The Strategic Role of Human Resource Development

1-1

Module 01

The Strategic Role of Human Resource Development

Outline Š Strategic Planning and Strategic Trends „ „ „ „

The Basics of Strategic Planning The Strategic Planning Process Basic Strategic Trends Managerial Consequences of the Basic Trends

Outline Š HR’s Strategic Role „ „ „ „ „

„

HR’s Evolving Role Strategic Human Resource Management HR’s Role as a Strategic Partner HR and Technology HR and Employee Performance and Commitment Research Insight

After Studying This Chapter, You Should Be Able To: Š Utilize your understanding of Human Resources Management to better understand human resources development. Š Explain what human resource development is and how it relates to Human Resources Management. Š Explain how human resources development relates to the management process. Š Give at least eight examples of how HR management concepts and techniques can be of use to all managers. Š Illustrate the HR management responsibilities of line managers and staff (HR) managers.

The Management Process Š Š Š Š Š

Planning Organizing Staffing Leading Controlling

Management Process Š Planning „ „ „

Goals and standards Rules and procedures Plans and forecasting.

Š Organizing „ „ „ „ „

Tasks Departments Delegating Authority and communication Coordinating

Management Process Š Staffing „ „ „ „ „ „ „ „

Hiring Recruiting Selecting Performance standards Compensation Evaluating performance Counseling Training and developing

Management Process Š Leading „ „ „

Getting the job done Morale Motivation

Š Controlling „ „ „

Setting standards Comparing actual performance to standards Corrective action

HRM Function

Human Resource Management is the process of acquiring, training, appraising, and compensating employees and attending to their labor relations, health and safety, and fairness concerns.

HRM People Functions Include: Š Š Š Š Š Š Š

Job analyses Labor needs Recruit Select candidates Orient and train Wages and salaries Incentives and benefits

Š Š Š Š Š Š Š

Performance Communicate Train and develop Employee commitment Equal opportunity Health and safety Grievances/labor relations

HRM is Important to all Managers. Don’t Let These Happen to You! Š Š Š Š Š Š Š Š Š

The wrong person High turnover Poor results Useless interviews Court actions Safety citations Salaries appear unfair Poor training Unfair labor practices

HR – It’s All About Results “For many years it has been said that capital is the bottleneck for a developing industry. I don’t think this any longer holds true. I think it’s the work force and a company’s inability to recruit train and maintain a good work force that does constitute the bottleneck….” F. K. Foulkes

Line and Staff Aspects of HR Š Authority „ „ „

Making decisions Directing work Giving orders

Š Line Managers „

Accomplishing goals

Š Staff Managers „

Assisting and advising line managers

Line Manager’s HR Jobs Š Š Š Š Š Š

The right person Orientation Training Performance Creativity Working relationships

Š Policies and procedures Š Labor costs Š Development Š Morale Š Protecting

Staff Manager’s HR Jobs Š Line authority Š Implied authority Š Functional control Š Employee advocacy

HR Department Organizational Chart

Strategic Planning and Trends Š Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.

Recall Strategic Planning There are three levels of strategic planning as shown below Corporate Strategy

Business Strategy

Business Strategy

Functional Strategies

Business Strategy

Business Strategy

The Strategic Planning Process Š SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats Š Best strategic plans balance a company’s Strengths and Weaknesses with the Opportunities and Threats the firm faces Š Basic strategic trends „ Globalization „ Technological advances „ The nature of work „ The workforce

Recall Importance of Globalization

80 70 60 50 40

% fortune 500 with a global presence

30 20 10 0 1920

1950

1970

2000

Technological Advances and the Nature of Work Š Technology mandates and enables companies to be more competitive Š Knowledge intensive jobs in industries such as aerospace, computers, telecommunications, and biotechnology are replacing factory jobs in steel, auto, rubber and textiles

Carrier

The Workforce Itself is Diverse

Asian Black Hispanic Men Women

US Department of Labor website

Consequences of these basic trends Global expansion Technology Strengths and Weaknesses Improved competition

Uncertainty, Turbulence, Rapid Change, Changing power bases

Companies must be Fast, Responsive, and Costeffective

HR’s evolving role

Protector and Screener

Change Agent

Strategic Partner

Strategic HRM Š Strategic human resource management: linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility.

