Strategic HR Management and Planning

NATURE OF HUMAN RESOURCE MANAGEMENT

The strategy an organization follow is its proposition for how to compete successfully and thereby survive and grow.

NATURE OF STRATEGY AND HR MANAGEMENT

Strategic HR management refers to the use of employees to gain or keep a competitive advantage.

NATURE OF STRATEGY AND HR MANAGEMENT

STRATEGIC MANAGEMENT PROCESS

HR Best Practices is a wide array of data from both academics and consulting firms shows that HR practices really do make a significant difference to business outcomes.

STRATEGIC MANAGEMENT PROCESS

• ■ Employment security
• ■ Selective recruiting
• ■ High wages/incentives
• ■ Information sharing/participation
• ■ Training/cross-training
• ■ Promotion from within
• ■ Measurement

Operationalizing Hr Strategy

• ■ Focus on the key business goals.
• ■ Understand the business.
• ■ Know what to measure.
• ■ Prepare for the future. 

Operationalizing Hr Strategy

USING HUMAN RESOURCES AS A CORE COMPETENCY

Using HR

as a Core Compentency

Human resources are a core competency in many organizations, as mentioned in Chapter 1. As such, they create value and create organizational results that are better than those of competitors.

Organizational Culture and Hr

The ability of an organization to use its human capital as a core competency depends at least in part on the organizational culture that is operating.

POSSIBLE HR AREAS FOR CORE COMPETENCIES

Human Resources

• ■ Innovation
• ■ Productivity
• ■ Outstanding Service
• ■ Special Skills
• ■ Unusual Quality

Organizational Culture and Hr

Operationalizing Hr Strategy

ORGANIZATIONAL PRODUCTIVITY

Productivity can be a competitive advantage because when the costs to produce goods and services are lowered by effective processes, lower prices can be charged.

Productivity measure the quantity and quality of work done, considering the cost of the resources used.

Unit labor cost is computed dividing the average cost of workers by their average levels of output.

IMPROVING ORGANIZATIONAL PRODUCTIVITY

• ■ Organizational restructuring
• ■ Re-designing work
• ■ Aligning HR activities
• ■ Outsourcing analyses

IMPROVING ORGANIZATIONAL PRODUCTIVITY

CUSTOMER SERVICE AND QUALITY LINKED TO HR STRATEGIES

• In addition to productivity, customer service and quality significantly affect organizational effectiveness. Having managers and employees focus on customers contributes significantly to achieving organizational goals and maintaining competitive advantage.

CUSTOMER SERVICE AND QUALITY LINKED TO HR STRATEGIES

HR EFFECTIVENESS AND FINANCIAL PERFORMANCE

HR EFFECTIVENESS AND FINANCIAL PERFORMANCE

• Effectiveness is the extent to which goals have been met.

• Efficiency is the degree to which operations are done in an economical manner.

TYPES OF GLOBAL ORGANIZATIONS

• A growing number of organizations that traditionally operated in only one country have recognized the need to develop more global operations. As they broaden their operations worldwide, organizations may pass through three stages.
• Importing and exporting Buying and selling goods and services with organizations in other countries.
• Multi-national enterprise (MNE) Organization that has operating units located in foreign countries.
• Global organization Firm that has corporate units in a number of countries integrated to operate as one organization worldwide.

TYPES OF GLOBAL ORGANIZATIONS

GLOBAL LEGAL AND POLITICAL FACTORS

Firms in the United States, Europe, and elsewhere are accustomed to relatively stable political and legal systems. However, many nations function under turbulent and varied legal and political systems. Therefore, HR-related laws vary in character and stability.

GLOBAL LEGAL AND POLITICAL FACTORS

GLOBAL CULTURAL FACTORS

Cultural forces represent another important concern affecting international HR management.

Culture Societal forces affecting the values, beliefs, and actions of a distinct group of people.

• ■ Inequality in power
• ■ Individualism/group orientation
• ■ Masculinity/femininity
• ■ Uncertainty avoidance
• ■ Long-term/short-term orientation

GLOBAL CULTURAL FACTORS

GLOBAL ECONOMIC FACTORS

Economic factors are linked to political, legal, and cultural issues, and different countries have different economic systems. In many developed countries, especially in Europe, employment restrictions and wage levels are high.

GLOBAL ECONOMIC FACTORS

HR Responsibilities

MANAGERS

HR UNIT

HR Planning Responsibilities

• Identify supply-and-demand needs for each division/department
• Review/discuss HR planning information with HR specialists
• Integrate HR plan with departmental plans
• Monitor HR plan to identify changes needed
• Review employee succession plans associated with HR plan

• Participates in strategic planning process for entire organization
• Identifies HR strategies
• Designs data systems for HR planning
• Compiles and analyzes data from managers on staffing needs
• Implements HR plan as approved by top management

Small Businesses and HR Planning

In a smaller business, even though the owner/manager knows on a daily basis what is happening and what should be done, planning is still important.

Resources or the lack thereof

Level of responsibility

Small Businesses and HR Planning

Naturally, small businesses tend to have limited resources, including a small HR team (usually one to three employees) and a restrictive budget, owing to their modest earnings.

In small businesses, many owners and managers have to wear more hats, especially when it comes to HR. This means roles and responsibilities will often overlap. These can range from recruitment, creating HR budgets or policies, creating financial statements, and managing payroll.

The most important aspects of HR differs significantly from small to large businesses. While small businesses have limitedresources, more responsibilities, and rudimentary recruiting methods, they offer more flexibility and a multifaceted work environment. Large organizations, on the other hand, tend to offer targeted workloads, less room for creativity, and a more structured work environment.

