Chapter 3

HR Planning for Alignment and Change
The strategic importance of HR planning for alignment and change

Alignment

Vertical alignment: exists when the HRM system fits with all other elements of the organizational environment: the culture, strategy, structure, etc. An example is creating new values, introducing new training, etc.

Horizontal alignment: exists when all the HR policies and practices that comprise the HRM system are consistent with each other so that they present a coherent message to employees concerning how they should behave while at work.

Types of Organizational Change

Radical change: when organizations make major adjustments in the ways they do business. Examples: adopting new organizational structure, merging with another organization, changing from private to public, etc.

Incremental change: an ongoing process of evolution over time, during whiech many small changes occur routinely. An example is TQM.

Reactive change: occurs when an organization is forced to change in response to an event in the external or organizational environment. Ex: strategic moves by competitors, new scientific or tech discoveries, performance problems, etc.

Anticipatory change: when an organization takes action in anticipation of upcoming events.

Leaning Organizations

Learning organization: continually finds new ways to satisfy customers and other stakeholders by skillfully integrating the resources of information, tech, and people to produce and then effectively use new knowledge. Learning organizations are adept at both incremental and radical change.

Overview of the HR planning and change process

In many orgs, the process of business planning begins with a scanning of the external environment and a vision of where the org needs to be in 5 or 10 years

HR planning: the activities associated with 1) scanning and assessing the environment; 2) specifying the objectives to be achieved by HR, along with the measures for assessment; 3) developing specific plans for HR policies and practices along with timetables for implementation.

HR objectives: state in quantitative or qualitative terms what is to be achieved with regard to the firm’s HR.

HR metrics: can include employee satisfaction, turnover rate, turnover costs, absenteeism, productivity cost per hire, and revenue per employee.

HR plans: blueprints for action; they specify who needs to do what, where, and how. Timetables specify when each activity will be completed.

HR Triad: HR professionals, line managers, and employees. Figure 3.2.

Line managers:

systematically scan and assess the environment to help establish specific strategic objectives

provide info about the current external and org environments, helps forecast likely changes

share info with and involve HR professionals (establish metrics, etc)

collaborate in collection and interpretation of data to asses progress towards strategic goals

learn about effective change processess and act as role model for effective learning and change

communicate constantly with employees about changes

HR professionals:

participate in environmental scanning and assessment to gain understanding of strategic objectives

manage HR planning activities

develop detailed HR objectives, plans, metrics, and timetables for strategic change.

develop, collect, and analyze data to assess progress toward strategic and HR objectives

serve as the facilitator of change; assist line managers and employees develop enhanced capacity for leading and accepting change

work with line managers to develop and disseminate formal communications about planned changes

assist in conducting evaluations of change initiatives, intrpreting results, and revising plans accordingly

Employees:

monitor and seek to understand environment and its potential implications for the company

provide input during planning

provide input during development of HR plans

collaborate in the collection and interpretation of data to assess progress toward strategic and HR objectives

recognize that change is constant and develop a personal capacity for change

take personal responsibility for ensuring own understanding of planning changes and their implications

participate in the process of evaluating change and making adjustments as needed

Scanning and assessing the external and organizational environments

1st phase of HR planning for change involves gathering data to learn about and understand all aspects of the environment. Important elements of external env:

economic globalization

political landscape

industry dynamics

labor markets

country cultures

legal institutions

unionization

Organizational analysis: assessment of the external and internal environment. Aim is to fully understand the current environment before taking action. Includes forecasts, employees’ opinions, focus groups, and shadowing.

HR forecasts: estimate of the firm’s future HUR needs. Includes judgmental and statistical forecasts.

Determining HR objectives and metrics:

the HR objectives must be tied to strategic business goals

these metrics must be well aligned with the specified HR objectives.

Linking HR objectives to strategic business objectives

Soft due diligence (referring to mergers): the activities that firms use to assess the compatibility of potential new partners, taking into consideration the corporate cultures and specific HR policies and practices in the organizations being combined.

Bottom line metrics

HC-ROI: Human capital return-on investment

= Revenue - (op expense - [compensation cost + benefit cost])

compensation cost + benefit cost

HR expense ratio

= total of all HR expenses / total operating expenses

HR revenue ratio

= total revenue / total # of full-time equivalent employees (FTE’s)

Developing HR plans and timetables

layoffs, reducing turnover, outsourcing, off-shoring

Complete HR planning:

staffing plans

talent management plans (succession planning, creating a talent pool, and a replacement chart)

training plans

leadership development plans.

WARN ACT (Worker Adjustment and Retraining Act of 1988):

employers are required to provide workers with 60 days’ notice of a plant or office closing. Applies to employers with 100 or more employees.

For plant closings and layoffs, employers must describe their planned actions to each of the following:

employees (or their union reps if applicable)

the mayor or other chief elected official of the local government

the top official of the state’s dislocated workers program.

Managing resistance to change: 1) fear, 2) misunderstandings, 3) cynicism

Current issues:

global workforce planning

the wholly sustainable enterprise (environmental footprint).

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