Strategic management And Advanced SHRM.pptx

Advance HRM and strategic management

1. Strategic Human Resource Management (SHRM) Chapter 1

2. Scope Define SHRM Key Roles of HR Manager Activities of HR Manager Which is most Important? References

3. When you think about HR, Human Resources… What comes to your mind?

4. Simple Difficult Cases#1 There is an SME operating as a supplier in the automotive industry (3500 employees). It is desperately looking for software developers . Relying on job ads only does not seem to lead to expected results anymore . Engaging an executive search consultancy turns out to be too expensive. What to do?

5. When facing challenges in hiring software developers for an SME in the automotive industry, there are alternative strategies you can consider that may help you find qualified candidates:

6. Simple Difficult Cases#2 In recent years a company had to deal with an increasing turnover among its most talented and most motivated people. Further research and discussions made clear that there is a lack of career prospects- talented are leaving (Promotion, Career adv) among most talented employees. At the same time key positions mainly have been filled with external candidates. What to do?

7. To address the increasing turnover among the most talented and motivated employees due to a lack of career prospects, you can consider implementing the following strategies:

8. Simple Cases # 3 The new externally hired CEO at an insurance company became instantly aware of the lacking ambition and drive for performance in almost all areas and functions. A strong appeal to all managers and employees probably might not be enough. The company is thinking about a new kind of performance management system. Does this make sense? If yes, how could it look like?

9. What is Strategic HRM? Define SHRM

10. Starbucks started health benefits to even its part time associates They generally believes that its employees who they call partners are the key to Starbucks experience. Starbucks wants its partners to have coffee knowledge & product expertise and provide excellent customer services at same time they believes in treating its partners with dignity and respects. Starbucks started giving comprehensive health benefits that exceed those provided by many other firms although many partners work part-time, they're still eligible for full time benefits, if they work 240 hours in a quarter. It order to save cost, the company cut the workers health care benefits at time of recession.

11. SHRM Definition Link all HR Activities to the Organization's Strategic Objectives “Strategic HRM is an approach that defines how the organization’s goals will be achieved through people by means of HR strategies and integrated HR policies and practices.” - Strategic human resource management : a guide to action, Michael Armstrong, 4th ed .

12. SHRM Definition “Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors that the company needs to achieve its strategic aims.” - Gary Dessler .

13. On the whole, SHRM is concerned with people’s issues and practices that affect or are affected by the organization’s strategic plan. To stay ahead of its competitors, an organization will continuously look for ways to gain an edge over others. Today, an organization competes for less on products or markets and more on people. In the 21st century, there is increasing recognition among management thinkers and practitioners of the potential of human capital resources in providing a competitive advantage.

14. Basics of Strategic HRM HR Programs to enhance overall organizational performance HR in organisation strategic planning from start Pro-actively participate in big picture decision making Redesign organizations and the work processes Measure financial results of all HR activities

15. Strategy- Road Map

16. Strategic Human Resource Management

17. Where is the organisation now? if no changes are made, where will the organisation be in one, two, five or ten years? Are the answers acceptable? If the answers are not acceptable, what specific actions should management undertake? what are the risks and payoff involved?

18. 4 Components of Strategic Human Resource Management

19. Four components of SHRM: It focuses on an organization’s human resources (people) as the primary source of the organization’s competitive advantage. The activities highlight the HR programs, policies, and practices as the means through which the organization’s people can be deployed to gain a competitive advantage. The pattern and plan imply a fit between HR strategy and the organization’s business strategy (vertical fit) and between all HR activities (horizontal fit). The people, practices, and planned patterns are all purposeful, directed towards the achievement of the organization’s goals.

20. Roles of the HR Manager The Multiple Roles of the HR Manager in SHRM

21. The Multiple Roles- David Ulrich 4 key roles for HR managers Strategic Partner Administrative Expert Employee Champion Change Agent-HR* HR manager is a guide, philosopher, friend, path-finder, path identifier, problem solver, competence maker of the human resource.

