(SHRM) Organization

Introduction to Organization
Domain
This domain in the SHRM Learning System® for SHRM-CP/SHRM-
SCP includes five Functional Areas: Structure of the HR Function,
Organizational Effectiveness and Development, Workforce
Management, Employee and Labor Relations, and Technology
Management.
Throughout the module, brief scenarios, titled “Competency

Connection,” describe how the Behavioral Competencies listed in the
SHRM Body of Competency and Knowledge™ apply to the
Functional Area under discussion.
While this module includes legal content, it should not be construed

as legal advice or as pertaining to specific factual situations. No
general statement of law, no matter how seemingly simple, can be
applied to any particular factual situation without a full, careful, and
confidential analysis of all relevant facts, the employer’s policies and
practices, and the applicable laws of the jurisdiction(s) in which the
employer operates.
Key Content
The content in the domain accounts for 17% of the SHRM-
CP and SHRM-SCP exams.
Functional Area #6: Structure of
the HR Function
Structure of the HR Function encompasses the people,

processes, theories, and activities involved in the delivery of
HR-related services that create and drive organizational
effectiveness.
Proficiency Indicators:
Proficiency indicators for all HR professionals include:
Adapts work style to fit the organization’s HR service model
(e.g., centralized vs. decentralized), to ensure timely and
consistent delivery of services to stakeholders.
Seeks feedback from stakeholders to identify opportunities for
HR function improvements.
Acts as HR point-of-service contact for key stakeholders within a
division or group.
Provides consultation on HR issues to all levels of leadership
and management.
Coordinates with other HR functions to ensure timely and
Ensures that outsourced and/or automated HR functions are
integrated with other HR activities.
Analyzes and interprets key performance indicators to
understand the effectiveness of the HR function.
Proficiency indicators for advanced HR professionals include:

Designs and implements the appropriate HR service model for
the organization (e.g., centralized vs. decentralized), to ensure
efficient and effective delivery of services to stakeholders.
Creates long-term goals that address feedback from
stakeholders identifying opportunities for HR function
improvements.
Ensures that all elements of the HR function (e.g., recruiting,
talent management, compensation and benefits, learning and
development) are aligned and integrated, and provide timely
and consistent delivery of services to stakeholders.
Identifies opportunities to improve HR operations by outsourcing
work or implementing technologies that automate HR functions
(e.g., time, payroll).
Designs and oversees programs to collect, analyze, and
interpret key performance indicators (e.g., balanced scorecard)
to evaluate the effectiveness of HR activities in supporting
organizational success.
Structure of the HR Function
Structure of the HR Function is about the way HR organizes its
assets to provide services to internal business partners in a way that
aligns with the organization’s own structure and strategy. The
structural model HR leaders choose balances efficiency with quality
of customer service and consistency with adaptability.
To do this, HR professionals must understand the structure of their

own organizations—their parts, their business goals and cultures,
the ways in which they are coordinated to produce value to the
organization. The organization may be large and multi-layered. It
may be geographically dispersed and culturally diverse. HR
professionals must understand the business goals and service
expectations of their fellow stakeholders in the organization and
apply creativity to collaborating with these stakeholders.
Equipped with a knowledge of its own capabilities and its

stakeholders’ needs, the HR function can choose an appropriate
structure. Key decisions are the location of HR services and the level
of control over HR policies and practices. Should assets and
services be located within a headquarters or embedded in the
divisions of the organization? How will HR develop and implement
policies? Will HR headquarters control all decisions, or will satellite
HR functions be allowed to adapt policies to local needs?
HR leaders must also measure the effectiveness of the services HR

delivers and commit to making structural changes that can correct
and improve its customer service and align it with changed strategy
or environmental conditions.
Role of HR
Proficiency indicators related to this section include:

and management.
Key concepts related to this section include:

Elements of the HR function (e.g., recruiting, talent
management, compensation, benefits).
Role of HR
HR’s focus will always be people: acquiring, developing, and
retaining talent. The roles that HR plays in today’s organizations are
complex, however. They include administrative and operational tasks
and also more strategically oriented activities. This complex role
requires the competencies of a professional.
Competency Connection
The essential role of HR is to provide value to the organization
through the application of HR expertise. A newly certified HR
professional was able to put the HR Behavioral Competencies to
work quickly in her new position.
The HR professional was hired to support a growing company with

about 80 employees. The company had no HR department.
The HR professional was nervous to jump into her workforce

management, recruitment, development, and consultation roles but
decided to begin by learning about the company’s structure, chain of
command, policies, and goals. Then she performed a gap analysis,
evaluating current resources against the business’s needs and
identifying deficiencies.
She chose to tackle a specific task first: figuring out a time-capturing
system to align with the current payroll system. She researched
time-capturing systems, compared them, and made a thoughtful
decision. She was able to launch a cost-effective electronic time
sheet system within two months. It helped to improve payroll
accuracy and employee accountability. Efficiency grew
tremendously.
In delivering value, the HR professional approached her position as

a consultant to the organization—seeing a problem and designing
and implementing necessary changes, thereby helping the
organization improve its effectiveness and efficiency. Her Critical
Evaluation skills were indispensable as well.
Strategic Role of HR
HR processes and activities must be aligned with the organization’s
overall strategy and business partners’ needs to create a stronger
and more strategically focused organization.
HR’s strategic role includes:
Participation in creating the organization’s strategy. This

requires HR practitioners to broaden their focus to include
global, long-term, and forward-thinking considerations. As an
organization seeks new opportunities, HR provides a valuable
perspective on the human factors inherent in any strategic
decision. Its contributions may include activities such as:
Providing current information about the organization’s human
capital.
Identifying the implications of the strategy across functions.
Applying knowledge of external forces that can affect the
strategy.
Communicating information about workforce planning and
management that will be necessary to implement the
strategy.
Aligning the HR strategy with the organization’s strategy.
For example:
Preparing the organization for change.
Forecasting human capital needs and the skills and
knowledge required to achieve strategic goals.
Increasing organizational effectiveness through appropriate
strategies, such as organizational restructuring and cultural
alignment.
Developing talent through, for example, performance
management, career development, and succession planning.
Supporting other functions in their strategic roles. For

example:
Assisting in identifying new skill requirements.
Acquiring and retaining talent.
Supporting succession planning and mentoring projects.
This strategic role shapes HR’s administrative and operational roles.
Administrative Role of HR
The HR focus in this role is twofold: managing compliance issues
and record keeping. Often referred to as “transactional activities,”
these responsibilities continue to be central to the HR function, but
they can be performed in a strategic manner.
Using technology to capture and analyze data. Technology,

such as human resource information systems (HRIS), facilitates
the integration of HR in strategic management by providing
information that can drive HR’s role as a consultant to the
organization’s leaders. HR data can be integrated into an
enterprise management tool that enables more timely access to
shared data throughout the organization. This also allows HR to
analyze data, identify issues and developing trends, and begin
planning.
Using technology to reduce transactional time. HRIS

manage HR data (e.g., employee records) and create
compliance reports. HR and management software applications
(e.g., applicant tracking software, project management) increase
productivity. In many organizations, managers and employees
can complete their own transactions (e.g., updating records,
changing benefits) through self-service portals.
Focusing on core capabilities. Tasks that are low in strategic

value and are not necessarily considered core HR functions can
be outsourced to allow HR to focus on strategic activities. Third-
party vendors can provide benefit plan administration, payroll
administration, background checks, and other less strategic
tasks. This means, however, that HR professionals must
develop skills and knowledge associated with outsourcing, such
as negotiating and performing due diligence and monitoring and
correcting vendor performance.
Operational Role of HR
Many HR activities—recruiting and hiring, resolution of employment
issues, employee communication—attend to the day-to-day
management of people. In addition, HR is called upon to interact with
line managers, consulting on specific issues and providing advice on
improving performance, productivity, and job satisfaction. This often
requires HR to develop performance assessment and improvement
processes and design effective reward systems.
HR can transform these operational activities by aligning them with

the organization’s strategic objectives:
Knowledge management can help the organization capture

and share the wisdom and experience of all its members. In
addition, HR can show leaders what and where talent and
specialized knowledge reside in the organization so that it can
be deployed toward attaining strategic objectives. This is
especially important in large and diverse organizations.
Targeted talent acquisition and development focus on

bringing the organization closer to its goals. For example, HR
can use data and its organizational skills (e.g., job analysis,
consultative skills) to identify potential disconnects between
current job descriptions and actual job competencies.
Incentive systems can be designed to promote rather than

discourage desired behavior—e.g., rewarding increased
customer satisfaction rather than decreased call time; rewarding
the size of single sales rather than the number of smaller sales.
Employee engagement programs target increased

productivity and retention—perhaps by improving supervisory
skills or promoting a change in leadership model from directing
to leading an empowered team.
Developing an HR Service Culture

HR’s roles in the organization can be performed more effectively if
the HR function develops an internal “service culture.” In the same
way that organizations must be mindful of the external customers
who use their products and services, HR must develop an outward-
focused culture—a sense that HR activities are more than
transactions, that HR is part of the system that is the organization,
that the quality it delivers to its internal customers enables the
organization to satisfy its external customers.
Imagine that HR is asked to conduct an organizational development

intervention with itself. What changes would be needed to create an
HR customer-driven culture?
The most complete answer can follow a common tool used in

organizational development, the McKinsey 7-S framework. This
model describes organizations as having seven interconnected
elements. Each of these elements must be considered in creating
sustainable organizational change:
Strategy. A customer-centric culture is a necessary part of HR’s

attempt to create value for the organization. The strategy
provides a plan for creating this value, and it should incorporate
input from members throughout the HR organization.
Shared values. HR leaders communicate to function members

a commitment to quality performance and customer service. The
message must be explicit; it must be communicated through
various media and at meaningful times, such as during
onboarding and at regular meetings and individual performance
meetings.
Structure. HR leaders must take steps to change HR’s

structure if it slows or prevents HR professionals from delivering
quality work to their customers. This can involve empowering
HR professionals to make changes to meet customer needs and
to correct mistakes quickly. It may involve creating a position or
group to continually assess customers’ perceptions of HR
service.
Systems. Systems support the way people do their jobs.

Systems can include a variety of tools, policies, and
processes.To improve customer service, HR leaders implement
processes to improve the customer relationship:
HR may implement software tools to support service
delivery, such as issue tracking software that shares
information and progress on resolving an issue with other
HR professionals and HR customers.
Customer satisfaction surveys are another type of system,
inviting internal customer assessment of HR product/service
quality—how well the products/services meet promises and
expectations.
The concept of quality and customer service is included in
HR job descriptions and the performance management
process.
Customer service is also a key criterion when outsourcing
HR services and monitoring suppliers’ performance.
Key Content
To deliver better service, HR may implement a process

of meeting periodically with internal customers to
understand their current needs accurately and
completely. As a result of these meetings, HR may
establish service-level agreements with customers. A
service-level agreement (SLA) defines the output
customers can expect—for example, the services HR
will provide a function (e.g., self-service portals,
dispute resolution), the normal time frames for results
(e.g., in filling job openings), or HR responsiveness to
customer queries and complaints (e.g., quickly
correcting errors in pay or benefits).
Staff. Ability to deliver customer service is a criterion for

selecting HR professionals. HR professionals are rewarded and
recognized for exceptional acts of customer service.
Skills. HR leaders undertake to assess the competencies

among HR staff to deliver quality customer service and to
address gaps through training and development (e.g., training in
communication, conflict resolution).
Style of leadership. Leaders must model in all their actions the

values they have identified for the HR organization—for
example, supporting customer focus even when it may require
additional resources. They must be willing to invite HR
employees to participate in problem solving and decision
making.
HR’s Internal Stakeholders

division or group.
and management.
HR’s Internal Stakeholders
Understanding the perspectives, challenges, and objectives of
internal stakeholders is essential to HR’s role as a strategic business
partner within the organization. This awareness allows HR
professionals to identify ways in which HR processes and abilities
can be used to help other functions achieve their strategic objectives
and plans and, in that way, strengthen the organization’s strategic
posture. In doing this, HR also demonstrates its value to its
stakeholders and strengthens relationships throughout the
organization.
The HR leader of a consumer products company has been involved
in the design and implementation of a new organizational design
structure that involves a significant change in centralizing common
engineering resources that had previously been dispersed across
multiple operating divisions. This new central resource, which would
define common design processes and their deployment, would use a
matrix structure to assign engineers to different divisions. HR must
get division leaders who previously had full control of their
engineering resources to support the centralized engineering
resource design.
As changes like this begin, tension levels and doubt will be high. HR
professionals can apply their Relationship Management competency
to identify and defuse possible conflicts.
The HR leader meets individually with the division heads

representing product design, manufacturing, and packaging and the
new head of the centralized engineering function to surface specific
personal concerns (those that would inhibit accomplishing the
operating goals) and organizational concerns (the practicality of
making this work). The HR leader summarizes all inputs, identifies
and surfaces legitimate operating concerns, and designs a process
to alleviate individual concerns.
HR then conducts one-on-one meetings and facilitates a group

design and decision-making process to collectively identify operating
guidelines and determine service-level agreements between the
shared engineering resource and each division. This effort allows:
Division leaders to surface reservations and identify risk
management plans to address their concerns that they can
share with the engineering division.
Definition of how required engineering resources will be
requested and made available in a timely manner.
Determination of service-level agreements to set expectations
for service quality and measurement.
Identification of a conflict resolution process for issues that arise
after implementation.
The HR leader demonstrates the ability to manage interactions with

key stakeholders and provide appropriate recommendations and
solutions based on in-depth organizational knowledge and expertise
by:
Promoting successful relationships with stakeholders.
Managing internal and external relationships in ways that
promote the best interests of all parties.
Championing the view that organizational effectiveness benefits
all stakeholders.
Negotiating with internal and external stakeholders to advance
the interests of the organization.
Fostering a culture that supports intraorganizational
relationships.
Fostering effective team building among stakeholders.
Designing strategic opportunities and venues for building
employee networks and relationships.
HR and the Organization’s Core
Functions
All organizations include certain core functions—to a greater or
lesser extent, depending on the size and nature of the organization.
These core business functions are illustrated in Figure 1.
Figure 1: Core Business Functions
Key Content
Organizations today realize that the most effective

strategies are not driven by a single function, such as
marketing/sales or operations, but are produced by cross-
functional collaboration. Because it participates in the
strategic planning process for the organization, HR
understands the value the organization is trying to generate
and the role each function plays in producing that value.
Because its mission as a core function is to deliver the talent and

services required by the other functions, HR also understands the
specific challenges each function faces. As a result, HR is well
positioned to serve as a cross-functional bridge. It can:
Facilitate the high degree of cross-functional understanding and

collaboration required to deliver results.
Use its mission to advise core functions on how to align with the
organization’s strategy and the best ways to elevate
organizational performance.
Identify and support the need for additional resources or
training.
Deliver necessary talent throughout the organization.
Figure 2 summarizes the information about HR and its core business

partners.
Figure 2: Cross-Functional Relationships with HR
Cross-Functional Relationships with HR

