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STRATEGIC HUMAN RESOURCE
MANAGEMENT
MGMT 950
Lecture 2
Outline
Strategic role of HRM
Measuring HRM’s contributions
Job analysis
Competency modeling
Strategic HRM
Mission and Vision of an
Organization
Mission

Spells out who the organization is, what it
does, and where it’s headed.
Vision

A general statement of the intended direction
of the organization.
Strategy

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A strategy is a course of action.
The company’s long-tem plan for how it will
balance its internal strengths and
weaknesses with its external opportunities
and threats to maintain a competitive
advantage.
A SWOT Chart
SWOT Analysis
The use of a SWOT chart
to compile and organize
the process of identifying
company
Strengths,
Weaknesses,
Opportunities, and
Threats.
Figure 3–2
Strategic Human Resource
Management
Strategic Human Resource Management

Formulating and executing HR systems—HR
policies and activities—that produce the
employee competencies and behaviors the
company needs to achieve its strategic aims.
Strategies in Brief
Company
Strategic Principle
Dell
Be direct
eBay
Focus on trading communities
General Electric
Be number one or number two in every
industry in which we compete, or get out
Southwest Airlines
Meet customers’ short-haul travel needs
at fares competitive with the cost of
automobile travel
Vanguard
Unmatchable value for the investor-owner
Wal-Mart
Low prices, every day
Source: Arit Gadiesh and James Gilbert, “Frontline Action,” Harvard Business Review, May 2001, p. 74.
Figure 3–3
Translating
Strategy into
HR Policy
and Practice
Basic Model of
How to Align
HR Strategy
and Actions
with Business
Strategy
Source: Adapted from Garrett Walker and J. Randal MacDonald,
“Designing and Implementing an HR Scorecard,” Human
Resources Management 40, no. 4 (2001), p. 370.
Figure 3–9
Strategic Human Resource
Management at Lucent & Quartum
1.
2.
3.
4.
5.
What are the internal & external environmental changes
that necessitated a new HR perspective?
What are the key company priorities?
What are the key strategies?
What are the key corporate values?
How does HR help the company to achieve its strategic
objectives? Describe activities in each HR function.
SHRM @ Lucent
Spun-off from AT&T in 1996; trying to create a new organization that is more flexible
and accountability-oriented (rather than entitlement-oriented) than the AT&T heritage.
HR is taking a leadership role in managing this culture change.
Strategy: Unleashing the power of people for competitive advantage and superior
business results. HR strategy: The new HR has to be fast, focused on business
needs, and flexible. Pursue operational excellence and value creation.
Create high performance operating environment through GROWS.
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Move HR functions to units; reduce the HR fix cost
Acquisition, development and retention of talent that creates value for shareholders.
Compensation and perf management
Building and operating style and culture to support the mission and strategy.
High impact HR policies
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Internal client-model; business partner focus (problems are handled on the first call; days of
service reduced; customer satis. increased; work closely with top mgmt; find HR practices
that no longer add value to shareholders; get in touch with line managers to tell HR how to
design better motivational programs for sales force, new competencies based on future
oriented thinking).
HR Competencies for partner role: what are the KS and commitments that will enable the
business partner to deliver upon their customer’s (internal client) expectations?
Talent acquisition: Develop staffing model based on benchmarked workforce productivity
numbers (revenue per employee); avoid overstaffing and downsizing!
Creating a high performance culture: Overcoming an entitlement culture; no tolerance for
poor performance; no equal pays and stock options for execs.
Compensation: No Hay system. Compensation is strictly based on performance.
Managerial bonuses are based on financial, customer and people satisfaction.
SHRM @ Quantum
Acquisition of Digital equipment increased the size from 2500 to 10000 employees;
after the spin-off with the Japanese partner, total employment is now 6800.
This industry operates with thin profit margins; survival is an issue. Notoriously short
product life cycle; time-to-volume: rapid product development w/o sacrificing the
quality.
Strategy: Consistently meet customer needs across 3 criteria: quality, time-tovolume, and being easy to do business with. Product development and operations
teams – constant reorganizations is a challenge for HR. All assignments are
temporary; glue is the culture. Extraordinary environment: disdain formal
bureaucracy (not much rules; flexible working hours), employees feel valued, sense
of pride of association with the company, sense of camaraderie, self-actualization,
fun and excitement.
High impact HR:
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Establish and communicate the HR mission, vision and values. 9 key behaviors (valued
behaviors) in creating the extraordinary environment. HR communicates them to
employees; upward feedback; 50 % of perf. evaluation is linked to valued behaviors.
