Strategic Human Resource Management and Planning – DUE IN 24 HOURS
DUE IN 24 HOURS
Unit 1.2 – Strategic Human Resource Management and Planning
1. What is the difference between HR plans and HRM strategic plans? How are they the same? How are they different?
2. Of the areas of focus in HRM, which one do you think is the most important? Rank them and discuss the reasons for your rankings.
READINGS
1.2: Strategic HR Management and Planning
o David Kryscynski’s “Introduction to Strategic Management”URL
This video discusses organizational strategy and the integral role that resources play in the success of organizational strategy. Write a list of reasons that HR is critical to overall organizational strategic success.
o Human Resource Management: “Chapter 2: Developing and Implementing Strategic HRM Plans”URL
This chapter discusses the value of strategic planning, the components involved, and the importance of HR being a strategic partner within the organization. At the end, read the Chapter Case and note your answers.
Chapter 2Developing and Implementing Strategic HRM Plans
The Value of Planning
James stumbled into his position as the human resource manager. He had been working for Techno, Inc. for three years, and when the company grew, James moved from a management position into a human resource management position. Techno, Inc. is a technology and software consulting company for the music industry.
James didnt have a good handle on how to effectively run a human resources (HR) department, so for much of the time he tried to figure it out as he went. When Techno started seeing rapid growth, he hired thirty people within a one-month period to meet the demand. Proud of his ability to accomplish his task of meeting the businesss current needs, James was rather pleased with himself. He had spent numerous hours mulling over recruitment strategies, putting together excellent compensation plans, and then eventually sifting through rsums as a small part of the hiring process. Now the organization had the right number of people needed to carry out its projects.
Fast forward five months, however, and it turned out the rapid growth was only temporary. James met with the executives of the business who told him the contracts they had acquired were finished, and there wasnt enough new work coming in to make payroll next month if they didnt let some people go. James felt frustrated because he had gone through so much effort to hire people, and now they would be laid off. Never mind the costs of hiring and training his department had taken on to make this happen. As James sat with the executives to determine who should be laid off, he felt sad for the people who had given up other jobs just five months before, only to be laid off.
After the meeting, James reflected on this situation and realized that if he had spoken with the executives of the company sooner, they would have shared information on the duration of the contracts, and he likely would have hired people differently, perhaps on a contract basis rather than on a full-time basis. He also considered the fact that the organization could have hired an outsourcing company to recruit workers for him. As Jason mulled this over, he realized that he needed a strategic plan to make sure his department was meeting the needs of the organization. He vowed to work with the company executives to find out more about the companys strategic plan and then develop a human resource management (HRM) strategic plan to make sure Techno, Inc. has the right number of workers with the right skills, at the right time in the future.
HRM Planning
(click to see video)
The author introduces the chapter on HRM planning.
2.1Strategic Planning
LEARNING OBJECTIVES
1. Explain the differences been HRM and personnel management.
2. Be able to define the steps in HRM strategic planning.
In the past, human resource management (HRM) was called the personnel department. In the past, the personnel department hired people and dealt with the hiring paperwork and processes. It is believed the first human resource department was created in 1901 by the National Cash Register Company (NCR). The company faced a major strike but eventually defeated the union after a lockout. (We address unions inChapter 12 “Working with Labor Unions”.) After this difficult battle, the company president decided to improve worker relations by organizing a personnel department to handle grievances, discharges, safety concerns, and other employee issues. The department also kept track of new legislation surrounding laws impacting the organization. Many other companies were coming to the same realization that a department was necessary to create employee satisfaction, which resulted in more productivity. In 1913, Henry Ford saw employee turnover at 380 percent and tried to ease the turnover by increasing wages from $2.50 to $5.00, even though $2.50 was fair during this time period.Michael Losey, HR Comes of Age,HR Magazine, March 15, 1998, accessed July 11, 2011,http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20514399.Of course, this approach didnt work for long, and these large companies began to understand they had to do more than hire and fire if they were going to meet customer demand.
More recently, however, the personnel department has divided into human resource management and human resource development, as these functions have evolved over the century. HRM is not only crucial to an organizations success, but it should be part of the overall companys strategic plan, because so many businesses today depend on people to earn profits. Strategic planning plays an important role in how productive the organization is.
