CH-16 Strategically Managing the HRM Function – Human Resource Management : Book Guide

Chapter 16 - Strategically Managing the HRM Function Please click here to access the new HRM Failures case associated with this chapter. HRM Failures features real-life situations in which an HR conflict ended up in court. Each case includes a discussion questions and possible answers for easy use in the classroom. HRM Failures are not included in the text so that you can provide your students with additional real-life content that helps engrain chapter concepts. Chapter Summary The chapter discusses the various roles and activities of the HR function first. Then it examines how to develop a market- or customer- oriented HR function. Next, the chapter describes the current structure of most HR functions. Finally, the chapter concludes with a discussion of new technologies that can improve HR effectiveness, including the Internet, expert systems, groupware, imaging, and various software applications. Learning Objectives After studying this chapter, the student should be able to: 1. Describe the roles that HRM plays in firms today and the categories of HRM activities. 2. Discuss how the HRM function can define its mission and market. 3. Explain the approaches to evaluating the effectiveness of HRM practices. 4. Describe the new structures for the HRM function. 5. Describe how outsourcing HRM activities can improve service delivery efficiency and effectiveness. 6. Relate how process reengineering is used to review and redesign the HRM practices. 7. Discuss the types of new technologies that can improve the efficiency and effectiveness of HRM. 8. List the competencies the HRM execution needs to become a strategic partner in the company. Extended Chapter Outline Note: Key terms appear in boldface and are listed in the "Chapter Vocabulary" section. Opening Vignette: Googling HR Google has been recognized over 100 times in the last five years as an exceptional employer, including being name the #1 Best Company to Work for in the United States (and many other countries), and the Top #1 Diversity employer. Laszlo Bock leads Google’s People Operations function, which has responsibility for all areas related to the attraction, development, and retention of “Googlers.” Block joined Google after holding a number of executive leadership positions at companies like GE Capital and McKinsey and Company. Block came to Google unencumbered by the traditional administrative HR mindset, and he sought to create an innovative and impactful People function. Discussion Question How did Bock’s lack of direct HR experience actually serve as a facilitative aspect of his success in imagining, creating and leading “People Operations” for Google? Answer: When Bock came to Google, he had served in leadership positions, but he had not held HR positions. This means that his frame of reference about Human Resources was, arguably, a bit wider than had he perhaps served in HR roles in his previous organizations. Bock’s leadership of HR at Google illustrates how HR can be conceptualized and developed to be a strategic function of Human Resources. Bock, for example, developed a vision and a strategy for the function, with a clear emphasis on the roles that the function would play in the organization. He created an infrastructure that supported that vision and strategy, and that supported managers in effectively managing Google employees, or “Googlers.” As evidenced by the many awards that the company has won as an employer of choice, Bock’s HR leadership has been very effective. Introduction—Human resource management practices can help companies gain a competitive advantage. Virtually every HR function in top companies is going through a transformation process to create a function that can play this new strategic role while successfully fulfilling its other roles. Activities of HRM A. Categories of HRM Activities 1. Transactional activities are the day-to-day transactions a company makes. These activities are low in their strategic value. 2. Traditional activities are the nuts and bolts of HR such as performance management, training, recruiting, selection, compensation, and employee relations. These activities have moderate strategic value. 3. Transformational activities create long-term capability and adaptability for the firm. These activities include knowledge management, management development, cultural change, and strategic redirection and renewal. These activities comprise the greatest strategic value for the firm (Text Figure 16.1). Competing Through Globalization: When Is a Bribe a Bribe? This vignette describes the issues organizations are frequently facing when doing business overseas – deciding which activities (such as giving gifts or other tokens of recognition or appreciation to people abroad) are legal or illegal according to the Foreign Corrupt Policies Act. A 130 page document was released by the US Department of Justice and the Securities and Exchange Commission in order to provide further guidance as to where the line of being unethical or illegal is. Since 2009, 50 companies have been prosecuted and fined (with upwards of $2 billion in fines being paid). Discussion Question How can a global HR function determine how to operate in compliance with its values and laws across countries that don’t share those values or laws? Answer: Students will have a variety of views on this topic. It is important to remember that regardless of the expectations or business practices in the foreign location, U.S. companies must continue to comply with U.S. laws. A global HR function can operate in compliance with its values and laws across diverse countries by: 1. Establishing Universal Standards: Develop core ethical standards and policies that align with the company's values and apply them consistently, while adapting to local regulations. 2. Conducting Local Assessments: Regularly assess local legal and cultural contexts to ensure practices comply with both local laws and the company’s ethical standards. 3. Training and Communication: Provide comprehensive training on global policies and local compliance, fostering awareness and alignment among employees. 4. Engaging Local Experts: Collaborate with local legal and HR experts to navigate complex regulatory environments while upholding company values. 5. Implementing Monitoring Systems: Set up systems to monitor adherence to both local laws and global standards, addressing discrepancies promptly. Strategic Management of the HRM Function For the HR function to become truly strategic in its orientation, it must view itself as being a separate business entity and engage in strategic management in an effort to effectively serve the various internal customers. A. A customer orientation is one of the most important changes in the HR function’s attempts to become strategic. The most obvious example of HR customers is the line managers who require HR services. Others include strategic planning team and employees (Figure 16.2 and 16.3). B. The products of the HR department must be identified. For example, line managers want to have high-quality employees committed to the organization. C. The technologies through which HR meets customer needs vary depending on the need being satisfied. For example, selection systems ensure that applicants selected for employment have the necessary knowledge, skills, and abilities to provide value to the organization. Building an HR Strategy A. The Basic Process – Figure 16.4 depicts the basic process for HR strategy (Figure 16.5 shows Goodyear’s strategic business priorities). From these issues, the HR strategy team needs to identify the specific people issues that will be critical to address in order for the business to succeed. Finally, the HR strategy is communicated to the relevant parties, both internal and external to the function. B. Involving Line Executives – Because the HR strategy seeks to address business issues, involving those in charge of running the business can increase the quality of information from which the HR strategy is created. Involvement can occur in a few ways: 1. Line executives could simply provide input. 