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31 - OBHR 4P94 > Chapter 2 - Aligning HR with Strategy > Flashcards

Chapter 2 - Aligning HR with Strategy Flashcards

1
Q

What is Human Resources Management?

A

An umbrella term that encompasses the following:
Overarching HR >philosophies< that specify the values that inform an organization’s policies and practices
> Formal HR >policies< that direct and partially constrain the development of specific practices
> Specific HR >practices

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2
Q

What is strategic HRM?

A

Interrelated philosophies, policies, and practices to enable the achievement of the organizational strategy

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3
Q

What are the primary HR strategic management theories?

A
  1. Resource Based view
  2. The contingency perspective > Human capital theory
  3. The contingency perspective > Behavioral Theory
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4
Q

What is the Human Resources Resource-Based View?

A

a riff on VRIO

> A resource that provides a sustained competitive advantage, because its culture is valuable, rare, and very difficult to imitate or substitute

> Human resources can be difficult for competitors to imitate

> The best human resources are rare

> The value of human resources can be hard to substitute

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5
Q

Sketch out the VRIO frameowork

A

as per saved pic

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6
Q

What are contingency perspectives?

A

Management effectiveness is contingent, or dependent, upon the interplay between the application of management behaviors and specific situations – One size doesn’t fit all
Refers to the need to modify HR strategies relative to its business and organizational strategies

The contingency perspective is explained by the human capital and behavioral theories

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7
Q

What is Human Capital?

A

The collective sum of employees’ attributes, experience, knowledge, and commitment invested in the organization

Human capital also includes:
Knowledge 
Education 
Vocational qualifications
Professional certifications 
Work-related experience
Competence
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8
Q

Where is human capital theory derived from?

A

Adam Smith defined four types of fixed capital (which is characterized as that which affords a revenue or profit without circulating or changing masters.
Useful machines or instruments of the trade
Buildings as a means of procuring revenue
Improvements of Land
Human Capital (physical, Intellectual and Psychological) and the productive power of labour

Classical economists view the firm as having control over three types of resources in the production of goods and services:
Land
Labour or human capital
Capital

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9
Q

What are Human Capital Effectiveness Metrics?

A

Human Capital Effectiveness Metrics

Human Resource (HR) metrics are measurements used to determine the value and effectiveness of HR initiatives, typically including such areas as turnover, training, return on human capital, costs of labor, and expenses per employee.

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10
Q

What is revenue factor?

A

Revenue Factor:
Is a basic measure of HC effectiveness and is the aggregate result of all of the drivers of Human Capital Management (HCM) that influence employee behavior.

It conceptually links the time and effort associated with the firm’s human capital to its revenue output by indicating employee productivity. It simply measures the revenue generated for each employee. 

The formula for this metric is

Revenue / Headcount

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11
Q

What is expense factor?

A

Expense Factor:
It conceptually links the time and effort associated with the firm’s human capital to its operating expense output.

The formula is:	Operating Expense / Headcount
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12
Q

What is income factor?

A

Income Factor:
Is calculated by taking the operating income and dividing it by the total headcount of the organization.
It conceptually links the time and effort associated with the firm’s human capital to its operating income output.

The formula is:	Operating Income / Headcount
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13
Q

What is the EBITDA factor?

A

EBITDA Factor:
Is calculated by taking the EBITDA and dividing it by the total headcount of the organization.

It conceptually links the time and effort associated with the firm’s human capital to its operations’ profitability without the potentially distorting effects of changes in depreciation, amortization, interest and tax. 

The formula is:		EBITDA / Headcount
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14
Q

What is Human Capital ROI?

A

Human Capital Return on Investment (HCROI):
It calculates the return on investment on a company’s employees. This is equivalent to calculating the value added of investing in the organization’s human assets.

HCROI is calculated by dividing the adjusted profit figure to human capital costs (except for training). It directly shows the amount of profit derived for every dollar invested in labor cost – in effect the leverage on labor cost.

