mana 3320- spring 2010 prewitt © 2010 south-western, a part of cengage learning. all rights...

MANA 3320- Spring 2010Prewitt

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

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Strategic Planning◦ Procedures for making decisions about the

organization’s long-term goals and strategies Human Resources Planning (HRP)

◦ Process of anticipating and making provision for the movement (flow) of people into, within, and out of an organization.


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Strategic Human Resources Management (SHRM)

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

Strategy formulation—providing input as to what is possible given the types and numbers of people available.

Strategy implementation—making primary resource allocation decisions about structure, processes, and human resources.


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Environmental Scanning◦ The systematic monitoring of the major external

forces influencing the organization.1. Economic factors: general, regional, and global

conditions

2. Industry and competitive trends: new processes, services, and innovations

3. Technological changes: robotics and office automation

4. Government and legislative issues: laws and administrative rulings

5. Social concerns: child care and educational priorities

6. Demographic and labor market trends: age, composition, literacy, and immigration


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FIGURE

2.2Five Forces Framework


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CultureCulture

CompositionComposition

CapabilitiesCapabilities

Internal AnalysisInternal Analysis

Cultural Audits◦ Audits of the culture and quality of work life in an

organization.

How do employees spend their time?

How do they interact with each other?

Are employees empowered?

What is the predominant leadership style of managers?

How do employees advance within the organization?


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Core Capabilities◦ Integrated knowledge sets within an

organization that distinguish it from its competitors and deliver value to customers.

Sustained competitive advantage through people is achieved if these human resources:1. Are valuable.2. Are rare and unavailable to competitors.3. Are difficult to imitate.4. Are organized for teamwork and cooperation.


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Strategic Knowledge Workers◦ Employees who have unique skills that are

directly linked to the company’s strategy. Example: R&D scientists

Core Employees◦ Employees with skills to perform a predefined job

that are quite valuable to a company, but not particularly unique or difficult to replace. Example: salespeople


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Supporting Labor◦ Employees whose skills are of less strategic

value and generally available in the labor market. Example: clerical workers

Alliance Partners◦ Individuals and groups with unique skills, but

those skills are not directly related to a company’s core strategy. Example: consultants


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FIGURE

2.3Mapping Human Capital

Forecasting involves:a. forecasting the demand for laborb. forecasting the supply of laborc. balancing supply and demand considerations.


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FIGURE

2.4Model of HR Forecasting


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Quantitative MethodsQuantitative MethodsQuantitative MethodsQuantitative Methods

Qualitative MethodsQualitative MethodsQualitative MethodsQualitative Methods

Forecasting DemandForecasting DemandForecasting DemandForecasting Demand

Forecasting labor demand based on an organizational index such as sales:1.Select a business factor that best predicts human

resources needs.

2.Plot the business factor in relation to the number of employees to determine the labor productivity ratio.

3.Compute the productivity ratio for the past five years.

4.Calculate human resources demand by multiplying the business factor by the productivity ratio.

5.Project human resources demand out to the target year(s).


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FIGURE

2.5Example of Trend Analysis of HR Demand

Management Forecasts◦ The opinions (judgments) of supervisors,

department managers, experts, or others knowledgeable about the organization’s future employment needs.

Delphi Technique◦ An attempt to decrease the subjectivity of

forecasts by soliciting and summarizing the judgments of a preselected group of individuals.

◦ The final forecast represents a composite group judgment.


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1HR Planning and Strategy Questions to Ask Business Managers

• What are your mission, vision, and values?

• What are your current pressing business issues?

• What are our organizational strengths?

• Who are our competitors’ organizational strengths? How do we compare?

• What core capabilities do we need to win in our markets?•

• What are the required knowledge, skills, and abilities we need to execute the winning strategy?

• What are the barriers to optimally achieving the strategy?

• What types of skills and positions will be required or no longer required?

• Which skills should we have internally versus contract with outside providers?

• What actions need to be taken to align our resources with strategy priorities?

• What recognition and rewards are needed to attract, motivate, and retain the employees we need?

• How will we know if we are effectively executing our workforce plan and staying on track?

Workforce planning requires that HR leaders periodically interview their managers to gauge future workforce needs. Here are some sample questions to ask.

Staffing Tables Markov Analysis Skill Inventories Replacement Charts Succession Planning


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Staffing Tables◦ Graphic representations of all organizational jobs,

along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

Markov Analysis◦ A method for tracking the pattern of employee

movements through various jobs.


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FIGURE

2.6Hypothetical Markov Analysis for a Retail Company

Skill Inventories◦ Files of personnel education, experience,

interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds.

Replacement Charts◦ Listings of current jobholders and persons who

are potential replacements if an opening occurs. Succession Planning

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


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FIGURE

2.7An Executive Replacement Chart


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2Succession-Planning Checklist

RATE THE SUCCESS OF YOUR SUCCESSION PLANNING

For each characteristic of a best-practice succession-planning and management program appearing in the left column below, enter a number to the right to indicate how well you believe your organization manages that characteristic. Ask other decision makers in your organization to complete this form individually, compile the scores, and compare notes.


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FIGURE

2.8Assessing a Firm’s Human Capital

Strategy Formulation◦ Moving from simple analysis to devising a

coherent course of action. SWOT analysis

◦ A comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes.

◦ Use the strengths of the organization to capitalize on opportunities, counteract threats, and alleviate internal weaknesses.


