Session IMM5002

Model of the link between HRM and PerformanceCIPD The case for good people managementA Summary of the Research

Human Resource Management Practices

A Conceptual Model of Theoritical Frameworks for Studying SHRMHRM PracticesFirmStrategyHR BehaviorsHR Capital Pool(Skills, Abilities)Institutional/PoliticalForcesFirst-Level Outcomes(Performance,Satisfaction,Absenteeism, etc)Cybernetic,Agency/Transaction CostsBehavioral ApproachResourceBasedView ofThe FirmResource Dependence,Institutional

HR Philosophy; Policies; Programs; Practices & ProcessesAn HR philosophy is how the organization regards its human resources, what role they play in the success of the overall business, and how they are to be treated and managed. HR policies provide guidelines for action on people-related business issues and for the development of HR programs and practices based on strategic needs. HR programs are coordinated HR efforts specifically intended to initiate, disseminate, and sustain strategic organizational change efforts necessitated by the strategic business needs. HR practices include customary behaviors that support strategic needs. Finally, HR processes is how all other HR activities are identified, formulated, and implemented.

SHRM: The Evolution of the FieldLengnick-Hall, Mark et al: SHRM :The Evolution of the Field, 2009. HRM Review

Theme Description 1Explaining contingency perspectives and fit (Settings as contingencies and Competing Frameworks)2Shifting from a focus on managing people to creating strategic contributions (The resource-based view of the firm and strategic contributions; Human Resource Practices and Strategic contributions; Human Capital and Strategic contributions; Social Capital and Strategic Contributions)3Elaborating HR system components and structure (HR bundles and HPWS; HR system architecture)4Expanding the scope of SHRM (SHRM outside the focal organization; SHRM in an international context)5Achieving HR implementation and execution6Measuring outcomes of SHRM7Evaluating methodological issues

HPWSHigh performance work systems were defined as those including comprehensive employee recruitment and selection procedures, incentive compensation and performance management systems, and extensive employee involvement and training.

HPWSTurnover &ProductivityFinancial PerformanceMediating VariableInput Output Employee Recruitment & SelectionIncentive compensation and PMSExtensive Employee InvolvementExtensive Employee Training

Lengnick-Hall, Mark L. et. al. Strategic Human Resource Management: The Evolution of the Field, Human Resource Management Review 19 (2009), pg. 64.

Micro HRMStrategic HRMInternational HRMCovers the subfunctions of HR Policy & Practices (HR PP) and consists of 2 categories:Managing individual & groups (recruitment, selection, induction, Training & Development, Performance Management, Remuneration).Managing work organization and employee voice systems.Covers the overall HR strategies adopted by Business Units and Companies and tries to measure their impacts on performanceWithin this domain both design and execution issues are examinedCovers HRM in Companies operating across national boundaries

Theme 1: Contingency Perspectives and Fit ApproachStrategy typology (Defenders, Prospectors, Analyzers, and Reactors)match with the specific sets of HR Practices (SHRM means ContingencyApproach meaning that the choice of a particular set of HR Practicesis dependent upon an organizations strategy). Miles & Snow: Organizational Strategy,Structure, and Process (1978)

Review C&B:CEO as Role Model to cut costNo longer match employees contributionsto their 401(k)Continue to offer health benefits, tuition reimbursement,Stock options, vacation, and retirement planPush Training: Perfect the Art of ExpressoWork Systems:Empower Baristas to promote products, ideas.Economic recession 2008Growth goals = poor new stores selection, lost its focus on coffeeNew Strategy::Refocusing on CoffeeGuiding Principle(s)To provide a great work environmentand treat each other with respect and dignity

