Organization - Structure of the HR Function Flashcards
HR roles - Strategic
- Help create the organization’s strategy
- Align HR strategy with organization strategy
- Support other functions in their strategic roles
HR roles - Administrative
Manage compliance issues and record keeping; strategic ways of doing this include:
- Use tech to capture and analyze data
- Reduce transaction time (also tech solutions)
- Focus on core capabilities (other tasks such as benefit plan administration, payroll administration, and background checks can be outsourced)
HR roles - Operational
Day-to-day people management activities such as recruiting, hiring, resolving issues, and communicating with employees
Aligning these activities with strategy:
- Knowledge management - help capture and share organizational knowledge; show leaders what and where specialized knowledge resides in the organization
- Targeted talent acquisition
- Incentive systems - design with strategy and objectives in mind
- Employee engagement programs - address root causes of barriers to productivity and retention
Finance vs. Accounting
Finance is more strategic, with focus on how the organization uses financial assets in short and long term - includes planning and analyzing
Accounting tracks financial transactions and reports financial info to finance
HR structure models
- Centralized
- Decentralized
Centralized - all HR staff are in the HR department, which delivers services to the whole organization (provides control and consistency, but can limit flexibility and communication with other departments)
Decentralized - HR staff within each function or location (provides direct contact between HR staff and other units, but can lead to lack of consistent policies)
HR structure models
- Functional
- Dedicated
Functional - HQ HR is staffed with specialists who craft policies; generalists (who might be located within divisions or at local branches) implement the policies, with a little room for adaptation (this option gives better consistency, but works best with the least diversified companies; HQ can become isolated)
Dedicated - AKA “corporatized” HR or “embedded” HR; corporate HR sets basic values and develops tools and programs (such as leadership development training); embedded HR groups can set their own strategies and develop their own policies (good for keeping units at diversified companies strategically aligned with HQ; but embedded HR staff can lose shared knowledge opportunities, leading to inefficiencies)
HR structure models
- Shared services
- Center of Excellence
Shared services - units agree to share certain HR services, and each unit can select from that shared service menu (provides expertise efficiently for transactional activities, freeing up HR staff for more strategic work; but service centers can be underused)
Center of Excellence - similar idea to shared services, but with more focus on strategic expertise like talent acquisition or learning/development; create networks (sometimes virtual) of experts who can reside anywhere in the organization (promote continuous improvement, but also risk of underuse)
HR structure models
- Business partners
- Matrix
Business partners - generalists are embedded in units and report directly to a unit manager and indirectly to HR leader (business partners can gain deep understanding of the business, but can be torn between conflicting priorities of their unit vs. HR leaders)
Matrix - HR staff report directly to HR leaders but also to business unit managers (works well in complex settings such as defining equitable benefits between different locations; but also comes with challenges of blurred reporting relationships)
Outsourcing vs. cosourcing
Outsourcing - 3rd party vendor provides selected services
Cosourcing - 3rd party provides dedicated services, usually locating contractors within the organization they’re serving
Best activities for outsourcing
- Not strategic
- Are resource-intensive or require specialized expertise
Ex: contract management, payroll services, benefit programs, investigations, recruitment programs, learning and development systems
Outsourcing process (9 steps)
- Analyze needs and define goals
- Define budget
- Create RFP
- Send RFP to chosen contractors
- Evaluate proposals
- Choose contractor
- Negotiate contract
- Implement project and monitor schedule
- Evaluate
Useful metrics - recruitment
- applicant yield ratio
- success ratio
- cost per hire
Applicant yield ratio - percentage of applicants who proceed to next step of selection process (can demonstrate effectiveness of recruiting methods)
Success ratio - percentage of selected applicants who are later judged to be successful on the job (can show effectiveness of recruiting, selection, orientation methods)
Cost per hire - total hiring costs divided by number of people hired (can show efficiency of recruitment and hiring process)
Useful metrics - employee development and engagement
- absence rate
- key talent retention
- promotion pattern
- transfer pattern
- training return on investment
Absence rate - ratio of lost days to number of employees (can show benefit of a change in workplace conditions)
Key talent retention - percentage of key talent retained (can show effectiveness of development and reward strategies)
Promotion pattern - percentage of internal promotions (can show effectiveness of development programs and strong culture)
Transfer pattern - number or percentage of employees transferring within company (can show internal competency development)
Training ROI - economic benefit of enhanced performance minus costs of developing, producing, and delivering training (can show strategic value of training programs)
Useful metrics - turnover
- turnover rate
- turnover costs
- vacancy costs
Turnover rate - ratio of exiting employees to all employees (can be combined with cost info to show economic value of change in pay or benefits)
Turnover costs - total costs associated with separation, vacancy, replacement, and training the new hire
Vacancy costs - costs of substitute labor, minus wages/benefits not paid because vacant (can support decision to outsource area)
Useful metrics - HR efficiency
- customer satisfaction
- HR staff per full-time employee
- human capital return on investment
- human capital value added
Customer satisfaction - measure of opinions across various services offered by HR (can show results of changes or new services)
HR staff per full-time employee - ratio (self-explanatory) (can show if HR is adequately staffed to support the workforce)
Human capital ROI - ratio of employment-related expenses, to revenue minus nonemployment expenses (can show value of HR programs)
Human capital value added - revenue minus nonemployment expenses, divided by number of full-time employees (used comparatively to show increase in employee productivity as result of HR activities)