2. Line executives could be members of a team that develops HR strategy. 3. Once strategy is developed, line managers could receive communications with the HR strategy information. 4. Line managers could formally approve a strategy. C. Characterizing HR Strategies – Four categories of the HR-business relationship can be identified (Figure 16.7): 1. HR-focused HR functions 2. People-linked HR functions 3. Business-linked HR functions 4. Business-driven HR functions V. Measuring HRM Effectiveness – Having good measures of the function’s effectiveness provides the following benefits: 1. Marketing the function – evaluation is a sign that the HR function cares about the organization as a whole and is trying to support operations, production, marketing, and other functions in the company. 2. Providing accountability – evaluation helps determine whether the HRM function is meeting its objectives and effectively using its budget. Approaches for Evaluating Effectiveness - There are two commonly used approaches for evaluating the effectiveness of HRM practices. Audit approach – focuses on reviewing the various outcomes of the HR functional areas. Both key indicators and customer satisfaction measures are typically collected (see Table 16.1). One important source of effectiveness data can be the customers. a. One important internal customer is the employee of the firm. Employees often have both direct and indirect contact with the HR function. However, the problem with assessing effectiveness only from the employees’ perspective is that often they are responding not from the standpoint of the good of the firm, but rather from their own individual perspective. Many firms have gone to surveys of top-line executives as a better means of assessing the effectiveness of the HR function (Figure 16.9 and 16.10). Analytic Approach – focuses on either (1) determining whether the introduction of a program or practice has the intended effect or (2) estimating the financial costs and benefits resulting from an HR practice. a. Evaluating a training program is one strategy for determining whether the program works. b. The second strategy involves determining the dollar value of the training program, taking into account all the costs associated with the program (Table 16.2). c. The analytical approach is more demanding than the audit approach because it requires the detailed use of statistics and finance. VI. Improving HRM Effectiveness Once a strategic direction has been established and HR’s effectiveness evaluated, leaders of the HR function can explore how to improve its effectiveness in contributing to the firm’s competitiveness. Figure 16.11 depicts this process. Table 16.4 depicts an example of analysis needed to determine the dollar value of a selection test. Restructuring To Improve HRM Effectiveness- Figure 16.12 depicts a generic structure for the HRM function. depicts the process of improving HRM effectiveness. The HRM function effectively is divided into three divisions: The Centers for Expertise usually consist of the functional specialists in the traditional areas of HR such as recruitment, selection, training, and compensation. These individuals ideally act as consultants in the development of state-of-the-art systems and processes for use in the organization. The Field Generalists consist of the HRM generalists who are assigned to a business unit within the firm. The Service Center consists of individuals who ensure that the transactional activities are delivered throughout the organization. Outsourcing to Improve HRM Effectiveness – Outsourcing entails contracting with an outside vendor to provide a product or service to the firm, as opposed to producing the product using employees within the firm. Usually this is done for one of two reasons: Either the outsourcing partner can provide the service more cheaply than it would cost to do it internally, or the partner can provide it more effectively than it can be performed internally. Firms primarily outsource transactional activities and services of HR such as pension and benefits administration as well as payroll. C. Improving HRM Effectiveness Through Process Redesign – Process redesign enables the HRM function to more effectively deliver HRM services. Reengineering is a complete review of critical work processes and redesign to make them more efficient and able to deliver higher quality. The reengineering process, shown in Figure 16.13 has four steps: Identify the Process – Managers who control the process should be identified and asked to be part of the reengineering team. Understand the Process – A variety of techniques are available to help with this step, such as data flow diagrams (Figure 16.14), data-entity relationship diagrams, senario analyses, surveys or focus groups, and cost-benefit analyses. Redesign the Process – During this phase, the team develops models, tests them, chooses a prototype, and determines how to integrate the prototype into the organization. Implement the Process—The company should try out the new process in a controlled setting before introducing it widely. D. Improving HRM Effectiveness Through Using New Technologies – HRM Information Systems New technologies are current applications of knowledge, proce¬dures, and equipment that have not previously been used. Transaction Processing—Computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments. Summarized information can be provided for government reports such as EEO 1. Decision Support Systems—These are systems designed to help managers solve problems. They usually include a "what if" feature. Expert systems are computer systems incorporating the decision rules of people deemed to have expertise in a certain area. Competing Through Technology: TD Bank Creates Internal Connections This vignette describes the growing pains being experienced by TD Bank. TD Bank was founded in Canada, but through a series of expansions and acquisitions now has locations throughout the U.S. as well as Canada, with the majority of their locations in the U.S.. TD Bank has utilized software known as “Connections” that was developed by IBM in order to help facilitate employees acting as one unified North American bank. Discussion Question In what ways can an HR function leverage internal social media technology to increase organizational effectiveness? Answer: Student’s responses here will likely be creative. Having tremendous familiarity with the use and functions of social media, students today can be very creative in their use of these platforms. The case outlines several ways TD Bank is presently utilizing Connections such as setting up employee profiles, collaborative communities to solve business problems and deal with common concerns, and to locate internal talent to work on projects requiring specialized expertise. An HR function can leverage internal social media technology to increase organizational effectiveness by: 1. Facilitating Communication: Enhancing real-time communication and collaboration across departments and locations. 2. Streamlining Knowledge Sharing: Creating platforms for employees to share expertise, resources, and best practices. 3. Boosting Engagement: Using social media to recognize achievements, foster a sense of community, and gather feedback. 4. Supporting Learning: Offering training resources, webinars, and discussions to support ongoing employee development. 