MANA 3320- Spring 2010
Prewitt
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Strategic Planning
◦ Procedures for making decisions about the
organization’s long-term goals and strategies

Human Resources Planning (HRP)
◦ Process of anticipating and making provision for
the movement (flow) of people into, within, and out
of an organization.
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Strategic Human Resources Management
(SHRM)
◦ The pattern of human resources deployments and
activities that enable an organization to achieve its
strategic goals
 Strategy formulation—providing input as to what is
possible given the types and numbers of people
available.
 Strategy implementation—making primary resource
allocation decisions about structure, processes, and
human resources.
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
Environmental Scanning
◦ The systematic monitoring of the major external forces
influencing the organization.
1. Economic factors: general, regional, and global
conditions
2. Industry and competitive trends: new processes, services,
and innovations
3. Technological changes: robotics and office automation
4. Government and legislative issues: laws and
administrative rulings
5. Social concerns: child care and educational priorities
6. Demographic and labor market trends: age, composition,
literacy, and immigration
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FIGURE
2.2
Five Forces Framework
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Culture
Capabilities
Internal Analysis
Composition
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Cultural Audits
◦ Audits of the culture and quality of work life in an
organization.
 How do employees spend their time?
 How do they interact with each other?
 Are employees empowered?
 What is the predominant leadership style of
managers?
 How do employees advance within the organization?
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Core Capabilities
◦ Integrated knowledge sets within an organization
that distinguish it from its competitors and deliver
value to customers.

Sustained competitive advantage through
people is achieved if these human resources:
1. Are
2. Are
3. Are
4. Are
valuable.
rare and unavailable to competitors.
difficult to imitate.
organized for teamwork and cooperation.
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Strategic Knowledge Workers
◦ Employees who have unique skills that are directly
linked to the company’s strategy.
 Example: R&D scientists

Core Employees
◦ Employees with skills to perform a predefined job
that are quite valuable to a company, but not
particularly unique or difficult to replace.
 Example: salespeople
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Supporting Labor
◦ Employees whose skills are of less strategic value
and generally available in the labor market.
 Example: clerical workers

Alliance Partners
◦ Individuals and groups with unique skills, but
those skills are not directly related to a company’s
core strategy.
 Example: consultants
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FIGURE
2.3
Mapping Human Capital
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Forecasting involves:
a. forecasting the demand for labor
b. forecasting the supply of labor
c. balancing supply and demand considerations.
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FIGURE
2.4
Model of HR Forecasting
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Quantitative Methods
Forecasting Demand
Qualitative Methods
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Forecasting labor demand based on an
organizational index such as sales:
1.Select a business factor that best predicts human
resources needs.
2.Plot the business factor in relation to the number of
employees to determine the labor productivity ratio.
3.Compute the productivity ratio for the past five years.
4.Calculate human resources demand by multiplying the
business factor by the productivity ratio.
5.Project human resources demand out to the target
year(s).
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FIGURE
2.5
Example of Trend Analysis of HR Demand
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
Management Forecasts
◦ The opinions (judgments) of supervisors,
department managers, experts, or others
knowledgeable about the organization’s future
employment needs.

Delphi Technique
◦ An attempt to decrease the subjectivity of forecasts
by soliciting and summarizing the judgments of a
preselected group of individuals.
◦ The final forecast represents a composite group
judgment.
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HR Planning and Strategy Questions to Ask
Business Managers
Workforce planning requires that HR leaders periodically interview their managers to
gauge future workforce needs. Here are some sample questions to ask.
• What are your mission, vision, and values?
• What are your current pressing business issues?
• What are our organizational strengths?
• Who are our competitors’ organizational strengths? How do we compare?
• What core capabilities do we need to win in our markets?•
• What are the required knowledge, skills, and abilities we need to execute the winning strategy?
• What are the barriers to optimally achieving the strategy?
• What types of skills and positions will be required or no longer required?
• Which skills should we have internally versus contract with outside providers?
• What actions need to be taken to align our resources with strategy priorities?
• What recognition and rewards are needed to attract, motivate, and retain the employees we need?
• How will we know if we are effectively executing our workforce plan and staying on track?
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Staffing Tables
Markov Analysis
Skill Inventories
Replacement Charts
Succession Planning
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Staffing Tables
◦ Graphic representations of all organizational jobs,
along with the numbers of employees currently
occupying those jobs and future (monthly or yearly)
employment requirements.

Markov Analysis
◦ A method for tracking the pattern of employee
movements through various jobs.
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FIGURE
2.6
Hypothetical Markov Analysis for a Retail Company
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Skill Inventories
◦ Files of personnel education, experience, interests,
skills, etc., that allow managers to quickly match
job openings with employee backgrounds.

Replacement Charts
◦ Listings of current jobholders and persons who are
potential replacements if an opening occurs.

