3 THE MANAGER’S ROLE IN STRATEGIC HUMAN RESOURCE MANAGEMENT
Why Strategic Planning is Important to All Managers The Hierarchy of Goals Fundamentals of Management Planning The Planning Process: 1. Set an objective 2. Make forecasts 3. Determine what your alternatives are for getting from where you are now to where you want to be 4. Evaluate your alternatives 5. Implement and evaluate your plan *There is usually a hierarchical aspect to managerial planning Business Plan-provides a comprehensive view of the firm’s situation today and of its company-wide an departmental goals and plans for the next 3 to 5 years -“long-term”/”strategic” plan Contents of typical business plan: 1. Description of the business (ownership, products/services) 2. The marketing plan-specifies the nature of the product/service; 4PS: product, price, promotion, place 3. The financial plan 4. The management and/or personnel/ human resource plan 5. The Production/Operations Plan How Managers Set Objectives · Setting SMART Goals (specific, measurable, attainable, relevant, timely) · How to Set Motivational Goals Goal-setting studies 1. Assign specific goals 2. Assign measurable goals 3. Assign challenging but doable goals 4. Encourage participation *But when (as is usually the case) the participatively set goals are more difficult than the assigned ones, participatively set goals usually produce higher performance · Using Management by Objectives Management by Objectives (MBO)-the supervisor and subordinate jointly set goals for the latter and periodically assess progress toward those goals -a formal oragnizationwide program in which managers at each organizational level meet with the subordinates to hammer out goals that make sense in terms of each department’s assigned goals
5 steps of MBO Process:
1. Set organization goals 2. Set department goals 3. Discuss department goals 4. Set individual goals 5. Give feedback · Using the Management Objectives Grid 4 things why use the MBO grid: 1. To list their supporting goals 2. To clarify what your own goals should be 3. What their goals are (for subordinates) 4. To track subordinates’ progress (start and end date) The Strategic Management Process Strategic plan-the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage Strategy-a course of action Strategic management-the process of identifying and executing the organization’s strategic plan, by matching the company’s capabilities with the demands of its environment 7 steps in strategic management process 1. Define the Current Business 2. Perform External and Internal Audit Environmental scanning worksheet-a simple guide for compiling relevant information about the company’s environment -includes things like economic competitive, and political trends SWOT chart 3. Formulate a New Direction Vision statement-a general statement of the firm’s intended direction and shows, in broad terms, “what we want to become” Mission statement-summarizes your answer to the question, “What business are we in?” -vertically integrate, product scope, (diversify), geographic coverage, competitive advantage 4. Translate the Mission into Strategic Goals 5. Formulate Strategies to Achieve the Strategic Goals 6. Implement the Strategies -strategies into action 7. Evaluate Performance Improving Productivity Through HRIS: Using Computerized Business Planning Software Types of Strategies 1. Corporate-wide strategic planning-identifies the portfolio of businesses that, in total, comprise the company and the ways in which these businesses relate to each other 1. concentration (single) business-the company offers one product or product line, usually in one market -market penetration, product development, horizontal integration (which means acquiring control of competitors in the same or similar markets with the same or similar products) 2. diversification -related diversification-diversifying so that a firm’s lines of businesses still possess some kind of fit -conglomerate diversification-diversifying into products or markets not related to the firm’s current businesses or to one another 3. vertical integration-firm expands by, perhaps, producing its own raw materials, or selling its product direct 4. consolidation-reducing the company’s size 5. geographic expansion-taking the business abroad 2. Business unit (competitive) strategic planning-identifies how to build and strengthen the business’s long-term competitive position in the marketplace Competitive advantage-any factors that allows a company to differentiate its product or service from those of its competitors to increase market share 1. Cost leadership 2. Differentiation 3. Focuses 3. Functional (departmental) strategic planning-identify the broad activities that each department will pursue in order to help the business accomplish its competitive goals Strategic fit- Michael Porter: the idea that each department’s strategy needs to fit the parent business’s competitive aims The Top Manager’s Role in Strategic Planning *devising a strategic plan is top management’s responsibility *Top management must decide what businesses the company will be in and where, and on what basis it will compete Departmental Manager’s Strategic Planning Roles 1. They Help Devise the Strategic Plan *the heart of strategic planning is gathering information on the company’s strengths, weakness, opportunities, and threats Offshoring-the exporting of jobs from developed countries to countries where labor and other costs are lower 2. They Formulate Supporting, Functional/Departmental Strategies 3. They Execute the Plans Strategic Human Resource Management Strategic Human Resource Management-formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims -strategic plan, implies certain workforce requirements, HR strategies (policies, practices) *The human resource manager identifies the measures he or she can use to gauge the extent to which its new policies and practices are actually producing the required employee