The value added of human capital investments or the human capital return on investment (ROI) can be calculated:

Total revenue - (operating expenses - total compensation costs) / Total compensation costs

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15
Q

What is Behavioral theory?

A

Different HR strategies are required to influence the diverse behaviors of employees

HR’s role is to reinforce certain behaviors via HR practices such as recruitment, selection, training, compensation, and performance

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16
Q

What is a more traditional approach to HR planning?

A

Traditional view of HR Planning

KSAs and broad organizational outcomes
Use of Statistical techniques
Mere labor shortages and surpluses

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17
Q

What are the 5 levels on the workforce planning continuim?

A
  1. Ad hoc - no workforce planning / hire as needed
  2. Head count planning - head count analysis and basic labour costing
  3. workforce forecasting analytics - Historical lagginf performance indicators/descriptive workforce analytics
  4. Strategic workforce planning - workforce segmentation/workforce planning to support projected business needs?
  5. Human capital planning - Enterprise level workforce planning/workforce risk management and mitigation planning
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18
Q

Why is strategic HR planning important?

A

> HR planning is the most important long-term HR priority for Canadian organizations
Perceived value to real value
Employees help an organization achieve success because they are its strategic resources
Results in improved goal attainment

> the value of employees as a resource must be placed within a strategic framework. In other words, a strategy can become obsolete, making current employee skills obsolete.

> HR planning ensures that human assets are managed and matched to the organizational strategy
Keeping employees’ skills current
Ensuring employees’ skills will enable the organization to implement its strategy

19
Q

How can strategic HR improve goal attainment?

A

Using Strategic HRM to improve an organization’s performance

Focus of the employees on important missions and goals of the organization

20
Q

What are some practical barriers to HR planning?

A 
Leaders lack planning and business insight
Multiple planning Horizons 
Organizations Silos
Moving Targets
Union restrictions
Budget priorities
No data available
Not enough time-competing priorities
21
Q

What are some perception and attitude barriers to HR planning?

A 
Important but not urgent
Resistance to Change
Lack of Holistic Approach
Success measurement is hard
seen as too daunting to change
considered to lack credibility
22
Q

How can HR strategy align with corporate strategy?

A

Aligning HR strategy with business strategy can be done in one of these ways:

  1. Start with organizational strategy and then create HR strategy
  2. Start with HR competencies and then craft corporate strategies based on these competencies

> or Do a combination of both in a form of reciprocal relationship

23
Q

How would a company with a low cost strategy align HR program regarding the employee?

A 
Narrow Jobs with limited scope
Least job – interdependence
Short-term focus
Capitalize on EOS
Doing more with fewer employees
Structured 
No Risk/No unique response system 
Elimination of possible management layers
24
Q

How would a company with a differentiation strategy align HR program regarding the employee?

A 
Open Jobs with wider scope
Broad employee skills
Need Creative behavior with long term focus
Greater Employee involvement
Unpredictable environment
Employee Feedback
25
Q

How would a company with a low cost strategy align HR program regarding HR planning?

A

Minimum Succession @ entry level, Feeder line to the next level
Keep a close eye on labor market
Availability and use of fringe workers
Executive level Succession Planning is important

26
Q

How would a company with a differentiation strategy align HR program regarding HR planning?

A

People First
HRP is critical (What and How)
Succession Planning is critical (unique job requirements)
Skill development
Long-term job security and reciprocal loyalty are the norms

27
Q

How would a company with a low cost strategy align HR program regarding selection?

A

Recruitment is made at entry level and through WOM
Application forms are available on-site
Internal promotions
Narrow Career Paths

28
Q

How would a company with a differentiation strategy align HR program regarding selection?

A

Need Employees with broad range of skills and abilities
Innovative environment for self motivation
Selection basis are wide which require comprehensive selection methods
Selection through Reputation/Graduate Schools

29
Q

How would a company with a low cost strategy align HR program regarding compensation?