5. Enhancing Recruitment: Leveraging internal networks to identify and attract talent from within the organization. VII. Software Applications for HRM: A. Improving HRM Effectiveness through New Technologies –E-HRM 1. Since the mid 1990’s, HRM functions sought to play a more strategic role in organizations. The first task was to eliminate transactional tasks in order to free up time to focus on traditional and transformational activities (Figure 16.11). 2. The speed requirements of e-business force HRM managers to explore how to leverage technology for the delivery of traditional and transformational HRM activities. B. Recruitment and Selection 1. Traditional recruitment and selection processes have required considerable face-to-face communications. Technology has transformed these processes. 2. Technology has enabled firms to monitor hiring processes to minimize the potential for discriminatory hiring decisions. C. Compensation and Rewards 1. Compensation systems in organizations probably reflect the most pervasive of bureaucracy within HRM. 2. Leveraging technology may allow firms to better achive their compensation goals with considerably less effort. D. Training and Development A number of firms have begun delivering training via the Web. Some types of training can be done effectively via the Internet or an intranet, while others might not. 2. The challenge of speedy delivery of HRM services brings the concept of Internet-based training to the forefront. Firms compete to attract and retain both customers and talented employees. How well a firm develops and treats existing employees largely determines how well it achieves these outcomes. 3. Technology allows firms to deliver training and development for at least some skills or knowledge faster, more efficiently, and possibly more effectively. It can quickly merge training, communication, and immediate response to strategic contingencies. Competing Through Sustainability: Electrolux Leads the Sustainable Way Swedish-based Electrolux has been names by the Dow Jones Sustainability Index as the durable household products sector leader for six consecutive years. Efforts such as providing customers with an “ecosavings” calculator on their website (which allows customers to calculate improved environmental impacts by replacing older appliances) and setting environmental goals for the company itself have allowed them to be on that list. These efforts also provide benefits outside of environmental issues such as building the company brand, customer loyalty, etc. Discussion Question How can HR functions help to support a firm’s sustainability efforts? Answer: Students may come up with creative ways to respond to this question. One issue that could be a potential answer would be to provide forms of recognition for employees who either practice environmentally friendly behaviors at work or come up with other environmentally friendly ideas that can be leveraged with the company’s product line for the benefit of the customer. HR functions can support a firm’s sustainability efforts by: 1. Incentivizing Green Practices: Implementing recognition programs for employees who engage in environmentally friendly behaviors or propose sustainable ideas. 2. Integrating Sustainability into Training: Incorporating sustainability principles into employee training and development programs. 3. Promoting Green Policies: Developing and enforcing policies that encourage sustainable practices within the workplace. 4. Encouraging Sustainable Recruitment: Prioritizing sustainability in hiring practices and seeking candidates with a commitment to environmental responsibility. VIII. The Future for HR Professionals – The future for careers in the HR profession seems brighter than ever. Firms need to seek the balance between attracting, motivating, and retaining the very best talent and keeping labor and administrative costs as low as possible. Finding such a balance requires HR leaders who have a deep knowledge of the business combined with a deep knowledge of HR issues, tools, processes, and technology. IX. The Role of the Chief Human Resource Officer The CHRO is responsible for several functions including leading the human resource function and ensuring that HR systems and processes deliver value to the organization. CHRO’s play seven roles (Figure 16.17 depicts the percentage of time CHRO’s spend in each role) as identified in a recent survey: Strategic advisor - A role of the CHRO that focuses on the formulation and implementation of the firm’s strategy. Talent architect - A role of the CHRO that focuses on building and identifying the human capital critical to the present and future of the firm. Counselor/Confidante/Coach - A role of the CHRO that focuses on counseling or coaching team members or resolving interpersonal or political conflicts among team members. Leader of the HR Function - A role of the CHRO that focuses on working with HR team members regarding the development, design, and delivery of HR services. Liaison to the Board - A role of the CHRO that focuses on preparation for board meetings, phone calls with board members, and attendance at board meetings. Workforce Sensor - A role of the CHRO that focuses on identifying workforce morale issues or concerns. Representative of the Firm - A role of the CHRO that focuses on activities with external stakeholders, such as lobbying, speaking to outside groups, etc. Integrity in Action: MF Global’s Illegal Transfer This vignette depicts the events that took place at investment bank MF Global in October 2011. A former governor and U.S. Senator, John Corzine, who headed the firm at the time, called a mid-level employee and explained to her, in vague terms, that it was important to transfer funds to cover overdrafts. The employee transferred customer funds to cover the investment bank’s overdrafts, an act that was illegal. Corzine later claimed he did not instruct the employee to do so and was not informed she had. The question is whether or not he encouraged the act, and if so, he is in violation of the law as well. Discussion Question What must HR functions do to ensure that leaders do not encourage employees to engage in behavior that is not in compliance with the firm’s values or legal requirements? Answer: There are many directions this conversation can take depending on students’ ethical and moral compass. One way that HR can contribute to protecting employees from these types of unscrupulous requests would be to have a strong checks and balances systems in place that requires multiple authorizations and authenticated requests prior to potentially illegal actions being taken. Additionally, solid ethical training and a culture of ethical behavior should also guide employees to make the right, ethical, and legal decision. HR functions must: 1. Establish Clear Policies: Develop and communicate clear policies and guidelines outlining acceptable behavior and compliance with firm values and legal requirements. 2. Provide Training: Offer regular training for leaders on ethical behavior, compliance, and company values. 3. Monitor and Enforce: Implement mechanisms to monitor leadership behavior and ensure adherence to policies. 4. Encourage Reporting: Create safe channels for employees to report unethical or non-compliant behavior without fear of retaliation. 