HR Panning Process

HR planning process begins with considering the organizational objectives and strategies. Then HR needs and supply sources must be analyzed both externally and internally and forecasts must be developed. Key to assessing internal human resources is having solid information accessible through a human resource management system.

Once the assessments are complete, forecasts must be developed to identify

the relationship between supply and demand for human resources. Management then formulates HR strategies and plans to address imbalances, both short-term and long-term.

HR Planning Process

The most telling evidence of successful HR planning is a consistent alignment of the availabilities and capabilities of human resources with the needs of the organization over a period

of time.

Government Influences

An expanding and often bewildering array of government regulations affects the labor supply and therefore HR planning. As a result, HR planning must be done by individuals who understand the legal requirements of various government regulations.

Government

Influences

In summary, an organization must consider a wide variety of government policies, regulations, and laws during the HR planning process.

Economic Conditions

The general business cycle of economic recessions and economic booms also affects HR planning. Factors such as interest rates, inflation, and economic growth affect the availability of workers and should figure into organizational and HR plans and objectives.

Geographic and Competition Concerns

net migration

The difference between immigration into and emigration from the area during the year (net migration is therefore negative when the number of emigrants exceeds the number of immigrants).

Direct competitors

another important external force in HR planning. Failure to consider the competitive labor market and to offer pay scales and benefits competitive with those of organizations in the same general industry and geographic location may cost a company dearly in the long run.

Geographic and Competition Concerns

international competition

The impact of international competition must be considered as part of environmental scanning. Global competition for labor intensifies as global

competitors shift jobs and workers around the world, as illustrated by the outsourcing of jobs from the United States to countries with cheaper labor.

Workforce Composition

Changes in the composition of the workforce, combined with the use of different work patterns, have created workplaces and organizations that are notably different from those of a decade ago. Many organizations face major concerns about having sufficient workers with the necessary capabilities.

Workforce Composition

When scanning the workforce, it is important to consider a number of variables, including these:

• Aging of the workforce
• ■ Growing diversity of workers
• ■ Women workers and work/life balancing concerns
• ■ Availability of “contingent workers”
• ■ Outsourcing possibilities

Assessing The Internal Workforce

Analyzing the jobs that will need to be done and the skills of people who are currently available in the organization to do them is the next part of HR planning. The needs of the organization must be compared against the labor supply available inside the organization.

A good example is found in the HR Best Practices feature :

Assessing The Internal Workforce

Job and Skills Audit

• The starting point for evaluating internal strengths and weaknesses is an audit of the jobs being done in the organization. A comprehensive analysis of all current jobs provides a basis for forecasting what jobs will need to be done in the future
• It’s a list of all the incredible skills you have that make you well.

Using a Skills Database

• The concept is to put employees’ skills and technical expertise, prior jobs, training, coaching aptitude, certifications, geographical experience, languages, career aspirations, etc., in a database. The finished product can be queried to fill jobs or analyzed to identify strengths and weaknesses of a division or the whole company.

Organizational Capabilities Inventory

• Organizational capabilities are the intangible, strategic assets that an organization draws from to get work done, execute its business strategy, and satisfy its customers.
• It is includes collaboration, talent management which binds all the part of the business together.
• Focuses on planning, designing and delivering business capabilities to the firm.

FORECASTING HR SUPPLY AND DEMAND

• Forecasting uses information from the past and the present to identify expected future conditions. Projections for the future are, of course, subject to error.
• The information gathered from scanning the external environment and assessing internal strengths and weaknesses is used to predict HR supply and demand in light of organizational objectives and strategies.

Forecasting Methods and Periods

• Methods for forecasting human resources range from a manager’s best guess to a rigorous and complex computer simulation. Despite the availability of sophisticated mathematical models and techniques, forecasting is still a combination of quantitative methods and subjective judgment.
• The facts must be evaluated and weighed by knowledgeable individuals, such as managers or planners, who use the mathematical models as tools and make judgments to arrive at decisions.

Forecasting the Demand for Human Resources

Forecasting the Demand for Human Resources

• Is the unit breakdown allows HR planners to better pinpoint the specific skills needed than the aggregate method does. Demand for human resources can be forecast by considering specific openings that are likely to occur.

• Additionally, forecasts must consider when employees leave positions because of promotions, transfers, turnovers, and terminations.

Forecasting the Supply of Human Resources

Forecasting the Supply of Human Resources

• Forecasting the availability considers both external and internal supplies. Although the internal supply may be somewhat easier to calculate, it is important to calculate the external supply as accurately as possible.

• Human resources needs have been forecast, then availability of human resources must be identified.

External Supply 


The external supply of potential employees available to the organization needs to be identified. Extensive use of government estimates of labor force populations, trends in the industry, and many more complex and interrelated factors must be considered. Such information is often available from state or regional economic development offices, including :

• Net migration into and out of the area
• Individuals entering and leaving the workforce
• Individuals graduating from schools and colleges

External Supply 


Internal Supply 


Internal Supply 


Estimating internal supply considers the number of external hires and the employees who move from their current jobs into others through promotions, lateral moves, and terminations. It also considers that the internal supply is influenced by training and development programs, transfer and promotion policies, and retirement policies, among other factors.

Succession Planning


Succession Planning


Is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions.

Succession planning is a process of developing talent to replace executive, leadership or other key employees when they transition to another role, leave the company, are fired, retire or die. It is relevant to all companies, from the largest to the smallest, in both the for-profit and not-for-profit sectors.