lepak / gowan mgt 430 – spring 2016 class 2 - chapter 2 organizational demands and environmental...
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LEPAK / GOWAN
MGT 430 – Spring 2016Class 2 - Chapter 2
Organizational Demands and Environmental Influences
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LEPAK / GOWAN
Syllabus Discussion Topics
1. Form teams2. Elect officers for 1st term (Jan 20 – Mar 15)3. Essays4. Presentations
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LEPAK / GOWAN
BASIC BUSINESS 101
INCREASE REVENUE
LOWER COSTS HR
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LEPAK / GOWAN
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LEPAK / GOWAN
A set of integrated and coordinated commitments and actions intended to achieve stated business goals.
Strategy answers the questions:• What is our business?• Who is the customer?• What is the value to the customer?• What should (or can) our business be?
Business Strategy
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LEPAK / GOWAN
Company Characteristics
• SizeLarge – medium- small; one division – multiple divisions
• Resources availablePlenty vs. limited; domestic vs. global
• Company life cycle stageIntroduction – Growth – Maturity - Decline
• Company success
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LEPAK / GOWAN
Organizational Culture
The mental programing of a group of people. It is comprised of the values, customs, and belief systems of that particular group
Impacted by: Industry (banking vs. construction)Geography (Miami vs. San Francisco vs. Cairo)Age (Millenials vs. Ba=by-Boomers)Diversity (Race vs. ethnic vs. age vs. income)History (Home-grown vs. start-up)
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LEPAK / GOWAN
Company Culture
• The unique pattern of shared assumptions, values, and norms that shape the socialization activities, language, symbols, and ceremonies of people in the organization, e.g.
• banking vs. construction
• teaching vs. retail sales
• accounting vs. R&D
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LEPAK / GOWAN
Employee ConcernsSome issues:• Single parents; caring for aging parents• Dual career; balancing demands of work and personal lives• Attractiveness of flexible scheduling, family-friendly benefits
and telecommuting
Some Topics of Interest• Work/Life Balance• Justice/Fairness• Engagement/Commitment
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LEPAK / GOWAN
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LEPAK / GOWAN
Labor Force Trends
• Diversity in race, gender and age• Number of women expected to grow 9% from 2006 to 2016• Fastest-growing groups: Hispanics and Asians• Aging of the workforce - Size of group 55 and older
increasing dramatically• Occupational trends
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LEPAK / GOWAN
Technology
• Factories and mass production• HRIS & QR• Reducing labor costs vs. acceding to consumer demand for
electronic transactions, e.g. ATM, QR apps, self-checkout• Challenges privacy issues and potential misuse by employees• Reach – Broadens access to labor market– Enables virtual workforce
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LEPAK / GOWAN
Globalization
• Blurs country boundaries • Enables international joint ventures and
partnerships• Challenges companies with differences in
values and beliefs• Encourages offshoring—sending work to
other countries for lower costs
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LEPAK / GOWAN
Ethics and Social Responsibility
• Companies and their management being held accountable for ethical behavior
• Corporate policies and procedures spell out ethical behavior
• Social responsibility takes ethics to a new level
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LEPAK / GOWAN
HRM MARKET FOCUS STRATEGY CONSIDERATIONS
Low cost Zales vs. TiffanyMotel 6 vs. Ritz-Carlton
Differentiation Sears vs. Brooks BrothersRolls-Royce vs. Hyundai
Niche Antique car parts vs.AutoZone/Pepboys
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Changes in the Labor Force
Aging Workforce
Diverse Workforce
Skill Deficiencies
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AGE DISTRIBUTION OF U.S LABOR FORCE, 2010 AND 2020
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HRM Implications of an Aging Workforce
• HR professionals spend much time on concerns related to retirement planning, retraining older workers, and motivating workers whose careers have reached a plateau.
• Organizations struggle to control rising costs of health care and other benefits.
• Managers will supervise employees much older than themselves.
• Organizations must find ways to attract, retain, and prepare youth labor force.
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Skill Deficiencies of the Workforce
• Employers are looking for skills:
mathematical verbal interpersonal Computer STEM
Science Technology Engineering Math
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LEPAK / GOWAN
Skill Deficiencies in HRM• Silo mentality
• Knowing how the company makes money
• Basic, but strong, understanding of business finance
• Enhanced business acumen
• Linking HR work to the critical decision making factors demanded by TMT
• Making a business case for HRM initiatives.
