Module 1: Business Management and Strategy 11% PHR
Module 1: Business Management and Strategy 11% PHR 30% SPHR Any student use of these slides is subject to the same License Agreement that governs the students use of the SHRM Learning System materials. SHRM 1-1 Additional Study Resources PHR / SPHR: Professional in Human Resources Certification Study Guide by Sandra M. Reed and Anne M. Bogardus PHR/SPHR Practice Test - 2012 Edition: 225-Question Practice Test by Aaron Frias PHR Exam Prep: Professional in Human Resources by Cathy Lee Gibson PHR Exam Practice Questions: PHR Practice Tests & Review for the Professional in Human Resources Certification Exams by PHR Exam Secrets Test Prep Team
www.hrci.org www.certgear.com www.strategichrinc.com www.upstarthr.com/phr-sphr SHRM 1-2 Thriving in a VUCA World SHRM Management Strategy Awareness Discipline Direction
Growth 1-3 HR in Strategic Organizations SHRM 1-4 HRs Nonstrategic Role in 20th Century Finance/accounting Sales/marketing Research and development HR Administrative Operational
SHRM Senior management Operations Information systems 1-5 HRs Strategic Integrated Role Finance/ accounting Sales/marketing HR Research and development Senior
management Operations Information systems Administrative Operational Strategic SHRM 1-6 Changes in the HR Profession
Workforce/workplace changes Globalization Ethics Flexible organizational boundaries Increased accountability SHRM 1-7 Key Trend: Offshoring SPHR only Home-country HR challenges Displaced workers Changes in work requirements Decline in employee morale Impacts on available
skills in domestic job pool SHRM Host-country HR challenges Recruiting, managing, and motivating the new workforce Ensuring communication and coordination Acculturation of new workforce 1-8 Key Trend: Mergers, Acquisitions, and Divestiture SPHR only HR in the M&A Process
1 Prepare for M&A. 2 Perform due diligence. 3 Plan Integration. 4 Implement and measure. 1. Identify issues, form and train teams, and prepare for change.
2. Investigate structural, technological, financial, legal, and cultural risks. 3. Develop plans to address key issues. 4. Measure activity of new organization against benchmarks. SHRM 1-9 Management Functions Planning Forecast Set goals SHRM Organizing Design Assist
Informational Communicator Information disseminator Decisional SHRM Conflict resolver Resource allocator 1-11 Business Case
Essential tool when competing for limited organizational resources SHRM 1-12 Project Planning Tool: Gantt Chart Also known as horizontal bar chart, milestone chart, or activity chart. Plots the sequential steps of a project against time. January February March April
May Development of RFP for new medical insurance plan Identification of possible providers Issuance of RFP Evaluation of proposals Company presentations Selection Development of plan Presentation of new plan to employees SHRM 1-13 Project Planning Tool: PERT Chart Arrow diagram or road map identifying all major events Shows how much time is needed to complete a project. 5
A Legend: Event Activity 1 C 2 B E 2 D 2
F 2 Numbers = Weeks Critical path SHRM 1-14 Change Management Models Common themes in change management models SHRM 1-15 A company must immediately downsize its workforce
by 15% due to shrinking markets. What important role will HR play during the process? A. Form new work teams based on the gaps created by the layoffs. B. Summarize industry trends and communicate them to employees. C. Ensure that top management regularly communicates with employees. D. Launch a new quality initiative to preserve customer satisfaction. SHRM 1-16 Strategies for Vendor Selection SPHR only
Define appropriate relationship. Choose goals. Identify and manage risks. Build metrics and rewards into service-level agreement. What do we stand to gain or lose? SHRM Do we want a partner or vendor? Should we include performancebased incentives? 1-17 The Outsourcing Process
1. Analyze needs and define goals. 2. Define budget. 3. Create RFP. 4. Send RFPs to vendors. 5. Evaluate vendor proposals. SHRM 6. Choose vendor. 7. Negotiate contract. 8. Implement and monitor. 9. Evaluate. 1-18 Managing Technology Trends SPHR only
SHRM 1-19 Strategic Planning Process Defines where the organization is now, where it wants to be, and how it will get there. Gathers internal and external information. Develops alternative strategies. Selects appropriate strategies. Implements a plan. Evaluates and revises the plan as needed. Phase 1 Strategy Formulation SHRM Phase 2
HR must understand: How the organization generates value. How and when to communicate the mission. How values connect to policies and processes. 1-21 Phase 2: Strategy Development Strategy Development Conduct a SWOT analysis, including an environmental scan. Establish long-term objectives (three to five years). Identify strategies.
SHRM S = Internal strengths W= Internal weaknesses O = External opportunities T = External threats 1-22
Phase 3: Strategy Implementation Strategy Implementation Establish short-term objectives (six months to a year). Develop action plans. Allocate resources. Motivate employees. SHRM Resources needed to achieve objectives: Financial Physical Human Technological
1-23 Phase 4: Strategy Evaluation Strategy Evaluation Review strategies. Measure performance. Take corrective action. Assess strategies by noting changes in: Internal strengths and weaknesses. External opportunities and threats. Take corrective action when changes have occurred. SHRM
1-24 Align HR Function with Strategic Plan SPHR only Serve the organization and its functions, not just HR. Position HR as expert in workforce planning. Create and maintain a motivated, participative workforce. Understand every functions role and processes. Strategic Plan Build partnerships across the organization and relationships inside and outside the organization. Learn about your industry. Support ideas with facts and data. Help the organization measure its strategic success. SHRM
1-25 Understanding the Internal Environment Research and Development Finance and Accounting HR Marketing and Sales Information Technology Operations
SHRM Understand the perspective of your business partners. Create communication and collaboration. Identify internal needs and emerging issues. 1-26 Finance and Accounting Goals of finance and accounting functions: Comply with all laws and regulations. Provide information to decision makers and stakeholders. Provide financial control. Ensure efficient use of organizations financial resources.
