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					HR as Strategic Business Partner


                BMA 360
                Session 2
                                       Human Resource
                                        Management




  Interpret & analyze       Explain the        Identify & explain HR   Discuss avenues to
 how HRM policies &      importance of the      policies & practices     maintain strong
practices support the      person-job-         that motivate workers      employment
  entire organization   organization match                                relationships
                         and how it can be
                           established

   Legal, ethical &
     bottom-line
 foundations of HR
      policies



   Contemporary
environmental issues
    affecting HR




 The financial impact
  of HR policies &
       practices
HR as Strategic Business Partner


 Three dimensions are critical
 in design & practice of HR
 policies & programs
HR as Strategic Business Partner




              Bottom
            Line Impact
HR as Strategic Business Partner




                    Legal
                 Implications


              Bottom
            Line Impact
HR as Strategic Business Partner

         Ethical
      Considerations

                          Legal
                       Implications


                  Bottom
                Line Impact
Value of Strategic HR
 Dr. Mark Huselid, Rutgers University
 10,000 US employers
 Hypothesis:
    –   “Sophisticated HR practices” will
        positively affect the bottom line
Value of Strategic HR
   “High performance management practices:”
    –   Formal information sharing device
    –   Formal job analysis
    –   Non-entry-level jobs filled from within
    –   Regular employee attitude surveys
    –   Participation teams
    –   Company incentives, especially profit-sharing
    –   Employee training
    –   Formal grievance procedure or complaint resolution
    –   Pre-hiring employment tests
    –   Performance appraisals linked to compensation
    –   Formal performance appraisals
    –   Qualified applicants for frequently filled positions
    –   Promotion decisions based on merit or performance
Value of Strategic HR
   For employers higher in HPMP by one
    standard deviation,
    –   Employee turnover is lower by 7%
    –   Productivity is higher, $27,000 per employee
    –   Profits and market value increase by over $3800
        per employee
    –   Increase in market value by over $18,000 per
        employee
Innovative Management Practices

   HR challenge
    –   Globally competitive
        environment
    –   Downsized organizations
    –   Precarious balance of
        competitive demands and
        employee needs & desires
HR Measures

       Traditional     measures
        – Behavioral
        – Statistical

       “Costing” HR
         – New approaches
         – Critical to HR becoming
           strategic partner
Costing HR

 Fixed costs
 Variable costs
 Opportunity costs
Costing HR

   All aspects of HR management can be
    quantified and measured
    –   Compensation
    –   Benefits, especially insurance premiums
    –   Personnel taxes
    –   Recruiting
    –   Training and development
    –   Affirmative action
    –   Turnover
    –   Outplacement

   Qualitative assessments also important
Costing HR

   Other areas in which costing is useful
    –   Absenteeism & sick leave
    –   EAPs & wellness programs
    –   Employee attitudes
    –   Labor contracts
    –   Economic value of job performance
    –   Selection device validity
Example: Utility Analysis

        “Utility of a selection device is
         the degree to which its use
         improves the quality of the
         individuals selected beyond
         what would have occurred had
         that device not been used”
         (Blum & Naylor, 1968).
Example: Utility Analysis

           U = ntrxySDyZx-NC
   U = Productivity in dollars
   n = Number of people hired
   t = Average job tenure of those hired
   rxy = Validity coefficient
   SDy = Standard deviation of job performance in dollars
   Zx = Average predictor score of those chosen
   N = Number of applicants
   C = Cost per applicant
Example:
Results of Attitude Change

      models
 Three
 needed
  – Cost model
  – Effectiveness
    model
  – Synthesizing
    model
Example:
Results of Attitude Change
   Each behavior has a cost
     $17.55 per shortage
     $49.14 per absenteeism incident

     $5,379.31 per turnover
                                   Absenteeism     Turnover Shortages
   Correlations:
                    Satisfaction           -.81*       -.20*        .10
                    Involvement             -.08       -.29*       -.12
                    Motivation             -.26*       -.16*      -.23*
Example:
Results of Attitude Change
   Present cost level
    –   Average number of balancing shortages (3.07) x cost per
        incident ($17.55):
           3.07 x $17.55 = $53.88 per month

   Estimated behavioral improvement
    –   Planned improvement in attitude (in SD units), or .5 x SD
        of balancing shortages (1.74) x correlation (r, -.23) of
        shortages & motivation
          .5 x 1.74 x (-.23) = -.20
Example:
Results of Attitude Change
   New behavioral rate
    –   Average number of shortages (3.07) + estimated behavioral
        improvement (-.20)
           3.07 + -.20 = 2.87 per employee per month

   New cost level
    –   New behavioral rate (2.87) x cost per incident
        ($17.55)
            2.87 x $17.55 = $50.37 per employee per month
Example:
Results of Attitude Change
   Original cost level
    –   Average number of balancing shortages (3.07) x cost per
        incident ($17.55):
            3.07 x $17.55 = $53.88 per month

   New cost level
    –   New behavioral rate (2.87) x cost per incident ($17.55)
            2.87 x $17.55 = $50.37 per employee per month

   Savings of $3.01 per employee; for 100,000
    employees, total savings > $300,000.

				
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posted:4/25/2012
language:English
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