5. Conduct Regular Audits: Perform regular audits and assessments to ensure leaders are upholding the firm’s values and legal standards. A Look Back HR at Google Continues As you have seen throughout this chapter, Laszlo Bock and Google have been innovating constantly in how they approach the role that the function can play and how it plays that role in the organization. However, this also illustrates that transforming an HR function is always a journey and not a destination. HR functions must constantly be sensing the changing needs of the business, developing strategies to help the business meet its goals, and delivering new systems and processes in an efficient and effective manner. Questions 1. What do you think it would be like to work for Google? In what ways might Google’s HR function have an impact on you as an employee there in terms of making your work experience better? Answer: Student answers will vary, but should draw from information in this chapter. Certainly, the alignment of Google’s HR strategy to support the overall strategy of the company, signals the extent to which the HR processes and policies are likely to emphasize that employees and their career matter. It also signals that the HR function at Google is thoughtfully designed. Because Google is a well-respected employer, particularly for minority employees, it is probable that the HR function could play a large role in making one’s work experience very good. Clearly, HR at Google is strategic, intentional, and proactive. Working for Google might offer a dynamic and innovative environment with a strong emphasis on employee well-being and development. Google's HR function could enhance your work experience through progressive policies, continuous learning opportunities, and a focus on work-life balance. 2. In what ways would you expect Google’s HR approach to be different from a manufacturing organization like General Motors? How does an HR strategy tend to reflect the nature of the business? Answer: Again, student answers can and will vary but look for evidence that students have acquired knowledge of the strategic role that HR plays, and that it should support the overall strategy of the business. Google is an information technology company, and General Motors is a manufacturing company. Therefore, the HR functions of each company should support the respective missions, visions and strategies of these companies, By definition, the HR strategies and processes would be different. For example, Google’s talent search likely focuses on applicants who have information technology knowledge, while General Motors has a greater emphasis on finding talent with manufacturing expertise. However, the HR function, again, should align and support the overall goals – whatever they may be—of the organization. Google’s HR approach would likely emphasize creativity, flexibility, and technology-driven solutions, while General Motors’ HR strategy might focus more on structured processes, safety, and operational efficiency. The HR strategy reflects the nature of the business by aligning with its core functions and industry demands. Chapter Vocabulary These terms are defined in the "Extended Chapter Outline" section. Audit Approach Analytic Approach Outsourcing Reengineering New Technologies Transaction Processing Decision Support Systems Expert Systems Strategic advisor Talent architect Counselor/confidante/coach Leader of the HR function Liaison to the board Workforce sensor Representative of the firm Discussion Questions Why have the roles and activities of the HR function changed over the past 20 to 30 years? What has been driving this change? How effectively do you think HR has responded? Answer: The roles and activities of HR have changed because many people feel that it should deal more with strategic functions rather than administrative. Many companies feel that they should be heading in this direction to adapt to the changing times within the market and competition. Virtually every HR function in top companies is going through a transformation process to create a function that can play this new strategic role while successfully fulfilling its other roles. HR roles in building a competitive organization have evolved into two dimensions. One dimension represents the focus of a strategic orientation and the other refers to the day-to-day/operational orientation. 2. How can the processes for strategic management discussed in Chapter 2 be transplanted to manage the HR function? Answer: The processes for strategic management starts with discussing the HRM role, which has been seen as a strategic partner that has input into the formulation of the company’s strategy and develops and realigns HR programs to help implement the strategy. For the HR function to become fully strategic it must view itself as being a separate business entity and engage in strategic management in an effort to effectively serve the various internal customers. HR executives should take a customer-oriented approach to implementing the strategic function. Also the products must be identified and the technologies through which HR meets customer needs vary depending on the need being satisfied. In doing so, it will become evident that for HR to fulfill its mission, the function must take a role in overall corporate planning and implementation. 3. Why do you think few companies take the time to determine the effectiveness of HR practices? Should a company be concerned about evaluating HR practices? Why? What benefit might the persons working in the HR function gain by evaluating the function? Answer: Students may suggest a variety of reasons. HR must be sold to upper management, particularly during budget cycles. Additionally, through evaluation, HR can learn where effort for improvement and change should go. If through evaluation it is discovered that certain categories of employee hires have a high turnover rate, it may be very useful in determining what to change in order to reduce turnover. Continuous improvement of the HR function can cut costs and increase the quality of its service to the firm. Few companies evaluate HR practices due to a lack of time, resources, or perceived immediate impact. However, evaluating HR practices is crucial as it helps ensure alignment with organizational goals, improves efficiency, and enhances employee satisfaction. HR professionals benefit from evaluation by gaining insights into the effectiveness of their strategies, identifying areas for improvement, and demonstrating the value of their function to the organization. 4. How might imaging technology be useful for recruitment? For training? For benefits administration? For performance management? Answer: Students should be encouraged to give specific examples of how imaging can reduce the need for paper storage, while making the needed information available to the HR function in a more efficient format. For example, scanning and storing resumes during the recruiting and selection process may be a very helpful use of this technology. • Recruitment: Imaging technology can streamline resume screening through AI-driven analysis and enhance candidate experience with virtual interviews and assessments. • Training: It can facilitate immersive training experiences with virtual reality simulations and interactive learning modules. • Benefits Administration: Imaging technology can simplify document management and claims processing through digital documentation and automated systems. • Performance Management: It enables real-time monitoring and analysis of employee performance through data visualization and tracking tools. 5. Employees in your company currently choose and enroll in benefits programs after reading communications brochures, completing enrollment forms, and sending them to their HR rep. A temporary staff has to be hired to process the large amount of paperwork that is generated. Enrollment forms need to be checked, sorted, batched, sent to data entry, keypunched, returned, and filed. The process is slow and prone to errors. How could you use process reengineering to make benefit enrollment more efficient and effective? Answer: By using a team to examine the process in depth, process reengineering might be able to design a system that utilizes new technologies to have employees enroll by computer, for example. By carefully plotting out what is currently done and then analyzing where the inefficiencies are, the company could develop a redesigned flow of tasks. 