Strategic Human Resource Development

K. Peter KuchinkeProfessor, Human Resource DevelopmentUniversity of Illinois at Urbana-Champaign

Yuan-Ze University, April 2008

Outline

• Strategic HRD

– Context, models, and definition

• Applications– Human Capital Formation, Organizational Learning,

and Implications for Life-long Learning Policies

• Case Examples

The “New” HRD

• Employees as org. assets• Driving business strategy• Spanning organizational functions• HRD Deliverables:

– Performance– Capacity Building– Problem solving/consulting– Org. change and development

The “New” HRD

• Employees as org. assets• Driving business strategy• Spanning organizational functions• HRD Deliverables:

– Performance– Capacity Building– Problem solving/consulting– Org. change and development

Strategic HRD

• Integration of HRD with strategy formulation and implementation

• Long-term view of HR policy• Horizontal integration among HR functions• Vertical integration with corporate strategy• SHR as core competitive advantage

Firm Capitals

• Human Capital– Knowledge, skills, abilities of individuals

• Social Capital– Relationships in social networks

• Structural, cognitive, relational dimensions

• Intellectual capital– Knowledge and knowing capability of social

collectivities• Procedural/declarative; tacit/explicit; individual/social

• Value and Uniqueness of capitals

Multiple Roles for HR (Ulrich, 1997)

Future/Strategic Focus

Day-to-day/Operational Focus

Processes People

Mgmt of SHR Mgmt of Trans-Formation/Change

Mgmt of FirmInfrastructure

Mgmt of EmployeeContributions

Definition of HR Roles

Role/Cell Deliverable/Outcome

Metaphor Core Activity

Mgmt of SHR Executing corp. strategy

Strategic Partner Aligning HR and bus. Strategy

Mgmt of Firm Infrastructure

Building an efficient infrastructure

Administrative Expert

Reengineering org. Processes

Mgmt of Employee Contributions

Increasing employee commitment and capability

Employee Champion

Providing resources to employees

Mgmt of Transformation/Change

Organizational renewal

Change Agent Managing transformation and change,

Universal/Best Practice Models

• TQM– Corporate culture, communications, voice/involvement, job design,

training, performance measurement/evaluation, rewards, health/safety, selection/promotion, career development

• Peters and Waterman “In search of excellence”– Org. culture, leadership, customer focus, core competency

• High involvement management (Lawler)– Developing skills and knowledge, pay for performance, investment

in HR, flexible operations, self-designing work systems, autonomous work-teams

Universal HR Models

• Pfeffer (1998)– Employment security– Selective hiring– Self-managed teams/decentralization of decision-making– Comparatively high pay linked to firm performance– Extensive training – Reduction of status differentials– Shared information

• Quality Awards (M. Baldrige, State Awards, etc.)– HR Focus (work systems, education/training, well-being and

satisfaction)

Human Capital Architecture

Uniqueness of HC: High

Uniqueness of HC: Low

HC

Val

ue:

Low

HC

Val

ue:

Hig

h

Quadrant 1:Empl’t Mode: Internal developmentEmpl’t Rel.: Organization focusedHR Configuration: Commitment

Quadrant 2:Empl’t Mode: AcquisitionEmpl’t Rel.: SymbioticHR Configuration: Market-based

Quadrant 3:Empl’t Mode: ContractingEmpl’t Rel.: TransactionalHR Configuration: Compliance

Quadrant 4:Empl’t Mode: AllianceEmpl’t Rel.: PartnershipHR Configuration: Collaborative

Architecture of Intellectual Capital

Uniqueness of IC: High

Uniqueness of IC: Low

IC V

alu

e: L

ow

IC V

alu

e: H

igh

Core Knowledge

Compulsory KnowledgeAncillary Knowledge

Idiosyncratic Knowledge

Contingent HRD (Kuchinke, 2004)

• Propositions– HRD Structure and Staffing Industry Specific– HRD Investments conservative (System

Maintenance vs. change)– HRD Core Processes Determined based on

Perceived Utility

Strategic HRD Roles

• Swanson/Toracco (1995):

• Helping implement strategy

• Helping determine strategy

• Setting strategy

Human Capital Formation

• Acceleration in changing organizational forms, roles, and processes– External:

