Leadership by Human Resources

Organizational Roles and Choices

Top 5 Barriers to HR Leadership

• HR and its employees lack business and strategic orientation

• HR executives not respected by top management• HR holding on too much to the HR of the past-

paper-pushing roles

• HR unwilling to take the lead in facilitating revolutionary change

• HR chases too many fads/ quick fixes

Module Objectives

• HR Responsibilities and Objectives• HR Roles• Management Choices/ Constraints on HR

Decision-making• Delivery of HR Roles• Human Resource Effectiveness: Contrasting

Approaches

What is Effective Management of Human Resources?

• Think about companies that you or someone you know have worked for or you’ve read about. What is it about these employers HR practices that might lead you or experts to rate them as being particularly effective?

• Employees are valued

• Innovative HR policies (invested in employees)

• Strategic HR orientation: Goal of HR was to make the business successful

Why is Effectively Managing HR Critical to Organizational Success?

• Labor costs are a major organizational operating expense

• People affect productivity • Having a skilled, motivated, and adaptable

work force or (“people embodied organizational skills”), is directly related to firm profitability.

Introduction: Traditional (Old) HR Paradigm

H u m a n R e s o u r c e s M a n a g e r sA c c o u n t a b i l i t y f o rM a n a g i n g P e o p l e

B u s i n e s s U n i t M a n a g e r sA c c o u n t a b i l i t y f o r

B u s i n e s s R e s u l t s

•Think “People” First - The Conscience•Less sensitive to Business Impact•Leverage Human Assets to Maximize Employee Satisfaction and Contribution

•Think “Bottom Line” First•Less Alert to People Impact•Leverage Financial and Capital Assets to Generate Profits, and “Delight” Customers

Source: Adapted from Conner, J. And Wirtenberg, J. “Managing the Transformation of Human Resources Work”

New HR Paradigm

•Integrate Business and People Strategic Planning•Joint Responsibility to share effective human resource management learning•Leverage financial, technological, and human assets to create value, “Delight” customers and maximize employee satisfaction

Shared Accountability for Business Results and

Managing People

Human Resource Managers

Business Unit Managers

Source: Adapted from Conner, J. And Wirtenberg, J. “Managing the Transformation of Human Resources Work”

HR Responsibilities and Objectives

• Purpose of the Human Resource Function: to design systems and policies to manage human assets in a way that enhances the individual and collective contribution of people to the short and long term success of the enterprise.

• HR Policy Clusters• Strategy & Organization• Talent Identification and

Deployment• Human Capital

Development• Reward Management• Employee Relations and

Voice

HR is at a Critical Historical Juncture

Time Period Primary HRStage

Key EnvironmentalPressure

Late 19th centuryU. S. IndustrialRevolution

Pre-PersonnelDept.

Market pressures,Immigration

Early 1900s-1930s

File DrawerMaintenance

Market pressures &WWI

1930s- 1960s UnionAvoidance/FunctionalSpecialization

Unions

1960s-1970s GovernmentAccountability

Government

1970s- 1990s StrategicBusiness Partner

Global MarketPressures

1990s- 2000+ Strategic Player:Adding Value

Global MarketPressures,TechnologicalChange

HR Under Pressure• Most firms have not

completely switched to new HR paradigm

• HR strategies are important because they are malleable and affect human capital

• Key to differentiate between management of HR function Vs. HR management

• While orgs. cannot easily change firm assets, they can change how they manage people.

• HR practices can operate in 2 ways:

• increase value • lower human capital

investments

HR Strategy Execution

• Ensure critical HR strategies and processes are aligned with critical to the business

• Provide insights that lead to developing/strengthening competitive advantage

• Work with line management to develop and implement practices

Model for Understanding HR Strategy: Context, Roles, & Constraints

ENVIRONMENTAL CONTEXT

ORGANIZATIONAL BUSINESS

Managerial Discretion

(More Less)

