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A DVANCED H UMAN R ESOURCE M ANAGEMENT Prof. Dr. Armin Trost.

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1 A DVANCED H UMAN R ESOURCE M ANAGEMENT Prof. Dr. Armin Trost

2 2 Advanced Human Resource Management; HFU Business School (2009) English Version for International Business Management

3 3 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Overview Retention Job Motivation and Satisfaction Employee Survey Change Management Knowledge Management Social Media HR Organization and Information Technology HR Controlling

4 Retention Prof. Dr. Armin Trost

5 5 Advanced Human Resource Management; HFU Business School (2009) Retention – Overview Key terms Turnover costs Turnover diagnosis Turnover prediction Retention measures Turnover strategies

6 6 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Turnover – Definition of Key Terms Turnover The process in which employees leave the organization and have to be replaced Turnover Rate Involuntary turnover Turnover initiated by the organisation (often among people who would prefer to stay). Voluntary turnover Turnover initiated by employees Number of Employees leaving the Company in a Year Number of Employees at Midyear 100%

7 7 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Performance Turnover Relation Performance Turnover LowMiddleHigh According to: William and Livingstone (1994). Another look at the relationship between performacne and voluntary turnover. Academy of Management Journal, 37, Poor Evaluation; small pay raises; poor satisfaction High mobility, opportunities due to high labor market value Average Average turnover underestimates critical leaves 10% 20%

8 8 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Turnover Costs Learning Curve of New Hire Separation Lost Productivity of Vacant Position Vacancy Marketing Selection Hiring Onboarding Training Employee Leaves New Employee Hired New Employee Fully Effective Lost Productivity of Other Employees Hidden (Indirect) Costs Lost Productivity of Other Employees Source: Corporate Leadership Council (1998). Employee Retention Visible (Direct) Costs Lost Productivity of Incumbant Pre-DepartureVacancyIntroduction

9 9 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) The Psychological Contract Regular Pay Benefits Social networks Challenging tasks Training Image Security Values Idendity Networks Customers Performance Creativity Capabilities Knowledge Talent Energy Time Health Employer ProvidesEmployee provides

10 10 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Retention Factors Which of the following factors are most likely to hinder your companys ability to retain talented employees over the next three years? Select up to three (Answers in %) The Economist Intelligence Unit 2008 (Responses of executives around the globe)

11 11 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Major Retention Factors for High Potentials Board Awareness Professional Networks Within Challenging and strategic Projects Executive Trust & Support Freedom to Act Retention Competitive Salary

12 12 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) New Generations require new Ways of Life Learn Work Private

13 13 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Flexible Working Structures Locationfixedmobile Timefixedflexible Structurefixedflexible Employees go to WorkEmployees take their Work with them

14 14 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) The common Approach: Turnover Diagnosis Usage of scientific methods to systematically answer the question: Who leaves why? 88% of all companies survey by Mercer in 1998 conduct exit surveys and/or exit interviews to capture reasons to leave While results are always of general interest they hardly provide relevant insights for the business line (e.g. female employees leave the company for different reasons than male employees) Results taken from turnover diagnosis help companies to undertake strategic measures with regards to employer branding Turnover diagnosis can be seen as a reactive rather than as a proactive measure

15 15 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Exit Interview (Example: Intel) What was the main reason that you decided to leave? Is your new position in a different line of work than the one you where in while at Intel? How would you characterize your new employer? Would you say your new employer is better than Intel, about the same as Intel, or not as good as Intel in terms of: How would you descibe your relationship with your manager while you where at Intel? How would you describe your experience with Intel? If a friend approached you and told you he/she was looking for a similar position at Intel, how likely would you be recommend Intel? Any other comments about Intel or you new position? Pay Benefits Location Working Conditions Job Security Advancement Opportunities Product Quality Coworkers Company Leadership Company Image

16 16 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) A simple Framework to predict Turnover 1Would you recommend a friend to work at X 1 ? 2Do you have everything you need to do your job well? 3Do you enjoy working with your peers and supervisor? 4Do you seriousely consider leaving X 1 within the next 6 months? Supervisor Quality Social embedded ness Capabilities to do a good Job Employee Commitment Intention to leave/stay Turnover Four strong questions to be asked regularly 1 X = Name of the company in question

17 17 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Commitment Capability Matrix clearly indicate Supervisor Quality LowHigh Capability Low High Commitment John Smith Garth McGrath Paul Paulson Mike McGuire Russ Rothen Kelley Clark Mark Myer John Shark Paul Cummings Ed Flaw Rock Stewart Tom Scott Linda Anderson Susan Power Chris Christensen Keneth Keith Carlson Pete Peters

18 18 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Retention Target Groups Let Go Re- Recruit Dont Care Take Care LowHighEmployee Value High Low Turnover Intention Impact of Departure Risk of Departure

19 19 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Impact of Cost of Changing Career Benefits of staying with current employer Benefits of working at other employer Cost of Changing Career Cost of Doing Nothing Cost of Change

