A Definition of Human Resource Management Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization. Human Resources the people who work for the organization.
Recurring Themes in Human Resource Management Strategic Approach International Human Resource Management Maintaining Ethical Policies and Behavior –Stakeholders –Ethical Duties Benchmarking, Measuring, and Evaluating Human Resources Results
Table 1.1: Top Challenges for Organizations and the HR Profession Sources: Adapted from “More on What CEOs Want from HR,” HRFocus, Vol. 80 (4), 2003, pp.5-6; “New Study Identifies Key Competencies Necessary for HR,” Society for Human Resource Management, June 22, (Available at:
Current and Future Challenges to Human Resource Management Corporate Reorganizations Global Competition –International Joint Ventures (IJVs) Cyclical Growth Increasing Diversity in Workplace Employee Expectations Organizations as Vehicles for Reaching Societal Goals
Why Is Managing Human Resources So Important? Rapid Change Uncertainty About Basic Business Conditions Rising Costs Rapid Technological Change More Limited Supplies of Highly Trained Labor Rapidly Changing Government Legislation and Regulations Increased Globalization of Industries
HRM - The Traditional View
HRM -- The Strategic View
Transforming HR People Requires: HR transformation linked to organization’s strategic orientation Active participation by HR staff, supported by HR champion Line managers involved in defining skills HR needs HR transformation = major change effort by firm
Enhancing Administrative Efficiency Increase Efficiency of Current HR Practices Centralized HR Services -- “One-Stop Shop” Outsourcing
The Strategic Planning Process Mission, Goals, and Values Statements Environmental Threats & Opportunities Organizational Strengths & Weaknesses Goals and Objectives Formulation of Strategies
Fitting HR Practices to Business Strategy and One Another Vertical Fit = the match between HR practices and overall business strategy Horizontal fit = the consistency and interrelationship among HR activities External fit = how well HR activities match the demands of the external environment
HR Fit Requires Right HR Choices Staffing Appraising Compensating Training and Development Employee Influence Work Systems
Developing Partnership Learn about the firm’s business Respond to and be aware of the firm’s needs and direction Shift away from traditional HRM functions Move toward supportive, collaborative relationships with line managers Demonstrate how HR is critical to business success
Is SHRM Worth All The Trouble? Huselid 1997 study Sears study A study in Germany, Italy, Japan and the USA New Zealand Study
SHRM Trends Recent surveys/views Economic realities Short- & long-term visions Which are you experiencing? What views have changed during course?
2008 Forrester Research Study Human resource management (HRM) will be key area of focus in 2009 as companies and government organizations put in place strategies to cope with economic crisis and recovery. The so called "war for talent" is on the backburner; focus shifts to hiring freezes, benefits and compensation cost management, and workforce reductions in the hardest-hit segments. HRM technology solutions can help savvy human resources professionals strategically manage through crisis and prepare as the climate shifts to the upside.
2008 Forrester Research Study Trends for 2009 Managing and developing talent Embracing HRM analytics Web 2.0 adoption HR technology strategy
CareerBuilder.com 2009 Job Forecast Surveyed 3,259 hiring managers and human resource professionals in private sector companies. Trend No. 1: Bigger paychecks (?) –Despite the fact that many employers are looking for ways to cut costs, they don't anticipate trimming salaries as a way to do so. Sixty-six percent of employers plan to increase pay for existing employees and one third of hiring managers estimate increasing salaries on initial offers to new employees in 2009.
CareerBuilder.com 2009 Job Forecast Trend No. 2: Flexible work arrangements –Companies are catching on to the flexible work arrangements that allow employees more freedom in the office. Thirty-one percent of employers say they plan to provide the following options for workers in 2009: alternate schedules (70 percent); telecommuting (48 percent); compressed workweeks (40 days); summer hours (19 percent); job sharing (13 percent); and sabbaticals (7 percent).
CareerBuilder.com 2009 Job Forecast Trend No. 3: Green jobs –Employers have tried to gain traction using environmentally friendly policies for a while and the New Year shows more of the same. Last year, one-in-ten hiring managers added "green jobs," which are environmentally conscious positions, compared to 13 percent of employers who plan to add them in 2009.
