Development of Human Resources - Research Paper Example

Table of Contents Table of Contents 1 1.Summary 2 2.Introduction 3 3.Problems and Issues 4 Flow Chart showing multiple causes of missed opportunities above (current state, see 3. e.) 5 Flow Chart showing multiple causes of maximized opportunities above (future state, see 4. f.) 6 6 4.Conclusions 6 5.Recommendations 7 CCDC Organization Chart for HR Leaders 12 Framework - Stages of HR Development 14 6.References 20 1. Summary a. CCD Construction (CCDC) has completed a four-year period with much business success. Completing a merger and financially sound, this construction company is located in the United Arab Emirates (UAE) and looks to the future to gain further competitive advantage with its’ human resource strategies. b. Key HR Objectives for Year Five i. Establish an HR Framework (See Appendix A) ii. Establish HR Measures aligned with Customer metrics iii. HR Strategic Objectives to work toward - Five priorities in Year Five (Five in Five): 1. Develop a culture that reflects CCDC Today and in the Future 2. Develop a succession planning process and implement process 3. Establish proper HR staffing levels and HR Staff as Strategic Business Partners 4. Identify key HR functions/objectives in relationship to Framework Stages 1 – 4 to allow maximum HR goal setting and achievement. 5. Develop and Implement a Performance Management System. 2. Introduction a. The purpose of this report is to present a brief summary of the case study for CCDC based on the company profile and circumstances and a recommendation for human resource (HR) strategy. The creation of the company, CCDC, is a result of two smaller construction companies merging in 2007. The services provided are project management and civil engineering, full design and construction services, and construction services for public and private clients. At 9,000 employees, the workforce has been reduced over the last three years due to economic reasons. The company is profitable and has a solid financial foundation in place. There are 12 offices around the UAE with a talented and diverse managing director team leading the company. This reporter is a human resource strategy student. b. CCDC’s current strategic business objectives involve reducing the levels in the chain of command; implementing a coaching method of management rather than autocratic; maintain financial success; and ensure high quality services, meet the health and safety needs of staff, meet environmental standards, and improvements made in networks and purchasing agreements. c. While there has been an emphasis on HR policies and initiatives to support these objectives, there is also a question as to whether HR practices add value and how the effects of HR on the organizational culture may be evaluated. 3. Problems and Issues a. First, Cabrera and Cabrera (2003) and Rose and Kumar (2006) would note the lack of a human resource strategic framework. CCDC lacks an overall HR strategic framework that HR objectives, programs, training, and policies can fall within or under. The framework could then be used by the leaders when they are conducting their strategic planning to avoid placing the leaders in the position to do the business planning, then step out of the planning and pass the business objectives to HR to do the work from a support standpoint – resulting in a disconnect (Porter, 1996). Both HR and the business need to be operating as one. There are resulting comments regarding HR functioning in a support role, which is counter to business needs. b. Second, once the framework is in place, CCDC needs the development of human resource strategic objectives and tactics that are an extension of the framework and the operational strategies as found in the literature rather than a reaction to operational requests. c. Third, there is a lack of measures and metrics for the human resource strategic practices, objectives, and tactics, which makes setting further goals or objectives difficult. d. Fourth, the HR staffing numbers are not aligned with the organization needs. e. Fifth, the performance appraisal system is not aligned with the performance needs of the organization. Training problems result. See flow chart 1 below. Flow Chart showing multiple causes of missed opportunities above (current state, see 3. e.) Flow Chart showing multiple causes of maximized opportunities above (future state, see 4. f.) 4. Conclusions a. CCDC lacks an HR Strategic Framework. b. CCDC lacks HR strategic practices, objectives, policies, goals, and tactics that align with any strategic framework. c. CCDC lacks HR Strategic measures and metrics that align with the operations goals and the customer needs. These are needed to ensure there is no doubt as to the value of human resource management. d. There are numerous assumptions missing in this case study, which make it difficult to generalize and continue with further recommendations. The assumptions are not clearly stated. e. CCDC HR staff need to be working strategically and can only do so if proper staffing levels are met. f. The performance management system needs a significant overhaul to represent the new organization and meet effectiveness goals at all levels of the organization (see future state chart 2 above). 