20 20 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Turnover Decision Styles High Involvement Decision Making Systematically and carefully taking into consideration current employment, alternative employement opportunities, own strength and weaknesses, long-term expectations and private situation Opportunity Driven Decision Making Underestimation of appealing elements of current employment and consistent overestimation of other employment offers even in times of limited pressure Fleeing from current Situation Feeling that everything is better compared to the status quo. Negatively perceived elements of actual job are main drivers for changing career Externally Driven Decision Making Employment alternatives including the current one are evaluated according to friends and familys attitudes and expectations

21 Job Motivation and Satisfaction Prof. Dr. Armin Trost

22 22 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Types of Theorie Content Theory These theories attempt to explain those specific things which actually motivate the individual at work Maslows Hierarchy of Needs Job Characterstics Model of Hackman & Oldham Herzbergs Theorie Process Theory These theories attempt to identify the relationship among the dynamic variables which make up motivation Maslows Hierarchy of Needs

23 23 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Job Characterstics Model by Hackman & Oldham Skill Variety Task Identity Task Significance Autonomy Feedback Experienced Meaningfulness Experienced Responsibility Knowledge of Results Motivation Performance Satisfaction Job Characteristics Psychological States Desired Outcomes The relationship is moderated by the strength of an employees need for growth

24 24 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Two Factor-Model by Herzberg Achievement Recognition The work itself Responsibility Advancement/Growth Self Actualization Compensation Subordinate Status Supervisor Colleagues Leadership Company Policies Working Condition Private Security In bad Situationsin good Situations Relative Frequencies of reported events Motivation Factor Satisfaction/No Satisfaction Hygiene Factor Dissatisfaction/No Dissatisfaction

25 25 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Expectancy Theory by Vroom Force – the motivation or the force to show a specific action Expectancy – the possibility of achieving a certain outcome through certain actions Valency – the preference an individual has for a particular outcome, the worth placed on a particular result F = (E V)

26 26 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Types of Job Satisfactioin By Bruggemann Vergleich Soll - Ist Progessive Zufriedenheit Stabilisierte Zufriedenheit Resignative Zufriedenheit Pseudo- Zufriedenheit Fixierte Unzufriedenheit Konstruktive Unzufriedenheit Verfälschung der Situations- wahrnehmung Ohne neue Problem- lösungs- versuche Neue Problem- lösungs- versuche Senkung des Anspruchs- niveaus Beibehaltung des Anspruchs- niveaus Erhöhung des Anspruchs- niveaus Beibehaltung des Anspruchs- niveaus Stabilisierende Zufriedenheit Diffuse Unzufriedenheit

27 27 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) McGregors Theory X and Y Theory X The average person is lazy and has an inherent dislike of work Most people must be coerced, controlled, directed and threatened with punishment if the organization is to achieve its objectives The average person avoids responsibility, prefers to be directed, lacks ambition and values security most of all Theory Y For most people work is as natural as play or rest People will exercise self- direction and self-control in the service of objectives to which they are committed Commitment to objectives is a function of rewards associated with their achievement Given the right conditions the average worker can learn to accept and to seek responsibility

28 Employee Survey Prof. Dr. Armin Trost

29 29 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Employee Survey – Overview Purpose and approaches Employee survey operation Commonly used content Result interpretation Limitations of traditional employee surveys Strategic employee survey

30 30 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Employee Survey Objectives II Identification fo strengths and weaknesses Evaluation of former actions Induction of discussion and initiatives I Insights into naturally hidden subjects –Employee Satisfaction –Corporate climate, culture, values –Commitment and capabilities related to strategic challenges –… III Improvements –Working conditions –Productivity –Employee retention –Culture –Meeting strategic goals –…

31 31 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Employee Surveys can adress the Needs of different Clients Top-Management Middle Management Employees Internal Service Provider

32 32 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Survey-Feedback Survey Analysis and Reporting Feedback Results to all Employees Problem Identification and Action Setup Improvement Activitiy

33 33 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) SurveyFollow-Up Employee Survey Project Steps Survey Administration Report Generation Feedback/Commu nication Action Planning Implementation Evaluation Preparation Project Planning & Setup Prestudy Survey Development Prior Communication

34 34 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Survey Development Topics Indicator Questions Pretest Operation & Evaluation Adjustment

35 35 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) During the past year, have you been bothered by pain in your abdomen?

36 36 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Q12 (Gallup) 1.I know what is expected of me at work 2.I have the materials and equipment I need to do my work right 3.At work, I have the opportunity to do what I do best every day 4.In the last seven days, I have received recognition and praise for doing good work 5.My supervisor, or someone at work, seems to care about me as a person 6.There is someone at work who encourages my development 7.At work, my opinions seem to count 8.The mission/purpose of my company makes me feel my job is important 9.My associates (fellow employees) are committed to doing quality work 10.I have a best friend at work 11.In the last six months, someone at work has talked to me about my progress 12.This last year, I have had opportunities at work to learn and grow

37 37 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) A Typical Way to Present Results

38 38 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Survey Results (Example) Tasks and Duties Work Environment Empowerment Colleagues Direct Supervisor Communication Work Flexibility Work-Life-Balance Compensation Benefits Commitment Career Development Region South-West (32 Employees) is part of Germany (186 Employees) 1 = Best possible result; 5 = worst possible result

