CHAPTER

6

Business Management and Strategy

Business Management and Strategy is probably the most important functional area for PHR, and especially SPHR, candidates, because it assists them in developing into the role of an essential internal business consultant for their organizations. Twelve percent of the PHR exam and a hefty 29 percent of the SPHR exam will focus on Business Management and Strategy.

Business Management and Strategy is where you will glean all the essential information about the skills and responsibilities of HR as a business partner, strategist, and protector of organizational assets. HR professionals not only need to understand the organization’s business, but they must also understand the external environments in which it operates, its competition, and trends that influence it. These continue to be expanding and evolving functions for HR in our current business environment with the emphasis on helping the organization compete in new global markets and respond to rapidly changing conditions. Embrace these skills and you will surely become a key internal consultant for your organization’s management team.

The official HRCI Business Management and Strategy functional area responsibilities and knowledge statements are as follows:

Responsibilities

• Interpret and apply information related to the organization’s operations from internal sources, including finance, accounting, business development, marketing, sales, operations, and information technology, in order to contribute to the development of the organization’s strategic plan.

• Interpret information from external sources related to the general business environment, industry practices and developments, technological advances, economic environment, labor force, and the legal and regulatory environment, in order to contribute to the development of the organization’s strategic plan.

• Participate as a contributing partner in the organization’s strategic planning process (for example: provide and lead workforce planning discussion with management, develop and present long-term forecast of human capital needs at the organizational level).

• Establish strategic relationships with key individuals in the organization to influence organizational decision-making.

• Establish relationships/alliances with key individuals and outside organizations to assist in achieving the organization’s strategic goals and objectives (for example: corporate social responsibility and community partnership).

• Develop and utilize business metrics to measure the achievement of the organization’s strategic goals and objectives (for example: key performance indicators, balanced scorecard).

• Develop, influence, and execute strategies for managing organizational change that balance the expectations and needs of the organization, its employees, and other stakeholders.

• Develop and align the human resource strategic plan with the organization’s strategic plan.

• Facilitate the development and communication of the organization’s core values, vision, mission, and ethical behaviors.

• Reinforce the organization’s core values and behavioral expectations through modeling, communication, and coaching.

• Provide data such as human capital projections and costs that support the organization’s overall budget.

• Develop and execute business plans (for example: annual goals and objectives) that correlate with the organization’s strategic plan’s performance expectations to include growth targets, new programs/services, and net income expectations.

• Perform cost/benefit analyses on proposed projects.

• Develop and manage an HR budget that supports the organization’s strategic goals, objectives, and values.

• Monitor the legislative and regulatory environment for proposed changes and their potential impact to the organization, taking appropriate proactive steps to support, modify, or oppose the proposed changes.

• Develop policies and procedures to support corporate governance initiatives (for example: whistleblower protection, code of ethics).

• Participate in enterprise risk management by ensuring that policies contribute to protecting the organization from potential risks.

• Identify and evaluate alternatives and recommend strategies for vendor selection and/or outsourcing.

• Oversee or lead the transition and/or implementation of new systems, service centers, and outsourcing.

• Participate in strategic decision-making and due diligence activities related to organizational structure and design (for example: corporate restructuring, mergers and acquisitions [M&A], divestitures).

• Determine strategic application of integrated technical tools and systems (for example: new enterprise software, performance management tools, self-service technologies).

Knowledge of

• The organization’s mission, vision, values, business goals, objectives, plans, and processes

• Legislative and regulatory processes

• Strategic planning process, design, implementation, and evaluation

• Management functions, including planning, organizing, directing, and controlling

• Corporate governance procedures and compliance (for example: Sarbanes-Oxley Act)

• Due diligence processes (for example: M&A, divestitures)

• Transition techniques for corporate restructuring, M&A, offshoring, and divestitures

• Elements of a cost-benefit analysis during the life cycle of the business (such as scenarios for growth, including expected, economic stressed, and worst case conditions) and the impact to net worth/earnings for short-, mid-, and long-term horizons

• Business concepts (for example: competitive advantage, organizational branding, business case development, corporate responsibility)

Core Knowledge of

• Third-party or vendor selection, contract negotiation, and management, including development of requests for proposals (RFPs)

• Project management concepts and applications

• Ethical and professional standards

• Technology to support HR activities

• Qualitative and quantitative methods and tools for analysis, interpretation, and decision-making purposes

• Change management theory, methods, and application

• Types of organizational structures

• Environmental scanning concepts and applications

• Budgeting, accounting, and financial concepts

Key Legislation Governing Business Management and Strategy

Now that you’ve reviewed the Business Management and Strategy responsibilities and knowledge statements, we recommend that you review the federal laws that apply to Business Management and Strategy as outlined in Figure 6-1. It would be helpful to refer back to Chapter 2 on these specific laws prior to reading any further in this chapter.

Figure 6-1 Federal laws that apply to business management and strategy

Role of Human Resources in Organizations

The role of Human Resource Management (HRM) has evolved over the years, probably more so than any other department function in an organization. In the early twentieth century, HR as a specialized function began with a narrow focus of hiring and keeping records of employees, an operational and administrative function. Changes in HR have been stimulated by external changes, as illustrated below in Table 6-1.

Table 6-1 Evolution of Human Resources

HR’s staff typically provided three types of support: advice, service, and control.

• Advice Advising line management on workforce matters, including policies and laws, providing solutions and procedural steps, offering assistance and guidance on employee issues, diagnosing problems or gathering facts, and providing resources.

• Service Maintaining records, hiring, training, answering, and clarifying information within a broad customer base, including management, employees, legal and regulatory agencies, applicants, retirees, families of employees, and vendors.

• Control An authoritative role involved in consistency of policy application, evaluation of employee performance, corrective action, and designing or implementation of employee programs.

While the focus continues to have a foundational basis in the day-to-day operational role (acquisition, development, resolving issues, and communications), along with administrative transactional activities (maintaining a Human Resource Information System, or HRIS), the significance of HR’s contributions has become more apparent as a business strategist with a forward-thinking, long-term global focus that includes protecting the organization from potential risks. HR professionals have earned a seat at the executive round table, contributing to the organization’s direction with strategic solutions for talent management, creating organizational culture, formulating and developing strategies, and balancing the external or internal environments to help the organization achieve its goals. The title of Chief Human Resource Officer (CHRO) is common in today’s large organizations—a recognition that indicates HR has come a long way up the perceived value added scale. In today’s global competitive business climate the HR role must contribute in quantifiable business terms, outlining a return on investment (ROI) that ensures the effective and efficient use of its human capital.

Table 6-1 provides a brief historical perspective of the evolution of the Human Resources function.

Strategic Alliances

As a strategic business partner, the role of an HR professional requires partnering with others in an alliance of collaboration that aims for a synergy where each partner’s benefits will be greater than those from individual efforts. Cooperation on planning, organizational design, and other broader HR activities are major emphases for these strategic relationships with an organization’s management. Strategic relationships are between individuals, defined as stakeholders, who could be employees, the management hierarchy, the shareholder, or the community and industry.

Building partnerships across the organization requires an understanding of the differing perspectives, views, and needs of the stakeholders, and how all areas are interrelated and affect one another. Having a broader perspective outside of the organization within its industry or its communities is necessary, too, for a big picture view.

HR’s Internal Business Partners

Every organization, regardless of size, has basic key business functions: sales and marketing, operations, information technology, finance and accounting. Larger organizations will have even more: Customer Service and Relations, Research and Development, Quality Assurance. They each have a connection and collaboration associated with the Human Resources function. HR professionals need to form partnerships within their organization’s key business functions to fully understand the key functional areas in an effort to become a true strategic business partner.

Sales and Marketing The sales function in an organization is normally the revenue generator. It is responsible for selling the organization’s service or product. The marketing function has responsibilities for promoting, pricing, and locating/identifying the customer base.

Operations Operations is considered the heartbeat of the organization. Operations will create the goods or services, acquire the resources, and ensure the customer receives those goods or services. Five concepts drive operations: capacity, scheduling, inventory, standards, and control.

Information Technology Information Technology is the brain of today’s organizations. The systems, tools, and information required for all other key functions to do what they do are dependent on the responsibilities of IT.

Finance and Accounting Similar to sales and marketing functions, the finance and accounting functions go hand-in-hand, yet are distinctively different. Finance has its focus on funding sources, such as bank loans and stock sales, along with budgeting for income generation and expenses. Accounting, on the other hand, is associated with the movement of the monies going in and out, such as payables and receivables processing, payroll, and taxes.

Influencing Decision Making

HR experts have experience and knowledge about how to build human capital in an organization, and there’s nothing more vital to a company’s success than its people. They deserve to have the CEO’s ear. Yet even today in the twenty-first century, there are many HR professionals who are not included in executive meetings where critical business is discussed and budgetary allocations are made. It’s a disservice if HR does not have a voice at the upper echelons in an organization to advocate for the funding of projects that will boost workforce morale, efficiency, retention, and engagement.

HR is viewed by some executives in an organization as the soft side of the business, mostly handling transactions such as hiring, onboarding, and training. Executives may need help in understanding that HR fits into discussions about the financial and operational issues facing the company. The following tips will help you make that shift:

• Become fluent in the language of economics. HR focuses primarily on human capital, yet there are four other kinds of capital—structural, financial, social, and intellectual—that require equal consideration in decisions. Understand how HR intersects with each area.

• Present concrete analysis. Be prepared with concrete analysis of how HR impacts the business function and aligns with the organization’s larger goals. Explain the cost versus value from an HR perspective, how a decision might impact human capital in areas such as hiring, training, and morale. This is how executives think. They are constantly using analytical techniques to make decisions and judgments that will move the organization forward. Those HR leaders who can master number-crunching, who not only explain the reasoning for something but show it via research and analytical evidence, will have a valued opinion in decision making.

