at making organisations more effective by opening up new opportunities
for increased use of human potential.

5) Systems Approach
OD represents a systems approach concerned with the interrelationship of
divisions, departments, groups, and individuals as interdependent subsystems
of the total organisation.

6) Scientific Method
OD is based upon scientific approaches to increase organisation
effectiveness.

29
3.4 Similarities and Relationship between LO and OD

Since LO and OD are closely related, they share similar benefits such as increased
communication, employees sharing the same company goals and values, innovation,
teamwork, learning opportunities, increased job satisfaction and increased profit, all
of which allowing the organisation to improve continuously by welcoming change,
both from the internal and external environment, and influencing it for renewal
(Janakiraman, 2008; HPU, 2015). These benefits help the organisation learn faster
than their competitors and develop a customer responsive culture and hence create
a competitive advantage for organisation (Sarangi, 2016:399).

According to Golembiewski (2000:1006), the LO is a metaphor which calls for

systemic efforts, co-creative models of OD practice and of dialogue, and
transformative theories of learning and change. The OD effort to create a LO is one
in which the goal is to have planned changes which will help the organisation face
challenges that it will meet 10 or 20 years later. The LO is a compelling argument for
redoubling efforts to move beyond short-term work aimed only at the level of the top
management team.

3.5 Conclusion

It can be said that both LO and OD have a lot in common. In fact, by applying OD to
an organisation, planned changes are incorporated into it so that the organisation
moves towards learning organisation. Thus, both of them bring about benefits to the
organisation in terms of dynamism, increased learning capabilities, being up to date
with the competitive environment, and achieving sustainable competitive advantage.

30
4.0 HR Metrics

As part the various activities performed by HR professionals, HR measurement help

them to measure how much their functions add value by setting levels of measure to
each activity and verifying the statistical link among the levels set. HR measurement
can be divided into two categories: efficiency measures and effectiveness measures,
the former focussing on how well HR performed some specific activities e.g cost per
hire, time to fill a vacant post, training costs, etc., while the latter measures the
contributions of HR to the success of the business (Storey, Wright and Ulrich,
2009:176).

Metrics are simply a way to measure and track key performance indicators (KPIs)
within an organisation over time. If applied to HR, HR metrics help assess the
performance of an organisation’s largest investment, its human capital, in terms of
hiring, training and retaining employees. Using cost, quantity, quality, timeliness and
other designated goals, metrics can be developed to track efficiency and
effectiveness (Mathis et al., 2016:70). Figure 4.1 shows a number of key HR metrics
and figure 4.2 shows some metrics used for primary HR responsibilities and how to
calculate them.

HR metrics may be classified in three different types: diagnostic measures,

evaluative measures and human capital measures.

Diagnostic measures are generally used by management to measure a variety of HR

initiatives on a regular basis e.g. employee turnover (Wärnich et al., 2015).

Evaluative measures mainly focus on the measurement of effectiveness e.g.

determining the reduction in recruitment costs for jobs vacated by retirees to
measure the effectiveness of the use of internal staffing and succession planning.

Human Capital metrics are those metrics that have an impact on the whole business,
e.g. the impact of management practices on the workforce (Wärnich et al., 2015).

31
Metrics help managers manage better and they allow HR managers to concentrate
their limited resources on tools and strategies that have the most business impact
(Sullivan, 2005:199).

Figure 4.1 – Key HR Metrics (Mathis et al., 2016:70)

32
Figure 4.2 – Metrics for primary HR responsibilities (Banks and CCH Inc., 2003:13)

33
4.1 HR metrics in recruitment

Recruitment refers to those activities undertaken by an organisation to find and

attract potential employees.

There are various metrics which provide insight and guide decision-making on
recruitment (Akingbola, 2015:141).

Some commonly used recruitment metrics include measures of cost per hire, time to
fill a position, etc.

4.2 HR Metrics in absenteeism

Absenteeism refers to any failure by an employee to attend work as scheduled or to

stay at work when scheduled (Mathis et al., 2016:177).

This causes an organisation to suffer from a decrease in productivity and puts

pressure on those who have to meet the needs. In order to reduce these costs, an
organisation must monitor absence rates (Banfield and Kay, 2008:227).

Two generally used metrics to measure absenteeism are:

i) Total time lost or gross absence rate (GAR):

It gives percentage of work time lost due to absenteeism

ii) Absence frequency rate (AFR):

AFR gives an indication of the number of absence incidents per employee whereby
an incident refers to one spell of absence, irrespective of the number of days
involved (Nel and Werner, 2014).

34
4.3 HR metrics in labour turnover and retention

Labour turnover involves the number of staff leaving and being replaced, while
retention designates the number of staff staying. It is therefore an important issue in
the industry as it is expensive to the company, reduces morale among employees,
lowers quality/productivity and presents advantages to the competition. However, it
is not always negative as it is necessary where work is seasonal and also results in
poor performers leaving and allowing ‘fresh blood’ into the organisation (Robinson,
2009:64).