Table 2.1Examples of Differences between Personnel Management and HRM
Personnel Management Focus
HRM Focus
Administering of policies
Helping to achieve strategic goals through people
Stand-alone programs, such as training
HRM training programs that are integrated with companys mission and values
Personnel department responsible for managing people
Line managers share joint responsibility in all areas of people hiring and management
Creates a cost within an organization
Contributes to the profit objectives of the organization
Most people agree that the following duties normally fall under HRM. Each of these aspects has its own part within the overall strategic plan of the organization:
1. Staffing.Staffing includes the development of a strategic plan to determine how many people you might need to hire. Based on the strategic plan, HRM then performs the hiring process to recruit and select the right people for the right jobs. We discuss staffing in greater detail inChapter 4 “Recruitment”,Chapter 5 “Selection”, andChapter 6 “Compensation and Benefits”.
2. Basic workplace policies.Development of policies to help reach the strategic plans goals is the job of HRM. After the policies have been developed, communication of these policies on safety, security, scheduling, vacation times, and flextime schedules should be developed by the HR department. Of course, the HR managers work closely with supervisors in organizations to develop these policies. Workplace policies will be addressed throughout the book.
3. Compensation and benefits.In addition to paychecks, 401(k) plans, health benefits, and other perks are usually the responsibility of an HR manager. Compensation and benefits are discussed inChapter 6 “Compensation and Benefits”andChapter 7 “Retention and Motivation”.
4. Retention.Assessment of employees and strategizing on how to retain the best employees is a task that HR managers oversee, but other managers in the organization will also provide input.Chapter 9 “Successful Employee Communication”,Chapter 10 “Managing Employee Performance”, andChapter 11 “Employee Assessment”cover different types of retention strategies, from training to assessment.
5. Training and development.Helping new employees develop skills needed for their jobs and helping current employees grow their skills are also tasks for which the HRM department is responsible. Determination of training needs and development and implementation of training programs are important tasks in any organization. Training is discussed in great detail inChapter 9 “Successful Employee Communication”, including succession planning. Succession planning includes handling the departure of managers and making current employees ready to take on managerial roles when a manager does leave.
6. Regulatory issues and worker safety.Keeping up to date on new regulations relating to employment, health care, and other issues is generally a responsibility that falls on the HRM department. While various laws are discussed throughout the book, unions and safety and health laws in the workplace are covered inChapter 12 “Working with Labor Unions”andChapter 13 “Safety and Health at Work”.
In smaller organizations, the manager or owner is likely performing the HRM functions.Jan de Kok and Lorraine M. Uhlaner, Organization Context and Human Resource Management in the Small Firm (Tinbergen Institute Discussion Papers 01-038/3, Tinbergen Institute, 2001), accessed August 13, 2011,http://ideas.repec.org/s/dgr/uvatin.html.They hire people, train them, and determine how much they should be paid. Larger companies ultimately perform the same tasks, but because they have more employees, they can afford to employ specialists, or human resource managers, to handle these areas of the business. As a result, it is highly likely that you, as a manager or entrepreneur, will be performing HRM tasks, hence the value in understanding the strategic components of HRM.
HRM vs. Personnel Management
Human resource strategyis an elaborate and systematic plan of action developed by a human resource department. This definition tells us that an HR strategy includes detailed pathways to implement HRM strategic plans and HR plans. Think of theHRM strategic planas the major objectives the organization wants to achieve, and theHR planas the specific activities carried out to achieve the strategic plan. In other words, the strategic plan may include long-term goals, while the HR plan may include short-term objectives that are tied to the overall strategic plan. As mentioned at the beginning of this chapter, human resource departments in the past were called personnel departments. This term implies that the department provided support for the rest of the organization. Companies now understand that the human side of the business is the most important asset in any business (especially in this global economy), and therefore HR has much more importance than it did twenty years ago. While personnel management mostly involved activities surrounding the hiring process and legal compliance, human resources involves much more, including strategic planning, which is the focus of this chapter. The Ulrich HR model, a common way to look at HRM strategic planning, provides an overall view of the role of HRM in the organization. His model is said to have started the movement that changed the view of HR; no longer merely a functional area, HR became more of a partnership within the organization. While his model has changed over the years, the current model looks at alignment of HR activities with the overall global business strategy to form a strategic partnership.David Ulrich and Wayne Brockbank,The HR Value Proposition(Boston: Harvard Business Press, 2005), 914.His newly revised model looks at five main areas of HR:
1. Strategic partner.Partnership with the entire organization to ensure alignment of the HR function with the needs of the organization.
