Strategic HRM

Presented By: Dr. B.Nayak

Strategic HRM
What is it? Who does it? When do you do it? How is it measured? What are the components?

Good HRM = Good Financial Results

HR

Financial Results
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The Topics
What is Strategic HRM? What are the forces creating a need for Strategic HRM? How can Strategic HRM use data and metrics to design and evaluate its processes?

Why is Strategic HRM Vital?

Because an organization must have people who are involved in the development of the business strategy, understand it, are committed to it, and can make a contribution to its success

What is Strategic HRM?

It is how an organization uses its people to help form and execute its business strategy

Steps in the Strategic HRM Process

New Business Strategy SWOT Analysis Assess HR Capacity Develop Core Competencies Test and Evaluate Initiate HR Practices HR Must be a Key Player in this Process. Design New Organization Assess new core competencies Recruit
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Steps in the Process

Orient, Train and Develop Evaluate Performance Establish Career and Succession Plans Set Total Reward System
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How Can HRM Be Strategic?

Participate in the Discussion of the New Strategy Evaluate Organizational Capacity Design HR Practices Which Can Execute New Strategy (Link) Establish Metrics to Evaluate Practices
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What are the competencies of a Strategic HRM Executive?

Be a Strategist - Know the Business Be an Administrator - Deliver the Basics Be a People Champion Be a Change Agent

What is the New Strategy?

Defend Your Market Expand Your Market New Product New Service Downsize/Centralize Prepare for WTO Transition to ecommerce Create New Customer Loyalty Lower Costs of Product or Service

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HRM Integration
HR Practices Must be Linked to Achieving the Business Strategy Each HR Practice must be Designed, Aligned, and Measured Using an Integrated Set of Metrics

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Quick Case Examples

Company has high turnover. General Manager wants it reduced. What are the steps? What are the metrics? Company HR manager wants to start new education center. She is competing for capital. What are the metrics?

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The New Global Market

Liberalization of Result: Trade - The Barriers Need for Market Come Down Access Shorter Product Cycle Need for High Demand for Standardization Value Accelerated Growth in IT/Telecommunication
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What are the Standardization Processes?

ISO HACCP CE Mark GMP HR Implications: Organizational Structure Recruitment/Selection Training and Development Performance Evaluation Reward
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What is ISO? (International Organization for

Standards)

Assure Product Consistency Develop Quality System Do Gap Analysis Quality Manual Process Control Documentation

Changes: Management Responsibility Attention to Detail Get it Right the First Time Decrease Inspection and Testing
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What are the HRM Changes?

Cultural Organizational Recruitment and Selection Training and Development Performance Management Reward System
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What is a CE Mark (Conformite Europene)

EU Requirements for Product Safety Steps: Disclosure Minimize Variations Compatibility Quality Performance Required Changes Tight Internal Control of Production Production Quality Assurance Product Quality Assurance Loss Prevention
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What are the HRM Implications?

Organizational Recruitment and Selection Training and Development Performance Management Reward System New Commitment to Invest in People

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What is HACCP?
Control Points)

(Hazard Analysis And Critical

Produce Safe Food Steps: Describe Product Critical Points/Flow Critical Limits and Risks Monitoring Correct/Verify

Resulting Changes: Prevention vs. Testing Documentation Get Right First Time Less Recalls/Customer Satisfaction Higher Productivity

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What are the HRM Implications?

How would jobs change? New commitment to people issues How would you measure?

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Case Example - Export/WTO

Enhance Productivity - What are HRM Machines, Production Implications? Management, Lower Costs.

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Case Example - New Strategies

Production Management Flexibility - Quick to change/Quick to market E-Commerce? Industrial Integration What are the HRM Challenges?

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Global Competitiveness
HRM Challenges: Convert to Teams Delegation Empowerment New Selection New Training New Rewards HRM Challenges New Job Design New Accounting/MIS New Performance Evaluation and Accountabilities New Authorities All Must Be Linked
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New Strategies - Strategic Partner

Contract Packing No more A to Z Joint Ventures for New Products Mergers Venture Capital Public Ownership Licensing Information Technology E-commerce New Niche Marketing Industrial Integration

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What are the HRM issues?

New Organization New Culture Competencies Dispute Resolution Selection Training/Development Career Paths Rewards How would you manage this change?

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What About Measurement?

We have designed and pursued a new business strategy. We have instituted new HRM changes and interventions How and why do we use data and metrics to both design and evaluate such HR practices?
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Protocols for Measurement The Balanced Score Card

Financial Customers

Employees

Business Development

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Points for Measurement

Convert soft to hard Establish Baselines Make causal connection Apply Balanced Scorecard Connect to business strategy

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Factors Affecting HRM?

