Mrs. Hala Omar Unit 1 - 1

Unit One: The Emerging Role of HR Professionals

Table of Contents

Unit 1

Introduction 2

Basic Characteristics of the business environment

Globalization

Technological Trends

Nature of Work

2

3

3

Strategic Human Resources Management

Definition of Strategic management

Strategy Formulation

Strategy Implementation

HR Role in Creating Competitive Advantage

Definition of Strategic Human Resources Management

Human Resources Strategic Management Process

Strategic Human Resources Management Challenges

3

4

7

8

8

9

9

The Role of Human Resources Professionals

Strategic Role

Role of Managing a Diverse Workforce

Innovator Role

Change and Knowledge Facilitator Role

Measuring Human Resources Management Effectiveness

10

12

12

12

13

Human Resources Professionals Proficiencies 13

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UNIT ONE

THE EMERGING ROLE OF HR PROFESSIONALS

The role of the human resources management is evolving with the changes in the competitive

market environment and the realization that human resources management must play a more

strategic role in the success of an organization. Consequently, organizations that do not put

their emphasis on attracting and retaining talents may find themselves in dire consequences,

as their competitors may be outplaying them in the strategic employment of their human

resources. This is due to the rapid changes that are increasing in the business environment,

locally as well as globally, which requires organizations to become more adaptable, resilient,

agile, and customer-focused to succeed.

As such, the human resource professional has to evolve to become a strategic partner, an

employee sponsor or advocate, and a change mentor within the organization i.e. An effective

human resource professional must be business driven function with a thorough understanding

of the organization’s big picture in order to be able to influence key decisions and policies.

This unit will highlight the following:

Basic Characteristics of Today's Business Environment

Strategic Human Resources Management

The Roles of Human resources professionals

Proficiencies of Human Resources Professionals

BASIC CHARACTERISITCS OF THE BUSINESS ENVIRONMENT

Globalization:

The tendency to extend sales, ownership, manufacturing to new markets abroad. Firms go

abroad for:

New markets for its services and products

Labor cost reduction

Globalization means:

Higher level of competition which means employees have to be more productive, to

do things better while reducing cost.

Consumer will get better quality at lower cost.

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Business will have the opportunity of higher sales volume but at the same time

higher competition in the local market.

Technological trends

The increased reliance on virtual on line communities to improve efficiency. For example,

Zara no longer relies on inventories as it operates a worldwide distribution network linked to

checkout registers at its stores around the world. This helps in:

Monitoring store sales

Computerized manufacturing system swings its action when an item runs out of a

store.

The manufacturing process is done in accordance and the item is directly sent to the

store.

Nature of work:

The technological change had a huge impact on how people impact on how people work, their

skills and training needed. Today, business environment needs:

High tech jobs where knowledge intensive high tech manufacturing systems are

replacing traditional jobs.

Service jobs where globalization will shift production to low labor cost areas added

to it technological changes that increase productivity. For example, Just -in-time

manufacturing will reduce inventory cost and consequently fewer employees will be

required.

Knowledge work and human capital: The jobs that remain require continuous

education and skills enhancement and, thus, growing emphasis on human capital.

STRATEGIC HUMAN RESOURCES MANAGEMENT

Definition of strategic management

It is the process of identifying and executing the organization's strategic plan, by

matching the company's capabilities with the demands of its environment.

Systematic analysis of the factors associated with customers and competitors (the

external environment) and the organization itself (the internal environment) to

provide the basis for rethinking the current management practices. Its objective is to

achieve better alignment of corporate policies and strategic priorities.

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Strategic management process

Strategy Formulation

a. Direction Setting: Vision, Mission

Definition of Vision: A general statement of an organization’s intended direction that

evokes emotional feelings in organization members.

Example: Disney Land …. "To be the happiest place on earth"

Definition of Mission: Spells out who the company is, what it does, and where it’s

headed.

Example: Disney Land …. "To make people happy"

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b. Internal and External Environment Analysis (SWOT Analysis)

Strengths: Internal resources and capabilities that can be used as a basis for

developing a competitive advantage.

Weaknesses: Internal weaknesses (attributes on the firm).

Opportunities: External opportunities for profit and growth.

Threats: External changes in the environment that prevents or slows down the

organization’s ability to achieve its aims.