2. Change agent.The skill to anticipate and respond to change within the HR function, but as a company as a whole.
3. Administrative expert and functional expert.The ability to understand and implement policies, procedures, and processes that relate to the HR strategic plan.
4. Human capital developer.Means to develop talent that is projected to be needed in the future.
5. Employee advocate. Works for employees currently within the organization.
According to Ulrich,David Ulrich, Evaluating the Ulrich Model, Acerta, 2011, accessed July 11, 2011,http://www.goingforhr.be/extras/web-specials/hr-according-to-dave-ulrich#ppt_2135261.implementation of this model must happen with an understanding of the overall company objectives, problems, challenges, and opportunities. For example, the HR professional must understand the dynamic nature of the HRM environment, such as changes in labor markets, company culture and values, customers, shareholders, and the economy. Once this occurs, HR can determine how best to meet the needs of the organization within these five main areas.
Figure 2.1
To be successful in writing an HRM strategic plan, one must understand the dynamic external environment.
HRM as a Strategic Component of the Business
(click to see video)
David Ulrich discusses the importance of bringing HR to the table in strategic planning.
Keeping the Ulrich model in mind, consider these four aspects when creating a good HRM strategic plan:
1. Make it applicable.Often people spend an inordinate amount of time developing plans, but the plans sit in a file somewhere and are never actually used. A good strategic plan should be the guiding principles for the HRM function. It should be reviewed and changed as aspects of the business change. Involvement of all members in the HR department (if its a larger department) and communication among everyone within the department will make the plan better.
2. Be a strategic partner.Alignment of corporate values in the HRM strategic plan should be a major objective of the plan. In addition, the HRM strategic plan should be aligned with the mission and objectives of the organization as a whole. For example, if the mission of the organization is to promote social responsibility, then the HRM strategic plan should address this in the hiring criteria.
3. Involve people.An HRM strategic plan cannot be written alone. The plan should involve everyone in the organization. For example, as the plan develops, the HR manager should meet with various people in departments and find out what skills the best employees have. Then the HR manager can make sure the people recruited and interviewed have similar qualities as the best people already doing the job. In addition, the HR manager will likely want to meet with the financial department and executives who do the budgeting, so they can determine human resource needs and recruit the right number of people at the right times. In addition, once the HR department determines what is needed, communicating a plan can gain positive feedback that ensures the plan is aligned with the business objectives.
4. Understand how technology can be used.Organizations oftentimes do not have the money or the inclination to research software and find budget-friendly options for implementation. People are sometimes nervous about new technology. However, the best organizations are those that embrace technology and find the right technology uses for their businesses. There are thousands of HRM software options that can make the HRM processes faster, easier, and more effective. Good strategic plans address this aspect.
HR managers know the business and therefore know the needs of the business and can develop a plan to meet those needs. They also stay on top of current events, so they know what is happening globally that could affect their strategic plan. If they find out, for example, that an economic downturn is looming, they will adjust their strategic plan. In other words, the strategic plan needs to be a living document, one that changes as the business and the world changes.
Human Resource Recall
Have you ever looked at your organizations strategic plan? What areas does the plan address?
The Steps to Strategic Plan Creation
As we addressed inSection 2.1.2 “The Steps to Strategic Plan Creation”, HRM strategic plans must have several elements to be successful. There should be a distinction made here: the HRM strategic plan is different from the HR plan. Think of theHRM strategic planas the major objectives the organization wants to achieve, while theHR planconsists of the detailed plans to ensure the strategic plan is achieved. Oftentimes the strategic plan is viewed as just another report that must be written. Rather than jumping in and writing it without much thought, it is best to give the plan careful consideration.
