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The role of HR is changing. Previously considered a support function, HR is now becoming a strategic partner in helping a company achieve its goals. A strategic approach to HR means going beyond the administrative tasks like payroll processing. Instead, managers need to think more broadly and deeply about how employees will contribute to the company’s success Strategic human resource management (SHRM) is not just a function of the HR department—all managers and executives need to be involved bec
  The role of HR is changing. Previously considered a support function, HR is now becoming a strategic partner in helping a company achieve its goals. A strategic approachto HR means going beyond the administrative tasks like payroll processing. Instead,managers need to think more broadly and deeply about how employees will contribute tothe company’s success Strategic human resource management (SHRM) is not just a function of the HRdepartment—all managers and executives need to be involved because the role of people is sovital to a company’s competitive advantage. [ 732] In addition, organizations that value theiremployees are more profitable than those that do not. [733] Research shows that successfulorganizations have several things in common, such as providing employment security,engaging in selective hiring, using self-managed teams, being decentralized, paying well,training employees, reducing status differences, and sharing information. [734] Whenorganizations enable, develop, and motivate human capital, they improve accounting profitsas well as shareholder value in the process. [735] The most successful organizations manage HRas a strategic asset and measure HR performance in terms of its strategic impact.Here are some questions that HR should be prepared to answer in this new world. [736] ã Competence : To what extent does our company have the required knowledge, skills,and abilities to implement its strategy? ã Consequence : To what extent does our company have the right measures, rewards,and incentives in place to align people’s efforts with the company strategy? ã Governance : To what extent does our company have the right structures,communications systems and policies to create a high-performing organization? ã Learning and Leadership : To what extent can our company respond to uncertainty andlearn and adapt to change quickly? The Importance of Human Capital Employees provide an organization’s human capital  . Your human capital is the set of skillsthat you have acquired on the job, through training and experience, and which increase yourvalue in the marketplace. The Society of Human Resource Management’s ResearchQuarterly  defined an organization’s human capital as follows: “A company’s human capitalasset is the collective sum of the attributes, life experience, knowledge, inventiveness, energyand enthusiasm that its people choose to invest in their work.”  [ 737] Focus on Outcomes Unfortunately, many HR managers are more effective in the technical or operational aspects of HR than they are in the strategic, even though the strategic aspects have a much larger effect  on the company’s success. [ 738] In the past, HR professionals focused on compliance to rules,such as those set by the federal government, and they tracked simple metrics like the numberof employees hired or the number of hours of training delivered. The new principles of management, however, require a focus on outcomes and results, not just numbers andcompliance. Just as lawyers count how many cases they’ve won—not just how many wordsthey used—so, too must HR professionals track how employees are using the skills they’velearned to attain goals, not just how many hours they’ve spent in training. [739] John Murabito, executive vice president and head of HR and Services at Cigna, says that HRexecutives need to understand the company’s goals and strategy and then provide employeeswith the skills needed. Too often, HR execs get wrapped up in their own initiatives withoutunderstanding how their role contributes to the business. That is dangerous, because when itcomes to the HR department, “anything that is administrative or transactional is going to getoutsourced,” Murabito says. [740] Indeed, the number of HR outsourcing contracts over $25million has been increasing, with 2,708 active contracts under way in 2007. [741] For example,the Bank of America outsourced its HR administration to Arinso. Arinso will providetimekeeping, payroll processing, and payroll services for 10,000 Bank of America employeesoutside the U.S. [742] To avoid outsourcing, HR needs to stay relevant and accept accountabilityfor its business results. In short, the people strategy needs to be fully aligned with thecompany’s business strategy and keep the focus on outcomes. Key Elements of HR Beyond the basic need for compliance with HR rules and regulations, the four key elements of HR are summarized in the following figure. In high-performing companies, each element of theHR system is designed to reflect best practice and to maximize employee performance. Thedifferent parts of the HR system are strongly aligned with company goals. Figure 16.4. Key HR Elements` Selection and Placement When hiring, acquaint prospective new