HROB 154

HR investments most impact business performance when they are

"bundled" or integrated (want to avoid best practices conflicting with each other.)

HR bundles (need more)

'calculative', 'collaborative' or 'intermediary'.

The strategic management process:

*Strategic Inputs - External Environment, Internal Environment, Strategic Intent *Strategic Mission *Strategic Actions - Strategy Formulation and *Strategy Implementation *Strategic Outcomes - Strategic Competitiveness AboveAverage Returns.

Two common approaches to evaluate HR effectiveness

- Audit approach: Type of assessment of HRM effectiveness that involves review of customer satisfaction or key indicators (like turnover rate or average days to fill a position) related to an HRM functional area (such as recruiting or training). - Analytic approach: Type of assessment of HRM effectiveness that involves determining the impact of or the financial cost and benefits of a program or practice. involves the cost/benefits of HR programs.... if programs are effective places a dollar amount on the value of HR. Analytical approach focuses on either determining whether the introduction of a program or practice (like training program or new compensation system) has the intended effect or estimating the financial costs and benefits resulting from an HRM practice. Analytical approach is critical because it shows HR has value.

Critical organizational capabilities that link HR and business performance, such as:

- HR operating efficiency - Human (intellectual) capital: - Leadership depth: - Learning: - Change: - Customer connection: - Shared mindset: - Strategic clarity: - Accountability: - Boundaryless organization:

Theoretical frameworks:

-behavioral perspective -human capital theory -resourcebased view -I/O model

The threedimensional model of people strategy: eight variations

1. Mere tactics speak: Weak vertical alignment. Weak horizontal alignment. Weak action. 2. Mere process speak: Weak vertical alignment. Strong horizontal alignment. Weak action. 3. Mere strategy speak: Strong vertical alignment. Weak horizontal alignment. Weak action. 4. Mere rhetoric: Strong vertical alignment. Strong horizontal alignment. Weak action. 5. Tactics driven: Weak vertical alignment. Weak horizontal alignment. Strong action. 6. Process driven: Weak vertical alignment. Strong horizontal alignment. Strong action. 7. Strategy driven: Strong vertical alignment. Weak horizontal alignment. Strong action. 8. Strategy and process driven: Strong vertical alignment. Strong horizontal alignment. Strong action.

I/O model

1. Strategy is dictated by the external environment of the firm. 2. Firm develops internal skills required by the external environment.Focuses on opportunities and threats.

Practice of Becoming a Strategic Partner

3 Key Factors Access, Credibility and Trust

Shared Mindset

Ability of an organization to create a common culture among all employees. (Degree of common focus among employees, degree of shared values).

Leadership Depth

Ability of an organization to ensure high quality of leadership throughout the company. (Ex: bench strength, backup in place for key jobs).

Learning

Ability of an organization to generate and generalize ideas with impact. (Ex: innovative training, compensation and communication efforts which encourage sharing ideas).

Strategic Clarity

Ability of an organization to have a focused and clear strategy. (Ex. degree of common strategy focus, degree to which strategy focuses on future).

Accountability

Ability of an organization to have clear standards and expectations. (Ex. Setting goals, degree of clarity around responsibility, degree of clear processes)

Boundryless Organization

Ability of an organization to move people, authority, and ideas and to reward behaviors across boundaries. (Ex. Encourage information sharing, talent movement, teams, and rewards to be shared all over).

Change

Ability of an organization to move quickly (agility, flexibility, speed). (Ex. Pace of change, speed of decision making, agility).

Assess HR's competencies

Administrative Expertise: Administrative efficiency. (Measured by: Benefits cost per employee, processing cost per transaction, response time for benefit information requested.) Employee Advocacy: Hiring effective workers. Can HR staff serve the workforce and growth and retention of 'A' players? (Measured by: Retention rates of critical human capital, growth rate of core competency human capital, etc.) Strategy Execution: Align HR practices with HR strategy. (Measured by: extent the workforce understands the business strategy, line management's feedback on HR's vertical alignment). Change Agency: "Cultural change". (Measured by: success rate of external hires, employee knowledge of the status of change efforts).