The goal ofSection 2 “Conduct a Strategic Analysis”is to provide you with some basic elements to consider and research before writing any HRM plans.
Conduct a Strategic Analysis
A strategic analysis looks at three aspects of the individual HRM department:
1. Understanding of the company mission and values.It is impossible to plan for HRM if one does not know the values and missions of the organization. As we have already addressed in this chapter, it is imperative for the HR manager to align department objectives with organizational objectives. It is worthwhile to sit down with company executives, management, and supervisors to make sure you have a good understanding of the company mission and values.
Another important aspect is the understanding of the organizational life cycle. You may have learned about the life cycle in marketing or other business classes, and this applies to HRM, too. Anorganizational life cyclerefers to the introduction, growth, maturity, and decline of the organization, which can vary over time. For example, when the organization first begins, it is in the introduction phase, and a different staffing, compensation, training, and labor/employee relations strategy may be necessary to align HRM with the organizations goals. This might be opposed to an organization that is struggling to stay in business and is in the decline phase. That same organization, however, can create a new product, for example, which might again put the organization in the growth phase.Table 2.2 “Lifecycle Stages and HRM Strategy”explains some of the strategies that may be different depending on the organizational life cycle.
2. Understanding of the HRM department mission and values.HRM departments must develop their own departmental mission and values. These guiding principles for the department will change as the companys overall mission and values change. Often the mission statement is a list of what the department does, which is less of a strategic approach. Brainstorming about HR goals, values, and priorities is a good way to start. The mission statement should express how an organizations human resources help that organization meet the business goals. A poor mission statement might read as follows: The human resource department at Techno, Inc. provides resources to hiring managers and develops compensation plans and other services to assist the employees of our company.
A strategic statement that expresses how human resources help the organization might read as follows: HRs responsibility is to ensure that our human resources are more talented and motivated than our competitors, giving us a competitive advantage. This will be achieved by monitoring our turnover rates, compensation, and company sales data and comparing that data to our competitors.Gary Kaufman, How to Fix HR,Harvard Business Review, September 2006, accessed July 11, 2011,http://hbr.org/2006/09/how-to-fix-hr/ar/1.When the mission statement is written in this way, it is easier to take a strategic approach with the HR planning process.
3. Understanding of the challenges facing the department.HRM managers cannot deal with change quickly if they are not able to predict changes. As a result, the HRM manager should know what upcoming challenges may be faced to make plans to deal with those challenges better when they come along. This makes the strategic plan and HRM plan much more usable.
Table 2.2Lifecycle Stages and HRM Strategy
Life Cycle Stage
Staffing
Compensation
Training and Development
Labor / Employee Relations
Introduction
Attract best technical and professional talent.
Meet or exceed labor market rates to attract needed talent.
Define future skill requirements and begin establishing career ladders.
Set basic employee-relations philosophy of organization.
Growth
Recruit adequate numbers and mix of qualifying workers. Plan management succession. Manage rapid internal labor market movements.
Meet external market but consider internal equity effects. Establish formal compensation structures.
Mold effective management team through management development and organizational development.
Maintain labor peace, employee motivation, and morale.
Maturity
Encourage sufficient turnover to minimize layoffs and provide new openings. Encourage mobility as reorganizations shift jobs around.
Control compensation costs.
Maintain flexibility and skills of an aging workforce.
Control labor costs and maintain labor peace. Improve productivity.
Decline
Plan and implement workforce reductions and reallocations; downsizing and outplacement may occur during this stage.
Implement tighter cost control.
Implement retraining and career consulting services.
Improve productivity and achieve flexibility in work rules. Negotiate job security and employment-adjustment policies
Source:Seattle University Presentation, accessed July 11, 2011,http://fac-staff.seattleu.edu/gprussia/web/mgt383/HR%20Planning1.ppt.
Identify Strategic HR Issues
In this step, the HRM professionals will analyze the challenges addressed in the first step. For example, the department may see that it is not strategically aligned with the companys mission and values and opt to make changes to its departmental mission and values as a result of this information.