hires with the nature of the jobs they will be expectedto fulfill. This includes explaining the technical competencies needed (for example, collectingstatistical data) and defining behavioral competencies. Behavioral competencies may have acustomer focus, such as the ability to show empathy and support of customers’ feelings andpoints of view, or a work management focus, such as the ability to complete tasks efficientlyor to know when to seek guidance.In addition, make the organization’s culture clear by discussing the values that underpin theorganization—describe your organization’s “heroes.” For example, are the heroes of your  company the people who go the extra mile to get customers to smile? Are they the peoplewho toil through the night to develop new code? Are they the ones who can network and reacha company president to make the sale? By sharing such stories of company heroes with yourpotential hires, you’ll help reinforce what makes your company unique. This, in turn, will helpthe job candidates determine whether they’ll fit into your organization’s culture.  Job Design Design jobs that involve doing a whole piece of work and are challenging but doable.  Jobdesign refers to the process of putting together various elements to form a job, bearing inmind organizational and individual worker requirements, as well as considerations of health,safety, and ergonomics. Train employees to have the knowledge and skills to perform all partsof their job and give them the authority and accountability to do so. [ 743] Job enrichment isimportant for retaining your employees.One company that does training right is Motorola. As a global company, Motorola operates inmany countries, including China. Operating in China presents particular challenges in terms of finding and hiring skilled employees. In a recent survey conducted by the American Chamberof Commerce in Shanghai, 37% of U.S.-owned enterprises operating in China said thatrecruiting skilled employees was their biggest operational problem. [744] Indeed, morecompanies cited HR as a problem than cited regulatory concerns, bureaucracy, or infringementon intellectual property rights. The reason is that Chinese universities do not turn outcandidates with the skills that multinational companies need. As a result, Motorola has createdits own training and development programs to bridge the gap. For example, Motorola’s ChinaAccelerated Management Program is designed for local managers. Another program,Motorola’s Management Foundation program, helps train managers in areas such ascommunication and problem solving. Finally, Motorola offers a high-tech MBA program inpartnership with Arizona State University and Tsinghua University so that top employees canearn an MBA in-house. [745] Such programs are tailor-made to the low-skilled but highlymotivated Chinese employees. Compensation and Rewards Evaluate and pay people based on their performance, not simply for showing up on the job.Offer rewards for skill development and organizational performance, emphasizing teamwork,collaboration, and responsibility for performance. Help employees identify new skills todevelop so that they can advance and achieve higher pay and rewards. Compensation systemsthat include incentives, gainsharing, profit-sharing, and skill-based pay reward employees wholearn new skills and put those skills to work for the organization. Employees who are trained ina broad range of skills and problem solving are more likely to grow on the job and feel moresatisfaction. Their training enables them to make more valuable contributions to the company,which, in turn, gains them higher rewards and greater commitment to the company. [ 746] The  company likewise benefits from employees’ increased flexibility, productivity, andcommitment.When employees have access to information and the authority to act on that information,they’re more involved in their jobs and more likely to make the right decision and take thenecessary actions to further the organization’s goals. Similarly, rewards need to be linked toperformance, so that employees are naturally inclined to pursue outcomes that will gain themrewards and further the organization’s success at the same time. Diversity Management Another key to successful SHRM in today’s business environment is embracing diversity. Inpast decades, “diversity” meant avoiding discrimination against women and minorities inhiring. Today, diversity goes far beyond this limited definition; diversity management involvesactively appreciating and using the differing perspectives and ideas that individuals bring tothe workplace. Diversity is an invaluable contributor to innovation and problem-solvingsuccess. As James Surowiecki shows in The Wisdom of Crowds , the more diverse the group interms of expertise, gender, age, and background, the more ability the group has to avoid theproblems of groupthink. [ 747] Diversity helps company teams to come up with more creativeand effective solutions. Teams whose members have complementary skills are often moresuccessful because members can see one another’s blind spots. Members will be more inclinedto make different kinds of mistakes, which means that they’ll be able to catch and correctthose mistakes.
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