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FIGURE

2.9An Example of a SWOT Analysis

Valero Energy Corporation (Valero) is one of the largest refiners in North America. Its core activities include refining and marketing of petroleum products. With a combined throughput capacity of approximately 3.3 million bpd, Valero is the 15th largest company on the Fortune 500 list. Valero’s large refining capacity gives it a significant competitive advantage. However, rising material and labor costs could affect the company’s margins.

Strengths Weaknesses

Large refining systemLeader in conversion capacity and feedstock flexibilityStrong revenue growth and capital expenditure

Weak performance in CanadaLitigationsHigh dependence on the United States

Opportunities Threats

Growing diesel demandStrategic refocusRising petrochemical capacity in the Middle East

Material and labor costStringent regulations


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Strategic Alliances and Joint Ventures

Strategic Alliances and Joint Ventures

Growth and Diversification

Growth and Diversification

Mergers and Acquisitions

Mergers and Acquisitions

Corporate Strategy

Corporate Strategy

Value Creation◦ What the 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 (value = benefits — costs).

◦ Low-cost strategy: competing on productivity and efficiency Keeping costs low to offer an attractive price to

customers (relative to competitors).◦ Differentiation strategy: compete on added value

Involves providing something unique and distinctive to customers that they value.


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3Key HR Activities Associated with Merger or Acquisition Phases


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3Key HR Activities Associated with Merger or Acquisition Phases (cont’d)

Functional Strategy: Ensuring Alignment◦ External Fit/Alignment

Focuses on the connection between the business objectives and the major initiatives in HR.

◦ Internal Fit/Alignment Aligning HR practices with one another to establish

a configuration that is mutually reinforcing.


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Taking Action: Reconciling Supply and Demand◦ Balancing demand and supply considerations

Forecasting business activities (trends) Locating applicants

◦ Organizational downsizing, outsourcing, offshoring Reducing “headcount”

◦ Making layoff decisions Seniority or performance? Labor agreements


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FIGURE

2.10The 7-S Model

Evaluation and Assessment Issues◦ Benchmarking: The process of comparing the

organization’s processes and practices with those of other companies

◦ Human capital metrics Assess aspects of the workforce

◦ HR metrics Assess the performance of the HR function itself


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4Ten Measures of Human Capital

1. Your most important issues

2. Human capital value added

3. Human capital ROI

4. Separation cost

5. Voluntary separation rate

6. Total labor-cost/revenue percentage

7. Total compensation/revenue percentage

8. Training investment factor

9. Time to start

10. Revenue factor

Strategy Mapping and the Balanced Scorecard◦ Balanced Scorecard (BSC)

A measurement framework that helps managers translate strategic goals into operational objectives financial customer processes learning


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FIGURE

2.11Building the Metrics Model


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FIGURE

2.12Assessing Internal Fit

5 = Strongly supports the priority, 0= Neutral, –5 = Strongly counterproductive

Organizational Capability

◦ Capacity of the organization to act and change in pursuit of sustainable competitive advantage.

◦ Coordination flexibility

The ability to rapidly reallocate resources to new or changing needs.

◦ Resource flexibility

Having human resources who can do many different things in different ways.


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Balanced Scorecard (BSC)

benchmarking

core capabilities

core values

cultural audits

environmental scanning

human capital readiness

human resources planning (HRP)

management forecasts

Markov analysis

mission

organizational capability

replacement charts

skill inventories

staffing tables

strategic human resources management (SHRM)

strategic planning

strategic vision

succession planning

SWOT analysis

trend analysis

value creation


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Computing Turnover Rates:◦ The U.S. Department of Labor suggests the

following formula for computing turnover rates:

◦ Thus, if there were 25 separations during a month and the total number of employees at mid month was 500, the turnover rate would be:


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Computing Turnover Rates (cont’d):◦ Another method of computing the turnover rate is one

that reflects only the avoidable separations (S). This rate is computed by subtracting unavoidable separations (US) from all separations. The formula for this method is as follows:

◦ where M represents the total number of employees at mid month. For example, if there were 25 separations during a month, 5 of which were US, and the total number of employees at mid month (M) was 500, the turnover rate would be:


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Computing Absenteeism Rates


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5Costs Associated with the Turnover of One Computer Programmer

(Turnover costs = Separation costs + Replacement costs + Training costs)Separation costs1. Exit interview cost for salary and benefits of both interviewer and departing employee during the exit

interview = $30+$30 = $602. Administrative and record-keeping action = $30

Total separation costs = $60 + $30 = $90

Replacement costs1. Advertising for job opening = $2,5002. Preemployment administrative functions and record-keeping action = $1003. Selection interview = $2504. Employment tests = $405. Meetings to discuss candidates (salary and benefits of managers while participating in meetings)= $250

Total replacement costs = $2,500 + $100 + $250 + $40 + $250 = $3,140

Training costs1. Booklets, manuals, and reports = $502. Education = $240/day for new employee’s salary and benefits x 10 days of workshops, seminars, or

courses = $2,4003. One-to-one coaching = ($240/day/new employee + $240/day/staff coach or job expert) x 20 days of one-to-

one coaching = $9,6004. Salary and benefits of new employee until he or she gets “up to par” = $240/day for salary and benefits x

20 days = $4,800Training costs = $50 + $2,400 + $9,600 + $4,800 = $16,850

Total turnover costs= $90 + $3,140 + $16,850 = $20,080

mana 3320- spring 2010 prewitt © 2010 south-western, a part of cengage learning. all rights...

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