39 39 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Ways to interpret results Absolute Means and frequencies of answers related to different items are absolutely compared. The more negative the results by absolut means the bigger the issue Relative Results are compared to internal and/or external standards or benchmarks. In most cases results of superior unit are used Longitudinal Current results are compared to results of previous surveys Objectives Results are compared with predefined expectations (objectives)

40 40 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Rules in Follow-up Processes All employees get all results of the survey Feedback of results follows a top-downn approach from to top-management to every single team All teams get their own results compared to the results of the superior organisational units Issue, which lay beyond an organizational units respnsibility will be escalated to the unit on the next level

41 41 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Shortcomings of Traditional Employee Survey Approaches Surveys are isolated events not integrated into regular leadership processes Not every topic is relevant for everybody on every hierarchy level Objectives are defined after the survey has been conducted based on survey results. But, surveys cant change priorities Required budgets for improvement activities are not defined. Therefore planned actions lead to minimal impact Focus on satisfaction – missing linkage to business drivers and results Tremendous efforts through intense reporting and follow-up processes Comparison with benchmarks means taking the mediocre as standard

42 42 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Satisfaction versus Strategy Factors driving competititiveness Business Indicators Factors driving employees satisfaction and performance based on a scientific model Topics Top-Management Employees, Managers, Internal Service Units Stakeholder (Customer) Results are natural part of top-management agenda and decision making Objectives are set in advance to the survey Units on all levels are encouraged to work with results and draw conclusions Objectives are set after the survey Follow-up Up to every month Every 1 to 5 yearsCycle Random samples, panels, high-potentials Every employeeParticipants Pulse SurveyTraditional Approach

43 43 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Commitment & Capabilities related to Strategy X

44 44 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) high low high Commitment Capability high low high Commitment Capability Garth McGrath Cost Reduction Innovation SAP Implementation Service Quality Garth McGrath Innovation Russ Rothen Pete Peters Kelley Clark John Shark Ed Flaw Schulze-Pübbelkamp Mark Myer Commitment Capability Grid – Example

45 Change Management Prof. Dr. Armin Trost

46 46 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Overview Large-Scale transformations and related human reactions and challenges Change Management – definition and framework Sponsorship and commitment Program organization Employee communication and involvement

47 47 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Types of large-scale Transformations Reengineering Changing the way people work Restructuring Changing roles and responsibilities of people Mergers & acquisitions Changing entire groups of people Strategic change Changing the direction of peoples work Cultural change Changing peoples attitutes, values and beliefs

48 48 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Response to Disruptive Changes Time Immobilization Denial Anger Bargaining Depression Testing Acceptance Emotional Response Passive Active Stability According to Kübler-Ross: On Death and Dying (1967)

49 49 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Resistance to Change Resistance is a natural human reaction on disruptive events (fear of loosing control) Change is seen by different people differently according to their individual frames of reference Resistant employees are often seen as not rationally thinking troublemakers Resistance of informal thought leaders are of greater power than those of formal leaders There is always a mixture of overt and hidden resistance. Overt resistance should be a valuable aspect of any change process Active involvement is propably the best way to deal with resistance

50 50 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Response to Positive Change Time Pessimism (Perceived Complexity) Uninformed Optimism (Naivité) Informed Pessimism Informed Optimism Completion According to: Conner: Managing at the Speed of Change Checking Out (?) Level of Tolerance Hopeful Realism

51 51 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Why Transformation fail (Kotter, 1995) Not establishing a great enough sense of urgency Not creating a powerful enough guiding coalition Lacking a vision Undercommunicating the vision Not removing obstacles to the new vision Not systematically planning for and creating short- term wins Declaring victory too soon Not anchoring changes in the corporate culture

52 52 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Sources of Complacency Complacency Too much happy talk from senior management A kill-the-messenger-of-bad- news, low-confrontation culture Human nature, with its capacity for denial, especially if people are already busy or stressed The absence of a major and visible crisis Organizational structures that focus employees on narrow functional goals Low overall performance standards Too many visible resources A lack of sufficient performance feedback from external sources Infernal measurement systems that focus on the wrong performance indexes Source: John Kotter (1996): Leading Change

53 53 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) People-related Challenges a any Transformation Do the people … understand what the change is about? agree, that the change is necessary? see the impact on their daily work? have required capabilities for the new situation? get support to make the change happen? benefit from newly expected behaviours?

54 54 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Support Functions Management Functions Change Management Framework Initialization Setup Design Change Stabilization Sponsorship/ Commitment Organization Controlling HRM Integration Communication Training & Support Stakeholder Involvement Scope & Vision

55 55 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Levels of Support Time Change Support Attention Understanding Acceptance Commitment visible, rationale und emotional Investment personally, financially, timely Sponsorship Longterm support No Idea Sponsorship/ Commitment Acceptance Preparation According to: Daryl Conner: Managing at the Speed of Change (1992)

56 56 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Roles in a Change Program 1/2 Sponsors –Have the power to sanction and legitimize change and to make decisions about change –Create an environment that inables change to be made on time and within budget –The sponsors make up the steering group Change Agents –Responsible for making the change happen on an operational local level –They directly deal with employees and managers, which are impacted by the change (targets) Target –The group who must actually change attitudes and behaviour