• Become known as a problem solver and collaborator. Pulling together various options for emerging problems, collaborating with management, and having a focus on holistic solutions (the greater of the whole) will definitely earn respect. Keep in mind the desired end result and what’s in the best interest for all stakeholders. Create scenarios with probability analysis to help decision makers make their decisions.

Business Case A major responsibility falling on the shoulders of HR professionals these days is development and presentation of a business case for the organizational programs that will solve specific problems. For example, a business case is needed when recommending certain medical insurance programs, particularly if the employer has not provided such benefits in the past.

A business case is a written or oral presentation that identifies a problem, analyzes the various possible solutions, and makes a recommendation for implementing one of them. It will almost always have an analysis of financial impact, personnel impact, and customer impact. It is designed and presented using business terminology. For example, a recommendation for medical insurance would include the current cost plus a forecast of future costs both in total dollars and in dollars per employee. It will have specific information about the way in which the recommendation will solve the problem that has been identified. (For example, retention of employees is significantly improved if the employer offers medical insurance to workers. Higher retention means less turnover and lower recruiting and training costs.) All of the benefits will have dollar values assigned to them in a business case presentation.

“Making a business case” means assembling business reasons for taking some action. The case will be ultimately presented to the decision maker, be it an executive or the Board of Directors. Business case content includes the following:

• Executive summary Short statement that summarizes the problem and recommendation with key reasons for choosing the recommended solution.

• Definition of the problem Identifying the issue that is being addressed in the business case. It could be changes in employee benefits, alterations in payroll, policy changes, or other HR-related issues. The definition should include a statement of how the organization is impacted by the problem.

• Objectives Statements of key results expected in solving the stated problem.

• Possible solutions List of key solutions possible for the stated problem.

• Recommended solution Identification of the solution that is being recommended and why. The list of reasons for making the choice should include statements of impact on the organization, its workforce, its customers/clients, and its other stakeholders. Those impacts should be quantified if possible.

• Implementation plan The steps needed to implement the solution and solve the problem. It could be a short list of steps or something quite complicated. An action plan should always include an action to be taken, who is responsible for that action, and the target date for completion of that action.

• Support documents All documents related to the selection decision. They might include financial analysis, statements of impact on profit and loss or balance sheet, analysis of HR impacts (for example, turnover, diversity, morale), organizational branding impacts, influences on competitive advantage, corporate responsibility changes, and staffing required for implementation.

Business Partner Consultant Over the last decade or so, a lot of excitement and focus has been around HR professionals evolving into business partners and no longer being pegged to just a support function role—thus the evolution of the title HR Generalist to HR Business Partner, which acts as an internal consultant to management, chiming in on human capital management. To be effective as a business partner consultant, HR professionals need to position themselves as a consultant does: providing advice, solutions, options, and not being the decision maker. They should provide proposals and factual data to back up recommendations, which gain credibility with the value of data and information.

With more HR professionals jumping on the bandwagon to partner with their business leaders, employees perceived that the pendulum might have swung too far, which left employees feeling left out of the equation; thus evolved the title of HR Employee Partner to provide a counterbalance.

Community Partnership

Community partnership, here referred to as corporate responsibility (CR), involves keeping a watchful eye within the organization’s communities—local, national, and even international. CR strives to enhance the organization’s reputation. Strategic relationships and behaviors include CR activities such as Chamber of Commerce membership or sponsoring a local non-profit fundraiser, creating a Corporate Citizenship. Multiple departments may have corporate responsibility in creating community relationships, yet HR is typically the department primarily at the core, absent an organization’s official CR or public relations department.

Corporate philanthropy has been around for decades and was typically under the control and influence of senior management within a corporation. Although corporate philanthropic activities such as monetary donations, percentage of sale, and cooperative programs are still widely in existence, the tide has shifted to a more strategic focus on donations, one that affiliates with the organization’s relevant business or branding. A good example of this is the cosmetic company Avon, which is widely known as a corporate sponsor for breast cancer research. The company’s customer base is relevant to the majority of affected individuals with breast cancer, women.

Sustainability and the associated accountability efforts within sustainability (behavior that is cognizant of depleting resources that the organization is intertwined with) have also become front and center for CR. Time, labor, and finances are where HR is involved with the design or implementation of programs. An example of a program would be re-entry into the workforce by former stay-at-home parents. “Green initiatives” along with “environmental footprints” are now a prime attention grabber within CR. Green initiatives might include an HR department reducing its paper printing needs by converting to online, paperless employment and benefit forms, employee handbooks, and newsletters. A paid time-off volunteerism policy for employees is another popular initiative in CR.

The external forces that typically drive goals and objectives in CR can be better understood by looking at Figure 6-2.

Figure 6-2 Corporate responsibility

When identifying the goals and objectives for CR, it is ideal to use the same analysis tools as used with strategic planning (see the section “Environmental Scanning” later in this chapter) to identify the long-term investment and involvement for the organization.

Facilitation and Communication

One important role that HR plays is facilitator of communications to the workforce at large. That includes serving as a bridge to link the workforce with new and/or existing strategic plans. The organization’s vision, mission, values, and ethics are foundational and should be linked by HR with its recruitment, onboarding, enrollment, development, and performance review materials and activities, just to name a few. There is also the role of communicator of change management, as discussed in this chapter.

Given the accessibility to information that is now in the hands of all levels of employees, and the manner in which employees access and share information, the role HR plays as Chief Communicator is a daunting one. The lines of transparency become blurred, and both accurate and inaccurate information can spread like wildfire. HR professionals are required to hone their writing skills, and visual presentation skills (such as those used for weekly intranet videos), in order to manage the accelerated flow of communications. Chapter 7 explores the various tactics and methods of communication for the HR professional.

HR Business Management and Acumen

It is highly important for HR management to understand all business functions within the organization and industry, especially if individuals are striving towards the business partner position within the organization. This means recognizing business issues and understanding their organization and industry from both an internal and external perspective. Simply put, in order to be strategic in HR and to be trusted as an internal business partner, you must understand the business and industry your organization is in.

Business Acumen

Business acumen is defined in SHRM’s Business Literacy Glossary as “the knowledge and understanding of the financial, accounting, marketing and operational functions of an organization.” It is generally considered to be a keen judge about all things related to business. Figure 6-3 illustrates the many categories of business that provide a well-rounded business acumen for an individual.

Figure 6-3 Business Acumen

You most likely learned quite a bit about business concepts in college courses. A good amount of knowledge is also gained by experiencing business firsthand. HR business management and acumen as a competency come about as you apply all that knowledge and experience. Building business acumen is a career tactic that never ends. Activities you can do to continue to build your business acumen are:

• Voracious reading of journals and media that are broader in topic than just HR

• Volunteering for an organization in a leadership position such as a non-profit credit union in a board of director’s position

• Studying your organization’s financials and regulatory compliances

• Knowledge of your organization’s competitive unique propositions and market share

• Staying tuned in to your organization’s industry threats and opportunities

• Researching your competitors and staying abreast of their developments

• Asking questions of other managers within the organization to learn about the issues and opportunities affecting their departments

• Enrolling a mentor or hiring an outside Executive Coach that will broaden your perspective and paradigms

• Taking classes or executive education programs on a continual basis

Budgeting and Financial Analysis

Budgeting is the process of estimating the amount of income and expenses that will occur within a given period of time. It is usually done on an annual basis, although budgets can be created for multiple years and for shorter periods of time such as months and quarters. Accuracy of budgeting can be improved when there is some historical data on which to rely. And, generally speaking, budgets in the short term can be easier to construct and are usually more accurate than long-range budgets. The reason, simply, is that many unforeseen influences can enter the long-range picture. Fewer unpredictable influences tend to occur in shorter periods of time. Figure 6-4 illustrates the basis of budgeting.

Figure 6-4 Budget chart

Whether in a for-profit enterprise or a governmental agency, a non-profit or a volunteer service organization, there is need for money management. Budgeting and financial analysis are critical to any organization large enough to have employees. Understanding how to plan for earnings and expenses, and then manage the process and ultimately conduct analyses of what happened after the fact, is key to any individual’s success in a management role.

There are two key financial reports that any organization should be preparing and studying. One measures the income and expenses over a defined period of time. That can be a year, a calendar/fiscal quarter, or a month. It is usually called the Profit and Loss Statement, or “P & L.” The second is a balance sheet that shows the assets (furniture, buildings, vehicles, cash, and accounts receivable) compared to the liabilities outstanding (accounts payable, taxes payable, credit card balances, and payroll payables). A balance sheet also shows the amount of equity owned by investors in the organization. “Equity” is the difference between income and liabilities in a for-profit organization. In a non-profit organization, it is called “net assets.”

NOTE This basic formula will help you understand balance sheets: Assets = Liabilities + Equity.

HR professionals at management levels will generally participate in the creation of the HR department’s budget to outline anticipated specific expenses, such as office supplies, equipment purchases, and software licenses, but also for other areas in the organization that have compensation and benefits associated with their budgets. Additionally, HR will provide projected budget expenses associated with plans that the organization’s strategic plan may pursue that year—for example, a strategic plan objective that creates a new incentive bonus plan for customer service representatives. HR will project how those additional earnings will impact 401(k) matching contributions.

Business Concepts

A business concept is an idea for producing goods or services that identifies the benefits that can be achieved for customers or clients in the end. Ordinarily, concepts rely on people for their realization. Human Resources thus becomes a key component of any business concept description.