Executive Recruiting executive candidates in highly Recruiting and training

management competitive markets members for board of
and board of Negotiating attractive compensation directors
directors packages that are responsible and Consulting on strategic
comply with regulatory restrictions issues such as talent
management, organizational
effectiveness, or culture
Finance and Coordinating requirements of different Providing training related to

accounting markets in terms of currency, taxation, good governance to board
benefits, reporting members or on compliance
Collaborating on start-up operations requirements with internal
(examples include setting up accounts, auditing
filing necessary documents) Selecting an external
Collaborating on ways to manage costs auditor
of benefit programs and reduce tax Promoting inclusion of
burdens for global assignees ethical dimensions in
enterprise value system and
fostering ethical
environment throughout the
organization
Marketing Aligning incentive/compensation Promoting sharing of

and sales programs with strategies and local learning through Internet or
cultures and practices intranet technology
Managing staffing Supporting teams in which
Coordinating knowledge management in marketing plays a key role
different markets (for example, ensuring
that product training is available in
different languages)
Research Developing talent pool with requisite Promoting processes that

and expertise (including employees with up- allow R&D personnel to
development to-date knowledge and skills) devote more time to the task
Identifying employees with needed skills of innovation
throughout the organization Identifying alliance or joint
Selecting members for global teams and venture partners,
building highly functioning teams acquisitions, or vendors to
supply critical elements
Promoting a climate that values
innovation and continuous improvement Ensuring security of patents
and intellectual property
Operations Developing staffing plans Ensuring physical security

Managing labor relations in different of operations
markets Coordinating with local
Dealing with intellectual property rights legal, regulatory, and
cultural requirements
Information Selecting the HR information system and Using Internet and extranet
technology implementing it to foster better
Using database analysis to support communication, knowledge
decision making and strategic initiatives sharing, and coordination
among internal and external
stakeholders
Executive Management
Executive management (often referred to as the C-suite) is ultimately
responsible for all of the core business functions and their effect on
the organization’s performance. The primary responsibilities of
executive management are to:
Develop and communicate strategy to the organization’s
components.
Monitor and control implementation of strategic and operational
activities through control of financial resources.
Be the primary interface with the organization’s stakeholders,
from investors and regulators to customers and communities.
Lead the organization through a shared vision and the values
they model in all interactions.
Executive management commonly includes an individual who holds

ultimate control of organizational resources and responsibility. Titles
vary—e.g., chief executive officer (CEO), president, or
executive/managing director. In a publicly held company, this
individual may report to a board of directors, compensated
individuals from outside the organization. (Nonprofit organizations
may also have boards whose members are compensated for
expenses.) The board is responsible for reviewing and approving
strategic plans, appointing and approving compensation of executive
management, and overseeing organizational governance.
The heads of the organization’s financial operations and day-to-day

operations are also at the executive level. According to an
organization’s mission and values, there may be other positions in
executive management, such as heads of information, innovation, or
risk management. Some of these positions may be “double-hatted”—
they may be held by someone in the organization in addition to that
person’s primary responsibilities.
How HR Interacts with Executive Management

HR leadership interacts directly with executive management. HR
contributes to the development of organizational strategy, advising
on the human capital implications of strategic decisions. It may work
directly with the board to advise on executive compensation and
matters of governance and with other members of the C-suite as
they manage the development and implementation of operations and
strategic initiatives.
Finance and Accounting Functions

Finance and accounting both reflect an interest in an organization’s
financial performance, although the functions play different roles.
Finance focuses on how the organization uses its financial assets to

operate in the short and long term. Finance activities include:
Supporting operations and strategic initiatives through the

creation and monitoring of operating and capital expenditure
budgets.
Providing financial analysis used in strategic planning. For
example, finance is involved in decisions regarding global
expansion, technology investments, and structuring strategic
alliances.
Managing the organization’s “treasury” through short- and long-
term investments and borrowing.
Accounting focuses on tracking financial transactions and reporting

financial information to finance (to support its strategic planning and
management decisions) and to external stakeholders (to support
compliance and demonstrate governance). Accounting activities
include:
Tracking revenue and expenses through accounting. Accounting

procedures must comply with applicable standards, such as the
International Financial Reporting Standards (IFRS) and the
generally accepted accounting principles (GAAP) in the U.S.
Supporting governance by maintaining records of finances and
arranging periodic audits. The internal auditing function often
resides within accounting.
Producing financial statements, such as the income or P&L
statement,
Complying with financial requirements and reporting information
to government agencies (e.g., for taxes), regulatory bodies
overseeing publicly traded companies, and
investors/stockholders. Public interest has demanded greater
transparency of fiduciary responsibilities and actions and greater
accuracy and completeness of financial reports. A number of
countries now have laws requiring varying degrees of corporate
governance.
The finance and accounting functions are challenged by changes in

laws and regulations, new technology that affects processes and
creates new vulnerabilities, and changes in workplace ethics that
make fraudulent behavior and abuse of fiduciary responsibilities
more common.
How HR Interacts with Finance and Accounting

HR depends on finance and accounting for everything it does or
would like to do. HR works with finance and accounting to plan and
monitor annual functional and special project budgets and to
manage relationships with suppliers. This internal customer is
especially interested in governance. HR can help provide
governance and ethics training to board members and employees,
participate in risk prevention programs (e.g., screening job
applicants, fraud investigations), and support the conduct of external
and internal audits.
Marketing and Sales Functions
This is the part of the organization that brings in revenue. Depending
on the organization, these functions may be separated into two equal
areas or one may be included as a sub-function inside the other.
Marketing is responsible for positioning (marketing) and selling

products and services (sales) to customers. The responsibility of
marketing is often described as managing the 4 Ps: price, product,
promotion, and place. Consequently, marketing usually has the best
intelligence about and the highest awareness of customers, market
needs, and competitive threats. For global companies, this may
mean balancing the advantages of a brand identity and a global
marketing strategy with local preferences and needs.
Marketing strategies are often characterized as “push” or “pull”:
A “push” strategy focuses on getting products/services in front of

customers. For example, companies may have showrooms or
create a strong point-of-sales presence at the retail level.
A “pull” strategy attracts customers to the product. An example
of this is the carbonated drinks industry, which invests heavily in
advertising and promotion to create brands and boost sales.
The sales strategy and its workforce characteristics are heavily
influenced by an industry’s customary distribution practices and the
company’s marketing strategy. Some companies may sell to
consumers (B2C, or business to consumer) or to businesses (B2B,
or business to business). They may sell directly (through their own
sales forces or a sales force shared with a strategic partner) or
indirectly (through distributors who sell to retailers, agents, or
representatives). The organization’s sales strategy affects its human
resource needs, including talent acquisition and compensation.
How HR Supports Marketing and Sales

Marketing’s work focuses on the creation of brand identity. HR can
ensure that its activities are aligned with the identity that marketing is
creating and use this brand identity to attract future employees. HR
can collaborate with marketing in creating teams and team cultures
that embody brand characteristics (e.g., customer service,
awareness of and use of cutting-edge technologies).
Sales may look to HR to design compensation systems that motivate

sales behavior and to provide skills and knowledge training.
Research and Development Function

In a commercial enterprise, research and development (R&D) or new
product design and development is responsible for future revenue.
Investment in R&D will vary by industry. When an organization’s
primary value is created through intellectual property, R&D is a
logical investment. In the past decade, the leaders in R&D
investment have been in the computing and electronics, health care,
software and Internet systems, and industrial sectors.
R&D also exists in the public sector, in the form of national research
institutes or centers associated with universities. Public-interest R&D
often focuses on performing theoretical research (as opposed to
applied research), promoting science and new technologies,
performing public-interest scientific research (such as research into
public health issues), and developing sustainable technologies.
Some organizations conduct R&D in a centralized manner (for

example, with a globalized strategy), while others focus R&D in
business units so that projects stay focused on customer needs.
R&D spending is not directly related to levels of innovation and

performance. “The 2018 Global Innovation 1000 Study” (conducted
by PwC’s strategy consulting division, Strategy&) noted that, when
one considered three financial performance metrics (revenue growth;
earnings before interest, taxes, and depreciation, or EBITDA; and
market capitalization growth), the top ten innovators outperformed
the top ten R&D spenders. This may be because these organizations
excel at aligning their investments with their strategy—making sure
they focus on highly impactful innovation (e.g., Tesla’s electric car)
but also on retaining the right people, understanding trends, and
implementing lean product development.
How HR Supports R&D

R&D thrives on cutting-edge employee skills and knowledge. HR is a
partner in sourcing good job candidates and creating attractive
compensation packages. HR’s efforts to create inclusive and diverse
cultures are also important to R&D. HR can protect the
organization’s investment in R&D by ensuring that contracts protect
intellectual property rights.
HR can consult with R&D on designing processes that support a

culture of collaboration and innovation through, for example, creating
career development paths for non-managers, revising job
descriptions to reduce bureaucratic burdens on R&D employees,
and designing systems and processes that support agile decision
making.
Operations Function
This part of the organization develops, produces, and delivers
products and services to customers. The operations function is
responsible for building the products and services that marketing and
R&D define and that sales monetizes. It is therefore the source of
the revenue for the enterprise. “Products” can cover a far-ranging
spectrum from the tangible (automobiles) to intangible (software) to
services (consulting engagements).
Human resources are an important asset for operations, but the

function is often challenged by having a workforce of the right size at
the right time and equipped with the right skills.
Operations is almost always concerned with efficient use of

resources, but issues of quality, environmental impact, and worker
health and safety are also important. Operations may need to satisfy
standards from customers and regulating agencies as well as
industry and professional standards.
Global organizations may have plants and operations in different

countries, with each potentially serving different markets and
customers. In addition, operations departments may be tasked with
locating manufacturing in countries with lower cost structures than
the headquarters country. The logistics, planning, and coordination
among global operations is frequently complex and sophisticated.
How HR Supports Operations
Operations managers may have complex workforce planning needs
that can be addressed through HR’s ability to analyze historical data
and predict and creatively manage gaps in resources. This includes
hiring as well as downsizing. HR collaborates with operations
managers to implement union contracts and advises on managing
grievances and discipline and performance issues in an organized
work environment.
Compliance issues are greater in this function, and HR helps

prepare managers and supervisors for these responsibilities and
performs many compliance activities, such as delivering and
documenting safety training and reporting and documenting
workplace accidents and conditions.
Information Technology Function

The information technology (IT) area manages the storage, access,
exchange, and analysis of information across the enterprise through
hardware and software systems. IT often oversees networks used
for voice and data communication as well as hardware components
and supports data storage and processing needs throughout the
organization.
Increasingly, IT’s major task is to support integration of data from
different organizational processes through an enterprise resource
planning (ERP) system. Through integration, IT helps make an
organization’s data more visible to decision makers in real time.
ERPs can include different modules according to an organization’s
needs:
Financials—examples include the general ledger, an assets

register, accounts payable and receivable, and financial
statements.
Management—examples include budgeting and costing.
Operations—examples include inventory management, work
flow management, work orders, quality control.
Supply chain management—processes from selection to claims
payment.
Customer relationship management—examples include sales
account information and activity.
Project management—processes from schedules and budgets
to resource tracking.
Human resources—examples include employee records,
payroll, benefit programs, training, and performance
management.
IT faces a number of major challenges.

First, IT systems grow over time. This means that some modules
may be proprietary while the rest come from an assortment of
vendors. Achieving smooth integration is often difficult or impossible.
Second, IT is charged with maintaining the security and reliability of

the organization’s data—an ethical, legal, and business requirement.
Systems must be made secure against internal and external
tampering, and IT management must plan for disasters that could
interrupt access to critical data. Failure to secure information can
damage an organization’s reputation and have legal and economic
consequences.
Third, IT must manage the information systems for efficiency as well

as security. System capacity and function must be weighed against
the benefit of added storage and processing tasks. The Internet has
helped in this area by making both off-site data processing
applications and data storage available. Software as a service
(SaaS) is a cost-effective way for IT to support some specialized
applications. The vendor is responsible for maintaining the software
and the servers on which it is stored, and the user pays only a
subscription fee.
How HR Works with IT

IT supports HR’s technology and consults on HR’s technology
projects. HR can assist IT by providing a good pipeline of qualified
employees. In IT’s efforts to manage the organization’s technology
risks, HR can develop and communicate technology policies, such
as safeguarding the organization’s networks from unauthorized
access.
HR Organization

Ensures that outsourced and/or automated HR functions are
integrated with other HR activities.
division or group.
Adapts work style to fit the organization’s HR service model
(e.g., centralized vs. decentralized), to ensure timely and

