Strategic SDM

STRATEGIC HUMAN RESOURCE MANAGEMENT
by
ACHMAD SOBIRIN
3/6/2013
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PEOPLE, MANAGEMENT AND ORGANIZATION

The state of nature: general scarcity of resources and hostility in nature Gives rise to Economic, social and political needs of people The management of organizations facilitate satisfaction of people needs Management - the activity that performs certain functions in order to obtain the effective acquisition, allocation, and utilization of human efforts and physical resources in order to accomplish some goals free template from
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To satisfy need, people form
Economic, social and political organizations Organized efforts require
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ORGANIZATION ICEBERG
FORMAL ASPECTS
Vision and Mission
OUTSIDE VIEW OF THE ORGANIZATION
Strategic Plan Organization structure, policy, and Procedures Job Descriptions
INFORMAL ASPECTS
Individual perception of the job
Personal agenda in each level of the organization Organization culture Sharing pattern of authority Competition among elements in organization Interdepartmental trust individual belief and value of the employee INSIDE THE ORGANIZATION Capability
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Organizational Architecture A
Vision Value proposition Bus and Revenue models Objectives Strategies
B Organizational
Culture
H
The Organizational Stakeholders:
Customers Employees Shareholders Partners Suppliers Communities Government Other
Performance Measures and reward
C
Structure
G
Technology
Processes and
Facilities
F
Resources
E
People and
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EXECUTIVE TRAITS NOW & IN THE FUTURE

ALL KNOWING DOMESTIC VISION PREDICT FUTURE FROM PAST CARING THE INDIVIDUAL OWNS THE VISION USE POWER DICTATE GOAL AND METHODS ALONE AT THE TOP VALUES ORDER
MONOLINGUAL INSPIRE THE TRUST OD BOARD AND SHARE HOLDERS
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LEADER AS LEARNER GLOBAL VISION INTUITS THE FUTURE CARE FOR INSTITUTION & INDIVIDUAL FACILITATES VISION FOR OTHERS USE POWER & FACILITATION SPECIFIES PROCESSES PART OF THE EXECUTIVE TEAM ACCEPTS PARADOX OF ORDER AMIDST CHAOS MULTI CULTURAL INSPIRES THE TRUST OF OWNERS, CUSTOMERS AND EMPLOYEES
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The Role of Top Management

Determining Organizational Purpose or Vision
Establishing Appropriately Balanced Controls
Exploiting and Maintaining Core Competencies
Effective Strategic Leadership

Emphasizing Ethical Decisions and Practices
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Developing Human Capital
Creating and Sustaining Strong Organizational Culture free template from

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Functional-Level Strategies
Focus is on improving the effectiveness of operations within a company.
Manufacturing Marketing Materials management Research and development Human resources
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What is the role of human resources in the strategy process? How is this role changing in the new knowledge intensive, hypercompetitive and IT enhanced environment?
The Strategic Management Process
Strategic change
Mission Statement External environment SWOT Analysis Strategic Plan
Feed-back & learning
Internal environment
Strategic fine tuning
Strategic Control
Strategy Implementation
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Outcomes
Characteristics of the Strategic Management Process

Strategic Planning
Involvement. Flexibility. Openness.
Management, organization & decision structure Strategy Implementation

Participation. Authority. Compensation.
Potential downsides in dynamic industries: Organizational Inertia The Competency Trap

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The Strategic Management Process

INTENDED
STRATEGY
Planned but not realized strategy
ACTUAL
STRATEGY
EMERGENT STRATEGY
Emergent strategy may become more important in rapidly changing industries
How do people in the organization influence emergent strategy?

Conventional HR Functions
Recruiting Selection process Compensation schemes Training and development Performance/relationship management Workforce planning Organizational development/structure
New HR Foci: Retain the best talent Maximize HR investment Exploit creativity and innovation
Criteria and Considerations

Motivation Teamwork Loyalty Competence
Innovating, coordinating & integrating
Success Factors (intangibles):

customer value process efficiency human resource effectiveness Empowerment Index
How people think, do and respond
Measure the impact of employees on financial value
What is the value of intangible assets?