Clarify the business strategy Realign the HR functions and key people practices Create needed competencies and behaviors Realization of business strategies and results Evaluate and refine

HR’s evolving role as strategic partner Corporate strategy HR operations Corporate strategy HR programs Corporate strategy

FedEx

HR programs

How HR helps strategy execution Š Functional strategies should support competitive strategies Š Value chain analysis Š Outsourcing Š Strategy Formulation

How HR helps form strategy Š Formation of a company’s strategy = identifying, analyzing and balancing external opportunities and threats with internal strengths and weaknesses Š Environmental scanning

The Value Chain Approach

HR and technology- End User Technology can be the Human Resources engine of change Š Basic HR systems demand paperwork „

70% of HR’s employees time = paperwork

„

Off the shelf forms from Office Depot/Office max

„

Online forms

Š Human Resource Information Systems (HRIS) Š HR on the Internet

Trends: Increased Use of Internet 60%

54% 48% 42% 34%

33% 27% 22% 16%

18% 18%

21% 16% 9%

10%

9% 8%

0% Telephone Sep/Oct 00*

Internet Sep/Oct 01*

Mail Jun 02*

In-person

Two years from now**

* Thinking now of your most recent contact with the federal government, what was the method of contact? ** Thinking about two years from now, what do you think will be your main method of contact with governments? (June, 2002)

HR portals Employees can answer their own questions HR moves from reactive to proactive

Training and Development translates into performance Š Can HR have a measurable impact on a company’s bottom line? Š Better HR Training translates into improved employee attitudes and motivation (e.g., working at home) Š Well run HR training programs drive employee commitment

TOYOTA

Factors affecting the training structure: Š Management Philosophy Š Organizational Strategy Š Organizational Structure Š Size Š Technology Requirements Š Industry demands

Role of Training in Organizations Š Regardless of where training lies in an organization, its role is to improve the organization’s effectiveness by: „ Providing employees w/ necessary KSAs „ Provide personal enrichment „ Increase competitive advantage „ Respond to specific organizational needs „ Increase organizational strategic capability „ Improve quality „ While staying within the budget!

Implications of of Business Business Strategy Strategy for for Training Training Implications

Strategy Concentration

How Achieved - improve quality

Key Issues - current skills - develop work force

Training Implications - team building - cross-training - people skills - on-the-job

Implications of of Business Business Strategy Strategy for for Training Training Implications

Strategy Concentration

Internal Growth

How Achieved - improve quality

- global expansion - new products - joint ventures

Key Issues

Training Implications

- current skills - develop work force

- team building - cross-training - people skills - on-the-job

- innovation - creating new jobs & tasks

- cultural training - creativity training - communication - technical skills - conflict resolution

Implications of of Business Business Strategy Strategy for for Training Training Implications

Strategy Concentration

How Achieved - improve quality

Key Issues

Training Implications

- current skills - develop work force

- team building - cross-training - people skills - on-the-job

Internal Growth

- global expansion - new products - joint ventures

- innovation - creating new jobs & tasks

- cultural training - creativity training - communication - technical skills - conflict resolution

External Growth (acquisition)

- acquire firms

- integration - redundancy - restructuring

- integrate training systems - team building - identify capabilities

Implications of of Business Business Strategy Strategy for for Training Training Implications Strategy Concentration

How Achieved - improve quality

Key Issues

Training Implications

- current skills - develop work force

- team building - cross-training - people skills - on-the-job

Internal Growth

- global expansion - new products - joint ventures

- innovation - creating new jobs & tasks

- cultural training - creativity training - communication - technical skills - conflict resolution

External Growth (acquisition)

- acquire firms

- integration - redundancy - restructuring

- integrate training systems - team building - identify capabilities

Disinvestment

- cost reduction - redefine goals - sell assets

- efficiency

- stress management - time management - cross-training - outplacement

Key Training Roles Š Š Š Š Š Š Š Š Š Š Š

Researcher Needs Analyst Evaluator Program Designer Materials Developer Manager Marketer Counselor Change Agent Instructor Communicator

TRAINING COMPETENCIES Š Š Š Š Š Š Š Š Š Š Š Š Š Š

Computer and data analysis skill Research skills Understanding of Adult Learning Oral and Written Communication Skills Goal setting Understanding how careers develop Ability to coach and give feedback Cost/benefit analysis Project Management/Records Management Delegation skills Logistics Strategic Planning Negotiation General business and industry understanding

A Training Process Model Š Utilizing Input-Process-Output Model „ „ „ „ „ „

Needs Analysis/Assessment Design Development Implementation Evaluation Follow-up

Ultimate Goal of Training: Š To provide and facilitate effective and efficient organizational learning that improves organizational performance

KSAs…. Š Knowledge - Info. we acquire & place into memory, how it’s organized into our structure & to our understanding of how/when it’s used Š Skills - Capacities needed to perform a set of tasks developed from a training experience Š Attitudes - Reflections of employee beliefs/opinions that support/inhibit behavior Š Abilities - General capacities related to performing a set of tasks developed over time as a result of heredity and experience

A Case Study Dell’s dual HR roles OPERATIONS Deals with staff - benefits - compensation - call center

MANAGEMENT Deals with management - education - recruitment - planning - training - personnel needs

