How HR can Improve its Credibility as Business Partners in Organizational Effectiveness

and Development

Chearlene Glover-Johnson, Ph.D.Organizational Development Consultant

for Small Business DevelopmentLawton, Oklahoma

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Objectives Examine HR’s role in the organizational

structure of Operational Management.

Examine ways HR can provide value in Organizational Management effectiveness and development.

Define Operations Management.

Discuss the Transformation Role and Process in Operational Management.

Identify the Critical Processes in relationship to HR & Operations Management.

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How HR becomes Strategic Partner

What should HR do and what can it do in order to become a more strategic business partner and greater contributor to organizational effectiveness?

Many ways that HR can contribute to business strategy: Helping to identify and design

strategic options Picking the best options Facilitating the implementation of the

strategic options the company chooses to pursue

Help with tactical and decisions

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How HR becomes Strategic PartnerUsually new strategies require

different behavior and different performance from many individuals and parts of the organization.

This type of change should be a real sweet spot for HR.

Critical to understand how the organization operates and manages its operations.

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HR’s Role via Understanding Operational Management

Know how to measure the effectiveness and growth of people and processes from long term and short term perspectives.

Know how to lead necessary organizational change initiatives.

Able to demonstrate HR’s value by aligning the organization's vision, mission, and goals with day to day operational activities, including organizational design, development, performance measures, and standards.

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HR’s Role in Understanding Operations• Ensuring workplace activities are accurately

reflected in job descriptions, job postings, interviewing questions, applicant tracking systems, etc.

• Creating/monitoring metrics to assess organizational effectiveness and development.

• Recognizing/eliminating barriers to organizational effectiveness by better aligning HR processes to the operations of the business.

• Plan/design org structures that align with the effective delivery of activities in support of the achievement of org strategy.

• Assess critical competencies required for organizational staff.

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How to ensure HR and Operations are a Conflict-Free Zone Conflict between operations departments

and human resources departments is nothing new.

Line managers have and will always disagree with human resources staff on one issue or another.

Conflict often arises regarding what operations managers, often called line management, are responsible for and what is the primary role of human resources staff.

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How to ensure HR and Operations are a Conflict-Free ZoneRegardless of what causes

conflict between HR and line management, the company's business model should delineate responsibilities and duties for their respective areas.

Conflict between operations and human resources often is based on division of responsibilities and line of authority.

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How to ensure HR and Operations are a Conflict-Free Zone In companies where the human resources

staff provides consultancy to line managers, the business model gives operations managers more control of their employees and greater latitude concerning workforce planning and staffing issues.

However, this type of model can result in conflict or catastrophe if line managers aren't fully aware of human resources processes or if they have more authority regarding staffing matters than they should.

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How to ensure HR and Operations are a Conflict-Free Zone

The level of authority given line managers concerning human resources matters should depend on if they have a firm grasp of fair employment practices and whether they have well-developed leadership skills.

HR should understand the authority and delegation of responsibility within Operations Management to ensure respective responsibility and authority within the organization.

The Key is:

What is Operations Management? Critical to the success of any business.◦ Creative, innovative and energetic use of resources for

improving the process, people, products and services.

Effective use of all available resources (i.e., financial, human, facilities, etc.) to effectively produce products and services.

Central Core Management Function (aka CCMF).

Function responsible for managing the process of creating goods and services.

Planning, Organizing, Coordinating, and Controlling all resources needed to produce goods or services.

SMART PrincipleSpecificMeasurableAchievableRealisticTimed and Tracked

Why Goal Setting and Tracking?1. Focus is on important things needed to move forward.2. Track actions taken and accomplishments made.3. Allows you to break big tasks into small steps.4. Shows you which activities give the best results.

SMART Start: Operations Management

A business can’t function without Human Resources and Operations Management.

Operations ManagementThe Core of Business Functions

PRESIDENTOR CEO

MARKETING

Customers

FINANCE

Money

MANAGEMENTINFORMATIONSYSTEMS (MIS)

Information

OPERATIONS

Goods and Services

HUMAN RESOURCES

People

Role of Operations Management Understanding strategic objectives:◦ Translate goals into activities for performance, quality,

speed, dependability, flexibility, and cost. Developing an operations strategy:◦ Decision-making guidelines aligned with goals.

Designing the products, services and processes:◦ Determine physical form shape and composition of product,

services and processes. Planning and Controlling:◦ Deciding what resources should be doing and make

sure it is getting done. Improving the performance of operation:◦ Continually monitor and improve overall performance.

Benefit of Operations ManagementFour Main Advantages: Reduces costs of producing products and services

and being efficient.

Increases revenue by increasing customer satisfaction through quality and service.

Reduces amount of investment ($) necessary to produce type and quantity of products and services by increasing effective capacity of business operations.

Provides for future innovation by building a solid base of operations skills and knowledge within the business.