Unilateral

Decisions

Negotiated

Decisions

Imposed

Decisions

Transaction

Translation

HR

Str

ateg

y

HR

Rol

es

Transition

ST

RA

TE

GY

Transformation

HR Roles: The Four Ts

• Transaction– Routine HR

– Day to day operational processes

– Administrative Expert

• Translation– Day to day people

communication

– Promote employee commitment

– Facilitate open lines of

communication and feedback

• Transition– Execute firm strategy– Integrate & Develop

future HR practices and processes

• Transformation– Massive organizational

change role– New organizational cultures,

structures, work design to support major strategic business change

Roles

Transitional

Transactional

Transformational

Translational

Management HR Decision-Making Constraints/Choices

• Unilateral• Full management discretion or decision-making rights

• Negotiated• Jointly decided between employees and management or

labor and management

• Imposed• Out of firm’s control (e.g. legislation, critical customer

demands)

Basic Organizational Criteria for Effective HR Delivery

• Roles and Choices Occur in All Policy Domains

• Integrated Line-Staff Relationship& Delivery• Top Management Commitment to HR• Employee Relations Climate of Openness and

Respect• Ability to balance tensions in HR decision-making• Competent HR Department

HR Competencies

• Masters of Global Operating Skills

• Business Experts

• Technology Leveragers

• Expert Communicators

• Employee Champions

• Change Managers

HR Role Delivery: Current Trends

• Strategic Emphasis– Ford 2000 shift from mostly

transactional activities toward transformational emphasis (reengineering mix of activities and level of management and employee involvement

• Shared Services– Service centers: the

consolidation or combining of transaction services in an organization; (Example 1-800 HR)

• Transformation-Based/Centers of Excellence:– Non-routine & Non-

administrative HR activities that help transform a firm

– Outsourcing

Service Center vs. Center of Expertise

Service Center Center of Expertise

Role Transactional Transformational

Work activity Reengineer Centralize Expertise

Successful if… Costs are reducedAll HR customers aresatisfied

HR practices helpaccomplish businessgoals

HR Effectiveness: Contrasting Ways to Transfer Value

Stakeholder/Multiple Constituency: • Perceptions of customers

– HR should be Customer service-oriented

• Utility: Translate economic utility of HR practices through financial indices

– People and HR practices generate costs that should be managed

• Strategic: Practices impact a business’s ability to accomplish strategic goals

– HR practices should match business strategies

High Performance Model

D e m o n s t r a t e s R e s u l t sS o u g h t b y o t h e r s a s r e s o u r c eU t i l i z e s ' b e s t p r a c t i c e s '

U s e s H R E x p e r t i s e

C u s t o m e r F o c u s e d

B u s i n e s s P a r t n e r

S t r a t e g i c T h i n k i n g

R e s u l t s O r i e n t a t i o n

A c c o u n t a b i l i t y f o rB u s i n e s s R e s u l t s

- I n t e g r a t e d L i n e S t a f f D e l i v e r y- R e s o u r c e A l l o c a t o r

- M a n a g i n gI n t e r p e r s o n a lR e l a t i o n s h i p s

- s p e c i a l i z e d f u n c t i o n a l e x p e r t i s e

HR Leader HR Manager HR Specialist

Success Factors

Source: Adapted from Conner, J. And Wirtenberg, J. “Managing the Transformation of Human Resources Work”

Application: Turnover of Key Staff Positions by Year

0%5%

10%15%20%25%30%35%40%45%50%

1995 1996 1997

Year

Pe

rce

nta

ge

Of

Tu

rno

ver

Consultant

Manager

Director

Application: Contracts Not Renewed Due to Employee Turnover

$0$4,000,000$8,000,000

$12,000,000$16,000,000

1995 1996 1997

YearAcc

ou

nts

No

t R

en

ew

ed

A

ttri

bu

ted

To

Em

plo

yee

Tu

rno

ver

3 Year Contract

5 Year Contract

Application: Answer Worksheet

Separation Costs

Application: Answer WorksheetReplacement Costs

Application: Answer Worksheet

Training Costs

AT&T

Exhibit 1. Human Resource Guiding Objectives

The Vision: Create exciting and successful high-performing businesses where people are valued andvaluable.

The Objectives:

1. Design, size, and staff each new company to meet its future business requirements and strengthen itsability to compete successfully.

2. Oversee the equitable distribution of talent among the entities and discourage unilateral "talentraiding."

3. Retain critical skills and key talent throughout the transition.

AT&T: New Practices

1. The assessment of talent within each support functionacross the company

2. The assignment of people to positions based on the skillrequirements and the needs of the new companies.

3. The determination of those who were going to be leftwithout job assignments within the new organization.

4. The design of appropriate career transition and employeesupport programs for all support staff.