Unit 1: Strategic Management
Module 1: A Need for Strategic Human Resource Management
It is important that HR professionals appreciate the role of strategic planning in their
organizations and understand the language and terminology of strategic planning. A
strategy is a planned process whereby organizations can map out a set of objectives
and methods of meeting those objectives.
Learning objectives:
Discuss why managers need to examine the human resource implications of their
organizational strategies Understand the various terms used to define strategy and its
processes Describe organizational strategies, including restructuring, growth, and
stability.  Define business strategy and discuss how it differs from corporate strategy.
 Discuss the steps used in strategic planning  List the benefits of strategic planning.
Strategic Human Resource Management: The need for SHRM Strategic management
of people through HR programs and policies helps to ensure positive organizational
outcomes such as: profitability, customer satisfaction, employee performance,
and organizational survival
Module 2: Strategy
Strategy is the formulation of organizational missions, goals and objectives, as well as
action plans for achievement that explicitly recognize the competition and the impact of
outside environmental forces.
Moreover, Strategy is the formulation of organizational missions, goals, objectives and
action plans for achievement that explicitly recognize the competition and the impact of
outside environmental forces
The reality of the strategic process:  Intended Strategy – the agreed upon strategy
arrived at through the formal planning process  Emergent Strategy – created from new
ideas and conditions  Discarded Strategy – deemed inappropriate due to changing
circumstances  Realized Strategy – the implemented plan, or what actually happened.
Module 3: Strategic Types
A strategy may be intended—one that is formulated at the beginning of the process—or
realized—what actually happens. The strategy may also be emergent—that is, it is
reactive, changing as necessary to deal with environmental changes. Corporate or
company-wide strategies are concerned with the long-term view of the organization.
Business strategies focus on one line of business, building a strong competitive
position.
Corporate Strategy - organizational-level decisions that focus on long-term survival 
Restructuring – includes turnaround, divestiture, liquidation, and bankruptcies  Growth
– includes incremental, international, and mergers and acquisitions  Stability –
maintains status quo
Restructuring Strategies: Turnaround Strategy - an attempt to increase the viability of
an organization Divestiture - the sale of a division or part of an organization
Liquidation - the termination of a business and the sale of its assets. Bankruptcy - a
formal procedure in which an appointed trustee in bankruptcy takes possession of a
business’s assets and disposes of them in an orderly fashion
Growth Strategies:  Incremental growth - can be attained by expanding the client
base, increasing products/services, changing the distribution networks, or using
technology.  International growth - can be attained by seeking new customers or
markets by expanding internationally  Acquisition - the purchase of one company by
another  Merger - two organizations combine resources and become one
Stability Strategies: These are maintenance strategies where companies do not wish
to see their companies grow and so their strategic HRM practices remain constant
These can be called status quo, neutral, or do-nothing strategies.
Module 4: Business Strategies
Business strategy is the action plan for managing a single line of business. Business
strategy involves plans to build a competitive focus in one line of business.
Module 5: The Strategic Planning Process
Establish the mission, vision values; Develop objectives; Determine the competitive
position; Identify the competitive advantage; determine the methods for accomplishing
the objectives; evaluate the performance.
A strategic plan describes the organization’s future direction, performance targets, and
approaches to achieve the targets in a formal, written statement Strategic planning
can be a long process that has numerous steps including the following:
 Establish the mission, vision and values  Develop objectives  Analyze the external
environment  Determine the competitive position  Identify the competitive advantage
 Implement the strategy  Evaluate the performance.
Step 1- Establish the mission, vision and values: Vision statement  A clear and
compelling goal that serves to unite an organizations efforts.
The mission statement: An articulation of a view of a realistic, credible and attractive
future for the organization.
Attributes of a mission statement: Clearly states the reason for the existence of the
business  Is realistic Serves the interests of all stakeholders Differentiates the
organization from the competition.
Values: The basics that govern individual and group behaviour in an organization.
Purpose of Values statement:  Conveys a sense of identity for employees 
Generates employee commitment to something greater than themselves  Adds to the
stability of the organization as a social system  Serves as a frame of reference for
employees to use to make sense of organizational activities and to use as a guide for
appropriate behaviour.
Step 2- Develop objectives: Soft goals: Soft goals may include being ethical and
environmentally responsible, and providing a working environment free of discrimination
with oppor- tunities for professional development. Hard goals: Hard goal always strong
and clear mission and vision statements enable all employees to work toward common
goals.
Step 3- Analyze the external environment: External environment  Threats and
Opportunities  (technology, laws, regulations, the economy, sociocultural factors, and
demographics). To achieve the company objectives, managers must be aware of threats
and opportunities in the external environment. By scanning and monitoring technology,
laws and regulations, the economy, sociocultural factors, and changing demographics,
managers can make reactive and proactive changes to the strategic plan.
Step 4- Identify the competitive advantage: Competitive advantage is defined as the
characteristics of a firm that enable it to earn higher rates of profits than its competitors
by utilizing its resources including:  Tangible assets – the organizational assets that
have substance and can be consumed  Intangible assets – the organizational assets
that are not concrete, such as reputation, goodwill  Capabilities - the collective skills,
abilities and expertise of an organization.
Resource based view: The resource-based view suggests that for these resources and
capabilities to provide a sustained competitive advantage, they must meet four criteria:
1. They are valuable to the firm's strategy (they help generate value/reduce cost).
2. They are rare (competitors don't have them).
3. They are inimitable (they cannot easily be copied by competitors).
4. They can be organized by the firm (the firm can exploit the resources).
Core competencies: Core competencies are the resources and capabilities that serve
as a firm’s competitive advantage. Dynamic Capabilities are the ability to adapt and
renew competencies.
SWOT analysis: Strengths Weaknesses Opportunities Threats.
Step 5- Determine the competitive position: Value proposition - a statement of the
benefits of the products or service being offered in the marketplace.
Portar’s model competitive strategeis:  Michael Porter made a major contribution to
the field of strategic management by grouping the ways organizations can compete into
five generic competitive strategies: 1. Low-cost provider strategy 2. Broad differentiation
strategy 3. Best-cost provider strategy 4. Focused or market niche strategy based on
lower cost 5. Focused or market niche strategy based on differentiation.
Step 6- Implement the strategy: Strategic implementation  the process by which a
strategy is put into action. Program  the steps or activities necessary to accomplish a
goal. Procedures  the steps that are required to get a job done.
Step 7- Evaluate the performance: Financial indicators Operational indicators
Other strategic indicators.
Benefits of strategy formulation: Clarity Coordination Efficiency  Incentives
Change Career Development.
Errors in strategic planning: Relegating the process to official planners and not
involving executives and managers Failing to use the plan as the guide in making
decisions and evaluating performance Failing to align incentives and other HR policies
to the achievement of strategy.
Functional HR strategy: Operations, procedures, programs, practices, techniques that
support a business strategy.
Unit 2: Aligning HR with Strategy:
Module 1: Strategic Human Resources Management
Strategic HRM is a set of distinct but interrelated practices, policies, and philosophies
with the goal of enabling the organization to achieve its strategy. HR strategy is
embedded in theories of the resource-based view of the firm, the behavioural
perspective, and the human capital approach. Benefits include increased goal
attainment and more effective use of employees.
Learning objectives:  Understand the importance of strategic HR planning  Identify
the risks associated with not planning  Discuss approaches to linking strategy and HR,
including the barriers to becoming a strategic partner.  List the characteristics of an
effective HR strategy.
Strategic Human Resource Management:  Human Resources Management (HRM) is
an umbrella term that encompasses:  Specific HR practices  Formal HR policies 
Overarching HR philosophies. Strategic HRM  interrelated practices, policies, and
philosophies that facilitate the attainment of organizational strategy.
Resource-based view:  This theory suggests that the management of resources and
capabilities will lead to competitive advantage resulting in superior performance and
value creation.  Typical resources might include: a) Human resources b) Proprietary
knowledge c) Reputation  Typical capabilities might include: a) Adaptability b)
Flexibility c) Speed of bringing new products to market.
VRIO model: Valuable Rare  Inimitability Organized.
HRM System: A competitive advantage- • New employee • Selection • Socialization •
Training • Incentives • Etc. Capable Committed Next New employee.
The behavioural perspective:  This theory suggests that different HR strategies are
required to influence the diverse behaviours of employees.  HR’s role is to reinforce
certain behaviours via the HR practices such as recruitment, selection, training,
compensation, and performance.
Human capital theory:  Classical economists view the firm as having control over three
types of resources in the production of goods and services including:  Land  Labour
(or Human Capital)  Capital.
Human Capital  the sum of employees’ knowledge, skills, experience, and
commitment invested in the organization.
The importance of strategic planning: There are two main reasons strategic planning is
so important: employees help an organization achieve success because they are its
strategic resources  the planning process itself results in improved goal attainment.
Employees as strategic resources: Human resources can deteriorate if skills and
knowledge become obsolete  Investment in employees’ skills increases the value of
the organization’s human capital.
Improved goal attainment:  Strategy formulation is important to the attainment of
organizational goals  Developing HR practices that support the strategy leads to
improved strategy implementation  Aligns all HR functional strategies with overall
strategy  Focuses employees on important missions and goals of the organization.
Module 2: The Risks
This module explores the downside to strategic HR planning.
Is there a downside to strategic HR Planning?  Time and energy in making decisions
 Information overload potential  Impossible commitments to employees  Overconcern with employee reactions  Potential job losses  Myopia developed from
commitment to one strategy  Inability to see and adapt to changes developing in
environment.
Cliché: “An organization that fails to plan, plans to fail.”
Module 3: Linking HR Processes to Strategy
There are various approaches to linking HRM strategies to organizational strategies. HR
strategy and corporate strategy- Some organizations start with the corporate strategy
that leads to the HR strategy, and others start with the HR competencies that lead to the
business strategy A third option is to use a blend of the interrelationship of the HR
strategy and the corporate strategy.
Aligning HR strategy with business strategy can be done in one of these ways:  Start
with organizational strategy and then create HR strategy  Start with HR competencies
and then craft corporate strategies based on these competencies  Do a combination of
both in a form of reciprocal relationship.
Corporate strategy leads to HR strategy:  A traditional view that supports the notion
that HRM programs flow from the corporate strategy  The HR needs are derived
subsequent to the inception of the corporate plan  For example, a low-cost strategy
needs to be aligned with low-cost labour, like McDonald’s.