5. Recommendations a. The strategic framework as recommended by Cabrera and Cabrera (2003) needs to be adopted and operational decision making, regardless of the timing, need to flow through that strategic framework. Since the people are the organization (Oakland and Oakland, 2002) this framework would be involved in all planning sessions. This is significantly different than the current process of a simple list of HR objectives formed in response to operational strategies being communicated to the HR Director. There is no evidence of an overall human resource (HR) Strategic Framework within this Case Study. A true HR strategic framework is a vision for the future and a guide for the entire organization including operations (Cabrera and Cabrera 2003; Lawler and Mohrman 2003). b. The HR strategic framework should flow and guide the entire organization from a people standpoint and be used as a reference for the managers and leaders when discussion is taking place about the business objectives. The HR strategy should be something that leadership is considering as they discuss those business objectives (Ulrich, Cody, LaFasto and Rucci 1989). i. Research has been conducted within the literature regarding frameworks for HR strategy as to best practices and a determination made as to final selection for CCDC. See Appendix A for framework as outlined in Cabrera and Cabrera (2003). 1. This framework was preferred over others reviewed as it would serve as a guiding vision for the company throughout the year rather than used as a planning tool and set aside. Other frameworks reviewed: a. Trahant, Steckler, and Sonnesyn (2007) present an HR capital planning framework, but this was not selected because it was presented as a process oriented framework with references to inputs and outputs, goals and metrics. However, this framework could be a reference for a working planning session. b. Another framework presented by Bhattacharya and Wright from 2005 that was reviewed was given due consideration, but ruled out as too specific on certain topics. Again, a good reference for a working session but this framework appears too narrow. For example, the table regarding the list of uncertainties of human assets would be helpful information when conducting annual planning, but lacks the continued focus on a broader macro vision one would need throughout the year and looking forward. c. Finally, a human resources portfolio framework was reviewed and ruled out. This is depicted by definitions and text and helpful information regarding the value of the human asset (Shonhiwa and Gilmore 1996) but lacks the broader approach and referencing the seminal works of Becker and Huselid. 2. Move beyond support to adding value and demonstrate the value, measure the value (cycle). An HR strategy should not be reactive to the objectives of the company (Lawler and Mohrman 2003; Noe et al. 2003). ii. HR staff role needs to be redefined as Strategic Partners in the business to ensure proper execution of the strategy once established (Lawler and Mohrman 2003; Noe et al. 2003; Rowden 1999; Ulrich et al. 1989). To do this, the HR staff to employee ratios needs to be re-examined. This is because the business needs an HR person that understands the business as well as the HR needs due to the complexity of the decisions that are now being made. 1. Lawler and Mohrman (2003) state there is no one correct size of HR staff ratio to employees. Current ratios versus tasks accomplished need to be analyzed for CCDC versus possible costs of future ratios versus outcomes and profitable results for the business. 2. The size of HR department and distribution of personnel will vary depending on the tasks needing to be completed. Now that the company is structured with a team of 4 centrally located people they simply cannot do justice in terms of quality and value to a workforce of 9000 staff across 12 locations. The recommendation is to move to six centrally located Senior HR people with two locations assigned to each of the centrally located leaders. a. The chart below is depicting the overall HR leadership structure with an HR director overseeing two locations each. b. Assuming there will be a Senior HR Leader that the HR Group reports into. c. HR staffing for all employees will be at a ratio of 1 to 1000, which would take the HR staff to a total of 900 including the 6 directors and the senior leader, plus the specialists listed below. i. Strategic Planning – 3 ii. Performance Management – 25 iii. Hiring and Employee Relations - 25 iv. Training & Development - 10 v. Payroll & Benefits - 5 vi. General Admin - 5 vii. Other - 3 viii. HR Business Partners – 824 to be split between locations at a ratio equal to the employee headcount per location and the ratio stated above, which would be 14 designated locations. ix. The specialists will report to the Senior HR Leader at the corporate office with a senior person designee in each specialized area. d. Each HR team member will be assigned a location