The Transformation RoleThe Transformation Role of Operations Management: The process of converting inputs (raw materials) into

finished goods and services (outputs).◦ Human resources, facilities, processes, equipment, materials,

technology, and information. The Transformation Process Model:

INPUTS:Energy

MaterialsHR/PeopleEquipmentInformation

Money

TRANSFORMATIONROLE OF

OPERATIONSMANAGEMENT

OUTPUTS:

Products(Goodsand/or

Services)

The Transformation Process Is directly responsible for all activities and decisions

that affect product design and delivery.◦ Costs –Planning – Coordinating – Production Delivery – Customer

Feedback – Problems and Problem Solving

Influences how much material resources are consumed to manufacture goods or deliver services.

Ensures there is enough inventory to produce quantity needed for customers.

Ensures what is made is what the customer wants.

Is the function that businesses use; improves overall performance and the financial bottom line.

Differences: Manufacturing

vs. Service Operations

ServicesIntangible product

Product cannot be inventoried

High customer contact

Short response time

Labor/People intensive (aka: Human Resources)

ManufacturersTangible product

Product can be

inventoried

Low customer contact

Longer response time

Capital/Money intensive

Talent

Structure HR Performance

Development

HR and Operation Management

Operation Management Decisions

TACTICAL DECISIONS

Operations Design

Two Levels of Decisions in Operations Management: Strategic: Broad scope and long-term.◦ The first decision made; sets direction for the business; and

determines tactical decisions. Tactical: Specific day-to-day issues; frequent/routine.◦ Focus on quantities and timing of resources; how specific

resources are used; and provides feedback to strategic decisions.

STRATEGIC DECISIONS

Operations StrategyHUMAN RESOURCES

(Strategic & Tactical)

a. Organization Structure

b. People Development

Talent, Structure &

Culture

Strategic Planning &Alignment

Effectiveness& Efficiency

Performance& Learning

HR & Operation Management Decisions

Critical Processes The Success of Business Operations. Production Plan (based off the Business Plan).◦ Identifies resources needed by OM to support the business plan (6 to

18 months).◦ Authorizes allocation of resources to meet objectives of the strategic

business plan.◦ Details production rate and size of workforce, amount of inventory,

overtime, hiring-firing of employees, back-ordering of orders.◦ Updated and evaluated monthly.

Master Production Schedule (MPS).◦ Anticipates scheduling for building specific finished goods and

providing specific services. ◦ Shows operational effectiveness and cost planned for a given period.◦ Details how operations will use available resources and the time frame

in which each product will be built. ◦ Reviewed weekly or daily.

Critical Processes The Success of Business Operations. Material Requirements Planning (MRP).◦ Uses the MPS, bill of material data, and inventory records to

determine specific requirements for materials.◦ Determines what the business plans to build and when from the MPS.◦ Calculates materials needed to build products in the schedule and plan

for needed materials.◦ More specific and detailed plan.

Rough Cut Capacity Planning (RCCP).◦ Converts the direct labor and production time of the MPS into specific

capacity requirements. ◦ Calculates a rough estimate of the workload placed upon critical

resources. ◦ Workload is compared against the demonstrated capacity for each

critical resource.

ROUGH CUT CAPACITYPLANNING

BUSINESS PLAN

PRODUCTION PLAN

MASTER PRODUCTIONSCHEDULE

MATERIAL REQUIREMENT

PLANNING

HUMAN RESOURCE PLAN

Planning Process Relationships

Critical Processes The Success of Business Operations. Measuring Productivity Levels.◦ Measures Productivity: How efficiently inputs are converted into

outputs.◦ Productivity Levels are a measure of how well resources are used.◦ Computed as a ratio of outputs (goods or services) to inputs (labor and

materials). Total Productivity = Output ÷ Inputs Example: $10,000 finished units with a $5,000 combined input value

$10,000 (output) ÷ $5000 (input) = 2.0 (Total Output Productivity)

Inventory Determination.◦ Quantities of goods, product, materials in stock. ◦ Determines the value of goods from perceived value by the customer

to the cost of purchasing material and/or parts.◦ Includes raw materials, parts, work in-progress, supplies and

equipment.◦ Must maintain inventory throughout the entire supply chain.

Critical Processes The Success of Business Operations. Types of Inventory/Stock◦ Cycle Stock: Amount of stock needed over a set period of time.◦ Safety Stock: Inventory for uncertainties in supply and demand.◦ Seasonal Inventory: Varies seasonally based up supply and demand.◦ Transportation/Pipeline Inventory: Supply in transit-being moved from

one location to another.◦ Maintenance, Repair, and Operating (MRO): On hand stock used for

office supplies, cleaning, tools and parts for equipment repair.

Independent Demand versus Dependent Demand.◦ Independent: Demand for a finished product (computer, bike, pizza). ◦ Dependent: Demand for component parts (intel chip, frame, cheese).◦ Quantities for dependent demand result from independent demand. Example: To produce 200 cars (independent demand), the resulting quantities

of wheels, windshield wipers, and brake systems (dependent demand) needed is 800 wheels, 400 windshield wipers, 200 brake systems.

Effective Organization ManagementCEO’s and Managers must: Accept that HR is a partner and a central core function

of business regardless of its size or industry! Understand HR’s crucial role in organizational

effectiveness through the org culture, structure, talent, performance, and development.

Work with HR to effectively plan, organize, coordinate, and control all resources needed to produce goods and services.

Realize the critical management function HR serves in areas of resources, equipment, technology, and information that are vital to business success.

QUESTIONS?