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After you have read this chapter, you should be able to:
1. Explain strategic HR management and how it is linked to organizational strategies.
2. Define HR planning and outline the HR planning process.
3. Describe the process for forecasting HR supply and demand including forecasting methods.
4. Discuss the importance surrounding the retention of employees.
5. Describe the process of developing and using a strategic HR plan including the action to be taken when there is a surplus of employees or a shortage.
6. Identify why HR metrics must consider both strategic and operational HR measures.
Nature of Strategic Human Resources ManagementNature of Strategic Human Resources ManagementNature of Strategic Human Resources ManagementNature of Strategic Human Resources Management
• Strategic Human Resources ManagementThe process of linking the HR function with the
strategic objectives of the organization in order to improve performance.
• Organizational StrategyThe pattern of decisions in a company that
determines and reveals its objectives, purposes or goals, and produces the principle policies and plans for achieving those goals.
Linkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR Strategies
Porter’s Competitive StrategiesCost Leadership
Competition on the basis of low price and high quality of product or service. Relies on “building” employees to fit specialized needs and requires a longer HR planning horizon approach
Linkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR Strategies
Competition through offering distinctively different products or services or establishing an exclusive image for quality products and services. Relies on hiring needed skills. Needs a shorter planning time frame in order to be responsive to dynamic environments.
Linkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR Strategies
Occurs when a firm concentrates effort on serving a distinctively defined market that may include some combination of a portion of a product line, customer segment, geographic area or distribution channel.
Linkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR StrategiesLinkage of Organizational and HR Strategies
Miles and Snow’s Strategy Typology View of the organization as a complete and integrative
system, in dynamic interaction with its environment. Competing firms within a single industry can be
Human Resource PlanningHuman Resource PlanningHuman Resource PlanningHuman Resource Planning
• Human Resource (HR) PlanningThe process of analyzing and identifying the need for
and availability of human resources so that the organization can meet its objectives.
• HR Planning ResponsibilitiesTop HR executive and subordinates gather
information from other managers to use in the development of HR projections for top management to use in strategic planning and setting organizational goals
Assessing the Internal WorkforceAssessing the Internal WorkforceAssessing the Internal WorkforceAssessing the Internal Workforce
• Jobs and Skills Audit What jobs exist now?How many individuals are performing each job?What are the reporting relationships of jobs?How essential is each job?What jobs will be needed to implement future
organizational strategies?What are the characteristics of anticipated jobs?
Net migration for an area Individuals entering and leaving the workforce Individuals graduating from schools and colleges Changing workforce composition and patterns Economic forecasts Technological developments and shifts Actions of competing employers Government regulations and pressures Other circumstances affecting the workforce
Developing and Using a Strategic HR PlanDeveloping and Using a Strategic HR PlanDeveloping and Using a Strategic HR PlanDeveloping and Using a Strategic HR Plan
• The ultimate purpose of the plan is to enable managers to match the supply of labour with the demand expected, given the strategies of the organization.
Managing a Human Resource SurplusManaging a Human Resource SurplusManaging a Human Resource SurplusManaging a Human Resource Surplus
• Outplacement Services provided to displaced employees to give them support
and assistance: Personal career counseling Resume preparation and typing services Interviewing workshops Referral assistance Severance payments Continuance of medical benefits Job retraining
Making Downsizing More Effective Making Downsizing More Effective Fig. 2-11Fig. 2-11Making Downsizing More Effective Making Downsizing More Effective Fig. 2-11Fig. 2-11
• HR MetricsSpecific measures tied to HR performance indicators.
Development and use of metrics that can better demonstrate HR’s value and track its performance.
Characteristics of good HR metrics: Accurate data can be collected. Measures are linked to strategic and operational objectives. Calculations can be clearly understood. Measures provide information expected by executives. Results can be compared both externally and internally. Measurement data drives HR management efforts.
• Measuring AbsenteeismSample formula for measuring or computing absenteeism:
100days) work of(Number employees) ofnumber (Average
period during absence jobgh lost throu days-person ofNumber
• Other Measures of Absenteeism:Incidence rate—the number of absences per 100 employees/dayInactivity rate—the percentage of time lost to absenteeismSeverity rate—The average time lost per absent employee during
• Calculations of the costs of absenteeism should usually include:Lost wagesBenefitsOvertime for replacementsFees for temporary employees, if incurredSupervisor’s timeSubstandard productionOverstaffing necessary to cover absences
• Ways to Measure Turnover:Job and job levelsDepartment, units, and locationReason for leavingLength of serviceDemographic characteristicsEducation and trainingKnowledge, skills and abilitiesPerformance ratings/levels.
• HR AuditA formal research effort that evaluates the current
state of HR management in an organizationAudit areas:
Legal compliance (e.g. Employment Equity, OH&S) Current job specifications and descriptions Valid recruiting and selection process Compensation and benefits system Employee handbook Absenteeism and turnover control Grievance resolution process Orientation, training and development Performance management system