HR competencies lead to business strategy:  A more current view assumes that an
organization cannot implement a strategy if it does not have the necessary human
capital  Small businesses are more in tune with this approach because the impact of
human capital has a greater effect.  This is also known as a “skills determine strategy”
 Drawbacks include over-reliance on employee capabilities and not enough
environmental analysis.
HR become business partner:  Requires concurrent strategy formulation  HR
Professionals play a more strategic role moving from outsider to insider status  HR
managers apply their financial, forecasting and entrepreneurial skills to assist in
developing the strategy  HR manager is a partner and problem solver.
Strategic partnering: Although most HR professionals recognize their need to be
involved in strategic issues, most non-HR managers do not see the importance of HR
professionals as a Strategic Partner The main reason is that “people issues” are an
HR issue rather than a strategic one.
Becoming more strategic: Get the basics right, then align HR programs with strategy
HR strategy by division.
Module 4: Characteristics of An Effective HRM Strategy
An HR strategy is effective if it has internal and external fit and is focused on results.
External Fit • Fit HR and organizational strategies  Internal Fit • Link HR programs to
other functional areas Focus on Results • Results must be measured and tracked.
HR program linkage: HR Program ↓ Employee Competencies ↓ Organizational Strategy
↓ Organizational Outcome
The strategic HR planning model: Steps in the Strategic Model are:  Monitor and
analyze external factors  Assess the strengths and weaknesses of the organization’s
human resources  Determine the HR implications of such corporate strategies as
restructuring, going international, merging or acquiring, or outsourcing. Steps in the
Strategic Model are:  Assess the effectiveness of these efforts  In summary, the HR
systems can be used strategically to facility the achievement of organizational
strategies.
Unit 3: Environmental Influences on HRM
Module 1: Environmental Scanning
HRM strategy is determined primarily by organizational strategy. However, there are
environmental factors that shape HRM strategy, so HR managers and planners must
continually monitor the environment. Typically, they scan by reading publications,
retaining memberships in professional associations, attending conferences, or using
professional scanners.
Learning objectives:  Identify the sources that HR planners use to keep current with
business and HR trends  Understand how environmental scanning is practiced 
Discuss the challenges in scanning the environment.  Delineate the environmental
factors, such as the economic climate, the labour force, the political and regulatory
context, and the social and cultural climate, that influence the practice of HRM 
Describe the role of the stakeholder, and list several examples.
Environmental scanning: External environment – is anything outside organizational
boundaries that might influence an organization The external environment is not part
of the organization but is tightly integrated with it.  Environmental Scanning systematic monitoring of the major factors influencing the organization  Goal is to
identify trends within the external environment.
Analyzing the external environment: Scanning Monitoring Forecasting Assessing.
Module 2: As an aside, you can gain a strategic advantage as a Canadian HR manager
by reading U.S. publications and attending conferences south of the border.
There are several key legal concepts in recruitment and selection.
Sources of information: Each source of information can be used to develop HR strategy:
Social Media Publications Professional Associations Conferences/Seminars
Professional Consultants.
Module 3: Methods of Forecasting
A number of methods, such as trend and impact analyses and the Delphi technique, are
used to identify future trends.
HR professionals use several methods to generate predictions about the future: 
Trend Analysis – a forecasting method that extrapolates from historical organizational
indices  Delphi Technique – a process that relies on the forecasts and judgments of
experts to determine the future of employment.
Competitive intelligence: Competitive intelligence – is a formal approach to obtain
information about competitors Two important questions  Is the source reliable? 
What is the likelihood of the information being correct? Examples include:  Study
competitor’s websites  Have employees ask suppliers about competitors  Hire
employees who have worked for competitors.
Module 4:Challenges in Environmental Scanning
It is difficult to isolate critical trends from insignificant changes, and to predict counter
trends.
Challenges:  Inability to accurately predict the future  Inability to isolate what really is
important to HR.
Isolating critical from insignificant:  Few trends exist in isolation  difficulty finding
employees where labour shortages exist – retiring university professors but increased
role of technology.  For every trend there is a counter-trend  globalization vs.
localization.
Module 5: Environmental Factors
The environmental factors that are monitored include the economic climate, the political
and regulatory climate, and social norms.
Major factors include:  Economic Climate  Globalization  Political and Legislative
Factors  Technological Factors  Demographic Factors  Social/Cultural Factors.
Economic Climate: Most organizations track indices:  Interest rates 
Unemployment rates  Value of Canadian dollar  Cost of fuel.
Globalization: The growth in the flow of trade and financial capital across borders.
Political and Legislative Factors: Changes in laws and regulations influence
organizations Employer-employee relationships are governed by laws including the
Charter of Rights and Freedoms, employment standards, etc.
Technological Factors: Major impact on how work is done  Impact on how HR work
is done.
Demographic: Demographics is the study of population statistics, e.g., age, gender,
family status, education, economic status, labour market.
Labour market: Labour market is the area from which an organization recruits its
employees The labour market is the most important demographic factor and might
include: unemployment rate; geographic migration; graduation rates; local, provincial,
federal, global regions.
Social-Cultural trends:  Individual rights to privacy The role of social media in our
work lives Work-life balance issues Contingent workers.
Module 6: Stakeholders
Stakeholders such as shareholders, unions, customers, and executives contribute
strongly to the formulation and implementation of strategy.
Stakeholders are groups of people who have vested interests in an organization’s
decisions They are also known as constituent groups. Powerful stakeholders affect
strategy formulation For example:  Board of Directors and Senior Executives 
Senior Management  Supervisors  Employees  Unions.
Other stakeholders:  Customers  Suppliers  Governments  Regulatory Agencies
 The Public  NGOs  Anyone who can influence or be affected by management
decision-making.
Issues Priority Matrix – is used to determine the important trends that may impact an
organization Managers rate the trends from high to low based on:  The probability of
these trends actually occurring  The likely impact of each of these trends on the
organization.
A proactive approach:  HR managers are not passive observers  They want to
participate and influence the trends  Some organizations will lobby for legislative
changes and shape perceptions
Unit 4: The Human Resources Forecasting Process
Module 1: What is HR Forecasting and its Strategic Importance
These activities can be divided into three categories: transaction based forecasting;
event based forecasting; and process based forecasting. The benefits of forecasting are
outlined.
Learning objectives:
 Understand what HR forecasting is, and its strategic importance to the firm 
Understand the value of human capital to the firm, and discuss the difference between
generic human capital and firm-specific human capital  Discuss the differences
between stocks and flows of human capital, and comprehend the implications that
stocks and flows have for HR planning.  Understand the rationale for giving special
attention to specialist/technical workers, managers, recruits, and designated groups in
the HR forecasting process  Comprehend the forecasting process in general, and the
categories of forecasting methods  Outline the environmental and organizational
factors affecting HR forecasting.
What is HR forecasting and its Strategic importance:
HR forecasting: Process of ascertaining the net requirement for human capital by
determining the demand for and supply of human resources now and in the future.
Strategic importance of HR forecasting:  Most beneficial when demand is high for jobs,
particularly for specialized jobs  Can ensure that the necessary human capital is
available to the firm, despite its scarcity in the labour market  Reduce HR costs as a
long-run planning approach to HR issues is exercised  Enhance flexibility.
KSAOs:  The knowledge, skills, abilities, and other characteristics that are necessary
for a person to perform well in a job  Also referred to as job specifications, KSAOs are
derived from job analysis.
 HR Demand  HR Supply  Minimize HR gaps or surpluses
HR gap:  Insufficient human capital to meet operational needs
HR surplus:  Organization has more human capital than needed
Strategic planning linkage to macro business forecasting: Must align with the overall
organizational business goals Eliminates the possibility that HR policies will veer away
from the overall operating and production policies of the organization.
Organizational equipment and HR: Desired organizational goals and objectives must
take priority over all issues concerning HR resource scarcity and implementation issues.
Module 2: The Value of Human Capital to the Firm
We are going to explore the questions, “What makes up human capital? How do we
define human capital?
Value of Human Capital:  Types of human capital include:  Generic human capital:
Competencies, knowledge, skills, and abilities that are held by individual employees and
that are useful to the firm  Firm-specific human capital: Competencies, knowledge,
skills, and abilities that employees possess based on their tacit knowledge, and learned
from experience and through mentorship in the organization.
Human Capital Stock and Flows: Human capital stock: The amount of any specific form
of human capital that is available to the firm at any given time. Human capital flow: The
change in the stock of human capital over time. Factors that affect the flow of human
capital include terminations, promotions, lateral movements, and demotions
Forecasting job requirements Vs task requirements: Organizations are beginning to
move away from the job requirements to align human capital with specific tasks Using
the job as the unit of analysis for human capital requirements may be redundant.
Key human capital analysis:  Specialist/technical/professional workers  Employment
equity–designated group membership  Managers and executives  Recruits.
Module 3: The HR Forecasting Process
The process of determining net personnel requirements includes determining HR
demand, ascertaining HR supply, and calculating the difference to realize a net surplus
or net shortage.
 Determine the staffing needs by skills, skill levels, or jobs  Perform the analyses to
determine the number of required employees  Create a budget to determine the costs
involved in fulfilling the stated organizational requirements  Put HR programs and
policies into place to ensure that the demand and supply requirements are met then
track the results.
Forecasting methods: Demand forecasting: The process of determining the
organization’s requirement for specific forms of human capital Supply forecasting: The
process of determining the source or sources of human capital to satisfy the
organization’s demand. Survey the business line for their anticipated needs  Normbased rules  Time series and regression-based models  Mathematical and
econometric models  Qualitative models such as the Delphi Technique, focus groups,
Nominal Group Technique, and scenario planning.
Module 4: Environmental and Organizational Factors Affecting HR Forecasting
These factors can be divided into organizational (including worker competencies,
company culture) and external, (such as labour markets and demographic changes).
HR forecasting time horizons:  Current forecast  Short-run forecast  Medium-run
forecast  Long-run forecast.  Prediction: A single numerical estimate of HR
requirements associated with a specific time horizon and set of assumptions 
Projection: Several HR estimates based on a variety of assumptions  Envelope: The
range of plausible values of a prediction based on a given set of assumptions. 
Scenarios: Proposed sequence of events with their own set of assumptions and
associated program details  Contingency plans: Implemented when severe,
unanticipated changes to organizational or environmental factors completely negate the
usefulness of the existing HR forecasting predictions or projections.
Institute HR program and policies:  The net HR requirement is the gap or surplus that
results from the forecasting exercise.  HR gap (shortage) can be addressed through
recruitment efforts, retention efforts, or an increase in temporary or contract workers.