Is There a “One Best HR Way”? Š Follow a company’s operating and strategic initiatives Š All companies can benefit from „ „ „ „

„

Profit sharing programs Results oriented appraisals Employment security Foster informal relationships- promote worldwide communications Develop global executives

Societal Trends, Work Place Changes, and Human Resource Challenges Societal trends • Rapid Change • Globalization • Rise of Internet

• Legislation • Hyper competitiveness • Rise of the service sector

Work place changes • Competitive Position: Cost, Quality, Distinctive Capabilities • Decentralization • Downsizing • Organizational Restructuring

• • • • •

Self-Managed Work Teams Small Businesses Organizational Culture Technology Outsourcing

Human Resource Challenges • • • • •

Ethical Dilemmas and Social Responsibility Staffing, Development, and Productivity Job Design and Empowerment Brain Drain and Talent Shortage Safety Net and Job Insecurity

Human Resource Challenges in HK and China Hong Kong „ „ „ „

Declining growth, a stagnant economy Primarily service economy Influx of talents from mainland Unclear competitive edge in global market

Š Chinese mainland „ „ „ „ „

Rapidly growth, especially private sector Competitive skilled & professional labor markets Evolving business and labor laws WTO and increasing competitiveness Business ethics

A Hong Kong Company: Computime Š Š Š Š Š Š Š

28 years old 30% annual sales growth in past 3 years 5% profit margin Production plant in Shenzhen Administrative and HQ offices in HK 7 divisions – 4 functions and 3 business units About 500 staff employees and 3000 production workers Š ISO objective but defective products due to rush

Computime (VMV) Vision

Mission

Value

To become a global leader in electronics supply chain services through establishing long-term partnerships based on integrity and ethical business practices.

We act as one responsive, flexible and innovative team with full commitment and dedication to exceed our customers’ expectations in quality, cost, delivery and service.

Customer First Zero Defect Innovations One Team Business Ethics Social Responsibility

Discussion Questions Š What are the HR challenges facing Computime? Š What information do we need to identify the HRM challenges of Computime? Š How can Computime use HRM to stay competitive and sustain its rapid growth?

An HRM Framework for analyzing HRM challenges of a company

Business Business Strategies Strategies

Fit Consistency

Consistency

Fit

Organizational Organizational Characteristics Characteristics

Environment Environment

Consistency

HR Strategies And choices Fit

Improved Improved Firm Firm Performance Performance

Fit Consistency

Organizational Organizational Capabilities Capabilities

Influence of Business Strategies on HRM Business Strategy

Common Organizational Characteristics

HR Strategies

Overall cost leadership

• Sustained capital investment • Tight cost control • Low-cost distribution system • Structured organization and responsibilities

• Explicit job descriptions • Detailed work planning • Emphasis on technical qualifications and skills • Emphasis on job-specific training • Emphasis on job-based pay

Differentiation

• Product engineering • Strong capability in basic research • Reputation for quality or technological leadership

• • • • •

Focus

• Combination of business strategies above.

Broad job classes Loose work planning External recruitment Individual-based pay performance appraisal as development tool • Combination of HR strategies above.

The Importance of Organizational Characteristics on HRM

Overall management philosophy Structure Culture

Influence of Environment on HRM Environmental Dimension

Low

High

Degree of Uncertainty

• Detailed work planning • Job-specific training • Fixed pay • High dependence on superior

• Loose work planning • Generic training • Variable pay • Multiple inputs for appraisals

Volatility

• Control emphasis • Efficient production • Job-specific training • Fixed pay

• Flexibility • Innovation • Generic training • Variable pay

Influence Environment on HRM (cont.) Environmental Low Dimension Magnitude of Change

Complexity

• Explicit job descriptions • Formal hiring and socialization of new employees • “make” skills • Uniform appraisal procedures • Control emphasis • Internal recruitment • Centralized pay decisions • High dependence on superior

High • Broad job classes • Informal hiring and socialization of new employees • “buy” skills • Customized appraisals • Flexibility • External recruitment • Decentralized pay decisions • Multiple inputs for appraisals

Importance of Organizational Capabilities on HRM

Leadership – at all levels Technology – process and product Management Systems – information and control Quality – reliability and timeliness Distinctive competences?

Human Resource Strategies and Choices 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Determining HR needs– HR planning and job analysis (chapter 2) Importing HR – recruiting and selection (chapter 5) Preparing HR – socialization and training (chapter 8) Compensating HR – setting compensation (chapter 10) Evaluating HR – appraising and managing performance (chapter 7, 14) Incentives HR – rewarding performance (chapter 11) Appreciating HR differences – managing diversity (chapter 4) Developing HR – career development (chapter 9) Protecting HR – designing and administering benefits (12) Positive HR relations – developing employee relations (chapter 13) HR in global companies – international HRM (chapter 17) Exporting HR – separation, downsizing and outplacement (chapter 6)

Questions to consider 1. 2. 3.

