Strategic HR Management and Planning

Developing Talent at Consumer goods conglomerate Procter and Gamble has had a long, successful history based on hiring at the entry level and developing and promoting its managers and executives from within. The key to this success is the organization’s Build from Within program, which tracks the performance of every manager within the organization’s top 50 jobs consistently has three internal replacement candidates lined up and ready to assume responsibility. Loyalty of employees is paramount to ensuring the success of such a program, and P&G’s history of grooming and training its employees promotes such loyalty. 2–2

Developing Talent at Fewer than 5% of the organization’s non-entry-level hires come from outside the organization, and its rigorous and competitive screening process, in which fewer than 5% of applicants are hire, ensures that P&G hires those best suited for the organization and its culture. P&G’s 138,000 employees are tracked via monthly and annual performance reviews in which managers discuss business goals, personal goals, and how they’ve trained others to assume responsibility. The latter is a key factor in the upward mobility of any manager. P&G prides itself in being able to fill any opening internally “in an hour.” All executives are required to teach in the organization’s training programs, and the CEO assumes direct responsibility for the development of the organization’s top 150 employees. 2–3

Strategic Planning and HR Planning 0 Strategic Human Resources Management (SHRM) 0 The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals 0 Strategy formulation—providing input as to what is possible given the types and numbers of people available. 0 Strategy implementation—making primary resource allocation decisions about structure, processes, and human resources. 2–4

Linking Strategic Planning and HRP 0 Strategic Analysis 0 What human resources are needed and what are available? 0 Strategic Formulation 0 What is required and necessary in support of human resources? 0 Strategic Implementation 0 How will the human resources be allocated? 2–5 Human Resources Planning Strategic Planning

2–6 Linking Strategic Planning and Human Resources

Step One: Mission, Vision, and Values 0 Mission 0 The basic purpose of the organization as well as its scope of operations 0 Strategic Vision 0 A statement about where the company is going and what it can become in the future; clarifies the long-term direction of the company and its strategic intent 0 Core Values 0 The strong and enduring beliefs and principles that the company uses as a foundation for its decisions 2–7

Since Mission, Vision, and Values influence HRP… 0 Small Group Discussion  In groups of 4, discuss the Mission and Vision, of… University of Baguio  Di scuss whether or not the university is fulfilling its obligations according to the stated Mission and Vision.  To what extent do the employees contribute to this?  To what extent is the organization committed to motivate their people to be dedicated in helping the organization achieve company goals and objectives? 2–8

Step Two: Environmental Scanning 0 Environmental Scanning 0 The systematic monitoring of the major external forces influencing the organization. 1.Economic factors: general, regional, and global conditions 2.Industry and competitive trends: new processes, services, and innovations 3.Technological changes: robotics and office automation 4.Government and legislative issues: laws and administrative rulings 5.Social concerns: child care and educational priorities 6.Demographic and labor market trends: age, composition, literacy, and immigration 2–9

The Competitive Environment 0 Assignment (Short bond paper; due: December 7, 2011)  List and discuss the competitive environment of… ABS-CBN  Who are its competitors?  What distinct advantages does ABS-CBN have over its competitors?  What can the company do to make sure they have the best pool of manpower considering the nature of competition in their industry? 2–10

Step Three: Internal Analysis 2–11 Culture Composition Capabilities Internal Analysis

Culture: Auditing Values, Beliefs, and Attitudes 0 Cultural Audits 0 Audits of the culture and quality of work life in an organization. 0 How do employees spend their time? 0 How do they interact with each other? 0 Are employees empowered? 0 What is the predominant leadership style of managers? 0 How do employees advance within the organization? 2–12

Capabilities: People as a Strategic Resource 0 Core Capabilities 0 Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers. 0 Sustained competitive advantage through people is achieved if these human resources: 1. Are valuable. 2. Are rare and unavailable to competitors.  Your best competitive assets walk out the door every night. 3. Are difficult to imitate. 4. Are organized for teamwork and cooperation. 2–13

Composition: The Human Capital Architecture 0 Strategic Knowledge Workers 0 Employees who have unique skills that are directly linked to the company’s strategy. 0 Example: R&D scientists 0 Core Employees 0 Employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace. 0 Example: salespeople 2–14

Composition: The Human Capital Architecture (cont’d) 0 Supporting Labor 0 Employees whose skills are of less strategic value and generally available in the labor market. 0 Example: clerical workers 0 Alliance Partners 0 Individuals and groups with unique skills, but those skills are not directly related to a company’s core strategy. 0 Example: consultants 2–15

Forecasting: A Critical Element of Planning 0 Forecasting involves: a. forecasting the demand for labor b. forecasting the supply of labor c. balancing supply and demand considerations. 2–16

2–17 Model of HR Forecasting

Forecasting Demand for Employees 2–18 Quantitative Methods Qualitative Methods Forecasting Demand