HR surplus:  Rather than layoffs or downsizing to deal with an HR surplus, first
consider less damaging methods:  Job sharing  Attrition.  Job sharing:  When two
or more employees perform the duties of one fulltime position, each sharing the work
activities on a part-time basis  Attrition:  The process of reducing an HR surplus by
allowing the size of the workforce to decline naturally from the normal pattern of losses
associated with retirements, deaths, and voluntary turnover.
You are now able to:  Understand what HR forecasting is, and its strategic importance
to the firm.  Understand the value of human capital to the firm and discuss the
difference between generic human capital and firm-specific human capital.  Discuss
the differences between stocks and flows of human capital and comprehend the
implications that stocks and flows have for HR planning.  Understand the rationale for
giving special attention to specialist/technical workers, managers, recruits, and
designated groups in the HR forecasting process.  Comprehend the forecasting
process in general, and the categories of forecasting methods.  Outline the
environmental and organizational factors affecting HR forecasting.
Unit 5: Determining HR Demand
Module 1: Forecasting Demand
Organizations that are better able to forecast their demand for labour will be in a better
position to continue to serve their customers’ needs through change, and to avoid
dramatic and damaging downsizing events.
Determining HR demand:
Learning objectives:
 Understand the importance of demand forecasting in the HR planning process 
Recognize the linkages between the HR plan, labour demand forecasting techniques,
and the subsequent supply stage  Compare and contrast the advantages and
disadvantages of various demand forecasting techniques, including quantitative,
qualitative, and blended techniques.
Forecasting demand: Firm’s future need for human capital, the types of jobs, and the
number of positions that must be filled for the firm to implement its strategy.
Module 2: Quantitative Methods
The two main approaches to calculating HR demand are discussed. We will also take a
closer look at a few quantitative methods of forecasting, including Trend analysis, Ratio
analysis, Time series models, Regression analysis and Structural equation modelling.
Trend analysis Ratio analysis Time series models Regression analysis
Structural equation modelling (SEM)
Trend analysis:  Forecast future human capital needs by extrapolating from historical
changes in one or more organizational indices
Steps for effective Trend analysis:  Select the appropriate business/operational index
 Track the business index over time  Track the workforce size over time  Calculate
the average ratio of the business index to the workforce size  Calculate the forecasted
demand for labour.
Ratio analysis: A straightforward method of examining the relationship between an
operational index and the demand for labour:  Can be used to calculate demand
requirements for direct labour and indirect labour.
Time series model: Use past data to predict future demand Can be a simple moving
average or a weighted moving average, or use exponential smoothing.
Regression analysis - an overview: Presupposes that a linear relationship exists
between one or more independent (causal, or predictor) variables, which are predicted
to affect the dependent (criterion) variable, future HR demand for human capital.
Regression analysis – planning tool: Regression models help HR planners to use
large amounts of organizational data These models can be easily adapted to reflect
organizational changes or new assumptions, and are a good choice for shortterm,
medium-term, and long-term forecasts.
Regression analysis – scatterplot and trend line:
If we are able to predict enough variability in the outcome (or criterion) variable with our
trend line, then the trend line may be used to extrapolate beyond the data at hand to
create a forecast. If we have a single predictor variable, and plot the predictor variable
(e.g., sales) along the x-axis, and plot the criterion variable (which in our case would be
the number of employees required) on the y-axis, we might get something that looks like
the scatterplot. Remember that the predictor variable is the information that we are
using to try to predict or forecast the number of required employees; in this case, we are
trying to predict the number of employees who will be required as sales revenues
increase. Where trend analysis borrows information from a single or from several data
points on the scatterplot to derive an employee requirement ratio, regression borrows
information from all the data points to predict the criterion.
Regression analysis – three-dimensional regression plane:
Regression analysis – shared variability:
Regression analysis – predictive redundancy:
Simple regression prediction model:  Y = A + BX  Y = dependent (target) variable  A
= constant (y intercept)  B = slope of linear relationship between X and Y  X =
independent (causal) variable.
Structural equation modelling (SEM): A statistical technique that permits the testing of
multiple relationships simultaneously in a theoretically derived model Forecasters can
develop a model of labour demand based on their own theory as to what factors may be
driving demand.
Module 3: Qualitative Forecasting Techniques
This module will look at a few qualitative methods of forecasting, including Scenario
Planning , Delphi Technique and Nominal Group Technique.
Scenario Planning:  Method most often used to develop organizational strategy 
Participants envision possible future conditions in which the organization might operate
 Requires participants to challenge existing assumptions and to generate vivid pictures
of possible future states.
Scenario Planning process:  Propose the forecasting question about the future state of
the firm or environment  Generate a list of factors that are likely to influence the
outcome in question  Sort the factors into naturally occurring groups and rank the
groups according to their importance to the main question and the ability of the firm to
control the factor.  Select the two groups of factors that are likely to have the strongest
and most unpredictable impact on the question and create four quadrants  Name and
describe in story form each of the resulting quadrants  Suggest the skills,
competencies, and organizational requirements that would be necessary for the firm to
be able to operate in each of these four worlds  Generate a demand forecast
necessary to fulfill the firm’s requirements in each of the four worlds.
Delphi technique: A process in which the forecasts and judgments of a selected group
of experts are solicited and summarized in an attempt to determine the future HR
demand.
Advantages of Delphi technique: Avoids many of the problems associated with faceto-face groups including reluctance on the part of individual experts to participate.
disadvantages of Delphi technique: Time and costs Results cannot be validated
statistically Selection of experts can skew the results Potentially insufficient attention
given to developing criteria due to having too narrow a scope of experts.
Delphi technique steps: Define and refine the issue or question  Identify the experts,
terms, and time horizon  Orient the experts  Issue the first-round questionnaire 
Issue the first-round questionnaire summary and second round of questionnaires 
Continue issuing questionnaires.
Nominal group technique: Long-run forecasting technique utilizing expert assessments.
Module 4: HR Budgets
The HR budget produces a staffing table, which is useful for Module by Module short
run forecasting. Quantitative, operational, or short-run demand estimates that contain
the number and types of jobs required by the organization as a whole and for each
subunit, division, or department
HR Budgets: staffing table - HR budget process produces a staffing table 
Information about a set of operational assumptions or levels of activity Total HR
demand requirement for operational or short-run time periods.
Module 5: Combining Quantitative and Qualitative Methods
Two basic methods can both be used in order to test the reliability of the forecast.
Differences between Quantitative and Qualitative Methods: TYPE OF DATA Quantitative
Qualitative Economic Outlook Labour-force growth Labour-force projections Industry
projections Occupational projections Economic Outlook Demographics Political and
regulatory environment Technological change Societal change TYPE OF RESULTS
Quantitative Qualitative Detailed, numeric estimates More specific information that can
easily be used to produce HR system development plans.
Simulation:  A blend of qualitative and quantitative modelling that incorporates a set of
assumptions about relationships among variables in a mathematical algorithm  Can
simultaneously model demand and supply, and is very useful for testing the impact of
assumptions on the outcome of the model  Can aid in the development of a better
understanding of what factors influence demand and supply, and what processes may
be causing bottlenecks in the flow of human capital.
Simulation steps:  Using qualitative methods, collect the relevant variables  Describe
how these variables interact together by developing a process model to map the
relationships between variables  Use simulation software and develop the algorithms
to estimate the model  Test the model using historical data to validate the assumptions
used in its development  Different assumptions can be easily tested in the model by
inputting new scenarios and re-running the simulation.
This chapter examined various quantitative, qualitative, and blended techniques that
organizations use to forecast future requirements for HR demand.
Unit 6: Ascertaining HR Supply
Module 1: Skills and Management Inventories
Inventories listing the educational levels, skills, positions held, performance appraisals,
interests and career motivations are useful for determining an organization’s HR supply.
Using predicted retirement dates and annual turnover rates, an HR planner can
determine future supply.
Learning objectives:
 Understand the relationship between demand and supply forecasting techniques in
the HR planning process  Recognize the importance of effectively managing the
supply of human capital  Comprehend the importance of segmenting human capital to
better understand where human capital plays a critical role in implementing strategy and
how to manage the supply of that human capital. After reading this chapter, you should
be able to:  Discuss and evaluate the advantages and disadvantages of the following
specific methods of determining external and internal supply:  Skills and management
inventories  Human capital segmentation  Markov models  Linear programming
and simulation  Movement analysis  Vacancy/renewal models.  Recognize when
an HR gap may be filled through substitution strategies such as automation, or when
the gap may be attributable mostly to the bullwhip effect.
Human Resources supply:  Internal supply: Existing employees who can be retrained,
promoted, transferred, or otherwise redeployed to fill anticipated future HR requirements
 External supply: Members of the workforce not currently employed by the firm, who
are currently undergoing training, working for competitors, members of unions or
professional associations, in a transitional stage, between jobs, or unemployed.
Module 2: Segmenting the Internal Supply of Human Capital
The question which we need to consider when looking at our supply. Employee
segmentation: The grouping of employees based on characteristics that are relevant to
the employee experience such as career preferences, demographics, work–life
preferences, or benefits.
Skills gap:  A situation in which the supply of a particular form of human capital
available to the firm is inadequate to address the demand.
Module 3: HR Supply Programs
In this module we will look at how supply is influenced by employers, labour pools,
Government, HR retention programs and the mass customization of HR.  Role of
employers  Other labour pools  Influence of government programs  HR retention
programs  Mass customization of HR:  The ability to customize HR practices at the
employee level efficiently and at low cost.
Module 4: Methods for Modelling the Supply of Human Capital
These models assess overall rates of movement between job levels based on historical
movement patterns and adaptations can be made to HR policies to change these rates.
 Skills inventory, includes:  Personal information  Education, training, skill
competencies  Work history  Performance ratings  Career information  Hobbies
and interests.
Management Inventory:  Management inventory includes:  A history of management
or professional jobs held  A record of management or professional training courses
and dates of completion  Key accountabilities for the current job  Assessment centre
and appraisal data  Professional and industry association memberships.
Markov models: A model that produces a series of matrices that detail the various
patterns of movement to and from the various jobs in the organization, including: 
Remaining in the current job  Promotion to a higher-classified job  A lateral transfer
to a job with a similar classification level  Exit from the job  Demotion.
Markov model assumptions:  Movement patterns are historical  Depends on stable
transition probabilities, so dynamic and unstable environmental scenarios may preclude
the effective usage of Markov models  Sequence of movements between jobs are
called Markov chains  Vacancies create a multiplier effect  Movement is tracked
annually.