For example, in 1971, Fred Smith founded a company called Federal Express. His business plan contended that it would be possible to provide overnight package delivery service by having a fleet of trucks and airplanes pick up shipments from originating cities around the country, fly them to a central hub in Memphis, Tennessee, sort them by destination, and fly them back to the remote locations for delivery the next day. The benefit was clearly based on next-day delivery of important documents and materials. The process involved using assets including trucks and airplanes and a sorting facility at a central airport. The sorting, driving, and flying had to be done by people. He had to design a system for human resource management that would permit him to successfully implement the concept.

In 2001, Dean Kamen unveiled his invention called the Segway Human Transporter. He had a business concept that he could create and sell a product that would solve some problems people had with transportation. His product is now used in factories, warehouses, and law enforcement. Segways are also rented as a means of transportation for city tours in numerous cities.

An employer’s enterprise or agency begins with a business concept. Someone has an idea for solving a problem he or she has noticed in the world. Fleshing out a statement about the assets and human resources that will be required to implement the concept is the process of preparing a business concept statement.

Management Skills

Management skills were first measured scientifically in the American Telephone and Telegraph “Management Progress Study,”¹ which began in 1956 and lasted for over 30 years. It followed the careers of managers within the Bell System, first in Michigan Bell, then nationally. That study led to the first industrial assessment centers, measuring the amount of management skills exhibited by participants in the assessment process.

Skills measured in the program included:

• Oral and written communication skill

• Human relations skill (later called “leadership skill”)

• Personal impact (forcefulness and likeability)

• Perception (environmental and perception of people)

• Creativity

• Self-objectivity

• Social objectivity

• Behavior flexibility

• Goal flexibility

• Organization and planning

• Decision making (willingness to make decisions and effectiveness of decisions)

In addition, non-skills were observed and measured. These included things such as:

• Tolerance of uncertainty

• Resistance to stress

• Energy

• Range of interests

• Primacy of work

• Inner work standards

• Need for approval of supervisors

• Need for approval of peers

• Need for advancement

There are other functions involved in managing. These typically involve four identified management functions that the early management theorist Henri Fayol identified and are the basis of most of today’s management theories.

Planning

Forecasting, setting goals and objects, determining actions and courses of direction— these activities are key to keeping HR activities in a proactive position rather than a reactive one. The HR department needs to perform strategic planning for its function to ensure that its programs and activities are aligned with the organization’s needs. Having a big picture view of how HR activities intertwine with the organization’s objectives is necessary.

Organizing

Organizing is the process of creating order out of chaos. It involves collecting process steps and information about the desired goal, and then structuring the methods to achieve the goal. Ordering and sequencing are things done while organizing.

HR professionals have huge organizational responsibilities. There are employee data systems to construct, benefit programs to identify, open enrollment to conduct, the interview selection process to design, and payroll processing to handle. HR professionals must create structures that effectively align the people of an organization with the organization’s goals and administration.

Directing

These days, directing work in an organization is thought of as leadership. It involves getting people to willingly do what is wanted or needed. Even in military organizations, it is rare for managers/officers to issue blunt orders. In most situations, it is appropriate to lead a group of people to the desired end without dictating. (That doesn’t necessarily apply to combat.)

Once a goal has been determined and a path chosen, the task of directing requires a manager to encourage people to willingly do what is necessary by engaging people in activities that contribute to the desired business’s outcomes.

Controlling

The function of controlling involves a monitoring activity to ensure that everything is carried out according to a plan. Managers monitor their organizations’ activities and results, determine the difference between what was planned and what actually happened, and then take corrective action to redirect the organization to the goal(s).

HR Management Skill Development

HRCI identified four critical skill development areas that prepare HR professionals for the career challenges they will face:

• Project management

• Managing change

• Managing third-party contractors

• Managing technology

Project Management

Projects come and go in the life of HR professionals. There are projects for implementation of new benefit programs, assessment of new recruiting sources, and all the projects associated with new paths of business that the organization is embarking on. Being able to juggle all those things at the same time while ensuring that each gets the proper amount of attention and actually moves toward a conclusion is the mark of a good project manager.

A project consists of a series of activities and tasks that have been identified that need to be performed to accomplish an outcome. Dates are identified, people assigned to the tasks, and resources such as budget and people allocated. Overseeing a project is project management.

A standard tool used in project management is the Gantt chart, also known as an activity log or milestone chart and is widely available as a template or dedicated software programs. A Gantt chart normally identifies in chronological order the simultaneous tasks that have to occur (see Figure 6-5). The benefit of a Gantt chart is the visual monitoring and communication of who is on first base and doing what task, what needs to occur before progression to second base, and where the results have to be before a run is counted at home plate.

Figure 6-5 Sample Gantt chart

PERT Program evaluation and review technique (PERT) is a project management tool used to organize, schedule, and manage tasks of a project. The U.S. Navy developed the methodology in the 1950s. The Critical Path Math (CPM) methodology is similar to PERT and you will frequently see CPM/PERT associated with one another—they both use visual charts. Large projects that employ cross-functional tasks for several interrelated departments will use the PERT/CPM process tool. Milestones are identified to keep the project on path progression and in a manner that illustrates what must happen before what. The input for a PERT/CPM chart is different from a Gantt chart (a Gantt chart shows the relationship of a task to time); the PERT/CPM is not fueled by time, but by the sequence of events that must occur first. With a PERT/CPM, only two inputs are required: the specific events with associated duration, and the sequence of the events. Advantages of using the PERT/CPM technique include the identification of tasks that can be delayed due to other resource priorities (money, labor). This, however, slows down the progression of the project.

Managing Change

Also referred to as change management; Chapter 8 elaborates more extensively on this skill development. Suffice it to say that managing change is the largest driving force behind employee relations. Change is a process that people and organizations undergo as a response; it is a transformation toward flexibility. HR is involved in the managing of the people issues resulting from change, either planned changed or a reactive change, such as something occurring from an external source (for example, an employment-related law that regulates behavior in the workplace).

Helping both employees and management in an organized process through the rollercoaster ride of change, as identified by Elisabeth Kubler-Ross in her book On Death and Dying,² is an emotional intelligent (EQ) competency skill for HR professionals and leaders. First, shock and denial about the change is awakened within people. Anger is the next response. Depression eventually sets in about the “loss” of status quo resulting from the change. Then movement toward bargaining and dialogue occurs related to the change. Finally, the rollercoaster ride ends as employees reach a level of acceptance about the change. The key knowledge is in understanding the change and the management of the anticipated reactions.

Donald Kirkpatrick’s How to Manage Change Effectively³ discusses a model with the seven basic steps in the change management process to be followed by HR and organizations:

• Determining the need or desire for change

• Preparing the tentative plans for change

• Discussing alternative and probable reactions to the change

• Making a final decision about the change

• Establishing a project plan and associated timetable

• Communicating the change

• Implementing the change and evaluation

Managing Third-Party Contractors

Outsourcing is now a regular everyday word impacting the HR function. It refers to third-party or outside contractors/companies that are able to more cost effectively and efficiently handle functions associated with HR activities. Staffing, benefit and compensation administration, relocation transfers of employees, and training and coaching are just a few of the services easily outsourced today. The value with internal HR personnel is not necessarily the administrative functions they may provide; the value lies with the strategic business management and development activities they offer.

More detailed information about the process of selecting a third-party contractor, requesting proposals, negotiating contracts, and management of contracts can be found in Chapter 4.

Managing Technology

New technology has increased the efficiency and cost effectiveness of HR greatly over the past two decades. The capability to respond to hundreds of applicants with timeliness and personalization, or for employees to have real-time access to their organization’s policies and procedures—these are examples of ways that technology has transformed HR. Electronic signatures, online recordkeeping, enrollment and ordering systems, and ASPs (application service providers) and the technology applications keep HR professionals on their toes. They must be keenly aware of the trends, security, and privacy issues, and the improvement capabilities that HR technology offers. HR professionals must assess and evaluate not only the positive effects of a new technology for HR, but also the negative uninvited effects, such as missing out on a wonderful applicant because her resume was not coded correctly for screening into the applicant tracking system.

As with all technological innovations, a live person needs to sit at the helm of control monitoring and ensure that what goes in comes out correctly, and to monitor hacking and security breaches. This is not just the function of the IT department; it is the function of the owner or the system—in the case of HR, the HR department.

Organizational Structures

Aligning the way the parts of an organization relate to one another is considered the organizational structure. HR professionals need to be familiar with organizational structures so they may act as a guide for management in the selection and determination as to which structure would be best to gain the best performance.

Business Structures and Functions

There are six types of organizational structures:

• Departmental

• Chain of command

• Span of control

• Work specialization

• Formalized

• Centralized or decentralized

• Matrix

Departmental

For this structure, tasks are divided into separate duties, grouping people and jobs together. The purpose is so that work can be coordinated. It can be functional in nature, divisional, or matrix.

Chain of Command

It is a structure where an employee typically reports to one manager in an up-down format, a clear line of decisions and authority. Chain of command is becoming less recognized in organizations today because, more and more often, organizations are pushing decision-making down matrix lines, which causes the line of authority to look more lateral.

Span of Control

This organizational structure refers to the number of individuals who report to a single supervisor. It’s hierarchical in nature through a chain of command: executives at the top, managers, then supervisors, and then direct reports—much like a pyramid. In organizations where many workers are skilled and require little supervision, employees may report to one supervisor. This would be considered a “flat organization.”

Work Specialization

Work specialization was first associated with the assembly line. It is where tasks are divided into specific jobs and workers are considered skilled labor. It may offer a more efficient manner of productivity, but it can lead to worker boredom. Today’s organizations using this organizational structure will typically rotate job functions on a regular basis, training the workers in skills that add variety to their tasks.

Centralized or Decentralized

To centralize or decentralize, that seems to be the question and the cycle of several long-standing organizations. Centralizing pulls decision-making authority to a central level of management, such as headquarters. Decentralizing is pushing the authority level and decisions out to units, such as regional divisions.