22. David Ulrich’s 4 Roles of Human Resources Model

23. HR Business Partner 1.  HRBP is a strategic role of Human Resources. 2.  HRBP builds a strategic partnership and relationship with dedicated internal clients. HRBP acts as a single point of contact for internal clients. He represents Human Resources and advertises HR services in the organization. 4.  HRBP gives a honest feedback to the internal client and uses feedback to improve HR procedures and services. 5.  HRBP opens vacancies and preselects candidates that fit best into the team and supports diversity. 6.  HRBP shares business objectives with the internal client and incorporates HR goals into the daily agenda. 7.  HRBP runs cross functional projects aiming to increase productivity, support innovations and develop talents. 8.  HRBP acts as a couch in difficult moments. He facilitates difficult meetings and find a win-win solution

24. Strategic Partner Ability to translate business strategy into action (strategic partnership and relationship with dedicated internal clients) Honest feedback to the internal client and uses feedback to improve HR procedures and services. opens vacancies and preselects candidates that fit best into the team Measure performance- check and recheck Provide Professional advise (facilitates difficult meetings and find a win-win solution) Make the line managers job easier

25. Strategic Partner cont. “A business with HRM involved at strategic level has a competitive advantage”

26. Administrative Expert-Intern Efficiency of HRM ( Cost ) Effective management of HR Activities ( Quality ) Re-engineer HR processes using technology and innovation Create value Measure HR activity results in terms above HR administration-  Daily, operational issues and topics Compensation HRIS Benefits Compliance-Black list

27. Administration Expert HR has to demonstrate its deep knowledge of the labor law, trade union bargaining, dealing with difficult employees and keeping of personal data accurate. HR implements all requirements evolving from the changes in the legislation, regulation, work and safety rules, etc. Administration Expert introduces modern HRIS solutions and eliminates the manual entry of data. The AE identifies data sources about employees for the entire organization and takes the full responsibility for the development of the source

28. Employee Advocate Meet the needs of employees Being fair and principle Assuring employees their voice is being heard Assist employees find new resources so that they can perform their jobs better During the pandemic, Employee Champions are shaping workforce policy and communications, and encouraging companies to take care of their workers Employee relations labour Relation Safety and workers compensation Diversity and equal opportunity

29. Employee Advocate 1.  Employee Advocate or Employee Champion is a core HR role. HR has to represent employees, protect their interests and make sure that strategic initiatives are well balanced. 2.  HR runs regular Voice of Employee satisfaction surveys to identify gaps in the corporate culture and HR and managerial practices. 3.  HR ensures that employees have a fair chance to apply for new roles in the organization. 4.  HR runs training and development sessions to develop skills and competencies of employees. 5.  HR leads initiatives to improve the experience of employees in the organization. 6.  HR manages the regular grievance and compliance procedure to ensure that employees enjoy fair treatment from the management

30. Agent for change & cultural transformation Change agent - Catalyst for change Leading Change (Including in HR) Problem Solving Communication Influencing and convincing skills Cultural transformation Culture of excellence Excellent leadership, planning, processes, people, customer satisfaction, measurement and analysis

31. Change Agent 1. The change agent is a second strategic role of Human Resources. 2.  HR participates in change management teams and takes the responsibility to communicate changes internally and gain the trust of employees. HR leads initiatives to prepare employees to live in a new organization. 3.  HR plans the internal communication and intervenes to plans to make them achievable and understandable by employees. 4.  HR plans training sessions for employees and helps them to gain new skills and competencies, which are required for a changed role. HR updates job descriptions, consults changes with employees and helps them to transform their job habits. 5.  HR continuously collects feedback from employees, transfers it to teams and requires project teams to introduce changes and adjustments, which are positive for employees. 6.  HR supports changes in the organization and leads initiatives to make changes easier for employees.

32. Other inter-related roles Legal Expert HR functional expert Talent manager Organisation ambassador Board & senior executive resource

33. Main HRM Activities What are the main activities of an HR Manager?

34. Management of Organization's HR involves the following aims: Acquisition Development Reward and motivation Maintenance Eventual Departure

35. HRM Activities Job analysis Human resource planning or employment planning Employee recruitment Employee selection Performance appraisal Human resource development activities Career planning and development activities Compensation Industrial relations Health and safety programs Managing diversity

36. HRM Activities Job analysis HR planning or Employment planning Defines a job: Job Descriptions Job Specifications Grouping jobs? Enhanced performance? The Starting Point… Ensures: qualified people Compares: present supply of people with projected demand for HR Produces: decisions Achieves: quality HR and effective equal opportunity planning.