Markov model utility:  The number of employees who move annually, and over
specified time periods, between various job levels  The number of external hires that
are required by the organization, and where the specific jobs are needed  The
movement patterns and expected duration in specified jobs associated with patterns of
career progression for employees in the organization  The number and percentage of
all starters at a particular job level who will successfully attain a future target job level by
a specified time period.
Markov model steps:  Determine the list of mutually exclusive states (promotion,
transfer, termination, demotion, or status quo)  Based on the pattern of transitions
between jobs, develop a matrix of jobs that are linked by career progression or historical
movement  Use historical data to determine the probability of moving from one state to
another  Populate the matrix with an initial distribution of job holders across the
various states of the model.
Linear programming and simulation: A mathematical procedure commonly used for
project analysis in engineering and business applications.
Movement analysis:  A technique used to analyze the chain or ripple effect that
promotions or job losses have on the movements of other employees in an
organization.  Chain or Ripple Effect is the effect caused when one promotion or
transfer in the organization causes several other personnel movements in the
organization, as a series of subordinates are promoted to fill the sequential openings.
Vacancy model: Also known as renewal or sequencing model:  Analyzes flows of
employees throughout the organization by examining inputs and outputs at each
hierarchical or compensation level.
Module 5: Substitution and Other Gap Strategies
In the event of a gap where demand exceeds supply firms must hire externally in the
short term but have a few more options when looking at the long term strategies.  In
the event of a gap, firms must hire externally in the short term  Long term strategies
include:  Outsourcing the extra requirement  Focusing on retention strategies to
reduce voluntary terminations  Increasing training and development efforts to further
develop the internal labour pool  Substituting human efforts with automation.
The Bullwhip effect: Occurs when errors in estimating the supply of human capital are
amplified along the supply chain, resulting in large overestimates of hiring needs.
 Range of methods used in organizations to determine future HR supply requirements
 As any forecasting method may lead to error, it is important for planners to
understand the potential sources of error in forecasting supply, and to monitor past
forecasts and forecasting methods in order to continuously improve forecasting
practices.
Unit 7: Succession Management
Module 1: Succession Management
Succession management is important in order to find the right leadership in place at the
right time, and to prepare a talent pool for the unpredictable future.
Learning objectives:  Understand why succession management is important  Trace
the evolution of succession management from its roots in replacement planning,
comparing the two models with respect to focus, time, and talent pools  List the steps
in the succession management process.  Compare and contrast the job-based and
competency-based approaches to aligning future needs with strategic objectives 
Discuss the four approaches to the identification of managerial talent  Describe
several ways to identify high-potential employees.  Evaluate the advantages and
disadvantages of the five management development methods  Recognize the
difficulties in measuring the success of a management succession plan  Outline the
employee’s role in the succession management process  Describe the limitation of
succession management, and propose some possible solutions to these limitations.
Succession management is the process of determining critical roles in the
organization, identifying and evaluating possible successors and developing them for
these roles.
The importance of Succession management:  Provide opportunities for high-potential
workers.  Identify replacement needs  Increase the talent pool of promotable
employees  Contribute to implementing the organization’s strategic business plans 
Help individuals realize their career plans  Tap the potential for intellectual capital. 
Encourage the advancement of diverse groups  Improve employees’ ability to respond
to changing environmental demands  Improve employee morale  Cope with the
effects of voluntary separation programs  Decide which workers can be terminated 
Cope with the effects of downsizing  Reduce headcount to essential workers only.
Module 2: The Evolution of Succession Management
Replacement planning is the process of finding replacement employees for key
managerial positions. Replacement planning has evolved into succession management
by: Broadening the focus Expanding the time horizon Creating a talent pool of
replacements  Improving the evaluation system.
Internal VS external candidates:  Internal:  More information  Increase morale 
Preserve culture  Less orientation  Costs are lower. External:  New blood 
Change management.
Module 3: The Succession Management Process
The five-step model of effective succession management includes these steps: (1) align
succession management plans with strategy; (2) identify the skills and competencies
needed to meet strategic objectives; (3) identify high-potential employees; (4) provide
developmental opportunities and experiences through promotions, job rotations, special
assignments, formal training and development, and mentoring and coaching; and (5)
monitor succession management. The employee’s role in the process must be
considered.  The process involves 5 steps:  Align Succession Management Plans
with Strategy  Identify the Skills and Competencies Needed to Meet Strategic
Objectives  Identify High-Potential Employees  Provide Developmental Opportunities
and Experiences  Monitor Succession Management.
Step 1 – align Succession Management plans with strategy: Organizations must start
with the business plan Using environmental scanning, managers try to predict where
the organization will be in three to five to ten years. Step 2 – Identity the skills and
competencies needed:  Job-Based Approach Competency-Based Approach.
Module 4: Job-based and Competency-Based Approaches
With organizations facing increasing complexity and uncertainty in their operating
environments, perhaps we should move away from the job-based approach.
 Job Based Approach – focus on duties, skills, job experience, and responsibilities
required to perform the job:  Not adequate since jobs change rapidly.  CompetencyBased Approach – focus on measurable attributes that differentiate successful
employees from those who are not  Hard and soft skills:  Produces more flexible
individuals.
Types of competencies: Core competencies Role or specific competencies Unique
or distinctive competencies.
Step 3 - Identify High-Potential Employees:
Organizations use several approaches to identify managerial talent. Organizations use
several approaches to identify managerial talent, including the following: Temporary
replacements Replacement charts Strategic replacement Talent management
culture.
Module 6: Techniques for Assessing Employee Potential
Techniques for assessing employee potential include performance appraisals,
assessment centres and human resources management software. Performance
appraisals Assessment centres HRMS.
Step 4 - Provide Developmental Opportunities and Experiences:
These methods include job rotations, promotions, special assignments, formal training,
mentoring and coaching. Peter Drucker states that: “Most managers are made, not
born. There has to be systematic work on the supply, the development, and the skills of
tomorrow’s management. It cannot be left to chance.”
Management development methods: Promotions: an employee’s upward
advancement in the hierarchy of an organization  Job Rotations: a process whereby
an employee’s upward advancement in the hierarchy of an organization is achieved by
lateral as well as vertical moves Special Assignments and action learning: High
degree of accountability Some risk Decision making authority Manage people.
Formal Training and Development:  In-house management courses University
courses Corporate universities. Mentoring and Coaching: executives who coach,
advise, and encourage junior employees.
Accelerated development: Assignments with visibility Stretch assignments More
training Specific developmental activities High level mentoring.
Step 5 - Monitor Succession Management:
Our fifth and last step of the succession management process is monitoring the
process.  Corporations with strong succession management programs are higher
performers in revenue growth, profitability and market share  HR metrics can be used
to help monitor succession management.
HR Metrics for succession management:  Increased engagement scores  Increase
positive perceptions of development opportunities  High potentials’ perceptions of the
succession management process  Higher participation in developmental activities 
Greater number involved in the mentoring process.
Succession Management measures:  Increased average number of candidates 
Reduced average number of positions having no identified successors  Increased
percentage of managers with replacement plans  Increased percentage of key
positions filled according to plans  Increased ratio of internal to external hires 
Increased retention rates of key talent  Increased percentage of positive job
evaluations  Increased number of bosses as talent developers.
Module 9: Employee Role in Succession Management
This module looks at the employee’s role in succession management.  Advantages 
Invites employee participation  Gain employee commitment to and ownership of the
plans.  Limitations  Elitism  Risk of the spotlight  Selection bias  Unpredictable
futures.
Managing talent: Vacancy risk Readiness risk Transition risk.
Unit 8: Information Technology for HR Planning
Module 1: IT and HRM
The big challenge that lies ahead is to add strategic functionality to core HR processes.
Much strategic functionality can be found in strategic HR planning applications. IT can
support workforce analytics, management and scheduling, skills inventories,
replacement planning, and succession management. Such applications may be made
available on an HRIS, specialty product, or ERP.
Learning objectives:  Describe the benefits of information technology (IT) solutions for
human resource planning (HRP)  Explain how different IT solutions can be leveraged
to improve HR planning  Identify specific IT applications for HR planning. 
Understand what is meant by Big data, and it implications for HRM  Differentiate
between HR metrics and HR analytics  Understand how to use HR metrics and HR
analytics to help solve business challenges.
According to industry analysts, “HR without technology is becoming an unthinkable
proposition.”  Information technology (IT):  The hardware and software, including
networking and communication technologies involved in storing, retrieving, and
transmitting information.
What can IT do for HRM?:  Better data storage, information retrieval, and tools for
analysis—capabilities that help alleviate the burden of transactional activities  HR
professionals have been able to handle a greater workload and achieve operational
efficiency  Allows more time and resources to be dedicated to the more strategic roles
of HR business partner and change agent.
Module 2: New Service Delivery Models, Web-Based HR
IT and HR professionals need to be aware of rapid developments in the use of IT to
facilitate HR solutions.
 Web-based HR allows service delivery that pushes employees and managers into
making transactions  Self-service is an important web-based service delivery model
such as online access to information  E-recruiting and e-learning are highly visible
applications  HR may consolidate its services into an internal HR service centre and
operate the centre with its own HR practitioners.
Enterprise portals: Knowledge communities that allow employees from a single or
multiple companies to access and benefit from specialized knowledge associated with
tasks Single site for employees to access HR services.
Self-service: A technology platform that enables employees and managers to access
and modify their data via a web browser from a desktop or centralized kiosk.
Module 3: Different Solutions for Different Needs - Human Resources Information
System (HRIS)
Explain how different IT solutions can be leveraged to improve HR planning.
A comprehensive across-the-board software system for HRM that includes
subsystems or modules Provides access to a large database through a variety of
modules that automate diverse functions.
Speciality products: Software solutions for specific specialized applications that may or
may not interface with the main database Address specific needs as they are focused
on a single area of HRM.
Enterprise solutions: Solutions that are based on software that integrates data from
diverse applications into a common database. Enterprise Resource Planning (ERP): 
Commercial software systems that automate and integrate many or most of a firm’s
business processes  Relational database:  Can share information across multiple
tables or files, which allows the same information to exist in multiple files
simultaneously.
Module 4: Big Data and Big Data Types
Understand what is meant by Big data, and it implications for HRM.
Big data: The integration of digitized data from multiple sources and in multiple
formats, including structured and unstructured data Commonly measured in petabytes
or larger measures One petabyte is the equivalent of 1000 terabytes.
Big data types:  Structured data:  Any form of data that can be organized into
columns and rows Unstructured data:  Include the various kinds of files you might
have on your computer  Examples: text documents, email or text messages, audio,
presentations, geotags, images, or videos.
