Chapter 16

Strategically Managing
the HRM Function

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 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.

 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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Categories of HRM Activities

Figure 16.1
Transformational
Knowledge Management
Cultural Change
Strategic Redirection &
Renewal
Management
Development

Traditional
Recruitment and
Selection
Training
Performance
Management
Compensation
Employee Relations

Transactional
Benefits Administration 16-3
Customer-Oriented Perspective

Figure 16.2

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Basic Process for HR Strategy Figure
16.4

Identify
strategic
business
issues

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 Types of Cost–Benefit Analyses

HR Accounting Utility Analysis

• capitalization of salary • turnover costs

• net present value of • absenteeism and sick

expected wage payments leave costs

• gains from selection and

training programs
• returns on human assets
and human investments
• impact of positive
employee attitudes

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Restructuring to Improve HRM

16-7
 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.

16-8
 Reengineering
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 :

Identify
process
to be
reengineered

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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?

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 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 HRM performance through

customer surveys and analytical methods to improve
performance.

 Reengineering and information technology, and outsourcing can

improve HRM performance.
 HR professionals need knowledge of four competencies: business,
change process, integration competence and 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. 16-11