16 Chapter Strategically Managing the HR Function Objectives Irwin/McGraw-Hill • Describe the roles that HR plays in firms today and the categories of HR activities • Discuss how the HR function can define its mission and market • Explain the approaches to evaluating the effectiveness of HR practices • Describe the new structure for the HR function • Relate how process reengineering is used to review and redesign HR practices • Discuss the types of new technologies that can improve the efficiency and effectiveness of HR • Describe how outsourcing HR activities can improve service delivery efficiency and © The McGraw-Hill Companies, Inc., 2000 effectiveness Roles of HR 16-2     Irwin/McGraw-Hill Strategicpartner partner Strategic managementof of strategic strategic human human  management resources resources Administrative expert expert Administrative managementof of firm firminfrastructure infrastructure  management Employeeadvocate advocate Employee managementof of employee employeecontributions contributions  management Change agent agent Change managementof of transformation transformationand and  management change change © The McGraw-Hill Companies, Inc., 2000 16-3 Activities of HR Transformational Traditional Transactional Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 16-4 Customer-oriented Perspective of the HR Function Customers •Line managers •Strategic partners •employees Technology Customer Needs •Staffing •Performance Management •Rewards •Training & Development Irwin/McGraw-Hill HR Function • committed employees •competent employees © The McGraw-Hill Companies, Inc., 2000 Measuring Human Resource Effectiveness: Why Do It? 16-5 Provides critical critical information information for for its its  Provides strategic management management strategic Market the the function function  Market Provides accountability accountability  Provides Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 16-6 Evaluating Human Resource Practices: Approaches  Audit approach approach Audit reviewsoutcomes outcomesof of HR HRfunctions functions  reviews  Analytic approach approach Analytic determineswhether whether program programhad had  determines intendedeffect effect intended estimatescosts costs//benefits benefitsof of program program  estimates human resource resource accounting accounting  human utilityanalysis analysis  utility Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 16-7 Auditing Examples of Key Indicators and Customer Satisfaction Measures for HR Functions Key Indicators Customer Satisfaction Measures Staffing - Average days to fill position - Ratio of acceptances to offers - Ratio of minority / women to representation in labor market - Treatment of applicants - Per capita recruitment costs - Average years of education per job family - Anticipation of personnel needs - Timeliness of referring qualified candidates to supervisors - Skill in handling terminations - Adaptability to changing labor market conditions Equal Employment Opportunity - Ratio of EEO grievances to employee population - Minority representation by EEO category - Minority turnover rate Irwin/McGraw-Hill - Resolution of EEO grievances - Daily assistance provided by HR department in implementing AA - Aggressive recruitment to identify qualified women/minority applicants © The McGraw-Hill Companies, Inc., 2000 16-8 Auditing Examples of Key Indicators and Customer Satisfaction Measures for HR Functions Key Indicators Compensation - Per capita merit increases - Ratio of reclassification to total employees - Competitiveness in labor market - Percentage of overtime hours to straight time - Ratio of average salary offers to other firms in community Customer Satisfaction Measures - Fairnesss of existing job evaluation systems in assigning grades & pay - Relationship between pay and performance - Employee satisfaction with pay Benefits - Average unemployment compensation payment - Average workers’ compensation payment - Benefit cost per payroll dollar Irwin/McGraw-Hill - Promptness in handling claims - Fairness in application of policies - Communication of benefits - Assistance to line managers in controlling unnecessary claims © The McGraw-Hill Companies, Inc., 2000 16-9 Auditing Examples of Key Indicators and Customer Satisfaction measures for HR Functions Key Indicators Training - % of employees participating per job family - % receiving tuition refunds - Training dollars per employee Customer Satisfaction Measures - How well programs meet needs of employees and company - Communication about available training opportunities - Quality of orientation program Employee Appraisal and Development - Distribution of appraisal info - Appropriate dimensions on appraisal forms - Ratio of promotions to employees - Ratio of openings filled internally to externally Irwin/McGraw-Hill - Assistance in identifying potential - Organizational development activities provided by department - Number of promotions from within - Counseling provided to employees in career planning © The McGraw-Hill Companies, Inc., 2000 16-10 Example of Cost- Benefit Approach for a Selection Test Cost-Benefit Information Current employment Number separating Number selected Average tenure Computation Quantity Quality Utility Irwin/McGraw-Hill 4,404 618 618 9.69 years Test Information Number of applicants Testing cost per applicant Total test cost Average test score Test validity SD (per year) 1,236 $10 $12,360 80 SD 76 $10,413 = Average tenure x Applicants selected = 9.69 years x 618 applicants = 5,988 person-years = Average test score x test validity x SDy = 80 x 76 x $10,413 = $5,331 per year = ( Quantity x quality ) costs = (5,988 person-year x $5,331 per year) - $12,360 = $37.9 million © The McGraw-Hill Companies, Inc., 2000 16-11 Improving HR Effectiveness Restructuring  Restructuring Outsourcing  Outsourcing Process Redesign Redesign  Process Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-12 STEP Identify the process to be reengineer ed Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-13 STEP STEP Identify the process to be reengineere d Irwin/McGraw-Hill Understand the process - can jobs be combined? - can employees have more autonomy? - are all the steps needed? - is there redundancy? - how many exceptions are there? - are steps in proper order? - what is the desired outcome? © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-14 STEP STEP Identify the process to be reengineered Irwin/McGraw-Hill STEP Understan d the process Redesign the process - develop models - test models - choose prototype - integrate prototype © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-15 STEP STEP Identify the process to be reengineered STEP Understand the process STEP Redesign the process Irwin/McGraw-Hill Implement the new process © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-15 STEP STEP Identify the process to be reengineered STEP Understand the process STEP Redesign the process Implement the new process feedback Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 Using New Technologies to Improve HR Effectiveness 16-17         Interactive Voice VoiceTechnology Technology Interactive Internet Internet Networks&& Client-Server Client-Server Networks Architecture Architecture RelationalDatabases Databases Relational Imaging Imaging CD-ROM&& Laser Laser Disc DiscTechnology Technology CD-ROM ExpertSystems Systems Expert Groupware Groupware Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 Software Applications for HRM 16-18           Staffing Staffing applicantrecruiting recruiting&&tracking tracking  applicant EEO&& AA AAreports reports  EEO Developingaamaster masteremployee employeedatabase database  Developing HumanResource ResourcePlanning Planning Human  work-force profile analysis  work-force profile analysis  work-forcedynamics dynamicsanalysis analysis  work-force PerformanceManagement Management Performance Training&&Career CareerDevelopment Development Training Compensation&&Benefits Benefits Compensation payroll  payroll jobevaluation evaluation  job salarysurveys surveys&&planning planning  salary internationalcompensation compensation  international benefitsmanagement management  benefits Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 [...]... HumanResource ResourcePlanning Planning Human  work-force profile analysis  work-force profile analysis  work-forcedynamics dynamicsanalysis analysis  work-force PerformanceManagement Management Performance Training&&Career CareerDevelopment Development Training Compensation&&Benefits Benefits Compensation payroll  payroll jobevaluation evaluation  job salarysurveys surveys&&planning planning... CD-ROM&& Laser Laser Disc DiscTechnology Technology CD-ROM ExpertSystems Systems Expert Groupware Groupware Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 Software Applications for HRM 16-18           Staffing Staffing applicantrecruiting recruiting&&tracking tracking  applicant EEO&& AA AAreports reports  EEO Developingaamaster masteremployee employeedatabase database  Developing... 4 Redesign the process Implement the new process feedback Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 Using New Technologies to Improve HR Effectiveness 16-17         Interactive Voice VoiceTechnology Technology Interactive Internet Internet Networks&& Client-Server Client-Server Networks Architecture Architecture RelationalDatabases Databases Relational Imaging Imaging... combined? - can employees have more autonomy? - are all the steps needed? - is there redundancy? - how many exceptions are there? - are steps in proper order? - what is the desired outcome? © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-14 STEP 1 STEP 2 Identify the process to be reengineered Irwin/McGraw-Hill STEP 3 Understan d the process Redesign the process - develop models... Process Redesign Redesign  Process Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-12 STEP 1 Identify the process to be reengineer ed Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-13 STEP 1 STEP 2 Identify the process to be reengineere d Irwin/McGraw-Hill Understand the process - can jobs be combined? - can employees have... Compensation&&Benefits Benefits Compensation payroll  payroll jobevaluation evaluation  job salarysurveys surveys&&planning planning  salary internationalcompensation compensation  international benefitsmanagement management  benefits Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2000 ... prototype - integrate prototype © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-15 STEP 1 STEP 2 Identify the process to be reengineered STEP 3 Understand the process STEP 4 Redesign the process Irwin/McGraw-Hill Implement the new process © The McGraw-Hill Companies, Inc., 2000 The Reengineering Process 16-15 STEP 1 STEP 2 Identify the process to be reengineered STEP 3 Understand the process