57 57 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Roles in a Change Program 2/2 Project Team –Operationally drives the entire change program –The project team is led by the project lead, who is responsible for the overall success of the program –The project team reports to the steering group Sounding Board –Key-players with a good sense of the companys culture and the actual mindset of the employees –Provide feedback to the project team about acceptance and resistance on side of the target External Advisors –Give advice to the project team from a neutral standpoint

58 58 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Target Typical Organizational Structure Steering Group Project Team Project Lead Sponsor External Advisor Project Lead (Consulting) Partner CA SB LM MA CA SB CA Sounding Board SB Change Agent LM Line Manager

59 59 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Relationships between different Roles Sponsor Agent Target Linear Structure Sponsor Agent Target Triangular Structure Sponsor Agent Target Square Structure Sponsor Source: Daryl Conner: Managing at the Speed of Change (1992)

60 60 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Positioning What do you do for whom why? Whats the problem (in terms of figures)? Who has the problem? What does the problem cost if not solved? Whats the solution? What will be the difference after the solution has been implemented successfully? What are the costs of the solution?

61 61 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Communication Measures Employee Newspaper Newsletter (Meassage from the CEO) Intranet (with F&Qs) Town Hall Meeting Available Media New Media One-direction Interactive efficient effective Broschures Posters Videos, webcasts PPT-Presentations Intranet, Social Media (with forums and chatrooms) Departmentmeetings Individual employee meetings Open Space Events Ask-the-CEO-Meetings Workshops, Conferences Hotline

62 62 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Communication Strategy When? Who informs – CEO, HR..? How – Media usage? What is the message? Why – What to achieve with communication? Whom?

63 63 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) The Communication Dilemma Time, Progress Unsecurity/ Need for Information Clarity High Low Early Communikation Late Communikation ?

64 64 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Employee Involvement Open Space Involvement of many people in a one to two days event, where no content is predefined. The event is srongly facilitated Focus Groups Groups of selected employees (capable, ambitious, highly accepted) work on solutions regarding clearly defined issues Sounding Boards Members of the target group provide regular feedback to programm plans and directions and how people react Employee Surveys Employees are asked for their opinions individually or in groups by using quantitative or qualitative data collections methods Nominating thought leaders into the program organization

65 65 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Open Space (Bar Camp) Up to 1000 participants Participants determine content to be discussed Major objectives are: –Involvement of many people in a short period of time –Collective motivation and commitment –Identification and prioritization of issues Intense and strong facilitation though facilitator and techniques Work in groups with rotating constitutions Public presentations of results Duration is between 2 to 3 days

66 66 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Stakeholder Analysis Impact Power strong weak lowhigh Resistance Support

67 Knowledge Management Prof. Dr. Armin Trost

68 68 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Knowledge Management – Overview Knowledge Economy From Sign to Wisdom Traditional Approaches in Knowledge Management Implicit versus explicit Knowledge Modern Approaches in Knowledge Management

69 69 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) The changing meaning of Knowledge

70 70 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Challenges Employees knowledge as key factor for competitiveness and corporate success (knowledge economy) Complex tasks require combination of the knowledge of multiple players New and relevant knowledge appears in increasingly shorter time periods Knowledge is located in peoples mind and hard to be retained to the company (knowledge worker) Growing need to collect and transfer knowledge across the globe

71 71 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) People versus Technology People who own their knowledge Subjectivity and creativity Significant corporate value Hard to be retained Data Information Knowledge Wisdom Technology (e.g. data bases) Objektivity through documentation Limited corporate value Information and data are owned by the company

72 72 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) From Signs to Competitiveness + Syntax Data + Meaning Information + Combination Knowledge + Task related Capability + Commitment Action + Doing the right things Competence + Unique/ Different Competitive- ness Signs IT Solutions Knowledge Organization Knowledge Leadership Source: Klaus North: Wissensorientierte Unternehmensführung, Gabler Verlag (own translation)

73 73 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) What people know Products Customers Processes Partners Tools/ Technology Competition (Informal) Networks Projects Solutions Mistakes Peers/ organization Culture (Hidden) Rules

74 74 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Classic #1: Central Knowledge Database Employees are encouraged to document their knowledge on a central database A facilitator takes care for quality of all documents There are general standards for creating knowledge material Downside Employees neither are motivated enough to document their knowledge nor find enough time to do so Within a short period of time masses of never used documents emerge

75 75 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Classic #2: Yellow Pages Employee maintain and commend their major fields of expertise in a few words All employees find peers with certain expertise using simple search options Expertise is documented on databases with web- access or on printed booklets Overall goal is to bring people with certain expertise and demand for expertise together Downside Detailed meaning of expertise remains unclear Limited opportunity to immediately learn from what is documented

76 76 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Knowledge Generation Model by Nonaka Tacit Socialisation Tacit Socialisation Tacit Explicit Externalisation Tacit Explicit Externalisation Explicit Tacit Internalisation Explicit Tacit Internalisation Explicit Combination Explicit Combination Source: Nonaka & Takeuchi (1995), The Knowledge-Creating Company

77 77 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Implicit Knowledge – Example Source: Gerd Gigerenzer (2007). Bauchentscheidungen