Strategy FormulationStrategy ImplementationHR PracticesRecruitingTrainingPerformance management Labor relations Employee relationsJob analysisJob design SelectionDevelopment Pay structureIncentivesBenefitsFirmPerformanceProductivityQualityProfitabilityHumanResourceActionsBehaviorsResultsHumanResourceCapabilitySkills,AbilitiesKnowledgeHumanResourceNeedsSkillsBehaviorCultureStrategicChoiceGoalsMissionExternal AnalysisOpportunitiesThreatsInternalAnalysisStrengthsWeaknesses

Able to executeOperate efficientlyEngage employeeManage change=

A MULTIPLE-ROLE MODEL FOR HRMFUTURE/STRATEGICFOCUSDAY-TO-DAY/OPERATIONALFOCUSPROCESSESPEOPLEManagement ofStrategic HumanResourcesManagement ofFirm InfrastructureManagement ofTransformationand ChangeManagement ofEmployeeContribution

Role/CellDeliverable/OutcomeMetaphorActivityManagement of Strategic Human ResourcesExecuting strategyStrategic PartnerAligning HR and business strategy : Organizational diagnosisManagement of Firm InfrastructureBuilding an efficient infrastructureAdministrative ExpertReengineering Organization Processes : Shared servicesManagement of Employee ContributionIncreasing employee commitment and capabilityEmployee ChampionListening and responding to Employees : Providing resources to employeesManagement of Transformation and ChangeCreating a renewed organizationChange AgentManaging transformation and change : Ensuring capacity for change

Customer Need : effective business and HR strategiesOwnership : 85%line; 15% HRHR Function : alignmentPM Role : Strategic HR managementPM Competencies : business knowledge HR strategy formulation influencing skillsCustomer Need : administrative processes efficiencyOwnership : 5%line; 95% HRHR Function : services deliveryPM Role : function managerPM Competencies : content knowledge process improvement information technology customer relations service needs assessment Customer Need : organizational effectivenessOwnership : 51%line; 49% HRHR Function : change managementPM Role : change agentPM Competencies : change management skills consulting/facilitation/coaching systems analysis skillsCustomer Need : employee commitmentOwnership : 98%line; 2% HRHR Function : management supportPM Role : employee championPM Competencies : work environment assessment management/employee development performance management

STRATEGIC LONG-TERMOPERATIONAL/DAY-TO-DAY

6 Competencies for the HR Profession

Increasing attention has been paid to the organizational components of competitivenessOrganization as a source of competitiveness has been defined in terms of :the organization itselfthe core competencies within the organizationthe people within the organizationthe organizational culture or shared valuesknowledge or learning

Time spent on administrative tasks is decreasing.HR roles as a strategic business partner, change agent, and employee advocate are increasing.HR managers are challenged to shift focus from current operations to future strategies and prepare non-HR managers to develop and implement HR practices.This shift presents two important challenges:Self-service giving employees online access to information about HR issuesOutsourcing the practice of having another company provide services to save money and spend more time on strategic business issues.

Sustainability includes the ability to: provide a return to shareholdersprovide high-quality products, services and work experiences for employeesincrease value placed on intangible assets and human capitalsocial responsibilityAdapt to changing characteristics and expectations of the labor forceAddress legal and ethical issuesEffectively use new work arrangements

The changing structure of the economy

Skill demands for jobs are changing

Knowledge is becoming more valuableIntangible assets -- human capital, customer capital, social capital, and intellectual capitalKnowledge workers employees who contribute to the company through a specialized body of knowledgeEmpowerment giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service

Learning organization

2 Changes in Employment Expectations:

Psychological ContractAlternative Work Arrangements

Employee engagement - degree to which employees are fully involved in their work and strength of their commitment. 10 Common Themes of Employee EngagementPride in employerSatisfaction with employerSatisfaction with the jobOpportunity to perform challenging workRecognition and positive feedback from contributionsPersonal support from managerEffort above and beyond the minimumUnderstanding the link between ones job and the companys missionProspects for future growth with the companyIntention to stay with the company

To survive companies must compete in international markets.Be prepared to deal with the global economy.