Quantitative Approach: Trend Analysis 0 Forecasting labor demand based on an organizational index such as sales: 1. Select a business factor that best predicts human resources needs. 2. Plot the business factor in relation to the number of employees to determine the labor productivity ratio. 3. Compute the productivity ratio for the past five years. 4. Calculate human resources demand by multiplying the business factor by the productivity ratio. 5. Project human resources demand out to the target year(s). 2–19

Qualitative Approaches 0 Management Forecasts 0 The opinions (judgments) of supervisors, department managers, experts, or others knowledgeable about the organization’s future employment needs. 0 Delphi Technique 0 An attempt to decrease the subjectivity of forecasts by soliciting and summarizing the judgments of a preselected group of individuals. 0 The final forecast represents a composite group judgment. 2–20

2–21 HR Planning and Strategy Questions to Ask Business Managers What are your mission, vision, and values? What are your current pressing business issues? What are our organizational strengths? Who are our competitors’ organizational strengths? How do we compare? What core capabilities do we need to win in our markets? What are the required knowledge, skills, and abilities we need to execute the winning strategy? What are the barriers to optimally achieving the strategy? What types of skills and positions will be required or no longer required? Which skills should we have internally versus contract with outside providers? What actions need to be taken to align our resources with strategy priorities? What recognition and rewards are needed to attract, motivate, and retain the employees we need? How will we know if we are effectively executing our workforce plan and staying on track? Workforce planning requires that HR leaders periodically interview their managers to gauge future workforce needs. Here are some sample questions to ask.

Forecasting the Supply of Employees: Internal Labor Supply 0 Staffing Tables 0 Markov Analysis 0 Skill Inventories 0 Replacement Charts 0 Succession Planning 2–22

Forecasting Internal Labor Supply 0 Staffing Tables 0 Graphic representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements. 0 Markov Analysis 0 A method for tracking the pattern of employee movements through various jobs. 2–23

2–24 Hypothetical Markov Analysis for a Retail Company

Internal Demand Forecasting Tools 0 Skill Inventories 0 Files of personnel education, experience, interests, skills, etc., that allow managers to quickly match job openings with employee backgrounds. 0 Replacement Charts 0 Listings of current jobholders and persons who are potential replacements if an opening occurs. 0 Succession Planning 0 The process of identifying, developing, and tracking key individuals for executive positions. 2–25

2–26 An Executive Replacement Chart

Succession-Planning Checklist RATE THE SUCCESS OF YOUR SUCCESSION PLANNING For each characteristic of a best-practice succession- planning and management program appearing in the left column below, enter a number to the right to indicate how well you believe your organization manages that characteristic. Ask other decision makers in your organization to complete this form individually, compile the scores, and compare notes.

2–28 Assessing a Firm’s Human Capital

Step Four: Formulating Strategy 0 Strategy Formulation 0 Moving from simple analysis to devising a coherent course of action. 0 SWOT analysis 0 A comparison of strengths, weaknesses, opportunities, and threats for strategy formulation purposes. 0 Use the strengths of the organization to capitalize on opportunities, counteract threats, and alleviate internal weaknesses. 2–29

Corporate Strategy 2–30 Strategic Alliances and Joint Ventures Growth and Diversification Mergers and Acquisitions Corporate Strategy

Business Strategy 0 Value Creation 0 What the firm adds to a product or service by virtue of making it; the amount of benefits provided by the product or service once the costs of making it are subtracted (value = benefits — costs). 0 Low-cost strategy: competing on productivity and efficiency 0 Keeping costs low to offer an attractive price to customers (relative to competitors). 0 Differentiation strategy: compete on added value 0 Involves providing something unique and distinctive to customers that they value. 2–31

2–32 Key HR Activities Associated with Merger or Acquisition Phases

2–33 Key HR Activities Associated with Merger or Acquisition Phases (cont’d)

Business Strategy (cont’d) 0 Functional Strategy: Ensuring Alignment 0 External Fit/Alignment 0 Focuses on the connection between the business objectives and the major initiatives in HR. 0 Internal Fit/Alignment 0 Aligning HR practices with one another to establish a configuration that is mutually reinforcing. 2–34

Step Five: Strategy Implementation 0 Taking Action: Reconciling Supply and Demand 0 Balancing demand and supply considerations 0 Forecasting business activities (trends) 0 Locating applicants 0 Organizational downsizing, outsourcing, offshoring 0 Reducing “headcount” 0 Making layoff decisions 0 Seniority or performance? 0 Labor agreements 2–35

Step Six: Evaluation and Assessment 0 Evaluation and Assessment Issues 0 Benchmarking: The process of comparing the organization’s processes and practices with those of other companies 0 Human capital metrics 0 Assess aspects of the workforce 0 HR metrics 0 Assess the performance of the HR function itself 2–36

2–37 Ten Measures of Human Capital 1.Your most important issues 2.Human capital value added 3.Human capital ROI 4.Separation cost 5.Voluntary separation rate 6.Total labor-cost/revenue percentage 7.Total compensation/revenue percentage 8.Training investment factor 9.Time to start 10.Revenue factor