Team-based product development and operational (product) teams. Teams are rewarded
on the basis of the success of the product that they develop. Hiring on the basis of team
competencies. Training on teams. Provide a flexible office environment for mobile teams;
reward not individual but team performance. Teams have their own HRM system and fulltime HR people to support them.
Selection: Behaviorally based, structured interviews. No honeymoon period; coaching.
Performance management and incentives compensation process: feedback be direct,
open, and honest; firm’s perf. And financial data are open to everyone. Half of the
bonuses are based on results, other half on valued behaviors. Not only what, but also
how. Team perf is assessed rigorously.
HR infrastructure: HRIS. On-line competency modeling soon.
M&A: Combining both cultures.
HR’s Contributions
REACTIVE
PROACTIVE
OPERATIONAL Implements the Improves the
basics
basics
STRATEGIC
Makes strategy Creates
happen
strategic
alternatives
If HR were Really Strategically proactive
(Brockbank, 1999)
1.
2.
Operationally reactive HR (early 80s). Implementing the
basics including activities such as administering benefits,
maintaining market-based salary grid, hiring, providing
basic skill training, and so on.
Operationally proactive HR (late 80s - early 90s). Focus on
improving the efficiency of their HR departments and the
quality of their HR practices. Do more with less by using
automation and technology. Outsourcing, work elimination,
reallocation of activities to the line, creation of HR service
centers. Apply TQM principles to HR. Set clear standards
to measure HR practices. Improve internal customer
satisfaction: ‘surprise and delight’ and ‘error-free HR work’.
3. Strategically Reactive HR. Support the execution of strategy; develop the
cultural and technical capabilities for long-term success.
- Tactical support that are aligned with the strategy. E.g., how many
people do we need? Where do we get them? What trainings are required?
Etc.
- Creating a strategy-focused culture.
Step 1: Identify and prioritize the firm’s sources of competitive advantage.
Step 2: Define the required culture and technical KSAs that are required to
create and support the sources of competitive advantage identified earlier.
Step 3: Identify the cultural characteristic that the firm should reduce /
eliminate.
Step 4: Design the HR practices that will have the greatest impact on
creating the desired culture.
Step 5: Establish action plans.
Step 6: Develop means by which effectiveness of the process is measured
- Management of change.
4. Strategically Proactive HR. HR’s role is to create strategic alternatives by
learning enough about the other functional areas and expanding the
scope of HR agenda.
- Create culture of creativity and innovation. Enhance the firm’s
probability that innovative breakthroughs will occur. Remove obstacles
to creativity. Focus on communication, staffing, T & D, measurement and
rewards.
- Involve in full breath of merges and acquisition activities. 65 % of the
M&A failed to achieve the financial objectives due to problems with
managing people and culture. HR can help define the corporate portfolio
(e.g. core competencies, KSAs, culture), strengths and needs. Identify
the potential M & A candidates accordingly. Evaluate the technical,
market, financial, cultural, and managerial capabilities of the candidates.
Assess the compatibilities and gaps. Determine salary and staffing
strategies. Develop managers’ negotiation skills.
- Create internal capabilities based on future external environmental
requirements. Link external human requirements with the internal human
capabilities. HR’s goal should be to make employees happy who are
happy to making the marketplace happy. Ensure that employees are
customer-oriented. Follow macro-societal trends.
HR’S Strategy Implementation Role
HR professionals should be part of the
firm’s strategic planning executive team.
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Identify the human issues that are vital to the
business strategy.
Help establish and execute strategy.
Communicate the vision & strategies and
ensure the alignment in the organization.
Plan and execute organizational change.
HR Involvement in Mergers
Source: Jeffrey Schmidt, “The Correct Spelling of M & A Begins with HR,” HR Magazine, June 2001, p. 105.
Figure 3–7
HR’s Strategy Formulation Role
HR helps top management formulate
strategy in a variety of ways by:
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Supplying competitive intelligence that may
be useful in the strategic planning process.
Supplying information regarding the
company’s internal human strengths and
weaknesses.
Build a persuasive case that shows how—in
specific and measurable terms—the firm’s HR
activities can and do contribute to creating
value for the company.
Measuring HR’s Contribution
The HR Scorecard
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Shows the quantitative standards, or
“metrics” the firm uses to measure
HR activities.
Measures the employee behaviors
resulting from these activities.
Measures the strategically relevant
organizational outcomes of those
employee behaviors.