Assess HR's Systems:

Alignment: Need to make sure culture aligned with firm value proposition. Does HR "fit" with the firm's strategy? Firm structure: loose vs tight Firm focus: internal vs external Strategies: 1. Operational excellence strategy: (tight and internal) low cost operator, no creative, no benefits, short term focused. Ex: McDonalds 2. Product (or service) leadership: (loose and external) Innovative strategy, R&D, uniqueness, good benefits. Ex: Intel 3. Customer intimacy:(tight and external) Customization, customer needs satisfied, adaptable and flexible. Ex: Home Depot Integration: HR needs a common language and HR and management should be supportive of each other. Differentiation: Does HR differentiate its practices based on the type of workforce? 1. Contract services: readily available human capital with little strategic value 2. Professional partners: Positions within the firm not directly responsible for leveraging value proposition 3. Operational partners: widely distributed in the labor market, have a significant impact of value proposition of the firm. 4. Strategic capabilities: require the most care by HR because they leverage the firm's value proposition.

HR scorecard to evaluate HR effectiveness

Assess HR's competencies, practices, Systems, and Deliverables

Transactional

Benefits the individual. Day to Day, routine hr activities. Ex. Updating an employees HR record.

Traditional/Tactical

Benefits work group. Organization can take back and doesn't cost a lot. Ex. Creating a newhire training curriculum for the sales force.

best practices

Best work practices are systems that have positive effects on org performance. Such as job security, selective hiring, and use of teams.

HR operating efficiency:

Better, faster, and cheaper HR practices to do better HR work at a lower cost. (ex: appropriate use of technology, creating shared service departments, and increasing investments in training and development for HR pros).

Strength in taking action

Build a complete picture of the organization's human resources: review all HR documentation and communication of the organization's strategic objectives to measure the degree of alignment between the stated HR objectives and the business goals and needs. Measure the enactment of people practices. Measure and appraise the behavior and values of managers. Take bold actions: Take bold and sometimes unpopular actions to demonstrate to the organization the behaviors you want to support. 6 Keep the best: Continuity of people is a crucial factor. Focus on doing: A clear ability to translate policies and strategies into definite action plans.

Competencies, characteristics, and attributes required to become a strategic HR partner (SP) and an effective HR leader

Business competence Know the company's business and understand its economic and financial capabilities. Calculate costs and benefits in terms of dollars and nonmonetary impact. Identify social and ethical issues attached to HRM practices. Professional and technical knowledge Staffing, development, rewards, organizational design, and communication. Integration competence Integrate the other three competencies to increase company's value. Need specialist knowledge and generalist perspective. Ability to manage and/or lead change diagnosing problems, implementing organizational changes, and evaluating results. Strategic partner competencies analytical skills, business knowledge, change management skills, facilitation skills, HR systems and process knowledge, human performance technology understanding, persuasive skills, project management skills, interviewing skills, relationship building skills, strategic thinking skills, systemic thinking skills, and technological skills. Strategic partner attributes behavioral flexibility, objectivity, selfconfidence, and tolerance for ambiguity .

THE HR SCORECARD SEVEN-STEP PROCESS TO IMPLEMENT HR'S STRATEGIC ROLE IN ORGANIZATION

Clearly define the business strategy Build a business case for HR as a strategic asset Create a strategy map Identify HR deliverables within the strategy map Align the HR architecture with deliverables Design the strategic measurement system (HR scorecard) Implement management by measurement

Assess HR's practices

Communication, Work Design, Selection, Development, Rewards Measured by: collect best practice data from available sources or actually conduct site visits. Compare against a baseline and make changes based on that.

Studying the External Enviornment VS Internal

External - What firms might choose to do. Examine opportunities and threats Internal - What they can do. Unique resources, capabilities, and competencies.

GAPS model

GGo for the business and performance SHOULDS... what should organization be doing? Ex. Business should be closing sales. A Analyze the business and performance IS What is business doing? P Pin down the causes. Factors external and internal to organization and internal to individual Why is organization doing what they are doing? S Select the right solution Ex. Is training really the problem? Maybe the wrong people are hired..

Strong horizontal alignment

Get the balance right: Have clearly articulated HR policies in place. Foster creative dialogue: Create time and space for conversations and legitimize big broad questions. Think systemically: Create a systems map of the practices and processes and the relationship between the two.