Offshoring exporting jobs from developed countries to less developed countriesOnshoring exporting jobs to rural parts of the United States

The overall impact of the Internet

The Internet has created a new business model e-commerce, conducting business transactions and relationships electronically

Advances in technology have:changed how and where we workresulted in high-performance work systemsincreased the use of teams to improve customer service and product qualitychanged skill requirementsincreased working partnershipsled to changes in company structure and reporting relationships

Advances in technology have increased:

use and availability of Human Resource Information Systems (HRIS)

use and availability of e-HRM

competitiveness in high performance work systems

Work in Teams-Virtual TeamsChanges in Skill RequirementsWorking in Partnerships.Changes in Company Structure and Reporting Relationships.Increased Use and Availability of e-HRM and Human Resource Information Systems.

Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity and competitiveness.

Customer needs for new products or services influence the number and type of employees businesses need to be successful.

Managers need to ensure that employees have the necessary skills to perform current and future jobs.

Besides interesting work, pay and benefits are the most important incentives that companies can offer employees in exchange for contributing to productivity, quality, and customer service.Create pay systems, reward employee contributions and provide benefits

Paradigm Shift for the HR RolesOperational to strategicQualitative to quantitativePolicing to partneringShort term to long termAdministrative to consultativeFunctionally oriented to business orientedInternally focused to externally and customer-focusedReactive to proactiveActivity focused to solutions focused this transitions form to simple in reality, the roles are multiple HR to add value they must perform increasingly complex and paradoxical rolesParadigm Shift in HR

What HR practices do you believe are most critical for Starbucks to maintain the coffee experience and customer service its known for?Do you think the culture and HR practices Starbucks is using during the recession would also help the bottom line at companies in other industries such as health care, manufacturing, or R&D? Explain why or why not.Could Starbucks be as successful without its current HR practices? Explain.

What challenges is Zappos facing that may derail its attempt to be the best online retailer? How can human resource management practices help Zappos meet these challenges?

Do you think that employees of Zappos have high levels of engagement? Why?Which of Zappos 10 core values do you believe that human resource practices can influence the most? The least? Why? For each of the core values, identify the HR practices that are related to it. explain how each of the HR practice(s) you identified is related to the core values.

Besides being cheaper, for what other reasons might companies try to avoid cutting their staffs and laying off employees during an economic downturn?

What evidence would you or look for to demonstrate that furloughs, unpaid leave, and salary or wage freezes are reducing costs and not negatively affecting the business?Some companies have a no layoff policy regardless of economic conditions. Do you think this is a good idea? Why or why not?

T H A N K Y O U !

John W. Boudreau and Peter M. Ramstad: Beyond HR The New ScienceOf Human Capital, HBSP, 2007

Percentage of time spent on19992006Maintaining recordsAuditing and controllingProviding HR servicesDeveloping HR systems and practicesServing as strategic business partner25.914.836.4

12.6

9.613.213.332.0

18.1

23.5

John W. Boudreau and Peter M. Ramstad: Beyond HR The New ScienceOf Human Capital, HBSP, 2007

Percentage of time spent on199520012004Maintaining recordsAuditing and controllingProviding HR servicesDeveloping HR systems and practicesServing as strategic business partner15.412.231.3

18.5

21.914.911.431.3

19.3

23.213.413.431.7

18.2

23.3

Employment and RecruitingWho Handles It? (percentage of all employers)Source: HR Department Benchmarks and Analysis, BNA/Society for Human Resource Management, 2002.Note: length of bars represents prevalence of activity among all surveyed employers.

