WHAT ARE HIGH-PERFORMANCE WORK SYSTEMS?
1. A living company is a learning company. The high-tech nature of Siemens business means that employees must
be able to learn on a continuing basis. Siemens uses its system of combined classroom and hands-on apprentice- ship training around the world to help facilitate this.
It also offers employees extensive continuing education and management development.
2.Global teamwork is the key to developing and using all the potential of the firm s human resources.Because it is so important for employees throughout Siemens to feel free to work together and interact, employees have
to understand the whole process, not just bits and pieces. To support this, Siemens provides extensive training and development. It also ensures that all employees feel they re part of a strong, unifying corporate identity. For example, HR uses cross-border, cross-cultural experiences as prerequisites for career advances.
3.A climate of mutual respect is the basis of all relationships within the company and with society.
Siemens contends that the wealth of nationalities, cultures, languages, and outlooks represented by its employees is one of its most valuable assets.
It therefore engages in numerous HR activities aimed at building openness, transparency, and fairness, and supporting diversity.
Questions
1. Based on the information in this case, provide examples for Siemens of at least four strategically required organizational outcomes, and four required workforce competencies and behaviors.
2. Identify at least four strategically relevant HR policies and activities that Siemens has instituted in order to help human resource management contribute to achieving Siemens strategic goals.
3. Provide a brief illustrative outline of a strategy map for Siemens.
EXPERIENTIAL EXERCISE
Developing an HR Strategy for Starbucks
By 2010, Starbucks was facing serious challenges. Sales per store were stagnant or declining, and its growth rate and profitability were down. Many believed that its introduction of breakfast foods had diverted its baristas from their traditional jobs as coffee-preparation experts. McDonald s and Dunkin Donuts were introducing lower priced but still high-grade coffees. Starbucks former CEO stepped back into the company s top job. You need to help him formulate a new direction for his company.
Purpose: The purpose of this exercise is to give you experi- ence in developing an HR strategy, in this case, by developing one for Starbucks.
Required Understanding: You should be thoroughly familiar with the material in this chapter.
How to Set Up the Exercise/Instructions: Set up groups of three or four students for this exercise. You are probably already quite familiar with what it s like to have a cup of coffee or tea in a Starbucks coffee shop, but if not, spend some time in one prior to this exercise. Meet in groups and develop an outline for an HR strategy for Starbucks Corp.
Your outline should include four basic elements: a basic business/competitive strategy for Starbucks, workforce requirements (in terms of employee competencies and behaviors) this strategy requires, specific HR policies and the activities necessary to produce these workforce require- ments, and suggestions for metrics to measure the success of the HR strategy.
TRANSLATING STRATEGY INTO HR POLICIES & PRACTICES CASE
THE HOTEL PARIS CASE
We present a Translating Strategy into HR Policies and Practices Case: The Hotel Paris Case in the end-of-chapter material of each chapter (starting with this chapter). This continuing case demonstrates how the Hotel Paris s HR director uses the concepts and techniques from each chapter to create a human resource management system that helps the Hotel Paris achieve its strategic goals.
As we explained in this chapter, the basic HR strategy process is as follows: Management formulates a strategic plan.
This plan in turn implies certain required organizational outcomes, such as improved customer service. Those required outcomes in turn imply certain workforce requirements.
Human resource management then formulates HR strategies (policies and practices)to produce the desired workforce skills, competencies, and behaviors. Finally, the human resource manager chooses measures to gauge the extent to which its new policies and practices are actually producing the required employee skills and behaviors. The Hotel Paris s human resource manager might for example use the following sequence of steps:50
Step 1: Define the Business Strategy.We saw first that translating strategy into human resource policies and activities starts by defining the company s strategic plans and goals.
Step 2: Outline a Strategy Map.As we also saw, a strategy map summarizes the chain of major interrelated
activities that contribute to a company s success in achieving its strategic goals.
Step 3: Identify the Strategically Required Organizational Outcomes.Every company must produce strategi- cally relevant outcomes if it is to achieve its strategic goals. For the Portman Hotel in Shanghai, in this chapter's introduction, the main outcome manage- ment sought was excellent customer service, to help their hotel stand out from the rest.