Partnership

HR professionals work in line with managers and employees

Explain why it is critical to measure HR function effectiveness

Having good measures of the functions effectiveness provides the following benefits, - Marketing the function: Shows HR cares about organization as a whole and supports operations, production, marketing and other functions. Information regarding cost savings and benefits is useful to prove to internal customers that HRM practices contribute to the bottom line. - Providing Accountability: Evaluation helps determine whether the HRM function is meeting its objectives and effectively using its budget.

Theories of strategic HRM

High performance work systems, best practices, and HR bundles practices that reinforce each other and predicts firm's financial performance

3 Key Factors Access

Identify client: Make sure you are talking to the right person. Needs to know the business strategy and objectives/goals. Someone who has power to make those decisions. Access consists of determining the specific owners of the business and performance needs and gaining facetime with those individuals.

Implement

Implement people initiatives in support of the business plan and manage change process. Make sure there are people initiatives that support HR plan. HR needs to wear different hats to support business plan.

In order to be an effective HR partner through strategic engagement...

In order to be an effective HR partner HR needs to contribute, integrate, implement and be able to measure the results.

Integrate

Integrate HR strategic plans, initiatives and processes into the business plan.. communicate the business plan to HR colleagues, conduct organization wide audits to determine readiness, etc.

Transformational/Strategic

Linked to strategic goals of firm, long term. Ex. Aligning reward systems across the organization to ensure that they consistently encourage the fulfillment of customer needs.

Measuring

Measuring Strategic plans must create ways of measuring results of their work in the major areas. Measure and be accountable for the results

Organizations possess capabilities which meet the following criteria:

Offer integration organizationally based Add value to customers capabilities defined by those outside the firm 7 Maintain continuity stable over time Offer uniqueness difficult to copy Engage employees create meaning for employees Establish identity

The three dimensions of a people strategy

Putting HR plans into action! - Vertical alignment HR policies and practices should reflect, reinforce, and support the organization's business goals and objectives. - Horizontal alignment Developing and articulating clear HR policies that consistently relate to one another. Focuses on the policies, not the practices. 5 - The action dimension 1. Experiences by employees of HR policies. (ex. a policy stating 5 performance appraisals a year. If employees don't experience 5 a year, the policy hasn't been put into action). 2. Behaviors and values of the managers as they are implementing policy. (Attitudes and behavior show if a manager supports a policy or not).

Strong vertical alignment

Quick wins: Decide on a few key areas where you could quickly demonstrate a contribution and where the positive benefits of change would be readily visible to significant line managers. Gain reputational effectiveness: Secure the resources you need by meeting the businessgoal expectations of line management colleagues. Build a businessfocused HR team: Work alongside line managers to take part in daytoday decision making about running business units. Look up and out: Look up at what's happening at the top of the organization and out to see what is happening in industry, profession, neighborhood, and world.

Human (intellectual) capital:

Represents the collective knowledge, skills, and abilities of all employees within a firm. (Ex: need to hire, train, incentivize, and govern employees with the right set of skills in the right way. Competence and commitment of employees).

What is Strategic HRM?

Show how HR adds value to the firm for above avg. returns. Goalto deploy & allocate resources in a way that gives an organization competitive advantage.

The integrated framework for managing human resources

The firm's strategy will affect HR activities. Start with complete external environment: Economic globalization, politics, labor markets, union, laws, culture. Within External Environment you have the following which all connect: 1)Org Environment: Tech, Company Culture, Biz Strategy 2) Activities for managing HR 3) Stakeholder objective to be satisfied

strategy implementation

The methods by which strategies are operationalized or executed within the organization

strategy formulation

The set of processes involved in creating or determining the org strategies; focuses on content of strategies

HR Roadmap

This Roadmap offers human resources leaders a framework and advice on how to create a robust succession planning program that aligns talent management with the vision of the company, ensures employees have development opportunities to hone their leadership skills, and guarantees that the organization has a leadership plan in place for success in the future.

