Strategic HR Strategic HR Management and

Management and PlanningPlanning

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

0Strategic Human Resources Management (SHRM)

0The pattern of human resources deployments and activities that enable an organization to achieve its strategic goals

0Strategy formulation—providing input as to what is possible given the types and numbers of people available.

0Strategy implementation—making primary resource allocation decisions about structure, processes, and human resources.

2–4

Linking Strategic Planning and HRP

0Strategic Analysis 0 What human resources are needed and what are

available?

0Strategic Formulation0 What is required and necessary in support of human

resources?

0Strategic Implementation0 How will the human resources be allocated?

2–5

Human Resources Human Resources PlanningPlanning

Human Resources Human Resources PlanningPlanning

StrategicStrategicPlanningPlanning

StrategicStrategicPlanningPlanning

2–6

Linking Strategic Planning and Human Resources

Step One: Mission, Vision, and Values

0Mission0 The basic purpose of the organization as well as its

scope of operations

0Strategic Vision0 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

0Core Values0 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 BaguioDiscuss 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

0Environmental Scanning0 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 Environment0Assignment (Short bond paper; due: December 7, 2011)

List and discuss the competitive environment of…

ABS-CBNWho 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

CultureCulture

CompositionComposition

CapabilitiesCapabilities

Internal AnalysisInternal Analysis

Culture: Auditing Values, Beliefs, and Attitudes

0Cultural Audits0Audits of the culture and quality of work life in an

organization.

0How do employees spend their time?

0How do they interact with each other?

0Are employees empowered?

0What is the predominant leadership style of managers?

0How do employees advance within the organization?

2–12

Capabilities: People as a Strategic Resource

0 Core Capabilities0 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

0Strategic Knowledge Workers0Employees who have unique skills that are directly

linked to the company’s strategy.0Example: R&D scientists

0Core Employees0Employees with skills to perform a predefined job

that are quite valuable to a company, but not particularly unique or difficult to replace.0Example: salespeople

2–14

Composition: The Human Capital Architecture (cont’d)

0Supporting Labor0Employees whose skills are of less strategic value and

generally available in the labor market.0Example: clerical workers

0Alliance Partners0 Individuals and groups with unique skills, but those

skills are not directly related to a company’s core strategy.0Example: 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 MethodsQuantitative MethodsQuantitative MethodsQuantitative Methods

Qualitative MethodsQualitative MethodsQualitative MethodsQualitative Methods

Forecasting DemandForecasting DemandForecasting DemandForecasting 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

0Management Forecasts0 The opinions (judgments) of supervisors, department

managers, experts, or others knowledgeable about the organization’s future employment needs.

0Delphi Technique0 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 Supply0Staffing Tables0Markov Analysis0Skill Inventories0Replacement Charts0Succession Planning

2–22

Forecasting Internal Labor Supply

0Staffing Tables0 Graphic representations of all organizational jobs, along

with the numbers of employees currently occupying those jobs and future (monthly or yearly) employment requirements.

0Markov Analysis0 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

0Skill Inventories0 Files of personnel education, experience, interests,

skills, etc., that allow managers to quickly match job openings with employee backgrounds.

0Replacement Charts0 Listings of current jobholders and persons who are

potential replacements if an opening occurs.

0Succession Planning0 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

0Strategy Formulation0 Moving from simple analysis to devising a coherent

course of action.

0SWOT 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

Strategic Alliances and Joint Ventures

Growth and Diversification

Growth and Diversification

Mergers and Acquisitions

Mergers and Acquisitions

Corporate Strategy

Corporate Strategy

Business Strategy0Value Creation0What 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).

0Low-cost strategy: competing on productivity and efficiency0Keeping costs low to offer an attractive price to customers

(relative to competitors).

0Differentiation strategy: compete on added value0 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)0Functional Strategy: Ensuring Alignment0External Fit/Alignment0Focuses on the connection between the business

objectives and the major initiatives in HR.0 Internal Fit/Alignment0Aligning HR practices with one another to establish a

configuration that is mutually reinforcing.

2–34

Step Five: Strategy Implementation

0Taking Action: Reconciling Supply and Demand0 Balancing demand and supply considerations

0Forecasting business activities (trends)0Locating applicants

0 Organizational downsizing, outsourcing, offshoring

0Reducing “headcount”0 Making layoff decisions

0Seniority or performance?0Labor agreements

2–35

Step Six: Evaluation and Assessment

0Evaluation and Assessment Issues0Benchmarking: The process of comparing the

organization’s processes and practices with those of other companies

0Human capital metrics0Assess aspects of the workforce

0HR metrics0Assess 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