Strategic HRM and Emerging Trends

MBA 405 Module 12

HRM in the 21st Century

HRM activities must be: 1. Responsive to a highly competitive marketplace and global business structures; 2. Closely linked to business strategic plans; 3. Jointly conceived and implemented by line and HR managers; and 4. Focused on quality, customer service, productivity, employee involvement, teamwork, and workforce flexibility.

Characteristics of High Performance Work Systems

Large number of applicants for each strategic position. The use of validated selection and promotion models/procedures. Extensive training and development of new employees. The use of formal performance appraisal and management. The use of multisource (360) performance appraisal and feedback. Linkage of merit increases to formal appraisal processes. Above market compensation for key positions. High percentage of the entire workforce included in incentive systems. High differential in pay between high and low performers. High percentage of workforce working in self-managed, projectbased teams. Low percentage of employees covered by union contract. High percentage of jobs filled from within.

Goal: Developing a Human Resources Scorecard!

Highly effective HR function:

Are conceptualized in a business capacity, focusing on the strategy and core competencies of the organization. Able to show how it can make a difference to the companys bottom line. Use research to make recommendations for cost improvement and more efficient operations.

Key to Competitive Advantage:

Building and sustaining core competencies within the organization and maintaining flexibility in order to react quickly to the changing global marketplace and the advances in technology.

Discrepancies Between Research and Practice

Research Finding
Recruitment
Quantitative analysis of recruitment sources using yield ratios can facilitate efficiencies in recruitment. Less than 10% calculate yield ratios. Less than 25% know how.

HRM Practice

Staffing
Realistic job previews can reduce turnover. Weighted application blanks reduce turnover. Structured, behavioral, or situational interviews are more valid. Use actuarial model of prediction with multiple measures. Graphology is invalid and should not be used Less than 20% use RJPs in high turnover jobs. Less than 30% know what an WAB is; < 1% use WABs. 45% use structured interviews. Less than 5% use actuarial model. Use is on the increase in the U.S.

Performance Appraisal
Do not use traits on rating forms. Train raters for accuracy, observation bias, etc. Make appraisal process important element of managers job. More than 70% still use traits. Less than 30% train raters. Less than 35% evaluate managers on performance appraisal.

Compensation
Merit-based systems should not be tied into bas salary. Gainsharing is an effective PFP system More than 75% tie merit pay into base pay. Less than 5% use it where they could

Major Trends Impacting HRM

Trend 1: The Increased Globalization of the Economy Trend 2: Technological Changes, Challenges and Opportunities Trend 3: The Need to be Flexible in Response to Changing Business Environments Trend 4: Increase in Litigation Related to HRM Trend 5: Changing Characteristics of the Workforce.

Increased Globalization
Development of a worldwide labor market for U.S. firms:
Easy to move work around when it can be digitized. Decrease the cost of labor. HRM becomes more complicated. More union activities. Corporate downsizing linked to new technology. Barriers to entry have been reduced, increasing international competition from firms and individuals alike. U.S. export jobs up 20% in last 10 years. U.S. firms are expanding in new countries and new markets.

Reduced work forces by more than 10% in last decade:

HRM specialists in organizational restructuring. Conduct vocational counseling for displaced employees. Assist in developing new staffing plans. Help in legal defense against allegations of discrimination related to downsizing.

Technological Changes
Optimal combination of people, software, and equipment. User testing programs assess computer interface. Use of intranet sites to convey personnel information. Maximize profit margins and sustained customer value. Electronic tracking of HR activities such as T/O and performance reviews. Impact of Internet on HRM activities:
Computer search of potential applicant pool. Standardized resumes in data base. Announcements and responses through e-mail. Increased focus on security of personnel information and intellectual property. Increased speed of communication across the organization. Video computer conducts testing and interviewing.

Need to be Flexible
Focus on core competencies leads to outsourcing of other activities:
Use of temporary or leased workers; Use of independent contractors; and Place personnel with new technology.

Consulting is now a thriving business for HRM:

Outsource HR activities.

Increase in Litigation
Federal lawsuits have increased over 125% since 1991. Expected increase in age discrimination lawsuits. State laws regarding mergers and acquisitions, AIDS victims and homosexuals, family leave benefits, and video displays. Health and safety regulations, employee pensions and other compensation programs, plant closures, mergers and acquisitions, and EEO laws and guidelines.

Changing Characteristics
Nearly 90% of workforce growth from 1995 to 2000 were women, immigrants, AfricanAmericans, Hispanic or Asian origin. Older workers are less likely to retire at 65. Increasing number of disabled workers. Increase in number of people experiencing sandwich generation issues. More programs on diversity, flexible work schedules, better training programs, childcare arrangements, and career development strategies.

Importance of Measuring HRM Performance

Enhance productivity, product and service quality, and customer satisfaction. Link HR programs to cost savings, financial performance, and productivity. Link employee behavior and attitudes to revenues and profits. Link leading and lagging indicators to organizational goals. Measures should be derived from organizational strategy. Feedback is essential for development and refinement. Relative weights should be linked to strategic goals Develop a workforce scorecard.

Steps in Developing a Workforce Scorecard

1. Identify critical and carefully defined outcome measures related to strategic objectives. 2. Translate measures into specific actions and accountabilities. 3. Develop and communicate detailed descriptions of what is expected. Determine how (or if) improvements can be achieved.

Steps (Continued)
4. Identify high and low performing employees. Establish a differentiated incentive systems. 5. Develop supporting HR management and measurement systems of selection, formal appraisal, promotion, development, and termination practices. 6. Specify the roles of leadership, the workforce, and HR in strategy execution.

Challenges in Developing a Workforce Scorecard

Perspective challenge Does management fully understand how workforce behaviors affect strategy execution? Metrics challenge Has the organization identified and collected the right measures of success? Education Challenge Does management have access to the data and motivation to use the data in decision making?

Challenges in HRM Measurement

View the workforce in terms of contribution rather than cost; Use measurement as a tool for differentiating contribution to strategic impact; and Hold line and HR management responsible for getting the workforce to execute strategy.

HRs Role in Sustaining Competitive Advantage

HR systems must be in place that not only maximize organizational capability, but also exploit any other potential sources of uniqueness. Organizational capability is matching customer and strategic needs through work structure and design. Organizational capability derives from HRM practices.