Strategic HR Management

and Planning
Subtitle

Learning Objectives
1. Explain strategic HR management and how it is linked to
organizational strategies.
2. Define HR planning and outline the HR planning process.
3. Describe the process for forecasting HR supply and demand
including forecasting methods.
4. Discuss the importance surrounding the retention of employees.
5. Describe the process of developing and using a strategic HR plan
including the action to be taken when there is a surplus of
employees or a shortage.
6. Identify why HR metrics must consider both strategic and
operational HR measures.

22

Part
Part 1:
1: Nature
Nature of
of Human
Human Resource
Resource
Management
Management

23

Nature of Strategy and HR Management

Strategy

Strategic HR Management

The proposition an
organization follows for how
to compete successfully and
thereby survive and grow.

The use of employees to gain

or keep a competitive
advantage, resulting in
greater organizational
effectiveness.

24

FIGURE 2-1

25

Strategic HR Management Process

Strategic Success with HR Practices

Recognized HR Best Practices
Employment security
Selective recruiting
High wages/incentives
Information sharing/participation
Training/cross training
Promotion from within
Measurement

26

FIGURE 2-2

27

Common Areas for HR Strategies

Operationalizing HR Strategy
Thinking
Strategically

Understand
the business

28

Focus on key
business goals

Know what
to measure

Prepare for
the future

FIGURE 2-3

29

Possible HR Areas for Core Competencies

Organizational Productivity
Productivity
Measure of the quantity and quality of work done, considering
the cost of the resources used.

Unit labor cost

Computed by dividing the average cost of workers by their
average levels of output.

210

FIGURE 2-4

211

Approaches to Improving Organizational Productivity

HR Effectiveness and Financial

Performance
Effectiveness
The extent to which goals have been met.

Efficiency
The degree to which operations are done in an economical
manner.

212

Global
Competitiveness
and Strategic

Global Competitiveness
& Strategic
HR affected in the last two types of enterprises in terms
of external environment ( legal, laws, political,
culture).
Types of Global Organizations: 3 STAGES
Importing and exporting ( buying & selling goods and
services with organizations in other countries).
Multinational
countries).

enterprises

(operating

in

foreign

Global organization (Corporate units in a number of

countries intergrated to operate separately in many
foreign countries).

Global Competitiveness and

Strategic
Global Legal and Political Factors :
HR-related laws vary in character and
stability.
Political and legal landscape change at
a different pace from one country to
another

Global Competitiveness and

Strategic
Global Cultural Factors: Hofstedes 5
dimensions of cross-cultural differences:
Power inequality
Individualism/group orientation
Masculinity/femininity
Uncertainty avoidance
Long-term/short-term orientation.

HR activities appropriate in one culture or country may have to be

altered to fit appropriately into another culture.

Wage rates differ

across
countries
but a lower wage
rate in a country
may
not
mean
employees do not
enjoy
good
working conditions
and
living
standards.

Human Resource
(HR) Planning
The
process
of
analyzing
and
identifying the need
for and availability of
human resources so
that the organization
can
meet
its
objectives.

Human Resource (HR) Planning

The focus of HR planning is to ensure the organization
has:

HR Planning Responsibilities
In most of organizations that
do HR planning, the top HR
executive and subordinates
staff specialists shoulder most
of the responsibilities for the
planning.

HR Planning Responsibilities
o Other managers
must
provide
information for the
HR specialists to
analyse.
o In turn, those
other managers
need to receive
data from the HR
unit.

Small Business and HR

Planning Issues
Attracting and retaining qualified outsiders
Management succession between generations
of owners
Evolution of HR activities as business grows
Family relationships and HR policies

HR Planning Process
HR Strategies
The means used to anticipate and manage the supply of and
demand for human resources.
Provide overall direction for the way in which HR activities will be
developed and managed.

Overall
Strategic Plan
Human Resources
Strategic Plan
HR Activities

HR Planning Process
HR planning process begins with considering the organizational
objectives and strategies.
HR needs and supply sources must be analysed both externally and
internally and forecasts must be developed
Having solid information accessible.

Specific strategies may be developed to fill vacancies or deal with

surplus employees.

Specific HR plans are developed to provide more specific direction for

the management of the HR activities
Making a consistent alignment.

