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Major changes in work environment

Globalization trends & implications Technological trends Nature of work

High-tech jobs Service jobs Contractual jobs
24x7 concept

Workforce demographic trends

Availability of Employable Talent

Major changes in work environment

Social & Cultural trends

Dual career families

Physical changes at work place

Interactive Customer focused / friendly

Structural changes

Hiring/firing Payroll Benefits plan

Strategic HRM

Testing & interviewing technology Union legislation Equal employment legislation

Creating High Performance Work systems

Strategic plan
A companys plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.

Three basic challenges

The need to support corporate productivity and performance improvement efforts. That employees play an expanded role in employers performance improvement efforts. HR must be more involved in designingnot just executingthe companys strategic plan.

Strategic - concepts

Strategy is The companys plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats and to maintain a competitive advantage. Strategic management is The process of identifying and executing the organizations mission by matching its capabilities with the demands of the environment.
Strategic Plan + Implementation of the Plan

A general statement of its intended direction that evokes emotional feelings in organization members.

Spells out who the company is, what it does, and where its headed.

Dell eBay General Electric Southwest Airlines

Strategic Principle
Be direct Focus on trading communities Be number one or number two in every industry in which we compete, or get out Meet customers short-haul travel needs at fares competitive with the cost of automobile travel Unmatchable value for the investor-owner Low prices, every day

Vanguard Wal-Mart

Source: Arit Gadiesh and James Gilbert, Frontline Action, Harvard Business Review, May 2001, p. 74.

Figure 33

"Our people are our single greatest strength and most enduring long term competitive advantage."

The Mission of Southwest Airlines The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. To Our Employees We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.

Gary Kelly, CEO Southwest Airlines

Strategic management - Steps

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7

Define current business and developing a mission SWOT evaluating internal & external strengths, weaknesses, opportunities and threats formulating a new business statement translating mission into goals formulate strategies or courses of action Implement the strategies Evaluate performance

Figure 31

SWOT Analysis
The use of a SWOT chart to compile and organize the process of identifying company

Strengths, Weaknesses, Opportunities, and Threats.

Figure 32

HR professionals should be part of the firms strategic planning executive team.

Identify the human issues that are vital to business strategy. Help establish and execute strategy. Provide alternative insights. Are centrally involved in creating responsive and market-driven organizations. Conceptualize and execute organizational change.

Corporate-level strategy
Identifies the portfolio of businesses that, in total, comprise the company and the ways in which these businesses relate to each other.

Diversification strategy implies that the firm will expand by adding new product lines.
Vertical integration strategy means the firm expands by, perhaps, producing its own raw materials, or selling its products direct. Consolidation strategy reduces the companys size Geographic expansion strategy takes the company abroad.

Business-level/competitive strategy
Identifies how to build and strengthen the businesss long-term competitive position in the marketplace. Cost leadership: the enterprise aims to become the low-cost leader in an industry. Differentiation: a firm seeks to be unique in its industry along dimensions that are widely valued by buyers. Focus: a firm seeks to carve out a market niche, and compete by providing a product or service customers can get in no other way.

Functional strategies
Identify the basic courses of action that each department will pursue in order to help the business attain its competitive goals.

Figure 34

Translating Strategy into HR Policy and Practice

Figure 39

HRM Role in strategic front

HRM Strategic Plan is formulating and executing HR policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims. HRM helps to create the competitive advantage for

the organization The Competitive advantage can take many forms: quality, research, software systems, diversity of the workforce, trained employees, HR policies & practices etc.

Competitive advantage
Any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share. Superior human resources are an important source of competitive advantage

Absence rate Cost per hire HR expense factor Time to fill Turnover rate

Dilemma of manager misfit Two possibilities to overcome:

Fit the manager should align functional strategies with and support its corporate and competitive strategies. Can result in limited growth Leveraging supplementing what you have and doing more with what you have Manager must underplay firms weaknesses & capitalize on unique core strength of the company

HR is responsible for defining an organizational structure as the model for the companys way of doing business. HR must be accountable for conducting an organizational audit. HR is to identify methods to renovate part of the organizational architecture. HR must take stock of its own work and set clear priorities.

The HR departments strategies, policies, and activities must make sense in terms of the companys corporate and competitive strategies, and they must support those strategies.

HR helps top management formulate strategy in a variety of ways by.

Supplying competitive intelligence that may be useful in the strategic planning process. Supplying information regarding the companys internal human strengths and weaknesses. Build a persuasive case that shows howin specific and measurable termsthe firms HR activities can and do contribute to creating value for the company.

Components of the HR process

HR professionals who have strategic and other skills HR policies and activities that comprise the HR system itself Employee behaviors and competencies that the companys strategy requires.

Figure 38

High Performance Work Systems

A system which tends to create human resource with unique support to organizational needs Aims to maximize competencies, commitment and abilities of the employees which produce superior performance Vary from organization to organization

High Performance Work Systems

Includes practices:
Employment security Selective hiring Extensive training Self managed teams and decentralized decision making Reduce status quo Information sharing Contingent rewards (pay-for performance) Transformational leadership Measurement of management practices Emphasis on high quality work

High-performance work system (HPWS) practices.

High-involvement employee practices (such as job enrichment and team-based organizations), High commitment work practices (such as improved employee development, communications, and disciplinary practices) Flexible work assignments. Other practices include those that foster skilled workforces and expanded opportunities to use those skills.

