Effective Human Resource Management: A Global Analysis

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Effective Human Resource

Management: A Global

Analysis

Effective Human Resource

Management: A Global

Analysis

Ed Lawler

Director and Distinguished Professor of Business

John Boudreau

(2)

• HR management

• Compensation

• Organization development

• Board effectiveness

• Talent

• Recent books include

Management Reset: Organizing

for Sustainable Effectiveness

(2011); Talent: Making People

Your Competitive Advantage

(2008) and the forthcoming

Effective Human Resource

Management: A Global Analysis

Some of Ed’s focuses

Dr. Edward E. Lawler

CEO Director and Distinguished Professor

(3)

• Bridge between superior human

capital, talent and sustainable

competitive advantage

• Works with companies worldwide to

discover and maximize specific

strategic bottom‐line impacts of

superior people and human capital

strategies

• Recent books include Effective

Human Resource Management: A

Global Analysis (forthcoming),

Transformative HR: How Great

Companies Use Evidence‐Based

Change for Sustainable Advantage

(with co‐author Ravin Jesuthasan,

2011) and Retooling HR: Using

Proven Business Tools to Make Better

Some of John’s focuses

Dr. John W. Boudreau

(4)

Effective Human Resource

Management: A Global

Analysis

By Edward E. Lawler III and

John W. Boudreau (Stanford

Press, 2012)

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Staff Functions …

• Are “Businesses” that deliver value to the firm

• Need a clear value proposition that contributes to the

success of the business and its ability of the

organization to carry out its strategy

• Are designed to optimize value delivered from

customer’s perspective

• Are designed to fit the organization and business

context

• By virtue of how they function, they can foster or

impede business strategy, help define and enrich, or

constrain new strategic directions.

‐ Based on Mohrman and Worley

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HR As a Business With 3 Product Lines

I. Basic Administrative Services and Transactions involved with

compensating, hiring, training and staffing

‐‐‐ Emphasis on resource efficiency and service quality

II. Business Partner Services involved with developing effective

HR systems and helping implement business plans, talent

management

‐‐‐ Emphasis on knowing the business and exercising influence‐‐solving problems,

designing effective systems to ensure needed competencies.

III. Strategic Partner Role contributing to business strategy based

on considerations of human capital, and organizational

capabilities, readiness, developing HR practices as strategic

differentiators

‐‐‐ Emphasis on deep and broad knowledge of HR and of the Business,

Competition and Market, and business strategies

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Business Partner

Business Strategy

HR Services

HR

Practices

Execution

Org.

Design

Implement

Change

Management

(8)

Strategic Partner

Human Capital

and Business Data

HR

Practices

Business Strategy

Org.

Design

Change

Management

(9)

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Criticism of HR

• Skinner, Wickham. (1981).

Big Hat, No Cattle: Managing Human Resources.”

Harvard Business Review.

• Stewart, Thomas. (1996). “Taking on the Last

Bureaucracy.” Fortune Magazine.



Why not blow the sucker up? Improvement’s for

wimps. I mean abolish it. Deep‐six it.

• Hammond, Keith. (2005). “Why we Hate HR.” Fast

Company

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CEO-HRPS Survey 2010

What HR Professionals

Believe

MEANS

5 – 7

Years Ago Current Difference

Maintaining Records

Collect, track, and maintain data on employees

23.2

13.6

Significant Decrease

Auditing/Controlling

Ensure compliance to internal operations, regulations, and legal and union requirements

15.7

12.5

Significant_Decrease

Human Resources Service Provider

Assist with implementation and administration of HR practices

32.8

30.4

Significant Decrease

Development of HR Systems and Practices

Develop new HR systems and practices

14.4

16.7

Significant Increase

Strategic Business Partner

Member of the management team. Involved with strategic HR planning, organizational design, and strategic change

13.9

26.8

Significant_Increase N=190

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Relationship of Current HR Roles (Time Spent) and

Organizational Performance

HR ROLES

1

Organizational

Performance

2

Maintaining Records

Collect, track, and maintain data on employees

‐.12

Auditing/Controlling

Ensure compliance to internal operations, regulations, and legal and union requirements

‐.13

Human Resources Service Provider

Assist with implementation and administration of HR practices

‐.23*

Development of Human Resources Systems and Practices

Develop new HR systems and practices

.16

t

Strategic Business Partner

Member of the management team. Involved with strategic HR planning, organizational design, and strategic change

.27**

1 _{Based on percentage of time spent on HR roles as rated by HR Executives.} 2 _{Based on Response: 1 = Much below average; 2 = Somewhat below average; 3 = About average;} 4 =Somewhat above average; 5 = Much above average.