37. HRM Activities Employee recruitment Employee selection Fill from within or outside? Be attractive to prospective employees Methods used: job posting newspaper ads Online Media ( LinkedIn ) executive search Screen the applications Review the applications, Psychological testing Interview References Medical test Make the final selection

38. HRM Activities Performance appraisal HR development activities Determine performance Communicate results Plan for improvement Use appraisal results for: performance based rewarding identifying training & development needs placement decisions Focus on A.S.K. : Attitudes Skills knowledge Continuously Improve Knowledge Skills & Capacity to adapt Change

39. HRM Activities Industrial Relations Remuneration/Compensation Employee – employer relationship Employee attitude & behavior Good or Bad? Broader perspective Employee cash rewards Motivating factor + ve relationship

40. HRM Activities Managing diversity Health and safety programs Ensure Physical & Mental Safety & Wellbeing Safe environment Legal requirements: HASAW 1996 in Fiji Integrate multicultural Fiji population Language challenges Clear communication vital Gender and Cultural challenges

41. HRM Activities Career planning Benefit both employee and the organisation Identifying career goals job opportunities personal improvement Ensure: qualified employees available

42. Which is most Important? Which Role or Activity is most important within the Organisation?

43. Strategic Partner Primary SHRM Role: “ link the various roles/activities of HRM with the strategic objective of the organization and make it clear ” This means strategic partner is the most important role...

44. Why Strategic partner? Strategic partner precedes the other roles In the planning stage Crucial to the organisation Where all HR strategies are aligned with the overall objective of the organization Other HRM roles follow

45. Strategic HRM The company started commercial operation and failed to provide even minimally acceptable quality services. Hence it failed to attract patients. The enquiry into the issue revealed that the doctor’s didn’t have required skills in critical areas to provide high quality treatment. X International Hospital Ltd. Entered a foreign country with a high quality and low price strategy (due to the low salary cost). The company invested heavily in the state of the art medical technology and equipment.

46. After a year of its painful journey, the company deputed its doctors in foreign country by convincing the department of immigration authorities of the country that the local doctor don’t possess advanced skills in critical areas of treatment and survey. The Indian doctors proved their efficiency and treated the patients most successfully. The company after another year of economically and increased the cost of operations and ultimately the company incurred loss for 4 consecutive years. Consequently, the company changed its strategy to high quality and high price strategy. This shift took 5 more years to the company to BEP its financial position. Thus, failed to scan HR envt . Correctly pushed the company adverse situation and change the corporate strategy.

47. X International Hospitals Ltd. The journey of High Quality and Low price strategy High Quality and High price strategy

48. AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT

49. Lecture Overview Employee as Asset The Value of Employees Investment Perspective HR Value Chain Factor Influencing Investment Perspective

50. AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT Employees as “Assets” Decision made by employees critical for success of organization. Competitive advantage does not come from innovative product, efficient and superior services, marketing strategy, financial management or state-of-the-art technology. Having appropriate system for attracting, motivating, and managing human resources determines competitive advantage of any organization.

51. AN INVESTMENT PERSPECTIVE OF HUMAN RESOURCE MANAGEMENT Employees something of value and worth Strategic view of HR consider employees as “asset "and develop appropriate programs to invest on this important asset Successful and most competitive organizations realize that employees have value like other resources Strategic view assist to plan investment on acquisition and management of human resources considering possible risk and return

52. ADOPTING AN INVESTMENT PERSPECTIVE Human Resources can not be duplicated Investment perspective of human resource believe that physical assets such as production facilities, products and services, process, and technology can be imitated by competitors while unique combination of human resource capabilities can not be duplicated Thoughts process, decision making process, and ability to analyze complex data and environment are owned by individual employees If organization's main strategic objective is innovation: must consider human resource as investment.

53. SOURCES OF EMPLOYEE VALUE The value of employees come from their Technical Knowledge (market, customers, process, environment) Ability to Learn and Grow (openness to new ideas, acquisition of knowledge and skills) Decision Making Capabilities Motivation Commitment Team work (Interpersonal skills, leadership skills)

54. ADOPTING AN INVESTMENT PERSPECTIVE Considering the risk and return on possible expenditures related to acquisition and development of human assets allows an organization to consider how current expenditures can best be allocated to meet long term performance goal. Example: New Training Program: Cost of training in terms of money as well as opportunity cost (time away from job) Benefits: Increased performance, loyalty and motivation Benefit – Cost = Decision for New Training Program Risk: Highly Skilled and Trained manpower have market value