SHRM 1-27 Balance Sheet Summarizes the firms financial position at one point in time. Basic form of the sheet is: Assets = Liabilities + Equity. Every financial transaction is an exchange, and both sides are recorded. Only records transactions measured in money. Employees constitute human capital, but, in accounting terms, people are not assets. SHRM 1-28 Balance Sheet Assets Current assets (easily liquidated/converted)
Fixed assets (intended to be held long-term) Accounts receivable Investments Total assets $310,000 $50,000 $20,000 $20,000 $400,000 Liabilities and equity Accounts payable Debt (short- and long-term) Equity Total liabilities and equity SHRM
$45,000 $100,000 $255,000 $400,000 1-29 Income Statement Compares revenues, expenses, and profits over a specified period of time. Basic form of the statement is: Revenues Expenses = Net income. Some expenses are never cash outflows (depreciation). Some expenses may be paid partly in one period and partly in another (cost of goods sold). Owner withdrawals are distributions, not operating expenses. SHRM 1-30
Income Statement Gross sales (revenues) $360,000 Less cost of goods sold $240,000 Gross profit $120,000 Less expenses: $50,000 Salaries $20,000 Rent $18,000 Utilities $7,200 Depreciation $1,800 Interest $3,000 Subtotal of expenses: $50,000 Income less expenses $70,000 Income tax expense $28,000
Net income $42,000 SHRM 1-31 Cash Flow Statement Shows how money is flowing into and out of the organization over a defined time period. Uses financial data from balance sheet and income statement and changes in values from previous period. Important indicator of organizational health for investors. SHRM 1-32 Cash Flow Statement Year 1 (thousands)
Year 2 (thousands) Net cash flow from operating activities $22,300 $11,700 Net cash flow from investments ($10,000) ($10,000) Net cash flow from financing activities ($8,000)
Items in parentheses represent cash amounts flowing OUT of the organization; other amounts represent cash flowing INTO the organization. SHRM 1-33 A company has $10,000,000 in gross sales, $500,000 in returned or discounted product, and $7,000,000 in cost of goods sold. What is its gross profit margin? A. B. C. D. 30% 26% 18% 10%
SHRM 1-34 Budgeting Methods SPHR only SHRM 1-35 Marketing and Sales Marketing: Plan, price, promote, and distribute goods and services. Product Product Promotion
Key elements Price SHRM Place Sales: Sell the organization's product to the marketplace. 1-36 Research and Development The role of R&D is to fill an organizations pipeline of products/services. R&D requires:
Awareness of latest knowledge and technology. Creativity and excellent problem solving. Team focus and skills. Flexibility and pragmatism. SHRM 1-37 Operations Capacity Standards Control Key concepts
Inventory SHRM Scheduling Goal: To provide goods and services to customers. Focuses on productivity, quality, cost, delivery, and performance. Affected by supply chain management. 1-38 A company commits to answering all phone calls within 15 seconds. Which operational concept deals with observing and documenting actual results?
A. Capacity B. Inventory C. Scheduling D. Control SHRM 1-39 Information Technology SHRM 1-40 Evolution of Organizations HR Focus: Staffing Staffing and
training Compensation, HR planning, training Challenge: Bureaucracy Challenge: Delegation Need: Formal systems Challenge: Leadership Need: Creativity Introduction SHRM
Cost Leadership Strategy Goal: To be the low-cost producer. Requires: SHRM Exploitation of all sources of cost advantage. Efficiency and productivity. Sharing of information. Centralized decision making. Cross-training and job rotation. Process improvements. 1-42 Differentiation Strategy Goal: To attempt to set the product apart from its
competition by giving it unique characteristics for which customers will pay a premium price. Requires: Reduced costs in areas not related to differentiation. Strong research and development and marketing. Product knowledge and quality training. Decentralized decision making for quicker speed to market. SHRM 1-43 Other Strategy Theories SHRM 1-44 Specialization and Departmentalization Specialization: Degree to which processes
are divided into tasks and grouped into jobs Balances need for productivity with employee satisfaction Departmentalization: The way an organization groups jobs so work can be coordinated Functional, divisional, or matrix SHRM 1-45 Functional Structure SHRM 1-46 Divisional Structure
SHRM 1-47 Matrix Structure NexStage President Director, Product Operations Design Vice President Manufacturing Vice President Marketing
Vice President Controller Procurement Manager Product Manager A Product Manager B Product Manager C Product Manager D SHRM Location of a twoboss employee
1-48 Authority and Reporting Issues Chain of command Line of authority within an organization Defines the boundaries within which a manager can make decisions SHRM Span of control Number of individuals who report to a supervisor Narrow span (tall organization)
Wide span (flat organization) 1-49 Centralization and Decentralization Centralization Decentralization Decision making Authority resides with upper management. Authority is shared with lower levels. Formalization: Degree of discretion individuals have over how to perform their work. SHRM
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