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LEPAK / GOWAN
HR As A Strategic PartnerEarning a Seat at the Decision Making Table
• Credibility• Business & financial intelligence• Competitive intelligence• Forecasting future needs • Talent management• Transactional perfection and efficiency• Helping other functions succeed
• Linking HRM to performance drivers of TMT
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LEPAK / GOWAN
Strategic Alignment of HRM Performance Metrics
HR Metrics Corporate Metrics
Talent management Value-added outcomes
Turnover/retention Shareholder value Benefits Profitability / solvencyLabor Cost controlsCompensation Market shareCompliance – EEO / AAP Mission, vision,
valuesTraining & development Performance ratios
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LEPAK / GOWAN
HR as a Strategic Partner Core Transactional & Strategic H.R. Deliverables
DIRECT/INDIRECT LINE OF SIGHT
• Increase revenue / decrease costs• Advance the objectives of the organization• Improve profitability & productivity• Generate competitive advantages• Keep the company in business
• Other???
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LEPAK / GOWAN
Customers Owners Environment Community Gov’t
TMT
HR PROD FIN M&S LOG R&D
Line of sight
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LEPAK / GOWAN
HR Challenge Question
Production department problem - Average monthly defect rate
Actual Acceptable Goal5/100 = 5% 3/100 = 3% 1/100 = 1%
1. Who owns this problem?Production? HR? Purchasing? Other?
2. How does HR impact these numbers?
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LEPAK / GOWAN
Potential HR Responses
• Production owns the problem
• HRM provides problem solving assistance, e.g.
Adequate staffing TrainingEmployee motivation CompensationGoal setting Job analysisOther
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LEPAK / GOWAN
Possible HRM Responses
HRM partners with TMT to address these issues along with partners from other disciplines
Staffing SchedulingLeadership Job descriptionsJob analysis TechnologyPerformance mgmt. Customer response
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LEPAK / GOWAN
Linking HR Activities To Corporate Financial Performance(Direct & Indirect)
• Health/pension liab. $$$ H.R.I.S• Employee/labor costs $$$ Layoffs• Outsourcing, TPA $$$ Legal defense • Training costs $$$ Compliance• FMLA $$$ Mandatory ins.• Other ??? $$$ Part time/Temp.
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LEPAK / GOWAN
HR’s Impact on Income Statements
Income Statement• Revenue minus Expenses = Net income / net loss• $10 - $7 = $3• Profit margin (3/10)= 30%
Cost of Goods SoldHeadcountWages paid to employees (e.g. labor contracts)
Expenses e.g.Selling, general & administrative expensesFringe benefits – e.g. vacation, holidays, sick leave
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LEPAK / GOWAN
HR Calculations
1. Revenue generated per employee Revenue / # FTE Employees$82,364,000/249 = $330,779
HR Linkage (cut 25 jobs) = $82,364,000 / (249-25 or 224) = $367,696= $367,696 - $330,779 = $36,917 (10%)
increase/employee
2. Benefit costs as % of revenue (40% of payroll)Benefit costs / revenue$14,825,000/$82,364,000 = 17.9%
HR linkage - National health care increase = $2million
$16,825,000 / $82,364,000 = 20.4%
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LEPAK / GOWAN
More H.R. Calculations
4. Workers Compensation costs per covered employeeW.C. costs / # covered employees
Current: $190,045 / 249 = $763Worse safety $223,529 / 249 = $898Better safety: $154,676 / 249 = $621
6. Turnover ratio (@150% of salary)Annual # turnover / average # employees
Current: 17 /249 = 6.8%Worse: 21 / 249 = 8.4%Better: 11 / 249 = 4.4%
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LEPAK / GOWAN
HR Impact on Financial Condition
Option 1: Raise revenue
- Improve training and its deliverables- Partner with other functions to discover opportunities for
productivity and profitability improvements- Define measureable and relevant outcomes across disciplines
(job descriptions)- Enter new markets (awareness of labor costs)- Exit non-productive markets (facility closing costs)- Intensify focus on 80/20 customers (Pareto’s Law)
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LEPAK / GOWAN
HR Impact on Financial Conditions
Option 2: Lower costs
- Reduce headcount- Outsource/off-shore- Evaluate third-party administration- Employ technology (H.R.I.S.)- Aggressive management of health care & pension costs- Cost vs. benefit analysis- Part time/temporary employees
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LEPAK / GOWAN
Suggested HR Metrics
Turnover ratios ComplianceCost per hire Training costsBenefit costs Payroll costsWorker’s Comp. UnemploymentRecruiting costs e-learningOutsourcing Labor relationsH.R.I.S.