Objectives
Introduce the concept of business models and why we need them for our work. Identify the practical linkages between an business model and day-to-day work. How to develop Powerful HR Business Model to Sustained Competitive Advantage Redefine The Future of HR (Professional) Get Coffee & Coaching from Neutron Jack!
Todays HR Dashboard
Business Challenge SCA Culture
Business Strategy
Kaizen
HR Strategy
GTMP
HPLO
The Future of HR
Business Challenges
Tough Times for Top Executives
Over the past three years, nearly 40 percent of the top 2500 CEOs have been removed from their posts. Nearly all of them, due to a failure to execute the strategy.
Bossidy and Charan
EXECUTION
Strategy
People
Processes
To execute strategy you need to align your strategy, process and people!
People
Processes
Fast Logical !
Success and speed of execution depend on people alignment, Yet this is the hardest element to align!
BUSINESS STRATEGY
Building Sound Business Strategies
WOTS External
WOTS Internal
Strategy Formulation
Implementation
Strategy Typology
Porter: Overall cost leadership Differentiation Focus Miles and Snow: Defenders Prospectors Analysers Reactors
Our Checklist
Economic Performance
Valuable ? No Rare? -Costly to Imitate? Exploited by the Organization? -Competitive Implications Competitive Disadvantage Competitive Parity Temporary Competitive Advantage Sustained Competitive Advantage Economic Performance Below Normal --
Yes
No
--
--
Normal
Yes
Yes
No
--
Above Normal
Yes
Yes
Yes
Yes
Above Normal
85% of management teams spend less than one hour per month on strategy issues
BUDGET
78% of organizations lock budgets to an annual cycle 20% of organizations take more than 16 weeks to prepare a budget
funding
reporting
Input (Resources)
Output (Results)
Business strategy
HR strategy
Business plans
Implementation
Monitor
External drivers
HR STRATEGY-1
Quality Enhancement Defender Prospector Analyser Reactor Innovation Strategies Cost Reduction Strategies Strategic Management Matching Model HR Strategy
Universalistic Cost Differentiation Focus Innovation HR Design Contingency Configurational HRM Practices
Architecture
Policies
Practices
HR STRATEGY-2
SW OT ANALYSIS High Value Resource Based View of the firm Firm Strategy Good HR Practices Competitive HRM Unique In-imitable Scarcity
Institutional
HR Outcomes
Organizational Performance
CULTURE
Levels of Culture
Manifest Manifest culture Expressed Values Expressed Values
water line
Basic Assumptions
Basic Assumptions
Iceberg
Onion
CULTURE
Flexibility and Discretion
Culture Type: ADHOCRACY Leader Type: Facilitator, Mentor, Leader Type: Innovator, Parent Entrepreneur, Visionary Effectiveness Criteria: Effectiveness Criteria: Cohesion, Morale, Human Cutting-edge output, Creativity, Resource Development Growth Management Theory: Management Theory: Participation fosters Innovativeness fosters new commitment resources Culture Type:
CLAN
Culture Type:
MARKET
Leader Type: Coordinator, Monitor, Organizer Effectiveness Criteria: Efficiency, Timeliness, Smooth Functioning Management Theory: Control fosters efficiency
Leader Type: Hard-driver, Competitor, Producer Effectiveness Criteria: Market share, Goal achievement, Beating competitors Management Theory: Competition fosters productivity
KAIZEN CULTURE
HR-KAIZEN CULTURE
Quality Performance Employee satisfaction Employee quality awareness Customer satisfaction Company's image Training of quality tools QCC activity Human resource planning Recruiting & selection Project team of improvement
CLAN
Work design & analysis Training & education Job rotation Leadership development Performance appraisal Incentive compensation Benefits & profit sharing Employee development Employee security & health Employee relations
Cross-functional management Usage of SQC Customer service system Managing customer satisfaction Leadership Supplier's cooperation Quality management system Business process re-engineering
Leader Type: Facilitator, Mentor, Parent Effectiveness Criteria: Cohesion, Morale, Human Resource Development Management Theory: Participation fosters commitment Culture Type:
Culture Type: ADHOCRACY Leader Type: Innovator, Entrepreneur, Visionary Effectiveness Criteria: Cutting-edge output, Creativity, Growth Management Theory: Innovativeness fosters new resources
MARKET
Leader Type: Coordinator, Monitor, Organizer Effectiveness Criteria: Efficiency, Timeliness, Smooth Functioning Management Theory: Control fosters efficiency
Leader Type: Hard-driver, Competitor, Producer Effectiveness Criteria: Market share, Goal achievement, Beating competitors Management Theory: Competition fosters productivity
Culture Movement
The Clan
50 40 30 20 10
The Adhocracy
10 20 30 40
The Hierarchy
The Market
50
Talent Management
GTMP
Future of HR Manager
Impact/Contribution to the Business
Add Value & Maximize Upside Strategic HR Planning Organizational Design Survey Action Planning Staffing Employee Relations Labor/Union Relations Benefits Limit Liability & Protect Downside Safety & Workers Compensation Compliance Training & Development Compensation EEO/AA
continue to grow
Culture & Image HR as Business Partner
Labor Relations
Employee Relations
Personnel
Human Resources
Organizational Effectiveness
Competence of HR Professional
Business Understanding Change Management Personal credibility Culture Management HR Processes & Practices
The Role of HR
The 2002 Human Resource Competency Study found that 43% of HRs impact on business performance came from its strategic contribution.