Approaches to HR operational integration (i.e., how HR
structures work together).
Approaches to HR function/service models (e.g., centralized vs.
decentralized).
Approaches to HR structural models (e.g., Center of Excellence
[COE], shared services).
HR staff roles, responsibilities, and functions (e.g., generalists,
specialists, HR business partners).
Outsourcing of HR functions.
HR Organization
The HR function is designed and structured to serve the strategy of
the overall organization as well as the HR strategy. The structure of
HR can take many different forms, depending on the requirements of
the organization.
The Consultation competency equips HR professionals to be their
organization’s problem solvers—to be proactive in identifying
opportunities to improve the organization’s performance, skilled at
listening to leaders and business partners, and creative in designing
solutions. The following example shows how an HR leader uses the
principles of structure to mitigate an organization’s legal risks.
Business leaders at a firm have typically made decisions about

corrective action and discipline without consulting HR. This has
resulted in increasing complaints, lawsuits, and settlements. The
current HR structure doesn’t align HR business partners with the
organization’s four divisions; rather, it has one employee relations
director assigned to all divisions. Aside from being overwhelmed, the
director hasn’t been able to provide applicable training on policies
and procedures or properly investigate incidents across the
organization. Thus, management is ill-prepared to make sound
decisions.
Senior leaders from each of the divisions have approached the vice
president of HR and raised concerns over HR’s unresponsiveness,
management making misaligned decisions, and the overall cost this
has brought to their budgets.
After reviewing the current HR structure, roles, and responsibilities—

particularly those of the employee relations director—the vice
president of HR immediately decides to align one HR practitioner
with each division in order to learn the divisional structure and team,
consult more quickly and more often on all HR issues, and handle
routine employee relations matters. As a result, the employee
relations director will be relieved of having to deal with every matter
herself. Moreover, this will allow the director to be more responsive
and consultative on critical items and also provide needed employee
relations training to management, thereby ensuring better
administration of employee relations and its impact to the
organization.
HR Team Members
The composition of the HR team will vary by organization, but the
following are the general roles and responsibilities:
Leaders have a strategic role. They are typically part of the

organization’s senior leadership team, and, ideally, they report
directly to the chief executive officer (CEO) or chief operating
officer (COO). This structure creates the opportunity for HR to
perform its strategic role. HR leaders bring information about
strengths, weaknesses, opportunities, and threats to the
organization’s strategy to other leaders and participate in the
development of overall strategy. In addition, they develop and
direct the strategy, priorities, and focus for their HR team. The
leader of the HR function may have different titles, including
chief HR officer (CHRO), HR director, or vice president of HR.
Managers are responsible for units within the HR function, such

as employee relations, talent acquisition, and organizational
development. HR managers plan, direct, and coordinate the
activities for their unit and provide input to the leader for HR
strategy.
Specialists (also known as functional experts) have expertise in
specific areas such as compensation and benefits design, talent
management, metrics, IT, occupational health and safety,
organizational development, and workforce relations. Their role
is to apply best practices in their discipline to advance the HR
strategy.
Generalists (also known as HR practitioners) are familiar with

all of HR’s varied services. Generalists may have expertise in
one or more specialty areas of HR but are generally proficient
enough in each area to provide sound advice and direction to
employees and managers. HR generalists work closely with
their specialist coworkers to ensure that the information and
programs they are providing to their employees are accurate
and complete. Generalists may also be embedded within
countries or business units.
HR business partners are more experienced generalists who

are assigned to represent HR services directly to other business
functions. HR business partners use a deeper understanding of
the business—both the organization and the function—to find
ways that HR can help functions achieve their goals. This
requires many competencies, including Business Acumen,
Consultation, Relationship Management, and Communication.
These individuals can be key to demonstrating HR’s value
throughout the organization.
HR Structural Alternatives
The manner in which HR is structured depends on its organization
and areas of responsibility. A critical factor is ensuring that the HR
structure is aligned with the organization’s strategic plan.
The advantages and disadvantages of the various alternatives for

structuring the HR function are summarized in Figure 3.
Figure 3: Advantages and Disadvantages of HR Structural

Alternatives
Structure Overview Advantages/Disadvantages
Centralized All HR personnel located Advantages: Provides more control and

within HR department; consistency across organization.
delivers services to entire Disadvantages: Can inhibit flexibility
organization. and responsiveness; can decrease
effective communication.
Decentralized HR staff within each Advantages: Allows for more direct

function, business unit, or contact between HR and other functions
location carrying out and facilitates communication and
required activities. responsiveness.
Disadvantages: Lack of consistency
among HR policies and standards.
Structure Overview Advantages/Disadvantages
Functional Headquarters HR is staffed Advantages: Facilitates consistency

with specialists who craft between headquarters policy and
policies. HR generalists, practices and implementation in
who may be located within business units.
divisions or other locales, Disadvantages: Can isolate
implement these policies, headquarters HR from business realities
adapt them as needed, and perceived by all staff and employees.
interact with employees.
Dedicated Allows organizations with Advantages: Promotes strategic

different strategies in alignment between headquarters and
multiple units to apply HR units.
expertise to each unit’s Disadvantages: isolation of dedicated
specific strategic needs. HR units and loss of shared knowledge
and experience; may lead to
duplications and inefficiencies.
Shared Each business unit can Advantages: Offers expertise efficiently,

services supplement its resources by reducing load of transactional activity in
selecting what it needs from favor of value-creating activity.
a menu of shared HR Advantages: Risks underuse of service
services (usually centers when their existence is not
transactional) that the units widely known.
agree to share.
Centralized/Decentralized HR
Centralized HR is characterized by having all HR personnel located
within the HR department and from there delivering services to all
parts of the organization. Headquarters (or corporate) makes all HR
policy and strategy decisions and coordinates all HR activities and
programs. The goal of the centralized structure is to ensure
standardized HR policies and processes throughout the
organization. Centralized HR also allows large organizations to
create efficiencies in the delivery of HR services.
In decentralized HR, each part of the organization controls its own

HR issues. Strategy and policy may still be made at headquarters,
with HR staff within each function, business unit, or location carrying
out the required activities.
For example, a local bank with a small number of branches may

have a centralized HR structure, handling all HR issues for the bank
departments and branches from one HR department at the bank’s
headquarters. A large heavy equipment manufacturer with multiple
locations in different countries may have a decentralized HR
structure. In this case, there would be a headquarters HR staff but
also dedicated HR functions at each location. Decentralizing HR can
allow HR to position itself closer to its internal business partners and
create stronger relationships.
Key Content
Centralized HR provides more control and consistency

across the organization, but it can also inhibit flexibility and
responsiveness and can decrease effective communication.
Decentralized HR allows for more direct contact between
HR and other functions and facilitates communication and
responsiveness. The downside can be a lack of
consistency among HR policies and standards. This is
especially a challenge for global organizations that would
like the economies and clarity of global HR policies and
processes but are aware of the need to adapt to local
cultures, laws, and business practices.
Some organizations have hybrid HR structures. For example,

learning management may be determined by headquarters, with the
content of the learning being determined at the functional, business
unit, or location level.
Functional/Dedicated HR
Another alternative is between a functional or dedicated HR
structure. In their book The HR Value Proposition, authors Dave
Ulrich and Wayne Brockbank describe the two alternatives.
In a functional HR organization, headquarters HR is staffed with

specialists who craft policies. HR generalists, who may be located
within divisions or other locales, implement these policies, adapt
them as needed, and interact with employees. This type of
organization is often found in the least diversified, but not necessarily
small, organizations.
A dedicated HR structure allows organizations with different

strategies in multiple units to apply HR expertise to each unit’s
specific strategic needs. This is in some ways a “corporatized” HR,
with an HR function at headquarters and separate HR functions
located (or “embedded”) in separate business units. Corporate HR
articulates basic HR values, develops tools to be used by the
organizational-level HR functions, and creates programs aimed at
enhancing global literacy and leadership skills. The business unit HR
staff develops local policies and practices.
Shared Services
Ulrich and Brockbank identify another structural alternative known as
the shared services HR model. This model is frequently used in
organizations with multiple business units. Rather than having to
develop its own expertise in every area, each unit can supplement its
resources by selecting what it needs from a menu of shared services
(usually transactional) that the units agree to share.
Centers with specific areas of expertise develop HR policies in those

areas and then deliver this service to all units. In a globally
integrated enterprise, the centers develop the services at an
international or global level and can be located within the most
appropriate unit or country. HR transactional work is thus shared by
a network of centers, allowing HR professionals to spend more time
working on strategic or transformational activities that help to
generate value.
Common processes folded into shared service centers include

payroll, procurement, accounts payable/receivable, travel expenses,
health benefits enrollment, and pension administration. The top four
positive outcomes for organizations that have implemented the
shared services concept are:
Reduced staff time spent on administrative tasks.

Reduced administrative costs.
Consolidation of redundant functions.
Better tracking of employee data.
Related—but not identical—to the shared service center is the

center of excellence (COE). Shared service centers deliver savings
and increased productivity by locating similar, more transactional
processes in one location. COEs aim at leveraging strategic
expertise in the organization to foster growth and continuous
improvement. COEs can be located in a certain facility but can also
be “virtual.” They can take advantage of digital communications to
create networks of experts who can reside anywhere in the
organization. COEs in HR might focus on talent acquisition, talent
management, organization development, learning and development,
compensation and benefits, and other areas of HR expertise.
Third-Party Contractors
Using third-party contractors is both a structural alternative and a
tool HR can use to deploy its own assets with a more strategic focus.
Third-party relationships take the following forms:
Outsourcing, in which a third-party vendor provides selected

activities
Cosourcing, in which a third party provides dedicated services
to HR, often locating contractors within HR’s organization
HR activities that are not strategic but are resource-intensive or that

require specialized expertise are candidates for outsourcing or
cosourcing. A survey of human resource outsourcing (HRO)
companies shows a wide range of outsourcing options, covering
administrative activities, implementation of services, and consultation
on specific issues and projects.
For example, HROs can administer or implement:

Payroll.
Employee benefit programs.
Employee self-service centers.
Learning and development systems, including training and
knowledge management.
Employee data retention and analytics.
Recruitment programs.
Key Content
Outsourcing can provide cost savings for an organization,

but there is a loss of managerial control. Cosourcing can be
more expensive than outsourcing, but there is more
managerial control over the contractor.
HR must approach the decision to outsource or cosource

strategically. For example, an organization may commit to increasing
the depth of leadership talent at all locations. To ensure that the task
is accomplished as quickly and as effectively as possible, the
organization’s HR function may choose to outsource a talent search
to one or more consultants who specialize in this field and who have
better access to informal networks of talent sources.
The third-party contractor’s performance objectives must be aligned
with the strategic goals of HR and the organization. The reliability,
capacity, and expertise of potential contractors must be confirmed,
as well as their ethical character, since HR retains responsibility for a
third-party contractor’s practices and ethical behavior. The
agreement should define specific deliverables and criteria such as
conformance with organization policies and service levels.
The Outsourcing Process

To ensure the most appropriate and productive use of outsourcing,
HR managers should rely on a thoughtful, well-tested process. Even
when an existing supplier relationship is satisfactory, it is beneficial
for the HR organization to consider other options periodically. This
improves transparency in the relationship, but it also helps HR to
confirm that the organization’s needs are being met and to gain
perspectives on new approaches and tools. Current suppliers should
be included in the process (unless there have been serious,
unresolved performance problems).
Key Content
The outsourcing process includes nine steps:
1. Analyze needs and define goals.

2. Define the budget.
3. Create a request for proposal (RFP).
4. Send RFPs to the chosen contractors.
5. Evaluate contractor proposals.
6. Choose a contractor.
7. Negotiate a contract.
8. Implement the project and monitor the schedule.
9. Evaluate the project.
Analyze Needs and Define Goals.

A thoughtful needs analysis is the most critical stage. Analyzing a
project that uses a contractor is not a one-person job. It requires a
multidepartmental team consisting of representatives of all potential
users. At this stage, project goals and expectations are defined.
Example: A project team has been formed to purchase a

new human resource information system (HRIS) for an
organization. The team, consisting of members of the HR,
accounting, marketing, and information technology
departments, develops a questionnaire to distribute to all
potential users of the new system to define the necessary
functions.
The team documents information regarding the current
system, for example:
Outputs currently received from the system (required
government agency reports, employee records, applicant
tracking, etc.).
User complaints and needs.
Key problems of and constraints on the current system
that limit its usefulness.
The questionnaire includes such questions as:

Where should the system be located?
How should the system fit with systems already on site?
What kind of hardware, software, and other components
are needed?
What calculations must it be able to perform?
Define the Budget.

If possible, plan for the use of outsourcing resources in your annual
budget. Know what can be spent for the outsourced service and
what it costs to provide that service in-house. This information
provides a look at the expected financial return on investment.
Example: The director of HR is analyzing the available

resources in the budget for a new HRIS. In doing so,
questions like the following are considered:
What is the budget for planning?
What is the budget for the system?
What is the budget to support the new system when it is
operating?
Create a Request for Proposal.

Once the team has reached a decision that outsourcing with a third-
party contractor could be beneficial, the next stage is to prepare a
request for proposal (RFP). An RFP is a written request asking
contractors to propose solutions and prices that fit the customer’s
requirements. The purpose of an RFP is not only to ensure that
responses actually meet the project’s needs but also to ensure some
consistency among responses so that they may be more easily
compared.
While RFPs may differ in structure depending on the organization

and industry, contractors are usually asked to provide the following:
Executive summary. Contains a synopsis of the vendor’s

product or service and usually includes an understanding of the
client’s needs.
Company information. Provides information on the vendor
company’s size, financial stability, business viability, and
experience in the field.
Project team/resources. Explains who will be involved in the
project from both the client and vendor companies.
Deliverables. Outlines how the vendor will meet client
needs/objectives.
References. Lists previous clients for whom the vendor has
performed similar work.
Outlined development process. Includes a detailed
description of the project plan, with the objectives, the scope of
the effort, and a time line.
Cost. Lists potential charges and prices for all products and
services involved in the project.
Example: The HRIS project team determines the type and

depth of information to be provided by each contractor.
Send RFPs to Chosen Contractors.

Once the RFP has been designed, it is sent to selected contractors.
Instructions on the manner and date for submission should be
included in the request.
Example: The HRIS project team researches prominent

contractors of HRIS systems, narrows the list to five, and
sends them the RFP.
Evaluate Contractor Proposals.

Many variables need to be considered when evaluating a third-party
contractor’s proposal. These variables differ based on the organization’s
size, priorities, and industry. See Figure 4 for criteria to consider when
selecting a contractor.
Figure 4: Factors to Consider When Evaluating Third-Party

Contractors
Evaluating a Third-Party Contractor
Scope of resources Company reputation/references

Ability to meet specifications Customization options
Results of site visit Additional value-added
Price capability
Previous/existing relationship
Commitment to quality of product
and service Flexible contract terms
Schedule Location
Cultural match
Example: The submitted proposals are reviewed by the

HRIS project team. In this case, the top three factors under
consideration are 1) ability to meet specifications, 2)
customization options, and 3) price. The team also calls the
contractors’ references and then narrows the field to two.
These two are asked to make presentations to the project
team.
Choose a Contractor.
When all proposals have been carefully reviewed, it’s time to select a
contractor that will meet the organization’s needs.
Example: The HRIS project team chooses a contractor
whose system meets 85% of their specifications and who
can customize the remaining 15% into the final product.
The price is well within the team’s stated budget.
Negotiate a Contract.
Before the project commences, a written contract that outlines the
contractor’s services should be agreed upon. This contract will
describe not only the key deliverables of the project but will include
additional information such as implementation time frames, payment
terms, performance standards (including response times), training
expectations, and upgrade costs and responsibilities.
Example: The director of HR and an advisor from the legal

department review and negotiate the final contract with the
chosen contractor.
Implement the Project and Monitor the Schedule.

Once the contractor is selected and the contract is approved, the
next step is to get the project up and running. First, conduct an initial
project planning meeting to review and refine implementation targets
in the project schedule.
Example: The HRIS project team meets with team

members from the contractor to finalize the project plan and
implement system development. The system is
implemented on schedule and within budget.
Evaluate the Project.