6. Some argue that outsourcing an activity is bad because the activity is no longer a means of distinguishing the firm from competitors. (All competitors can buy the same service from the same provider, so it cannot be a source of competitive advantage.) Is this true? If so, why would a firm outsource any activity? Answer: Outsourcing involves contracting with an outside vendor to provide a product or service to the firm, as opposed to producing the product using employees within the firm. Outsourcing is done for two reasons, either the outsourcing partner can provide the service more cheaply than it would cost to do it internally, or the partner can provide it more effectively than it can be performed internally. Outsourcing can still be a means of competitive advantage because you usually have an agreement with the outsourcing firm so it still maintains the competitive advantage. Self-Assessment Exercise: How ethical are you? Refer to the self-assessment exercise in the text. Exercising Strategy: Transforming the Business and HR at Xerox The vignette describes the transition Xerox went through in the late 1990’s and early 2000’s when they nearly went bankrupt. The combined efforts of a new VP of HR, Pat Nazemetz and CEO Anne Mulcahy drastically reduced the size of the company, sold some overseas operations, and transformed the HR function. As a result, the company survived and within a few years had seen increasing net income. Questions 1. After having gone through the massive downsizing, morale obviously has presented challenges. While Xerox employees seem to understand the need for change (minds), they may not emotionally embrace it (hearts). How can Xerox gain both “hearts” and “minds”. Answer: Student answers may vary. To win hearts and minds, a company first has to show that it cares about employee opinions. Xerox showed this by issuing surveys to its employees. The harder task for company officials is to prove to employees that downsizing will save the company in the long-run. One way to gain the hearts of current employees is to develop strategies that will make future downsizing unlikely for the company. Xerox can gain both "hearts" and "minds" by: 1. Transparent Communication: Clearly explaining the reasons for changes and how they benefit the company and employees. 2. Involvement in Change: Engaging employees in the transformation process through feedback and participation. 3. Support Systems: Providing resources such as counseling, career development, and training to help employees adapt. 4. Recognition and Rewards: Acknowledging and rewarding employees' efforts and achievements during the transition. 5. Leadership Visibility: Ensuring leaders are visible and accessible, showing commitment and empathy towards employees. 2. Xerox’s HR function focuses on three initiatives: (a) employee value proposition (what can employees expect from the company, and what can the company expect from employees?), (b) performance culture (how can the company develop a culture that encourages continuous improvement and high performance from all employees?), and (c) “three exceptional candidates” (how can HR deliver a pipeline of three-deep bench talent for every position within the organization?). From everything you have learned, how might Xerox address each of these issues? Answer: Student answers will vary. Responses should draw from HR issues in every chapter of this book. Xerox can address each HR initiative as follows: 1. Employee Value Proposition: • Clarify Expectations: Define and communicate clear expectations for both employees and the company, including benefits, career development, and performance standards. • Enhance Engagement: Foster a supportive environment where employees feel valued and understand their role in the company’s success. 2. Performance Culture: • Continuous Improvement: Implement regular feedback mechanisms, set clear performance goals, and promote a growth mindset. • Recognition: Develop a system for recognizing and rewarding high performance and innovation. 3. Three Exceptional Candidates: • Talent Pipeline: Create a robust talent management strategy that includes succession planning, targeted recruitment, and internal development programs. • Bench Strength: Ensure a deep pool of qualified candidates by investing in leadership development and cross-training programs. Managing People: Saving Starbucks’ Soul This vignette describes the voyage of Starbuck’s over the past years from a small craft coffee shop in Pike Place Market to a multi-billion dollar enterprise that was viewed as a commoditized entity, and its attempt to return to its artisan roots. Questions What are some of the HRM issues inherent in Howard Schultz’s concerns? Answer: The student responses will vary, however, responses could include that Starbucks is attempting to regain its “roots,” or go back to traditional activities. Starbucks also wants to market their function as an experience, a story, something more than just a jolt of caffeine.and a caramel topping. 1. HRM Issues: • Employee Retention: Addressing high turnover and maintaining morale. • Workplace Culture: Ensuring alignment with company values and addressing concerns of inclusivity and equity. • Leadership Development: Training and supporting leaders to uphold company standards. How would an effective strategic HRM function contribute to keeping Starbucks on track? Answer: Again, student responses will vary, but they should include that by creating an effective strategic HRM function Starbucks would be able to focus more on customer orientation and find high-quality employees to serve those customers. Starbucks wants to stay away from the image of being “corporate and slick.” Strategic HRM Contribution: • Aligning HR Practices: Ensuring HR strategies support company goals and values. • Enhancing Engagement: Implementing programs to boost employee satisfaction and retention. • Talent Management: Developing and maintaining a strong pipeline of talent and leadership. HR in Small Business: Employees Make a Difference at Amy’s Ice Creams This vignette describes the birth of Amy’s Ice Creams in Austin, Texas. Amy Miller, the company’s founder, dropped out of medical school to start the company after her employer sold out and the new owners were, in her words, “too stodgy”. Her philosophy of managing her employees is to combine informal fun with care for others. This philosophy begins at the employment interview and continues throughout the entire employment experience. Questions Which elements of a customer-oriented HRM perspective does Amy’s Ice Creams seem to have? (See Figure 16.2.) Answer: The students will have varying views of this issue, but regardless of how vague the information in the vignette is, this is a business that is committed to keeping both customers and employees happy. As such, HR’s customers in this case seem to be all employees. And by making work fun, it appears that Amy’s Ice Creams encourages employees to also share that fun spirit with the firm’s customers. • Employee Engagement: Creating a positive work environment that aligns with customer service goals. • Training and Development: Providing ongoing training to enhance customer interactions. • Recognition and Rewards: Acknowledging employees who deliver exceptional customer service. Suppose Amy’s hired you as a consultant to evaluate whether the company has an effective HRM function. Which outcomes would you look