PRIORITY
The Top Seven People-Related HR Issues
Retaining Talent Attracting Talent with Critical Skills Improving Workplace Performance Gaining Control of Health Care Costs Using the Web Effectively for Information/Service Delivery 6. Creating People Measures for a Balanced Scorecard 7. Building New Workforce Skills for the Next Round of Growth SOURCE: Towers Perrin interview of HR Professionals 1. 2. 3. 4. 5.
The Role of HR
Future / Strategic Focus
Strategic Partner
Strategic HR Planning HR as Business Partner Culture and Image
Change Agent
Staffing Organizational design Survey action planning Performance measurement Training and development
Processes
People
Administrative Expert
Compensation Benefits HR information systems Compliance
Administrative Expert
Compensation
Payroll as %--total operating costs (benchmarked); compensation targets benchmarked against peer companies; turnover rates; quality of management review and Board material.
Benefits
Medical cost per participant; dental cost per participant; 401K employee participation rate; $ saved in union negotiations.
Compliance
# Good corporate citizen, Permits
Labor Relations
Absence of the extreme negative (strikes, slowdowns, sit-downs, boycotts); $ outcome of new contracts, both immediate & longer term; timeliness & quality of new contracts; productivity per employee; safety & quality measures.
Strategic Partner
Strategic HR Planning
Quality of succession management program assessment. Quality of Bench Strength. Quality of Succession Plan Follow-up (% Actions Completed).
HR as Business Partner
Any business measure of effectiveness. 360-Degree Feedback on the extent to which HR is considered a partner by those they support.
Change Agent
Staffing
$ to Fill; Days to Fill; # Filled; Quality of Hires; Retention of Hires.
Organizational Design
Benchmarking headcount; effectiveness of communications & key processes (no bottlenecks); spans and layers; management ratios.
Performance Management
Performance Reviews: Timeliness and Quality; #/% Positions with written accountabilities and measures; other measures vary with the position.
SCA
The primary objective of business-level strategy was to create sources of sustainable competitive advantage (SCA). How do we know SCA when we see it? What is it? When is it considered sustainable? To produce SCA, the capability must:
1. Produce value 2. Be rare 3. Imperfectly imitable, i.e. not be easily imitated or substituted 4. Be exploitable by the organization
Integral contribution to business plan Strong influence on other departments Member of top team Quality systems and processes Service management PROACTIVE Intellectual capital/knowledge management (Rapid growth) Customer/needs focused Workforce empowerment and teams Pro-active/improvement Return on investment Management development Cost/benefit Leadership training analysis INTERNAL Comprehensive database Policies and manuals Succession planning POLICE ControlsWorkforce planning headcount, hiring, (Emerging) restructuring, travel, relocation Performance management Reporting systems & budgets Workforce productivity Basic measures turnover, KIND HEARTS absenteeism (Lending Support) Cafeteria Technical and skills training Car park disputes, grievances IR Security OH&S procedures BASIC Recruitment Gymnasium NEEDS Induction Social club Payroll Party Admin/Records Leave
SCA
Competencies vs. Core Competencies vs. Distinctive Competencies
A competency is an internal capability that a company performs better than other internal capabilities. A core competency is a well-performed internal capability that is central, not peripheral, to a companys strategy, competitiveness, and profitability. A distinctive competence is a competitively valuable capability that a company performs better than its rivals.
SCA
Strategy
Human Resources
Executive Leadership
People
Culture
Organisational Structures
a little strategic work, a little consulting, and a lot of administrative duties empowering line management to perform necessary HR roles
Strategic Consultative
Strategic Consultative
Value adding service & delivery
Strategic Strategic
Consultative
Administrative
Admin
Old paradigm Our Emerging paradigm
Admin
Increasing Relevance
A new reputation and value proposition for our HR requires a fundamental mind-set change in the organisation, however more critically mindset change from the HR Leaders.
HR Strategy Unique value proposition, tailored chain of activities, trade offs, Reinforcing activities fitting in together, continuity and continuous improvement
Technology (Enabler) Leadership and Culture Change Management Business Strategy
Business Model
Employee
Line-of-sight Performance Management Competitive Remuneration, Rewards and Incentives
Focused Learning
If you cant measure it, you cant understand it. If you cant understand it, you cant control it. If you cant control it, you cant improve it.