78 78 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) McKinsey Approach Employees publish specific knowledge through webbased documents not longer than three pages Knowledge must have been proven in practise Access to documents is tracked and reported. Reader evaluate the value of documents Employees are encouraged to commend on documents and to get in direct touch with experts (authors) Rankings are published and constantly updated about the success of all documents

79 79 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Knowledge Transfer Process Knowledge Employee Project Lead/ Manager 1. Knowledge Documentation Project 2. Search for Expertise 3. Contacting 4. Cooperation/Support 5. Knowledge development/ Enhanced Network

80 80 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) T-Concept Focus on one field of expertise Personal commitment to enhance knowledge within that field and to proactively support colleagues where required Commitment to publish new insights Doing presentations on internal knowledge transfer conferences and training events Experts are communicated internally General Knowledge Expert- Knowledge

81 HR Organization & Information Systems Prof. Dr. Armin Trost

82 82 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) HR Organization and Information Systems – Overview Global Human Resource Management HR as Strategic Business Partner Roles in a global HR Organization Shared Service Center HR Outsourcing HR Information Systems Focus: e-Recruiting

83 83 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Global Organizational Landscape Global Headquarter Corporate HR managing HR globally; Regional HR managing regional HR; Local HR serving Headquarter Staff Subsidiary Local HR serving Subsidiary Staff Regional Headquarter Regional HR managing regional HR; Local HR serving Subsidiary Staff

84 84 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Types of Organizations Global Views the world as a single market; operations are controlled centrally from the corporate office. Global Views the world as a single market; operations are controlled centrally from the corporate office. Transnational Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration. Transnational Specialized facilities permit local responsiveness; complex coordination mechanisms provide global integration. Multinational Several subsidiaries operating as stand-alone business units in multiple countries. Multinational Several subsidiaries operating as stand-alone business units in multiple countries. International Uses existing capabilities to expand into foreign markets. International Uses existing capabilities to expand into foreign markets. LowHigh Global Efficiency Low High Local Responsiveness

85 85 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Perceived Strength and Interests from two Perspectives We are more familiar with operational requirements and practices We know our customers better We need our freedom to decide whats good for our local customers We expect responsibilities to design our own processes and tools Its all different in our country We are closer to senior management We know better whats good for the company as a whole We are more familiar with the differences across countries We have the power to decide about strategic directions Locally operating HR employee Globally acting HR employee

86 86 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Trends in Human Resource Management Responsibilities Administration Support Consulting Strategy ?

87 87 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) HR Roles by Dave Ulrich Strategy Operation ProcessesPeople Strategic Partner Defining and executing strategy Change Agent Creating a renewed organization Administrative Expert Building an efficient infrastructure Employee Champion Increasing employee commitment and capability Source: Dave Ulrich: Human Resource Champions 1997

88 88 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Filtering Queries Self Service WEB Service Center / Call Center HR Generalist HR Manager SERVER Queries Intranet Internet Source: Accenture Database

89 89 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Screenshot Abwesenheitsmitteilung

90 90 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Virtual Advisor (Lingubot)

91 91 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Shared Service Center Corporate Functions Divisional Units Board internalexternal External Partner HR HR-Shared- Service HR

92 92 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Economies of Scale and Scope through Shared Service Organization Economies of Scale Combination of similar Processes Economies of Scope Costs/Unit Volume Joint Usage of Resources t0t0 t1t1 Costs/nit C1 C2 Q2Q1Shared Volume t0t0 t1t1 decentral S1S1 t0t0 t1t1 Utilization Time consolidated S2S2 Economies of Scale through Decreasing redundancies Standardization of IT/HR processes Learning Economies of Scope through Combination of resources and infrastructures Leveling utilization and capacities

93 93 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Decentralized Recruiting Organization Applicant Branch A Preselection Assessment Application management Job Offer Preparation HR Marketing Job Offer Negotiation Branch B Preselection Assessment Application management Job Offer Preparation HR Marketing Job Offer Negotiation Application Data Base Definition of Target Profile Introduction Definition of Target Profile Introduction

94 94 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Identifying Duties to be Transferred into a Shared Recruiting Center Ability to Standardize Relationship to Candidate high low distant close Recording unsolicited Applications in the System Arranging Interviews Conducting Interviews Pre-Selecting Cand. Writing Job Offers Maintaining Candidate Information Feeding back to Candidate Searching in the Talent Pool Publishing Job-Postings online Negotiating Work Contract

95 95 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Integrated Recruiting Organization with centralized e-Recruiting Technology Applicant Branch A Assessment Branch B Assessment Job Offer Negotiation Shared Recruiting Center Application management Job Offer Preparation HR marketing e-Recruiting Job Offer Negotiation Pre- Selection Definition of Target Profile Introduction Definition of Target Profile Introduction

96 96 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Central Coordination Partner-/Supplier Management Modernd HR-Organization Employees Applicants Customers Managers HR Business Partner near to business Individual support of managers on HR- related topics Shared Service Center company wide Delivery of standardized and regularly demanded services to all employees with high volume (e.g. payroll) IT Hotline ESS MSS Center of Expertise company wide Dealing with complex HR- related Issues

97 97 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Outsourcing Purposes Cost Focus Flexibility Quality