Strategic Human Resource Management

The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility. Formulating and executing HR systemsHR policies and activitiesthat produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Becoming an Administrative Expert

Increase efficiency of both their function and that of organization

Rethinking how work is done through out the organization

Can design and implement a system that allows departments to

share administrative services

Create centers of expertise that gather, coordinate, and disseminate

vital information about market trends, organizational processes. companys money but also improving its competitive position

These groups can act as an internal consultants, not only in saving

Engaged employees that is, employees who believe they are valued share ideas, work harder and relate better with customers

HR professionals must be held accountable for ensuring that

employees are engaged HR professionals can orient and train line managers how to achieve high morale HR can play a critical role in recommending ways to improve morale problems

HR staff must be an advocate for employees

Building organizations capability to embrace and capitalize on change Change initiatives that are focused on creating high performance teams, reducing cycle time for innovations etc. are defined, developed, and delivered in timely manner Broad vision statements get transformed into specific behaviors by helping employees figure out what work they can stop, start, and keep doing to make vision real HR role as a change agent is to replace resistance with resolve, planning with results, and fear of change with excitement about possibilities

HR can help bring about a cultural change by:

Defining and clarifying the concept of cultural change. Articulating why cultural change is central to business success. Defining a process for assessing the current culture and the desired new culture, as well as measuring the gap between the two. Identifying alternative approaches to creating culture change.

Figure 36

Organisation strategy and human resource planning Organisation strategy

Retrenchment strategy Stability Strategy Maintain status quo Downsizing Business sale Shut down

Growth strategy Internally generated growth Acquisitions, mergers or joint ventures





HR planning Determine number and types of jobs to be filled. Match human resource availability with job openings.

Source:Asia Pacific Management Co. Ltd. 2001

The purpose of HR planning is to ensure that a

predetermined number of persons with the correct skills are available at a specified time in the future. HR planning systematically identifies what must be done to guarantee the availability of the human
resources needed by an organisation to meet its strategic business objectives. HR planning cannot be undertaken in isolation. It must be linked to the organisations overall

business strategy.

As part of the strategic planning process, HR planning must consider the environmental influences on an organisation, its objectives, culture, structure and HRM . HR planning must reflect the environmental trends and issues that affect an organisations management of its human resources. Government regulations relating to for example conditions of employment, EEO, industrial relations and OHS need to be considered. Other examples include demographic changes, the casualisation of the work force, employee literacy etc. The growing trend of women in the workforce needs to be considered in HR planning.

HR planning Determine number and type of jobs to be filled. Match human resource availability with job openings Human resource demand Human resource supply

Human resource requirements: nu mbers skills qualifications occupation performance experience career goals

Human resource inventory: numbers skills qualifications occupation performance experience career goals



No action
If surplus If shortage Increase overtime Increase casual and part -time employment Postpone retirements Start recruiting Accelerate training and development Use outsourc ing

Stop recruiting

Reduce casual and part -time employment Start early retirements Start retirements Start retrenching Reduce working hours

Source:Asia Pacific Management Co. Ltd. 2001


Sees employees as numerical entities and group them according to age, sex, experience, skills, qualification, job level, pay, performance rating or some other means of classification. The focus is on forecasting HR shortages, surpluses and career blockages; its aim is to reconcile the supply and demand for human resources given the organisations objectives.

The qualitative approach to HR planning uses expert opinion (usually a line manager) to predict the future (for example, the marketing manager will be asked to estimate the future personnel requirements for the marketing department). The focus is on evaluations of employee performance and capacity for promotion as well as management and career development

Once the HR manager has estimated the HR needs of the organisation, the next challenge is to fill the projected vacancies. Present employees who can be promoted, transferred, demoted or developed make up the internal supply. Constraints may apply on the use of both internal and external labour supplies (for example, a promotion from within policy, union restrictions, management preference and government regulations).

Turnover analysis A detailed analysis of why people leave the organisation is essential if meaningful information is to be obtained. Labour turnover rates from past years are the best source of this information for most organisation. Turnover for each job classification and department should also be calculated because turnover can vary dramatically among various work functions and departments.

This consolidates basic information on all employees within the organisation and permits the HR manager to: identify qualified employees for different jobs determine which skills are present or lacking in the organisation assess longer term recruitment, selection and training and development requirements. Skills inventories can be quite simple and manually kept, or detailed and maintained as part of an integrated HR information system (HRIS).

Replacement Charts Replacement charts summarise this information in visual form for key managers so they can easily identify both the present incumbents and potential replacements (or lack of) for given positions.


Succession planning is concerned with the filling of management vacancies. It stresses the development of high potential employees and takes a long-term view of the organisations HR needs. The HR managers role is to ensure that succession planning provides the organisations future managers with the necessary preparation to successfully fill potential vacancies. This means having an effective performance appraisal system, needs-orientated training and development programs, and a corporate culture which fosters individual growth and promotion from within.

Source: Jeffrey Schmidt, The Correct Spelling of M & A Begins with HR, HR Magazine, June 2001, p. 105.

Figure 37


Conceptualization of the firm portfolio logic Ability to understand the firms core competencies Three categories of core capabilities could be identified (1) What the firm knows, (2) what the firm does (skills) (3) how the firm thinks (culture) HR has greater responsibility for conceptualizing and understanding the firms core capabilities that might be acquired through mergers or acquisition

2. Identification of potential candidates HR may contribute in two ways i. The technical, market, financial and culture capabilities of the potential seller must be evaluated ii. Also contributes by raising important issues during diligence. Benefits and pension commitments Union relationship Strength and weaknesses of work force Staffing requirements for the combined entities

3. Negotiation Stage a. Content role: HR continues in depth analysis of issues raised at diligence but now is done opportunistically with the potential partner seeking the highest selling price and with HR looking for potential problems that might influence buying price b. Process Role Maintaining functional working relationship within its own companys team and with the members of other companys negotiating team. HR must be aware of negotiation style of other team and providing negotiation training to his/her own team