James Harrington The Improvement Process
Metric Design
Assess
Your Data
Build Your
Metrics
Create
Meaningful Measures
Impact Effectiveness
Efficiency
Impact
Effectiveness
Efficiency
Work Processes
Competent Employees
Training Costs
Voluntary Separations
$ labour cost as % of sales Revenue generated per FTEs Unit production per FTEs Productivity and utilisation Labour utilisation rate Quality reject rate (employee error) Number of credit returns (linked w ith employee error) Number of customer complaints (employee related) Recruitm ent Average days vacancy duration - management Average days vacancy duration - staff Average cost recruitment - management Average cost recruitment - staff % new hires achieving 6 months service % new hires achieving 12 months service % new hires achieving sat. appraisal at first assessment Average $ cost per vacancy filled Company training expenditure (% of salaries & w ages) Average training hours per employee % training course participant satisfaction % training course attendance Number of employees completing sponsored tertiary studies Number of employees completing sponsored MBA programs Learning centres - number of courses offered - % course participation - Internet hours utilised - e-learning courses utilised - % e-learning pass rate Learning centre effectiveness throughout the organisation Staff retention performance throughout the organisation Recruitment Status Report Recruitment performance throughout the organisation Employee satisfaction levels/organisational culture Workforce productivity/employee relations performance
Average cost of vacancies filled $ commitment to staff training and development Time commitment to staff training and development Participant satisfaction w ith training courses provided Participant attendance at training courses provided Commitment to professional development of staff throughout the organisation Training & Development Expenditure Report Training Hours Allocation Report
% of internal appointments above level __ Succession planning Avg length of service of staff apptd above level ___ Number of unf air dismissal claims Workf orce lost time (hours) Number of f ormal union grievances % w orkf orce on individual contracts Internal communications - number of bulletins issued - number of emails issued Em ployee relations - number of staf f brief ing sessions conducted Work/lif e balance - number of active flexible w ork agreements - number of active w orking f rom home agreements - number of active job sharing agreements Workf orce teams - number of active teams - number of team meetings % compa ratio $ pay f or performance gaps Rem uneration $ pay equity gaps % employee share scheme take-up rate Level of outstanding annual leave liability Adm inistration Number of manual payroll adjustments Number of employees aged under 25 Number of employees aged 2535 Number of employees aged 3545 Number of employees aged 4555 Organisation profile Number of employees aged over 55 Avg length of service (current employees) Avg length of service (terminating employees) % ratio of salaried staf f to w aged staf f Adequacy of w orkf orce planning % ratio of surplus staf f to required staf f Average length of service of employees across the organisation and terminating Demographic prof ile of employees by age across the organisation Organisation perf ormance in managing annual leave Payroll performance Organisational competitiveness and equity in remuneration packaging/policy Organisational ef f ectiveness in creating and sustaining a team-based structure/culture Organisational success in providing an ef f ective w ork/lif e balance program f or all employees Staff alignment and commitment to the organisation Employee relations performance throughout the organisation Succession planning eff ectiveness
ER Status Report
Number of FTEs in HR HR FTEs as % of total w orkforce (FTEs) HR headcount HR labour cost as % of sales/revenue HR $ cost as % of total w orkforce (FTEs) Level of satisfaction w ith w ages/salary/benefits Level of satisfaction w ith conditions/physical w ork environment Level of satisfaction w ith job Level of satisfaction w ith personal relations Exit interview s Level of satisfaction w ith participation and recognition Level of satisfaction w ith opportunities for development Number of employees w ho w ould recommend company Number of employees w ho w ould seek reemployment w ith company % of appraisals completed on time Number of formal staff grievances raised Perform ance appraisals % of individual training plans completed % of employees above competent % of employees below competent Workforce attitude surveys Average satisfaction % vs norm Average satisfaction % vs previous survey Staff satisfaction levels w ithin the organisation. (This section is likely to be produced on an annual basis.) Performance management effectiveness throughout the organisation. (This section is likely to be produced on an annual basis.) Staff satisfaction levels w ith the organisation and reasons for leaving. (This section may not be reported on a regular monthly basis, dependent upon the volume of exit interview s received and the need to create meaningful data and protect employee confid Human resources efficiency/cost effectiveness
Use the metrics to demonstrate or prove how we are driving business performance
HR Framework
Strategic Priorities
HR ROAD MAP
In order to make these key success factors tangible and meaningful, enabling In order to make these key success factors tangible and meaningful, enabling performance measures will need to be applied for each and every key success factor. performance measures will need to be applied for each and every key success factor.
HR Strategic Priorities
The following table provides a best practice example of four HR business model categories and specifically-related priorities.
Integrated HR Processes Support Mechanisms Integrated HR Processes Support Mechanisms and Programs and Programs Role of Line Management Role of Line Management Cultural Readiness HR Policy Framework Cultural Readiness HR Policy Framework
Technology/Systems Technology/Systems
Strategic Priorities
Operational Priorities
Enabling Priorities
Accountability framework Workforce analysis/HR planning/transition/succes sion planning Supported HR vision & strategy approved by the Board of Trustees and Senior management
Classification Performance management Leadership/development Union/management relations Internship (recruitment)/ mentoring Wellness Conflict resolution Training strategy Employment equity Staffing process Organization & work design HR service delivery model and cost profile Service to retirees Sick leave/disability management
Communication plan HR marketing/education/ promotion HR performance measurement/reporting HR policies HRIS (databases, technology architecture)
High
Medium
Organizational integration
Career paths
Low
HR PROJECTs