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Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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Page 1: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Chapter 16

Strategically Managing

the HRM Function

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Page 2: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Learning Objectives1. Discuss HRM roles and categories of HRM activities.

2. Discuss how HRM function can define its mission and market.

3. Explain approaches to evaluating the effectiveness of HRM practices.

4. Describe new structures for HRM function.

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Page 3: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Learning Objectives, continued

5. Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness.

6. Relate how process reengineering is used to review and redesign HR practices.

7. Discuss new technologies that can improve HR efficiency and effectiveness.

8. List competencies HRM executives need to become a strategic partner in the company.

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Page 4: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Introduction

HRM practices can help companies gain a competitive advantage.

Virtually every HR function in top companies is going through a transformation process to play a new strategic role while fulfilling its other roles.

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Page 5: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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Categories of HRM Activities

Page 6: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Categories of HRM Activities

Transformational Knowledge Management

Cultural ChangeStrategic Redirection &

RenewalManagement Development

TraditionalRecruitment and Selection

TrainingPerformance Management

CompensationEmployee Relations

TransactionalBenefits Administration

Record KeepingEmployee Services

Figure 16.1

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Page 7: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Strategic Management of HRM

For HR to become truly strategic in its orientation, it must view itself as a separate business entity.

Customer orientation is one of the most important changes in HR's attempt to become strategic.

Products of HR must be identified.

Technologies through which HR meets customer needs vary depending on the need being satisfied.

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Page 8: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Customer-Oriented Perspective

Figure 16.2

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Page 9: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Basic Process for HR Strategy

Identifystrategicbusiness

issues

Figure 16.4

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Page 10: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Involving Line Executives

Involving those in charge of running the business can increase quality of information from which HR strategy is created.

Involvement occurs 4 ways:1. Line executives could provide input.2. Line executives could be members of a team that develops HR

strategy.3. Once strategy is developed, line managers could receive

communications with HR strategy information.4. Line managers could formally approve a strategy.

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Page 11: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Characterizing HR StrategiesApproaches to Developing an HR Strategy

HR-Focused

People-Linked

Business LinkedBusiness-Linked

Business-Driven

People issues/outcomes

People issues/outcomes

Business issues/outcomes

People issues/outcomes

Business issues/outcomes

People issues/outcomes

Figure 16.7

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Page 12: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Measuring HRM Effectiveness

Marketing the function – evaluation is a sign that HR cares about the organization as a whole and supports operations, production, marketing and other functions.

Providing accountability – evaluation helps determine whether HRM function is meeting its objectives and effectively using its budget.

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Page 13: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Audit & Analytic ApproachesEvaluating HRM Effectiveness

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Page 14: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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Types of Cost–Benefit Analyses

HR Accounting

• capitalization of salary

• net present value of expected wage payments

• returns on human assets and human investments

Utility Analysis

• turnover costs

• absenteeism and sick leave costs

• gains from selection and training programs

• impact of positive employee attitudes

Page 15: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Restructuring to Improve HRM

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Page 16: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Outsourcing

Outsourcing - Contracting with an outside vendor to provide a product or service to the firm.Outsourcing partner can provide the service more

cheaply, efficiently and effectively.Firms primarily outsource transactional activities and

services of HR such as payroll, pension and benefits administration.

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Page 17: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality.

4 Steps of The Reengineering Process :

Identifyprocess

to bereengineered

Reengineering

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Page 18: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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When Evaluating A Process, Consider:

1. What is the value of the process?

2. Can employees be given more autonomy?

3. Can jobs be combined?

4. Can decision making and control be built into the process by streamlining it?

5. Are all the steps and tasks in the process necessary?

6. Are data redundancy, unnecessary checks, and controls built into the process?

7. How many special cases and exceptions have to be dealt with?

8. Are the steps in the process arranged in their natural order?

9. Are all of the tasks necessary?

10. What is the desired outcome?

Page 19: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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Improving HRM Effectiveness through New Technologies - E-HRM

Page 20: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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Changes in Delivery

Page 21: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Software Applications for HRM

HRM Effectiveness Through New Technologies–E-HRM – Speed requirements of e-business force HRM managers to leverage technology for delivery of traditional and transformational HRM activities.

Recruitment and Selection - Technology monitors hiring processes achieve compensation goals with less effort.

Compensation and Rewards - Leveraging technology may allow firms to better achieve compensation

Training and Development - Technology allows firms to deliver training and development for some skills or knowledge faster, more efficiently and possibly more effectively.

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Page 22: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

The Future for HR Professionals

The future for HRM careers brighter than ever. HR professionals need knowledge of four competencies:

1. business2. change process3. integration competence and4. people’s role in competitive advantage

HR professionals need to understand social and ethical issues, tools, management of change and other processes and HR technologies, policies, programs and practices such as staffing, development, rewards, communication and organizational design

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Page 23: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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Seven Roles of Chief HRO

Strategic advisor to the executive teamCounselor/confidante/coach to the executive teamLiaison to the board of directorsTalent architectLeader of the HR functionWorkforce sensorRepresentative of the firm

Table 16.5

Page 24: Chapter 16 Strategically Managing the HRM Function Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

Summary

HRM functions have transformed from solely transactional activities to strategic activities.

HRM roles include administrative expert, employee advocate, change agent, and strategic partner to deliver transactional, traditional, and transformational services and activities efficiently and effectively.

HRM must develop measures of the function’s performance through customer surveys and analytical methods to improve performance.

Reengineering and information technology, and outsourcing can improve HRM performance.

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