Upon completion of the project, all payment terms are usually settled
and the contractor could ask for an evaluation of its services. This is
also the time to conduct an internal evaluation to gather information
on how the new system is working and to develop an ongoing
evaluation plan.
Example: During the project planning process, the HRIS

project team defined benchmarks that could be used to
evaluate the system once it was implemented—e.g.,
percentage of errors, number of times support is required.
The team now evaluates the system’s performance and
works with the contractor to correct deficiencies. The team
determines that an annual evaluation will be sufficient to
plan changes to the system required by legal changes or
changes in compensation and benefits.
Demonstrating the Value of HR

and management.
Analyzes and interprets key performance indicators to
understand the effectiveness of the HR function.

HR-function metrics (e.g., HR staff per full-time employee,
customer satisfaction, key performance indicators, balanced
scorecard).
Demonstrating the Value of HR
Just as the organization must measure and demonstrate the value it
is delivering to stakeholders, HR must measure and demonstrate its
value to the entire organization.
The HR professional in this scenario is the head of human resources
for a company in the logistics industry in Ghana. She has a strong
background in HR strategic planning and is also an effective
generalist. She was able to apply her experience, expertise, and
Behavioral Competencies to a critical personnel problem.
During her first weeks at the company, the HR head completed an

HR audit and identified that about 75% of the employees had a
problem with the attitude of the managing director (MD). Employees
complained of verbal abuse, often in public at company social
gatherings. The MD also tended to jump to conclusions about the
root causes of problems and then would assign blame. After some
few months on the job, the head of HR started experiencing the
same issues with the MD. Complaints continued to come from other
employees and the senior management team.
According to exit interviews, the MD’s attitude was causing key
employees to resign. On investigation, the HR head discovered that
the average period for which key talent were staying on the job was
14 months. She also looked at the organizational design and saw
that the current structure did not empower employees to execute
their responsibilities. The MD was approving almost every decision
in the company.
The HR head scheduled a feedback exercise with the MD. She

started by asking the MD why she had been recruited for the role.
The MD reiterated that he needed a professional to drive the human
resource agenda to achieve growth. The HR head asked how the
MD perceived the culture of the organization. He responded that he
wanted a positive working culture where people are seen as the
company’s greatest asset and also where mistakes are seen as
opportunities for growth.
Then the head of HR began to review the findings from the HR audit
with the MD. The MD became defensive. The head of HR calmed
him down and urged him to remember his reason for establishing an
HR department and engaging an HR professional to create an
enabling working environment. She then reported her research on
turnover and noted that, without some changes in culture and
structure, the company would continue to lose key talent and would
not achieve the efficiency it needed.
The HR head engaged the MD every week to review events and

complaints from employees and the MD’s experience in changing his
management style. She secured his buy-in to redesign the
organizational chart and fully empower line managers to make
specified decisions. The MD could then focus on strategic issues
and making his company what he had envisioned.
This solution required many Behavioral Competencies. The HR head

used Critical Evaluation in gathering and analyzing data, Leadership
and Navigation and Relationship Management to have a frank
discussion with the MD, and Consultation and Communication to
introduce continuous improvement for the MD and the entire
company.
Importance of Measuring HR
Performance
Measuring and reporting results has several important benefits for
HR:
Reinforcing HR’s role in strategic development by measuring the

effectiveness of HR strategies and senior management’s
implementation of those strategies
Identifying opportunities for redirection and improvement
through periodic measurement of progress on strategic
objectives
Strengthening HR’s relationship with internal business partners
Supporting future investment in HR programs
The process begins with establishing key performance indicators.

HR KPIs are sometimes established by applying a balanced
scorecard approach to the function’s mission. The function then
collects data to compare performance with these KPIs and other
metrics. Assessment can include variance analysis of outcomes or
results—e.g., variances of recruiting costs from budget. It can also
include assessment of processes—how HR performs its work;
whether that performance meets the function’s mission, values, and
goals; and, if needed, how those processes can be improved.
Creating an HR Balanced Scorecard
Balanced scorecards provide a concise yet overall picture of an
organization’s performance. They can be used to focus
organizations and functions on key strategic activities, to craft
responses to goals, and to create metrics to assess the
effectiveness of these responses. Balanced scorecards help support
a clear line of sight from strategic goals to strategic performance.
Key Content
By linking clearly defined department objectives and

performance to the company’s strategic business goals, a
balanced scorecard for HR can serve as a way of focusing
human resource staff on activities that will support the
company’s goals. An HR balanced scorecard also
demonstrates HR’s strategic value by defining and
measuring HR’s contribution in concrete, clearly understood
terms.
For example, consider an HR function that has analyzed the

organization’s strategy and has identified the following ways in which
it can contribute, based on the four perspectives of the balanced
scorecard:
Financial: Develop alternative staffing strategies to provide more

flexibility to meet shifts in production demands.
Customers (other functions and employees): Provide easier
access to HR services, including consultation with functional
leaders.
Internal business processes: Apply technology to increase
efficiency and capture data.
Learning and growth: Make sure that future leaders will be
available across functions, throughout the organization.
These goals lead to actions or programs. For example, the focus on

leader development leads HR management to contract with an
outside consultant to assess and work with identified high-value
employees. To measure the effectiveness of this action, HR must
identify the right metrics. What will indicate that the program is, in
fact, resulting in a growth in leadership capabilities? Results from
simulation exercises? Retention of key employees? Fill rate of
leadership positions from internal candidates?
For an HR balanced scorecard to be truly effective, it must:
Contain accountability and measurable results.

Be valid. The measurement system must contain
understandable measures, metrics, and targets that are aligned
to the objective and can be supported with solid data.
Contain only those measures that are most important to the
objective and the organization’s strategic plan; that is, the
measures must result in actionable items.
Focus on results. Simply measuring turnover or time to fill is
ineffective if no action is taken as a result. More meaningful
measures that are aligned clearly with the organization’s
strategic plan include productivity and retention.
Be carefully planned and executed.
HR Metrics
HR metrics focus on traditional measures of efficiency and
effectiveness (e.g., budget performance, hiring ratios and costs) and
strategic HR activities (e.g., metrics indicating increased employee
engagement, such as reduced absenteeism or discipline issues, or
reduced risk, such as accident rates and compliance audit results).
Figure 5 lists common HR metrics.
Figure 5: Sample HR Metrics
Metric Description Possible Use

Absence rate Ratio of lost days to To reflect benefits of a

number of employees change in workplace
conditions
Accruals Comparison of budget to To monitor expense accruals

actual assignee costs and make sure that
assignment budget and
financial goals are met
Applicant yield Percentage of applicants To demonstrate

ratio who proceed to the next effectiveness of recruiting
step of the selection methods
process
Cost per hire Total costs of hiring To demonstrate increased

divided by number hired efficiencies in recruitment
and hiring process
Human capital Ratio of employment- To demonstrate value of HR

return on related expenses to programs
investment revenue minus
nonemployment expenses
Human capital Revenue minus Used comparatively to

value added nonemployment expenses indicate increase in
divided by number of full- employee productivity as the
time employees result of HR activities
Key talent Percentage of key talent To demonstrate

retention retained effectiveness of employee
development and reward
strategies
Promotion Percentage of internal To demonstrate

pattern promotions effectiveness of
development programs and
strong culture
Success ratio Proportion of selected To indicate effectiveness of

applicants who are later recruiting, selection, and
judged to be successful orientation methods
on the job
Training return Economic benefit of To demonstrate value of

on investment enhanced performance strategic choice to invest in
minus costs of developing, training
producing, and delivering
training
Transfer Number or percentage of To track internal competency

employees moving across development and global
divisions to new jobs talent management
Turnover costs Costs associated with When turnover rate is

separation, vacancy, combined with costs of
replacement, and training turnover, to demonstrate
economic benefits of a
Turnover rate Proportion of exiting
change in pay or benefits
employees to all
employees
Vacancy costs Costs of substitute labor To support decision to

(temporary workers, outsource function or area
contractors, outsourcing and decrease internal head
partners) minus wages count
and benefits not paid
because vacant
Each organization must choose the metrics that are meaningful for
their activities and strategic focus. Note that formulas for the same
metric can vary; it is important to use a consistent formula
throughout your organization and when benchmarking.
HR Audits
In an HR audit, an organization’s HR policies, practices, procedures,
and strategies undergo a systematic and comprehensive evaluation
to establish whether specific HR practices are adequate to achieve
the function’s goals. For example, policies must be aligned with
current organizational goals. Audit results help to identify gaps,
which can then be prioritized for corrective action.
Decisions about what to audit can result from a variety of internal

and external factors. Poor KPI results may require closer analysis of
processes to identify possible causes. Changes in organizational
strategy may require realignment of HR policies and practices. New
laws and technology can change the way work is done and introduce
vulnerabilities that must be managed. The audit targets are
prioritized depending on the constraints of time, available resources,
and/or budget. Keeping a log of issues that have arisen may help
identify areas of weakness that can be examined and addressed
during the audit process.
Types of HR Audits
There are different types of HR audits, and each is designed to
examine different types of HR goals—for example, to use resources
efficiently or to maintain compliance with local laws and regulations.
Figure 6 lists the more common types.
Figure 6: Types of HR Audits
Audit Type Description
Compliance Focuses on how well the organization is complying with

current employment laws and regulations
Best practices Helps the organization maintain or improve a competitive

advantage by comparing its practices to those of
employers identified as having exceptional HR practices
Strategic Focuses on the strengths and weaknesses of systems

and processes to determine whether they align with the
HR departmental and/or the organizational strategic plan
Function- Focuses on a specific area in the HR function (e.g.,

specific payroll, performance management, records retention,
etc.)
Source: “Conducting Human Resource Audits,” SHRM
The Audit Process

The actual process of conducting an audit typically follows these
steps:
Determine the scope and type of audit. Will the audit examine
all or only specified policies and processes?
Develop the audit questionnaire. This tool helps ensure that

all necessary data is collected in a consistent manner.
Collect the data. The process should be designed for efficiency.
It should be thorough but should aim at creating minimal
disruption.
Benchmark the findings. The findings are compared with

agreed benchmarks, which may be policy or legal requirements
or best practices.
Provide feedback about results. It is an ethical obligation to

describe audit findings to management. Areas of poor
performance are prioritized in terms of their strategic or risk
impact.
Develop action plans. The audit generally includes

recommendations for addressing the issues identified.
Ownership is assigned for the plans, and a time frame for action
is set. The actions taken are reviewed. If the plans have not
been fulfilled, management may be involved.
Foster a climate of continuous improvement. Audits are a

key part of a quality improvement process—a cyclical process of
planning, acting, and checking.
Figure 7 summarizes the audit process steps.
Figure 7: The HR Audit Process

Audit Step Description
Determine the scope Identification of exactly what areas should be

and type of audit. targeted for review (e.g., comprehensive review of
all practice areas or a limited review of the
adequacy of a specific process or policy)
Develop the audit Development of a comprehensive document that

questionnaire. elicits information during the inquiry (e.g., a list of
specific questions)
Collect the data. Use of the audit questionnaire as a “road map” to

collect information
Benchmark the Comparison of the audit findings with HR

findings. benchmarks (e.g., results for other similarly sized
employers, national standards, or internal
organizational data)
Provide feedback Review of data and presentation of summarized

about the results. findings and recommendations (e.g., a written
report and discussions) for the organization’s HR
professionals and senior management team
Prioritization of recommendations based on the risk
level (e.g., high, medium, and low)
Development of a time line for required action(s)
Develop action plans. Development of action plans for implementing the

changes suggested by the audit, with the findings
separated by order of importance: high, medium,
and low
Foster a climate of Constant observation and continuous improvement

continuous of the organization’s policies, procedures, and
improvement. practices (e.g., continuous monitoring of HR
systems to ensure that they are up-to-date and
have follow-up mechanisms)
Source: “Conducting Human Resource Audits,” SHRM

Functional Area #7: Organizational
Effectiveness and Development
Organizational Effectiveness and Development concerns

the overall structure and functionality of the organization
and involves measurement of long- and short-term
effectiveness and growth of people and processes and
implementation of necessary organizational change
initiatives.
Ensures that key documents and systems (e.g., job postings
and descriptions, performance management systems)
accurately reflect workforce activities.
Supports change initiatives to increase the effectiveness of HR
systems and processes.
Identifies areas in the organization’s structures, processes, and
procedures that need change.
Provides recommendations for eliminating barriers to
organizational effectiveness and development.
Collects and analyzes data on the value of HR initiatives to the
organization.

Aligns HR’s strategy and activities with the organization’s
mission, vision, values, and strategy.
Regularly monitors results against performance standards and
goals in support of the organization’s strategy.
Establishes measurable goals and objectives to create a culture
of accountability.
Consults on, plans, and designs organizational structures that
align with the effective delivery of activities in support of the
organization’s strategy.
Assesses organizational needs to identify critical competencies
for operational effectiveness.
Designs and oversees change initiatives to increase the
effectiveness of HR systems and processes.
Ensures that HR initiatives demonstrate measurable value to the
organization.
Organizational Effectiveness and
Development
In its role as a consultant to the organization, HR may be called upon
to act in the capacity of an “organizational” physician, requested by
organizational leaders to examine the health of the organization,
assess its ability to function at a level needed to attain strategic
goals, and recommend and possibly implement improvements to the
organization’s “effectiveness.”
Organizational effectiveness and development (OED) can be seen

as a process or tool to fulfill this role—to identify and remove internal
obstacles to the organization’s strategic goals and continuous
improvement. The skill of asking questions is critical in OED, and the
questions should start with “Where do we want to go?” and “What is
keeping us from getting there?” This is the effectiveness part of
OED. The development part comes with the next question: “How
must we change to get onto the right path toward our goals?”
OED identifies and addresses organizational performance issues

through planned interventions that engage stakeholders in
information gathering and solution design and implementation.
Interventions may focus on organizational or team performance
issues. Organizational interventions may result in changes in
structure, culture, competencies, technology, or processes. Team
interventions focus on developing more unified and focused teams
and helping dysfunctional teams move past conflict and toward
accomplishment.
Organizational Development

Collects and analyzes data on the value of HR initiatives to the
organization.
Regularly monitors results against performance standards and
goals in support of the organization’s strategy.
Assesses organizational needs to identify critical competencies
for operational effectiveness.
Designs and oversees change initiatives to increase the
effectiveness of HR systems and processes.
Ensures that HR initiatives demonstrate measurable value to the
organization.
Organizational performance theories, structures, and
approaches.
Organizational Development
Organizational effectiveness and development (OED) focuses on the
structure and functionality of the organization to increase the long-
and short-term effectiveness of people and processes. The term
organizational development (OD) refers to an organizational
management discipline used to maintain and grow organizational
effectiveness and efficiency through planned interventions.
An outpatient physical therapy company was having difficulty
meeting its monthly objectives. Overall employee morale was also
low. Perhaps it was a cause of the problem, or it might have been a
result of the organizational performance. The team lead of patient
services was assigned to investigate the issue.
He collected and analyzed data regarding knowledge and

experience at each of the company’s 15 clinics, focusing on the
clinics’ team leads. The analysis identified significant variations in
competency among the 15 clinics, primarily within the administrative
and clerical function.
To address the issue, the HR professional developed a transfer-of-

learning program in which offices would “share” employees between
clinics. The employees assigned temporarily to higher-performing
clinics were able to obtain valuable information to bring back to their
own offices.
He discovered that his own competency in Communication was

required to promote, facilitate, and foster the openness and trust
essential to the sharing of knowledge. He was able to listen,
establish relationships, and model good communication skills that
the staff could use to learn about and trust each other.
Organizational Theories
If organizational development is comparable to conducting a medical
examination, organizational theories help to explain how the
organization functions, including its parts and how they interact.
A number of organizational models have been developed, such as

the McKinsey 7-S Framework or the Burke-Litwin Performance and
Change Model. The terms may be different, but what these models
propose is very similar. In order for an organization to implement its
strategy successfully, it must align its various components. For
example, its structure must suit the strategy. If it does not, the
structure—or the strategy—must be changed.
Figure 8 illustrates this general concept.
Figure 8: Organizational Model

The major organizational elements that must be aligned with strategy
include:
Structure—the way the organization separates and connects its

pieces.
Systems—the policies that guide behavior and work, the
processes that define how tasks will be performed, and the
technology or tools used to support that work.
Culture—the set of beliefs, attitudes, values, and behaviors
shared by members of the organization and passed on to new
members.
Values—principles that the organization and its leaders have
explicitly selected as a guide for decisions and actions.
Leadership—the model of behavior that leaders set for the rest
of the organization.
The way these elements are implemented and aligned can affect:
The motivation employees apply to their work.