Legal Environment Demand, Supply, Education of Human Resources Economic Conditions of Area

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Case -- What are the Metrics for Turnover?

Employee Surveys Ex-employee Surveys Cost of turnover Customer surveys Financial Measures Organizational Performance Benchmarks

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What are the types of Metrics - Recruitment?

Competencies Cost per hire Retention rate Time to fill Performance evaluations Overall company performance Surveys

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Case - What are the data sources for training program?

Employee Surveys Customer Surveys Service and production measurements Knowledge/skill transfer Actual Climate and Work Changes. Higher productivity of trained personnel

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Convert Data to Metrics Training

Costs of proposed training Baseline measures Post training measures Return on investment Does this program have any measurable results? Is it worth an investment?

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Training Metrics - Some Issues

Cost effective? ROI? Timeliness Adaptable, Simple Measure a variety of outcomes Look at soft and hard data - convert if possible Is there a casual connection?

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The Kroger CBT Experience

The Steps The Baselines The Metrics The Pilots and Controls The Results The Causal Connection The ROI

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Other Types of Measurement

Leading Edge Sears approach Practices and Market Use the Customer Capitalization Loop - Kroger CBES Link between preferred customer and employer of choice Ulrich Matrix
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The Kroger CBES Program

Customer Service Opportunity Selection not training problem Use customers to identify positive employee behaviors Convert to competencies Take baseline measures Create hypotheses Set Pilots and Controls Select using new competencies Measure against baselines
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Integrated Problem - Strategy and Metrics

Kamal Enterprises Manufacturer of 5 distinct consumer products with nearly independent and dispersed business units wants to reduce costs of products and maximize synergies, develop brand extensions, eliminate wide variations in HR practices, establish better accountabilities, enhance follow-up, improve communication up and down, establish a corporate role, and become an employer of choice.

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Kamals New Goals and Strategy

Design new organization Develop new policies Commit to effective communication Streamline Lower Costs New products Maximize autonomy and flexibility Facilitate follow up and execution Maintain caring culture Maximize synergies Employer of choice
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Steps and Metrics - Kamal

Conduct SWOT New Mission Statement? HR Policies to fill gaps New job designs New competencies Recruit and Select Performance Management Training & Development Career Paths Succession Total Reward Plan Metrics
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New Organizational Structure Kamal

Eliminate overlaps Enhance synergies Reduce cost Uniform practices R&D for new products Communication New Corporate role Metrics to develop and to evaluate Linked to Strategy Acceptance by organization

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Recruitment and Selection Kamal

New Jobs New core competencies New work methods Validity of selection Effectiveness of selection Efficiency of selection Skill acquisition and requirements Metrics

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Training and DevelopmentKamal

Needs assessment Linked to new competencies Communication skills Metrics and Data Inputs and Outputs Linked to career paths

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Performance Management Kamal

Development perspective Simple Accepted MBO/Competency Job traits for nonmanagement Link to strategy Metrics

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Career Paths - Kamal

What are the Stick to and monitor competencies/skills of the plan General Managers? Metrics Career path and steps Make a plan for all high potentials

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Reward strategy - Kamal

Compensation philosophy? Internal equity within and among business units Incentives - unit performance Incentives - what drives performance Funding incentives Line of sight. Metrics and Balance Some Models

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What about ethics and values Kamal?

Employee treatment Confidentiality Conflicts of interest Sex harassment Merit is key Corporate citizenship Democratic capitalism

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What is Major Issue Here?

How do you manage this change? Who manages the change? How do you overcome cultural resistance? Remember the interstices! Design a good implementation strategy!

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Metrics and Evaluation - New Kamal Strategy and HRM

Goals met? Plans conform to principles? Sales Profits Cash flows ROIs Productivity Costs Quality Customers Employee surveys Turnover Are managers complying?
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Figure 1 HRMs Select to Profits Loop

Select

Enroll

Enroll

Train

Evaluate

Profits

Reward

Sales

Costs

Productivity

Motivate

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Figure 2 Linking Customers to Employees A Data and Metrics Driven Approach

1. Customer Data Determines Expectations for Service and Quality

2. Employee Data Determines Capacity of Organization to Deliver

5. HRM Implements Proven Practices and Measures Customer Response

4. HRM Pilots and Tests to See What Works, What Does Not, and Financial Returns

3. Based upon Research, HRM Designs Practice to Meet Customer Expectations

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Remember: There is only one boss - the customer. And, he or she can fire all of us! (Sam Walton) Link your HRM practices to satisfying the customer!
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