responsibility even if located centrally. The specialists will not be location specific, but will serve HR CCDC as a whole. CCDC Organization Chart for HR Leaders The routine tasks such as payroll, leave, medicals, government formalities etc. would take up most if not all of their time and therefore they would not be able to provide and real "strategic" value. Items such as performance management and training would lack quality which is evident from the case study. iii. The HR strategic objectives need a complete audit prior to update and establishment of the new framework. Each functional area listed below would audit based on a checklist format determined for that area. This would be done to ensure the deliverables. iv. Additionally, common definitions need to be developed for terms such as strategy, goals, tactics, and objectives. Assumptions are not clear and are missing from the strategic plan. c. Human resource strategic objectives for CCDC will now be aligned with the Strategic Framework as depicted in the Framework as shown below from Cabrera & Cabrera (2003). Framework - Stages of HR Development Source: Cabrera and Cabrera 2003 d. This researcher has made some assumptions about where the HR functional areas may be and at what stage based on the framework. Assuming from what has been stated in the case study, the HR Function/company is somewhere between Stage 1- Stage 3. Cabrera and Cabrera state that what holds most companies back from achieving a Stage 4 level is the lack of “measurements and organizational capabilities focused on strategic results” (2003, p. 48). Determining the exact combination of HR strategic practices, policies, and tools can be difficult. To affect this shift, to create value, CCDC needs metrics and measures developed for the key HR strategic objectives, practices, initiatives, policies, and tactics. e. Key indicators need to be established and are aligned with customer satisfaction measures as shown in Hagood and Friedman (2002); Noe et al. (2003). i. These indicators would be established in all HR functional areas such as: 1. For example, with training the HR key indicators aligned with Customer Satisfaction Measures might be: Training Customer Satisfaction Measures Percentage of employees participating in training programs per job family. Extent to which training programs meet the needs of employees and the company. Percentage of employees receiving tuition refunds. Communication to the employees about available training opportunities Training dollars per employee. Quality of introduction/orientation programs. a. As a part of the indicators metrics need to be established for each key HR component and function. 2. Further HR functional areas needs indicators will be aligned with customer indicators (Cabrera and Cabrera, 2003; Noe et al. 2006). Additionally, this researcher made an initial assessment based on the proposed framework of the HR function in their position on the HR framework line of Stages 1 – 4 : a. Staffing function is at a Stage 2 (Efficiency). There is a focus on employees learning their jobs and being efficient. b. Issues involving Diversity are being audited and assumed at Stage 1 until further information is presented or uncovered. c. Compensation – make sure employees that are hired are compensated properly and efficiently or Stage 2. There were some back steps on compensation during the merger due to the inability to maintain competitive wages for all involved. d. Benefits are being audited and are assumed at Stage 1 until further information is presented or uncovered. e. Employee appraisals - This function is at Stage 1 trying to get to a Stage 2 and not there due to efficiency problems. The numbers that are actually given are low at 60%. That number should be somewhere around 90 – 95% or with some locations and departments 100% of those who are entitled to a performance evaluation. f. Succession planning program is being established as recommended below. This initiative is at Stage 1. g. Safety and health of the employees is a goal for the company, so Stage 1 is assumed with the goal of Stage 2 until further information presented or uncovered. h. Labor relations is being audited and assumed at Stage 1 until further information presented or uncovered. i. Overall effectiveness of HR – Struggling with Stage 1. It seems the HR Director is doing a lot of busy work in an effort to prove value, but is lacking the framework and the processes to fulfill the requirements. The full value of HR cannot be achieved unless Stage 4 is met. HR must evaluate their contribution carefully, show measures of strategic results and be prepared to be accountable as the other operational areas are. One indication that is quite worrisome is the line departments creating action plans “against these HR priorities from year 4” (p. 26 of Case Study). It sounds as though the line managers are rebelling or disrespectful or simply doing their own thing and believe HR is totally ineffective. The HR Director needs to adopt the measures and the format proposed above with customer metrics aligned to HR metrics and in very simple terms. Whatever