The centralizing and decentralizing continuum is also applicable to HR departments. With decentralized structures, corporate headquarters will create policy and develop programs—rollout and application are then carried out by the HR staff in the regional divisions. When it is centralized, HR headquarters would make the policy and coordinate the rollout activities or administrative functions.

Matrix

Matrix structures create a dual, rather than a single chain of command. A function, such as HR, would report to the local division executive at a facility, along with a direct reporting function to the head of HR in the headquarters office, which is typically located in another geographical area. As a result, the HR manager at the division location would have two managers, neither manager having a superior role over the other in this reporting relationship. A huge disadvantage of this type of reporting relationship is the conflicting priorities of the division and the headquarters. The employee with two direct superiors is attempting to follow the direction of one, and the other is competing for their priority. It can be a bit of a tug-of-war.

Corporate Culture

Corporate culture is deliberately created by management to achieve specific strategic end results. It is achieved through identifying the specific values, norms, working language, systems, ethics, beliefs, and habits that are aligned and connected with achieving the organization’s vision and mission. An organization determines its own corporate culture based on how it wants to be perceived. It is also the pattern of such collective behaviors that are taught to new employees as a way of perceiving, acting, thinking, and even feeling. Ideally, corporate culture is clearly defined and communicated by HR in the onboarding of new hires and in the alignment of HR policies and practices, and it is reinforced within the leadership/employee training functions. Management has the responsibility to “walk the talk” of the desired corporate culture, along with setting expectations and evaluating employee performance against corporate culture expectations. Culture affects the manner and way employees interact with one another, with customers, and with all stakeholders.

Life Cycles of Organizations

Just like the life cycle of people, organizations have life cycles, too. Life cycles are predictable and lead to levels of growth or decline. There are phases in the organizational life cycle: startup, growth, maturity, decline, rebirth, and death. Figure 6-6 is an adaptation of the original Five Stage Organizational Life Cycle Model by Lester, as it includes the newer phases of death and rebirth stages.⁴

Figure 6-6 Life cycle of an organization

After the formation and sometimes turbulent, yet exciting, start-up phase, the lucrative growth phase sets in, which is when the organization begins to settle and reaches its maturity stage. In the maturity stage, the organization establishes its market share and niche loyal customer base. The brand identity and image of the organization is well established in its market at this point. During this phase, cash flows stabilize and organizational functions are operational and optimized.

The maturity phase can be the most profitable stage of the life cycle if the primary area of business has gained control of a sizable market share that yields profits. Sales and revenue in the maturity phase are no longer exponential; rather, they are normally consistent and regular. Profit margins are stable as revenue/sales have reached a considerable volume and require fewer resources from the creation of a new service/product stage to the new item promotion stage.

The maturity stage is the key phase in the organizational life cycle as it will determine if the organization survives in the long term. This phase is characterized by a slowdown and a false sense of security. A watchful eye needs to be kept on external factors that could affect the organization’s business, such as competition, or substitutions that obliterate the need for the product or service the organization provides, which then leads to the death phase. A recent example of an entire industry being affected by substitutions is the direct marketing product fundraising industry. Within the last decade and a half, what has evolved in fundraising for schools and nonprofit organizations has been the invention of scrip, which is a percentage of sales at businesses (such as grocery stores and restaurants) given to schools and nonprofit organizations, thus no longer requiring the need for fundraising through products (magazines, gift wrap, and candy sales).

When organizations fail to implement growth measures to improve sales/revenue, they will eventually enter the final phase of decline, becoming inefficient and top-heavy with bureaucracy. To remain viable, restructuring may be a course of action by reducing the workforce and divesting certain lines of the business. The rebirth phase is characterized by a need for reinvigoration in order to survive, which means a retooling of the business with new vision, focus, and strategies. Rebirth requires the strategic planning process; outside facilitation assistance can be helpful in stretching the organization’s leaders to think outside the box.

Corporate Restructuring

The act of recognizing the structures of an organization for the purpose of making it more profitable, or better organized, is known as corporate restructuring. Additional changes can necessitate restructuring such as a change of ownership or a bankruptcy filing. Restructuring can include selling off portions, or divesting, to reduce debt or operations. The 1980s experienced a heyday of restructuring due to the rampant under-valuation of publicly traded organizations that attracted hostile takeover attempts. If the targeted organization was lucky enough to find a major investor to ward off the hostile takeover attempt (known as a White Knight), the aftermath usually involved a tremendous amount of debt and then restructuring and divesting to pay off the White Knight and debt.

During the recent great recession, corporate restructuring occurred as a result of economic decline to reduce financial losses from the lack of revenue. The basic nature of restructuring is a zero-sum game. It can quickly reduce financial losses and simultaneously reduce the tensions between major stakeholders (shareholders) and the overriding condition prompting the distressed situation.

Divestiture

Organizations divest to refocus, rethink, and restructure their core business capabilities with an ultimate goal in mind to be leaner and more cost effective. Going from big to smaller, or refocusing on the core product/service that the organization offers by selling off a separate line of business arms, can present a variety of challenges for HR. To minimize disruption of operations and employees during divestiture, HR may need to redefine some of the organizational structure that is currently in place. Reviewing re-employment policies, severance packages, and employee classifications and job descriptions for either increased or decreased responsibilities are just a few considerations.

Mergers and Acquisitions

Mergers and acquisitions (M&A) are intended to enhance an organization by accessing market share or increasing assets. It is best to involve HR right from the get-go to plan for the effects that mergers and acquisitions have on an organization, such as culture blending, job function redundancy, and comparison of benefits/compensation/job titles, along with effects on HR information systems, policies/procedures/ethics, and, if there is a union, collective bargaining.

The M&A process has four basic phases, which are covered in the following sections.

Preparation

You must first ascertain if the HR staff has the necessary knowledge, strategic planning, and project management skills, for managing the transition of an M&A.

Due Diligence

The due diligence stage is next, which includes scrutinizing not just the financials, but many of the other risks associated with HR. The organization’s workforce-related risks are just the tip of the iceberg. Factoring in people matters are more difficult to quantify, and yet absolutely crucial.

Research and investigation are needed on the proposed M&A organization to determine the technology differences and needs, structural and talent risks, and cultural issues that will arise. The sheer recognition that two cultures must be brought together and blended to create a collaborative, high-performance new organization is daunting. Compliance, corporate governance, and legal claims/lawsuit information—those in process and those that appear on the horizon as a potential threat—would additionally be reviewed and understood at this phase. It is important to understand that oversimplifying these risks can lead to misguided integration planning, unexpected costs, and loss of critical talent.

Integration Planning

Here’s where a good strategic planning process resulting in goals and objectives is necessary, along with project management implementation. A change management plan associated with a culture blending process, communication strategies, and consolidation activities occurs during this phase.

Implementation, Measurement, and Monitoring Results

The process is not complete when the organizations are finished with the M&A. HR plays a vital role in monitoring the pulse and mood, assisting with workforces that have blended successfully, and helping to troubleshoot new issues that may have occurred during integration. Employees, after all, will be the implementers of the changes to enable an organization to realize the goals of the merger. Creating metrics and milestones that measure the intended results the organization set out to achieve, with respect to the people related value of the deal, is the last phase for HR.

Transition Tactics

During a major transition, management often expects leadership transitions to happen without major changes in the acquired business. When clarity and trust are most needed, it’s possible that leadership may appear more focused on itself (individuals impacted personally by the transition) than on taking care of its anxious people. Employees can’t help noticing the disconnection between leadership’s actions and words, with potentially damaging effects of costly turnover of valued employees and serious morale and productivity problems. Poor people management and communication drain financial value from many changeovers.

Having a clear vision and consistent frequent communication about organizational transition is vital. Creating a strategic blueprint should revolve around communication, not just to the workforce, but also to other stakeholders such as the customers and communities served by the organization (plural in the case of M&A). The best transition tactics revolve around trust and communication. Leadership groups must move forward together, fully aligned, and “owning” the strategic blueprint of the newly created vision in sharing its messages. If the messages and themes that are expressed to all parties are not consistent, then confusion, fear, and a lack of faith in the transition process will likely occur. Those signals could send tremors of uncertainty throughout the organization. The workforce can surely be counted on to fill a vacuum of information with worst-case scenario rumors, in terms of who will be retained, who will be let go, and how the everyday rules of the game will change.

Outsourcing and Offshoring

Sometimes the terms “outsourcing” and “offshoring” are used interchangeably; however, they do have distinctly different meanings. Offshoring is moving a function, such as a manufacturing plant or customer call center, to another country away from the “home” of the organization. The plant or call center is still part of the organization, and the workforce are employees of the organization.

With outsourcing, a function is moved to a third-party entity, a business separate from the organization. Order fulfillment and benefit and payroll administration are functions that might be outsourced. The third-party company that the function has been outsourced to may or may not be within the organization’s country.

There are nine identifiable steps in the outsourcing process:

1. Define the needs and goals for outsourcing.

2. Establish the budget.

3. Create the RFP (Request for Proposal).

4. Select third-party contractors to send the RFP to.

5. Evaluate the return proposals.

6. Select the third-party contractor.

7. Negotiate the contract.

8. Create the project plan schedule and implementation of the function move to the third-party contractor.

9. Evaluate the project’s implementation and continued measurement of intended results.

Chapter 4 contains detailed information about RFPs and negotiating third-party contracts. With both outsourcing and offshoring, there is generally a cost savings strategy at play, typically involving labor costs.

Strategic Planning

Strategic planning is an important process in the life cycle and health of an organization. The process produces a blueprint for the organization’s growth intentions, typically from three to five years. It helps define the foundational premises for growth: Where is the organization now, where does the organization intend to go (vision), and how will it get there (strategies, goals, and objectives), and lastly, what will be the milestones and measurements of success?