Employees’ engagement or identification with their work and the
organization’s goals.
Performance levels and results—i.e., the effectiveness and
efficiency in reaching goals—for the entire organization, for its
structural pieces (e.g., divisions, functions, teams), and for
individual employees.
Governance—the organization’s ethical and legal compliance
and its approach to managing risk.
HR professionals will apply their Consultation competency to

understand their organization according to this model and then to
evaluate its ability to meet the strategic goals the organization has
set. HR will deliver a diagnosis or assessment and then a course of
treatment or interventions that will be taken to correct performance
obstacles.
OED Interventions
An OED intervention can be seen as stepping in to interrupt the
status quo or the current state in order to examine a situation more
closely and make changes that could improve outcomes.
Interventions are often described as “structured activities,” in the
sense that an intervention may involve multiple actions that are each
focused on the same objective, organizational performance
improvement.
An intervention includes both the tools used to examine the issue

and the change or solution that will be implemented. For example,
HR may be asked by management to find out why it takes so long to
implement strategic initiatives. In the course of the intervention, HR
may conduct multiple interviews and focus groups and determine
that problems primarily occur in departments that have recently
undergone a change in leadership. After more interviews and
reviews of personnel files, HR determines that the issue is caused by
a weak succession planning system that does not adequately
prepare for transitions in leadership. A program to improve
succession planning is developed and launched. HR meets with all
departments to explain the new process and calm employee fears. A
year later, HR reviews data on recent initiatives, focusing on their
start-up times and delays that might have been caused by leadership
problems.
Since organizations are systems, solutions must address root

causes and contributing factors for dysfunctions and, for strategic
changes, overall goals and key performance indicators. Changes
proposed in one area must be analyzed for possible effects on other
parts of the organization. The complete answer may be an OED
strategy composed of multiple interventions, aimed perhaps at
different audiences or scheduled for different stages in an extended
period of change.
HR professionals may be involved in OED interventions directly as

internal consultants to the organization, or they may participate
indirectly with third-party consultants, contributing their knowledge of
the organization, its people, and its processes and their expertise in
managing workforce capabilities and productivity. HR managers may
apply OED principles to increasing the effectiveness of the HR
function.
Key Content
The OED strategy should include the correct number and

type of interventions, aimed at the correct audiences and
sequenced and scheduled for maximum effectiveness. For
example, improving a dysfunctional team’s performance
may require first a workshop to reach consensus on shared
vision, roles and responsibilities, and ground rules. This
may be followed by individual coaching with the team’s
leader and team workshops on conflict resolution. Those
interventions may be followed by redesign of processes
such as communication.
Proactive Interventions
Proactive OED interventions identify and correct potential problems
before they begin affecting performance. They may also prepare the
organization to take advantage of anticipated opportunities. For
example, OED can help organizations that must compete in a rapidly
changing marketplace to develop:
Communication networks that allow critical information to be

exchanged quickly, free of hierarchical structures that slow
communication.
Iterative work processes (developing a product through
increasingly functional versions) that control the costs of
mistakes while allowing continuous learning and improvement.
Structures that allow employees to make decisions quickly and
independently.
Intrinsically motivated employees who feel they can try new
ideas without being punished for worthy failures.
Remedial Interventions
Remedial interventions make changes that bring an organization
back on course toward its strategic goals. For example, during
economic downturns, organizations can adopt a “do more with less”
operating style that reaps some short-term benefits due to cost
savings. However, these short-term benefits might inflict long-term
problems on the organizations’ overall capabilities, organizational
structure, business processes, and levels of workforce engagement,
such as:
Diminished capacity, capability, and agility. The organization
no longer has the quality or quantity of human resources to
remain competitive.
Misaligned organizational structure. Employees may be

forced to perform duties for which they are not equipped.
Managers may be neglecting strategic work to accomplish
immediate tactical tasks.
Broken work processes. Processes are not redesigned to the

conditions. Rather, they work around current limitations and
grow less efficient and effective.
Declining workforce engagement. Feeling stressed and

underpaid for their increased workloads, employee productivity
may decline. If the economy has improved, valued employees
may leave.
Assessing OED Interventions

To demonstrate the value of an intervention, HR professionals must
measure and report to their internal clients the effects of the
intervention.
The most important measure of success is the degree to which the
intervention has improved the organization’s ability to attain its
strategic goals. HR and the client should identify reasonable change
or improvement goals when planning the intervention.
Whether the strategic goal is increasing output, engagement, or

market responsiveness, organizational performance metrics focus on
an organization’s:
Efficiency in using resources to create value. A common

metric here is the ratio of revenue or income to cost of sales and
goods. It could also be measured by the number of hours or the
number of full-time employees it takes to produce a good or
service. A not-for-profit organization may consider the number of
clients it serves.
Effectiveness in achieving its strategic goals. This may

include a much broader range of metrics that evaluate, for
example, the organization’s ability to:
Attain its targets (e.g., increased market share, lower rate of
homelessness).
Develop key competencies (e.g., innovation, customer focus,
quality).
Create the internal environment leaders envision (e.g.,
collaborative work, distributed decision making, diverse
teams, ethical decision making).
The client’s perception of the experience is also an important part of

the assessment. Clients may be surveyed or interviewed after the
intervention about whether their expectations were fulfilled. Were
objectives achieved? Did HR communicate the process well during
the planning phase and then throughout the process? Did HR
involve and listen to stakeholders (e.g., employees)?
Finally, HR should assess its own effectiveness and efficiency in

conducting the intervention. Did HR achieve its own quality goals
throughout the intervention? Did members of the team execute their
roles properly? Were commitments to the client met in terms of
project deliverables (e.g., written reports) and promised delivery
dates?
Characteristics of Effective OED

Interventions
Effective OED interventions share the following characteristics:
They are strategically aligned and have top management

support.
They are evidence-based and avoid assumptions and
generalizations.
They aim for sustainable results and continuous improvement.
Solutions focus on systemic changes rather than patches.
They use the shared language and tools of organizational
development so that everyone involved in the intervention
understands the goals and processes.
They are collaborative, inviting input and feedback from all those
affected.
They are flexible and dynamic; solutions are revised based on
results and feedback.
Some characteristics of effective organizational effectiveness and

development interventions are described in Figure 9.
Figure 9: Characteristics of Effective OED Interventions
Characteristics Importance
Strategically aligned Helps ensure that plans reinforce, complement, and build on
each other and support overall organizational goals and
strategies
Collaborative Facilitates discovery of causes and development of solutions

with critical input from those most closely involved (managers,
supervisors, and employees) in intervention area
Supported by top Helps reduce resistance to eventual change

management
Characteristics Importance
Producing sustainable Changes that can continue to deliver long-term results,

results perhaps because of management preparation or group
involvement and acceptance of new processes and success
criteria
Supporting continuous Aims at strengthening the organization in an ongoing manner

improvement by identifying weaknesses and opportunities and engaging
employees in performance improvement (Continuous
improvement is a basic tenet of the quality management
programs to which many organizations today have committed.)
Using common tools Allows for easy comparisons and collation of data
Using common Avoids confusion and misunderstanding

language
Explicit assumptions Allow the validity of underlying assumptions to be challenged
Fact-based Clarifies the difference between what is known and what is

supposed
Oriented toward Uses systems theory and IPO model to analyze problems
systems and processes (These topics are discussed in the HR Strategic Planning
Functional Area in the People module.)
Flexibility Recognizes and accepts that assumptions are likely to change
Multiple perspectives Provides access to diverse perspectives
Why OED Interventions Fail

It is important to remember all the dangers that can surround an
intervention as it is planned, implemented, and sustained.
Some interventions fail because they never get started. Those

involved may be afraid of the effect of change on the organization
and may hold back. They collect data, they analyze it, they discuss
possible actions, but in the end they fail to act. This is often called
“analysis paralysis,” but the analysis is not the problem. The real
issue is a reluctance to take reasonable risks.
Other interventions fail because their objectives are too grand or the
number of changes necessary is too great. The hurdles may be
limited resources or an organization that is not skilled at change. The
requirements for the objectives to be met may not have been
thoroughly defined, and therefore the organization is not prepared or
equipped to implement the changes. The impact of external forces
may be underestimated. The gaps between the current and
envisioned organizational cultures may be too great to overcome in
the amount of time allocated. Small steps may be required rather
than great leaps.
And sometimes interventions fail because the planners focus on their

solution and not on the people who will make the solution work.
Interventions involve change, and implementing change involves the
entire organization. Some of the specific communication pitfalls and
possible remedies for them are the following:
Leadership does not get involved. Sometimes decisions

about major organizational changes are made at the top
management level and then news is allowed to trickle down to
employees. As a result, why and how the organization is
changing may be unclear. Leaders and HR professionals should
roll out a clear, universal, consistent message to everyone in the
organization at the same time, even across multiple sites and
locations.
The wrong messengers are used. Studies have found that

employees tend to trust information from managers.
Understanding the organization’s culture will indicate who is the
best messenger for change—the manager, the senior executive
team, or HR. Middle and front-line leaders are the primary
communicators to employees; communication from them should
be frequent and consistent. Everyone affected by the change
needs to know what it entails, why and how it is happening, and
what’s in it for them. Don’t impose change; engage employees
in a conversation about it. Ask them what they think and how
they are feeling. They will talk if you listen.
Communication is too sudden. Leaders and managers need

to prepare employees for change, allow time for the message to
sink in, and give them an opportunity to provide feedback before
a change is initiated.
Communication is too late. If anxieties are not managed in a
timely manner, it will take longer for changes to be accepted,
and, during this period, productivity and employee engagement
will suffer. To avoid this problem, HR should be involved in
change planning early to help motivate employees to participate.
While the solution is being developed, HR needs to develop a
plan for communicating the program to the organization—both
the content of the message and the way in which it will be
communicated. Change-related information should be
communicated to employees via multiple forms (e.g., e-mails,
meetings, training sessions, internal social media, press
releases).
Communication is not aligned with organizational realities.

Messages should be honest and include the reasons behind the
change and the projected outcomes.
Communication is too narrow. If the communication focuses

too much on detail and technicalities and does not link change
to the organization’s goals, it will not resonate with employees.
Improving Organizational
Performance

Ensures that key documents and systems (e.g., job postings
and descriptions, performance management systems)
accurately reflect workforce activities.
Establishes measurable goals and objectives to create a culture
of accountability.
Consults on, plans, and designs organizational structures that
align with the effective delivery of activities in support of the
organization’s strategy.

