HRM STRATEGY & ANALYSIS

Lecture 2

HRM STRATEGY & ANALYSIS

Human Resource Management

Jeeshan Mirza

Topic Overview1. HRM Strategy & Analysis

2. Job Analysis

3. Personal Planning & Recruiting

4. Selecting Employees

5. Training & Developing Employees

6. Performance Management & Appraisal

7. Managing Employee Retention, Engagement, and Careers

8. Developing Compensation Plans

9. Pay For Performance & Employee Benefits

10. Ethics, Employee Relations, Fair Treatment At Work

11. Working With Unions/Improving Occupational Safety, Health, and Risk Management

Lecture Overview• Strategic HRM • HR As Organizational Contributor • Environmental Analysis• Global Competitiveness & Strategic HR• HR Planning In Mergers & Acquisitions• Strategic Challenges• Measuring Effectiveness Of HR Initiatives• Technology & HRM • Impact Of Legal & Regulatory Framework

Strategic Human Resource Management

Strategic Planning Process & Link To HR Strategy

Strategic HRM ▷ Strategic planning-Defining organizational

strategy, direction

▷ Decisions on allocation of organizational resources (capital and people) to pursue strategy

▷ Typically 5-year time frame

▷ Management considers internal and external forces in formulating strategic plan

Strategic HRM

Strategic Planning Process

Source: Mathis

Strategic HRM

Types Of Strategy

▷ Corporate Strategy-How many and what kind of businesses should we be in?

▷ Competitive Strategy- How to build, strengthen the business’s long-term competitive position in marketplace

▷ Functional Strategy- What departments must do in terms of policies and practices to help the business accomplish its competitive goals

Emerald International

▷ Local Brands

▷ Export

▷ Corporate Sales

▷ Retail

▷ International Brand Licensing/Franchising

Strategic HRM

Types Of Strategy

▷ Corporate Strategy-How many and what kind of businesses should we be in?

RETAIL

Expand retail presence by 200% by 5 years; from 10 to 30 stores

In this period, through increase in same stores sales, plus 20 new stores target 500% growth in retail business sales

Strategic HRM

Types Of Strategy

▷ Competitive Strategy- How to build, strengthen the business’s long-term competitive position in marketplace

▷ This strategy defines how Emerald Retail Store must compete against other shirt stores, departmental chains

Develop retail brand through international standard visual merchandising and service delivery

Retail wide portfolio of local and imported products, full wardrobe solution

Strategic HRM

Types Of Strategy

▷ Competitive Strategy

Strategic HRM

Types Of Strategy

▷ Functional Strategy- What departments must do in terms of policies and practices to help the business accomplish its competitive goals

Expand retail presence by 200% by 5 years; from 10 to 30 stores

In this period, through increase in same stores sales, plus 20 new stores target 500% growth in retail business sales

Develop retail brand through international standard visual merchandising and service delivery

Corporate

Strategy

Competitive

Strategy

To achieve the above corporate and competitive strategy, what functional HR strategy must Emerald develop?

Strategic HRM

Types Of Strategy

▷ Functional Strategy

▷ HR Strategy

Develop sound recruitment system to ensure steady supply of sales and customer service staff for 20 extra stores

Develop service delivery policies, invest in training, incentive systems, grooming of sales staff to meet international service standards

Strategic HRM

Types Of Strategy

▷ Functional Strategy

▷ HR Strategy

Strategic HRM


Source: Mathis

HR Strategy is a functional strategy

Strategic HRM


Source: Dessler

Retail Local Brands Export

Emerald

Strategic HRM ▷ Strategic HRM-formulating and executing HR

policies and practices to produce employee competencies and behaviors required to achieve strategic aims

▷ Use of HRM practices to gain or keep a competitive advantage

▷ Managers call the specific HRM policies and practices- human resource strategies

Source: Dessler

The HR Strategy Model

Emerald Retail Expansion

International Standard Service & VM

World Class Service

Product Knowledge

Communication

Professionalism

Source: Mathis

Strategic HRM

Source: Dessler

Strategy Map For Southwest Airlines

Strategic HRM In Action

Ritz-Carlton Company took over managing the Portman Hotel in Shanghai China in 1998

Ordinary five-star property, employee and guest satisfaction ranged between 70 and 80 percent, and finances were unspectacular

To be more competitive, they had to improve the hotel’s level of service

Strategically, they set the goal of making the Shanghai Portman outstanding by offering superior customer service

To achieve this, Shanghai Portman employees would have to exhibit new skills and behaviors, for instance, in terms of how they treated and responded to guests

Strategic HRM In Action

To produce these employee skills and behaviors, management formulated new human resource management plans, policies, and procedures

“Best Employer in Asia” by Hewitt Associates, “Overall Best Business Hotel in Asia” byBloomberg TV. “Best Business Hotel in China”by Business Asia Magazine

Annual employee satisfaction rate highest among all of the Ritz-Carlton’s 59 hotels worldwide, reaching 98 percent last year.