Succession Planning
◦ The process of identifying, developing, and tracking
key individuals for executive positions.
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FIGURE
2.7
An Executive Replacement Chart
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Succession-Planning Checklist
RATE THE SUCCESS OF YOUR
SUCCESSION PLANNING
For each characteristic of a
best-practice successionplanning and management
program appearing in the left
column below, enter a number
to the right to indicate how well
you believe your organization
manages that characteristic.
Ask other decision makers in
your organization to complete
this form individually, compile
the scores, and compare notes.
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FIGURE
2.8
Assessing a Firm’s Human Capital
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Strategy Formulation
◦ Moving from simple analysis to devising a coherent
course of action.
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SWOT analysis
◦ A comparison of strengths, weaknesses,
opportunities, and threats for strategy formulation
purposes.
◦ Use the strengths of the organization to capitalize
on opportunities, counteract threats, and alleviate
internal weaknesses.
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FIGURE
2.9
An Example of a SWOT Analysis
Valero Energy Corporation (Valero) is one of the largest refiners in North America.
Its core activities include refining and marketing of petroleum products. With a
combined throughput capacity of approximately 3.3 million bpd, Valero is the 15th
largest company on the Fortune 500 list. Valero’s large refining capacity gives it a
significant competitive advantage. However, rising material and labor costs could
affect the company’s margins.
Strengths
Weaknesses
Large refining system
Leader in conversion capacity and
feedstock flexibility
Strong revenue growth and capital
expenditure
Weak performance in Canada
Litigations
High dependence on the United States
Opportunities
Threats
Growing diesel demand
Strategic refocus
Rising petrochemical capacity in
the Middle East
Material and labor cost
Stringent regulations
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Growth and
Diversification
Mergers and
Acquisitions
Corporate
Strategy
Strategic Alliances
and Joint Ventures
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Value Creation
◦ What the firm adds to a product or service by virtue
of making it; the amount of benefits provided by
the product or service once the costs of making it
are subtracted (value = benefits — costs).
◦ Low-cost strategy: competing on productivity and
efficiency
 Keeping costs low to offer an attractive price to
customers (relative to competitors).
◦ Differentiation strategy: compete on added value
 Involves providing something unique and distinctive to
customers that they value.
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3
Key HR Activities Associated with Merger or Acquisition Phases
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3
Key HR Activities Associated with Merger or Acquisition Phases
(cont’d)
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Functional Strategy: Ensuring Alignment
◦ External Fit/Alignment
 Focuses on the connection between the business
objectives and the major initiatives in HR.
◦ Internal Fit/Alignment
 Aligning HR practices with one another to establish a
configuration that is mutually reinforcing.
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
Taking Action: Reconciling Supply and
Demand
◦ Balancing demand and supply considerations
 Forecasting business activities (trends)
 Locating applicants
◦ Organizational downsizing, outsourcing, offshoring
 Reducing “headcount”
◦ Making layoff decisions
 Seniority or performance?
 Labor agreements
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FIGURE
2.10
The 7-S Model
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Evaluation and Assessment Issues
◦ Benchmarking: The process of comparing the
organization’s processes and practices with those
of other companies
◦ Human capital metrics
 Assess aspects of the workforce
◦ HR metrics
 Assess the performance of the HR function itself
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4
Ten Measures of Human Capital
1.
Your most important issues
2.
Human capital value added
3.
Human capital ROI
4.
Separation cost
5.
Voluntary separation rate
6.
Total labor-cost/revenue percentage
7.
Total compensation/revenue percentage
8.
Training investment factor
9.
Time to start
10. Revenue factor
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
Strategy Mapping and the Balanced Scorecard
◦ Balanced Scorecard (BSC)
 A measurement framework that helps managers
translate strategic goals into operational objectives
 financial
 customer
 processes
 learning
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FIGURE
2.11
Building the Metrics Model
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FIGURE
2.12
Assessing Internal Fit
5 = Strongly supports the priority, 0= Neutral, –5 = Strongly counterproductive
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
Organizational Capability
◦ Capacity of the organization to act and change in
pursuit of sustainable competitive advantage.
◦ Coordination flexibility
 The ability to rapidly reallocate resources to new or
changing needs.
◦ Resource flexibility
 Having human resources who can do many different
things in different ways.
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Balanced Scorecard (BSC)
replacement charts
benchmarking
skill inventories
core capabilities
staffing tables
core values
strategic human
resources management
(SHRM)
cultural audits
environmental scanning
human capital readiness
human resources planning
(HRP)
strategic planning
strategic vision
succession planning
management forecasts
SWOT analysis
Markov analysis
trend analysis
mission
value creation
organizational capability
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
Computing Turnover Rates:
◦ The U.S. Department of Labor suggests the
following formula for computing turnover rates:
◦ Thus, if there were 25 separations during a month
and the total number of employees at mid month
was 500, the turnover rate would be:
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
Computing Turnover Rates (cont’d):
◦ Another method of computing the turnover rate is one
that reflects only the avoidable separations (S). This rate
is computed by subtracting unavoidable separations (US)
from all separations. The formula for this method is as
follows:
◦ where M represents the total number of employees at mid
month. For example, if there were 25 separations during
a month, 5 of which were US, and the total number of
employees at mid month (M) was 500, the turnover rate
would be:
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Computing Absenteeism Rates
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5
Costs Associated with the Turnover of One Computer Programmer
(Turnover costs = Separation costs + Replacement costs + Training costs)
Separation costs
1. Exit interview cost for salary and benefits of both interviewer and departing employee during the exit
interview = $30+$30 = $60
2. Administrative and record-keeping action = $30
Total separation costs = $60 + $30 = $90
Replacement costs
1.
2.
3.
4.
5.
Advertising for job opening = $2,500
Preemployment administrative functions and record-keeping action = $100
Selection interview = $250
Employment tests = $40
Meetings to discuss candidates (salary and benefits of managers while participating in meetings)= $250
Total replacement costs = $2,500 + $100 + $250 + $40 + $250 = $3,140
Training costs
1. Booklets, manuals, and reports = $50
2. Education = $240/day for new employee’s salary and benefits x 10 days of workshops, seminars, or
courses = $2,400
3. One-to-one coaching = ($240/day/new employee + $240/day/staff coach or job expert) x 20 days of one-toone coaching = $9,600
4. Salary and benefits of new employee until he or she gets “up to par” = $240/day for salary and benefits x
20 days = $4,800
Training costs = $50 + $2,400 + $9,600 + $4,800 = $16,850
Total turnover costs= $90 + $3,140 + $16,850 = $20,080
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