4. 5.

How much responsibility does an organization have to shield its employees from the effects of rapid changes in the environment? Does an employer have an ethical responsibility to train employees who lack basic literary and numerical skills? Why yes or why no? In today’s increasing chaotic business and economic environment, does an employer have a responsibility to help employees prepare for these changes that may affect their jobs and careers? All civil servants in HK will face a pay reduction of 1 to 5% this October. Is this fair to the employees? Why yes or why no? Some European countries have laws barring organizations form using computer technology that invades employee privacy. Do you believe that similar laws should be developed in Hong Kong? Why yes or no?

HRM and the Bottom Line Š Research has shown consistently a clear link between progressive HR practices (e.g., High involvement HR systems) and „ Sales „ Productivity „ Retention

An Exceptional Company: Southwest Airline Š 31 years old Š Post 9/11, SWA had no layoff, posted profits and did not reduce flights Š What account for the success of SWA? Š Can or how can SWA sustain its success? Š Can other companies imitate SWA’s approach to HRM? If not, why not? Š What can Computime learn from SWA?

Continuum of Resources Sustainability Level of Resource Sustainability Low (Easy to Imitate) Slow-Cycle Resources • Strongly shielded • Patents, brand name • Gillette: Sensor razor

Standard-Cycle Resources

Fast-Cycle Resources

• Standardized mass production

• Easily duplicated

• Economies of scale Complicated processes

• Sony: Walkman

• Idea driven

• Chrysler: Mini-van

Source: Suggested by J. R. Wiliams, “How Sustainable Is Your Competitive Advantage?” California Management Review (Spring 1992), p. 33.

Typical Value Chain for a Manufactured Product

Raw Materials

Primary Manufacturing

Fabrication

Product Producer

Distributor

Retailer

Source: Suggested by J. R. Galbraith, “Strategy and Organization Planning,” in The Strategy Process: Concepts, Contexts, Cases, 2nd ed., edited by H. Mintzberg and J. B. Quinn (Englewood Cliffs, N.J.: Prentice Hall, 1991), p. 316.

Corporate Value Chain Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Support Activities

Technology Development (R&D, product and process improvement) Procurement (purchasing of raw materials, machines, supplies)

Inbound Logistics (raw materials handling and warehousing)

Operations (machining, assembling, testing)

Outbound Logistics (warehousing and distribution of finished product)

Marketing and Sales (advertising, promotion, pricing, channel relations)

Primary Activities

Service (installation, repair, parts)

Profit Margin Source: Adapted/repri nted with the permission of the The Free Press, an imprint of Simon & Schuster, from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, p. 37. Copyright © 1985 by Michael E. Porter.

Basic Structures of Corporations: Simple and Functional I. Simple Structure Owner-Manager

Workers

II. Functional Structure Top Management

Manufacturing

Sales

Finance

Personnel

Basic Structures of Corporations: Divisional

III. Divisional Structure* Top Management

Product Division A

Manufacturing

Product Division B

Finance

Sales

Manufacturing

Personnel

*Conglomerate structure is a variant of the division structure.

Finance

Sales

Personnel

Engineering Perspective on Quality

Product Design Life Cycle Idea Generation

Prototype Iterations Preliminary Design Prototype Development Final Definition Product Design & Evaluation Implementation

Operations Perspective on Quality The Systems View of Operation Management

Planning

Inputs

Organizing

Conversion Process

Outputs

Feedback Controlling

Customers

Operations Perspective on Quality An Operations Management Competence Model The Sand Cone Model Cost Efficiency Speed

Dependability

Quality

Strategic Management Perspective on Quality A Generic Strategic Planning Process Firm Mission and Goals External Analysis

Strategic Options

Internal Analysis

Business Level Strategy Corporate Level Strategy Operational Subplans Organizational Design

Conflict Politics and Change Strategic Alignment Between Structure and Goals

Org. Reward Systems

Marketing Perspective on Quality A Marketing System

Organization Offering

Payment

Intermediary

Offering Offering

Payment Payment

Customer

Financial Perspective on Quality The Deming Value Chain

Improve Quality

Cost decrease because of less rework, fewer mistakes, fewer delays, snags; better use of machine-time and materials

Capture the Market

Stay in Business

Productivity Improves

Provide Jobs and More Jobs

Financial Perspective on Quality Basic Economic Quality Level Model Cost

Total Quality Costs = Sum of Losses and Gains

Costs of Improving Quality

Minimum Cost Losses due to poor quality Optimum Quality Level

Quality

The Three Spheres of Quality

Quality Management

Quality Assurance

Quality Control