The five pillars of big data: Volume Velocity Variety Veracity Value.
Artificial intelligence and machine learning: A software-based ability to demonstrate
learning and decision making Expected to become efficient at sifting through Big data
Data security is a growing concern.
Ethics and big data: Artificial intelligence lacks transparency around the decision rules
that it develops AI cannot explain the decisions that it arrives at.
Module 5: HR Metrics and Workforce Analytics
Differentiate and understand how to use HR metrics and HR analytics to help solve
business challenges.
Business Intelligence:  The applications and technologies for gathering, storing,
analyzing, and providing access to data to help users make better business decisions
HR Metrics:  Summary measures of HR outcomes that are relevant to the
performance of the HR function. Example metrics include the cost of recruitment, timeto-hire, and turnover rate. Some uses of workforce analytics include
• predicting the probable success of a candidate;
• identifying and quantifying the physical risks to employees;
• identifying workforce characteristics that contribute to fraud;
• measuring employee engagement and predicting turnover;
• identifying obsolete departments and or positions.
Despite the power of data to inform decisions, only about 10 to 15 percent of companies
use workforce analytics, although two-thirds indicated that they intended to do so in the
next two years. This "datafication" of HR is a major business trend.
Maximizing HR metrics: HR Dashboard:  An aggregation of useful or relevant HR
metrics or performance indicators that provide a summary snapshot of performance
Key Performance Indicator (KPI):  A snapshot measure of system performance that
demonstrates the success of strategy implementation in terms of cost, quality, or time.
Module 6: IT for HR Planning
IT supports a variety of HR planning functions.
 IT supports these HR planning functions:  Workforce management and scheduling
 Forensic reporting  Ensuring data security.
Module 7: Evaluating HR Technology
HR professionals will need to deploy their change management skills when
implementing new IT solutions. Communication and training are keys to successful HR
technology implementation. HR may also find some opportunities for realigning
processes and service delivery with IT. Finally, evaluating the IT solutions with various
methodologies may reveal opportunities for improvement.
 User satisfaction and system usage are important indicators of HRIS success 
Technology acceptance:  Extent to which users intend or actually use technology as a
regular part of their job.  Needs Analysis Questions:  Is HR spending too much time
on manual processing?  Are there too many data security risks involved with manual
processing?  Is the current HRIS obsolete?  Are we able to ensure an adequate
follow-up of health and safety incidents?  Are we being responsive to current business
priorities?  Will we be able to keep up with company growth?  Are we managing our
human capital as a strategic asset?  Are we maintaining too much redundant
information?  Which requests for information is the human resources department
unable to respond to?  Would it be more efficient to integrate our different legacy
systems into a single database?
 IT is becoming increasingly integrated across the HR function  The methods for
dealing with the increasing complexity are becoming more reliant on computers and
artificial intelligence  Big data and artificial intelligence aid in improved HR metrics and
HR analytics  HR will have to develop policies around issues such as privacy, security,
and ethics.
Unit 9: Change Management
Module 1: Organizations as Open Systems
Organizations are complex systems made up of multiple sub-systems that interact in
complex ways. Adding to this complexity is the fact that organizations are dependent on
their environment for many of their critical inputs.
Learning objectives:
 Understand the importance of organizational change  Discuss the role of change as
part of organizational planning  Discuss the steps of a generic change project 
Define and discuss the process of planned change.  Understand how emergent
change occurs  Understand the principles of a learning organization  Discuss how
the principles of a learning organization are important to both planned and emergent
change.
Increasing pace of change: More information available in real-time Crowd-funding
gives greater access to capital for start-ups Crowd sourcing provides flexible
expansion of human capital.
Organizations are complex systems made up of many sub-systems Organizations
have little control over their external environment Accurately predicting the path or
outcome of a change implementation in complex systems is impossible.
Importance of feedback and learning:  Negative feedback – information that tells the
system whether it is achieving its goal  Positive feedback – information that a system
uses to determine if its purpose is suited for its environment  Single-loop learning – the
learning that is associated with negative feedback and uses existing mental models 
Double-loop learning – learning that is associated with positive feedback and seeks to
explore new mental models.
Module 2: Models of Organizational Change
To help sort through the many existing models of change to understand what is at the
core of the change process, we will look at a generic model of change, followed by the
original model of planned organizational change, and a more recent approach to
change that embraces the emergent nature of change.
 To help sort through the many existing models of change, look at:  a generic model
of change,  a original model of planned organizational change, and  a more recent
approach to change that embraces the emergent nature of change.  A review of these
three models will help you to understand what aspects of a change process should be
planned and what aspects should be allowed to develop naturally, according to the
culture, capabilities, and needs of the firm or the change participants.
Module 3: Generic Model of Change
The generic model of change simply points out the signal posts along which any change
process occurs.
Adaptation of Hayes’ generic model of change: Recognize the need for change 
Diagnose what needs to change  Plan & prepare for change  Implement the change
 Sustaining the change.
Module 4: The Planned model of Change
Kurt Lewin, a social psychologist, developed the planned model of change in the 1940s.
This change model is actually part of a larger approach to understanding how people’s
behavior is influenced by their situational constraints. This approach is called Field
Theory, which provides structure around the attempt to understand all the situational
forces that act on individuals, and influence those forces in ways that can change
behaviors.
Planned change- force-field analysis: Driving Forces  Highly skilled, motivated
employees  Strong organizational culture of pride in good work  Managers are highly
respected by subordinates  Employees respect one another within functional
departments  Functional departments have frequent and productive meetings 
Organization has a clear vision. Current condition:  Team coherence is at an all-time
low  Desired condition:  Effectiveness and communication within 1 year. Restraining
Forces  No measures of team effectiveness  No measures of team coherence 
Team purpose is not always clearly stated  No formal structure for managing teams 
Individuals not given adequate time to devote to team responsibilities  Some functional
departments fell like they are more important  Organizational culture supports friendly
competition  Technology does not support interdepartmental collaboration.
Planned change - Group dynamics: Group norms and processes determine a
substantial amount of individual behaviour. Changing individual behaviours can only be
achieved by focusing on these group norms and processes.
Planned change - action research:  Action Research – An iterative process of learning
whereby change agents diagnose a problem, plan a solution, act on the solution, make
observations and evaluate outcomes, and ask new questions. Diagnose the problem 
Action planning  Taking action  Evaluating outcomes  Specifying learning.
Module 5: The Three Step Model of Change
The three step model lies at the heart of Lewin’s model of planned change. He asserts
that any change can be divided into three stages consisting of an unfreezing stage, a
moving stage, and a refreezing stage.
The Three Step Model of Change unfreezing:  Requires a shared understanding
among stakeholders of the urgent need to change in order to overcome the status quo.
 Requires that stakeholders experience survival anxiety.  Requires establishing
psychological safety. The Three Step Model of Change moving:  Where plans are put
into action.  Uses Action Planning to take steps toward change, evaluate, and plan
next steps. The Three Step Model of Change refreezing: In order to prevent employees
from returning to old ways, new norms and a new firm climate must be established
around the change.
Module 6: Emergent Change
Emergent change is based on the idea that the future cannot be known or even
controlled, and that attempts to do so are destined for failure. • Acknowledges that
uncertainty is unavoidable. • The future cannot be known or controlled, and attempts to
do so often end in failure. • The interactions of all the forces at play in a complex system
make it impossible to predict more than general aspects of the system’s performance. •
Using narrowly defined goals to guide change can lead to unintended or even negative
consequences.
Three simple rules to guide flocking behaviours • Separation: avoid crowding nearby
others • Alignment: move toward the average heading of nearby others • Cohesion:
move toward the average position of local others.  Emergent change can be guided by
vision, or purpose, stated in the form of a small set of guiding values.
Module 7: Organizational Learning
One of the similarities that you might notice between Lewin’s planned change model
and the model of emergent change is that change decisions and change
implementations are placed in the hands of those directly involved in the work. In other
words, both these models imply a bottom up approach to change as well as a top-down
approach.  Organizational Learning supports learning processes throughout the firm to
help all employees to become more reflective about their work. There are five
interdependent aspects of Organizational Learning: 1. Personal Mastery:  Personal
development  Commitment to learning  Understanding one’s own purpose 2. Mental
Models:  Our understanding of the way things work.  Provide the heuristics we use to
speed decision making in particular situations.  Influence the way we understand and
frame issues.  Understanding our own mental models can facilitate double-loop
learning. 3. Shared Vision:  When employees share a common understanding of the
overall purpose of the group or organization.  Shared vision brings together and
focuses employee efforts. 4. Team Learning:  Occurs when individual ideas are picked
up by the team, and amplified to become something that could not have been achieved
on one’s own.  Team learning allows the knowledge from individuals to be passed on
to the team where it can then be codified to become organizational knowledge.  Team
learning requires trust and open dialogue. 5. Systems thinking:  Systems thinking is
about examining issues within the context of the entire system rather than as isolated
issues.  Systems thinking helps to focus on the forces that must be influenced to bring
about change.
Strategic HR and change: The HR function plays a strategic role in the management
of change in two primary ways:  Communicating the values that are central to the
organization and the change effort.  Developing a learning culture.
Unit 10: Downsizing
Module 1: The Downsizing Phenomenon
HR planning plays an important role in the development and implementation of an
effective downsizing strategy. The “job for life ? approach has been radically changed in
the past decade, resulting in a number of new challenges for both employees and
employers. It does not appear that the downsizing phenomenon is over, and,
consequently, HR professionals must have a solid understanding of how to manage the
downsizing process.
Learning objectives:  Appreciate the importance of defining “downsizing” and
understand why organizations may decide to downsize  Be familiar with issues relating
to artificial intelligence and job loss  Recognize the need to address concerns of both
the victims and survivors of downsizing  Know the ethical issues and consequences of
downsizing.  Understand what downsizing strategies are effective in enhancing
organizational performance  Comprehend the concept of the “psychological contract”
 Develop an awareness of the importance of HRM in managing the downsizing
process.
 Popular in the 1990s and resurfaced aggressively with the global financial crisis in
2008  Firms can become too “lean,” and downsizing may cut into the muscle of the
organization  A number of the reductions have been characterized as “mean”—
destroying the lives of victims of cutbacks and leaving a demoralized and frightened
group of survivors of downsizing.
Downsizing – Background: Operational flexibility is increased by transferring the fixed
cost of full-time employees to a variable cost through parttime or contingent status. 
Downsizing - Strategy to improve an organization’s efficiency by reducing the workforce,
redesigning the work, or changing the systems of the organization.