HR Metrics
Absence Rate
[(Number of days absent in month) ÷ (Average number of
employees during mo.) × (number of workdays)] × 100
Cost per Hire
(Advertising + Agency Fees + Employee Referrals + Travel cost
of applicants and staff + Relocation costs + Recruiter pay
and benefits) ÷ Number of Hires
Health Care Costs per Employee
Total cost of health care ÷ Total Employees
HR Expense Factor
HR expense ÷ Total operating expense
Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T.
Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–
20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers,
Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce
Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; www.shrm.org.
Figure 1–5
HR Metrics (cont’d)
Human Capital ROI
Revenue − (Operating Expense − [Compensation
cost + Benefit cost]) ÷ (Compensation cost +
Benefit cost)
Human Capital Value Added
Value of workforce’s knowledge, skills, and
performance. Illustrates how people add value to
the organization.
Time to fill
Total days elapsed to fill requisitions ÷ Number hired
Employee satisfaction and productivityFigure 1–5 (cont’d)
HR Metrics (cont’d)
Training Investment Factor
Total training cost ÷ Headcount
Turnover Costs
Cost to terminate + Cost per hire + Vacancy Cost +
Learning curve loss
Turnover Rate
[Number of separations during month ÷ Average
number of employees during month] × 100
Workers’ Compensation Cost per Employee
Total WC cost for Year ÷ Average number of
employees
Figure 1–5 (cont’d)
Job Analysis & Competency
Modeling
Job Analysis
The procedure for determining the duties and
skill requirements of a job and the kind of
person who should be hired for it.
Uses of Job Analysis
Information
Job Analysis
Job Description
and
Job Specification
Recruiting and
Selection
Decisions
Figure 3-1
Performance
Appraisal
Job Evaluation—
Wage and Salary
Decisions
(Compensation)
Training
Requirements
What Information does it contain?
Work activities (cleaning, selling, teaching, etc.)
Human behaviors (communicating, deciding, writing, etc. plus job
demands such as lifting)
Machines, tools, equipment and work aids
(Products made, materials processed, knowledge, services)
Performance standards
Job context (Working conditions, schedule, organizational
context, social context)
Human requirements
Job-related knowledge and skills (education, training, work
experience)
Personal attributes
(Aptitudes, physical characteristics, personality, interests)
Collecting Job Analysis Information
Joint effort between HR / I&O, the worker
and the supervisor
“SME’s” (Subject Matter Experts)
Phases of Job Analysis
Detecting the areas that job analysis will be used for.
Gathering information about the organization
 Organization scheme, work schedule, social
structure
Gathering data for job analysis
 Interview, survey, observation
 Employees, supervisors, analysists, observers
Revision of collected data
 Employees and supervisors
Development of job description and job requirements
Methods of Collecting
Job Analysis Information
The interview
Questionnaire
Observation
Participant diary/logs
Multiple sources of information
Widely Used: The Interview
Individual interviews with each employee
Group interviews with groups of employees
who have the same job
Supervisor interviews with one or more
supervisors who know the job.
Sample Interview Questions
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What is the job being performed?
What are the major duties of your position? What exactly do you do?
What physical locations do you work in?
What are the education, experience, skill, and [where applicable] certification
and licensing requirements?
In what activities do you participate?
What are the job’s responsibilities and duties?
What are the basic accountabilities or performance standards that typify your
work?
What are your responsibilities? What are the environmental and working
conditions involved?
What are the job’s physical demands? The emotional and mental demands?
What are the health and safety conditions?
Are you exposed to any hazards or unusual working conditions?
Quantitative Job Analysis
Techniques
Position Analysis Questionnaire
Functional job analysis
Writing Job Descriptions
1. Job Identification Title, date, approvals,
supervisor’s title, salary, grade level
2. Job Summary General nature, major functions or
activities, includes general statements
3.
4.
5.
6.
Relationships
Responsibilities and Duties
Standards of Performance
Working Conditions and Physical
Environment
Sample Job Summary
Relationships Statement for
Human Resource Director
Vice President
Employee Relations
Works with all
department
managers and
executive
management
Human Resource
Director
Department
Secretary
Human Resource
Clerk
Test
Administrator
Labor Relations
Manager
Works with
employment
agencies,
recruiters, union
reps, state and
federal agencies,
vendors
Responsibilities and Duties
Examples
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Establishes marketing goals to ensure share
of market
Maintaining balanced and controlled
inventories
Defines the limits of job holder’s authority
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Purchasing authority
Discipline
Interviewing and hiring
Standards of Performance Example
Duty: Meeting Daily Production Schedule
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Work group produces no fewer than 426
units per working day
Next workstation rejects no more than an
average of 2% of units
Weekly overtime does not exceed an
average of 5%
Using web-based systems
http://www.job-analysis.net/
http://www.paq.com/
www.onetcenter.org
www.jobdescription.com
www.iskur.gov.tr
Job Analysis in a “Jobless”
World
From specialized to enlarged jobs
Why managers are “de-jobbing” their
companies
From Specialized to Enlarged
Jobs
Job enlargement

Assigning workers additional same level
activities, thus increasing the number of
activities they perform.
