Strategy and Human Resources Planning
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Transcript of Strategy and Human Resources Planning
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Strategy and HumanResources Planning
1–1
The Challenges of Human Resources Management
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Strategic Planning and Human Resources
• Strategic Planning Procedures for making decisions about the organization’s
long-term goals and strategies
– Strategy formulation: the process of deciding on a strategic direction by defining an organization’s mission and goals and its SWOTs
• The process of devising structures and allocating resources to enact the strategy a company has choses
– Strategy implementation: plans are enacted and put into place
• 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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Why Strategic Planning Is ImportantTo All Managers
• The firm’s strategic plan guides much of what is done by all to accomplish organizational goals.
• Decisions made by managers depend on the goals set at each organizational level in support of higher level goals.
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Strategic Planning Process
• 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.
1–4
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Step One: Mission, Vision, and Values
• Mission The basic purpose of the organization as well as its
scope of operations
• Strategic Vision A statement about where the company is going and
what it can become in the future; clarifies the long-term direction of the company and its strategic intent
• Core Values The strong and enduring beliefs and principles that the
company uses as a foundation for its decisions
1–5
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Merck & Co.’s Mission and Values
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Starbucks’ Corporate Mission Statement
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Strategic Planning Process
• 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.
1–8
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Type of Strategy at Each Company Level
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Environmental Analysis
• Environmental Scanning The systematic monitoring of the major external
forces influencing the organization.– Economic factors: general, regional, and global conditions– Industry and competitive trends: new processes, services,
and innovations– Technological changes: robotics and office automation – Government and legislative issues: laws and
administrative rulings – Social concerns: child care and educational priorities – Demographic and labor market trends: age, composition,
literacy, and immigration
1–10
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Worksheet for Environmental Scanning
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SWOT Matrix, with Generic Examples
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Personal SWOT Analysis
• http://homepages.se.edu/cvonbergen/files/2012/11/SWOT-Analysis-for-Individuals_060313.docx
1–13
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Types of Corporate Strategies
Concentration
Vertical integration
Diversification
Corporate Strategy Possibilities
Consolidation
Geographic expansion
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Strategic Planning Process
• 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.
1–15
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Linking Strategic Planning and HRP
• Strategic Analysis What human resources are needed and what are
available?
• Strategic Formulation What is required and necessary in support of human
resources?
• Strategic Implementation How will the human resources be allocated?
1–16
Human Resources Planning
Human Resources Planning
StrategicPlanning
StrategicPlanning
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Strategic HR Choices
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Comparison of Selected Human Resource Practices in High-Performance and Low- Performance Companies
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The Human Resources Planning Process
1–19
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1–20
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10 Things Managers Should Avoid When Supervising Temporary/Contingent Employees
• Treat the temporary employee as if the temp agency is in fact his or her employer
• DO NOT
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Quantitative Approach: Trend Analysis
• Forecasting labor demand based on an organizational index such as sales:
Select a business factor that best predicts human resources needs.
Plot the business factor in relation to the number of employees to determine the labor productivity ratio.
Compute the productivity ratio for the past five years. Calculate human resources demand by multiplying
the business factor by the productivity ratio. Project human resources demand out to the
target year(s).
1–22
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Forecasting Demand for Employees
1–23
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500 Bed Hospital → 1200 BedsSize of Hospital (Number of Beds) Number of Registered Nurses
200 240
300 260
400 470
500 500
600 620
700 660
800 820
900 860
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Excel Problem: Beds and Nurses
1–25
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Forecasting the Supply of Employees: Internal Labor Supply
• Staffing Tables
• Markov Analysis
• Skill Inventories
• Replacement Charts
• Succession Planning
1–26
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Forecasting the Supply of Employees: Internal Labor Supply
1–27
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Internal Demand Forecasting Tools
• 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.
1–28
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Skills inventory and HRIS
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Internal Demand Forecasting Tools
• 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.
1–30
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1–31
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Calculating employee Turnover
and Absenteeism
1–32
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Employee Turnover Rates
• Computing Turnover Rates (for a month): 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:
25/500 X 100 = 5%
1–33
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How would you determine annualized turnover?
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Key Terms
1–35
Balanced Scorecard (BSC)benchmarkingcore capabilitiescore valuescultural auditsenvironmental scanninghuman capital readinesshuman resources planning (HRP)management forecastsMarkov analysismissionorganizational capability
replacement chartsskill inventoriesstaffing tablesstrategic human resources management (SHRM)strategic planningstrategic visionsuccession planningSWOT analysistrend analysisvalue creation
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Chapter 2 - Learning Outcomes
Learning Outcome Statements Related Outcomes from Body of the Text
1 Identify the advantages of integrating human resources planning and strategic planning.
Why is HR planning integral to a firm’s strategic planning? As an HR professional, what do you think you could do to tie the two functions together?