Tangible Versus Intangible Assets

Tangible Assets
Ready Visible Rigorously Quantified Part Of The Balance Sheet Investment Produces Known Returns Can Be Easily Duplicated Depreciates With Use Has Finite Applications Best Manage With Scarcity Mentality Best Leveraged Through Control Can Be Accumulated And Stored
Intangible Assets
Invisible Difficult To Quantify Not Tracked Through Accounting Assessment Based On Assumption Cannot Be Bought Or Imitated Appreciates With Purposeful Use Has Multiple Applications Without Value Reduction Best Managed With Abundance Mentality Best Leveraged Through Alignment Dynamic, Short Shelf Life When Not In Use
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HRs Strategic Architecture
The HR Function
HR Professionals With Strategic Competencies
The HR System
High Performance, Strategically Aligned Policies And Practices
Employee Behaviors
Strategically Focused Competencies, Motivations, And Associated Behaviors
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Transforming The HR Architecture Into A Strategic Assets

CLEARLY DEFINE THE BUSINESS STRATEGY BUILD A BUSINESS CASE FOR HR AS A STRATEGIC ASSETS CREATE A STRATEGI MAP Leading and Lagging Indicators Tangibles and Intangibles IDENTIFY HR DELIVERABLES WITHIN THE STRATEGY MAP ALIGN THE HR ARCHITECTURE WITH HR DELIVERABLES HR Function HR System Strategic Employee Behaviors
Regularly Test Measure Against Strategy Map
DESIGN THE STRATEGIC MEASUREMENT SYSTEM Develop HR Scorecard ( Leading, Lagging, Cost Control, And Value Creation Measures ) Measure HR Intangibles Firm Performance Relationship
IMPLEMENT MANAGEMENT BY MEASUREMENT
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HR and Strategy Implementation

HR Strategic Alignment
HPWS
Balanced Performance Measurement
Employee Strategic Focus
Strategy implementation
Firm Performance
Knowledge Management System

Intersection Of HR With Strategy Map
Focus Of HR System Alignment
HR Deliverable (enabler)
Single Performance Driver
Market Rewards Career Opportunities
Senior Staff Employment Stability
R & D Cycle Time
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The Balanced Scorecard

Another attempt to measure the impact of employees on strategy development and value creation
The balanced scorecard translates the mission and strategy into a comprehensive set of performance measures
financial results customer satisfaction process effectiveness
improvement
Performance drivers
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Outcome measures
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Strategy Map : Competency Skill Attainment Focus

Costumer Financial
Revenue From Current Costumers Increase Share Holder Value
Service
Partnership
Operations
Provide Target Training And Service Establish Ongoing Assessment Of Targeted Employees
Strategic
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Sales Competencies free template from www.brainybetty.com
Understand Employee Skill Gaps 27
HR Management in the New Economy

Reality or Imagination? Traditional Economy
1. Integrity lead by example 2. Develop winning strategy
New Digital Economy

1. Obsession with customers 2. Build flat cross-functional organization 3. Managing by business model 4. Evangelize and create buzz 5. Encourage risk taking 6. Roll up sleeves and work hard
3. Build great management team

4. Inspire to achieve greatness 5. Create flexible, responsive organization 6. Reinforce management and compensation systems
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Strategic Management Issues

An Integrative Perspective
Industry profitability - market position Competitive dynamic - hypercompetition Business strategy - cost & differentiation Sustainable competitive advantage International strategy - globalization Corporate strategy - scale & scope Accounting and financial drivers Marketing and operational drivers Human resources as drivers
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Strategic Management Issues

An Integrative Perspective
Human interaction
Mission statement Strategic intent Motivation Incentives

Involvement Participation Autonomy Openness Flexibility
A sense of direction Aspirations
Innovate Learn through trial and error Agility and Responsiveness

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The Creation Of Employee Strategic Focus Through Increasing Measurement Sophistication
4 STRATEGIC (clear causal chain identified)
Profit Relationships Measured NF NF $$ $$ .46 .62 .82
$$ = Financial measures NF = Non financial measures
Measurement-led Management (Acting On Measures) NF NF $$ $$
Tracking Intangibles Without Managing Intangibles
NF
TRADITIONAL 3/6/2013
NF
$$
$$
HR-Focused Operational Measures

Balancing Cost Control and Value Creation
(empty set)
Rate Of Return
HR deliverables disciplined by attention to both benefits and cost
HR doables driven entirely by cost control
Undisciplined attention to value creation that misjudges benefits and/or ignores efficiency
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Operational Focus
Strategic Focus
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The Synergy of Measurement Structure

balance
Bottom-Line Emphasis
Emphasis on single HR policies Measures based on doables Operationally focused Low rate of return for HR imbalance narrow
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Emphasis on system Measures include deliverables and doables Strategically focused High rate return for HR
HR Architectural Emphasis
broad
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Examples Of High Performance Work System Measures