Organizational performance theories, structures, and
approaches.
Organizational design structures and approaches (e.g.,
customer, functional, geographic, matrix, program).
Improving Organizational
Performance
Improving organizational performance often involves aligning
structure, roles and responsibilities, process, and culture with new
strategic goals.
An organization is pursuing a growth strategy through merger and
acquisition (M&A). HR has been actively involved in performing due
diligence for a proposed M&A target. Senior management is very
committed to acquiring the operation because it would advance their
planned vertical strategy.
The chief human resources officer (CHRO) is reviewing data

gathered by an HR task force. This analysis is supported by a variety
of Behavioral Competencies. Much of the data is financial, assessing
the financial implications of the target’s workforce demographics and
existing contracts. Business Acumen and Critical Evaluation help
there. Global and Cultural Effectiveness helps the CHRO note some
characteristics of the target company’s culture that might cause
problems. A few lines in a report suggest that the CHRO’s
organization differs in its approach to employee relations from the
organization targeted for acquisition. The CHRO’s organization has
implemented many processes designed to promote individual
initiative and innovation. The target organization, however, is very
hierarchical. This is reflected in the many layers of approvals that
must be obtained to make decisions, the intricate dispute resolution
path, and the formal communication channels its employees must
follow. The differences suggest entirely different employee relations
strategies, probably different cultures, and possibly different
employee skill sets, which could have strategic implications.
Using the Consultation competency, the CHRO presents HR’s

complete findings to senior management, emphasizing the cultural
and strategic challenges that this merger poses.
Organizational Interventions
Organizational interventions look at how the structure of the
organization is helping or hindering the organization’s strategic
progress. Organizational structure refers to the way in which work
groups are related.
Organizational interventions are required when an organization:
Is failing to meet its strategic objectives because its structure is

inefficient and/or ineffective. The organization’s structure no
longer meets its needs. A common example of this situation is
the progression of an organization through its early stages of
growth. The organization’s design must be aligned with its new
realities.
Has changed its competitive strategies and needs to develop
new skills and traits—for example, skills needed to respond to
market changes quickly. The organizational design must be
focused in a new direction.
Redesigning the Organization

Organizational design refers to elements that support an
organization’s functioning. These elements include structure but
other factors as well, including:
The organization’s mission and vision and the strategies it is
pursuing to achieve its goals.
The way decisions are made.
The way information is communicated.
The processes used to perform work and the degree to which
those processes connect parts of the organization’s structure
and the way in which those linkages are managed.
The systems used to align the organization’s needs with the
resources required to fill those needs. This, of course, includes
human resources and all the systems HR uses to fulfill its
responsibilities, from recruitment through talent management
and exit. It can also include physical and financial assets (e.g.,
equipment, facilities, budgets) and organizational knowledge
and expertise.
All of these elements create the integrated system that is the

organization. Any OED solution must acknowledge the integrated
nature of the organization’s design.
HR’s Role in Organizational Design

HR’s roles and responsibilities in organizational design should
include:
Providing leaders with a structural diagnosis by identifying the
root causes of organizational performance issues.
Helping leaders evaluate a range of clear design options.
Ensuring that leaders align organizational design decisions with
short- and long-term strategic goals by identifying critical
activities, strengths, and weaknesses.
Helping leaders understand their roles and responsibilities that
ensure that the structure is properly implemented.
Continually monitoring the structure for alignment with the
organization’s business strategy and highlighting challenges as
needed.
Planning for internal or external resources to deliver appropriate
short- or long-term development interventions and activities and
ensuring that those resources have the appropriate subject
matter expertise and credibility to be effective or have the
appropriate background, relationship-building skills, and cultural
familiarity to quickly build credibility.
Structural Characteristics in
Organizational Design
Organizational structures share certain characteristics that must be
aligned with the organization’s strategic goals, competitive
environment, and culture.
Work Specialization
Work specialization refers to the degree to which tasks are
performed as separate jobs. While work specialization is seen as
increasing efficiency and quality, it can also result in boredom and
lack of quality. And in complex and technology-driven enterprises,
specialization can also hamper collaboration and innovation.
Decision-Making Authority
This principle describes how decisions are made within the
organization. Authority relates to the scope of responsibilities that
define the area in which a manager or supervisor is empowered to
make decisions. The organization determines which decisions can
be made at each level of the organization and within each function in
order to ensure that the best decisions are made in the most timely
manner. In a global organization, decisions may be made at
headquarters (centralized) or delegated to other parts of the
organization (decentralized).
Layers of Hierarchy
The hierarchical layers of an organization range from the chief
executive officer to the employee in a function. The trend in
organizational structure has been to reduce the number of layers
and waste within organizations. The result is flatter and, leaders
hope, more efficient organizations with fewer staff support positions.
The ratio of direct to indirect employees (people doing the work as
opposed to people supporting those doing the work) is a key metric
of organizational efficiency. Global organizations often value
nimbleness or agility since their interconnectedness and global
exposure may call for rapid organizational response.
There are two important concepts when determining the layers of

hierarchy: chain of command and span of control.
Span of control refers to the number of individuals who report to a

supervisor. Executives, managers, supervisors, and subordinates
are hierarchically connected through the chain of command.
Organizations in which many subordinates report to a few
supervisors are referred to as “flat.” There are many factors that
drive an organization toward a wider span of control, including the
desire for subordinates to communicate directly with their ultimate
supervisor and decision maker. However, spans of control that are
too large can slow an organization, making it difficult for supervisors
to make decisions quickly. Many decisions must flow to the top, and
the decision queue can become crowded. Flat organizations can be
nimbler. When decisions are made, they can be communicated and
implemented quickly.
Chain of command refers to the line of authority within an
organization. Traditionally, a subordinate reported to only one
superior. This eliminated the confusion, loss of productivity, and
stress that could result from an employee trying to follow the
directions of two separate managers. Today the chain of command is
growing less distinct in many organizations. As organizations push
decision-making authority downward or become matrixed, and as ad
hoc or permanent work teams become more common, the line of
authority can appear lateral or web-like.
Formalization
Formalization refers to the extent to which rules, policies, and
procedures govern the behavior of employees in the organization.
The more formal the organization, the greater the written
documentation, rules, and regulations. Some organizations are more
loosely structured than others. Formalization may serve an
organization well when uniformity is an imperative—for example,
when there is low tolerance for variations in parts or when it is critical
that, for reasons of compliance, a process be conducted in a precise
manner. It can, however, restrict employees’ abilities to respond to
unusual situations or customer needs as well as stifle creativity and
innovation.
Over time, formalization becomes ingrained in an organization’s
culture and can be difficult to change. This may be a challenge when
an organization merges with or acquires an entity with a dissimilar
approach to formalization. Similarly, when an organization expands
into a country or region where different culturally defined tastes for
formalization prevail, it has to decide how to manage the differences
to achieve global cohesion.
Mechanistic and Organic Organizations

A mechanistic organization tends to be highly specialized,
hierarchical, and formal, while in an organic organization job
boundaries are less distinct and there are fewer levels of decision
makers and a more flexible approach to structures and rules.
Departmentalization and Types of

Structures
Departmentalization refers to the way an organization groups its
jobs and aligns effort. Four commonly seen structures are discussed
here (functional, product, geographic, and matrix), but you may
encounter other, less common types of structures in your work. New
business models may require different structural approaches.
There are advantages and disadvantages to each type of
organizational structure, as shown in Figure 10.
Figure 10: Advantages and Disadvantages of

Organizational Structures
Type of Advantages Disadvantages

Structure
Functional Easy to understand Weaker customer or

Specializations develop product focus
Economies of scale Potentially weak

communication among
Easier communication
functions
within functions
Weak grasp of broader
Clear career paths
organizational issues
Product Economies of scale Regional or local focus

Product team culture Weak customer focus
Product expertise
Cross-functional
communication
Geographic Proximity to customer Fewer economies of scale

Adapted to local practices Potential issues with
Quicker response time consistency across regions
(e.g., practices, values,
Cross-functional
strategic focus)
communication
Matrix Combination of cross- Complex reporting

disciplinary capabilities and structures
perspectives Potential for conflicts
Availability of best global between functions and
talent projects over resources
Flexibility and agility Potential cultural conflicts
on teams
Functional Structure
In a functional structure, departments are defined by the services
they contribute to the organization’s overall mission, such as
marketing and sales, operations, and HR. Traditionally, this has been
the most common organizational structure.
A related method is departmentalization by process. If the

organization’s work is divided according to a linear process, the
organization might be divided into departments like design, supplies
procurement, manufacturing, sales and marketing, distribution, and
customer service.
Figure 11 illustrates a functional structure. In this example, all

employees—no matter what products they are working on—report to
a single location.
Figure 11: Functional Organization
Some units are considered line units while others are considered
staff units. Line units are work groups that conduct the major
business of the organization, such as the production or marketing
functions. Staff units assist the line units by performing specialized
services for the organization, such as accounting or HR.
Product or Customer Structure

In an organization with a product structure, functional departments
are grouped under major product divisions. A consumer electronics
company, for example, may have separate divisions for home
appliances, mobile devices, and televisions. Each division will have
its own marketing, sales, manufacturing, and finance functions. More
employees are required to staff this type of organization, but
presumably this is offset by accumulated experience and expertise.
Figure 12 illustrates a product structure.
Figure 12: Product Organization

The customer structure is similar, with each division focusing on a
group of customers with distinct needs. For example, a financial
service business may have commercial, residential, and institutional
customer divisions.
Geographic Structure
A geographic structure is very similar to a product structure, with
the exception that geographic regions or countries—rather than
products—define the organizational chart. A purely domestic
organization may be structured around regions within the country.
Global organizations may be organized by, for example, continents
or countries. Each region or country has its own complete and self-
sufficient set of functions. More employees are required to staff this
type of organization than in a purely functional enterprise, but value
is achieved because each division can be more responsive to local
markets.
Figure 13 illustrates a geographic structure. The example shows the

geographic structure for a multinational enterprise. Each region or
country has its own division, and decision making is decentralized.
The region must be sufficiently large to support this structure.
Figure 13: Geographic Organization
Matrix Structures
A matrix structure combines departmentalization by division or
program and function to gain the benefits of both. An organization
may use a matrix structure when the vertical hierarchy begins to
obstruct value activities—when silos get in the way of collaboration.
A matrix structure includes cross-functional teams who may work
together to design, develop, and market products.
Key Content
The matrix structure creates a dual rather than single chain

of command. As a result, some employees report to two
managers rather than one, with neither manager assuming
a superior role. The project or program manager interacts
with the employee about project work; the functional
manager may be responsible for regular performance
reviews and career development. This structure requires
good communication and collaboration between the
managers. Without it, employees may become overworked
and stressed.
An example of a matrix structure would be an aeronautics

manufacturer who maintains the usual functions but structures work
around contracts that it has received or programs dedicated to
developing new models or technologies. As contracts and programs
end, employees return to their functions and wait for reassignment to
new projects.
Aligning Roles and Responsibilities in

New Organizational Structures
Lack of clarity about authority and coordination of communication
can cause highly integrated structures, such as matrix structures, to
fail. This is often addressed simply by better defining the roles and
responsibilities of each member in the structure.
The RACI matrix is commonly used for this purpose. A sample

matrix is shown in Figure 14.
Figure 14: RACI Chart
Activity John Mary Team George

leaders
Documenting Responsible Accountable Consulting Informed

changes
Key Content
RACI stands for responsible (R), accountable (A), consult

(C), and inform (I). For any given activity, individuals will be
assigned a certain role.
For example, one of the activities in a software development function

may be to track and record changes to software programs. In this
instance:
A responsible member will perform the activity. In our example,

John is responsible for updating documentation of every change
made to the software issued by the function. For a large and/or
complex activity, multiple people may be assigned responsibility
for a single activity and must coordinate performance with each
other.
The accountable member is in charge of the activity and
answers to management for the activity’s performance. This
individual approves and allocates resources. In our example, the
accountable person would probably be the head of the software
development function, Mary. To avoid confusion, there should be
only one accountable role. An accountable member, however,
may also be involved in performing the activity or providing
guidance and expertise.
A consulted member provides advice or information necessary

to perform the task. For example, the leaders of the different
software application teams or the coders/designers themselves
may be tasked with providing this information to John.
Members to be informed receive communication about activities

but do not perform or consult. For example, George needs to
know when changes are being made because his responsibility
is to contact all the users in the organization about changes that
may affect them.
A RACI chart helps an organization establish clarity around its critical

activities by assigning responsibility and describing communication
needs. These charts can be a helpful exercise when an organization
is restructuring or introducing new activities or processes.
Building Organizational Performance
Interventions may require focusing on performance requirements at
an organizational level: knowledge and skills, technology, processes,
and organizational culture.
Gaps in Required Knowledge and Skills

A gap analysis must be performed between the skill set needed now
or in the near future and the skill set as defined in current job
descriptions. These problems may be addressed through different
types of training, coaching, and mentoring. Job descriptions must be
revised to align with current needs. For example, an OED
intervention may identify a strategic need for a deeper pool of
supervisory/managerial talent. High-potential employees may be
identified and provided with the knowledge and skills needed to fill
this organizational need (e.g., mentored job experience; training in
leadership, relationship management, and communication skills.)
Activities designed to develop organizational talent are shown in

Figure 15.
Figure 15: Talent Development Interventions
Activity Tasks
Activity Tasks
Identify the talent needs Ensure that the current job descriptions accurately reflect
of the organization. What the work to be done to achieve organizational objectives,
is essential to meet the and prepare job descriptions for any anticipated positions.
overall objectives?
Clarify performance standards and assessment metrics.
Compare skill set inventories (formal and informal) of the
incumbents to the selected future competencies.
Identify any competency deficiencies.
Develop existing staff. Determine if adequate staffing exists or if recruitment
efforts will be required.
Coordinate selection processes.
Develop comprehensive workforce development initiatives
that grow internal technical/functional capabilities as well
as the management and employee behavioral practices
needed to achieve results.
Build talent pool. Establish a comprehensive performance management
program that stresses instituting stretch goals.
Communicate performance expectations.
Measure performance objectively and regularly, and

provide candid, honest feedback on a regular basis.
Develop coaching or mentoring programs and internal
social networks between experienced and more-junior
employees to promote knowledge sharing.
Identify the positions for which succession planning (a
proactive program designed to keep talent in the pipeline)
makes sense. These often include key positions, positions
with direct impact on strategic practices, and those with
lengthy learning curves.
Technology Requirements
Inadequate technology can prevent employees from performing
efficiently. These issues may be addressed through new or
expanded technology—for example, new digital tools that reduce
errors or expanded knowledge management systems that put
information into the hands of those who need it when they need it.
Process Requirements
Over time, work processes can become detached from customer
needs, changing technology, or changed work conditions. Obstacles
that cause serious delays can develop. Work can be duplicated by
multiple groups. Separate groups may work with different objectives.
The resulting conflicts may not be apparent until late in the process.
Processes must be routinely audited for efficiency and the need for
updating and then redesigned and tested.
Organizational Culture Requirements

As a result of organizational evolution or a change in strategic focus,
the organization’s culture may no longer support the organization’s
vision of its future and its values.
An intervention aimed at cultural transformation can include the

following steps:
1. Describe the current culture. This involves observing
language (e.g., the expressions and metaphors commonly used)
and leadership and decision-making styles (e.g., autocratic,
participative); mapping communication paths and choices;
identifying meaningful objects, stories, people, and behaviors
(i.e., rituals); and gathering evidence of values in action.
Assessment instruments, cultural audits, and focus groups can

be used to describe key elements of the current culture and
identify possible areas of conflict, disconnect, or dysfunction.
For example, if customer service is a focus of the organization’s
culture, evaluate how much time employees spend visiting
customer sites, how much interaction they have with customers,
what customer service training they receive, and other indicators
of a customer service focus. These tangible customer service
indicators can then be measured before and after the OED
initiative to provide data for the initiative’s success or failure.
2. Identify the aspirational culture. The OED team researches

existing data and interviews key leaders to define the desired
cultural traits.
3. Identify gaps and conflicts. Leadership must acknowledge

these discrepancies and decide that the aspirational culture is in
fact what they need and want. The OED team can help leaders
understand how culture is affecting factors such as
performance, employee engagement, and employer brand.
4. Develop change initiatives. Organizational culture can be

changed in various ways:
Correcting managers who do not support necessary cultural

traits (such as employee involvement in decision making) or
model organizational values, and punishing or replacing
those managers if necessary
Aligning reward systems with desired behaviors and values
Replacing old cultural artifacts, which may require creating
new rituals and identifying new heroes
Greater emphasis on leader behavior—on communicating
and modeling desired values and actions
For example, an organization that has made a public commitment to

diversity may discover that its workforce is not diverse, that its
management still represents only one cultural perspective, that it is
not attracting and retaining diverse candidates. The OED strategy
here will focus on various interventions:
A new recruiting process will be engineered to produce the

desired diverse candidate pool.
An onboarding program will be designed to support new hires’
transition into the workforce (perhaps through peer mentoring
programs).
Education on cultural differences and stereotyping is made a
requirement for advancement into supervisory positions.
An office is established to collect, investigate, and brief
management on employee complaints about discrimination.
Improving Team Performance