All major organizational functions are involved in the strategic planning process: finance, marketing, sales, operations, IT, customer service, public relations, and human resources. Many types of organizations are required to do strategic planning as part of their legal governance requirements. The benefits of strategic planning include maintaining a competitive position within the organization’s market and industry, and internally, the goal of strategic planning is to communicate to the workforce a big picture view of what lies ahead, keeping everyone singing from the same hymn-book page.

In previous decades, the strategic planning process was initiated generally by the sales or revenue producing functions. The focus was narrow with financial objectives and sales/revenue initiatives. HR’s involvement has come about through the recognition of the human capital component in planning and its impact on business strategy, and the recognition that HR as a whole has moved away from just a transactional role to a more strategic role within organizations.

Developing Goals and Objectives

After a strategy has been created and identified in the strategic planning process, goals and objectives are then created to set a course of action for how to achieve the stated strategy. There may be more than one goal associated with a single strategy. Strategies might look like this: increasing market share to 24 percent; opening a fulfillment center in the Midwest to decrease transit time to client; launching a new line of gluten-free products with a private label brand name.

Goals might be problem solving in nature, correcting something that is not right yet. Or they might be development goals that foster a growth initiative. A third type of goal is an ongoing goal, one that keeps routine events occurring. The following are examples of goals: year-end decrease in the number of customer complaint calls by 20 percent; partner with the Main Street Merchants Association as a sponsor for the community’s Fourth of July parade; maintain social media presence with weekly guest expert blog posts.

Objectives fall under goals, and include the basics steps for accomplishing the goal. They are specific, clearly stated, and relate to a time frame. Typically, a single goal will include several objectives. In an organization, different functions will have objectives related to an organizational goal—finance will have one that relates to the finance function, IT and HR will have theirs, and so on. The following are examples of objectives related to the first goal example, to decrease the number of customer complaint calls by 20 percent:

• Evaluate 2013’s customer complaint categories by March 1.

• QA to retool IT’s inspection process of the ABC widget by Quarter 2.

• Sales and marketing staff initiates round-robin scheduling for listening in on 500 customer service calls during Quarter 1, identifying the typical FAQ and associated responses.

• IT streamlines the automated response generator on the website with FAQs by end of Quarter 2.

There is a memorable acronym for the creation of goals and objectives, SMART.

S = Specific

M = Measurable

A = Attainable

R = Relevant and realistic

T = Time bound

Environmental Scanning

When developing a strategic plan, leaders need to understand and know what is going on in their organization’s industry, the market it serves, and within the organization itself. They need to be acutely aware of risks such as technological advances and how that may impact the organization or its business. The framework to collecting, analyzing, and interpreting relevant information of threats and opportunities is known as environmental scanning. It’s not always easy to define what is going on outside an organization, yet it is vitally important for the outcome of strategic planning.

The following factors will shape an organization’s external environment and need to be considered when doing environmental scanning:

• Demographic factors, such as age, gender, ethnicity, generations, shifts in population, education trends, and labor force.

• Economic factors, which can be a host of things such as the current day recession, rising health and retirement costs, and emerging global economies—just to name a few. The Gross Domestic Product (GDP), Consumer Price Index (CPI), interest rates, and inflation all can have an immediate and direct effect on financial planning, which includes wage increases, benefit costs, and retirement notices.

• Political factors must weigh in because one thing that U.S.-based organizations can count on is an ever fluid regulatory and legislative government arm continually being enacted at the federal, state, and local levels.

• Employment factors are looked at in environmental scanning. Retention, turnover, skilled labor competition, unions, immigration, and even attitude and generational trends and realities are determined.

• International factors are interwoven into the environmental scanning due to the nature of our growing global connections as a world. Trade agreements, offshoring, and international labor laws may impact the organization or its industry.

• Social factors have a place in the scanning review and research. For example, the prominence of single parents in the workforce and a generation that is working past normal Social Security retirement age will necessitate planning and consideration.

• Forever increasing in their speed of change are technological factors. The advances we have seen in just the past five years are astounding when it comes to information access and the speed of that access. The awareness of technological skills and the training to keep workforces up-to-speed on ever-changing software programs and equipment is required. A digital divide has been created, in much the same manner as the divide created during the first years of automobile ownership in the early 1900s. The haves and have-nots are apparent again in terms of broadband access.

SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are looked at as internal factors within the organization that can be managed. Opportunities and threats are controlled by external forces. It is a long-standing simple process used in strategic planning for collecting information about an organization’s current state. Four foundational questions are posed:

• S: What are the organization’s strengths?

• W: What are the organization’s weaknesses?

• O: What external opportunities might help the organization to progress toward its vision?

• T: What external threats could foil the organization’s plans and business?

Assessments are helpful in SWOT analysis, including customer focus groups or surveys, current employee attitude surveys, and exiting employee interviews. It’s important to ask these groups open-ended questions such as:

• What’s going well and right with the organization?

• What would be more ideal with the organization?

• What needs improvement or is not working so well?

PEST Analysis PEST analysis is also referred to as STEP analysis—they are the same tool used within the SWOT process. The acronym stands for political, economic, social, and technological factors. The PEST process is focused on the external scanning and gathering of information. Today, software has been developed to use the PEST process, which is widely helpful in reducing the amount of time for research, in particular with opportunities and threats. An additional way to obtain information from the organization’s marketplace is through a third-party consulting firm. Those firms have collected vast amounts of data and information, including data about trends and other predictions of information.

Porter’s Five Forces

This is another analytical tool created by a Harvard Business School professor, Michael E. Porter. Porter asserts in his book Competitive Strategy: Techniques for Analyzing Industries and Competitors⁵ that there are five forces found in all industries—competitors, suppliers, buyers, alternative products for consumers, and the type/level of competition in the industry. Porter’s model of analysis targets the specific issues of the industry in which the organization operates, keeping an eye on the horizon and futuristic events. Five questions are posed:

• What new competition might enter the organization’s market?

• What level of reliance does the organization have with its suppliers?

• What is the diversity of the organization’s customer base?

• What substitutions as a more reasonable cost to the customer might pop up?

• What is the level of competition in the current marketplace?

Internal Environment Scanning

As mentioned previously, in SWOT analysis, the internal environment of the organization also plays a role in the gathering and analysis of information prior to the strategic planning process. It’s essential to be able to read the strengths and weaknesses of the organization’s internal environment and assess whether the structure of the organization is helping or hampering its effectiveness. This can include functional reporting relationships and also policies that are conflicting in nature, such as a customer service policy that clamps down on customer service authority and is in direct violation of the organization’s expressed value of employee empowerment.

Gathering information in the form of facilitating employee discussion groups, assessments, and surveys is helpful with the internal environmental scanning process. Employee surveys, interviews, focus groups, suggestion systems, confidential hotlines, and steering committees are just a few of the ways this scanning can occur.

Strategic Planning Contributions

When HR earns a seat in the strategic planning team process, it is expected to contribute as a consultant, not as a decision maker. You can leverage your authority and credibility by providing the environmental scanning data and backing up opinions with objective data to support your recommendations. To contribute effectively as a consultant, you must know all the internal functions in the organization and have a broader perspective, and again, you should have that big picture view of what is in the best interest of the greater whole. You must not just be the voice and advocate for the human capital in an organization, or just perform the HR function, but you must also represent the entire constituency of an organization. SHRM cites in its 2008 report HR’s Evolving Role in Organizations and Its Impact on Business Strategy that the top-three HR critical functional areas that contributed to organizations’ business strategies were:⁶

• Staffing, employment, and recruitment

• Training and development

• Employee benefits

Employee relations and strategic planning followed this list with close percentages.

Forecasting Human Capital

Predicting human capital aligned with the organization’s objectives is known as forecasting. And in order to forecast, the information gathered from the internal and external scanning is needed. Like forecasting the weather, information from the past, current, and future is used to identify an expected condition. The methods used to forecast can either be judgmental or mathematical. More detailed information about the methods for forecasting is located in Chapter 5.

Aligning HR Initiatives or Organizational Objectives

The purpose of aligning HR’s initiatives and objectives with the organization’s objectives is to ensure that the functions and responsibilities HR is accountable for are in alignment with the organization’s plans and are helping move the organization toward its vision. This is the “big picture” view that we’ve been referring to in this book and is expressed in the “In the Trenches” sections. Having the right number of people, with the right capabilities, at the right times, and in the right places, engaged and motivated to do the right things is HR’s primary support role for the organization. Basically, HR is charged with aligning the human capital with the organization’s strategy plans. For example recruitment initiatives must correlate with plans for opening a new facility. Retention incentives such as compensation and benefits would fit into the organization’s plans for holding on to key employee groups. Or culture-creating initiatives to heighten the engagement of the workforce could involve HR policies and procedures. It is the human capital in an organization that actually produces the desired results from a strategic plan, and HR is a gatekeeper of the human capital.

Measuring Strategic Results

Quarterly, if not more frequently, the results being achieved from strategic planning initiatives, goals, and objectives should be reviewed to determine whether plans and projects are “on track” or “off course,” requiring corrective action. Too many organizations skip this important stage of strategic planning and, instead, dust off the planning binders from the previous year just prior to the new year’s planning session to evaluate how well they executed the year’s goals and objectives. Change is inevitable during the year and something could occur that causes a shift in priority and allocation of resources.

It’s helpful to have milestones set for each objective and goal on a quarterly basis. Those milestones set the short-term placards of what should have been achieved and by what function. Quarterly review meetings should be held to review the progress against objectives and to keep an eye on the plan. A scorecard of sorts is necessary to account for the expense, resources, and results that are being (or not being) achieved. The HR professional is likely to facilitate these types of quarterly reviews, or minimally, to be present as a contributor.