Many organizations and departments will use a strategic planning tool that identifies strengths, weaknesses, opportunities, and threats (SWOT analysis) to determine some of the issues they are facing. Once this analysis is performed for the business, HR can align itself with the needs of the business by understanding the business strategy. SeeTable 2.3 “Sample HR Department SWOT Analysis for Techno, Inc.”for an example of how a companys SWOT analysis can be used to develop a SWOT analysis for the HR department.
Once the alignment of the company SWOT is completed, HR can develop its own SWOT analysis to determine the gaps between HRs strategic plan and the companys strategic plan. For example, if the HR manager finds that a departments strength is its numerous training programs, this is something the organization should continue doing. If a weakness is the organizations lack of consistent compensation throughout all job titles, then the opportunity to review and revise the compensation policies presents itself. In other words, the companys SWOT analysis provides a basis to address some of the issues in the organization, but it can be whittled down to also address issues within the department.
Table 2.3Sample HR Department SWOT Analysis for Techno, Inc.
Strengths
Hiring talented people
Company growth
Technology implementation for business processes
Excellent relationship between HRM and management/executives
Weaknesses
No strategic plan for HRM
No planning for up/down cycles
No formal training processes
Lacking of software needed to manage business processes, including go-to-market staffing strategies
Opportunities
Development of HRM staffing plan to meet industry growth
HRM software purchase to manage training, staffing, assessment needs for an unpredictable business cycle
Continue development of HRM and executive relationship by attendance and participation in key meetings and decision-making processes
Develop training programs and outside development opportunities to continue development of in-house marketing expertise
Threats
Economy
Changing technology
Prioritize Issues and Actions
Based on the data gathered in the last step, the HRM manager should prioritize the goals and then put action plans together to deal with these challenges. For example, if an organization identifies that they lack a comprehensive training program, plans should be developed that address this need. (Training needs are discussed inChapter 8 “Training and Development”.) An important aspect of this step is the involvement of the management and executives in the organization. Once you have a list of issues you will address, discuss them with the management and executives, as they may see other issues or other priorities differently than you. Remember, to be effective, HRM must work with the organization and assist the organization in meeting goals. This should be considered in every aspect of HRM planning.
Draw Up an HRM Plan
Once the HRM manager has met with executives and management, and priorities have been agreed upon, the plans are ready to be developed. Detailed development of these plans will be discussed inSection 2.2 “Writing the HRM Plan”. Sometimes companies have great strategic plans, but when the development of the details occurs, it can be difficult to align the strategic plan with the more detailed plans. An HRM manager should always refer to the overall strategic plan before developing the HRM strategic plan and HR plans.
Even if a company does not have an HR department, HRM strategic plans and HR plans should still be developed by management. By developing and monitoring these plans, the organization can ensure the right processes are implemented to meet the ever-changing needs of the organization. The strategic plan looks at the organization as a whole, the HRM strategic plan looks at the department as a whole, and the HR plan addresses specific issues in the human resource department.
KEY TAKEAWAYS
Personnel managementandHRMare different ways of looking at the job duties of human resources. Twenty years ago, personnel management focused on administrative aspects. HRM today involves a strategic process, which requires working with other departments, managers, and executives to be effective and meet the needs of the organization.
In general, HRM focuses on several main areas, which include staffing, policy development, compensation and benefits, retention issues, training and development, and regulatory issues and worker protection.
To be effective, the HR manager needs to utilize technology and involve others.
As part of strategic planning, HRM should conduct a strategic analysis, identify HR issues, determine and prioritize actions, and then draw up the HRM plan.
EXERCISES
1. What is the difference between HR plans and HRM strategic plans? How are they the same? How are they different?
2. Of the areas of focus in HRM, which one do you think is the most important? Rank them and discuss the reasons for your rankings.