• Globalization• Technology• Demography• Competition

– Internal:• Cycle time• Product innovation and introduction• Process innovation and improvement

• Change as constant; ‘permanent white water’ (P. Vaill)

• Shortened half-life of knowledge

Nature of Work

• Robert Reich: The work of nations (1991)– Routine production– Personal Service– Symbolic Analyst

• Normative and rational models of management (Barley & Kunda, 1992)– Industrial betterment (1870 - 1900)– Scientific management (- 1923)– Welfare capitalism/human relations (- 1955)– Systems rationalism (- 1980)– Organizational culture (- present)– Correlates with economic expansion/contraction, environmental and

technical certainty/uncertainty: Kondratieff longwaves)

HR Capitals

• Human Capital– Individual level store of knowledge, skills, abilities

(e.g., Becker)

• Social Capital– Group level, network characteristics, density,

centrality, marginality (e.g., Adler and Kwon, 2002)

• Intellectual Capital– Firm-level, formal (e.g., patents), informal (e.g.,

process knowledge (e.g., Nahapiet & Ghoshal, 1999)

Organizational Learning

• Information processing perspective– Environmental scanning, information

acquisition, interpretation (Daft and Weick, 1984)

– Information acquisition, storage, dissemination, interpretation (Huber, 1991)

– Tacit -- explicit knowledge (Polyani, 1967)– Org. Knowledge creation spiral (Nonaka,

1995)

Learning Organization

• Senge (1991)– Systems thinking– Personal mastery– Mental models– Building shared vision– Team learning

• Marsick and Watkins (1998)– Continuous learning at individual, group, and system levels– Knowledge generation, sharing, and evaluation– Systems thinking capacity– Employee participation and accountability– Supportive culture and structure

Human Capital Formation

• Firm-level– Corporate classrooms (Eurich, 1984)– US: $65 b/2006 direct cost, $220b total– 45% of firms provide formal training– 90+ hours per year– External training– Corporate universities– Non-US examples– Informal training, on-the-job training, action learning

OECD Human Capital Research

• OECD (1999)– Formal education, – Non-formal/enterprise-based training and labor

market initiatives– Experiential learning– Learning in informal environments

• HC Measurement:– Educational attainment, i. e.: years of schooling etc.– Adult skills (i.e.: reading, math)

OECD Human Capital Research

• Measures of investment– Expenditures on education and training– Time investment

• Returns on investment– Employment patterns– Earnings– Firm-level outcomes– National level outcomes– Social benefits– Health outcomes– Crime, teen pregnancy

OECD Human Capital Research

• Policy issues– Adequate levels of HC investment– Appropriate sharing of investment costs– Optimal allocation of scarce resources– Equitable distribution of investments– Monitoring, measuring, and accounting

Firm-level HC formation

• Accountability and measurement

• Business/education partnerships

• Life-long learning

• Burden-sharing

• Technology and innovative learning strategies

Johnson Diversey CaseCurrent vs. Future State of HR

Strategic Partner Change Agent

Administrative Expert Employee Advocate

35

20

2540

Current vs. Future State of HR

Strategic Partner Change Agent

Administrative Expert Employee Advocate

35

20

2540

Global - OD Team

Client - HRBP Manager

Regional - Head HRBP

OD Responsibility

Level & Process Owner

Organization Development Roles & Responsibilities

• The OD COE has a dual responsibilityo Global implementation of strategic interventions

Cultural assessment and alignment Performance Management Succession Planning Leadership Bench strength

o Support to HRBPs on regional and client interventions Process improvement tools Intervention design Knowledge transfer of OD skills

Global OD Model

HR Business Partners

Leadership Team

HR/OD

Business Strategy

Solutions Emerging Needs/

Feedback

MeasuresOf

Effectiveness

Global OD Services

• Program Management of global initiatives - – Core Employee Development– ES&D– Performance Management– Leadership Development – Consultation with senior leaders regarding - – Customized interventions– Assessment tools

• Services contracted with HRBPs (based on the capacity of the OD COE) - – Regional OD intervention design

HRD in Practice

3M Company: Industrial Markets Initiative (IMI)

• 3M: 75,000 employees in 60 countries

• Sales: US$ 15 Billion, 303rd on Fortune 500 list

• IMI: Cross-Business Cooperative Strategic Effort with 6 divisions – Gap Analysis