Methods and Tools Used in Decision Making

The process of decision making is complex. When coupled with building a business case for the recommended solution to a specific problem, there is need for supporting documentation that provides legitimate rationale for the recommendation.

Decision-Making Methods

In the book Crucial Conversations: Tools for Talking When Stakes Are High,⁷ Kerry Patterson and his coauthors outline four specific methods for making decisions: command, consult, vote, and consensus:

• Command decisions Made by the decision maker with no involvement from other people.

• Consult decisions Decisions made following invitations from decision maker to others requesting their input.

• Voting decisions Following discussion of the problem and alternative solutions, the group takes a vote on the solution it wishes to support. Majority rules.

• Consensus decisions Discussion continues until everyone in the group agrees on a decisions.

Analysis of Research

Decisions are often based on research that comes either from primary or secondary sources.

• Primary source An original work such as a study, eyewitness account, or literary paper

• Secondary source A document written about a primary source

If a primary source is a study about costs of medical insurance, a secondary source could be a white paper that refers to the study and evaluates how it describes medical insurance costs.

Then, there are quantitative and qualitative approaches to analysis:

• Qualitative analysis Based on stories and pictures without numerical support. Often based on interviews, the depth of information gathered about each individual is usually more extensive than with numerical analysis techniques. Fewer samples are included than with a quantitative approach.

• Quantitative analysis Based on statistics from a large sample or population. Results can be used to predict what an entire population looks like or will do.

Informational Formats

Presenting the information gathered as part of the decision-making process is ultimately what the process is all about. It is necessary to communicate the gathered information to a decision maker or group of decision makers. Here are some ways that this can be accomplished:

• Descriptive statistics These techniques involve preparation of charts or graphs to allow visual descriptions of the results from research and analysis.

• Measuring central tendency There are three basic measurements that are commonly used for central tendency. They are “mean,” “median,” and “mode.” Mean is the arithmetic average of all data points. Median is the data point in the middle of the sequence. Mode is the most frequently appearing data point. For example, the following data set will result in the results indicated.

Length of Employee Service with Employer in Years
17 employees
1,1,1,2,3,4,4,5,5,6,6,6,6,7,7,8,9
Mean = 1+1+1+2+3+4+4+5+5+6+6+6+6+7+7+8+9 = 81/17 = 4.76 years
Median = 5
Mode = 6

Statistical Analysis

Statistical measurements can be used to infer conclusions. For example, they can be used to show that certain things could not have happened by chance. Disparate impact is one such measurement. When applied with enough data points, regression and correlation analysis can demonstrate beyond the shadow of a doubt that a conclusion is accurate.

Correlation analysis measures the relationship of two or more variables. It can be used to track how one variable reacts in response to the other variables. Perhaps the amount of vacation an employee receives is positively correlated with the length of that employee’s service with the employer. Employees with five years of service are entitled to three weeks of vacation while employees with under five years of service are entitled to only two weeks of vacation. A negative correlation exists when one variable goes up and the other goes down, or vice versa. Volume discounts offer a good representation of this type of statistical analysis. The unit price of a widget is set at $5.00. But if a customer orders 100 widgets at once, the unit price is only $4.50. There is a negative correlation between the number of units ordered and the unit price.

Regression analysis can show how one variable is responsible for a specific result regardless of the influence from other variables. One application is the determination that there is disparate impact discrimination in compensation against women regardless of their length of service, age, educational levels, job history, and perhaps other variables. If a statistical significance can be shown at levels beyond two standard deviations or 5 percent probability, a conclusion can be drawn that there could have been discrimination. Proof requires analysis of many more variables and the entire employee workforce. Courts accept regression analysis as evidence of illegal discrimination so the process holds value for HR professionals.

Variation analysis is a mathematical process that allows the comparison of how much two or more things vary from one another. Perhaps those variations fluctuate over time. In HR terms, it could measure the turnover rate with the employee survey satisfaction rate and the cost per employee for company-provided benefits.

All of these methods give us mathematical tools to draw conclusions (inferences) about the likelihood of what will happen in the future. We may be able to predict the lowering of turnover rates if we improve our employee satisfaction survey results.

Develop Metrics to Measure Milestones/Results

Creating and reporting on metrics and milestone results are good ways for HR to express its value and achievements. There are several ways that expand on measurement reporting such as six sigma, total quality management, management by objectives, and the balanced scorecard (Figure 6-7).

Figure 6-7 Balanced scorecard

The balanced scorecard is a tool developed by Robert Kaplan and David Norton⁸ to help organizations expand the level of measurements from solely financial results to include other key elements that impact an organization’s success. A balanced scorecard tracks information in four key areas:

• Financial results

• Customer results

• Key internal processes organization excels with

• Innovation

Examples and instructions on the concept and use can be located at The Balanced Scorecard Institute, http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard.

Chapters 5 and 8 have more information on the specifics of metrics used with hiring and training activities.

Performance Cost and Benefit (ROI) Analyses

The most commonly used metric for measuring results in an organization is a return on investment (ROI) metric. It is one of the most effective manners for HR to communicate and evaluate its impact on strategic initiatives. ROI is calculated by dividing the benefits realized from an initiative, such as hiring or training, by the total related costs (direct or indirect). ROI occurs after-the-fact and not as a tool for projecting. The formula is:

In the proposal stage, the analysis used would be a study of cost benefit analysis (CBA). CBA compares all costs associated with the initiative or project that are forecasted if the initiative is implemented. The formula for CBA is:

The main difference between ROI and CBA is that CBA includes projected soft costs in its calculation, and ROI calculates only the concrete costs that occurred.

Organizational Vision, Mission, and Values

The creation, defining, and composing of vision and mission statements, along with identification of corporate values, is the beginning of the strategic planning process. Diving into objectives and goals would be putting the cart before the horse. Facilitating the development along with communicating the vision, mission, core values, and ethical standards of an organization typically lies within the HR function, beginning with the onboarding orientation process of new hires.

A vision statement speaks of what the organization intends to “be” in its future—the direction it is headed in. The mission statement is the organization’s clear definition of what business it intends to be in and for whom, which is the method of how it will achieve its vision. And the corporate core values provide the compass of behaviors on its journey toward achieving the vision. Standards of ethics address the attitude and actions.

Vision Statement

A corporate vision statement is the guiding and compelling image of a desired future for an organization, a big picture view of what company leadership is developing the organization into. It is what convinces people to hire on with an organization, to contribute their work to that organization, and align their own values, morals, and goals with the result the organization desires to achieve. A vision statement provides clear direction like a pinpoint on a map. Following are two examples of a vision statement:

To be the preferred choice of hotels for business travels in the nine western states.
To be the largest provider of durable widgets to the U.S. defense industry contractors.

Mission Statement

The mission statement describes what an organization does and for whom. It specifies a general outline of how its vision will be achieved. Mission statements are helpful for keeping employees directed toward the same common goal, defining the purpose of the organization and who its intended customers are. They have been excellent points of reference for decisions by management and policy creation, along with charting the course for new ventures. Mission statements also act as an organization’s promise to its customer as to what they can expect from the organization and its employees. The following is an example of a well-conceived mission statement:

The mission of ABC Corporation is to manufacture and distribute to U.S. defense industry contractors, the highest quality of widgets that are safe, reliable, durable, and low cost, on a just-in-time order basis, and in an environmentally Green manner.

Values

Corporate values are the behaviors that an organization has that dictate to employees how they will act, interact, and what will drive their decisions and behaviors for business performance. They are guiding principles that help define not only how the employees will behave and act, but also how the organization as a whole will act, and the building blocks to corporate culture. Some values are written and purposefully identified by management in order to set an expectation of desired employee behavior (right from wrong) with customers and with representatives of the organization. The values can align with branding of the organization to help set those expectations of what customers and employees can anticipate from the organization. Many core corporate values are also expressed in the organization’s mission statement. Others might be the unwritten values, positive or negative, that have an undercurrent that drives behavior, actions, and decisions—they are important as a core to the organization and thus referred to as core values. A core value, however, is only a true core value if it influences employees’ actions the majority of the time. A few examples are listed in Table 6-2.

Table 6-2 Driving Core Organizational Values

Corporate Ethics

Corporate ethics define the moral principles and values that establish an organization’s expectations of conduct from its leadership and employees. Where corporate values define desired behaviors, corporate ethics are the code for attitude and norms. Identifying and establishing an organization’s ethics go hand-in-hand with creating its vision, mission, and values, helping clearly identify what an ethical workplace is for new hires and existing employees.

Organizations have a responsibility and even a legal requirement thanks to the Sarbanes-Oxley Act (SOX, see Chapter 2) to interact with its employees, stakeholders, and communities in an ethical and trustworthy manner. Responsibilities are wide and vary ranging from decisions involving local community environmental hazard notifications, to the treatment of customers or employees with truth and integrity. HR’s role in organizational ethics is an important one because ethical issues raised are generally about honesty, truthfulness, fairness, social responsibility, and legal governance, typically coming from within the workforce.

SOX made many of the practices of organizations come under added scrutiny, providing penalties and even jail time for executives for violations. The following are scrutinized under SOX:

• Insider trading, which is illegal and monitored by the Securities and Exchange Commission, occurs when investors receive information that could only be known by internal organizational sources, and this information impacts buy-sell shares of that company. For example: Your benefits manager in HR discloses a planned merger (that has not been made public yet and would likely increase the value of shares) to your third-party employee benefit firm’s account executive. If that account executive were to increase his shares and/or share that information with friends who invested, this would be considered insider trading.