for? How would you measure them? Answer: Students will have varying responses here as well. While it is not indicated in the vignette, one can infer that the company is profitable. In order to measure the success of the HRM function for this firm however, balanced scorecard items such as employee satisfaction, turnover rate, customer satisfaction, engagement, etc. should be considered outside of financial performance. • Employee Satisfaction: Measure through surveys and feedback to assess morale and engagement. • Customer Satisfaction: Use customer feedback and satisfaction scores to evaluate service quality. • Retention Rates: Track turnover rates to gauge the effectiveness of employee engagement and development programs. • Performance Metrics: Analyze performance data and service standards to ensure alignment with company goals. Additional Activities Twitter Focus Fun is the name of the game for employees as well as customers at Amy’s Ice Creams in the Austin, Texas area. Founder Amy Miller’s goal is to manage her employees in a different way—one that combines informal fun with care for others. The employee selection process involves handing candidates a white paper bag with the instruction to “make something creative.” Service to the community is also an important employee activity at Amy’s—employees choose the charities the company will support. Question 1. What would your reaction be to the employee selection process used by Amy’s Ice Cream? What would you do with the “white paper bag?” Answer: The employee selection process at Amy’s Ice Creams is highly innovative and reflects a unique approach to assessing creativity and fit with the company culture. My reaction would be positive, as it emphasizes creativity and individuality, which are important traits for a fun and customer-focused environment. With the “white paper bag,” I would use it to create something that showcases my creativity and problem-solving skills. For example, I might design a small, creative object or an interactive display that highlights my ability to think outside the box, communicate effectively, and align with the playful and community-oriented values of Amy’s Ice Creams. Manager’s Hot Seat Exercise: Change: More Pain Than Gain? -Please refer to the Asset Gallery on the OLC for Hot Seat videos and notes. I. Introduction The scenario depicts the difficulties that arise when two companies merge and highlights the role conflicts employees face in such situations. Analyzing this case will generate a rich discussion of the issues involved in promoting the acceptance of change and managing a difficult change process. II. Learning Objectives To assess students’ understanding of change concepts and the challenges of change management. To identify ways to decrease resistance to change. To analyze and evaluate change leadership behaviors. III. Scenario Description: Overview: A national media communications company acquires a regional communications company. As a result of the merger the regional marketing department is re-organized, combining the staff of the two organizations. Our Manager is overseeing the restructuring process and is having a lot of difficulty with people shifting roles, sharing assignments and adapting to new hierarchies. The manager meets with two department members who are very displeased with the new changes. The employees eventually ask the manager to leave the company and head a start-up – funding is already in place. Profile: Carlos Alarcon is the Vice President of Marketing at MediaWorld and manages a team of 120 people. MediaWorld recently acquired Franklin/Warner a regional company where Carlos has worked for 14 years. Carlos was a key player in organizing and managing this merger. Rita Finch is the Associate Director of Advertising and has worked at Franklin/Warner for eight years. Since the merger, a second Associate Director of Advertising, Ronny Peters, has been moved into Rita’s office suite. Over the course of their six months working together, Rita has found Peters insulting and uncommunicative. Juan Rayes is the Creative Director and has worked at Franklin/Warner for seven years. Since the merger, a second Creative Director, Bill Jackson, has been moved into Juan’s office suite. Like Rita, over the course of their six months working together, Juan has found Jackson uncooperative and deficient in his creative skills. References: The references included in the DVD are: Concepts in Change (PPT 6-3) Merging Organizational Cultures (PPT 6-4) Forces Resisting Change (PPT 6-6) Reducing Resistance (PPT 6-8) Back History: Alarcon, Rayes and Finch have been working together at MediaWorld for over eight years and have a very amicable working relationship. Since the merger, Finch and Rayes are now sharing their roles with two employees from the merger company, Jackson and Peters. They both perceive Jackson and Peters to be incompetent and a hindrance to the productivity of their departments. Each have different issues, complaining of arrogance, condescension, slacking, and poor communication skills, but at the root of the problem, they are furious that they are in essence working under people who are less experienced and less knowledgeable than they. Scene Set-up: Alarcon is having check-in meetings with all of the employees in his department, to assess the progress of the reorganization since the merger took place. Scene Location: Alarcon’s Office, MediaWorld; 3:00pm Friday The Meeting - Summary: Carlos apologizes for the delay in meeting and asks them to share their feelings. Rita and Juan complain that their new counterparts are difficult to work with and they are very dissatisfied with their roles and their jobs in the new organization. Carlos says that they need to work out the personal issues on their own. Juan and Rita both indicate that they don’t see a future and are ready to quit. They insinuate that they would like Carlos to leave with them so they can work together “on their own”. Carlos firmly rejects this offer and, while he admits the transformation is difficult, he says he plans to stay focused to make it work. Afterthoughts – Summary: Carlos is concerned about Rita’s and Juan’s actions before they leave. He wants to protect company property and clients because he is sure that they will leave the organization sooner or later. He did not think that it was ethical for them to approach him about leaving the organization with them – especially in the workplace. He is concerned that they indicated that many people are unhappy and admits that he needs to ensure the communication channels are open so that he can prevent further turnover. Carlos suggests that he would have tried harder to keep them if he didn’t think their minds weren’t already made up. While he hates to lose this talent, the merger plan accounted for some turnover to occur. Dossier: The specific artifacts included in the DVD are: New Hierarchy/ Department Structure Rayes’ notes on Jackson’s daily schedule over the course of two weeks Voicemails left for Rayes from various clients stating that they would rather have their accounts managed by a new company instead of continuing with MediaWorld. IV. Discussion Questions: The References and related Discussion Questions may be found in PowerPoint slides 6-1 to 6-9 on the instructor’s side of the text’s Website. Learning Objective #1: To assess students’ understanding of change concepts and the challenges of change management. Refer to “Concepts in Change” (PPT 6-3). What stage of change is this organization in? How do you know? Answer: At this point the merger has already occurred and employees are performing in their new roles. Therefore, they are in the refreezing stage where decisions are made and policies are enforced that support the new