Human Resources Chapter 2

SWOT Analysis

A comparison of one's strengths, weaknesses, opportunities, and threats for strategy formulation purposes.

Quality of fill

A metric designed to measure how well new hires that fill positions are performing on the job.

Skill inventories

Files of personnel education, experience, interests, skills, and so on that allow managers to quickly match job openings with employee backgrounds.

Stakeholders

Key people and groups that have an interest in a firm's activities and that can either affect them or be affected by them.

Strategic planning

Procedures for making decisions about the organization's long-term goals and strategies.

Apply what you learned: HR Strategy Steps: Order the following strategy formulation and implementation steps in the order in which they are likely to occur in a firm.

1. Outlining the firm's mission, vision, and values 2. Conducting an environmental analysis 3. Conducting an internal analysis 4. Formulating a strategy 5. Implementing the strategy 6. Evaluating how well the strategy worked

Balanced scorecard (BSC)

A measurement framework that helps managers translate strategic goals into operational objectives.

Markov analysis

A method for tracking the pattern of employee movements through various jobs in a firm.

Trend analysis

A quantitative approach to forecasting labor demand based on a factor such as sales.

Staffing table

A table that shows a firm's jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

Staffing tables

A table that shows a firm's jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

LO 4

After managers have analyzed the internal strengths and weaknesses of the firm, as well as external opportunities and threats, they have the information they need to formulate corporate, business, and HR strategies for the organization. A firm's corporate strategy includes the markets in which it will compete, against whom, and how. The firm's business strategy is viewed in terms of domain navigation. It is more focused on how the company will compete against rival firms to create value for customers. A firm's HR strategies and practices should be aligned with its corporate and business strategies.

LO 2

Analyzing the firm's external environment is central to strategic planning. Benchmarking is the process of looking at your practices and performance and then comparing them to those of your competitors. Environmental scanning is the systematic monitoring of major external forces influencing the organization, including forces in the business environment and the competitive environment. Changes in the external environment have a direct impact on the way organizations are run and people are managed. Some of these changes represent opportunities, and some of them represent real threats to the organization.

Cultural audits

Audits of the culture and quality of work life in an organization.

LO 3

Conducting an internal analysis to gauge the firm's strengths and weaknesses involves looking at a firm's core capabilities, its talent and composition in the firm, and the firm's corporate culture. An internal analysis enables strategic decision makers to assess the organization's workforce—its skills, cultural beliefs, and values. An organization's success increasingly depends on the knowledge, skills, and abilities of employees, particularly as they help establish a set of core capabilities that distinguish an organization from its competitors. When employees' talents are valuable, rare, difficult to imitate, and organized, a firm can achieve a sustained competitive advantage through its people. HRP is a systematic process that involves forecasting the demand for labor, performing supply analysis, and balancing supply and demand considerations. Quantitative and qualitative methods help a firm identify the number and type of people needed to meet the organization's goals.

Competitive environment

Consists of a firm's specific industry, including the industry's customers, rival firms, new entrants, substitutes, and suppliers.

Apply what you learned: Demand or Supply? If you are doing the following activities as an HR manager, are you assessing your firm's demand for employees externally or its supply of employees internally? Match each item to the appropriate category.

Demand: 1. You ask managers how many employees they will need in the coming year. 2. You look at your firm's sales records to detect any seasonal patterns in revenues. Supply: 1. You conduct a Markov analysis. 2. You outline the skills your firm will need in the months to come and match them to the skills of your current employee base. 3. You look at your organizational chart to see if there are shortages of employees in certain areas or if there will be in the future.

Business environment

Factors in the external environment that a firm cannot directly control but that can affect its strategy and performance.

LO 5

Formulating an HR strategy is only half of the HR battle. The strategy must also be executed. Human resources management is instrumental to almost every aspect of strategy execution, whether it pertains to the organization's structure, systems, style, skills, staff, or shared values. Like the firm as a whole, HR has to focus on ensuring agility when the environment changes. Employment forecasts must also be reconciled against the internal and the external supplies of labor the firm faces. This can include having current employees work overtime; hiring full-time, part-time, or contract employees; downsizing employees; furloughing them; and outsourcing or offshoring. If there is a labor shortage, the firm might have to reformulate its long-term and short-term strategic plans or find ways to develop employees "from the ground up."

Core capabilities

Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers.

Replacement charts

Listings of current jobholders and people who are potential replacements if an opening occurs.

LO 1

Strategic human resources management (SHRM) integrates strategic planning and HR planning. It can be thought of as the pattern of human resource deployments and activities that enable an organization to achieve its strategic goals. The firm's mission, vision, and values provide a perspective on where the company is headed and what the organization can become in the future. Ideally, they clarify the long-term direction of the company and its strategic intent.

Talent reviews

Strategic meetings to determine if a company has the human resources it needs to compete in the future.

Environmental scanning

Systematic monitoring of the major external forces influencing the organization.

Mission

The basic purpose of the organization as well as its scope of operations.

Management forecasts

The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization's future employment needs.

Strategic human resources management

The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals.

Human resources planning (HRP)

The process of anticipating and providing for the movement of people into, within, and out of an organization

Human capital readiness

The process of evaluating the availability of critical talent in a company and comparing it to the firm's supply.

Succession planning

The process of identifying, developing, and tracking key individuals for executive positions.

Benchmarking

The process of looking at your practices and performance in a given area and then comparing them with those of other companies.

Core Values

The strong and enduring beliefs and principles that guide a firm's decisions and are the foundation of its corporate culture.

LO 6

To evaluate their performance, firms need to establish a set of "desired" objectives as well as the metrics they will use to monitor how well their organizations delivered against those objectives. The objectives can include achieving certain levels of productivity, revenue, profit, market share, market penetration, customer satisfaction, and so forth. Issues of measurement, alignment, fit, and agility are central to the evaluation process. Firms use strategy mapping, the balanced scorecard (BSC) tool, and various HR-related metrics for these purposes.

Value creation

What a firm adds to a product or service by virtue of making it; the amount of benefits provided by the product or service once the costs of making it are subtracted.