55. HR Value Chain Causal link between HR practices and an organizations market value Market based Outcomes Stock price Employee outcomes Attitudes Behavior Organizational outcomes Productivity Quality Financial outcomes Expenses Revenues Profitability Source: Mello (2001, p.8)

56. Financial Equity Investments/Securities Accounts Receivables Physical Plant Land Equipment Raw Materials Market Goodwill Branding Customer Loyalty Product Line Distribution Networks Patents, Trademark Operational Management Practices Structure of Work Technology Human Knowledge Skills Work habits/Motivation/Personality Personal Relationship Education Easy to Measure Easy to Measure Difficult to Measure Organizational Resources/Assets Source: Mello (2001, p.7)

57. MEASURING HUMAN CAPITAL HR practitioners striving to develop metric to measure the value of HR relative to market value and profit 90% of Fortune 500 organizations in USA, Canada, and Europe evaluate their HR practices on three metric Employee retention and turnover Corporate moral and employee satisfaction HR expenses as a percentage of operational expenses This approach fails to conceptualize the HR contribution in share holder value and profit

58. MEASURING HUMAN CAPITAL The staffing metrics focus and treat employee as expense rather than asset Accounting valuation method focus on current and past value of assets whereas human capital asset value lies in its ability to face and react to challenges coming ahead The challenge is to develop financial metrics for value added human capital investments initiatives for senior managers Another important metric for measuring human performance was developed by Mercer

59. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Five factors that determine organization's investment orientation Management value Attitude towards the Risk Nature of employee skills utilitarianism Ability of outsourcing

60. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Management Value What value management places on value of its human resource relative to other capital assets like brand names ,distribution channel, facilities, plant, equipment and tools etc. Senior management values and actions decide organization investment in assets The extent to which organization is investment oriented on human asset can be known through these questions 1 Does the organization see its people as being central to its mission strategy ?

61. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Management Value 2 Does the both company wide and with in individual business units support the value of human assets and their role in achieving goals? 3 Does the management philosophy of the organization encourage the development of any strategy to prevent the depreciation of human assets ,are they considered replicable and amortizable as physical assets?

62. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Attitude Towards Risk Universal principal higher a risk higher a return In general, investment on human resource is very very risky Physical assets are property of company whereas employees are not owned by it If organization view investment on human resource necessary for realizing strategic objectives they often develop strategy to have ownership of employee services such as long term employment, long term benefits, opportunities for personal and professional development

63. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Nature of Employee Skills Employee skills that are specific and can not be applied to other organization are less risky Customized software knowledge(UBL using Unisoft) Marketable skills applicable and demand in other organizations Need to apply retention strategy (ESOP)

64. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Utilitarianism Approach Cost Benefit Analysis(investment from utility perspective) In this approach all costs and benefits are tried to quantify For example: Development of Performance appraisal system calculated based on direct cost and time spent on this initiative Generally investment on human resources and output are difficult to quantify Its very difficult to access level of services required to prevent customers from moving to competitors/or maintain their loyalty. Any additional service has no impact on financial performance Impact of employee moral program difficult to quanitfy, therefore, organization reluctant to make investment

65. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Ability To Outsource Cost effective outsourcing facility is available An investment oriented company make decision on investment based on sustainable competitive advantage Whether outsourcing provide more saving,effeciency, and access to expertise

66. FACTORS INFLUENCING HOW “INVESTMENT ORIENTED” AN ORGANIZATION IS Conclusion Organization invest in resources where they will have higher and visible return like investment in marketing, advertising, product development ,physical expansions and mergers/acquisitions. For example: McDonald put little emphasis on employee development and more focus on product development, advertisement, expansion. An investment perspective approach is often avoided as employee may not remain with the organization for longer time period Most organizations measure performance on short term criteria Investment on human resource/asset is long term

67. CONCLUSION Organization need to develop effective strategy. Employee stock ownership program Employee stock ownership is beneficial for employee commitment and stay with organization When organization gains competitive advantage through its employees when they invest on this important resource than very difficult for competitors. Investment on human asset is long term and risky but obviously it is source of competitive advantage

68. Barriers to strategic human resource management Short term mentality:  Short-term mentality and focus on the current performance of SHRM is the first barrier. Every manager act, long-term focus, because the organization has been established with long-terms objectives/focus. Strategic inability:  Very often SHRM does not think strategically and he cannot think it due to incapability. This type of inability may arise for many reasons as lack of technical knowledge, insufficient training and the like. Lack of appreciation:  Sometimes top managers do not recognize the activities of strategic human resource management. So SHR manager does not get interested in doing any innovative venture. A few appreciations may get them a substantial mental boost up.