organizational structure and direction. Based on “Concepts in Change,” Amy’s Ice Creams appears to be in the "Institutionalization" stage. This is evident because the company has integrated unique and informal practices, such as the creative employee selection process and community involvement, into its daily operations and organizational culture, indicating that these changes are becoming a standard part of the organization. Which strategy would be the most effective in merging these company’s organizational cultures (see PPT 6-4)? Provide justification for your answer based on information from the scenario. Answer: The separation strategy would be the least appropriate because we know that the employee’s from Franklin/Warner and MediaWorld have the same positions and job titles. This indicates that the companies provided the same services. Keeping their cultures separate would hinder the successful integration of their strengths. From the conversation, it seems that Franklin/Warner had a positive culture in which the employees enjoyed working with each other. Therefore, deculturation would likely inhibit the productivity and acceptance of change on the part of Franklin/Warner employees. Given the fact that MediaWorld is a much larger company than Franklin/Warner was, assimilation may work well depending on how strong and effective MediaWorld’s culture was. Integration may also be appropriate if both had relatively weak cultures. The scenario does not provide definitive information on this point.  1. Why does Rita mention feeling alone? Assert control Win sympathy Reprimand him Rita is indirectly trying to reprimand him for being so hard to reach and communicate with during the initial period of this merger. Learning Objective #2: To identify ways to decrease resistance to change. Refer to “Forces Resisting Change” (PPT 6-6). Which of these factors are most strongly affecting Rita and Juan? Support your answer with examples from the scenario. Answer: Clearly, incongruent team dynamics are seriously affecting Juan and Rita’s job satisfaction. They feel that their counterparts from the other company do not treat them with respect. They also feel that the quality of their work does not meet the standards they and their clients expect. Breaking routines is another major factor for Rita and Juan because they now have to perform their jobs in concert with their counterparts rather than working autonomously. Therefore, every aspect of how they do their job is affected by this. Having to share responsibilities with someone else also creates resistance because the employees want to “save face”. They may feel belittled and denigrated by now having to share the jobs they used to do alone.  4. Why does Carlos share his perspective? Create camaraderie Persuade them Assert power Carlos would like Juan and Rita to stay but indicates that they have accounted for turnover when planning the merger. Learning Objective #3: To analyze and evaluate change leadership behaviors. How effective is Carlos in decreasing Juan and Rita’s resistance to change? (see PPT 6-8) Answer: It’s not clear what he has done prior to their meeting. Presently, he seems to not have been available for his employees and is apologetic for that. This has reduced the communication between them. Had the communication been more free-flowing earlier, they may not have been at the point of wanting to leave. During the conversation, he does not attempt to negotiate with them to make up for something they’ve lost. He places the responsibility of making the merger successful back on them. He suggests that they need to work out their personal differences on their own. These actions do not indicate that he is too concerned with losing these employees.  2. What is Carlos’ goal? Calm them Get clarification Redirect responsibility Carlo’s goal is to redirect responsibility to them for working out their differences with their new coworkers. 3. Carlos’ response demonstrates: Complacency Empathy Attempt to intimidate Because Carlos mentions the fact that turnover has been accounted for (while not Rita and Juan specifically), it seems he is being complacent about their dissatisfaction and impending departure.  5. How should Carlos respond? Win them back Fire the other two Say goodbye Given that Juan and Rita have been long-time effective employees, Carlos should probably have made more of an attempt to win them back. Instead, he seems to be completely prepared to say goodbye. Firing the other two would not facilitate the merger of these companies because employees of the other company would feel threatened.  6. Carlos’ response to their proposal is: Appropriate Short sighted Premature Acting as an agent of the company in his managerial role and change agent, Carlo’s response was entirely appropriate. His main goal is to ensure that the merger and its transition operate as smoothly as possible and result in a productive and profitable end state. Teaching Suggestions Five options for activities are described next. First, short group presenta¬tions are suggested as a method for providing the class with detailed exam¬ples of companies that have implemented various organizational change processes. Secondly, there is a short case that asks the students to describe appropriate security measures for an HRIS, as well as to describe how the system can be used to help improve quality throughout the organization. A third activity is discussion of an article that can be used very effectively with the first case. The fourth activity can be used as a type of integrating mech¬anism for the course. Students are asked to design an evaluation system for the HRM function and to describe the information that should be collected in an HRIS so that the evaluation can be done efficiently. Finally, sugges¬tions are made for outside speakers associated with this chapter. 1. Students may be assigned in groups and be asked to research a topic related to this chapter and to make a two part presentation on it. For example, process reengineering could be assigned to a group. In the first part of the presentation, students could provide an overview of process reengineering, while in the second portion they could provide a fairly detailed company example of the concept's application. 2. Security Case: Tellabs, Inc. manufactures and sells over $155 million in telecommunications systems a year. Its product line includes equipment for sending digital signals over telephone lines, making it possible to send voice data and video information simultaneously through a telephone system. The products have a major impact on the future of communications around the world. The company has production facilities in Illinois, Texas, Puerto Rico, and other facilities in Canada. The company employs 1,500 people, with manufacturing being the largest group. Production workers build electronic components. In 1986, in response to the need to increase margins, the company changed its management philosophy to total quality commitment (TQC). The company defines TQC as a commitment to excellence in which all functions focus on continuous process improvement, resulting in increased customer satisfaction. A key indicator of performance in TQC is the achievement of a zero defect rate in the product and in each process of the organization. As a result of the TQC program, the need to improve the data management system in HR was recognized. The company decided to purchase a microcomputer based system, HR 1. Individual personnel information is used for the traditional payroll through a link with the payroll processing computer. The system is routinely used for reporting information required by the EEOC, OSHA, and immigration agencies. The system is also being used for organizational performance information and traditional reports such as employee master lists, hiring and termination, turnover, and absenteeism reports. Temporary staff is being used to input information needed for the skills bank and training modules that are not yet functional. Discussion Questions What security procedures would you implement for this micro based system? Why? Answer: 1. Access Controls: Implement user authentication and authorization to ensure only authorized personnel can access the system. 