• Conflicts of interests where either an individual or the organization is involved in a situation of multiple interests, one of which could possibly influence or corrupt motivation. For example: An executive in an organization has a spouse with a separate business that provides products or services to the organization, and that executive has a say in awarding the contract.

• Kickbacks, bribes, and payoffs are common terms used for payoffs of some nature for doing something such as awarding a contract. For example, buyers in the procurement department of an organization can get caught in this unethical behavior if they accept tickets to the Super Bowl from a vendor in exchange for awarding the procurement contract to that vendor. Acceptance of gifts by an employee and the amount of the gift needs to be clearly defined in policy.

NOTE Not all unethical behavior may be breaking the law.

Whistleblower Retaliation Protection

Employees who report to government agencies real or perceived illegal activity committed by their organizations are called whistleblowers. Encouragement to inform on organizations that are acting illegally arose from the False Claims Act of l863 (see Chapter 2), where persons could report government contractors to the federal government.

Over the last couple of decades, whistleblowing incidents have occurred that have made it to lawsuits and headlines in the news. Enron, AOL, WorldCom are just a few. The most noteworthy and largest payout occurred when a former employee at Warner-Lambert reported (and brought a lawsuit) that the pharmaceutical firm used illegal means to market a drug. Some states have specific statutes protecting whistleblowers, but even if there is no specific statute, protection is provided under the “public policy” exception in the employer-at-will doctrine. HR professionals need to be familiar with their local laws in the states where their organization is located.

The degree to which employees report wrongdoings outside of the organization is a direct reflection on the culture of the organization. HR needs to create reporting avenues that maintain a strong level of confidentiality, and be aware of signs, such as when a performance review rating discloses that an employee is insubordinate and not following procedures.

Retaliation against whistleblowers is clearly not allowed according to numerous court decisions (see Chapter 2, Sarbanes-Oxley Act).

Corporate Governance Compliance

The manner in which an organization is managed (shareholders, management, and board of directors) is known as corporate governance. Its system of structures, obligations, rights, and duties by which the organization is directed and controlled influences the decisions that are made by those in charge (be it top management or a board of directors). They all have a fiduciary responsibility, aligned with the values and ethics of the organization, to act in the best interests of the shareholders.

An owner, board of directors, and/or top management committed to standards of corporate governance, business integrity, and standards of conduct in all activities are the cornerstone of fiduciary responsibility. They are ultimately accountable to the shareholders and must show that the organization is appropriately governed; follows compliance rules, regulations, and standards; and delivers on its strategy and mission statement.

Assessment of Policies/Procedures

Each year, human resource professionals should conduct a review of the organization’s policies and procedures. It is necessary because federal or state laws may have changed, causing new requirements for monitoring and oversight. It is also appropriate to re-evaluate policies in light of financial obligations. For example, health insurance benefit programs are experiencing a rise in expense from year to year. To manage that expense, it may be necessary to reconfigure health insurance benefits, offering less expensive options to employees. It might also be necessary to make major changes by instituting different benefits for new hires who begin after a certain date in order to lower the organization’s financial obligations. Pension programs are obviously another example of policies that need review from time to time.

When legal requirements change, employers must adapt to the new rules. One example might be the addition of genetic information as a protected category in equal employment law. Policy statements may need to be rewritten to include the new protections.

Keeping policies current will contribute to proper employee communication and can help reduce financial liabilities should a lawsuit challenge employer treatment.

Ethics Investigations

SHRM’s Business Literacy Glossary of Terms defines “business ethics” as, “A philosophy principle concerned with opinions about appropriate and inappropriate business conduct or behavior by individuals or groups of individuals.” Some organizations are subject to legal expectations about ethical behavior. (See Chapter 2 and the Sarbanes-Oxley Act of 2002.)

It is fairly common these days for employers to have telephone hotlines for employees to report instances of unethical behavior. Once reported, the employer can investigate and resolve any problems that may exist.

Behavior is influenced by rewards so it is critical that HR professionals be sure to think through how behavior is rewarded. For example, are sales representatives told that they should reach their sales quotas “at all costs”? If that is the case, there may be some incentive for people to cut corners and do things that aren’t exactly proper. Some people may find it reasonable to do things that aren’t even legal in order to reach their quotas. That disconnect between rewards and behavioral expectations is something to guard against.

Monitoring Legislative and Regulatory Issues

Some industry associations have legislative monitors or lobbyists to keep track of state and federal legislatures. It is only the larger employers who would find it beneficial to employ their own representatives to the legislative process. Collective funding for common interests is often quite effective and it is done by most industries, including the pharmaceutical, automobile, high technology, and the lumber and paper industries. Many more can be added to that list.

When legislation is proposed that will have an impact on the employers within an industry, these representatives work with legislators and their staffs to understand the impact proposals will have on the work done by people in those groups. It is common for these discussions to take place and for lobbyists to try to convince legislative representatives that their industry’s interests should be taken into account when considering legislative action.

Individual employers may find it advantageous to perform their own monitoring of state and federal legislatures so they can participate by testifying at hearings or submitting comments regarding their suggestions for new laws.

Federal regulations are published in the Federal Register and thus are available for review by the general public. When new regulations are developed, opportunities are available for employers to offer comments on the impact those regulations will have on them. It is frequently in the best interest of employers to participate in that process, yet few actually do. All employers should be alert to what is going on in Washington, D.C., and state capitals.

The Legislative Process

While each state legislature follows much the same process, the following are the steps for a federal law:

1. The bill is introduced in either the House of Representatives or the Senate.

2. One of the House or Senate committees is assigned to consider the bill.

3. Either a sub-committee or the full committee considers the bill, marks it up, and votes on whether or not to pass it along to the full House or Senate. Sub-committees must “report out” on the bill to the full committee by a majority vote. The committee must report out on the bill to the full House or Senate. The report out includes a recommendation for passage.

4. The bill goes to the full House or Senate for a vote by all members. Amendments can be made by representatives or senators. If an amendment passes, it becomes part of the bill. A vote of the entire body will result in passage by simple majority or defeat if a majority is not achieved.

5. The bill is sent to the other body for consideration. The same process is followed. Committees and sub-committees are involved and may hold hearings to listen to experts talk about the proposed law. Once passed by the committee, the bill goes to the full body for consideration.

6. If the Senate version and the House version of the bill are different, it goes to a joint committee of both bodies to resolve those differences. It is now called a “conference bill.” When a final joint agreement is reached, the bill goes back to each body for another vote.

7. Once passed by both Congressional bodies, the bill goes to the president for his signature. If he signs the bill, it becomes law in the time specified in the law. If the president opposes the bill, he can veto it. It then goes back to Congress for a veto override consideration. If the president takes no action after Congress has adjourned its second session, it is a pocket veto and the legislation dies.

8. Congress can override the president’s veto by a two-thirds roll call vote of the members who are present (meeting sufficient numbers for a quorum) in each house.

Chapter Review

If you were beginning your HR career today, you would most likely notice a significant difference than if you had entered the field just a decade ago. While the HR role traditionally was one of a transactional administrative nature, it has now grown and shifted into an area of responsibility and focus as a strategic element to an organization’s competitive advantage. The role of HR now encompasses: strategic business planning, change facilitation, and employee advocacy.

The greatest way of showing that the HR function is strategic is through the partnering with organizational management as an internal business consultant. A true business consultant presents all the factual data and necessary information, along with recommendations from their broader perspective in an effort to help their client reach a decision. For the HR professional, that includes presenting credible data, understanding all functions of the organization, aligning HR initiatives with the organization’s strategy, and knowing how to monitor and measure the results. The Business Management and Strategy area of the HRCI exam is heavily emphasized on the SPHR exam with 29 percent of the test questions focused in this functional competency area.

Questions

1. A statement that describes what the organization does and its customer base is a:

A. Vision statement

B. Statement of position

C. Lofty statement

D. Mission statement

2. A strategy that focuses on launching a new line of business would most likely occur at which stage in the organization’s life cycle?

A. Maturity

B. Startup

C. Growth

D. Rebirth

3. Which of the following is not part of a SMART goal?

A. Relevant

B. Strength

C. Time bound

D. Measurable

4. Mikayel is the shipping and receiving manager at your Russian parts plant. He has experienced problems with getting shipments through Customs for timely delivery to the United States. His contact at Customs informs him that he can expedite the shipments if Mikayel would pay him a gratuity for his service in cash. Your organization’s ethics clearly state that bribes are considered unethical behavior; however, this “gratuity” seems to be in the best interest of the organization. What is your best course of action?

A. Authorize Mikayel to make the payments out of petty cash.

B. Report the bribe incident to the local Russian Customs head officer.

C. Ask executive management for “special outside-of-policy” authorization.

D. Adhere to the organization’s no-bribe ethics policy and seek other solutions for the shipment delay issue.

5. Taylor is the Quality Assurance director at her organization and reports to both the Division VP at her facility and the VP of Quality Assurance located at the headquarters office. This is an example of what type of organizational structure?

A. Span of control

B. Formalized

C. Matrix

D. Chain of command

6. Elton has hired a consultancy firm to perform an environmental scanning on his organization. The report comes back indicating that a global competitor is moving into a state where Elton’s company has existed for decades. Elton should present this information to executive management as a(n):

A. Opportunity

B. Weakness

C. Strength

D. Threat

7. Which of the following HR functions is not appropriate for outsourcing?

A. Benefit administration

B. Development of HR goals aligned with the organization’s strategy plan

C. New employee orientation/onboarding

D. Open enrollment

8. Which is the most important foundational issue of organizational effectiveness?

A. Ethics

B. Governance

C. Policies

D. Rewards

9. Which of the following actions taken by HR Manager Chris is the most ethical?

A. Working exclusively with a technical contracting agency for the IT group to qualify for a random prize drawing for customers

B. Not standing up and voicing displeasure about a discriminatory decision made by a superior

C. Referring a qualified friend for a vacant position at the company

D. Deleting low-paying companies from salary survey results of HR positions

10. The matrix type of organizational structure is uniquely suited to managing a group of activities that are:

A. Narrow and interrelated

B. Narrow in focus and unrelated

C. Diverse and unrelated

D. Diverse and interrelated

11. The process of analyzing and identifying the need for availability of human resources so that the organization can meet its objectives is known as:

A. Strategic planning

B. PEST analysis

C. Human resource planning

D. Organization planning

12. In an organizational structure, what is centralized?

A. The degree to which decision-making authority is restricted to senior management.

B. The degree to which decision-making authority is given to lower levels in an organization’s hierarchy.

C. The hierarchical division of labor that distributes formal authority and establishes how critical decisions will be made.