98 98 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Scope of Serices outsourced in the United States Source: SHRM 2004 Human Resource Outsourcing Survey Report …partially …completely Relative Frequency (in %) Health Care Pension Benefits Admin Payroll Recruitment (/wo Mgr) Relocation HR Development Management Development Compensation Admin HR Technology Mobility/Expatriates Performance Management

99 99 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Top Factors in Considering HR Outsourcing Vendors A proven track record Cost of vendor services Guaranteed service levels Flexible contract options Recommendations from other comp. A compatible corporate culture Niche in a specific area Source: SHRM 2004 Human Resource Outsourcing Survey Report (n=168 HR Professionals in Companies that currently outsource)

100 100 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Internal versus external Recruiting-Expertise depend on Positions to be filled ExecutivesKey FunctionsNon-critical Functions External Internal External InternalExternal Internal Expertise

101 101 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) HR Information System Example SAP HCM

102 102 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) User and Expert Systems

103 103 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Expert System User Interface

104 104 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Services can be classified according to the Type of Users and Tasks Employees Rare usage Event-triggered No training efforts Experts Frequent usage Limited to intense training efforts Administration Standardized processing Automatization Reliable results Value Creation Creative usage Personal judgements Fuzzy output Master data management Leave request Online-Application Training booking Employee-/Self- Assessment Knowledge Management Performance Management Payroll Accounting Application screening Training administration Talent Relationship Management Succession planning HR Controlling User Task * Inclusing applicants, managers etc.

105 105 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) User and Expert Systems Usage Decentral CentralCentralization Decentralization Employees HR Expert Systems User User Systems

106 106 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) e-Recruiting Innovation Waves Innovators Early Adaptors Early Majority Late Majority Laggards Website Online- Application Backend/ Integration

107 107 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Typical e-Recruiting functionalities Search request creation, approval and maintenance Job-posting on copmany career website and on public job boards Applicant portal supporting job search, registration and online-application Application screening and filtering based on selection criteria Automatic communication with candidates via Creation and approval of short-lists through line managers Interview administration and invitation

108 108 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Learning Management System (e-Learning) Lerner Portal personalized & intranet-based LMS Learning Management System CMS Content Management System External Content Qualifications Role Personalized Training Offers Learning History Collaboration Tests Training Administration Learning Strategies Profile-Matching Tests & Certificates Authorization & Accounting Analytics Learning Content Generation Embedding external Content Formal Standards Authorization Literature Databases Company Information Relevant Websites Communities of Practice

109 Social Media Prof. Dr. Armin Trost

110 110 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media – Overview Social Media User and Usage Recruiting und Employer Branding Learning and Development Social Media Platforms Internal Social Media Policies

111 111 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Forrester Ladders Creators Write blogs, upload videos, generate content used by others Critics React on others content, edit wikis, engage in forums Collectors Collect and sort internet content actively, use tags and RSS, evaluate content Joiners Maintain relations to others Spectators Pasively use web content Inactives Dont use content generated by others

112 112 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media Activity Source: ( ) US: Forrester Research's North American Technographics® Online Benchmark Survey, Q (US), 26,913 respondents Europe: Forrester Research's European Technographics® Benchmark Survey, Q2 2010, 25,535

113 113 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media User Types in Employer Branding Me too Spontaneousely share career- related information and content Be there Spontaneousely share career- related information and content Be there Maturity Communicator Intensively share career-related information in any situation Be present Intensively share career-related information in any situation Be present Brand Builder Transfer a clear employee value proposition Clear employer profile Transfer a clear employee value proposition Clear employer profile Networker Actively build networks into relevant target groups Reach target group Actively build networks into relevant target groups Reach target group

114 114 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media/Web 2.0 Platform Usage Employer Branding Repu- tation Carreer- info Job- Posting Inter- action Talent Search TRM Blogs Forums

115 115 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media Roadmap Way to a Social Media Strategy for Recruiting and Employer Branding Objectives Definition of Key and Bottleneck Functions Target Group Identification Setting Social Media Objectives Definition of Key and Bottleneck Functions Target Group Identification Setting Social Media Objectives Listen Involve and understand target group Consider internal conditions Involve and understand target group Consider internal conditions Do it Definition & action on Social Media Activities Employer Branding Sourcing Talent Relationship Management Clarify rules and responsibilities Definition & action on Social Media Activities Employer Branding Sourcing Talent Relationship Management Clarify rules and responsibilities Check and Develop Constantly check effects of Social Media Activities Set priorities and develop selected Social Media Activities Constantly check effects of Social Media Activities Set priorities and develop selected Social Media Activities

116 116 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Medium Twitter Incident WitnessTweetFollower Journalist Incident ReaderWitnessInterviewArticle Editor Text Time

117 117 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Elements of a Twitter Strategy How will the twitter account be positioned and what will be the relevant content Who are the target groups? Who are relevant multiplicators (Follower)? How will the twitter account be marketed/sold? What are measurable objectives? Who/which person will represent the twitter account? Who decide upon the shared content?