A

Lower Wages but with careful eye on competitor
Lag Strategy in terms of wages
Movement of production from highly unionized to smaller non-unionized cities
Cost reduction /part time workers
Pay cuts @ cost of bonuses

30
Q

How would a company with a differentiation strategy align HR program regarding compensation?

A

Compensation plan directly affects employee behavior
Profits Vs enhanced expenses/innovation
Slightly low pay rates with enhanced growth opportunities, commission, bonuses and Stock options etc.
Egalitarian pay structures are associated with product/service quality
Individual & team-based incentives

31
Q

How would a company with a low cost strategy align HR program regarding training?

A

Minimal
Efficiency and job specialization
No/least development
Lean training staff/OTJ by supervisors

32
Q

How would a company with a differentiation strategy align HR program regarding training?

A

Strong training teams
Skill and attitude development focus
Training for new idea generation
Development Experiences/efforts are encouraged
Value working in multiple domains and units
Learning is must

33
Q

How would a company with a low cost strategy align HR program regarding performance evaluation?

A

Standardized criteria
Short-term results
Immediate feedbacks with specific individual behavior
One way feedback/Simplex

34
Q

How would a company with a differentiation strategy align HR program regarding performance evaluation?

A 
Long term behavioral implications
Innovations are rewarded 
They way innovations are achieved
Appraise attitudes, empowerment, diversity sensitivity and team work
Working beyond the job 
360 Degree feedback
35
Q

How would a company with a low cost strategy align HR program regarding labour relations?

A

Prevent Unionization/part-timers

High turnover as advantage

36
Q

How would a company with a differentiation strategy align HR program regarding labour relations?

A 
Role of unions is renewed 
Collective approach (Union – Management Relationship)
Shared Relationships/Share responsibilities
37
Q

What is another HR approach, where HR competencies lead to business strategy?

A

Organization cannot implement a strategy if it does not have the necessary human capital

Yet this “skills determine strategy” outlook relies too heavily on employee capabilities and not enough on environmental analysis.

Small businesses are more in tune with this approach because the impact of human capital has a greater effect.

38
Q

What is reciprocal interdependency?

A

A reciprocal interdependency exists between HR strategy and business strategy

Both strategies influence each other

Changes to one type of strategy will require changes to the other type

HR should build its strategy by acknowledging the main issues facing the business

39
Q

How can HR Become a Business Partner?

A

Requires concurrent strategy formulation

HR professionals play a more strategic role, moving from outsider to insider status

HR managers must appreciate marketing, financial, and operational issues

40
Q

What are four elements/areas of A Strategic Vision for HR?

A

Corporate HR - HR director on the executive team

Services - Three levels of service for compensation and benefits administration—training and education administration, staffing administration, and records management

Solutions - HR subject-matter experts who are responsible for creating solutions to organizational problems and for preparing the organization to achieve its strategic intents

Organization Capability Consultants - HR professionals in this unit are dispersed throughout the organization, providing guidance and assistance to operating units, with the goal of improving the effectiveness of the organization

41
Q

What is HR Strategy Differentiation?

A

Firms with more than one business strategy are likely to have more than one approach to HR strategy

Different divisions are responsible for realizing different aspects of the strategy; employees in different divisions may be encouraged to display different behaviors through appropriate HR practices

42
Q

How are Canadian companies segmenting workers into categories?

A

Hot skills: Skills that are in short supply and high demand in the labour market

Mission critical skills: capabilities needed within an occupation

mission critical roles: these are highly skilled, highly trained individuals who drive organizational value

key job positions: these workers are well trained on core organization processes, but are more easily replaced

contingent labour: temporary, demand based and project based workers

43
Q

What are the Characteristics of an Effective HR Strategy?

A
  1. External fit: HR programs must align with or fit the overall strategy of the organization
  2. Internal fit: HR must fit with other functional areas, such as marketing, and among all HR programs
  3. Focus on results: Results must be measured and tracked.

This chain must be in place:
HR program → employee human capital and behaviors
→ organizational strategy → organizational outcome

31 - OBHR 4P94 (13 decks)

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