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Noe11e_ch_16_FINAL.pptxChapter 16
Strategically Managing the HRM Function
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Learning Objectives 1 of 2
LO 16-1 Describe the roles that HRM plays in firms today and the categories of HRM activities.
LO 16-2 Discuss how the HRM function can define its mission and market
LO 16-3 Explain the approaches to evaluating the effectiveness of HRM practices.
LO 16-4 Describe the new structures for the HRM function.
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Learning Objectives 2 of 2
LO 16-5 Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness.
LO 16-6 Relate how process reengineering is used to review and redesign HRM practices.
LO 16-7 Discuss the types of new technologies that can improve the efficiency and effectiveness of HRM.
LO 16-8 List the competencies the HRM executive needs to become a strategic partner in the company.
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Activities of HRM
Transactional activities
Day-to-day transactions such as benefits administration, record keeping, and employee services
Traditional activities
Performance management, training, recruiting, selection, compensation, and employee relations
Transformational activities
Knowledge management, management development, cultural change, and strategic redirection and renewal
LO 16-1
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Figure 16.1 Categories of HRM Activities and Percentages of Time Spent on Them
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Strategic Management of the HRM Function
Customer-oriented approach
HRM function as a strategic business unit defined in terms of the customer base, the customers’ needs, and the technologies required to satisfy customers’ needs
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Figure 16.2 Customer-Oriented Perspective of the HRM Function
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Building an HR Strategy 1 of 2
The Basic Process
Scan the environment
Examine strategic business issues or needs
Identify people issues to address
Design HR strategy
Communicate to relevant parties
LO 16-2
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Figure 16.4 Basic Process for HR Strategy
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Building an HR Strategy 2 of 2
Involving Line Executives
Can increase the quality of information from which the HR strategy is created
Provide input
Team members
Receive communications
Approve the strategy
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Figure 16.7 Approaches to Developing an HR Strategy
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Measuring HRM Effectiveness 1 of 3
Benefits
Marketing the function
Shows how HR supports the organization
Providing accountability
Shows how HR is meeting its objectives
LO 16-3
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Measuring HRM Effectiveness 2 of 3
Audit Approach
Key indicators
Staffing
Equal employment opportunity
Compensation
Benefits
Training
Employee appraisal and development
Succession planning
Safety
Labor relations
Overall effectiveness
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The audit approach focuses on reviewing the various outcomes of the HRM functional areas.
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Figure 16.9 Comparing HR and Line Executives’ Evaluations of the Effectiveness of HRM Roles
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Figure 16.10 Comparing HR and Line Executives’ Evaluations of the Effectiveness of HRM Contributions
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Measuring HRM Effectiveness 3 of 3
The Analytic Approach
Determines whether the introduction of a program or practice has the intended effect
Estimates the financial costs and benefits resulting from an HRM practice
Human resource accounting
Utility analysis
Uses analytic data to increase organizational effectiveness
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The analytic approach focuses on either (1) determining whether the introduction of a program or practice (like a training program or a new compensation system) has the intended effect, (2) estimating the financial costs and benefits resulting from an HRM practice, or (3) using analytic data to increase organizational effectiveness.
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Table 16.2 Types of Cost–Benefit Analyses
Human resource accounting
Capitalization of salary
Net present value of expected wage payments
Returns on human assets and human investments
Utility analysis
Turnover costs
Absenteeism and sick leave costs
Gains from selection programs
Impact of positive employee attitudes
Financial gains of training programs
SOURCE: Based on A. S. Tsui and L. R. Gomez-Mejia, “Evaluating HR Effectiveness,” in Human Resource Management: Evolving Roles and Responsibilities,
ed. L. Dyer (Washington, DC: Bureau of National Affairs, 1988), pp. 1–196.
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Improving HRM Effectiveness 1 of 6
Improving both the efficiency and effectiveness in performing each of the activities
Eliminating as much of the transactional work as possible (and some of the traditional work) to free up time and resources to focus more on the higher-value-added transformational work
LO 16-4
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Figure 16.11 Improving HRM Effectiveness
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Improving HRM Effectiveness 2 of 6
Restructuring to Improve HRM Effectiveness
Traditional structured around basic HRM subfunctions, such as staffing, training, compensation, appraisal, and labor relations
Generic structure divides the HRM function into three divisions
The centers for expertise
The field generalists
The service center
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Figure 16.12 Old and New Structures for the HRM Organization
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Improving HRM Effectiveness 3 of 6
Outsourcing to Improve HRM Effectiveness
An outside source may provide a service more cheaply or more effectively (more expertise) than doing it internally
Primarily outsource transactional activities and services
Pensions and benefits administration
Payroll
LO 16-5
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Outsourcing entails contracting with an outside vendor to provide a product or service to the firm, as opposed to producing the product using employees within the firm.
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Improving HRM Effectiveness 4 of 6
Improving HRM Effectiveness Through Process Redesign
Reengineering
Identify the process to be reengineered
Understand the process
Redesign the process
Implement the new process
LO 16-6, 16-7
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Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality.
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Improving HRM Effectiveness 5 of 6
Improving HRM Effectiveness Through Process Redesign continued
New technologies—E-HRM
Leveraging technology for the delivery of traditional and transformational HRM activities
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Improving HRM Effectiveness 6 of 6
Improving HRM Effectiveness Through Process Redesign continued
Recruitment and selection
Online recruiting one out of every eight hires
Enables firms to monitor hiring processes to minimize the potential for discriminatory hiring decisions
Compensation and Rewards
Training and Development
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Improving HRM Effectiveness through New Technologies—HRM Information Systems
Three broad functions HRM has used in the past
Transaction processing, reporting, and tracking
Decision support systems
Expert systems
New technologies
Predictive analytics
Customization
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New technologies are current applications of knowledge, procedures, and equipment that have not been used previously.
