Module 12 Contemporary Issues of HRM Learning objectives • Consider future directions for the HR function • Explain the approaches to evaluating the effectiveness of HR practices • Discuss the issues related to measuring and evaluating the HR function • Discuss how outsourcing HR activities may improve service delivery efficiency and effectiveness • Relate how process re-engineering is used to review and redesign HR practices HR Managers face a myriad challenges with todays workforce. Major issues concerning the diverse workforce, legislation affecting the workplace and technology matters that rise to the top of the list of challenges. Major Contemporary issues in HRM are: Talent Management SHRM IHRM Organizational Development and Change Employee Wellbeing Employee Benefits and Compensation Career management and Development Contemporary Issues in HRM Overall Framework for Human Resource Management COMPETITIVE CHALLENGES • Globalization • Technology • Managing change • Human capital • Responsiveness • Cost containment HUMAN RESOURCES • Planning • Recruitment • Staffing • Job design •Training/ development • Appraisal • Communications • Compensation/Benefits • Technology • Industrial relations EMPLOYEE CONCERNS • Background diversity • Age distribution • Gender issues • Educational levels • Employee rights • Privacy issues • Work attitudes • Family concerns Categories of HR activities • Transactional activities: – day-to-day transactions such as pay administration, maintaining human resource information systems and employee services • Traditional activities: – include performance management, learning, recruiting, selection, compensation and industrial relations • Transformational activities: – include knowledge management, management development, cultural change, and strategic redirection and renewal Categories of HR activities Adding value to the firm using the HR function Increase efforts in traditional and transformational HR activities by: – developing a strategy for the HR function – assessing the current effectiveness of the HR function – redesigning, reengineering or outsourcing HR processes to improve efficiency and effectiveness Strategic management of the HRM function HR professionals need to adopt a system of metrics, or measurements, for human performance that will enable effective decisions to be made regarding the function and value creation in organisations Effective measurement of the HR function provides benefits • Marketing the HR function • Accountability • Objective not subjective/intuitive measures • Elevating the HR function to an equal footing with other functions • Enables evaluating the HR function’s contribution to strategy implementation • A valid and systematic justification for resource allocation Approaches for evaluating HR effectiveness • Audit approach: – involves a review of customer satisfaction or key indicators (e.g. turnover rate, average days to fill a position) related to an HR activity (e.g. staffing) • Analytic approach: – involves determining the impact of, or the financial costs and benefits of, a program or practice continued Approaches for evaluating HR effectiveness • Types of cost–benefit analyses: – human resource accounting – utility analysis • Analytic tools include: – HR activity index – balanced scorecard – causal chain analysis (employee–customer–profit chain) Measuring corporate sustainability • Negative screening: – companies are assessed as non-‘socially responsible investments’ (SRIs) for a variety of reasons, including their environmental records, their products or their company policies – Positive screening: • companies are judged SRIs based on factors such as a good environmental or social record – Best-of-sector approach: • making investments by selecting the ‘least-worst’ performer in that industry Human capital management • A management approach that aims to capture all the efforts related to people in an organisation. While human capital management includes HRM, it is intended to serve as more than a new label for the HR function • Focuses on measuring the effectiveness of HR activities, with an emphasis on enhancing the fit between those activities and organisational strategic goals Improving HR effectiveness Kramar_fig18.2_p634.jpg Kramar_fig18.2_p634.jpg Reengineering • A complete review of the organization’s critical work processes to make them more efficient and able to deliver higher quality. • Involves reviewing all the processes performed by all the organization’s major functions. – This includes human resources management. Reengineering • Reengineering affects human resource management in two ways: – The way the HR department itself accomplishes its goals may change dramatically. – The fundamental change throughout the organization requires the HR department to help design and implement change so that all employees will be committed to the success of the reengineered organization. Improving HR effectiveness through process redesign • Re-engineering: – review and redesign of work processes to make them more efficient and improve the quality of the end product or service • Involves four steps: Improving HR effectiveness through new technologies • New technologies are current applications of knowledge, procedures and equipment that have not been used previously • Technology requires companies to have appropriately skilled and motivated people and streamlined work processes • There is evidence that new technology is related to improvements in productivity • Improvements in productivity have been credited largely to downsizing, restructuring and re-engineering • In some cases, technology has replaced human capital Major trends, challenges of HR in Australia • Globalisation • Demographic changes • Talent management • Technological changes on employment market and on how work is performed • Education • Smart work • Income distribution Summary • The roles required of the HR function have changed as people have become recognised as a true source of competitive advantage • Strategic management of the HR function will determine whether HR will transform itself into a true strategic partner or simply disappear • The HR function must deliver transactional, traditional and transformational services and activities to the firm, and it must be both efficient and effective Summary • Restructuring, re-engineering and outsourcing may be appropriate in some circumstances, but require careful planning, attention to detail in implementation and ongoing evaluation • Multiple performance outcomes for the HR function should be considered, including financial terms and social terms • New technology has allowed companies to find more effective, not simply more efficient, ways of operating to improve productivity