2Understand how an organization’s competitive environment influences its strategic planning.
What external factors in the environment do you think firms are most likely to overlook when formulating their business strategies? How can an HR manager help its executive team get a fuller picture of the competitive environment in which it operates?
3Understand why it is important for an organization to do an internal resource analysis.
Think back to the discussion in Chapter 1 about the auto-parts makers that had to look for new business lines when GM, Ford, ad Chrysler sales plummeted in the last recession. How do you think the auto-parts makers assessed their ability to enter their new markets? Do you think they looked first at new markets and then the capabilities of their employees and external partners or vice versa?
4 Describe the basic tools used for human resources forecasting.
If you are currently employed, ask your manager how your firm goes about forecasting
5 Explain the linkages between competitive strategies and HR.
Think about a firm you enjoy doing business with or one you don’t. What competitive strategy does it pursue? Do you think its employees have the right skills given the strategy? Do you detect any mismatches?
6 Understand what is required for a firm to successfully implement a strategy.
Why is it difficult to translate a firm’s strategy into HR deliverables that actually get the job done? What part of this endeavor do you think HR managers struggle with the most?
7 Recognize the methods for assessing and measuring the effectiveness of a firm’s strategy.
Why do some organizations rely more on some HR metrics than others? Think about the businesses on or near your campus. Which metrics do you think they are most likely to track?
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Employee Turnover Rates (cont’d)
• 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:
1–39
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Employee Absenteeism Rates
• Computing Absenteeism Rates
1–40
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1–41
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Chapter ObjectivesAfter studying this chapter, you should be able to
Identify the advantages of integrating human resources planning and strategic planning.
Understand how an organization’s competitive environment influences its strategic planning.
Understand why it is important for an organization to do an internal resource analysis.
Describe the basic tools used for human resources forecasting.
Explain the linkages between competitive strategies and HR.
Understand what is required for a firm to successfully implement a strategy.
Recognize the methods for assessing and measuring the effectiveness of a firm’s strategy.
LEARNING OUTCOME 1
LEARNING OUTCOME 2
LEARNING OUTCOME 3
LEARNING OUTCOME 4
LEARNING OUTCOME 5
LEARNING OUTCOME 6
LEARNING OUTCOME 7
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Measuring a Firm’s Strategic Alignment
1–43
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Ensuring Strategic Flexibility for the Future
• 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.
1–44
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Measuring a Firm’s Strategic Alignment
1–45
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Measuring a Firm’s Strategic Alignment
• 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
1–46
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Step Four: Formulating Strategy
• 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.
1–47
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Step Four: Formulating Strategy
1–48
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Step Four: Formulating Strategy
1–49
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
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Business 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.
1–50
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Business Strategy (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.
1–51
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Step Five: Strategy Implementation
• 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
1–52
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Step Five: Strategy Implementation (Cont.)
1–53
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Step Six: Evaluation and Assessment
• 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
1–54
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Step Two: Environmental Analysis (Cont.)
1–55
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Step Two: Environmental Analysis (Cont.)
1–56
CultureCulture
CompositionComposition
CapabilitiesCapabilities
Internal Analysis
Internal Analysis
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Step Two: Environmental Analysis (Cont.)
1–57
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Corporate Culture: Values, Assumptions, Beliefs, and Expectations (VABEs)
• 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?
1–58
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Forecasting: A Critical Element of Planning
• Forecasting involves: forecasting the demand for labor forecasting the supply of labor balancing supply and demand considerations.
1–59
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Step Six: Evaluation and Assessment
1–60
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Step Two: Environmental Analysis (Cont.)
1–61
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Step Two: Environmental Analysis (Cont.)
1–62
CultureCulture
CompositionComposition
CapabilitiesCapabilities
Internal Analysis
Internal Analysis
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Step Two: Environmental Analysis (Cont.)
1–63
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Corporate Culture: Values, Assumptions, Beliefs, and Expectations (VABEs)
• 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?
1–64
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Forecasting: A Critical Element of Planning
• Forecasting involves: forecasting the demand for labor forecasting the supply of labor balancing supply and demand considerations.
1–65
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Forecasting Demand for Employees
1–66
Quantitative MethodsQuantitative Methods
Qualitative MethodsQualitative Methods
Forecasting DemandForecasting Demand