D. The degree to which decisions are made by committees.

13. A balance sheet shows:

A. Historical budgeting

B. Amount of equity owned by investors

C. Taxes paid last year

D. The income and expenses over a defined period of time

14. Colin is the HR manager at a tax preparation firm. During the tax season, Colin contracts with a temporary agency for seasonal help. The seasonal workers receive payroll checks from the temporary agency and not Colin’s organization. What type of contract will Colin sign with the temporary agency for the seasonal workers?

A. Temporary contract

B. Seasonal contract

C. Third-party contract

D. Direct contract

15. Yoko’s organization is acquiring another smaller company. What is the first step for her HR department to be involved with?

A. Survey the existing workforce of both companies.

B. Eliminate the redundant positions.

C. Review the collective bargaining agreements that exist.

D. Assurance of OSHA compliance.

16. Which of the following is a legal consequence of the Sarbanes-Oxley Act?

A. Organizations are allowed to conduct their own stock appraisal.

B. Shareholders are prevented from suing the company.

C. CEOs may be punished, including jail time, for fraudulent financial reports.

D. Audit firms must alternate every two years.

17. Antonio has been assigned as the HR project manager for the implementation of the new HRIS. The IT staff, Training and Development group, Risk Management department, and the Compensation and Benefits group will be involved in the implementation. What project management tool will be best for Antonio to use for scheduling and managing the tasks with all groups?

A. Gantt chart

B. PERT chart

C. Implementation schedule

D. Balanced scorecard

18. The role of human resource management has changed over the last few decades because more focus is now placed on

A. Finding people with qualifications in high technology that can meet today’s challenges

B. Strategic management of the organization and less focus on labor relations

C. Recruiting and less focus on paperwork

D. Supporting the executive suite and the programs that the officers want implemented

19. Financial contributions from the HR department are important because

A. Training and staffing are the easiest areas to cut and gain back budget.

B. Executives expect the HR department to be the most flexible in budget terms.

C. There is little impact from reducing the HR department’s budget.

D. Every strategic decision must contribute to the financial performance of the organization.

20. Management skills have been identified over a long period of time through the work of

A. Various universities around the country and their studies of manufacturing plants

B. Various consulting firms across the country and their studies of university environments

C. Studies such as the Management Progress Study conducted by American Telephone and Telegraph beginning in 1956 and continuing over the next 30 years

D. IBM’s study of management individuals that lasted for 35 years

21. Complex project management is made easier through the use of

A. PARK/ITEM planning charts

B. Gaunt PERK planning charts

C. PACK/CWA planning charts

D. PERT/CPM planning charts

22. The AB Trucking Co. is expanding its routes and hiring more people. Those changes will mean that employees will have to take on different work assignments. How should the HR manager handle those changes with the workforce?

A. Explain the coming changes to all employees and solicit their help in deciding how to assign the new routes. Prepare a project plan and make sure everyone has a chance to see it before the implementation date.

B. Explain the coming changes and tell the truckers that assignments will be made based on seniority. The new people will be assigned last.

C. Explain the coming changes and let the senior executives handle the questions about how new job assignments will be made.

D. Explain the coming changes and let the employees discuss among themselves how they want to assign routes to the workforce.

23. When the AB Trucking Co. makes its organizational changes, it plans to alter its reporting relationships. If it elects to have each supervisor report to an operations manager and also to a financial manager, what type of organizational structure will AB Trucking Co. be using?

A. Formalized. A firm structure that can be charted, regardless of how many reporting lines exist from one job to another.

B. Matrix. A perfect example when multiple reporting relationships exist for certain jobs.

C. Span of control. The span of control will be exceedingly easier to manage with multiple reporting relationships.

D. Work specialization. Because there are multiple reporting relationships, the specialization of each will increase.

24. Mergers and acquisitions (M&A) provide HR managers with special problems of cultural differences. In order to make sure that the cultures don’t clash after the merger, the HR manager should

A. Assign a subordinate to monitor the complaint levels and report on problems that are being addressed.

B. Conduct meetings with key players from each organization to outline the cultural values of each organization and determine how best to protect them in the blended employer unit.

C. Send memos to department heads that specify the new cultural characteristics and express the expectation that the department heads will “make it happen.”

D. Provide written complaint forms to all employees and express a willingness to listen to any comments the employees have to make about the merger.

25. The AB Trucking Co. is considering outsourcing its HR, accounting, and safety functions to vendors. What considerations should be given to issues impacting that decision.

A. How the decision will fit into the organization’s strategic plan and whether it will be cost effective

B. How the employees will react

C. How much money can be saved and what workload can be eliminated from the company executives

D. How all the compliance work can be done by someone else

Answers

1. D. A mission statement contains a description of both organizational products/services and the customer base for which it exists.

2. D. When organizations move past maturity and enter the rebirth phase of existence, they begin actively assessing their structure and lines of business.

3. B. SMART goals and objectives are Specific, Measurable, Attainable, Relevant/Realistic, and Time Bound. Strength is not included in the list.

4. D. A bribery demand is not only a violation of the company’s policy but also a violation of the Foreign Corrupt Practices Act of 1997 (see Chapter 2). To pay such a bribe could be a criminal act under federal law.

5. C. When the organization calls for reporting to two or more supervisors, the organization is known as a matrix organization.

6. D. Competition constitutes a threat to the company. During strategic planning and SWOT analysis, all perceived threats should be considered seriously.

7. B. The employer should always retain control of its goal determination function so it can be assured the goals will support the organization’s strategic plan.

8. A. Ethics determine how we behave with employees, vendors, customers, clients, and other stakeholders. They govern “how we do things around here.” They are constant references for employee decision making and behavior.

9. C. Suggesting a friend apply for a job opening at the employer’s organization is perfectly ethical. It even demonstrates a willingness to support the employer as a good place to work.

10. D. Matrix organizations allow for great flexibility and quick reaction to outside changes.

11. C. Human resource planning involves all facets of people management issues. Forecasting the need for more or fewer people, budget considerations, and recruiting sources comes into play. How HR can be used to support the organization’s strategic plans is critical.

12. A. The greater grasp senior management retains on decision making, the more centralized the organization.

13. B. Balance sheets show assets, liabilities, and owner’s equity.

14. C. Because Colin doesn’t contract directly with the employees, he instead contracts with a third party for the services of the employees.

15. A. Part of the due diligence is surveying the workforce to determine not only how many employees are in the organization but what they are doing and their certifications/licenses/skills.

16. C. SOX brought criminal liability to the most senior manager in the organization. There is some personal incentive for the CEO to insist that employees behave and follow the rules.

17. B. Program Evaluation and Review Technique is the project management tool that will allow multiple groups and many tasks to be tracked at once.

18. B. Designing strategic support programs for human resource management is critical in today’s fast-paced employment world. Competition is more stringent and legal requirements are constantly expanding. While supporting executive wishes has always been part of the HR job, the design of strategic programs is relatively new.

19. D. It is not just a matter of budget dollars, but the contribution they make toward the organizational “bottom line.”

20. C. It was the psychologists at AT&T that gathered data about management skills over a 30+ year period of time. They identified characteristics of successful managers in the process.

21. D. Program Evaluation and Review Technique charts handle multiple project requirements and can be enhanced by the Critical Path Method in visual charts.

22. A. Whenever possible, involving employees in designing the plan for accommodating organizational changes will be the best for employee morale.

23. B. Matrix structures involve multiple reporting relationships.

24. B. Involving key managers from each organization can provide a foundation for whatever cultural values the new organization could like to build.

25. A. Key factors are the organizational strategic plan and the budget. If outsourcing will fit nicely into those two considerations, it may be a good alternative. But there are also other factors to be considered such as employee morale, responsiveness of the vendor, and more.

Endnotes

1. Douglas W. Bray, Richard J. Campbell, and Donald L. Grant, Formative Years in Business: A Long-Term AT&T Study of Management Lives (John Wiley & Sons, Inc., 1974).

2. Elisabeth Kubler-Ross, On Death and Dying (Scribner; Reprint Edition June 1997).

3. Dr. Donald L. Kirkpatrick, How to Manage Change Effectively (Jossey-Bass, October 1985).

4. Donald L. Lester, John A. Parnell, and Shawn Carraher, “Organizational Life Cycle: A Five-Stage Empirical Scale,”International Journal of Organizational Analysis 11, no. 4(2003), 339–54.

5. Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Free Press, 1980).

6. SHRM Research Department, HR’s Evolving Role in Organizations and Its Impact on Business Strategy, Project leader Amanda Benedict, M.A. (2008) http://www.shrm.org/research.

7. Kerry Patterson, Joseph Grenny, Ron McMillan, Al Switzler, and Stephen R. Covey, Crucial Conversations: Tools for Talking When Stakes Are High (New York: McGraw-Hill, 2002).

8. Robert Kaplan and David Norton, The Balanced Scorecard: Translating Strategy into Action (Harvard Business Review Press, September 1, 1996).