Transaction processing refers to computations and calculations used to review and document HRM decisions and practices.
Decision support systems are designed to help managers solve problems.
Expert systems are computer systems incorporating the decision rules of people deemed to have expertise in a certain area.
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The Future for HR Professionals
Four Basic Competencies
Business competence
Professional-technical knowledge
Management of change processes
Integration competence
LO 16-8
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The Role of the Chief Human Resource Officer
Chief HR Officer
Bear the responsibility for leading the HR function
Ensure that HR systems and processes deliver value to the company
Seven roles
Strategic advisor to the executive team
Talent architect
Counselor/confidante/coach
Leader of the HR function
Liaison to the board
Workforce sensor
Representative of the firm
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Figure 16.17 Percentage of Time CHROs Spend in Each Role
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Table 16.5 Roles of the CHRO 1 of 2
Strategic advisor to the executive team: activities focused specifically on the formulation and implementation of the firm’s strategy.
Counselor/confidante/coach to the executive team: activities focused on counseling or coaching team members or resolving interpersonal or political conflicts among team members.
Liaison to the board of directors: preparation for board meetings, phone calls with board members, attendance at board meetings.
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Table 16.5 Roles of the CHRO 2 of 2
Talent architect: activities focused on building and identifying the human capital critical to the present and future of the firm.
Leader of the HR function: working with HR team members regarding the development, design, and delivery of HR services.
Workforce sensor: activities focused on identifying workforce morale issues or concerns.
Representative of the firm: activities with external stakeholders, such as lobbying, speaking to outside groups, etc.
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Appendix of Image Long Descriptions
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Appendix 1 Figure 16.1 Categories of HRM Activities and Percentages of Time Spent on Them
Transformational (5-15 percent)
Knowledge management
Strategic redirection and renewal
Cultural change
Management development
Traditional (15-30 percent)
Recruitment and selection
Training
Performance management
Compensation
Employee relations
Transactional (65-75 percent)
Benefits administration
Record keeping
Employee services
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Appendix 2 Figure 16.2 Customer-Oriented Perspective of the HRM Function
Customers include line managers, strategic planners, and employees.
Customers’ needs include committed employees and competent employees.
Technology includes staffing, performance management, rewards, and training and development.
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Appendix 3 Figure 16.7 Approaches to Developing an HR Strategy
An outside-in perspective
Business Driven (5 cases)
Business issues/outcomes
People issues/outcomes
HR strategy
3 Different Inside-Out strategies
Business-linked (5 cases)
Business issues/outcomes
People issues/outcomes
HR strategy
People-linked (7 cases)
People issues/outcomes
HR strategy
HR-focused (3 cases)
People issues/outcomes
HR strategy
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Appendix 4 Figure 16.9 Comparing HR and Line Executives’ Evaluations of the Effectiveness of HRM Roles
On a scale of 0 to 8, HR managers rated their effectiveness in 5 areas. Line managers also rated HR managers in these 5 areas.
Providing HRM services – HR mean is 7.3, line mean is 6.1
Change consulting – HR mean is 6.2, line mean is 4.7
Business partner – HR mean is 6.1, line mean is 5.3
Developing the organization – HR mean is 6.5, line mean is 5.2
Tailoring HRM practices to strategy – HR mean is 6.8, line mean is 5.3
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Appendix 5 Figure 16.10 Comparing HR and Line Executives’ Evaluations of the Effectiveness of HRM Contributions
On a scale of 0 to 7, HR managers rated their effectiveness in 7 areas. Line executives also rated HR managers in these 7 areas.
Performing the expected job – HR mean is 4.5, line mean is 3.9
Responsive to customer needs – HR mean is 5.0, line mean is 4.2
Providing useful information – HR mean is 4.8, line mean is 4.3
Enhancing competitiveness – HR mean is 5.0, line mean is 3.8
Value-added contribution – HR mean is 5.0, line mean is 4.1
Contributing to core competence – HR mean is 4.8, line mean is 4.2
Building human capital – HR mean is 4.8, line mean is 4.2
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Appendix 6 Figure 16.11 Improving HRM Effectiveness
From top to bottom:
Transformational (5-15 percent)
Knowledge management
Strategic redirection and renewal
Cultural change
Management development
Traditional (15-30 percent)
Recruitment and selection
Training
Performance management
Compensation
Employee relations
Transactional (65-75 percent)
Benefits administration
Record keeping
Employee services
On the bottom level are two more categories – outsourcing and process redesign, information technology
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Appendix 7 Figure 16.12 Old and New Structures for the HRM Organization
Historical structure
At the top is the VP of HRM, followed by a second level with the directors of staffing, compensation, training and development, and planning.
New structure
At the top is the VP of HRM, followed by a second level with 3 areas: centers for expertise (rewards, staffing, training and development, communications). This is labeled traditional/transformational. Next to this is field staff (HR generalists), which is labeled transformational/traditional. And finally service center (information technology, claims processing), which is labeled transactional.
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Appendix 8 Figure 16.17 Percentage of Time CHROs Spend in Each Role
What percent of your time would you say you spend in each of the following roles?
Functional leader 22 percent
Workforce sensor 8 percent
Firm representative 5 percent
Talent architect 17 percent
Board liaison 10 percent
Executive coach 17%
Strategic advisor 21%
Other 0%
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