CareerBuilder.com 2009 Job Forecast Trend No. 4: Recruitment tools –As employers slow down on hiring, recruitment budgets shrink as well. As a result, more employers are using the Internet as an employment medium. Twenty-three percent of employers say that although their hiring budgets will decrease in 2009, they will spend money on the following staffing vehicles: online recruitment sites (19 percent); newspaper classifieds (15 percent); career fairs (12 percent); staffing firms and recruiters (12 percent); and social networking sites (7 percent).
CareerBuilder.com 2009 Job Forecast Trend No. 5: Retaining retirees –Though baby boomers are approaching retirement age, many are continuing to work -- both out of desire and necessity. Employers are looking at ways to retain these workers; 17 percent say they will likely rehire retirees from other companies in 2009 and 12 percent plan to offer incentives for baby boomers to stay on with the company longer.
CareerBuilder.com 2009 Job Forecast Trend No. 6: Diversity recruitment –Hiring managers will also focus recruitment efforts on employing diverse workers. Employers said they plan to hire Hispanic, African American and mature workers aggressively in Eighty-eight percent of companies say they will continue to recruit bilingual candidates, as well.
CareerBuilder.com 2009 Job Forecast Trend No. 7: Freelance or contract hiring –To continue their cost-cutting efforts, employers are using freelance or contract workers to help support their businesses. Twenty-eight percent of hiring managers expect to utilize these workers in 2009.
SHRM Report: Creating People Advantage--How to Address HR Challenges Worldwide Through 2015 Talent and leadership – scarcer than ever before Workforce –growing older and people are having fewer children Globalization - companies are becoming global organizations Emotional well-being of employees – is more important than ever before
SHRM Report: HR Challenges Worldwide Through critical HR challenges identified for the future: 1.Managing talent 2.Improving leadership development 3.Managing change and cultural transformation 4.Managing globalization 5.Managing demographics, especially aging workforce 6.Becoming a learning organization 7.Transforming HR into a strategic partner 8.Managing work/life balance.
SHRM Report: HR Challenges Worldwide Through critical HR challenges identified for the future: Category 1: Developing and Retaining the Best Employees 1 - Managing talent 2 - Improving leadership development 3 - Managing change and cultural transformation Category 2: Anticipating Change 4 - Managing globalization 5 - Managing demographics, especially aging workforce 6 - Becoming a learning organization
SHRM Report: HR Challenges Worldwide Through critical HR challenges identified for the future: Category 3: Enabling the Organization 7 - Transforming HR into a strategic partner 8 - Managing work/life balance.
SHRM Report: HR Challenges Worldwide Through key steps for making the best decisions: 1.Build an internal capacity to analyze trends in the external environment. 2.Use quantitative and qualitative indicators that give a detailed view of the HR impact on the company's internal environment. 3.Set priorities based on the issues of most critical importance as determined by both external and internal factors. 4.Initiate projects to tackle these priorities with dedicated teams. 5.Perhaps most important, secure support from top management.
Adecco Institute Study Survey of 5,000 HR professionals heavily supports Category 2. Top 3 challenges facing corporations today are: – Globalization – Demographic change – Technical progress (skills shortages)
Mercer Consulting Report 60 senior-level HR executives, 70% of whom hold global positions Biggest Challenge: finding a global service delivery model for the administration of HR and benefits Increasingly: HR executives are promoted to carry out global responsibilities. –45% of surveyed have taken on global roles within the last two to three years – 40% of surveyed have assumed such responsibilities within the last 12 months alone
Mercer Consulting Report Key drivers of globalization challenge: Rapid employee growth in emerging markets (many companies reported having more than 50% of their workforce located outside of their corporate home country or region) An increase in global workforce mobility More stringent governance and compliance requirements that vary dramatically by region Pressure for overall cost savings through process and policy standardization
Invest in Technology Gantry Group Research: U.S. companies plan to allocate 46% of HR IT budgets for to strategic functions such as: Talent Management Performance Management Leadership/Development Recruitment
Invest in Technology Adecco Institute Report: Technology will infiltrate the HR function automating transactional services HR practitioners will increasingly rely on knowledge management tools to track –Skills, experience, background, interests –Formal/informal feedback on employee performance 55% of companies maintain standardized records of business critical knowledge 30% publish information about “knowledge holder” in an internal directory Traditional administrative tasks will be handled by outsourcing, automation and self-service.
Going Global: What is IHRM? International HRM (IHRM) is the process of: –procuring, –allocating, and –effectively utilizing human resources –in a multinational corporation, while –balancing the integration and differentiation of HR activities in foreign locations.