Jenis industri di Indonesia:Industri Kecil dan Kerajinan Rumah Tangga (IKKR): 3.218.597 (data tahun 2007) mempekerjakan 7.289.726 orang tenaga kerja (2007) dengan nilai produksi Rp 184,233 Triliun Rupiah.Industri Manufaktur Skala Besar dan Menengah (IBM) (non Migas): 27.808 unit (data tahun 2008) mempekerjakan 4.550.277 orang tenaga kerja (2008)

Sektor industri PMA:Sektor Primer:Tanaman Pangan & Perkebunan/Food Crops & PlantationPeternakan / LivestockKehutanan / ForestryPerikanan / FisheryPertambangan / MiningSektor Sekunder:

Sektor industri PMA:Sektor Sekunder:Industri Makanan / Food IndustryIndustri Tekstil / Textile IndustryInd. Barang Dari Kulit & Alas Kaki / Leather Goods & Footwear IndustryIndustri Kayu / Wood IndustryInd. Kertas dan Percetakan / Paper and Printing IndustryIndusti kimia dan Farmasi / Chemical and Pharmaceutical IndustryInd. Karet dan Plastik / Rubber and Plastic IndustryInd. Mineral Non Logam / Non Metalic Mineral IndustryInd. Logam, Mesin & Elektronik / Metal, Machinery and Electronic IndustryInd. Instru. Kedokteran, Presisi & Optik & Jam / Medical Preci. & Optical Instru, Watches & Clock IndustryInd. Kendaraan Bermotor & Alat Transportasi Lain / Motor Vehicles & Other Transport Equip. IndustryIndustry Lainnya / Other Industry

Sektor industri PMA:Sektor Tersier:Listrik, Gas dan Air / Electricity, Gas & Water SupplyKonstruksi / ConstructionPerdagangan & Reparasi / Trade & RepairHotel & Restoran / Hotel & RestaurantTransportasi, Gudang & Komunikasi / Transport, Storage & CommunicationPerumahan, Kawasan Ind & Perkantoran / Real Estate, Ind. Estate & Business ActivitiesJasa lainnya / Other Services

CATATAN:Diluar investasi sektor Minyak & Gas Bumi, Perbankan, Lembaga Keuangan Non Bank, Asuransi, Sewa Guna Usaha, Pertambangan dalam rangka Kontrak Karya, Perjanjian Karya Pengusahaan Pertambangan Batubara, Investasi yang perizinannya dikeluarkan oleh instansi teknis/sektor, Investasi Porto Folio (Pasar Modal) dan Investasi Rumah Tangga.

Sources: The Jakarta Post quoting BPS as of August 2011, Tuesday, February 7, 2012

Transportation, communication and warehouseFinance Services AgricultureIndustry Construction Trade Others 5.082.6316.6539.3314.546.3423.401.70

Sources: The Jakarta Post quoting BPS as of August 2011, Tuesday, February 7, 2012

Agriculture Non agricultureFamily employmentBusiness with non-permanent laborBusiness with permanent laborSelf-employedLabor 5.485.6417.9919.663.7219.4137.77

20102011=Full employed=Half employedSources: The Jakarta Post quoting BPS as of August 2011, Tuesday, February 7, 2012

February August Workforce Employed Unemployed Workforce Employed Unemployed 116.0074.618.59116.5374.948.3232.3833.27

February August Workforce Employed Unemployed Workforce Employed Unemployed 119.477.098.12116.5375.087.7034.1934.59

Figure 1.1 emphasizes that there are several important HRM practices. The strategy underlying these practices needs to be considered to maximize their influence on company performance. As the figure shows, HRM practices include analyzing and designing work, determining human resource needs (HR planning), attracting potential employees (recruiting), choosing employees (selection), teaching employees how to perform their jobs and preparing them for the future (training and development), rewarding employees (compensation),evaluating their performance (performance management), and creating a positivework environment (employee relations).*Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*This figure presents the Strategic Management Process Model. The success of the strategic management process depends largely on the extent to which the HRM function is involved. The mission, goals and strategic choice, along with an external and internal analysis encompass the strategy formulation that precedes strategy implementation. HR needs shapes the HR practices based on HR capabilities and actions that ultimately determine the firms performance.