How many exceptional candidates do we recruit for each strategic job opening? What proportion of all new hires have been selected based primarily on validated selection methods? To what extent has your firm adopted a professionally developed and validated competency model as the basis for hiring, developing, managing, and rewarding employees? How many hours of training does a new employee receive each year? What percentage of the workforce is regularly assessed via a formal performance appraisal? What proportion of the workforce receives formal feedback on job performance from multiple sources? What proportion of merit pay is determined by a formal performance appraisal? If the market rate for total compensation would be fiftieth percentile, what is your firms current percentile rankings on total compensation? What percentage of your exempt and nonexempt employees is eligible for annual cash or deferred incentive plans, or for profit sharing? What percentage of the total compensation for your exempt and nonexempt employees is represented by variable pay? What is the likely differential in merit pay awards between high-performing and low-performing employees?
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High-Performances Work System Measures

Average merit increase granted by job classification and job performances Backup talent ratio Competency development expense per employee Firm salary/competitor salary ratio Incentive compensation differential (low versus high performers) Number and quality of cross-functional teams Percentage of employees whose pay is performance-contingent Percentage of employees with development plans Percentage of total salary at risk Quality of employee feedback system Range (distribution) of performanceappraisal ratings Range in merit increase granted by classification
Number and type of special projects to develop

High potential employees Number of suggestions generated and/or 3/6/2013 implemented
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HR Efficiency Measures (Doables) (1)

Absenteeism rate by job category and job performance Accident cost Number of stress-related illness Number of training days and programs per year
Offer to acceptance ratio

Accident safety ratings OSHA audits Average employee tenure (by performance level) Average time for dispute resolution Benefits costs as a percentage of payroll and venue Benefits costs/competitors benefit cost ratio Compliance with federal and state fair employment practices Compliance with technical requirements of affirmative action Comprehensiveness of safety monitoring Cost of HR related litigation 3/6/2013 Percentage of and number of employees involved in training
Percentage of correct data in HR information system

Percentage of employee development plans completed Percentage of employee with access to appropriate training and development opportunities Percentage of new material in training programs each year
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Cost of injuries Cost per grievance Cost per hire Response time per information request Cost per trainee hour Sick days per full-time equivalent per year HR department budget as a percentage of sales Speed of salary action processing Percentage of payroll spent for training Percentage of performance appraisals completed on time
HR expense per employee

Time needed to orient new employees HR expense/total expense Time to fill an open position Incidence of injuries Total compensation expense per employee Interviews-per-offer ratio (selection ratio) Total HR investment/earnings Lost time due to accidents Total HR investment/revenues Measures of cycle time for key HR processes Turnover by recruiting sources Number of applicants per recruiting source (by quality) 3/6/2013
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Number of hires per recruiting source (by quality) Number of courses taught by subject Number of recruiting advertising programs in place Number of safety training and awareness activities
Turnover costs Turnover rate by job category and job performance Variable labor costs as percentage of variable revenue Workers compensation costs Workers compensation experience rating
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Hierarchy Of Cost-Benefit Analysis Decisions
Level 3
Benefits Estimates : Good Cost Estimates : Good Calculations : NPV Frequency : Regular
Level 2
Level 1
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Benefits Estimates : Intuition Cost Estimates : Good Calculations : Payback, Break Even Frequency : Irregular Benefits Estimates : Intuition Cost estimates : intuition Calculations : none Frequency : never free template from www.brainybetty.com
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An Example Of Multiple Measures Reflecting Different Dimension Of The Same Construct: A Compelling Place To Work
Response to these 10 question on a 70-question employee survey had a higher impact on employee behavior (and, therefore, on costumer satisfaction) than the measures that were devised out initially: personal growth and development and empowered teams
1. 2. 3. 4. 5. 6. I like the kind work I do My work gives me a sense of accomplishment I am proud to say I work at Sears How does the amount of work you are expected to do influence your overall attitude about you job? How do you physical working conditions influence your overall attitude about your job How does the way you are treated by those who supervise you influence your overall attitude about your job?
Attitude About The Job
Employee Behavior
I feel good about the future pf the company 8. Sears is making the changes Attitude necessary to complete effectively 9. I understand our business strategy About 10. Do you see a connection between the The Company work you do and the company 3/6/2013 free template from strategic objectives?
7.
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Misalignment Of Construct and Measure, Causing Contamination/Deficiency

Measure
Construct
Deficiency
Construct Validity
Contamination
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An Example Of Establishing Links Between The HR System And Performance Drivers In A Strategy Map
High Tech Sourcing
Stable HighTalent R&D Workforce
New Product Cycle Time
Costumer Satisfaction
Retention Policies
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HR Alignment
Strategy Implementation Emphasized and Balanced
HR Competencies HR Professionals and General Manager
HR Role
Employee Strategic Focus Effective strategy execution HR as Strategic Asset
Internal and External Views
HR System
Aligned to HR Deliverables
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Internal and External Alignment Measures on Continuum between HR System and Strategy Map
Internal Alignment External Alignmen t External Alignmen t
Large Strategy Map From Step 3 Of Strategy Implementation Model (Chapter 2)
Elements of HR System
Skills Motivation Opportunity
HR Deliverables
Table 6-1
Table 6-3
Table 6-2
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GEs HR-Development Opportunities