HR Planning Process

SCANNING THE EXTERNAL

ENVIRONMENT
Subtitle

Environment Scanning
The process of studying the environment of
the organization to pinpoint opportunities
and threats.
External environment affects HR planning
in particular.
One measure of organizational
effectiveness is the ability to compete for a
sufficient supply of human resources with
the appropriate capabilities.

Gov.
Influences

Workforce
Compositions

External
Changes

The net migration

Direct
competitions
International
competitions

Geographic
and
Competition
Concerns

Economic
Conditions

Assessing the Internal

Workforce

Assessing the Internal Workforce

Jobs and Skills Audit
What jobs exist now?
How many individuals are performing each job?
What are the reporting relationships of jobs?
How essential is each job?
What jobs will be needed to implement future
organizational strategies?
What are the characteristics of anticipated jobs

Organizational Capabilities Inventory

HRIS databasessources of information about
employees knowledge, skills, and abilities
(KSAs)
Components of an organizational capabilities
inventory
Individual employee demographics
Individual employee career progression
Individual job performance data

Forecasting HR Supply
and Demand

Forecasting HR Supply and Demand

Forecasting is using of information
from the past and present to identify
expected future conditions.
Forecasting Periods
Short-termless than one year
Intermediateup to five years
Long-rangemore than five years

 Forecasting Method
Mathematical
Method

HR Demand and
Supply Forecast

Judgmental
Method

Forecasting the Demand for HR

The Demand for employees can be calculated for an entire

organization and/or for individual units in the organization.
Demand for HR can be forecast by considering specific
opening that are likely to occur :
New jobs are being created or current jobs are being reduced.
Employees leave positions because of promotions, transfers,
turnovers and terminations.

An analysis is used to develop decision rules ( or fill rates )

for each job or level.

Forecasting the Supply of HR

Once human resources needs have been

forecast, then the availability of human
resources must be identified.

1. External Supply
.Extensive use of government estimates of labor
force populations, trends in the industry, and
many more complex and interrelated factors
must be considered.

2. Internal Supply

3. Succession Planning

Process of identifying a long-term

plan for the orderly replacement
of key employees.
One common flaw in succession
planning is that too often it is
limited to key executives.

Workforce
Realignment

Workforce Realignment

Workforce Realignment (Contd.)

Managing a Human Resources Surplus
Workforce Reductions and the Law
Workforce Downsizing
Attrition and hiring freezes
Voluntary separation programs
Layoffs
Outplacement Services
Managing a Shortage of Employees
Overtime
Contingent Workers
Recent Retirees
Outsourcing
Reduce Turnover

HR Planning in Mergers
and Acquisitions
Subtitle

 Organizational cultures must mesh before

a merger and acquisition can succeed
Decision Making Styles
Levels of Teamwork
Information Sharing Philosophies
Formality

Revising the Structure

Morale may decline due to redundancies

 Key Factors in Cultural Fit

Internal Integration
Autonomy
Adaptability
Employees Trust
Diversity

Merging HR Activities
Compensation
Benefits
Performance Appraisal
Employee Relations
Databases and Information Systems

Measuring effectiveness
using HR metrics
Specific measures tied to HR performance
indicators
Costs
Quantity
Quality
Timeliness
Examples
Cost of Turnover
Average Time Taken to Fill a Job Opening
Employee Satisfaction Scores
Ratio of Payroll Expenses to Revenues

Return on Investment (ROI)

Calculation showing the value of expenditures for HR activities.

C
ROI
A B
A = Operating costs for a new or enhance system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period

 Economic Value Added (EVA)

A firms net operating profit after the cost of capital (required return) is
deducted.
Cost of capital is the benchmark for returns for all HR activities.

HR and the Balanced Scorecard

Financial
Internal business processes
Customer
Learning and growth

247

2008
Thomson/South
-Western. All
rights reserved.

HR Measurement and Benchmarking

Benchmarking
Comparing specific measures of performance against data
on those measures in other best practice organizations

Common Benchmarks
Total compensation as a percentage of net income before
taxes
Percent of management positions filled internally
Dollar sales per employee
Benefits as a percentage of payroll cost

248

2008
Thomson/South
-Western. All
rights reserved.

Assessing HR Effectiveness
HR Audit
A formal research effort that evaluates the current state of HR
management in an organization
Audit areas:
Legal compliance
Administrative processes
Recordkeeping
Employee retention
Benefits
Absenteeism and turnover control
Performance management system

249

2008
Thomson/South
-Western. All
rights reserved.

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