According to Nel and Werner (2004), labour turnover can be divided into controllable
and uncontrollable labour turnover. The former is the only one included in measure
of labour turnover and it includes voluntary resignations and dismissals while the
latter includes death, permanent illness, pregnancy, retirement and retrenchment.

Labour turnover is often measured over a 12-month period to smooth out seasonal
differences, but can be tracked weekly or monthly to provide a more detailed and
contemporary understanding of what is happening (Banfield and Kay, 2008:229).

Labour turnover (LTO) may be calculated as follows:

V+D (voluntary resignations and dismissals) over a given period

LTO = x 100%
Number of employees at the period end

Equation 4.1 (Banfield and Kay, 2008:229)

For equation 4.1, the data required are number of employees who left the firm due to
voluntary resignations and dismissals over a given period and the number of
employees at the period end.

This is usually obtained from the organisation’s HR information system (HRIS) or

from spreadsheets for smaller firms which collect and maintain data about their
employees.

If the details of termination of employments can be analysed in conjunction with

other simple data items (such as location, length of service, grade, gender and so
on) then the organisation has the basis for potentially sophisticated labour turnover
analysis (Saridakis and Cooper, 2016:89).

35
Retention is a useful measure to accompany turnover and can give a better
reflection of the retention of employees than can turnover. It is a measure of the
percentage of employees with more than a stipulated amount of service.

Retention is usually calculated using the stability index (SI) which gives the retention
rate of experienced employees.

No. of employees with over one year service over a given period
SI = x 100%
No. of employees employed at period end

Equation 4.2 (Banfield and Kay, 2008:230)

For equation 4.2, the data required is the number of employees who worked at the
firm for more than one year and the number of employees employed at the period
end and can be obtained from the HRIS and spreadsheets.

The data collection and data handling is done in the way as is done for retention.

4.4 Example of application of HR metrics in labour turnover and retention

ABC Electrical Contracting Ltd had 80 employees including a General Manager, a

HR Manager, two HR Officers, an Accounts Manager, two Accountants, two
Secretaries, two Project Managers, three Senior Engineers, two Junior Engineers,
two Trainee Engineers, five Draughtsmen, three Site Supervisors, three
Storekeepers, five Team Leaders and 46 Electricians of various grades comprising
of ten grade 1, 15 grade 2, 15 grade 3 and 6 helpers. Over a period of one year, 15
employees left the company. Out of the 65 employees remaining, 58 have over one
year service. During that same period, two new employees joined.

Details of the 15 leavers are given in table 4.1.

Using equations 4.1 and 4.2 and the given information, LTO and SI are calculated as
follows:

14
LTO = x 100%
67

= 20.9%

36
 58
SI = x 100%
67

= 86.6%

Table 4.1 - Extract from Company spreadsheet showing details on leavers

From table 4.1, it can be observed that one Grade 2 Electrician was dismissed onky
after 3 months. This may be due to failure to abide to company rules e.g. high rate of
lateness or absenteeism or misconduct. One Grade 1 Electrician was dismissed
after 1.5 years which may be due to gross misconduct or negligence. As for the 12
voluntary resignations, possible reasons for departure could be personal
dissatisfaction with the job, employer or working conditions, personal reasons e.g.
family obligation, education, or health, etc. or better job offer with better conditions
(Sanghi, 2014:160).

The fact that only two employees were hired shows that the company can manage
without replacements. Possible reasons may be due to limited amount of projects, to
increase profitability or HR department is tracking new talents.

37
From the calculations, the LTO is 20.9% and the SI is 86.6%. It can be deduced that
it is mostly shorter serving employees who are leaving and that retention seems to
be better among longer serving employees (Banfield and Kay, 2008:230). Some
factors of this low turnover and high retention rate could be career opportunities,
salary, corporate culture, management recognition and a comfortable workplace
(Sanghi, 2014:160). This shows the importance of assessing both turnover and
retention against the overall change in numbers employed.

Exit interviews can be performed by the HR department to get feedbacks or exit data
from leavers. These can help them to devise better recruitment plans, improve
induction and employee engagement process for employees with low service time.
As for high service time employees, talent management strategies can be improved
to meet market needs and better retain existing employees.

Once the new strategies have been implemented, the measures need to be
calculated again after a targeted period and the results to be analysed to check the
effectiveness of these strategies.

4.5 Conclusion

Metrics, when applied properly, can be a useful tool in assessing the organisation’s
efficiency and effectiveness. They help diagnose and keep track of issues facing the
firm so that strategies can be formulated to reduce or eliminate them. Thus, the firm
can continuously evaluate its performance, improve it and hence keep a sustainable
competitive advantage. It has also been seen that recruitment, absenteeism, labour
turnover and retention are essential parameters to be measured, evaluated,
controlled and monitored for a firm to run smoothly. Labour turnover and retention
metrics allow organisations to keep track of its human capital, determine the cause
for departure through exit interviews and help HR department review its strategies.

38
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Appendix – Case Study

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