H600

HR people arent the sharpest tacks in the box. Anthony Rucci, EVP at Cardinal Health Inc., summarizes this in one statement, business acumen is the single biggest factor that HR professionals in the U.S. lack today. There is a widening gap between the capabilities of those working in HR and the business acumen needed for them to be successful strategic partners in a business organization. The core responsibility of HR is to serve the organizations corporate objectives, therefore, if HR does not understand all aspects of business, it will not be able to do this adequately. The soft skills are not enough. Those skills must be used in context with the strategic function of the organization.

HR pursues efficiency in lieu of value. HR departments spend a considerable amount of time reporting efficiency measures such as the percentage of employees with advanced training or the degree of employee satisfaction because they are easier to measure than the impact of those activities on the organizations bottom line. HR departments argue that these activities and metrics are important to know, but those activities/metrics dont exist in a vacuum. Every program and/or activity that the HR department endorses and implements must bring value to the organization and help it achieve high performance. Just as the metric ROI explicates the impact of investments on an individuals or an organizations bottom line, so must HR develop a similar metric to understand the financial impact HR activities have on the success of an organization.

VALUING THE ORGANIZATION

Market Value to Book Value? Cash-ow Analysis? Capital Asset Pricing Model (CAPM)?

MARKET VALUE TO BOOK VALUE

Apple market cap = 376B, Total Assets - Liabilities = 76B: ratio=4.95 (20%) Microsoft market cap = 218B, Total Assets - Liabilities = 58B: ratio=3.76 (27%) PotashCorp market cap = 35B, Total Assets - Liabilities = 6.8B: ratio=5.15 (19%)

VALUING THE ORGANIZATION

Don Coxe (Coxe Advisors) warns that the Capital Asset Pricing Model may be obsolete and misleading. Comparisons of market to book values shows that 70% to 80% of firm value is not reflected in current accounting systems (i.e. balance sheet & income statement).

PURPOSE OF THIS COURSE

Firm Strategy Competitive Advantage HR Strategy HR Practices Individual Level Organization Level

PURPOSE OF THIS COURSE

Goals Firm Strategy Product Market Focus Value Proposition Core Activities

FIRM STRATEGY
According to Michael Porter, too many organizations confuse operational effectiveness and strategy. Operational Effectiveness Is your organization performing similar activities better than your competitors? Strategic Positioning What actions can your organization take to distinguish itself from competitors? What does your organization consider to be its competitive differentiators in the marketplace?

WHAT IS THE PURPOSE OF HR?