Step 4: Identify the Required Workforce Competencies and Behaviors.Here, ask, What competencies and behaviors must our employees exhibit if our company is to produce the strategically relevant organizational outcomes, and thereby achieve its strategic goals?
Step 5: Identify the Required HR System Policies and Activities.Once the human resource manager knows the required employee competencies and behaviors, he or she can turn to formulating the HR activities and policies that will help to produce them.
Here it is important to be specific. It is not enough to say, We need new training programs or disciplinary processes. Instead, the manager must now ask, Exactly what sorts of new training pro- grams do we need to produce the sorts of employee competencies and behaviors that we seek?
cleaning fluid before washing items like these. As a result, these fine white blouses were being washed in cleaning fluid that had residue from other, earlier washes.
Jennifer now wonders whether these employee meetings should be expanded to give the employees an even bigger role in managing the Carter stores quality. We can t be everywhere watching everything all the time, she said to her father. Yes, but these people only earn about $8 to $15 per hour. Will they really want to act like mini-managers?
he replied.
Questions
1. Would you recommend that the Carters expand their quality program? If so, specifically what form should it take?
2. Assume the Carters want to institute a high-performance work system as a test program in one of their stores. Write a one-page outline summarizing important HR practices you think they should focus on.
The High-Performance Work System
As a recent graduate and as a person who keeps up with the business press, Jennifer is familiar with the benefits of programs such as total quality management and high- performance work systems.
Jack has actually installed a total quality program of sorts at Carter, and it has been in place for about 5 years.
This program takes the form of employee meetings. Jack holds employee meetings periodically, but particularly when there is a serious problem in a store such as poor-quality work or machine breakdowns. When problems like these arise, instead of trying to diagnose them himself or with Jennifer, he contacts all the employees in that store and meets with them as soon as the store closes. Hourly employ- ees get extra pay for these meetings. The meetings have been useful in helping Jack to identify and rectify several problems. For example, in one store all the fine white blouses were coming out looking dingy. It turned out that the cleaner/spotter had been ignoring the company rule that required cleaning ( boiling down ) the perchloroethylene
CONTINUING CASE
CARTER CLEANING COMPANY
Step 6: Choose HR Scorecard Measures.We saw that many managers quantify and computerize this chain of strategic goals, employee competencies, and required HR practices. The HR Scorecard process helps them to do so. Recall that the HR Scorecard is a process for assigning financial and nonfinancial goals or metricsto the HR- related chain of activities required for achieving the company s strategic aims and for monitoring results.
The task here is to choose the appropriate metrics. For example, if we decide to improve the disciplinary system, how precisely will we measure improvement? Perhaps we would use the metric, number of grievances.
The Hotel Paris International
Let us demonstrate how this process works by considering our fictitious company, the Hotel Paris International (Hotel Paris). Starting as a single hotel in a Paris suburb in 1990, the Hotel Paris now comprises a chain of nine hotels, with two in France, one each in London and Rome, and others in New York, Miami, Washington, Chicago, and Los Angeles. As a corporate strategy, the Hotel Paris s management and own- ers want to continue to expand geographically. They believe doing so will let them capitalize on their reputation for good service by providing multi-city alternatives for their satisfied guests. The problem is that their reputation for good service has been deteriorating. If they cannot improve service it would be unwise for them to expand, since their guests might actually prefer other hotels after trying the Hotel Paris.
The Strategy
Top management, with input from the human resource manager and other managers, and with the board of direc- tors approval, chooses a new competitive strategy and formu- lates new strategic goals. They decide: The Hotel Paris International will use superior guest services to differentiate the Hotel Paris properties, and to thereby increase the length of stays and the return rate of guests, and thus boost revenues and profitability. All Hotel Paris managers including the director of HR services must now formulate strategies that support this competitive strategy.