2.2Writing the HRM Plan
LEARNING OBJECTIVE
1. Describe the steps in the development of an HRM plan.
As addressed inSection 2.1 “Strategic Planning”, the writing of an HRM strategic plan should be based on the strategic plans of the organization and of the department. Once the strategic plan is written, the HR professional can begin work on the HR plan. This is different from the strategic plan in that it is more detailed and more focused on the short term. The six parts described here are addressed in more detail inChapter 4 “Recruitment”,Chapter 5 “Selection”,Chapter 6 “Compensation and Benefits”,Chapter 7 “Retention and Motivation”,Chapter 8 “Training and Development”,Chapter 9 “Successful Employee Communication”,Chapter 10 “Managing Employee Performance”, andChapter 11 “Employee Assessment”.
How Would You Handle This?
Compensation Is a Touchy Subject
As the HR manager, you have access to sensitive data, such as pay information. As you are looking at pay for each employee in the marketing department, you notice that two employees with the same job title and performing the same job are earning different amounts of money. As you dig deeper, you notice the employee who has been with the company for the least amount of time is actually getting paid more than the person with longer tenure. A brief look at the performance evaluations shows they are both star performers. You determine that two different managers hired the employees, and one manager is no longer with the organization. How would you handle this?
How Would You Handle This?
https://api.wistia.com/v1/medias/1371287/embed
The author discusses the How Would You Handle This situation in this chapter at:
https://api.wistia.com/v1/medias/1371287/embed
.
Figure 2.3
As you can see from this figure, the company strategic plan ties into the HRM strategic plan, and from the HRM strategic plan, the HR plan can be developed.
The six parts of the HRM plan include the following:
1. Determine human resource needs.This part is heavily involved with the strategic plan. What growth or decline is expected in the organization? How will this impact your workforce? What is the economic situation? What are your forecasted sales for next year?
2. Determine recruiting strategy.Once you have a plan in place, its necessary to write down a strategy addressing how you will recruit the right people at the right time.
3. Select employees.The selection process consists of the interviewing and hiring process.
4. Develop training.Based on the strategic plan, what training needs are arising? Is there new software that everyone must learn? Are there problems in handling conflict? Whatever the training topics are, the HR manager should address plans to offer training in the HRM plan.
5. Determine compensation.In this aspect of the HRM plan, the manager must determine pay scales and other compensation such as health care, bonuses, and other perks.
6. Appraise performance.Sets of standards need to be developed so you know how to rate the performance of your employees and continue with their development.
Each chapter of this text addresses one area of the HR plan, but the next sections provide some basic knowledge of planning for each area.
Determine Human Resource Needs
The first part of an HR plan will consist of determining how many people are needed. This step involves looking at company operations over the last year and asking a lot of questions:
1. Were enough people hired?
2. Did you have to scramble to hire people at the last minute?
3. What are the skills your current employees possess?
4. What skills do your employees need to gain to keep up with technology?
5. Who is retiring soon? Do you have someone to replace them?
6. What are the sales forecasts? How might this affect your hiring?
These are the questions to answer in this first step of the HR plan process. As you can imagine, this cannot be done alone. Involvement of other departments, managers, and executives should take place to obtain an accurate estimate of staffing needs for now and in the future. We discuss staffing in greater detail inChapter 4 “Recruitment”.
Many HR managers will prepare an inventory of all current employees, which includes their educational level and abilities. This gives the HR manager the big picture on what current employees can do. It can serve as a tool to develop employees skills and abilities, if you know where they are currently in their development. For example, by taking an inventory, you may find out that Richard is going to retire next year, but no one in his department has been identified or trained to take over his role. Keeping the inventory helps you know where gaps might exist and allows you to plan for these gaps. This topic is addressed further inChapter 4 “Recruitment”.
HR managers will also look closely at all job components and will analyze each job. By doing this analysis, they can get a better picture of what kinds of skills are needed to perform a job successfully. Once the HR manager has performed the needs assessment and knows exactly how many people, and in what positions and time frame they need to be hired, he or she can get to work on recruiting, which is also called astaffing plan. This is addressed further inChapter 4 “Recruitment”.
Recruit
Recruitment is an important job of the HR manager. More detail is provided inChapter 4 “Recruitment”. Knowing how many people to hire, what skills they should possess, and hiring them when the time is right are major challenges in the area of recruiting. Hiring individuals who have not only the skills to do the job but also the attitude, personality, and fit can be the biggest