HRD in Practice

East Central Minnesota Human Resource Development Partnership

• 5 family-owned businesses/rural MN

• Total workforce: 300, range 12 - 123

• Pine Technical College

• WorkKeys assessment and training– Problems Solving; Interpersonal Skills,

Communication Skills

HRD in Practice

Lucent Technologies

• Global Fortune 50 Telecommunication Co, 140,000 employees, US$28 Billion Revenue

• Leadership and Culture Audit for 2 US and 1 German production sites

HRD in Practice

Parkland College, Champaign, Illinois

• Publicly funded community college in East Central IL

• 17,000 Annual Students, 50% in Occupational programs

• Business Training Center

• Workforce Preparation Center

HRD in Practice

HRD responds to

• Global Challenge

• Quality Challenge

• Social Challenge

• High Performance Work Systems Challenge

Source: R. A. Noe (1999): Employee Training and Development

HRD Definitions

HRD is…

“the integrated use of training and development, organization development, and career development to improve individual, group, and organizational effectiveness.” (McLagan, 1989)

HRD Definitions

HRD is…

“a process of developing and/or unleashing human expertise through organization development and personnel training and development for the purpose of improving performance.” (Swanson, 1995)

HRD Careers

• Classic Roles (McLagan, 1996)– HR Strategic Advisor– HR systems designer– Org. Change Consultant– Org. Design Consultant– Learning Program Specialist– Instructor/Facilitator– Individual development and career consultant– Performance Consultant– Researcher

Roles and Job Titles in HRD

• Advertised as– Instructional designer– Trainer– Training and development specialist– HR specialist– Learning systems architect– Chief learning officer– Education specialist– …..

Example: HRD Consulting Firm

• Process Mgmt International– Focus: Quality Management, ISO 9000, Org. Change– Products: Seminars, consulting, assessments, books– Size: 50 employees

• Instructional Design (5), Trainers (10), Consultants (25), Admin (10)

– Strategic Alliances in Europe– Revenue (2005): $5,000,000– Clients: Chevron, IRS, Zytec, Medtech, Graton Beverages

HRD in Practice

East Central Minnesota Human Resource Development Partnership

• 5 family-owned businesses/rural MN

• Total workforce: 300, range 12 - 123

• Pine Technical College

• WorkKeys assessment and training– Problems Solving; Interpersonal Skills,

Communication Skills

HRD in Practice

Lucent Technologies

• Global Fortune 50 Telecommunication Co, 140,000 employees, US$28 Billion Revenue

• Leadership and Culture Audit for 2 US and 1 German production sites

HRD in Practice

Parkland College, Champaign, Illinois

• Publicly funded community college in East Central IL

• 17,000 Annual Students, 50% in Occupational programs

• Business Training Center

• Workforce Preparation Center

Example: Multinational Corporation

• Abbott Laboratories• 60,000+ employees in 120 countries• Five divisions• Corporate and division level HRD• Director of Training and Organizational Development, Ph.D. HRD• Staff of 15 (instructional designers, trainers, OD consultants)• Performance Management, Leadership Development, Quality

Management, Expatriate Training, New employee orientation, regulatory/mandated training

• Diversity Initiatives• Clients: Everybody!• Divisional and corporate roles (committees, councils, strategic

planning)

HRD in Practice

3M Company: Industrial Markets Initiative (IMI)

• 3M: 75,000 employees in 60 countries

• Sales: US$ 15 Billion, 303rd on Fortune 500 list

• IMI: Cross-Business Cooperative Strategic Effort with 6 divisions – Gap Analysis

Careers in HRD• Faster than average growth (DOL) through 2014

www.bls.gov/oco/ocos021.htm• Over 800,000 people employed in HR/HRD jobs (2005)• About 600,000 people engaged in learning activities, organizational

HRD• Trends:

– Better preparation of HRD professionals– Focus on Strategic HR– Technology, International, Diversity– Broader career options and career paths– Competition for good jobs– Strong employment opportunities outside of US

Trends in Professional HRD Work

• Higher Visibility• Higher Accountability• Greater Cross-Functional Involvement• Higher Performance Demands• Multiple Projects• Greater need for comprehensive business

knowledge• Need for solid research and theory know-how