The Downsizing Phenomenon Done to cut costs to help get through difficult business.
times.
Three types of downsizing strategies:  Cameron identifies three types of downsizing
strategies:  Workforce reduction  Work redesign  Systematic change.
Workforce reduction: A short-term strategy to cut the number of employees through
attrition, early retirement or voluntary severance packages, and layoffs or terminations.
Work redesign strategy: A medium-term strategy in which organizations focus on work
processes and assess whether specific functions, products, and/ or services should be
eliminated.
Systematic change: A long-term strategy that changes the organization’s culture and
attitudes, and employees’ values, with the goals of reducing costs and enhancing
quality.
The Downsizing Phenomenon  Organizations may not be accounting for the full cost
of downsizing when calculating the benefits, by ignoring employee attitudes and firm
culture.
Module 2: Why Organizations Downsize
Most downsizings fall into the categories of work-force reduction and work redesign.
 Declining profits  Business downturn or increased pressure from competitors 
Merging with another organization, resulting in duplication of efforts  Introduction of
new technology  The need to reduce operating costs  The desire to decrease levels
of management  Getting rid of employee “deadwood”.
Downsizing benefits: Leads to lower overhead, less bureaucracy, faster decisionmaking, smoother communications, greater entrepreneurship, and potentially greater
productivity. (All these benefits rarely occur).
Module 3: Alternatives to Downsizing
The generic model of change simply points out the signal posts along which any change
process occurs.
Flexible Work Practices:  Categories:  Alternate schedules (Flextime, Flexible
schedule, Compressed work-week)  Teleworking (working from a location other than
the central workplace). Flexible Work Practices (cont.):  Categories:  Reduced-hour
alternatives (part-time, job sharing, contract work, seasonal).
Flexible HR practices: Demand for flexible work is increasing due to demographic and
societal changes. Flexible work options increase employee productivity and retention;
reduce absenteeism; support diversity goals; and align with social responsibility efforts.
Artificial intelligence and job loss:  Technological progress should lead to increased
productivity and job losses and greater income equality  Occupations most at risk are
retail salesperson, administrative assistant, food counter attendant, cashier, and
transport truck driver  Occupations at least risk include management, teaching,
science, technology, engineering and math.
Other alternatives to downsizing: Cutting non-personnel costs Cutting personnel
costs Providing incentives for voluntary resignation or early retirement
Module 4: The Effects of Downsizing on Survivors and Victims
Downsizing affects three groups of people – those who lose their jobs as a result of the
initiative, also known as the victims of downsizing; those who remain with the
organization, or the survivors; and the managers doing the laying-off. In this module we
will focus on the impacts to the victims and survivors of downsizing.
 Victims of downsizing  Survivors of downsizing - experience role confusion, job
insecurity, work overload. Survivor attitudes suffer - lower job satisfaction, involvement,
commitment, intentions to remain, morale, higher risk aversion, & distrust of mgt (aka
‘survivor syndrome’).  The “Downsizers”
Mitigating effects of downsizing: Downsizers are a small group. Research suggests
that they are also negatively affected through:  Social and organizational isolation  A
decline in personal health and well-being  An increase in family-related problems.
Studies show that survivors demonstrate reduced performance and lower commitment
when they identified with lay-off victims and perceive that victims were poorly
compensated.
Survivor reactions:  Negative attitudes and behaviours  Reduced performance
capabilities  Lower organizational productivity  Perceived lower organizational
performance, lower job security, reduced attachment to the organization, and a higher
intention to quit their job  Survivors perceive that their employer’s organizational
performance is lower, manager fairness is lower, and commitment to the organization is
not as high.
Module 5: Downsizing and Fairness
Taking into account the survivors’ perceptions of fairness in dealing with both victims
and survivors is the best strategy to undertake in mitigating the negative effects of
downsizing.
Psychological contract:  An unwritten commitment between employers and their
employees that historically guaranteed job security and rewards for loyal service.
Perceptions of justice:  A study by Jerald Greenberg (1990) illustrates the importance
of management behavior in affecting employee perceptions of fairness.  Employee
reprisals are less likely when the organization offers a thorough and sensitive
explanation for their actions. From Research to Practice - Example  Maple Leaf
Foods – Listeria outbreak of 2008. CEO Michael McCain showed sincere remorse and
used frequent media communications to explain what happened and what the firm is
doing about it. Three types of justice warrant consideration: 1. Procedural justice 2.
Distributive justice 3. Interactional justice. Distributive justice  Based in Equity
Theory, in which individuals compare the ratio of their own inputs/outcomes to the ratio
of inputs/outcomes for others to determine if the ratios are the same.  Interactional
justice  The degree to which people are treated with dignity and respect.
Module 6: Downsizing and HR Practices
Many downsizings were carried out without considering the strategic objectives of the
organization, and many employers failed to assess how downsizing would affect its
victims, surviving employees, the organization, customers, or society. Suggestions for
more managing human resources in a time of cutback management are provided.
 Advance notification of layoffs  Severance pay and extended benefits  Education
and retraining programs  Outplacement assistance  Clear, direct, and empathetic
announcement of layoff decisions.
Inplacement and outplacement issues:  Inplacement - a career management approach
aimed at reabsorbing excess or inappropriately placed workers into a restructured
organization  Outplacement - providing a program of counselling and job-search
assistance for workers who have been terminated.
Summary implication: Downsizing should be part of a strategic re-formulation.
Employees should be involved in the planning stages of downsizing. Those who are
downsized should be treated well.
Unit 11: Strategic International HRM
Module 1: Key Challenges Affecting Strategic International Human Resource
Management
These challenges include workforce diversity, employment legislation, and the need for
HR to be flexible.
Learning objectives:
 Identify key challenges influencing human resources (HR) practices and processes
within an international context  Identify key characteristics of strategic international
HRM (SIHRM)  Understand the relationship between different approaches of SIHRM
and corporate business strategy options  Understand the impact of globalization and
internationalization on HR planning.
Key challenges:  Workforce diversity  Employment legislation  Security.
Workforce diversity: Human resource management systems must consider and
accommodate the needs of an increasingly diverse labour force and tailor international
HR policies and practices.  Diversity issues in Canada include:  Increased number of
older workers  Employees with disabilities  Gender identities  Ethnic and cultural
differences among employees. Employment legislation: HR managers face a complex
legislation framework When crossing national borders, Canadian HR managers
encounter additional, hostcountry employment legislation. Security:  HR support
structures include:  Risk assessment processes  Precautionary actions and
procedures  Contingency planning are critical aspects.
Module 2: Strategic International Human Resource Management
Strategic Human resource management can be defined as being concerned with
issues, functions, policies, and practices that result from the strategic activities of
multinational enterprises and that affect the international concerns and goals of those
enterprises.
Strategic international HRM includes:  Projecting global competence supply 
Forecasting global competence needs  Developing a blueprint to establish global
competence pools within companies. The domestic stage and strategy:  Domestic
strategy:  Internationalizing by exporting goods abroad as a means of seeking new
markets. The multidomestic stage and strategy:  Multidomestic strategy:  A strategy
that concentrates on the development of foreign markets by selling to foreign nationals
 Strategic international HRM system will apply an adaptive IHRM approach, adopting
HR practices that will be consistent with the local economic, political, and legal
environment. The multinational stage and strategy:  Multinational strategy: 
Standardizing the products and services around the world to gain efficiency  MNCs
adopt an exportive IHRM approach  Transferring home HRM systems to foreign
subsidiaries without modifying or adapting to the local environment. The global stage: 
Global strategy:  Introducing culturally sensitive products in chosen countries with the
least amount of cost  Fitting this global business strategy is an integrative IHRM
approach  Combines home HR practices with local practices and selecting the most
qualified people for the appropriate positions no matter where these candidates come
from.
Module 3: Key HR Practices and Processes within an International Context
International assignments: Involve placing home-country nationals in the host country
for a period of time; may be put into place for a variety of reasons.
 International assignments: Involve placing home-country nationals in the host country
for a period of time; may be put into place for a variety of reasons  The two categories
of international assignments include:  Strategic control  Transfer of knowledge and
skills.
Types of international assignments:  Frequent flyers  International commuters 
Short-term assignment  Expatriate assignment  Permanent transfer.
Module 4: International Human Capital Demand and Supply
HR Planners must forecast the demand for human capital and the supply of human
capital, calculate the gap, and put HR practices in place to ensure that the firm has an
adequate supply of human capital to operate.  Planners must forecast the demand for
human capital and the supply of human capital, calculate the gap, and put HR practices
in place to ensure that the firm has an adequate supply of human capital to operate 
Political, economic, social, legal, and regulatory issues that may be relevant to the
business must be taken into account.
Labour market data:  Governments produce these types of analyses to help foreign
and domestic businesses to understand where issues of demand and supply are
leading to gaps or surpluses, and to make policies to ensure a strong labour market 
Best to use several sources of information.
External Human Capital Demand and Supply:  The mix of home- and host-country
employees will be determined by the balance between the strategic needs of the firm,
the availability of host-country human capital, and the costs associated with providing
home-country employees when hostcountry human capital is not available.
The environment: Deciding where to locate a business in a foreign country is
determined by the availability of the necessary resources and the proximity to
customers.
Flexible labour strategy: Flexible labour strategies include the types of working
relationships that the firm can have with its employees, such as:  Telecommuting 
Flexible work hours  Job sharing  Part-time  Contract.
Module 5: International Recruitment and Selection
This module explores international recruitment. Once the organization selects a
corporate strategy, the question now is: who are best people to fulfill that strategy and
where are they going to come from, headquarters or the subsidiaries? Home-country
nationals (HCNs) Parent-country nationals (PCNs) Third-country nationals (TCNs)
Selection: Three dimensions of cross-cultural competencies include:  Selfmaintenance competencies  Relationship competencies  Perceptual competencies.
Module 6: Pre-Assignment Training
The well-being of these expatriates and their families in the local country depends
largely on how well they were prepared for the global assignment.  Assess and
evaluate the needs of training for expatriates  Clarify the purpose and goals of training
that are relevant and applicable to participants’ daily activities  Plan and design the
training programs to meet training goals  Implement the training plan  Use several
techniques to increase the effectiveness of training programs.
Module 7: Post-Assignment Activities
In this module, we will look at repatriation, reverse culture shock and career
development.  Repatriation:  The PCNs, TCNs, or even HCNs finish their overseas
assignment and come back to their home headquarters or home subsidiaries Reverse
culture shock  Feelings of anxiety, uncertainty, and disorientation upon reintegration
into one’s home country and culture.