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HR’s Actual Progress Since 1995

Percentage of Time

Spent in the Role

1995

1998

2001

2004

2007

2010

Maintaining Employee Records

15.4

16.1

14.9

13.2

15.8

13.6 Auditing and Controlling,

Ensuring Compliance

12.2

11.2

11.4

13.3

11.6

12.5 Providing HR Services and

Implementing Programs

31.3

35.0

31.3

32.0

27.8

30.4 Developing HR Systems and

Practices

18.6

19.2

19.3

18.1

19.2

16.7 Strategic Business Partner

22.0

20.3

23.2

23.5

25.6

26.8

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Relationship of HR Strategy to Organizational

Performance

HR STRATEGY

Organizational

Performance

Data‐based talent strategy

.22*

A human capital strategy that is integrated with business

strategy

.33***

Provides analytic support for business decision‐making

.24**

Provides HR data to support change management

.23*

Drives change management

.20*

Makes rigorous data based decisions about human capital

management

.18

t Significance Level: t _{p ≤ .10 * p ≤ .05 ** p ≤ .01 *** p ≤ .001}

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HR’s Role in Business Strategy

ROLE IN STRATEGY

1998

2001

2004

2007

2010

No Role

4.2

3.4

2.0

5.7

4.3 Implementation Role

16.8

11.6

12.2

17.0

17.4 Input Role

49.6

43.8

45.9

45.3

47.3 Full Partner

29.4

41.1

39.8

32.1

31.0 MEAN

3.0

3.2

3.0

3.1

Percent Responding Means Response Scale: 1 = No Role to 4 = Full Partner

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ROLE IN STRATEGY

MEANS

USA1 _CANADA2 _AUSTRALIA3 _EUROPE4 _UK5 _CHINA6

No Role

_4.3

_2.2

_9.4

_4.6

_2.2

_15.5

Implementation Role

_17.4

_24.4

_12.5

_15.4

_17.8

_41.3

Input Role

_47.3

_42.2

_40.6

_56.9

_42.2

_37.6

Full Partner

31.0

31.1

37.5

23.1

37.8

5.6 MEAN

3.05

6

_3.02

6

_3.06

6

_2.98

6

_3.16

6

_2.33

12345

HR’s Role in Business Strategy

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State of Human Resources Information System

(HRIS)

PERCENTAGES

STATE OF INFORMATION SYSTEM

USA1 _CANADA2 _AUSTRALIA3 _EUROPE4 _UK5 _CHINA6

Little or No Information Technology/ Automation Present in the HR Function 3.8 13.6 23.3 11.3 18.6 41.8 Some HR Processes Are Information Technology Based/ Automated 30.1 31.8 23.3 33.9 39.5 19.2 Most Processes Are Information Technology Based/ Automated But Not Fully Integrated 49.7 43.2 43.3 38.7 30.2 27.7 Completely Integrated HR Information Technology/ Automated System 16.4 11.4 10.0 16.1 11.6 11.3 Meana _3.796 _3.506 _3.40 _3.586 _3.35 _3.02124

a_{Response Scale: 1=No Information Technology; 2=Little Information Technology; 3=Some Processes Integrated;} 4=Most Processes Integrated; 5=Completely Integrated

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Relationship of Information System Use to

Organizational Performance

INFORMATION SYSTEM

Organizational

_Performance

1

Completely Integrated HR IT System _4.3 Most Processes are IT Based but not Fully Integrated 3.8 Some HR Processes are IT Based _3.7 Little IT Present in the HR Function _3.8 No IT Present _{No Responses} 1_{Based on Response: 1 = Much below average; 2 = Somewhat below average; 3 = About average;} 4 =Somewhat above average; 5 = Much above average.

