HR as a Value Added Function Sunil Ramlall, Ph.D
The HR Value Proposition • • • • •
Knowing external business realities Ensuring HR professionalism Serving external and internal stakeholders Building HR resources Creating HR practices (Ulrich & Brockbank, 2005)
HR Practices that Add Value • Flow of people – proper flow ensures the availability of talent the firm needs to accomplish business objectives • Flow of performance management – standards, measures, rewards that reflect stakeholders’ interests • Flow of information – collective knowledge resources • Flow of work – ensuring high quality results
Template for Action Planning - Defining the HR Practices to invest in Action: What Resources: will be done What resources are required to do it?
Responsibility: Who will do it?
Timing: When will it be done?
Tracking: Who will follow up and how?
Building an HR Strategy • Understand the firm’s environment – life cycle stage, characteristics, competition, etc. • Specify the sources of competitive advantage and the measurements for each source of competitive advantage • Define the cultural capabilities along with the behaviors necessary to achieve the desired culture • Identify the HR practices that will have the greatest impact on creating sustainable competitive advantages • Develop an overall implementation plan
Key Issues in the Implementation Phase • • • • • •
What will we do? Who takes the lead? Who else needs to be involved? When are the interim reports due? When is the final report due? Who has the final approval?
Transforming the HR Function • Diagnose business strategy and organization • Align HR and business organization structures • Differentiate transaction and transformation work • Create a project team (if necessary). • Build transaction efficiencies • Monitor progress
Roles of HR Professionals 1. Human Capital Developer 2. Employee Advocate (vs. employee champion) 3. HR Leader 4. Strategic Partner (vs. change agent) 5. Functional Expert (vs. administrative expert)
Key HR Competencies • • • • •
Business Knowledge Personal Credibility Strategic Contribution HR Delivery HR Technology
HRM in the Banking Industry • A growing body of research, including both industry-specific studies and cross-industry studies, investigates the impact of human resource management (HRM) on firm performance. • Positive relationship between branch performance and employees' satisfaction with the quality of performance evaluation, feedback, and recognition at the branch — the "incentives" dimension of a high-performance work system
• Satisfaction with the quality of communications at the branch was also important. • The HRM environment can be an even more important determinant of productivity in the service sector than in the manufacturing sector, given the much larger share of total production costs accounted for by employment, and the much more extensive direct contact between employees and customers, in services.
• Using a cross-sectional framework that ignored the role of bank fixed effects, they found a positive correlation between the bank's returns on assets and equity and the existence of profit-sharing and employment security for loan officers, controlling for the size and age of the bank.
• In the past, tellers simply processed customers' transactions. Today, they are evaluated on the basis of their ability to sell various financial products or make referrals to the proper sales personnel. "Sales is now the name of the game in this industry." In the new sales-oriented environment, branches are evaluated based on their sales of products.