Turnover rate for Asia’s hotel industry is 29percent, the rate at the Portman Ritz-Carltonis a modest 15 to 16 percent.

Ritz-Carlton: Motto, Employee Promise, and Credo

1

Strategic HR as Organizational Contributor

Significant strategic role HR plays in enhancing organizational effectiveness

Strategic HR as Organizational Contributor▷ High Performance Work Practices

Organizational Productivity-Compensation, Rewards, Pay For Performance, Training, Selectivity, Workplace

Customer Service Quality Reduced Turnover

High-performance work system-set of HRM policies and practices that together produce superior employee performance

Source: Dessler

Strategic HR as Organizational Contributor▷ HR Effectiveness & Financial Performance

Effectiveness- Ability to produce specific desired effect or result that can be measured

Efficiency-Degree to which operations are done in an economical manner

Benefits of HR programs not always immediately visible-measuring HR’s impact such a challenge

Efforts should be made to financially assess HR practices

Environmental AnalysisHow internal and external environmental factors

affect HR strategies

Environmental Analysis ▷ Pinpoint strengths, weaknesses, opportunities,

and threats that the organization will face during the planning horizon

Environmental Analysis

Internal Environmental

Analysis

External Environmental

Analysis


Internal

Source: Mathis


External▷ Economic Conditions

High economic growth, labor and material shortages are more likely

Economic downturns, resources are underutilized and organizations seek to increase productivity and to lower costs

Interest rate, inflation, unemployment

▷ Legislative

Legislation regarding taxes, labor unions, compensation, benefits, employment, and safety and health affect the HR practices in all organizations


External▷ Demographic Changes

Population shifts and demographic changes can affect organizational strategy

Consumer demographics influences the demand for products and services.

Workforce demographics will also affect the quality and quantity of labor available to the organization

Workforce diversity; one size fit all strategy wont work


External▷ Geographic & Competitive Concerns

Local industrial base and economic conditions. Eg: Locating in Silicon Valley is advantageous for IT firm over setting up in a sparsely populated location with no labor supply

Competition. Can drive up the cost for talent if competition is very high

Global Competitiveness & Strategic HR

Impact of Globalization of Business on Organizations


▷ Globalization of business-organizations operate across borders, foreign operations, international suppliers, vendors, employees, business partners

Import

Export

Multinational corporation (MNC)

Transnational corporation

Offshoring

Foreign Employees


▷ Global companies must deliver basic HR services overcoming various operational, cultural, and organizational obstacles

▷ Domestic based organizations face pressure from foreign competitors, suppliers, partners

▷ Supply chain increasingly internationally dispersed, foreign business practices influence operations

▷ Technology advances eliminated barriers to operating on global scale


▷ Global HR mindset- HR issues from an international perspective, using ideas, resources throughout the world, ensuring openness to other cultures and ideas

▷ Policies and practices should be established to address the unique demands for operating in a global context

▷ Determine which policies to standardize which to tailor for each locale

▷ Strike balance between home-country and host-country policies that utilizes the best practices within the organization


International Staffing Policy

Source: Mathis

HR Planning In Mergers & Acquisitions

Maximizing Chance Of Successful Integration With HRM


▷ Purpose-generate shareholder value, creating competitive, cost-efficient company by combining two existing companies

▷ Most M&As fail to deliver expected financial, marketing, or product gains, one-third achieve their goals

▷ Many failed ventures trace their roots to HR issues- loss of key staff, culture clashes, and poor communication

▷ HRM can contribute to the success of mergers and acquisitions (M&As)


HR Activities During M&A

Source: Mathis

Strategic ChallengesBeing Attentive To Impact Of Environmental Forces On

Organizations

Strategic Challenges

Managing Talent Surplus ▷ Abundant or adequate workforce with right

qualifications but declining sales revenue in tough market conditions

Reduction in work hours or compensation Attrition and hiring freezes Voluntary separation programs Workforce downsizing

Legal consideration for workforce reduction-SL Labor Law

Strategic Challenges

Managing Shortage▷ Demand outgrowing capacity, mismatch between

qualifications required and skills of workers

Overtime Outsource Alternate work arrangements-flexible work system, job

sharing, transportation, accommodation Retirees/contingent workers Reduce turnover

In SL, bringing labor from abroad not encouraged by government, unless specific skillset not present in market

Class DiscussionIf you owned a hotel down south, how would you handle talent surplus in off peak season?