2. Data Encryption: Use encryption to protect sensitive data both at rest and in transit. 3. Regular Updates: Keep software and security patches up to date to protect against vulnerabilities. 4. Backups: Regularly back up data to prevent loss in case of system failure or attack. 5. Firewall and Antivirus: Install and configure firewalls and antivirus software to prevent unauthorized access and malware. 6. Audit Logs: Maintain logs of system access and changes for monitoring and auditing purposes. What processes will the new system help improve? In what ways? Answer: Process Improvements: 1. Efficiency: Streamline operations by automating tasks and reducing manual processes, leading to faster execution and reduced errors. 2. Data Management: Improve data accuracy and accessibility, enabling better decision-making and reporting. 3. Compliance: Enhance adherence to regulatory requirements through automated controls and secure data handling. 4. Customer Service: Speed up response times and service delivery by integrating and centralizing customer information and interactions. 3. With the above case, you may wish to assign the following article. It may be assigned for discussion by itself. "Lead Report, Privacy, and Electronic Mail," BNA's Employee Relations Weekly 10 (November 16,1992). Ask students how they feel about and how they would evaluate the "policy for privacy." 4. Have student groups design a plan for evaluating the effectiveness of a company's HRM department. Students might first have to state goals and objectives for the department in each of the major areas: compensation and benefits, employee development, work force diversity, recruitment and selection, and so on. Next, students would draw up a plan that would state what data would be examined and for what purpose (i.e., to answer what specific questions about the function). From these plans, students could also be asked to list the data field labels for a master HRIS, which would support the evaluation process. This assignment would cause students to consider the overall goals of human resource management and how they should be evaluated, drawing together much of the semester's work. 5. In class speakers may be invited from such local organizations as the American Society for Quality Control to talk about applications of process reengineering or the relationship of HR to quality programs, for example. Additional Activities In Class Activity 1 Ask for student volunteers to assume the roles of management and labor during contract negotiations for a major automotive manufacturer. Instruct the students to role play following the traditional adversarial format of "us against them." Try to set the stage by having four representatives from management and four from labor to meet at a large table, with the rest of the class remaining as quiet observers. For interest or, if necessary, the instructor could enter the negotiations as an arbitrator. Issues to be resolved could include pay, insurance coverage for retirees, early retirement packages, quality control, training, safety measures, and so on. In Class Activity 2 Ask for different student volunteers to assume the roles of management and labor during contract talks for a major automotive manufacturer. This time, however, instruct the students to role play modeling the living agree¬ment format in place at Saturn Corporation. Tell them to eliminate the familiar confrontational approach in favor of a spirit of constructive coop-eration. (The issues could remain as above.) The ultimate goal is to have all students, especially the observers, note and discuss their findings on the two approaches to resolving workplace issues facing both management and labor in today's competitive business environment. What are the pros and cons of each approach? Which approach is most effective and why? Top Case 16: Human Resources to the Rescue? India is making its mark in the global marketplace—but not without a few stumbles. Recently, one of the nation’s most respected employers made headlines when its leader acknowledged falsifying an earnings report. Satyam Computer Services saw its share price—and its reputation—plummet after company founder B. Ramalinga Raju confessed to his board of directors that a reference to $1 billion in cash assets in a recent report was a lie. Satyam and its 52,000-employee workforce provide information technology services to more than 650 clients, including Fortune 500 firms such as Cisco Systems, Unilever, Nestlé, and General Electric. As India works to burnish its position in the international marketplace, the issue of corporate governance takes on greater importance. And who better than human resource professionals to take the lead in guiding and facilitating the organization in these matters? In the past, when most of India’s industries were state run, matters of corporate governance were almost irrelevant, and the HR function’s role was primarily administrative. But HRM moved to the forefront during India’s high-tech boom, taking responsibility for recruiting, hiring, and training activities. The profession has continued to grow since that time. Now, in the face of a global economic meltdown, the time may be right for HR practitioners to take the next step and become strategic partners with organizational leadership in both contractor and client companies. Question If you were Director of Human Resources at Satyam Computer Services, what recommendations would you provide to prevent problems in the future? Possible answers Create checks and balances in the company’s accounting and financial reporting processes to ensure that no one individual has unmonitored access to the company’s assets and financial records. Articulate a policy of transparency in all financial and operational matters. This policy should include the establishment of a corporate ethics hotline that individuals may call, anonymously and without fear of retribution, to report concerns. Communicate the organization’s policies and protocols regularly and frequently to all employees, beginning during new-hire orientation and occurring at least annually thereafter. Periodically reinforce the messages of openness and guaranteed anonymity for whistleblowers. As Director of Human Resources at Satyam Computer Services, I would recommend: 1. Strengthen Ethical Standards: Develop and enforce a robust code of ethics and conduct, ensuring all employees are trained on compliance and ethical behavior. 2. Enhance Transparency: Implement rigorous financial controls and auditing processes to prevent and detect fraudulent activities. 3. Promote Whistleblower Protection: Establish a confidential reporting system for employees to report unethical practices without fear of retaliation. 4. Leadership Training: Provide training for leaders on ethical leadership, governance, and the importance of integrity in business operations. 5. Regular Audits: Conduct regular internal and external audits to ensure financial accuracy and adherence to regulations. Source: Jeremy Smerd, “Indian Outsourcer’s Woes May Open Doors for HR There,” Workforce Management, January 9, 2009, http://www.workforce.com. Solution Manual for Human Resource Management Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright 9780077164126