Job enrichment

Redesigning jobs in a way that increases the
opportunities for the worker to experience
feelings of responsibility, achievement,
growth, and recognition.
Job rotation
Why Managers Are Dejobbing
Their Companies
Dejobbing
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Broadening the
responsibilities of the
company’s jobs
Encouraging
employee initiative.
Internal factors
leading to dejobbing
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Flatter organizations
Work teams
External factors
leading to dejobbing.
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Rapid product and
technological change
Global competition
Deregulation,
Political instability,
Demographic changes
Rise of a service
economy.
Limitations in traditional JA
Employee resistance
Jobless work
Updating job descriptions is a burden
Teamwork
Change in organizational structure
Lack of flexibility
Employees may be Concerned
Because of –
Lack of trust of consequences
Resistance to change
Possible changes to job duties
Changes to pay
The same job title may have different
responsibilities and pay rates in different
departments
Traditional Organization Chart
President
Chief Executive Officer
Executive Assistant
Vice President
Sales
Director
East Region
Vice President
Marketing
Director
West Region
Director
Public Relations
Vice President
Human Resources
Director
Compensation
and Benefits
Manager
Manager
Manager
Clerk
Manager
Manager
Manager
Administrator
Vice President
Operations
Vice President
Finance
Director
Training and
Development
Director
Manufacturing
Driector
Audit and
Accounting
Manager
Logistics
Tax
Plant Manager
Finance
Plant Manager
Accounting
Tech. Writer
Manager
Manager
Sr. Trainer
Manager
Manager
Sr. Trainer
Sales
Sales
Sales
Sales
Sales
Clerk
Accounting
Accounting
Flatter Organizations
Executive and
Operations
Team
Technical
Development
Team
Manufacturing
Engineering
Team
People
Systems
Team
Finance
Team
Purchasing and
Suppllier Quality
Team
Sales, Service and
Marketing
Team
Organization Strategies and
Competencies
Mission
Strategies
Competencies
HRM
Vision
practices
Competency: A set of observable performance
dimensions that are linked to high performance of the
organization.
 Core competencies: Qualities that are required for
the high performance of all employees.
 Functional competencies: Qualities required for the
high performance of specific jobs.
Competency-based HRM practices
A competency is a set of observable
performance dimensions, including individual
knowledge, skills, attitudes, and behaviors as
well as collective team, process, and
organizational capabilities that are linked to
excellent performance, and provide the
organization with sustainable competitive
advantage and uniqueness.
Differences between JA and CM:
JA focuses on ‘what’ is accomplished; CM focuses on ‘how’ it is
accomplished.
While JA identifies specific KSAOs for each job or job family,
competencies are identified to apply to employees in all jobs in the
organization (‘core competencies’).
KSAOs are identified by job analysts, whereas CM is conducted with the
participation of all employees.
CM is conducted in accordance to organizational mission and culture,
while there is no such link in JA.
JA is relatively stable, fix and narrowly defined; CM is dynamic and broad.
JA focusing on job-related KSAs; CM focuses on ability to change, adapt,
learn, and develop.
JA is limited to a set of narrowly defined jobs; CM is based on the
assessment of the ‘whole-person’.
CM creates a common language and serves the creation of the
organizational culture; also contributes to the integration of HR functions.
Trends in the CM
1.
Demand for more participative approaches
2.
Shift towards short-cycle CMs
3.
Increasing emphasis on emerging future competencies
4.
Increasing focus on team and process competencies
5.
Transition to an organizational learning perspective
An example of dictionary of
competencies
http://www.wilkes.edu/include/aboutwilkes/
hr/perfmgmt_dictionary.doc
Key take aways from Lecture 2
HRM departments have to provide
administratively excellent services (operational
function). This is necessary but not sufficient.
They have to be involved in strategy
implementation (strategically reactive) as well as
strategy formulation (strategically proactive).
HR’s performance should be assessed against
whether or not they contribute to strategy
implementation.
Job analysis and competency modeling
are the basis of all other HR functions.
HR is responsible for the accuracy and
level of detail involved in job descriptions.
Strategic alignment is the key: do job
descriptions and competencies reflect the
desired organizational culture?