1. Employee-relations problem-solving assignment 2. HR-generalist assignment 3. Technical specialization assignment 4. Organization-effectiveness intervention experience 5. Process-consulting experience 6. Community-relationship experience 7. Stretch job assignment 8. Exposure to global issue 9. Staff assignment 10. Cross-functional experience 11. Fix-it assignment 12. Start-up assignment 13. Large-scale change effort 14. Organization-structuring assignment 15. Corporate assignment 16. HR functional-leadership assignment 17. Business-team partnership experience 18. Business-leader support assignment 19. Exposure to role models 20. Extended professional network 3/6/2013 free template from www.brainybetty.com
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Keys and Process For Making Changed Happened (1)

Key Success Factors For Change 1. Leading Change Question for Assessing and Accomplishing Change Do we have a leader Who owns and champions the change? Who demonstrates public commitment to making it happen? Who will garner resources to sustain it? Who will invest personal time and attention to following it thorough? Do employees ... See the reason for change? Understand why the change is important See how it will help them and/or the business in the short and long term Do employees See the outcomes of the change in behavioral terms (that is, what they will don differently as a result of the change)? Get exited about these outcomes? Understand how the change will benefit costumers And other stake holders? free template from www.brainybetty.com 46
2. Creating a shared needed
3. Shaping a vision (what will it look like when we are done)
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4. Mobilizing commitment (who else Needs to be involved) Do the sponsor of the change Recognize who else needs to be committed to the change for it to happen? Know how to build a coalition of support for the change? Have the ability to enlist the support of key individuals in the organization? Have the ability to build a responsibility matrix to make change happen? Do the sponsor of the change Understand how to sustain the change thorough modifying HR systems (e.g., staffing, training, appraisal, rewards, structure, communication)? Recognize the technology investment required to implement the change? Have access to financial resources to sustain the change?
5. Building enabling systems (how will it be institutionalized)
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6. Monitoring and demonstrating progress (how will it be measured) Do The sponsor of the change Have a means of measuring the success of the change? Plan to benchmark progress on both the result of the change and the implementation process?
7. Making it last (how will it be initiated and sustained)
Do the sponsor of the change Recognize the first steps needed to get started?
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Strategic SDM

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STRATEGIC HUMAN RESOURCE MANAGEMENT

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

free template from www.brainybetty.com

PEOPLE, MANAGEMENT AND ORGANIZATION

To satisfy need, people form

Economic, social and political organizations Organized efforts require

OUTSIDE VIEW OF THE ORGANIZATION

Strategic Plan Organization structure, policy, and Procedures Job Descriptions

Individual perception of the job

free template from www.brainybetty.com

Performance Measures and reward

EXECUTIVE TRAITS NOW & IN THE FUTURE

free template from www.brainybetty.com

The Role of Top Management

Establishing Appropriately Balanced Controls

Exploiting and Maintaining Core Competencies

Effective Strategic Leadership

Developing Human Capital

Creating and Sustaining Strong Organizational Culture free template from

free template from www.brainybetty.com

The Strategic Management Process

Mission Statement External environment SWOT Analysis Strategic Plan

Feed-back & learning

Strategic fine tuning

Characteristics of the Strategic Management Process

Management, organization & decision structure Strategy Implementation

Potential downsides in dynamic industries: Organizational Inertia The Competency Trap

The Strategic Management Process

How do people in the organization influence emergent strategy?

Criteria and Considerations

Innovating, coordinating & integrating

Success Factors (intangibles):

Measure the impact of employees on financial value

What is the value of intangible assets?

Tangible Versus Intangible Assets

free template from www.brainybetty.com

HRs Strategic Architecture

free template from www.brainybetty.com

Transforming The HR Architecture Into A Strategic Assets

Regularly Test Measure Against Strategy Map

free template from www.brainybetty.com

HR and Strategy Implementation

Balanced Performance Measurement

Employee Strategic Focus

Knowledge Management System

Intersection Of HR With Strategy Map

Focus Of HR System Alignment

Single Performance Driver

Market Rewards Career Opportunities

Senior Staff Employment Stability

R & D Cycle Time

free template from www.brainybetty.com

The Balanced Scorecard

Strategy Map : Competency Skill Attainment Focus

Sales Competencies free template from www.brainybetty.com

Understand Employee Skill Gaps 27