Example: Disneyland strengths

- Global Standardization

- Target Customer: Children

- Creative Process

- Popular Brand Name

- Diversification

Disneyland weaknesses

- High sunk cost

- Excessive Research & Development

- High Investment

- High Risk Factor

Disneyland opportunities

- Global Localization: Think global, Act Local

- Characters of national or regional appeal

S W

O T

Internal Environment

External Environment

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- Cheaper alternatives to soft toys

- Disney Music Channel

- Disney School of Management/Training Institute

- Decreased international travel expense

Disneyland threats

- Competitors: National, Regional & Global

- Employee Retention

- Highly Demanding in terms of Sales, Creativity and Innovation

- Unprofitable or hasty acquisition

- Brand Consistency

- Product Differentiation

c. Generate, evaluate and Select Strategies

Definition of Strategy: A chosen course of action.

Types of strategies

Corporate Strategy: It identifies the portfolio of business that, in total, comprises

the company and the ways in which these businesses relate to each other. There are

several generic possibilities:

Diversification corporate strategy; the firm expands by adding new product

lines.

Vertical integration strategy; the firm expands by producing its own raw

material or selling its products direct.

Consolidation; the firm reduces its company size

Geographical expansion; the firm takes the business abroad.

Competitive Strategy: It identifies how to build and strengthen the business's long-

term competitive position in the market place i.e. how the company will achieve a

competitive advantage – how it will differentiate its products or services from those

of its competitors to increase market share. There are several competitive strategies

that can be used:

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Cost leadership aims at becoming low cost leader in an industry.

Differentiation where the firm seeks to be unique in its industry along

dimensions that is widely valued. For example, Mercedes Benz emphasizes

on reliability and quality.

Focusers carve out a market niche and compete by providing a product or

service customers can get in no other way. For example, Ferrari Cars

Functional Strategy: It identifies the basic course of action each department will

pursue in order to help the business attain its competitive goals.

Strategic Planning Definition

How an organization intends to balance its internal strengths and weaknesses with its external

opportunities and threats to maintain a competitive advantage over the long-term.

Achieving the strategic fit: The Dilemma

Analysis reveals that there are opportunities that could be pursued but the company

does not have the required strengths and assets.

Analysis reveals that there is a threat that the company has overwhelming

weaknesses.

What should the company do?

1. Fit: Michael Porter emphasizes the "fit" point of view i.e. firm's functional strategies

should fit (align) with and support its corporate and competitive strategies.

2. Leverage: Hamel and Prahalad argue that preoccupation with "fit" can limit the

organization's growth. Though alignment is important, yet leveraging resources can

be more important (supplementing what you have and /or doing more with what you

have?)

Strategy Implementation

The pattern of decisions and actions that are intended to carry out the plan. It involves:

Stakeholders relations management

Organization resources management

Creation of organizational design and control systems

Performance evaluation

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Human Resources Management Role in Creating Competitive Advantage

In most firms today, it is the employees' skills and commitment, and the management system

that produces them that makes the difference and not the technology in itself. This is simply

because the technology is available to all organizations. Thus operational flexibility is what

counts (plant operators and managers who use the technology) first and then equipment and

computer integration comes second.

Definition of Strategic Human Resources Management

It refers to the specific human resource management courses of action the company

pursues to achieve its strategic aims.

Formulating and executing human resource policies and practices that produce the

employee competencies and behaviors the company needs to achieve its strategic

aims.

Example 1:

FedEx strategic aim: Achieve superior levels of customer service and high profitability

through a highly committed workforce preferably in non-union environment.

FedEx human resource strategy:

Use tools to build two way communication

Look for people-oriented managers

Guarantee greatest extent of fair treatment and employee security

Utilize promotion from within which allows employees to realize their full potential

Example 2:

Southwest Airline strategic aim: To deliver low cost, convenient service on short haul routes

by:

Getting fast, 15 minute turnarounds at gates

Keep plans turned around

Southwest Airline employee competencies:

All employees should do whatever it takes to get planes turned around

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Southwest Airline human resource policies and practices:

High compensation

Flexible job assignments

Cross training

Employee stock ownership

Human Resources Strategic Management Process

Strategic Human Resources Management Challenges

Organization Performance Improvement: The need to support corporate productivity

and performance improvement efforts.

Technology is useless without competent and committed employees: Employees play

an expanded role in employer's performance improvement efforts.

How the firm makes money: Human resource units must be more involved in

designing the organization's strategic plan i.e. Human resource managers need to

fully understand the value creating proposition of the firm.

Company's

Competitive environment

"Opportunities and threats"

Company's strategic situation

Company's

Internal environment

"Strengths and weaknesses"

Company's strategic plan

"Expansion, cost cutting,

diversification"

Company's HR Strategies

What are the Basic courses of

action HR will pursue to ensure

that the HR systems will achieve

the company strategic plan.