The Strategy Map
Based on discussions with other managers, the HR director, Lisa Cruz, outlines a strategy map. This should help her visu- alize the HR activities that are crucial to helping the hotel achieve its strategic goals. For example, producing satisfied guests requires attending to all those activities where there is an opportunity to affect the guests experiences. For the Hotel Paris, activities include getting the guest from the airport and checked in, cleaning the guest s room, and picking up baggage and getting the guest checked out.
The Strategically Required Organizational Outcomes The Hotel Paris s basic strategy is to use superior guest services to expand geographically. Each step in the hotel s strategy map provides opportunities for improving
guest service. For example, Lisa and her management colleagues must take steps that produce fewer customer complaintsand more written compliments, more frequent guest returnsand longer stays, and higher guest expenditures per visit.
The Strategically Relevant Workforce Competencies and Behaviors
Therefore, the question facing Lisa is this: What are the com- petencies and behaviors that our hotel s employees will have to exhibit if we are to produce the required organizational outcomes such as fewer customer complaints, more compli- ments, and more frequent guest returns? Thinking through the types of activities that occur at each step in the hotel s value chain helps Lisa answer that question. For example, the hotel s required employee competencies and behaviors would include high-quality front-desk customer service, taking calls for reservations in a friendly manner, greeting guests at the front door, and processing guests s room service meals efficiently. All require motivated, high-morale employees.
The Strategically Relevant HR System Policies and Activities
The HR manager s task now is to identify the human resource policies and activities that will enable the hotel to produce these crucial workforce competencies and behaviors. As one example, high-quality front-desk customer service is one such required behavior. From this, Lisa identifies human resource activities to produce such front-desk customer service efforts. For example, she decides to institute practices to improve the disciplinary fairness and justice in the company, with the aim of improving employee morale. Her assumption is that enhanced fairness will produce higher morale and that higher morale will produce improved front-desk service.
The HR Scorecard
Finally, Lisa may (or may not) decide to computerize all these cause-and-effect links among the HR activities, the workforce behaviors, and the organizational outcomes, using scorecard software to present results on digital dash- boards. With a computerized scorecard software package, Lisa need not limit herself to assessing the effects of the handful of employee behaviors (such as percentage of calls answered on time). Instead, she could include metrics covering dozens of activities, from recruitment and selec- tion through training, appraisal, compensation, and labor relations. Her HR Scorecard model could also include the effects of all these activities on a variety of workforce compe- tencies and behaviors, and thus on organizational outcomes and on the company s performance. In this way, her HR Scorecard would become a comprehensive model repre- senting the value-adding effects of the full range of Hotel Paris human resource activities.
How We Will Use the Hotel Paris Case in This Book Table 3-2 presents some of the metrics that Lisa could use to measure human resource activities (by chapter). For exam- ple, she could endeavor to improve workforce competencies and behaviors by instituting (as per Chapter 5, Recruiting) improved recruitment processes, and measure the latter in terms of number of qualified applicants per position.
KEY TERMS
strategic plan,73 strategy,73
strategic management,73 vision statement,75 mission statement,75 corporate-level strategy,77
competitive strategy,77 competitive advantage,77 functional strategies,78 strategic human resource
management,80 strategy map,82
HR Scorecard,82 digital dashboard,83 strategy-based metrics,87 HR audit,89
high-performance work system,91 human resource metric,92 Similarly, she may recommend to management that they
change the firm s pay policies (see Chapter 11, Pay Plans) so that the target percentile for total compensation is in the top 25%. She could then show that doing so improves employee morale, employee service behavior, customer sat- isfaction, and the hotel chain s performance. In practice, all the HR activities we discuss in this book influence employee competencies and behaviors, and, thereby, organizational outcomes and performance.
Questions
1. Draw a simple strategy map for the Hotel Paris. Specif- ically, summarize in your own words an example of the hierarchy of links among the hotel s HR practices, necessary workforce competencies and behaviors, and required organizational outcomes.