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Figure 1.3 shows the six competencies that are needed for the HR profession.1.Credible activist: delivers results with integrity, shares information, builds trusting relationships, and influences others, providing candid observation, taking appropriate risks.2.Cultural steward: facilitates change, develops and values the culture, and helps employees navigate the culture. 3.Talent manager/organizational designer: develop talent, design reward systems, and shapes the organization.4.Strategic architect: recognizes business trends and their impact on the business, evidence-based HR, and develops people strategies that contribute to the business strategy.5.Business Ally: understands how the business makes money and the language of the business.6.Operational executor: implements workplace policies, advances HR technology, and administers day-to-day work of maintaining people.Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*The amount of time that the HRM function devotes to administrative tasks is decreasing and its roles as a strategic business partner, change agent, and employee advocate are increasingIn shifting the focus from current operations to strategies for the future and preparing non-HR managers to develop and implement HR practices, HR managers face two important challenges:Self-service refers to giving employees online access to information about HR issuesOutsourcing refers to the practice of having another company provide servicesMultimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment. Sustainability includes the ability to deal with economic and social changes,practice environmental responsibility, engage in responsible and ethical business practices, provide high-quality products and services, and put in place methods todetermine if the company is meeting stakeholders needs.Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeedsMultimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*As mentioned before: Sustainability includes the ability to: provide a return to shareholdersprovide high-quality products, services, and work experiences for employeesincrease value placed on intangible assets and human capitalsocial responsibilityAdapting to changing characteristics and expectations of the labor forceLegal and ethical issuesEffectively use new work arrangements

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*There are several changes in the economy that has implications for HR: --Impact of September 11, 2001 companies are spending more on security--The competition for labor affected by the growth and decline of industries and availability of number and skills of persons.Also, skill demands for jobs are changing.Knowledge is becoming more valuable--Intangible assets refer to a type of company asset including human capital, customer capital, social capital, and intellectual capital--Knowledge workers are employees who contribute to the company not through manual labor but through a specialized body of knowledge--Empowerment means giving employees responsibility and authority to make decisions regarding all aspects of product development or customer serviceA learning organization embraces a culture of lifelong learning, enabling all employees to continually acquire and share knowledge. Improvements in product or service quality do not stop when formal training is completed. Employees need to have the financial, time, and content resources (courses, experiences, development opportunities) available to increase their knowledge. Managers take an active role in identifying training needs and helping to ensure that employees use training in their work. Also, employees should be actively encouraged to share knowledge with colleagues and other work groups across the company using e-mail and the Internet. For a learning organization to be successful requires that teams of employees collaborate to meet customer needs. Managers need to empower employees to share knowledge, identify problems, and make decisions. This allows the company to continuously experiment and improve.Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Changes in Employment Expectations: The need for companies to make rapid changes are reshaping the employment contracts.The psychological contract describes what an employee expects to contribute and what the company will provide to the employee for these contributionsAlternative work arrangements include independent contractors, on-call workers, temporary workers, and contract company workers. in the new economy a new type of psychological contractis emerging. The competitive business environment demands frequent changes in the quality, innovation, creativeness, and timeliness of employee contributions and the skills needed to provide them. This has led to company restructuring, mergers and acquisitions, layoffs, and longer hours for many employees. Companies demand excellent customer service and high productivity levels. Employees are expected to take more responsibility for their own careers, from seeking training to balancing work and family. In exchange for top performance and working longer hours without job security, employees want companies to provide flexible work schedules, comfortable working conditions, more autonomy in accomplishing work, training and development opportunities, and financial incentives based on how the company performs.Employees realize that companies cannot provide employment security, so they want employabilitythat is, they want their company to provide training and job experiences to help ensure that employees can find other employment opportunities. The HRM challenge is how to build a committed, productive workforce in turbulent economic conditions that offer opportunity for financial success but can also quickly turn sour, making every employee expendable. Learning Organization Employees are continually trying to learn new things. Psychological Contract Expectations of Employee contributions and what the company will provide in return. Employee engagement refers to the degree to which employees are fully involved in their work and the strength of their commitment to their job and the company. Employees who are engaged in their workand committed to the company they work for give companies competitive advantage including higher productivity, better customer service, and lower turnover.