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Relationship of HRIS Outcomes to Organizational

Performance

HRIS OUTCOMES

1

Organizational

Performance

OVERALL Effectiveness

a

.21*

Employee Satisfaction

.13

Efficiency

.22*

Business Effectiveness

.18*

Improve Human Capital Decisions Of Managers Outside HR

.20*

Effective

.13

Create Knowledge Networks

.22*

Build Social Networks That Help Get Work Done

.24**

a_{Includes items from Employee Satisfaction, Efficiency, and Business Effectiveness scales only.} Significance Level: t _{p ≤ .10 * p ≤ .05 ** p ≤ .01 *** p ≤ .001}

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Relationship of HR Skill Satisfaction to Organizational

Performance

HR SKILLS

1

Organizational

Performance

HR Technical Skills

.25**

Interpersonal Dynamics

.29***

Business Partner Skills

.23*

Metrics Skills

.17

t Significance Level: t _{p ≤ .10 * p ≤ .05 ** p ≤ .01 *** p ≤ .001}

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Relationship of HR Analytics And Metrics Use to

Organizational Performance

MEASURES

1

Organizational

Performance

EFFICIENCY Measure the financial efficiency of HR operations (e.g. cost‐per‐hire, time‐ to‐fill, training costs?) .13 Collect metrics that measure the cost of HR Programs and Processes? .14 Benchmark analytics and measures against data from outside organizations (e.g. Saratoga, Mercer, Hewitt, etc.)? .09 EFFECTIVENESS Use HR dashboards or scorecards? .13 Measure the specific effects of HR programs (such as, learning from training, motivation from rewards, validity of tests, etc.)? .20* Have the capability to conduct cost‐benefit analyses (also called utility analyses) of HR programs? .23* IMPACT Measure the business impact of HR programs and processes? .34*** Measure the quality of the talent decisions made by non‐HR leaders? .04 Measure the business impact of high versus low performance in jobs? .24** 1_{Response Scale: 1 = Yes, have now; 2 = Being built; 3 = Planning for; 4 = Not currently being considered.} Significance Level: t _{p ≤ .10 * p ≤ .05 ** p ≤ .01 *** p ≤ .001}

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Relationship of HR Metrics & Analytics

Effectiveness to Organizational Performance

EFFECTIVENESS1 Organizational Performance Strategy Contributions Contributing to decisions about business strategy and human capital management .19* Identifying where talent has the greatest potential for strategic impact .38*** Connecting human capital practices to organizational performance .19* Supporting organizational change efforts .10 HR Functional and Operational Contributions Assessing and improving the HR department operations .16t Predicting the effects of HR programs before implementation .16t Pinpointing HR programs that should be discontinued .19* Logic, Analysis, Measurement and Process (LAMP) Using logical principles that clearly connect talent to organization success .26** Using advanced data analysis and statistics .23* Providing high‐quality (complete, timely, accessible) talent measurements .32*** Motivating users to take appropriate action .30***

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Relationship of Decision Science Sophistication to

Organizational Performance

DECISION‐MAKING

1

Organizational

Performance

We excel at competing for and with talent where it matters most to our strategic success .32*** Business leaders’ decisions that depend upon or affect human capital (e.g. layoffs, rewards, etc.) are as rigorous, logical and strategically relevant as their decisions about resources such as money, technology and customers .27** HR leaders have a good understanding about where and why human capital makes the biggest difference in their business .33*** Business leaders have a good understanding about where and why human capital makes the biggest difference in their business .24* HR systems educate business leaders about their talent decisions .27** HR adds value by insuring compliance with rules, laws and guidelines .27** HR adds value by delivering high quality professional practices and services .30*** HR adds value by improving talent decisions inside and outside the HR function .29** 1 _{Response Scale: 1=Little or no extent; 2=Some extent; 3= Moderate extent; 4=Great extent; 5=Very great extent} Significance Level: t_{p ≤ .10 * p ≤ .05 ** p ≤ .01 *** p ≤ .001}