skills and behaviors Strategic HR in Action: Improving Mergers and Acquisitions 1. Using HRM 2. Due Diligence Stage-before finalizing a deal, it is usual for the acquirer (or merger partners) to perform “due diligence” reviews to assure they know what they’re getting into -includes reviewing things like organizational culture and structure, employee compensation and benefits, labor relations, pending employee litigation human resource policies and procedures and key employees 3. Integration Stage-include choosing the top management team, ensuring top management leadership, communicating changes effectively to employees, retaining key talent, and aligning culture 4. Using HR Consultants 1. Manage the deal costs 2. Manage the messages 3. Secure the top team and key talent 4. Define and implement an effective HR service delivery stage 5. Develop a workable change management plan 6. Design, and implement the right staffing model 7. Aligning total rewards Strategic Human Resource Management Tools 1. Strategy map -shows the “big picture” of how each department’s performance contributes to achieving the company’s overall strategic goals -helps the manager understand the role his or her department plays in helping to execute the company’s strategic plan 2. HR scorecard-is not a scorecard -refers to a process for assigning financial and nonfinancial goals or metrics to the human resource management-related chain of activities required for achieving the company’s strategic aims and for monitoring results Computerized Scorecard process helps quantify the relationship between: 1. The HR activities (mount of testing, training) 2. The resulting employee behaviors (customer service) 3. The resulting firm-wide strategic outcomes and performance (customer satisfaction, profitability) 3. Digital Dashboard -presents the manager with desktop graphs and charts, and so a computerized picture of where the company stands on all those metrics from the HR Scorecard process Translating Strategy into Human Resource Policies and Practices: Einstein Medical Example 1. New Strategy 3 important organizational outcomes: initiate, adapt, deliver 2. New Employee Competencies and Behaviors -dedicated, accountability, apply new knowledge 3. New Human Resource Policies and Practices New Human Resource Programs: 1. New training program 2. Enriching work 3. Appropriate returns 4. Improved selection, orientation and dismissal procedures Building Your Own High-Performance Work System High-Performance Work System (HPWS)-a set of human resource management policies and practices that promote organizational effectiveness 4 things about high-performing firms’ human resource management systems 1. It helps demonstrate why metrics are important Human resource metric-the quantitative measure of some human resource management yardstick such as employee turnover, hours of training per employee or qualified applicants per position 2. The things human resource systems must do to be high-performance systems - For example, they hire based on validated selection tests fill more jobs from within, organize work around self-managing teams and extensively train employees 3. High-performance practices generally aspire to help workers to manage themselves - the point of the recruiting, screening, training, and other human resources practices is to foster a trained, empowered, self-motivate and flexible workforce 4. The notable differences between high-performance and low-performance companies’ human resource management systems - For example, high-performing companies have more than 4 times the number of qualified applicants per job than do low performance Benchmarking-means comparing and analysing the practices of high- performing companies to your own in order to understand what they do that makes them better
Tools for Evidence-Based Human Resource Management
1. Human resource audits 2. Benchmarking Science-a way of going about doing something/methodology Ground Rules of Science 1. Objectivity 2. Experimentation 3. Quantification 4. Explanation 5. Prediction 6. Replication 4 steps in experimentation: 1. Setting up a hypothesis Hypothesis-a tentative explanation of what to expect, usually based on prior theories and observations 2. Developing a method for testing the hypothesis 3. Gather the data Data-actually making the observations and measuring what you find 4. Drawing conclusions based on the findings Quantification-they measure or assign numerical values to , the phenomenon that they’re studying HR audit-an analysis by which an organization measure where it currently stands and determines what it has to accomplish to improve its HR function Types of HR Audits: 1. Compliance audits-how well are we complying with relevant laws and regulations? 2. Best practices audits-how do our recruitment practices, hiring practices and so on compare to those of “best practices” companies? 3. Strategic audits-are our HRM practices helping us to achieve the strategic goals, by fostering the required employee behaviors 4. Function Specific audits-audits here concentrate on one or more specific human resource management areas, such as compensation or training and development The HR Audit Process 1. Decide on the scope of the audit 2. Draft an audit team 3. Compile the checklists and other tools that are available 4. Know your budget 5. Consider the legalities 6. Get top management support 7. Develop the audit checklist 8. Use the questionnaire to collect the data 9. Benchmark the findings 10. Provide feedback 11. Create action plans 3 illustrative sets of HR audit checklist areas and checklist items 1. Personnel Files 2. Wage and hour compliance 3. Headcount HR Metrics and Benchmarking Benchmark-compare your results to those of comparable companies Types of metrics -sales per employee, absence rate, cost per hire, health care costs per employee 1. Absence Rate 2. Cost per Hire 3. Health Care Costs per Employee 4. HR Expense Factor 5. Human Capital ROI