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Employees engagement is influenced by how managers treat employees as well as human resource practices such as recruiting, selection, training and development, performance management, work design, and compensation. Employees who are engaged in their work and committed to the company they work for give companies competitive advantage including higher productivity, better customer service, and lower turnover Companies measure employees engagement levels with attitude or opinion surveys .Although the types of questions asked on these surveys vary from company to company, research suggests the questions generally measure 10 common themes illustrated in this slide.

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Companies are finding that to survive they must compete in international markets as well as fend off foreign corporations attempts to gain ground in the United StatesEvery business must be prepared to deal with the global economy. This is made easier by technologyOffshoring refers to the exporting of jobs from developed countries to less developed countriesOnshoring refers to exporting jobs to rural parts of the United States

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Technology has reshaped the way we play, plan our lives, and where we workThe overall impact of the InternetThe Internet has created a new business model e-commerce in which business transactions and relationships can be conducted electronically Seventy-ninepercent of adults, approximately 178 million, go online, spending an average of 11 hours a week on the Internet. 141 Seventy-two percent access the Internet from home,while 37 percent do so from work. Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Advances in technology have:changed how and where we workresulted in high-performance work systems, which maximize the fit between the companys social system and technical systemincreased the use of teams to improve customer service and product qualitychanged skill requirementsincreased working partnershipsled to changes in company structure and reporting relationships

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Technology is pushing the boundaries of artificial intelligence, speech synthesis, wireless communications, and networked virtual realityAdvances in technology have:increased the use and availability of Human Resource Information Systems (HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and distribute HR informationincreased the use and availability of e-HRM, which is the processing and transmission of digitalized information used in HRMincreased the competitiveness in high performance work systems

Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*New technology causes changes in skill requirements and work roles and often results in redesigning work structures (e.g., using work teams). High-performance worksystems maximize the fit between the companys social system (employees) and its technical system Work teams involve employees with various skills who interact to assemble a product or provide a service. Work teams may assume many of the activities usually reserved for managers, including selecting new team members, scheduling work, and coordinating activities with customers and other units in the company. High-performance work systems have implications for employee selection and training. Virtual Teams Teams that are separated by time, Geographic distance, culture and/or organizational Boundaries and rely exclusively on technology for interaction between team members. Employees need job-specific knowledge and basic skills to work with the equipment created with the new technology Besides changing the way that products are built or services are provided within companies, technology has allowed companies to form partnerships Electronic human resource management (e-HRM) refers to the processingand transmission of digitized information used in HRM, including text, sound, and visual images from one computer or electronic device to another. New technologies and advances in software, including avatars, collaborative social networks, and mobile technologies such as personal digital assistants and iPods, are influencing training, development, work design, recruiting, and other aspects of HR. with one or more other companies. Multimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity and competitivenessLinking HRM practices to the companys business objectivesthat is, strategic human resource management. Ensuring that HRM practices comply with federal, state, and local laws. Designing work that motivates and satisfies the employee as well as maximizes customer service, quality, and productivity.Customer needs for new products or services influence the number and type of employees businesses need to be successfulMultimedia Lecture Support Package to Accompany Basic MarketingLecture Script 6-*Managers need to ensure that employees have the necessary skills to perform current and future jobs. Measuring employees performance. Preparing employees for future work roles and identifying employees work interests, goals, values, and other career issues. Creating an employment relationship and work environment that benefits bothBesides interesting work, pay and benefits are the most important incentives that companies can offer employees in exchange for contributing to productivity, quality, and customer service*