4 types of business strategies

Total quality Low cost Customer service Innovation

How to Identify and partner on strategic projects

Use GAPS model to engage client in strategic thinking and problem solving before jumping to a solution

In order for a resource or capability to help a firm gain a competitive advantage, it must be

Valuable Rare Inimitable (costly to imitate) History / path dependency Importance of small decisions Social complexity And the firm needs to be organized in order to exploit the competitive potential of its resources and capabilities

The practice of strategic HRM

Vertical integration, Horizontal integration, Demonstrating effectiveness, & Partnership

Assess HR's Deliverables and link to the business scorecard:

Workforce Mindset: measure with surveys by asking 3 questions: 1) Do employees know & understand firm's strategy? 2) Do emps know & understand the status of firm's success? 3)do emps know & understand firm's value proposition & how it's delivered? Technical Knowledge: Workforce Behavior:

Credibility

achieved when your clients believe in your capabilities to deliver the results they expect that meet agreed upon criteria and standards. When you have credibility your clients know you will take actions that have a positive impact on employees performance and business results.

Why do investments in HR lead to business performance?

because investments in HR create capabilities which create an organization's unique ability to turn strategy into results.

How do investments in HR lead to business performance?

by focusing or bundling HR investments on capabilities which in turn allow strategies to lead to results.

There are ___ factors that affect investment in HR and firm performance.

contingent (subject to chance.)

behavioral perspective

different strategies require different role behaviors of the employees and thus require different human resource practices. HRM is effective when the expectations which it communicates internally and the ways in which it evaluates performance are congruent with the systems behavioral requirements. defines an effective HRM system as one that accurately identifies the behaviors needed to implement the firms strategy, provides opportunities for employees to engage in the behaviors needed, ensures employees have the competencies required and motivates employees to behave as needed.

Sustainable competitive advantage

difficult to copy and understand. (Hard to copy, rare, adds value).

resourcebased view

emphasizes the need for resources as being primary in the determination of policies and procedures. Organizations are viewed as being able to succeed by gaining and retaining control over scarce, valuable, inimitable resources. Focuses on strengths and weaknesses

The HR Triad

he close cooperation between HR professionals, line managers, and employees (includes unions). Sharing ideas with each other to improve company performance. Employers ensure they meet needs of employees. 1) HR professionals: assist line mgrs, employees, union to develop & implement elements of HR systems 2) Line Mgrs: include HR with business strategy & put into place to achieve strategies 3) Employee/union: implement HR activities

Firms with extraordinary increases in market value seem to invest in

high performing work practices

HR investments have a ___ impact under conditions of high environmental change. They do ___ as well in consistent conditions.

higher; not work

Horizontal integration

integrate HR as a whole; communication between departments effectively (cohesively and coherent HRM systems; ie. Best practices)

Strategic contingencies

managers adopt strategies to compete in specific environments ie. cost reduction, quality improvement, or innovation

Vertical integration

objectives of company are aligned with HR policies, goals, & practices (ie. Mission statement & values; organizational environment) Ensures the firm's HR practices comply with all aspects of organization's environment & 1 competitors ie. Pay Practices

Organizational capabilities

offer a way of thinking about the missing link between strategy and action.

human capital theory

people are of value to the organization to the extent they make it productive. Organizations make decisions about investment in people viewing them as a form of capital. Costs related to training, retraining, motivating, viewed as a form of capital.

Demonstrating effectiveness

show how HRM system affects organization's performance (unbiased and objective; in monetary terms; how we add value)

Ulrich describes the capabilities as the

skills, abilities, and expertise of the organization.

High performance work systems

specific combination of HR practices, work structures, and processes that maximize employee knowledge, skill, commitment, and flexibility - with the aim of enhancing employee effectiveness. High-performance work systems are complex structures, and are formulated out of several interrelated components. Characteristically, the system is created with planning empowered work teams to carry out key business practices. All the Team members are selected and trained on technical, problem-solving, and interpersonal skills.

Integrated framework(

the characteristics of organization & external environments are important between human resource management systems and context.

Configuration perspective

those who view this perspective differently from contingencies have two issues: horizontal & vertical integration. certain bundles or practices may be more appropriate because they fit together mutually

Contribute

to formation of business strategies/plans... have deep knowledge of business, familiarize with organizations strategic planning process.

Different types of HR activities (for becoming a strategic HR partner)

transformational / strategic, traditional / tactical, transactional (like the pyramid)

Trust

when your clients have confidence in your integrity and reliability to achieve results in support of the business. Developing trust requires congruence between what you say and what you do.