118 118 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Key Terms of Social Network Analysis Nodes, Relations, Density, Centrality, Cliques, Clusters, Stars

119 119 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Career Cluster versus Professional Cluster Career Cluster Professional Cluster Purpose is to share career-related content Purpose is to share professional content High Centrality Little Centrality Active Candidates Active und passive Candidates Access through HR Access through the line Passive approach Active approach

120 120 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Learning on Demand Yellow Pages Wiki, Blogs Off-the-Job Training Social Expert Communites Literature Education Offerings YouTube Tutorials Simulations Peers Direct Manager Podcasts iTunes U Conferences Micro-Blogging Yammer Communities of Practice

121 121 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Formal versus informal Learning 20% Budget 80% Effect Formel Learning Informal Learning 80% 20% Cross, J. (2006). Informal Learning: Rediscovering the Natural Pathways That Inspire Innovation and Performance. San Francisco/CA: John Wiley.

122 122 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) YouTube Tutorials

123 123 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Audio and Video Podcasts Easy to produce and share with others Flexible usage anywhere at any time Short duration Direct access through mobile Internet Usage of gadgets (Smartphones)

124 124 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Principals of informal Learning Learning content is easily produced, shared and found via Web 2.0 (e.g. YouTube) Flexible and problem-related usage of content (Learning-on-Demand instead of Learning- just-in-case) Learning from others (peers) through Social Media und Communities of Practice Room and infrastructures allow self-directed learning and knowledge exchange

125 125 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Internal Talent Markets Talents Experiences Projects Expectations Preferences References Experiences Projects Expectations Preferences References Jobs & Projekte Requirements Challenges Objectives Working Conditions References Requirements Challenges Objectives Working Conditions References According to: Bryan, L., Joyce, C., & Weiss, L. (2006). Making a Market in Talent. McKinsey Quarterly. HR Consultant Rules Internal notice periods Roles and views Compensation rules Internal notice periods Roles and views Compensation rules

126 126 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Social Media Policy at Yahoo! Personal Blog Guidelines Legal Parameters –Legal Liability. When you choose to go public with your opinions via a blog, you are legally responsible for your commentary. (..) –Company Privileged Information. Any confidential, proprietary, or trade secret information is obviously off-limits for your blog per the Proprietary Information Agreement you have signed with Yahoo!. –Press Inquiries. (..) If a member of the media contacts you about a Yahoo!-related blog posting or requests Yahoo! information of any kind, contact PR. Best Practice Guideline –Be Respectful of Your Colleagues –Get Your Facts Straight –P ovide Context to Your Argument. –Engage in Private Feedback.

127 HR Controlling Prof. Dr. Armin Trost

128 128 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) HR Controlling – Overview Purpose of HR Controlling Important indicators in HR Performance indicator positioning and implementation ROI of HR investments

129 129 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Purposes of HR Controlling Current Situation Future Situation Past investment DiagnosisPrognosisEvaluation

130 130 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Indicators in HRM Employer Branding –% Awareness –# Applications –Reasons to apply –Employer image Recruiting –Time-to-fill –Cost per Hire –Offer-Acceptance-Rate –Interviews per Hire –New Hire Satisfaction –Hiring Manager Satisfaction –No-show-Rate Workforce Structure –Age –Gender –Span of controll –Tenure –% Freelancers –% Female Leaders Expatriation –# Expatriates –Return-Rate

131 131 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Indicators in HRM Training –Training days/employee –Training costs/employee –Training quality Development –# High Potentials –HiPos ready for promotion –Duration on one level HR-related costs –Salary/Total costs –Salary/employee –Compensation structure Productivity –Revenue/employee –Human Capital Value Added –Verbesserungs- vorschläge/Mitarbeiter –Employee satisfaction –Commitment Retention/Safety –Turnover Rate –HiPo Turnover –Boomerang-Rate –Bradford Factor (SxSxD) –# Accidents/ 1000 Employees

132 132 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Classic #1: Cost-per-Hire Advertising costs Candidates travel costs Executive search retainer and contingency fee Selection tools and measures Salary of employees involved in recruiting (HR, Line) Costs for facilities of the recruiting organization Market Research Opportunity costs related to involved line employees Costs of recruiting infrastructure (e.g. e-Recruiting) Referral bonuses HR Marketing events Sign-on-bonuses Relocation costs Onboarding costs Which components make up cost-per-hire and how is cost per hire divided through organizational units involved and new employees?

133 133 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Cost Elements – Case Advertising Job ads (e.g. in newspapers); Postings in job boards; Website/Homepage modifications; Marketing material; Image campaigns Job ads (e.g. in newspapers); Postings in job boards; Website/Homepage modifications; Marketing material; Image campaigns Events Job fairs; College recruiting; Direct mailings; Open days at SAP; Company visits; Inhouse events Image Reports; Labor Market Research etc. Job fairs; College recruiting; Direct mailings; Open days at SAP; Company visits; Inhouse events Image Reports; Labor Market Research etc. Search Agencies Executive search; Retained search; Contingency search; Direct source providers; Contractors Referral Bonuses Employee Referrals; Candidate Referrals Travel Travel costs of recruiters and/or candidates Assessment Assessment centers; reference/background investigation; Assessment tools; tests Assessment centers; reference/background investigation; Assessment tools; tests Relocation Estate agents; Removal firms; Visa / Work Permit Application; Relocation services; Tax service; Temporary housing; Rental car; Language training Estate agents; Removal firms; Visa / Work Permit Application; Relocation services; Tax service; Temporary housing; Rental car; Language training Sign on Bonuses Operating Costs Recruiters payroll and trainings; Applicant tracking systems; Infrastructure costs; IT support; Office costs; Communication costs Exlusively Recruiting (special accounts) Related to Recruiting (e.g. cost centers)

134 134 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) ? Classic #2: Time-to-Fill When does it start? When does it end? Workforce Demand Start HR Marketing/ Search Signed Job Offer End of Onboarding VacancySelectionFirst Day at Work End of Probation Period ?