Career development: Two primary issues related to career development for global
managers:  The international assignment is one step in the career development plan
 With subsequent assignments, it is important to make use of the KSAOs developed
internationally.
Module 8: Labour Relations
From a labor relations point of view, the knowledge and types of unions in the host
country and the rate of unionization in that country is critical to the information for
international HR managers.  Different types of unions in a country include:  Industrial
 Craft  Conglomerate  General  Host country labour relations may:  Constrain
MNCs’ abilities to influence wage levels  Hinder or prevent global integration of the
operations.
 Organizations seeking to expand their businesses globally should:  Recognize the
strategic decision issues inherent in managing the HR function in an international
context  Strive to make these decisions in ways that take into account the firm’s
strategic objectives and recognize the added complexity that the international context
brings  Arrange the continuous career development of global managers starting from
the point of expatriate selection, followed by ongoing training, and career arrangement
after repatriation  Overall, SIHRM practices and issues should be implemented in line
with the firm’s strategy.
Unit 12: Mergers and Acquisitions
Module 1: Review Strategic Types
This module review some strategic types.
Learning objectives:
Understand the various types of mergers and acquisitions Explain why organizations
merge and the methods used to achieve a merger.  Identify the financial and human
impacts of mergers  Describe the issues involved in blending cultures  Discuss how
a merger affects HR planning, selection, compensation, performance appraisal, training
and development, and labour relations.
Corporate Strategy - organizational-level decisions that focus on long-term survival 
Restructuring – includes turnaround, divestiture, liquidation, and bankruptcies  Growth
– includes incremental, international, and mergers and acquisitions  Stability –
maintains status quo.
Definitinos: Merger - the consolidation of two organizations into a single organization
Horizontal merger - the merging of two competitors Vertical merger - the merger of a
buyer and seller or supplier.  Conglomerate merger - the merger of two organizations
competing in different markets  Acquisition - the purchase of an entire company or a
controlling interest in a company  Consolidation - two or more organizations join and
form a new organization  Takeover - one company acquiring another company.
Module 2: The Urge to Merge
Mergers are undertaken to provide a strategic benefit or a financial benefit, or to fulfill
the psychological needs of the managers. The financial and other results of mergers are
not always as positive as expected, and the effect on staff can be devastating, whether
they stay with the merged company or not. Companies merge for 3 reasons: 1.
Strategic Benefits 2. Financial Benefits 3. Needs of the CEO or Managing Team.
Strategic benefits: Operating synergy - the cost reduction achieved by economies of
scale produced by a merger or acquisition Economies of scale Economies of scope.
Financial benefits:  Organizations need to reduce the variability and risk of their cash
flow  Organizations often use “cash cows” to fund “star” operations  All growth
strategies have different tax implications  Developing new products and entering new
markets is expensive  Financial statement analysis often reveals undervalue
organizations  Goal is to increase shareholders’ wealth.
Needs of the CEO or managing team: Managers may pursue their personal interests
at the expense of stockholders Often the motives of executives can be deemed
unconscious Some managers make decisions only to prove their capabilities Other
studies link personality factors such as the need for power to management decisions.
Merger methods:  Hostile takeovers – are dramatic and complex  Poison pills –
refers to the right of key players to purchase shares in the company at a discount
making the takeover extremely expensive  White knights – are buyers who will be
more acceptable to a targeted company  Pac-Man – is a defensive manoeuvre where
the targeted company makes a counteroffer for the bidding firm.
Module 3: The Success Rate of Mergers
This module discuss some points about the success and failure of mergers.  Only
about 15 percent of all mergers (and acquisitions) are successful  Best success rates
are with similar businesses rather than dissimilar ones  Mergers take so much time
and resources often the original business is neglected  Mergers are more successful
when a large firm absorbs a small firm  Mergers are less successful in service
industries (compared to manufacturing) due to greater risk.
Financial impact: Estimated financial returns are rarely realized Many mergers fail
because the buyer overextends itself financially with high debt loads and then must
apply cost cutting measures to service the debt Some forecasted economies of scale
are never achieved.
Impact of human resources: Reduced morale may lead to lower productivity,
sabotage, stress, anxiety, survival tactics, higher turnover and lower efficiency, all of
which have financial consequences to an organization.
Module 4: Cultural Issues in Mergers
The culture of the previously separate companies and the new merged company is the
area that experts say is the most important predictor of merger success. Very difficult
to blend cultures This can take years.
What is culture: Culture - the set of important beliefs that members of an organization
share.
Cultural issues in merger: Cultural Options for Mergers and Acquisitions:  Pluralism 
Integration  Assimilation  Transformation.
Pluralism: Pluralism The partners co-exist
Integration:  Integration – the two companies blend their cultures.
Assimilation: Assimilation – one company absorbs the other obliterating their culture
Transformation: Transformation – both companies abandon key elements of their
cultures and deliberately adopt new norms.
Module 5: HR Issues in Mergers and Acquisitions
The merger has an impact on each of the functional areas—HR planning, selection,
compensation, performance appraisal, training and development, and labour relations.
HR planning in Mergers and Acquisitions: Planning moves beyond the traditional
concepts of HR planning for several reasons: 1. The Contingency Plan 2. HR Due
Diligence 3. Transition Team.
The contingency plan:  Plan should identify the contact person and the merger
coordinator  Contact person should develop a plan  Plan should outline the chain of
command, communication methods, procedures, and negotiation skills training.
HR Due diligence – is a process through which a potential acquirer evaluates a target
firm for acquisition including the review of:  Collective agreements  Employment
contracts  Executive compensation contracts  Benefit plans and policies. 
Incentive, commission, and bonus plans  Pension plans and retirement policies 
WSIB statements, claims, assessments, experience rating data  Employment policies
 Complaints – employment equity, health and safety, wrongful dismissal, unfair labour
practices, certification and grievances.
Transition team:  Appoint a transition team to deal with:  Urgency  Information gaps
 Stress  HR policy review might uncover complementary, duplicated or contradictory
HR policies for the merger companies.
Impact of the merger on HR:  Merger affects the  following functions:  Selection 
Compensation  Performance Appraisal  Training and Development  Labour
Relations.
Selection:  The two most critical issues for HR are related to:  Retention, and 
Reduction  HR managers must terminate duplicate positions and redundant
employees once the merger or acquisition is completed  “How many employees does
the merged company need?”  Lean and mean cuts to the workforce results in greater
work overload and stress.
Post-merger changes in status:  Demotion – under the new organizational structure,
some employees are given less responsibility, less territory, or fewer lines due to
amalgamation  Competition for the same job – some companies force employees to
compete for their old jobs  Termination – some employees are let go strategically.
Compensation: An important compensation decision for post-merger company is
related to:  Merge compensation systems?  Adopt the best benefits of each or the
least expensive of each?  Create a new compensation system?  All employee
benefits will be subjected to the same scrutiny.
Performance appraisal:  Employee behaviour and performance is usually not typical
after a merger or acquisition  Employee behaviour post-merger can be modeled into
three categories: 1. Not knowing – remedied by more communication 2. Not able – the
solution is training 3. Not willing – a strong case for performance management through
feedback and incentives.
Training and development:  Managers and peers may need some additional training in
the role of coach and counsellor to deal with post-merger behaviours  Employees
need training for stress reduction and relaxation techniques.
Labour relations:  It is important to interpret the collective agreement for all relevant
clauses that may affect employees and/or managers and their rights to job security,
seniority, buy-outs, etc.  Collective agreements ultimately need to be renegotiated to
protect the rights of employees and/or managers that belong to unions  Early union
participation helps the merger process go more smoothly because unions make
valuable contributions.
Evaluation of success: Financial indices Customer service metrics Human capital
metrics Operational measures.
Unit 13: Outsourcing
Module 1: Outsourcing
Outsourcing refers to the contractual arrangement wherein one organization provides
services or products to another. There is a growing trend to outsource HR functions,
particularly payroll and benefits.
Learning objectives:  Define outsourcing  List the reasons why organizations
outsource functions and programs  Identify the advantages of outsourcing  Cite the
risks and limitations of outsourcing  Develop the criteria necessary for managing the
outsourcing relationship.
Outsourcing – a contractual relationship for the provision of business services by an
external provider.
Criteria for outsourcing: Rule based Repetitive Frequent Predictable
Technology enabled Can be delivered by remote sites.
Strategic HR:  Level 1: Ancillary - grounds maintenance  Level 2: Routine - benefits
administration  Level 3: Economies of scale - test admin.  Level 4: Specialized
knowledge - training  Level 5: Organizational knowledge - mgt.  Level 6: Confidential
- layoffs  Level 7: Mgt. Decisions - HR strategy.
Outsourced HR functions: HR functions most likely to be outsourced:  Temporary
staffing  Payroll  Training  Recruiting  Benefits administration.
Module 2: Reasons for Outsourcing
The advantages of outsourcing include the reduction of costs; the increased energy and
time to focus on an organization’s core competencies; access to technology and
specialized expertise, which both result in increased levels of service; and the political
advantages of removing a troublesome function or reducing headcount. Six Major
Reasons: 1. Financial savings 2. Strategic focus 3. Access to advanced technology 4.
Improved service levels 5. Access to specialized expertise 6. Organizational politics.
Module 3: Financial Savings
A major reason behind choosing to outsource a function is the financial savings
outsourcing can bring to the organization.  Cost reduction is typically 10 to 20 percent
 Economies of scale from specialized outsourcers who are more efficient  Cost
control  Decreased capital commitments.
Strategic focus: decide to focus on specific core competencies, like customer service or
innovation  Core work is transformational and adds value to employees or customers
 Move secondary functions (or non-core work), like benefits administration, to firms
that have that do these things well (they are core competencies for the outsourced firm)
What is core: Activities critical to business success Contributes to bottom line  Is a
competitive advantage Can influence future growth.
Another framework: Operational HR practices Administrative HR practices
Technical HR practices.
Core competencies: resources and capabilities that serve as a firm’s competitive
advantage  Core competencies distinguish a company competitively and reflect its
personality
Advanced Technology:  Technology has been a main driver of outsourcing 
Organizations want to improve technical service if they cannot find technical talent or
need quick and reliable access to technology  Technology enables a company to
reduce transaction time (the time it takes to handle a request)
Improved service:  Quality improvement  Outsource to those who are excellent
performers  More flexibility in hiring and rewarding employees  Improved response
time, performance and confidentiality.
Specialized expertise:  “Outsource when somebody can do it better than you.” 