2. Using Table 3-1 (page 92), list at least five metrics the Hotel Paris could use to measure its HR practices.
TABLE 3-2 Examples of HR System Activities the Hotel Paris Can Measure as Related to Each Chapter in This Book
Chapter Strategic Activities Metrics
2. EEOC Number EEOC claims/year; cost of HR-related litigation; % minority/women promotions 3. Strategy % employees who can quote company strategy/vision
4. Job Analysis % employees with updated job descriptions
5. Recruiting Number applicants per recruiting source; number qualified applicants/position 6. Testing % employees hired based on validated employment test
7. Interview % applicants receiving structured interview
8. Training Number hours training/employee/year; number hours training new employee 9. Appraisal Number employees getting feedback; % appraisals completed on time 10. Career Management % employees with formal career/development plan
11. Compensation Target percentile for total compensation (pay in top 25%) 12. Incentives % workforce eligible for merit pay
13. Benefits % employees 80% satisfied with benefits
14. Ethics Number grievances/year; % employees able to quote ethics code 15. Labor Relations % workforce in unions
16. Health and Safety Number safety training programs/year; $ accident costs/year; hours lost time due to accidents 17. Global % expatriates receiving predeparture screening, counseling
18. Entrepreneurship Employee turnover
Overall HR Metrics HR cost/employee; HR expense/total expenses; turnover costs
ENDNOTES
1. Arthur Yeung, Setting Up for Success:
How the Portman Ritz-Carlton Hotel Gets the Best from Its People, Human Resource Management45, no. 2 (Summer 2006), pp. 67 75.
2. See, for example, Fred David,Strategic Management (Upper Saddle River, NJ:
Prentice Hall, 2007), p. 11.
3. Tony Bingham and Pat Galagan, Doing Good While Doing Well, Training &
Development, June 2008, p. 33.
4. www.checkmateplan.com, accessed April 24, 2009.
5. www.pepsico.com/PEP_Company/
Overview, accessed December 7, 2007.
6. Paul Nutt, Making Strategic Choices, Journal of Management Studies, January 2002, pp. 67 96.
7. Michael Porter, Competitive Strategy (New York: The Free Press, 1980), p. 14.
8. Peter Coy, A Renaissance in U.S. Manu- facturing, Bloomberg Businessweek, May 9 15, 2011, pp. 11 13.
9. Samuel Greengard, You re Next! There s No Escaping Merger Mania! Workforce, April 1997, pp. 52 62. The extent to which top executives rely on HR man- agers to support their strategic planning efforts is a matter of debate. Many employers still view HR managers mostly as strategy executors. On the other hand, a recent study found that 71% of the management teams do see HR as a strategic player. See Patrick Kiger, Survey: HR Still Battling for Leaders Respect, Workforce Management, Dec- ember 15, 2008, p. 8. See also E. E. Lawler et al., What Makes HR a Strategic Partner? People & Strategy 32, no. 1 (2009), p. 14.
10. Andy Cook, Make Sure You Get a Prenup, European Venture Capital Journal, December/January 2007, p. 76. See www.
accessmylibrary.com/coms2/summary_
0286-29140938_ITM, accessed June 29, 2009.
11. www.towersPerrin.com, accessed Decem- ber 4, 2007.
12. Mergers & Acquisitions: Managing the HR Issues, The M&A Spotlight, January 1, 2007.
13. Leah Carlson, Smooth Transition: HR Input Can Prevent Benefits Blunders During M&As, Employee Benefit News, June 1, 2005.
14. www.towersPerrin.com, accessed Decem- ber 4, 2007. See also Ingmar Bjorkman, The HR Function in Large-Scale Mergers and Acquisitions: The Case of Nordea, Personnel Review 35, no. 6 (2006), pp. 654 671; Elina Antila and
Anne Kakkonen, Factors Affecting the Role of HR Managers in International Mergers and Acquisitions: A Multiple Case Study, Personnel Review37, no. 3 (2008), pp. 280 299; and Linda Tepedino and Muriel Watkins, Be a Master of Mergers and Acquisitions, HR Magazine, June 2010, pp. 53 56.
15. This is paraphrased or quoted from HR Services, Service Offerings: Mergers, Acqui- sitions and Restructuring, www.towers Perrin.com, accessed December 4, 2007.