system is currently being used is not working or the systems are not in place to generate the results with a framework or the framework is not in place. Starting over again and working it down is the best approach. Framework – objectives- measures and then we begin again. j. Providing practitioners with methods of measurement is critical for moving to Stage 4 successfully. f. Special emphasis needs to be placed on the following program development: i. Each functional area needs to be audited for program development. Weak areas need to be addressed from a Stage one standpoint immediately. All functional areas need to be at a minimum of Stage one before moving on to another stage. The first goal would be to ensure the foundation is in place based on the framework provided. ii. Create a succession planning system to develop ready replacements for key leaders including the HR Director. 1. As a part of the succession planning, identifying high consistent achievers, underachievers, and low achievers in all 12 locations, can be completed at this time. This identification system could be used as a tactical means to address other HR concerns (Shonhiwa and Gilmore 1996). iii. Performance Management System needs to be fully developed: 1. The organisation will redesign the performance appraisal process and it will become a performance management process. 2. Management will have a competency-based based performance appraisal system which is directly linked to the business objectives and the employee development plan as well as the Total Compensation Program. 3. Improve rate of completion of the performance management tool to 95%. 4. Utilize a 360 degree appraisal system for manager or higher positions only. 5. Training needs analysis and training programs will be an outcome of the performance management system. iv. The organizational culture needs to be redefined. There is a dichotomy in evidence that needs to be resolved and a new order needs to arise. For example, there has been an emphasis in the past on the manager as coach, but yet there are up to 8 levels of management and the HR Director has been quoted as saying there is “virtually no slack”. This cannot continue long term. Now that the company has had three years with the two new companies and down-sizing has taken place, it is time for reflection and redefinition of whom and what this company is. As stated in Oakland and Oakland (1998) the organization is the people who work within the organization – no organizational process or task, duty or phone call happens without them. People are involved in every step of each aspect of the company. A new company mission, vision , and values needs to be developed and communicated to all staff to create a solid bond and a corporate identity to which the employees can connect with. 1. This initiative would have a separate set of tactical measures to address the outcomes as a result through the climate survey. Specific questions can be included as to what the employees think about the corporate culture, the identity of then and now and how that identity changing may or may not have affected business. 6. References a. Bhattacharya, Mousumi and Wright, Patrick. 2005. “Managing Human Assets in an Uncertain World: Applying Real Options Theory to HRM,” The International Journal of Human Resource Management, volume 16, number 6: 929-948. b. Cabrera, Elizabeth and Cabrera, Angel. 2003. “Strategic Human Resource Evaluation,” Human Resource Planning, volume 26, number 1, 41-50. c. Hagood, Wesley. 2002. “Using the Balanced Scorecard to Measure the Performance of Your HR Information System,” Public Personnel Management, volume 31, number 4, 543-557. d. Lawler, Edward and Mohrman, Susan. 2003. Creating a Strategic Human Resources Organization. CA: Stanford University Press. e. Noe, Raymond, Hollenbeck, John, Gerhart, Barry, and Wright, Patrick. 2003. Human Resource Management: Gaining a Competitive Advantage. NY: McGraw-Hill Irwin. f. Oakland, John and Oakland, Susan. 1998. “The Links between People Management, Customer Satisfaction and Business Results,” Total Quality Management, volume 9, numbers 4 & 5, S185-S190. g. Porter, Michael E. 1996. “Operational Effectiveness is Not Strategy,” Harvard Business Review, November-December, 61-78. h. Rose, Raduan and Kumar, Naresh. 2006. “The Influence of Organizational and Human Resource Management Strategies on Performance,” Performance Improvement, volume 45, number 4, 18-48. i. Rowden, Robert. 1999. “Potential Roles of the Human Resource Management Professional in the Strategic Planning Process,” SAM Advanced Management Journal, 22-34. j. Shonhiwa, Shepherd and Gilmore, Harold. 1996. “Development of Human Resources: A Portfolio Strategy,” SAM Advanced Management Journal, 16-23. k. Trahant, Bill, Steckler, Fred, and Sonnesyn, Chris. 2007. “Elements of Successful Strategic Human Capital Planning,” Public Manager, volume 36, number 2, 45-50. l. Ulrich, Dave, Cody, Tom, LaFasto, Frank, and Rucci, Tony. 1989. “Human Resources at Baxter Healthcare Corporation Merger: A Strategic Partner Role,” Human Resource Planning, volume 12, number 2: 87-102. Read More