Experts understand the complex laws and regulations required in HR  Use of experts
reduces the risks and liabilities for organizations  Access to “best practices”
Organizational politics:  Outsourced function is not as visible as an in-house
department performing the same tasks  Outsource to get rid of a troublesome
department (e.g., employees who are underperforming)  Outsourcing reduces
headcount  HR outsourced ratio 1:231  Traditional HR ratio 1:100.
Module 4: Outsourcing - Risks and Limitations
In this module, we will discuss some concerns about outsourcing. Some questions to
consider:  Are the anticipated benefits realized?  What are the risks to service
levels?  What is the effect on employee morale?  Does outsourcing reduce the value
of the organization?
Projected benefits Vs actual benefits:  Outsourcing is not as cost effective and
problem-free as expected  50 percent found that it was more expensive to outsource
 Incompatible systems and client demands are the reason for excessive costs 
Organizations often duplicate some of the outsourced work for anomalous employees 
About 30 percent of outsourcing contracts are not renewed.
Service risk:  Contractual arrangements dictate which services will be provided 
Flexibility is compromised to add new features or change service levels  Disruption of
service could pose challenges from potential labour relations problems with outsourced
organization.
Employee moral:  Outsourcing is a form of restructuring that can create displaced,
resentful, alienated, and anxious employees  Organizations that outsource face a
backlash  About one-third of HR professionals resist outsourcing because they worry
about:  Losing their jobs  Being forced to work for a vendor  Fear that management
believes outsiders are more competent.
Reduced value: Extreme levels of outsourcing hollow out a company An
organization experiences a reduced capacity to generate profits or innovate The
internal image of HR may deteriorate Only about 10-15 % would bring the outsourced
service back in house.
Module 5: Management of Outsourcing
Managing the contractual arrangement with the service provider is the key to optimizing
the benefits and minimizing the risks. How will outsourcing be managed? Selecting
the vendor Negotiating the contract Monitoring the arrangement.
Selecting the vendor: Once outsourcing has been selected, the organization needs to
do the following:  Inform the staff of the affected function  Prepare a request for
proposal (RFP)  Invite internal and external bids  Establish a team to evaluate these
bids. Request For Proposal (RFP): describes the responsibilities to be outsourced and
invites potential providers to present their proposal for carrying out the job.
Negotiating the contract: Customize and negotiate the outsourcing contract Set
performance standards or penalty clauses for the outsourcing company Establish
benchmarks for service expectations  Response time  Response cost  Customer
satisfaction ratings.
Monitoring the arrangement:  Most frequent causes of outsourcing problems are: 
Poor service definition  Weak management processes  Establish a relationship to
ensure the outsourcer acts in the best interests of the organization, and has relevant
knowledge of the organization  Check outsourcing company’s references  Demand
frequent and accurate reporting  Conduct internal and external client satisfaction
surveys.
Government role in outsourcing: The dilemma – Canadians want both cheaper goods
and services and job protections  Invest in long term solutions.
Unit 14: HR Assessment and Analytics
Module 1: Keeping Scorea
This Module attempts to close the loop in the strategic HR planning process by
examining evaluation. When managers implement a plan, they need to know if the plan
was successful. In addition, it is important to measure the impact of HRM so as to prove
the value of HR and to improve its performance.
Learning objectives:
 Understand the importance of measuring the effectiveness of HRM activities 
Outline five aspects of HRM that can be evaluated using the 5C model for measuring
effectiveness.  Discuss methods of measurement, such as costbenefit analysis, utility
analysis, and auditing techniques  Identify the challenges in measuring HR activities.
Keeping score: Corporate Scorekeeping - allows organizations to make the
adjustments necessary to reach their goals Scorecard - has measures of key
indicators that focuses managers’ and employees’ attention on what is important to the
organization.
Workforce analytics: HR analytics or workforce analytics - is an evidence-based
approach for making better decisions about employees and HR policies, using a variety
of tools to report HR metrics and to predict outcomes of HR programs.
Barriers to measurement: Cost Non significant results Other departments don’t
have to prove value No measurement skills HR not solely responsible for employees
Risk.
Barriers: The numbers game Unique to North America? Do-able versus valuable
Cause-effect.
Slow growth in HR Measurement is fueled by:  Business improvement efforts 
Positioning HR as a strategic partner  The need for objective indicators of success.
Sarbanes-Oxley a case for HR Measurement:  U.S. legislation that affects Canadian
companies operating in the U.S.  Disclosure requirements include:  Executive
compensation  Pension plans  Whistleblower protection.
Reasons measuring HRM effectiveness: 1. Labour costs are most often a firm’s largest
controllable cost. 2. Managers recognize that employees make the difference between
success and failure and therefore good performance can be rewarded objectively. 3.
Organizations have legal responsibilities to ensure compliance with laws governing the
employeremployee relationship. 4. Evaluations are needed to determine which HR
practices are effective (and not fads). 5. Measuring and benchmarking HR activities will
result in continuous improvements. Performance gaps can be identified and eliminated.
6. Audits will bring HR closer to the line functions of the organization. 7. Data will be
available to support resource allocations. 8. Investors want this information. 9. HR
managers are more likely to be welcomed at the boardroom table and to influence
strategy if they use measures to demonstrate the contribution of their function.
Module 2: The 5C Model of HRM Impact
The 5C model for measuring HR effectiveness has five areas: compliance with laws and
regulations, client satisfaction, culture management, cost control, and contribution.
Compliance: Ensure that organizational practices comply with the law in areas such
as:  health & safety,  employment equity,  industrial relations,  employeremployee relationships.
Client satisfaction:  Organizations are tracking their success by measuring customer
satisfaction  Managers are turning to client or stakeholder perceptions about the
effectiveness of HR performance  Stakeholders (including external and internal
clients) are those people who can influence and interact with the HR department.
“Keeping the clients happy” has important political reverberations for the HRM
department because clients like the CEO control the purse strings.
Advantages of Measuring client satisfaction:  Measuring client satisfaction reminds the
HR department that it provides a service to the clients and must meet their expectations
 Surveying clients about their unmet needs increases the credibility of the HR function
 When change takes place, it is important to survey the stakeholders before, during
and after a change program.
Methods of Measuring client satisfaction:  Information can be gathered from clients in
several ways:  Informal Feedback  Surveys  Critical Incident Method.
Problems with Measuring client satisfaction: Challenges High expectations of clients
Conflicting expectations Professional affiliations.
Culture management: Culture - a set of important beliefs that members of a
community share Attitudes - perceptions or opinions about organizational
characteristics.
Commitment: Normative Continuous Affective.
Cost control: Three ways to reduce labour expenses by reducing the size of the labour
force:  Technology  Outsourcing  Downsizing
Increasing Efficiency:  Efficiency - results achieved compared to resource inputs 
Measures of efficiency include:  Time – e.g., time to process a claim  Volume – e.g.,
number of people interviewed  Cost – e.g., cost per training hour.
Cost of employee behaviour: All of these HR costs can be measured, benchmarked,
managed:  Absenteeism  Turnover – includes termination, replacement, lost
revenues, learning curve and productivity losses  Occupational injuries  Illnesses
How organization measure the return of investment:  Identify and evaluate HR’s
contribution  Beyond its use of financial resources, HR must contribute to the bottom
line  HR practices can affect organizational performance via:  Increased knowledge,
skills and abilities  Improved motivation  Reduced shirking  Increased retention of
competent employees.
Module 3: Financial Measures
Methods to measure the impact of HRM include cost–benefit analysis, utility analysis,
and audits. Benchmarking is a valuable tool that provides comparative data on key
ideas and stimulates discussion about better ways to operate. Survival is the first
measure of effectiveness  If an organization does not go bankrupt, it is a success
This is called a life-or-death index New organizations survived better with effective
HR practices. ROI - return on investment ROE - return on equity Ratios measure
the relative success of an organization in meeting its goals They do not capture
managerial perceptions of effectiveness.
Measures of managerial perceptions of effectiveness: Non-financial measures need to
be used:  Management’s assessment of the organization’s performance relative to its
competitors  Goal optimization – an organization is effective if its employees behave in
a manner that is conducive to the achievement of organizational goals and the longterm adaptability of the organization to its environment.
Approaches of measuring HR practices: Typical ways of measuring HR activities
include the following:  Activity-based measures: training, hiring  Costing measures:
training program, hiring  Client satisfaction: solving problems effectively and efficiently
Measures: Activity measure Performance measure Added value measure.
Cost-benefit analysis: the relationship between the costs of a program and its benefits 
Direct costs: the hard costs that can be measured by expenditures  Indirect costs: the
soft costs whose value can be estimated but not measured easily by financial
expenditures.
Utility Analysis: a method of determining the gain or loss that results from different
approaches A tool that calculates the costs and probable outcomes of decisions  It
assists HR managers in making choices between programs.
Auditing and Benchmarking: Audit: a measurement method that assesses progress
against a plan Benchmarking: a tool that can enhance organizational performance by
establishing standards against which processes, products, and performance can be
compared and improved.
Four Sources of Benchmarking partners:  Internal Competitive Sector Best in
breed
Problems with Benchmarking:  Causal link  Doables versus deliverables  No links
to strategy  Anecdotes, not evidence  What is cause?  Value of copying?
The HR Scorecard:  Balanced Scorecard – a balanced set of measures to show
contribution to organizational performance  Assumes that financial measures alone do
not capture organizational performance  Assumes that successful business satisfies
the needs of investors, customers and employees. There are four main areas to be
considered in the Balanced Scorecard:  Customer perspective  Internal business
perspective  Innovation and learning perspective  Financial perspective.
Measuring the worth of employees:  Great slogans like “Our product is steel; our
strength is people” indicate importance of employees’ human capital for organizational
success  Human capital typically includes employees’ knowledge, skills, capabilities
and attitudes  Some attempts have been made to measure human capital using
historical costs, replacement costs and present value of future earnings models
Module 4: Challenges in Measuring the Impact of HRM
There are challenges in measuring HR effectiveness, however; overall organization
goals may not be applicable to all branches or subsidiary companies; it is difficult to
relate cause and effect; and some HR professionals do not see the benefit in such
measuring. Universality of Best Practices – no single best practice works in every
situation Separation of Cause and Effect – it is difficult to determine what causes
organizational success.
Successful Measurement: all measures should be assessed against the following: 
Alignment  Actionable  Trackability  Comparability  Drill deep  Report and
communicate a limited number of measures.
Reporting to shareholders: Turnover of key talent Employee engagement scores
Succession management data.