16. See, for example, Evan Offstein, Devi Gnyawali, and Anthony Cobb, A Strate- gic Human Resource Perspective of Firm Competitive Behavior, Human Resource Management Review15 (2005), pp. 305 318.
17. Automation Improves Retailer s Hiring Efficiency and Quality, HR Focus82, no. 2 (February 2005), p. 3.
18. www.activestrategy.com/solutions/
strategy_mapping.aspx, accessed March 24, 2009.
19. When focusing on HR activities, man- agers call this an HR Scorecard. When applying the same process broadly to all the company s activities, including, for example, sales, production, and finance, managers call it the balanced scorecard process.
20. The idea for the HR Scorecard derives from a broader measurement tool man- agers call the balanced scorecard. This does for the company as a whole what the HR Scorecard does for HR, summarizing instead the impact of various functions including HRM, sales, production, and distribution. The balanced in balanced scorecard refers to a balance of goals financial and nonfinancial.
21. See, for example, Using HR Performance Metrics to Optimize Operations and Profits, PR Newswire, February 27, 2008;
and How to Make Over Your HR Metrics, HR Focus84, no. 9 (September 2007), p. 3.
22. SHRM Human Capital Benchmarking Study: 2007 Executive Summary.
23. For additional information on HR metrics see, for example, Karen M. Kroll, Repur- posing Metrics for HR: HR Professionals Are Looking Through a People-Focused Lens at the CFO s Metrics on Revenue and Income per FTE, HR Magazine51, no. 7 (July 2006), pp. 64 69; and http://shrm.org/
metrics/library_publishedover/measure- mentsystemsTOC.asp, accessed February 2, 2008.
24. Connie Winkler, Quality Check: Better Metrics Improve HR s Ability to Measure
and Manage the Quality of Hires, HR Magazine52, no. 5 (May 2007), pp. 93 94, 96, 98.
25. Ibid.
26. Ibid.
27. See, for example, Benchmarking for Functional HR Metrics, HR Focus 83, no. 11 (November 2006), p. 1; and John Sullivan, The Last Word, Work- force Management,November 19, 2007, p. 42.
28. See Brian Becker and Mark Huselid, Measuring HR? Benchmarking Is Not the Answer! HR Magazine 8, no. 12 (December 2003), www.charmed.org, accessed February 2, 2008.
29. Ibid.
30. Ed Frauenheim, Keeping Score with Ana- lytics Software, Workforce Management 86, no. 10 (May 21, 2007), pp. 25 33.
31. Steven Baker, Data Mining Moves to Human Resources, Bloomberg Business- week, March 12, 2009, www.BusinessWeek.
com/magazine/, accessed April 13, 2011.
32. Ibid.
33. Ed Frauenheim, Numbers Game, Work- force Management90, no. 3 (March 2011), p. 21.
34. George Marakas,Decision Support Systems (Upper Saddle River, NJ: Prentice-Hall), 2003, p. 326.
35. Thomas Davenport, Jeanne Harris, and Jeremy Shapiro, Competing on Talent Analytics, Harvard Business Review, October 2010, pp. 52 58.
36. Ibid., p. 54.
37. Lin Grensing-Pophal, HR Audits: Know the Market, Land Assignments, SHRM Consultants Forum, December 2004, www.shrm.org/hrdisciplines/consultants/
Ar ticles/Pages/CMS_010705.aspx, accessed July 7, 2010.
38. Bill Coy, Introduction to The Human Resources Audit, La Piana Associates, Inc., www.lapiana.org/consulting, accessed May 1, 2008.
39. Grensing-Pophal, HR Audits: Know the Market, Land Assignments ; and Coy, Introduction to The Humsan Resources Audit.
40. Dana R. Scott, Conducting a Human Resources Audit, New Hampshire Business Review,August 2007.
41. Ibid.
42. Coy, Introduction to The Human Resources Audit.
43. See for example, www.personneltoday.
com/blogs/hcglobal-human-capital- management/2009/02/theres-no-such- thing-as-eviden.html, accessed April 18, 2009.