Application of behavioral assessments (e.g., personality
assessments).
Intergroup dynamics (e.g., intergroup conflict).
Intragroup dynamics (e.g., group formation, identity, cohesion,
structure, influence on behavior).
Improving Team Performance
Improving team performance often involves improving team
formation and function. Interventions may help teams reach levels of
productivity more quickly or help dysfunctional teams revise roles
and behaviors.
An OED director for a film and television media company is asked by
the executive vice president (EVP) of television advertising sales to
“do some team building” with the disgruntled team of a senior vice
president (SVP) who also happens to bring in more revenue than the
other four SVPs collectively. The EVP says he wants to “build up the
morale” in the “over-stressed department.”
After holding one-on-one interviews with all team members, it is

highly evident that, as a team, they are highly functional, and, in fact,
that is what seems to hold them together. However, they each report
the highly abusive, inappropriate management style of their boss, the
SVP. Some express a significant fear of retribution just for discussing
their experiences.
Team members reveal being pressured to work 12- to 14-hour days

and skip family events. The SVP called one employee at his
mother’s funeral and insisted that he come back to work that
afternoon. Some have experienced belittling comments about their
personal appearance made publicly, including derogatory comments
against protected classes.
Calling on the Ethical Practice competency, the OED director

ensures confidentiality, to the maximum extent possible, of who said
what, reassures the employees of the company’s no-retaliation
policy, and notes that some of these incidents need to be reported
and that could lead to a separate investigation.
Before sharing feedback with the SVP, the OED director meets with
the EVP and shares the very disconcerting, and potentially
explosive, feedback that has been gathered. The EVP’s response is,
“I understand this is a problem. But let me be perfectly clear, you will
not do anything to demotivate the SVP, cause him to leave, and put
that revenue stream at risk.” You share this with the head of HR and
are told to “make it work and don’t rock the boat.”
The OED director feels a personal sense of responsibility to address

the serial harassment doled out by the SVP. He knows, however,
that this is more than just a sense of his personal and professional
integrity. He also has a hunch that now that this information has
been shared with a member of human resources and in turn with the
EVP, he has a duty to look into this further to understand any
additional legal risk to the company for not addressing this
harassment.
The OED director meets with and shares the information with
internal legal counsel and solicits and gains support for building a
legal and business case to take action to stop this manager’s
behavior immediately. The case presents a risk of potential legal
consequences for the company, the SVP, and the EVP for knowing
about these behaviors and not having taken action to prevent them.
The business case presents the impact of a mass exit by the team
reporting to the SVP. Once better aware of these risks, the EVP
decides to take action.
The OED director demonstrates the ability to integrate core values,

integrity, and accountability throughout all organizational and
business practices by:
Acting with personal, professional, and behavioral integrity.
Responding immediately to all reports of unethical behavior or
conflicts of interest.
Empowering all employees to report unethical behavior or
conflicts of interest without fear of reprisal.
Showing consistency between espoused and enacted values.
Establishing himself as a credible and trustworthy resource to
whom employees may voice concerns.
Challenging other executives and senior leaders when potential
conflicts of interest arise.
Withstanding politically motivated pressure when developing
strategy.
Setting the standard as a role model of ethical behavior by
consistently conforming to the highest ethical standards and
practices.
Balancing organizational success and employee advocacy when
creating strategy.
Team or Unit Interventions
OED interventions aimed at teams or units are often triggered by
reports of poor performance. The causes may include high levels of
unresolved conflict within the team, poor leadership, and poor
communication. These issues interfere with the formation of effective
teams.
Team interventions focus on processes and interactions within and

between teams.
Common targets for team interventions include:
New groups that must develop a team identity.

Dysfunctional groups that must identify and resolve conflicts that
are hurting productivity.
Existing groups that must redefine processes and relationships
to be more productive or to align with the needs of a new
strategic direction.
Virtual teams that must learn to trust each other and
communicate and collaborate over distances and sometimes
across different languages and cultures.
For example, a cross-functional team may be working on a

particularly important project and experiencing high levels of conflict
that are damaging productivity and alarming senior management.
OED interventions here might focus on supporting the stages of
team formation and coaching the team leader on conflict resolution
skills and improving group dynamics.
Team Formation Process

A certain amount of conflict and dysfunction is inevitable as teams
form. Bruce Tuckman defined four stages of group or team
development (see Figure 16):
Forming. Individuals come together around common activity

and shared goals. Members are polite, but there is little sense of
trust, shared experience, or common values.
Storming. Individuals move past politeness, and there may be

higher levels of discord as perspectives, styles, and agendas
clash. This may be painful, but valuable communication is
occurring.
Norming. Over time, effective groups build trust and establish

relationships. They create rules that guide behavior. They begin
to establish a group identity and to identify “outsiders.” This can
sometimes take a negative form. “Groupthink” can impel
members to adopt the same positions and reject outside views;
this can dampen innovation and creative problem solving.
Performing. The group becomes fully productive, collaborative,

and mutually supportive.
Figure 16: Tuckman’s Ladder of Team Development
The group leader plays an important role in facilitating this evolution.

During the early stages, the group leader can provide opportunities
for communication and relationship building and can enforce ground
rules that prevent permanent animosity between some group
members.
Since the group can be affected by changes of any sort—for

example, by the addition or loss of group members, by changes in
work processes or environment—the leader plays an important role
in helping the group move as quickly as possible through the
common reactions to change and become fully productive again.
Group Dynamics
In 1948 Kenneth Benne and Paul Sheats proposed that there are
three basic types of roles individuals play within groups:
Task roles help get the work done. Those performing this role
propose solutions or collaborate in group problem solving. They
share task information and perform their assigned tasks.
Social roles help maintain relationships and positive group

function. This role recognizes the importance of social and
interpersonal ties within a group. Group members playing a
social role promote harmony, conflict resolution, and
involvement of all group members.
Dysfunctional roles weaken the group and reduce its

productivity. In a dysfunctional role, a group member may attack
others, dominate discussions, resist others’ ideas, or damage
group focus and energy through negativity.
Key Content
Benne and Sheats found that an individual’s role in a group
can change under different circumstances. For example, a
group leader who is very task-focused at first may gradually
become more focused on social roles as the group agrees
on a direction and individual responsibilities.
Managing group dynamics requires:
Recognizing the need for both task and social roles.

Quickly identifying and correcting dysfunctional roles, perhaps
through behavioral assessments, offline discussions, and/or
coaching.
Understanding the usefulness of certain roles at certain points in
the group process and making sure that these roles are present
when needed and managed when they obstruct progress. For
example, team members adept at improving social connections
contribute greatly at the beginning of the project, but when the
group is focused on work, they may find a social focus
distracting.
Team Building
Team building involves a series of activities designed to help team
members examine how they function now and how they could
function better. This includes both the nature of their work (what they
do or create together) and how they coordinate and collaborate on
their efforts (how they work together). Emphasis is on early
identification and solution of problems that stand in the way of group
effectiveness. The purpose of a team-building intervention is to
facilitate the alignment of the management team with the team’s
mission and goals and to develop effective team dynamics for
working together to accomplish these goals.
Team-building activities may focus on:
Goals and priorities. The OED team may facilitate team

meetings in which mission, vision, values, and norms are
developed. Meetings could also focus on understanding the
team’s stakeholders better and developing better processes for
engaging stakeholders.
Role and responsibility of each team member. In new,

merged, or existing teams, unclear roles can create conflict and
loss of productivity. The OED team can facilitate role and
responsibility negotiation and definition. This activity could use
the roles and responsibilities matrix discussed earlier in this
section.
Processes for team activities, such as assigning tasks,

monitoring progress, and evaluating results; for communicating
and coordinating efforts; and for making decisions. The OED
team can help diagram processes in terms of inputs,
requirements, and outputs. These diagrams can be used to
sequence activities more efficiently, identify potential obstacles
and solutions, define communication requirements and
channels, identify organizational systems that can support the
team, and make sure all team members have what they need to
perform their assigned tasks.
Interpersonal relationships within the team, such as building

trust, communicating more effectively, resolving conflict,
negotiating, and cultural awareness. The OED team can advise
team leaders on changes that can build trust (e.g., non-work
team events that allow team members to learn about each other
as human beings), facilitate workshops in which team members
confront their disagreements, and guide them safely to effective
solutions. The OED team may also deliver developmental
activities on these essential skills.
Functional Area #8: Workforce
Management
Workforce Management refers to HR practices and

initiatives that allow the organization to meet its talent
needs (e.g., workforce planning, succession planning) and
to close critical competency gaps.
Identifies gaps in workforce competencies and misalignment of
staffing levels.
Implements approaches (e.g., buy or build) to ensure that
appropriate workforce staffing levels and competencies exist to
meet the organization’s goals and objectives.
Plans short-term strategies to develop workforce competencies
that support the organization’s goals and objectives.
Administers and supports approaches (e.g., succession plans,
high-potential development programs) to ensure that the
organization’s leadership needs are met.
Supports strategies for restructuring the organization’s
workforce (e.g., mergers and acquisitions, downsizing).

Evaluates how the organization’s strategy and goals align with
future and current staffing levels and workforce competencies.
Develops strategies to maintain a robust workforce that has the
talent to carry out the organization’s current and future strategy
and goals.
Coordinates with business leaders to create strategies (e.g.,
succession planning, leadership development, training) that
address the organization’s leadership needs.
Develops strategies for restructuring the organization’s
Workforce Management
Workforce management encompasses all the activities needed to
ensure that workforce size and competencies meet the
organization’s strategic needs. HR plays a vital role in these
activities, ensuring that the right numbers of the right people are in
the right jobs with the right skills at the right time. In this sense,
workforce management is, in its essence, a form of risk
management. HR manages human resources to maximize the
organization’s opportunities for success.
The workforce management process begins with the workforce

management plan, which assesses workforce needs against future
demands. It also includes long-term strategies to sustain workforce
strength (e.g., talent management, succession planning, and
knowledge management) and short-term strategies to address
identified gaps (e.g., temporary and contingency workers,
outsourcing, and workforce resizing).
Workforce Planning

Identifies gaps in workforce competencies and misalignment of
staffing levels.
Evaluates how the organization’s strategy and goals align with
future and current staffing levels and workforce competencies.
and goals.

Analysis of labor supply and demand.
Techniques for organizational need-gap analysis (e.g.,
examination of HR records, interviews, focus groups).
Workforce planning approaches, techniques, and analyses (e.g.,
attrition, gap and solution, implementation and evaluation,
reduction in force, supply and demand, workforce profile).
Workforce Planning
From the inception of the HR discipline, one of HR’s key roles has
been staffing the organization: identifying organizational human
capital needs and then providing an adequate supply of qualified
individuals for jobs. Through staffing, the organization’s current and
future needs for knowledge, skills, abilities, and other characteristics
—its required competencies—must be met.
In workforce management, HR professionals can call on their
Business Acumen to anticipate organizational actions and prepare
an action plan. In the following case, an HR practitioner
demonstrates understanding of the organization’s business
environment and the workforce’s current state and will be ready with
a recommendation when the opportunity materializes.
An HR practitioner for a steel fabrication plant learns that there is a

possibility to introduce a new product. Understanding that the current
staff is working at capacity on the existing products, the HR
practitioner takes a look at the experience and training of the existing
team members and their potential to learn and lead new product
activities. The HR practitioner then identifies a local temporary
staffing organization that can provide quality temporary employees to
either back-fill the current work or work on the new project.
The HR practitioner also identifies the costs for the human resources
needed and for any training and development activities that would be
required to support the new product. Applying the Consultation
competency, she approaches the plant manager with a plan that will
support his expansion strategy and provides the financial and other
pertinent data he needs to include in his business plan.
Workforce Planning Process
Workforce planning is the first step in the workforce management
process. It involves all the activities needed to ensure that workforce
size and competencies meet current and future organizational and
individual needs. Workforce planning strategically aligns an
organization’s human capital with its business direction. This
requires that the HR professional look at where the organization is
now as well as where it wants to be in the future. During workforce
planning, the current state of the workforce is defined, gaps in size
and competency are identified, and steps required to prepare for
future needs are developed.
Key Content
An organization’s strategic plans should generate a list of

the workforce capabilities needed to execute business
strategy as well as a monetary value for each capability
based on how critical it is to generating new revenues or
reducing costs. Then, as with a well-managed supply chain,
employers should compare the competencies they need
with the “inventory” (workforce) they actually have. The gap
between the ideal and the real can keep learning needs
(and budgets) in line because it will sustain a focus on what
people really need in order to be competent and to execute
strategy.
A workforce analysis gathers data about the current workforce and

forecasts future workforce needs. This information is analyzed to
provide the data to support the organization’s staffing strategy.
Forecasting involves projecting future conditions based on
information about the past and the present. It is used to estimate
future workforce supply and demand. Forecasts are subject to error,
as the conditions on which they are based may change. But with
careful planning, HR professionals can generally forecast with
enough accuracy to help sustain organizational objectives and
strategies. Sound forecasting requires environmental scanning—for
example, the age of the current workforce or the availability of
certain skills in the market.
A workforce analysis typically includes four areas: supply analysis,

demand analysis, gap analysis, and solution analysis.
Figure 17 illustrates the workforce analysis process and the key

questions addressed at each stage.
Figure 17: Workforce Analysis Process
Staffing Supply Analysis
The workforce analysis process begins by analyzing supply: the skill
mix in the organization as it exists now and the organization’s future
needs based on attrition and strategic growth or adjustment.
Accurate supply forecasts account for movement into and inside the
organization (new hires, promotions, and internal transfers) and out
of the organization (resignations, retirements, involuntary
terminations, and discharges). Forecast approaches include a
variety of quantitative and qualitative analyses. Analysis tools range
from a manager’s “best guess” to rigorous mathematical
applications.
A logical starting place is to consult with line managers and identify

how many hours of each type of skilled work are needed to meet
current needs. These current practices must be examined more
closely to determine if human resources are being used effectively
and efficiently. Planners may consider possible areas of waste, such
as:
Overstaffing that results in a poor ratio of revenue per

employee.
Inadequate skills that cause lower productivity levels and/or high
error rates and need for rework.
Inappropriate use of employee skills and/or time.
Inefficient work processes.
Inability to flex to changing production requirements.
The result of this analysis is a more accurate rubric showing the

resources required to produce a specified amount of revenue. In
addition, if steps are taken to correct these issues, the current supply
may be more productive than it appears.
Projections of internal supply might seem to be a simple calculation:

Consider the number of people in each job, along with the number of
people who will transfer or who will leave the organization, and the
number of people who will be left provides an estimate of the internal
supply.
Unfortunately, reality is rarely that simple. There are many variables

involved in forecasting, such as:
Will the jobs remain the same?