69. Barriers to strategic human resource management Cont.. 4. Failure in understanding the role:   General managerial roles may not be fully understood by be managers. This failure is due to lack of knowledge about the specialty of a degree of responsibility. This failure may create distance between these managers. 5. Difficulty in quantifying outcomes:  Many outcomes may not be quantified. But SHRM  tries to enjoy the contribution. This is not always possible. Participation, work etc. type function cannot be quantified because of their intangibility. 6. Wong perception on human assets:  Investment in human assets may be regarded as high risk than that of technology and information. Though these technologies are run by the human resources. This wrong perception may inhibit the progress.

70. Examples of Strategic Human Resource Management (SHRM) Infosys Chairman Mr. Narayan Murthy has emphasized on human capital as one of Infosys’ critical factors for growth. Thus, there has been a strategic Human resource dimension added to the organization in the form of ‘ People managers ’, whose function is to look after the needs of employees . The company aims to treats its employees as assets rather than just as resources. Nurturing and nourishing the resources ensures competitive advantage for Infosys. Thus, a dedicated human resource department including people managers in every group serves as a SHRM practice which fulfills the business objectives of the organization. Samson Enterprises through strategic HR initiatives started recruiting people with good communication skills along with technological prowess, due to the increase in number of client calls, so that client solutions could be effectively dealt with by the team.

71. Competencies required for HR Business Partner: The role of HR is ever changing with the organization's experiencing unprecedented change with enormous levels of complexities. In order to meet or satisfy this, HR is the function always aligning themselves with the business or simply adopting various measures to be a true business partner. There have been many numerous arguments that HR being a support function can never become a business partner. In my view, HR can become a true business partner and it requires certain competencies. These are not the regular competencies to handle day-to-day activities. These are different and will position HR as a true business partners. HR business partners are the professionals who work closely with an organization's senior leaders in order to develop an HR agenda that closely supports the overall aims of the organization.

72. Competencies required for HR Business Partner: Self-belief : Believe in self is most important. Self-belief in themselves that they (HR) can make a difference in the business. Business Acumen : Business acumen is keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome. HR needs to develop their knowledge and understanding of the financial, accounting, marketing and operational functions of an organization. It can develop business acumen through experience, self-learning through reading and networking with business leaders, and formal training. https://www.youtube.com/watch?v=sZL1hDOrp7A Problem Solving Skills : Problem solving skills is the process of finding solutions to difficult or complex issues. Find the right talent within budget (and on time). ... Get employees engaged with your benefits package Deal with difficult employees. ... Overcome software issues . ...

73. How can HR become a Strategic Partner? By understanding the business deeply:  It is important to understand all aspects of a business and know how different parts function together. Have basic information about: How does the company generate revenue? Who are the competitors? What makes your business different from competitors? Knowing in and out of a business is necessary to create better strategies that can go a long way. By putting analytics to the right use:   HR Analytical tools  have become important in the recent times . These tools aid in identifying high potential employees and predicting which employees may be at the risk of leaving the organization. Through analytics, employee leave trends can also be found out. By changing the mindset: Though HR is becoming a strategic partner by bringing innovative ideas on the table, yet there are companies that don’t believe in the concept. Human resource professionals need to change the mindset that the role of human resources is not only to manage administration needs, perform transactional operations or meet compliance, but it goes beyond. The role of HR is ever evolving.

74. Competencies required for HR Business Partner: Strategic Partner : In this role, HR to contribute to the development of and the accomplishment of organization wide business plan and objectives. Trusted Advisor : HR to act as an advisor on various organizational related aspects with respect to people. Flexibility : This is the most important competency. HR to be flexible or in simple terms adapt themselves as per the business requirements. To achieve this, do we really need to designate or title HR as “HR business partner”? Title do not matter. Becoming an HR business partner requires more than changing behavior, it requires a change in self-perception.

75. References Course/ Student Study Guide, MBA 423 HRM , Prof. Dr. K C. Patrick Low , (PhD ( UniSA ) & Chartered Marketer ) Managing Human Resources ; 4 th edition; Raymond J. Stone (2013); John Wiley & Sons Australia Ltd; Sydney. Strategic human resource management : a guide to action , Michael Armstrong (2008); 4 th edition; Kogan Page Ltd; London