Human Resource Management: Gaining a Competitive Advantage Chapter 16 Strategically Managing the HRM Function McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc All rights reserved Learning Objectives  Discuss roles that HRM plays and categories of HRM activities  Discuss how HRM function can define its mission and market  Explain approaches to evaluating the effectiveness of HRM practices  Describe new structures for HRM function  Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness  Relate how process reengineering is used to review and redesign HR practices  Discuss types of new technologies that can improve HR efficiency and effectiveness  List competencies HRM executive needs to become a strategic partner in the company 16-2 Introduction  HRM practices can help companies gain a competitive advantage  Virtually every HR function in top companies is going through a transformation process to create a function that can play this new strategic role while fulfilling its other roles 16-3 Categories of HRM Activities Transformational Knowledge Management Cultural Change Strategic Redirection & Renewal Management development Traditional Recruitment and Selection Training Performance Management Compensation Employee Relations Transactional Benefits Administration Record Keeping Employee Services 16-4 Categories of HRM Activities  Transactional activities - day-to-day transactions - Low strategic value  Traditional activities - nuts and bolts of HR such as performance management, training, recruiting, selection, compensation and employee relations - Moderate strategic value  Transformational activities create long-term capability and adaptability Activities include knowledge management, management development, cultural change and strategic redirection and renewal - Greatest strategic value 16-5 Strategic Management of HRM  For HR to become truly strategic in its orientation, it must view itself as a separate business entity  Customer orientation is one of the most important changes in HR's attempt to become strategic  Products of HR must be identified  Technologies through which HR meets customer needs vary depending on the need being satisfied 16-6 Customer-Oriented Perspective Customers Line managers Strategic planners Employees H R M Technology Customers’ Needs Staffing Performance Management Committed Employees Rewards Competent Employees Training & Development 16-7 Basic Process for HR Strategy Scan external environment Identify strategic business issues Identify people issues Develop HR strategy Communicate HR strategy 16-8 Involving Line Executives  Involving those in charge of running the business can increase quality of information from which HR strategy is created  Involvement can occur ways: Line executives could provide input Line executives could be members of a team that develops HR strategy Once strategy is developed, line managers could receive communications with HR strategy information Line managers could formally approve a strategy 16-9 Characterizing HR Strategies HR-Focused People issues/ outcomes HR strategy People-Linked People issues/ outcomes HR strategy Business-Linked Business issues/ outcomes People issues/ outcomes HR strategy People issues/ outcomes HR strategy Business-Driven Business issues/ outcomes 16-10 Measuring HRM Effectiveness  Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions  Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget 16-11 Audit & Analytic Approaches Evaluating HRM Effectiveness Audit Approach • Focuses on reviewing various outcomes of HR functional areas • Both key indicators and customer satisfaction measures are collected • Employee assessment • Surveys of top executives Analytic Approach • Focuses on either: (1) determine whether introduction of a program or practice has intended effect or (2) estimate financial costs and benefits resulting from HR practice • More demanding than the audit approach because it requires detailed use of statistics and finance 16-12 Restructuring to Improve HRM  Divisions of HRM: Centers for Expertise - functional specialists in traditional areas of HR who act as consultants in development of state-of-the-art systems and processes for use in the organization Field Generalists - HRM generalists assigned to a business unit Service Center - ensure that transactional activities are delivered throughout the organization 16-13 Outsourcing  Outsourcing - Contracting with an outside vendor to provide a product or service to the firm  Reasons to Outsource:  Outsourcing partner can provide the service more cheaply  Outsourcing partner can provide it more effectively • Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration 16-14 Reengineering  Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality Steps of The Reengineering Process : Identify process to be reengineered Understand process Redesign process Implement process Feedback 16-15 Improving HRM Effectiveness through New Technologies  New technologies - Applications of knowledge, procedures, and equipment that have not previously been used  Transaction Processing—Computations and calculations used to review and document HRM decisions and practices These include documenting employee relocation, payroll expenses and training course enrollments  Decision Support Systems—Systems designed to help managers solve problems  usually include a "what if" feature  Expert systems - Computer systems incorporating decision rules of people deemed to have expertise in a certain area 16-16 Network and Client Server Architecture  A Network is a combination of desktop computers, computer terminals and mainframes or minicomputers that share access to databases and a means to transmit information throughout the system • Client-server architecture