Measuring Effectiveness Of HR Initiatives

Evaluating Performance of HRM


▷ Long-standing myth- cannot really measure the value of HR practices

▷ Has hurt HR’s credibility, suggests that HR efforts do not add value, are too far removed from business results

▷ HR, like other functions, must be evaluated by considering results of its actions and value it adds to organization

▷ People-related costs-largest controllable expense in organizations, effective management of these costs can make big difference


HR Metrics ▷ HR metrics-specific measures tied to HR performance

indicators, assess the HR function and results within the organization over time

▷ Using costs, quantity, quality, timeliness, and other designated goals.

▷ Metrics can be developed to track both HR’s efficiency and effectiveness

▷ HR and line managers collect, analyze and interpret metrics-improve human capacity utilization

Source: Mathis


HR Benchmarking▷ Benchmarking is the process of comparing the business

processes and outcomes to an industry standard or best practice

▷ External practices that the organization can use to improve its own processes and practice

▷ Careful to find organizations with similar contexts, cultures, operations, and size

▷ Starting point, not the end point, for improving the organizational HR function


HR Audit▷ An analysis by which an organization measures where it

currently stands and determines what it has to accomplish to improve its HR function

▷ Reviewing company’s HR function (recruiting, testing, training, and so on), using a checklist, ensuring firm is adhering to regulations, laws, and company policies


▷ Evidence-based HRM means using data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support HRM proposals, decisions, practices, and conclusions

▷ Being scientific-be objective, use experimentation for prediction

Class DiscussionIt is important to evaluate effectiveness of target based incentive systems

Technology & HRMImpact of Information Technology On HRM

Technology & HRM▷ Human resource management system (HRMS) is an

integrated system providing information used by HR management in decision making

Two Main Benefits

1. Administrative and operational efficiency- data compilation, automation, communication

2. Effectiveness- strategic HR planning, accessible data enables HR planning and managerial decision making to be based to a greater degree on information rather than relying on managerial perceptions and intuition

▷ Watch the “Day In Life Of HR Video” and identify how technology is changing they way organizations practice HRM

Recruitment Interviews Engagement

Administrational Survey Performance Management

Strategy Talent Management E-Learning

Succession Planning

Communication & Coordination

Induction, Training

Metrics & Analytics

Impact Of Legal & Regulatory Framework

Impact Of Law On HRM


Purpose Of Employment Law ▷ Employment law exists to protect employees

from unjust exploitation or unfair treatment by employers

▷ Necessary employment relationship is very unequal in terms of the power that each side is able to exercise over the other


Purpose Of Employment Law ▷ Employers vastly more powerful

▷ Easy for them to abuse power by treating, employees poorly, dismissing or discriminating against them for no good reason

▷ Underpaying and overworking them, causing them to risk their heath, safety and welfare while at work


Terms & Conditions Of Work

▷ Wages Board Ordinance▷ Shop & Office Employees Act

Social Security

▷ Employees Provident Fund Act▷ Employees Trust Fund Act ▷ Payment Of Gratuity Act


Occupational Safety & Health

▷ Factories Ordinance▷ Workmen’s Compensation Ordinance

Employment of Women , Young Persons & Children

▷ Maternity Benefits Ordinance▷ Employment of Women , Young Persons and Children Act


Industrial Relations

▷ Trade Union Ordinance Industrial Dispute Act▷ Termination of Employment of Workmen (Special

Provision )Act

Others

▷ Sri Lanka Bureau of Foreign Employment Act ▷ Estate Quarters Act ▷ Estate Labour Ordinance


▷ Legal and regulatory framework governing employment is thorough

▷ Employee is fairly well protected and shielded from exploitation, unfair practices

▷ Employers are fairly complaint with legislation

▷ Employers would prefer a more capitalist market driven framework Vs socialist system

▷ Well ahead compared to other regional nations


Employee

Employer

Advantages

Fair treatment Ethical Employee has rights and powerQuality of life

Disadvantages

Lack of competitivenessWork rate, work culture, work ethicHR Challenges

Thanks!Any questions?

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HRM STRATEGY & ANALYSIS

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