135 135 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Performance Indicator Positioning What? Which Indicator? For whom? Who benefits from the indicator? Why? To which objectives is the indicator related? How? Which sources and methods are used to collect the data when?

136 136 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Balanced Scorecard Source: Robert Kaplan and David Norton, Strategic Learning and the Balanced Scorecard, 1996 Financials ObjectiveKPI People ObjectiveKPI Customer ObjectiveKPI Processes ObjectiveKPI Vision & Strategy

137 137 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Performance Indicator Framework Client CEO, HR Head, Manager Objectives Object Employee, Org. Unit, HR Function Topic Function Diagnosis, Prognosis, Evaluation Positioning Method Survey, Statistics Source People, Systems Owner Decentral/central, HR Controlling Timing Operation Reporting Online/ Paper, Views, Roles Training Interpretation, Presentation, Usage Usage Action planning, tracking, monitoring Usage

138 138 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Implementing an HR Controlling System Example: Turnover Early Warning Definition of Scope/Objectives Definition of client, objectives and function Setting budgests, timeline and project structure Approach definition Analysis Systematic analysis of turnover reasons and possible early indicators Develpment of a model to explain and predict turnover behavior Method Definition Definition of methods and tools to track/measure turnover drivers and predictors Defining ways to analyse and report data and results Implementation Development and installation of controlling system and related technical infrastructure Identification and training of employees (clients) impacted Operation Tracking data and report to clients Data usage and related actions Evaluation Determination of validity and acceptance Defining fields for improvements Meeting with client/steering group and project lead Interviews with managers, former employees, experts Workshop with experts, clients and HR managers Validation study interviews with client, user tracking

139 139 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Traditional ways to evaluate Investments in HRM InvestmentCostsObjectivesSuccess Indicators Management development program (200 participants) kImprovement of customer and market orientation Higher customer satisfaction Responses to the training by the participants Customer satisfaction Employee survey ( employees) kImprovements of employee satisfaction, working conditions and processes Response rate Amount of defined actions as result to the survey Implementation of a performance management system (5.000 employees) kPerformance improvements Better linkage between operational work and strategic directions Relative amount of performance management meetings Responses of managers and employees

140 140 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Return on Investment (ROI) ROI = 100% Benefit - Costs Costs Time Operating Costs Investment Cummulated Benefits Cummulated Costs Start Operation Profit Break- Even Project start ROI

141 141 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) From Problem to ROI Problem Cost of doing nothing Solution Cost of solution Impact of solution ROI

142 142 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) P&B 40 OE 160 P&B 180 OE 20 R 220 R 220 Döner ShopDesign Office Human Capital Value Added (HCVA) FTE = – = – 20 1 = 200 Human Capital Return on Investment (HCROI) 220 – = 1, – = 1,11 Value Added and ROI of Human Capital P&B=Pay & Benefits OE=Other Expenses (Total expenses minus Pay & Benefits) R=Revenue FTE=Full-Time Equivalent R – OE FTE = R – OE P&B = Source: Jac Fitz-Enz: The ROI of Human Capital.

143 143 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Measuring Employee Performance Revenue k Employees2.000 FTE Revenue/FTE100 k Total Expenses k Personnel Exp k Workdays/Year220 Company ExampleIndicators Profit/FTE HCVA* k Human Capital Value Added Revenue – (Total Exp. – Personnel Exp.) = Human Capital ROI Human Capital Value Added Personnel Expenses = HCROI** 114 % × 100% * ** */** Source: Jac Fitz-Enz (2000). The ROI of Human Capital. Amacon. HCVA/FTE80 k

144 144 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) How much does a Top-Perfomer add more Value than an average Employee? Source: Corporate Leadership Council (2003) Reponse by HR Directors

145 145 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Added Value in Key Functions compared to Other Functions Performance Added Value ,5 1 1,5 C B A

146 146 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Differenciated Added Value Estimation Key Function Others 10% 90% C 10% B 70% A 20% FTE20 Factor1 Per FTE (k): HCVA69 P-Exp.80 Benefit- 11 FTE140 Factor2 HCVA139 P-Exp.100 Benefit39 FTE40 Factor3 HCVA208 P-Exp.120 Benefit88 FTE180 Factor0,5 HCVA35 P-Exp.60 Benefit-25 FTE1.260 Factor1 HCVA69 P-Exp.70 Benefit FTE360 Factor1,5 HCVA104 P-Exp.90 Benefit14 Per FTE (k):

147 147 Prof. Dr. Armin TrostAdvanced Human Resource Management; HFU Business School (2009) Training ROI Calculation Example


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