ORGANIZATIONAL

PERFORMANCE

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THE ROLES OF HUMAN RESOURCES PROFESSIONALS

The Strategic Role

They should be part of the company's strategic planning team in order to identify

human issues that are vital to the business strategy.

Human resource managers should work closely with senior management in both

formulating and implementing their firm's strategic plans.

Creation of human resource management policies and practices that support

employer's strategic goals with an assumption that the human resource manager can

measure how well the practices and policies are achieving the strategic goals.

Human resource department plays two roles:

Strategy formulation: With globalization, more competition means more

performance which requires boosting employees' competencies and

commitment, which makes human resource management knowledge and

expertise crucial to strategy formulation process. Strategy formulation

requires external and internal analysis (SWOT analysis) with the resulting

strategic plan capitalizing on opportunities and strengths and minimizing or

neutralizing threats and weaknesses. It is the role of human resources to:

- Provide details regarding incentive plans.

- Analyze how competitors constructed their organization chart and

staffing levels.

- Determine how competitors group their brands into divisions

(who reports to whom). This may reflect how competitors set

their strategic priorities.

- Provide input on company's internal human strengths and

weaknesses.

Strategy implementation (execution): Based on the company's corporate and competitive strategies, the human resource manager designs strategies, policies and practices, as for example:

- Administration of downsizing or restructuring efforts

- Institution of pay-for performance plans

- Reduction of health care costs

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High performance work system: Every company tends to build its HR

system that is uniquely appropriate to its needs. With globalization, there is

a growing need for high performance work system that includes:

- Multi-skilled work teams

- Empowered front line workers

- Extensive training

- Labor-management cooperation

- Commitment to quality

- Committed to customer satisfaction

Example: Comparison of HR practices in high performance and low

performance companies Low performance

company HR

system Bottom 10%

High performance

company HR

system Top 10%

Number of qualified applicants per person 8.24 36.5

% hired based on a validated selection test 4.26 29.67

% of jobs filled from within 34.90 61.46

Number of hours of training for new

employees (less than one year)

13.40 72.00

% of employees receiving regular

performance appraisal

41.31 95.17

Employee turnover 34.09 20.87

Sales per employee $158,101 $617,576

Market value to book value 3.64 11.06

Human resource function

Human resource professionals with strategic management competencies

Human resource system

High performance work system consisting of strategically aligned human

resource policies, practices and activities

Employee behavior

Employee competencies, values, motivation and behavior required by the

company's strategic plan

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The Role of Managing a Diverse Workforce

The future success of any organizations relies on the ability to manage a diverse

body of talent that can bring innovative ideas, perspectives and views to their work.

Thus:

A diverse workforce can be turned into a strategic organizational asset if an

organization is able to capitalize on this melting pot of diverse talents.

The mixture of talents of diverse cultural backgrounds, genders, ages and

lifestyles, the organization can respond to business opportunities more

rapidly and creatively, especially in the global arena which must be one of

the important organizational goals to be attained.

Organizations failing to accept a diverse workforce within its culture runs

the risk of losing talent to competitors.

The role of the human resources manager becomes one of:

Search for human resources requirements globally and then organize the

pool of diverse talents strategically for the organization.

Harnesses the full potential of workplace diversity by creating a culture that

accept diversity.

The Innovator Role

Today, organizations are asking their HR departments for innovative approaches and

solutions to improve productivity and the quality of work life while complying with the law in

an environment of high uncertainty, energy conservation, and intense international

competition. This means that human resources departments should continually streamline

their operations and redesign the way work gets done.

Change and Knowledge Facilitator Role

It's increasingly necessary for organizations to adapt new technologies, structures, processes,

cultures, and procedures to meet the demands of intense competition. Organizations look to

the human resource department for

The skills to facilitate organizational change and to maintain organizational

flexibility and adaptability.

The need to be more focused on the future.

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Guiding the discussion and flow of knowledge, information and learning throughout

the organization.

Measuring Human Resources Management Effectiveness

Human resource managers are expected to show in specific and measurable terms how human

resource activities contribute to the firm's profit i.e. Human resource manager should show in

measurable terms how the human resource system is supporting the employer's strategic aims,

productivity indicators for example.

HUMAN RESOURCES PROFESSIONALS PROFICIENCIES

HR proficiencies: Refers to knowledge and skills in human resources activities as

hiring, training …etc.

Business proficiencies: Refers to the ability to assist top management in formulating

strategies, strategic planning, marketing, production and finance.

Leadership proficiencies: Refers to the ability to work with and lead management

groups and to drive change.

Learning proficiencies: Refers to the ability to learn and apply new technology.