is a common form of network that provides the means of consolidating data and applications into a single system 16-17 Relational Database, Imaging and Groupware  Relational database – Information is stored in separate files that look like tables and can be linked by common elements such as name  Imaging – Process for scanning documents, storing them electronically and retrieving them  Groupware (or electronic meeting software) – software application that enables multiple users to track, share and organize information and to work on same document simultaneously 16-18 Software Applications for HRM  Improving HRM Effectiveness through New Technologies–E-HRM – Speed requirements of e-business force HRM managers to explore how to leverage technology for delivery of traditional and transformational HRM activities  Recruitment and Selection - Technology monitors hiring processes to minimize potential for discriminatory hiring decisions  Compensation and Rewards - Leveraging technology may allow firms to better achive compensation goals with less effort  Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively 16-19 The Future for HR Professionals  The future for HRM careers brighter than ever  HR leaders need knowledge of the following: - business, change processes, integration competence and people’s role in competitive advantage - HR issues, tools, processes and technologies, policies and programs - HR practices in areas such as staffing, development, rewards, communication and organizational design 16-20 Summary  HRM functions must consist of individuals who view themselves as businesspeople who work in HRM  With the opportunity to impact the way organizations compete through people, comes serious responsibility and accountability  Firms need balance attracting, motivating and retaining the best talent and keeping costs low  HR leaders need knowledge of the business combined with knowledge of HR issues, tools, processes and technology 16-21 [...]... Relational Database, Imaging and Groupware  Relational database – Information is stored in separate files that look like tables and can be linked by common elements such as name  Imaging – Process for scanning documents, storing them electronically and retrieving them  Groupware (or electronic meeting software) – software application that enables multiple users to track, share and organize information... to have expertise in a certain area 16-16 Network and Client Server Architecture  A Network is a combination of desktop computers, computer terminals and mainframes or minicomputers that share access to databases and a means to transmit information throughout the system • Client-server architecture is a common form of network that provides the means of consolidating data and applications into a single...Measuring HRM Effectiveness  Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions  Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget 16-11 Audit & Analytic Approaches Evaluating HRM Effectiveness Audit Approach... detailed use of statistics and finance 16-12 Restructuring to Improve HRM  3 Divisions of HRM: 1 Centers for Expertise - functional specialists in traditional areas of HR who act as consultants in development of state-of-the-art systems and processes for use in the organization 2 Field Generalists - HRM generalists assigned to a business unit 3 Service Center - ensure that transactional activities are... reviewing various outcomes of HR functional areas • Both key indicators and customer satisfaction measures are collected • Employee assessment • Surveys of top executives Analytic Approach • Focuses on either: (1) determine whether introduction of a program or practice has intended effect or (2) estimate financial costs and benefits resulting from HR practice • More demanding than the audit approach because... change processes, integration competence and people’s role in competitive advantage - HR issues, tools, processes and technologies, policies and programs - HR practices in areas such as staffing, development, rewards, communication and organizational design 16-20 Summary  HRM functions must consist of individuals who view themselves as businesspeople who work in HRM  With the opportunity to impact... information and to work on same document simultaneously 16-18 Software Applications for HRM  Improving HRM Effectiveness through New Technologies–E -HRM – Speed requirements of e-business force HRM managers to explore how to leverage technology for delivery of traditional and transformational HRM activities  Recruitment and Selection - Technology monitors hiring processes to minimize potential for discriminatory... throughout the organization 16-13 Outsourcing  Outsourcing - Contracting with an outside vendor to provide a product or service to the firm  2 Reasons to Outsource:  Outsourcing partner can provide the service more cheaply  Outsourcing partner can provide it more effectively • Firms primarily outsource transactional activities and services of HR such as payroll, pension and benefits administration 16-14... decisions  Compensation and Rewards - Leveraging technology may allow firms to better achive compensation goals with less effort  Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively 16-19 The Future for HR Professionals  The future for HRM careers brighter than ever  HR leaders need knowledge... previously been used  Transaction Processing—Computations and calculations used to review and document HRM decisions and practices These include documenting employee relocation, payroll expenses and training course enrollments  Decision Support Systems—Systems designed to help managers solve problems  usually include a "what if" feature  Expert systems - Computer systems incorporating decision rules