Domestic HRM vs IHRM Compared to Domestic HRM, IHRM Encompasses more functions Has more heterogeneous functions Involves constantly changing perspectives Requires more involvement in employees’ lives Influenced by more external sources, and finally Involves a greater level of risk than typical domestic HRM
Approaches to IHRM (cont’d) Factors Affecting the Approach to IHRM Political Policies and Legal Regulations Managerial, Educational, and Technological Development in the Host Country Home and Host Country Cultures International Experience of the Firm
Approaches to IHRM (cont’d) Factors Affecting the Approach to IHRM (cont’d) Method of Subsidiary Founding Technology and the Nature of the Product Strategic Importance of Particular Employee Groups Organizational Culture Organizational Life Cycle
Managing Human Resources in a Foreign Subsidiary Culture and HR Functions within a Foreign Subsidiary Staffing in the Subsidiary Training in the Subsidiary Appraising Performance of Subsidiary Staff Subsidiary Compensation Systems
Global Managers Understand the worldwide business Learn about many cultures Work with many types of people Create cultural synergy Adapt to living in many cultures Use cross-cultural skills daily Treat foreign colleagues as equals Use foreign assignments as career development
IHRM: Adding Value in the Global Business Environment HR Activities that Should Be Assessed on a “Value-Added” Basis that Are Unique to IHRM: –Costs and Benefits of Repatriation Programs –Whether the Mix of PCN, HCN, and TCN (parent, host and third country nationals) Managers is Optimal for Efficiency and Effectiveness –Costs and Benefits of Localization Programs in Foreign Subsidiaries –Costs and Benefits of HR Activities Customized for Particular National Cultures and Legal Systems –Costs and Benefits of HR Programs Related to Foreign Taxation and Social Security Systems
7 Best Practices For Handling Layoffs And Downsizings (Bayer, 2009) Handling terminations correctly: Helps separated employees make best of bad situation Calms nerves of coworkers Salvages public opinion of organization
Terminate with Dignity Many HR professionals aren't using right protocols Must terminate employees with dignity If bad appearance, best talent will think twice before applying Negative word can spread quickly Same care taken when hiring should be taken when terminating
I - Put your policy in writing Why, when and how Preparedness is vital Managers must be trained
II - Train managers in realities of hurt Great sensitivity is required Listen attentively and respond to employee distress Human lives and futures are at stake Organization's image is on line
III - Develop positive scripts to help people keep dignity Carefully prepared (flexible), positive scripts are indispensable Kindness helps employee maintain confidence needed to find new job Nice words play critical role in keeping dignity In downsizing or merger, assure it’s a no-fault situation
IV - Be up-front about why Be prepared to explain Be sensitive to feelings of the person being singled out Be as open and honest as possible More likely to feel empowered if they understand
V - Prepare fair severance package & be ready to describe Must allocate severance pay fairly Severance pay (when possible) Ongoing career coaching In-house counseling Full explanation of benefits provided at termination
VI - Avoid sudden-death discharges Reduces shock and humiliation Don’t create impression that termination is a punishment Consider option of decompression period: –2 weeks of notice –Opportunity to finish tasks, complete projects, etc.
VII - Assure employee you'll be a good reference Empower employee and enable to move ahead Convey good news to prospective employers Even poor performers deserve statement of good points
Other Issues - RIF “Layoff Survivor Sickness” Fear, insecurity and uncertainty Frustration, resentment and anger Sadness, depression and guilt Unfairness, betrayal and distrust Exodus? Data confirms it…
Stemming Flight “Job embeddedness”: total compensation ($, benefits, childcare, etc.) Procedural justice: policies, ombudsman, grievance, etc. Perception of fairness Overcommunicate, tell truth, keep lines open Don’t act like it’s the same
Other Strategies… On-site counseling, EAPs, outplacement Train: listening, empathy, skills Involve top managers Executives: do something visible Give survivors a reason to stay Hire-back bonuses
SHRM Info Systems Source: CedarCrestone IT Survey, 2008
SHRM Analytics Retiring workforce Skill shortages Retention Employee engagement Escalating benefit costs Non-competitive or unaligned compensation Compensation’s contribution to turnover Merger/acquisition activity Revenue per employee Source: CedarCrestone Whitepaper, 2008