What are the anticipated and required employee skill sets?
Will some jobs be eliminated while others are added or
combined?
Will historical data hold true in the future?
Will new employees perform comparably to former employees in
terms of productivity, punctuality, sick days, attitudes, and
leadership abilities?
As a result, HR professionals use analytical tools to improve their

forecasts. Two analytical tools are described in the Critical
Evaluation competency in the HR Competencies module: trend
analysis and ratio analysis. We will introduce two additional tools
here that are specific to workforce management: turnover analysis
and flow analysis.
Turnover Analysis
Employees may leave an organization for a variety of reasons, such
as retirement, resignation, dismissal, layoff, disability, leave of
absence, or death. Turnover is defined as the act of replacing
employees leaving an organization or the attrition or loss of
employees. The turnover rate is a metric that is normally expressed
using an annualized formula that tracks the number of separations
and the total number of workforce employees per month.
Figure 18 shows monthly separations and total workforce numbers

for one year at a medical supplies wholesaler, ABC Medical.
Figure 18: Separations at ABC Medical
Month A (separations) B (total workforce)
January 15 250
Month A (separations) B (total workforce)
February 5 245
March 5 240
April 2 238
May 3 235
June 10 225
July 5 220
August 0 220
September 4 216
October 1 215
November 15 200
December 0 200
Total 65 2,704
To calculate the annualized employee turnover percentage, the HR

manager:
Divides the total number of employees for the year (2,704) by 12

months. This yields an average monthly workforce of 225
employees.
Divides the number of separations for the year by the average

number of employees per month:
Turnover can also be calculated for shorter time periods (e.g., the
first three months of the year), and then the results can be
annualized to project what the annual turnover would be for 12
months.
Two common methods for projecting turnover are:
Examining previous turnover rates and adjusting them to reflect

knowledge of changing conditions such as pay rates and the
economy.
Analyzing trends in turnover rates for particular geographic
locations or occupational categories.
Flow Analysis
Employees can flow in, up, down, across, and out of an organization,
so examining this flow is important in supply analysis. To accomplish
this, HR professionals must separate employees by levels,
occupational groupings, or organizational units.
There are three methods to accomplish flow analysis:
Analyze the career development plans for employees on an

aggregate basis by job function, division, or other organizational
classification. Using the target positions for employees and their
rating of readiness for the positions (e.g., immediately, one year,
two years), the availability of talent for positions can be
projected.
Obtain estimates from each division of transfers and promotions

into, out of, and within the divisions. These estimates may be
aggregate and may reflect the subjective probability of
movement based on historical data.
Project future movement through statistical analysis. Models of

employee flows project the numbers of employees who will
remain in an organizational classification based on past
transition rates or probabilities. One caution, though: Past
transition rates and probabilities may have limited value in
predicting future trends. Like everything else, these too are
affected by change.
Figure 19 shows movement in the shipping department of ABC

Medical for the first quarter of the year.
Figure 19: Flow Analysis for ABC Medical Shipping Department
This simple flow analysis allows the HR manager to visualize the

change in the department and predict future staffing needs.
Staffing Demand Analysis

Demand analysis considers the model organization of the future and
its human capital needs. Once the supply model is developed, data
can be compared to the demand analysis projections and gaps can
be identified, including numbers of employees and gaps in skills.
Demand analysis should not just project the most probable future.
Other future scenarios should be considered, as the potential impact
on gaps may be considerably different.
Two techniques used in demand analysis are judgmental forecasts

and statistical forecasts. In both, the basic issue is forecasting the
number of employees and the skills required to meet future
organizational goals.
Judgmental Forecasts
Judgmental forecasts apply expert judgment to information from
the past and present to predict future conditions and staffing needs
and to understand opportunities and threats that can affect the
staffing plan.
This information can be gathered using research into industry

standards and benchmarks (e.g., productivity and revenue-
generation rules of thumb) as well as the Critical Evaluation
competency:
Interviews with management and industry and economic experts

Questionnaires for operational managers
Focus groups with managers, using the nominal group
technique and the Delphi technique to focus on likely outcomes
and reach consensus
To effectively use judgmental forecasting, HR needs estimates of:
New positions or skill sets needed.

Positions to be changed, eliminated, or left unfilled.
Job sharing.
Job design needs or organizational structure changes.
Costs of changes.
Adjustments in overhead, contracted labor, and supervision.
As with budgeting, estimating workforce needs can flow from the top
down or the bottom up. The success of this method is entirely
dependent upon the quality of information provided to managers to
use in making estimates.
Statistical Forecasts
Statistical forecasts generally fall into two categories: regression
analysis and simulations. These techniques have many uses but are
illustrated here in the area of workforce planning.
Regression analysis can be subdivided into two types:
Simple linear regression is a projection of future demand

based on a past relationship between employment level
and a single variable related to employment. For example,
a statistical relationship between gross sales and the
number of employees might be useful in forecasting the
number of employees needed in the future if sales increase
by 25%.
Multiple linear regression operates the same as simple
linear regression, except that several variables are used to
project future demand. For example, hours of operation
might be added to gross sales to determine the number of
employees needed.
Simulations are representations of real situations in abstract

form; they are often referred to as “what if” scenarios. They
provide organizations with the opportunity to speculate as to
what would happen if certain courses of action are pursued. For
example, an organization might consider the ramifications of
changing a compensation system or doing business online.
Staffing Gap Analysis

The supply analysis identifies the staffing levels and competencies
that are currently available, and the demand analysis determines the
staffing levels and competencies that will be needed in the future.
The next step in the workforce analysis process is the gap analysis.
This is the process of comparing the supply analysis to the demand
analysis to identify the differences in staffing levels and
competencies needed for the future. This process of reconciling the
differences between supply and demand establishes the goals and
objectives for the staffing plan. A gap analysis may identify
deficiencies in staffing needs as well as any surplus of staffing levels
in certain jobs and/or competencies. A surplus can result from a
number of factors, including operation efficiencies, new technology,
lower attrition rates, and changes in the organization.
Examples of staffing gaps are shown in Figure 20.
Figure 20: Examples of Staffing Gaps
Type of Staffing Gap Description
Skill gap New skills are needed to perform new jobs.
Abilities gap New behaviors are needed to be successful.
Distribution gap Talent is not properly spread throughout the

enterprise.
Diversity gap The organization is too homogeneous.
Deployment gap Talent cannot be sent where it is needed most.
Time gap It takes too long to achieve results.
Cost gap Too much money is being spent on talent

acquisition and development activities.
Knowledge-sharing Organizational learning is not occurring.

gap
Succession gap It is not clear where the next generation of leaders

will come from.
Retention gap The best talent is leaving the organization.
Prioritizing Gaps
Once the gaps have been identified, they must be analyzed and
prioritized to determine which ones will be addressed. Rarely can all
gaps be addressed at the same time or completed in the one- to
three-year time frame of a typical staffing plan. High-priority gaps are
used as the basis for defining the plan’s tactical objectives.
Management and other key stakeholders should be involved when

gaps are prioritized. The following criteria can be used to establish
priorities and make recommendations:
Permanence. Does the problem identified in the gap analysis

occur on an ongoing basis, or is it due to some temporary factor
that may be resolved without having to take any action?
Impact. How significant is the impact of this gap on the

organization compared to other identified gaps?
Control. Does the organization have sufficient resources to

address the gap? Will an effective solution use a reasonable
expenditure of resources, or is the solution likely to be more
expensive than the problem itself? Will employees be willing to
participate in the solution? For example, because the
permanence of a recent increase in business is uncertain,
leadership chooses to meet increased demand by requiring
overtime. How will employees react to a prolonged period of
required overtime? Will there be resignations or a decrease in
activity or an increase in accidents or poor quality work?
Evidence. How certain is the quality of the data? Does the

evidence provide a clear indication that the gap is a serious
problem, or is more evidence required?
Root cause. To the extent that the gap indicates a problem that
needs to be addressed, is it the root cause of the problem? Or is
there a deeper problem that must be fixed to eliminate this gap
permanently?
Some gaps may appear unexpectedly. For example, a key executive

without a successor may suddenly decide to retire, or a recently
agreed-upon joint venture may require an executive with unique
knowledge and skills. These gaps quickly become high priorities.
Other gaps will not come as a surprise, especially if they have been
targeted as long-term objectives in the HR strategic plan. In these
cases, the priority may be to simply continue chipping away at the
gap, perhaps at 10% to 20% per year. Figure 21 provides examples
of gaps in different kinds of enterprises, both global and domestic.
Figure 21: Examples of Staffing Gaps
Future Vision Current State Staffing Gap

Future Vision Current State Staffing Gap
All executives will have at least 15% have met this 85% must be
two years’ experience in standard from addressed.
nonheadquarters countries. expatriate or shorter-
term international
assignments.
At least three potential 30% of these 70% need

candidates must exist for each positions are in succession
senior vice president or compliance. plans.
managing director position in the
organization.
All senior managers working in 5% of these 95% require

the China divisional offices must employees speak language
speak Chinese. Chinese. training.
Attrition rates for the top 10% of Current attrition rates A gap of 7
scientists and sales are at 14%. percentage
representatives will be 7% or points must be
less. closed.
Average time to hire a manager Current time to hire is 25 days must

needs to be 45 days. 70 days. be eliminated.
Defining Tactical Staffing Objectives

High-priority gaps identified in the workforce analysis process are the
basis for defining tactical objectives. Tactical objectives focus on
closing high-priority gaps in the near term (as opposed to the long-
term HR strategic objectives). They specify in concrete and
measurable terms which gaps must be closed and when.
Tactical objectives may focus on a single functional component of

staffing, such as recruitment, selection, or relocation, or they may
apply to multiple functions. For example, improving retention could
relate to all three of these staffing functions and possibly more.
Figure 22 shows sample tactical objectives for three staffing gap

examples. Note that these tactical objectives take the organization
only part of the way toward its ultimate long-range vision.
Figure 22: Examples of Tactical Objectives
Future Vision (Seven Current State Staffing Gap

Years)
All executives will have 15% have met this 85% must be
at least two years’ standard from expatriate addressed.
experience in or shorter-term
nonheadquarters international
countries. assignments.
Tactical objective: By the end of the fourth quarter of year 2, the 100%
goal will be achieved among all senior-level sales executives. By the same
time, the gap across all executives will be reduced from 85% to 50%.
All senior managers 5% of these employees 95% require

working in the China speak Chinese. language training.
divisional offices must
speak Chinese.
Tactical objective: By the end of year 1, 75% of all senior managers

working in the China divisional offices must be enrolled in intensive training
in Chinese for at least three hours per week. By the end of year 3, 50% of
this group of senior managers must speak Chinese fluently enough to lead a
business meeting with Chinese nationals.
Attrition rates for the Current attrition rates are A gap of 7

top 10% of scientists at 14%. percentage points
and sales must be closed.
representatives will be
7% or less.
Future Vision (Seven Current State Staffing Gap
Years)
Tactical objective: By the end of year 2, attrition rates for the top 10% of
scientists and sales representatives will be reduced to 11%, based on year 2
data only. By the end of year 3, the attrition rate will be 7%, based on year 3
data only. (Note: Location X will be exempted from this objective to avoid
interference with their division-wide attrition reduction program.)
These tactical objectives support the organization’s staffing needs

because they:
Specify which gaps will receive focused attention.

Describe the degree to which the gap will be closed.
Specify the time frame in which this will be achieved.
Describe the localities or functional groups to which the
objectives will apply.
Identify special considerations to be made because of unique
local conditions.
Staffing Solution Analysis

The final stage in the workforce analysis process is the solution
analysis. This is an examination of how the organization can get
what it needs to meet the tactical objectives within budget
constraints. Solution analysis considers whether an organization
should have a continuous recruitment program or wait until
vacancies appear before engaging in an intensive effort to fill
openings.
During solution analysis, an organization decides whether to “build,”

“buy,” or “borrow” the talent needed to attain the staffing levels and
competencies required to meet the tactical objectives:
“Building” the talent refers to redeploying as well as training and

developing the current workforce to meet the future needs of the
organization.
“Buying” the talent refers to recruiting and hiring employees.
“Borrowing” the talent refers to outsourcing, leasing, and
contracting with others to get the work done.
Labor market trends should be considered during solution analysis.

For example, the U.S. Department of Labor Bureau of Labor
Statistics (BLS) conducts ongoing surveys of employers, analyzes
the data, and then produces estimates on jobs, wages, the labor
force, employment and unemployment, layoffs, and numerous other
workforce-related statistics. Some state agencies in the U.S. also
publish workforce data. The International Labour Organization (ILO)
publishes Key Indicators of the Labour Market, which compiles data
from 18 countries.
Census data can also be useful, and it can be easily retrieved online
from sites such as the United Nations Statistics Division, the
European Union’s Eurostat, and the U.S. Census Bureau, which
includes data for the U.S. and other countries.
The ultimate goal of the workforce analysis process is to create a

staffing plan that will be in alignment with the organization’s strategic
plan and support the future needs of the organization. Founding the
staffing plan on data collection and analysis positions HR as a
strategic business partner by ensuring that the right people are in the
right place at the right time.
Staffing Plan
The staffing plan turns workforce analysis data and tactical
objectives into reality. A staffing plan describes—in some detail—
how the tactical objectives are going to be achieved through the
delegation of tasks and the application of resources.
Planning approaches may vary within organizations, but the

important points are that the processes should be:
Consistent with other HR planning initiatives.

Collaborative and easily understood by all participants.
Accepted by those responsible for implementing the plan.
Figure 23 lists the common elements of a staffing plan.
Figure 23: Elements of a Staffing Plan
Staffing Plan Element Purpose
Statement of purpose Establishes the goals and targets for the

staffing plan
Stakeholders Identifies key decision makers and others who

should be involved in the development of the
plan
Activities and tasks Describes the activities and tasks that need to
be carried out and the time line for completion;
notes relationships between activities, tasks,
and deliverables
Team members Identifies all the people who have been

assigned or who have volunteered to work on
specific activities, tasks, and deliverables
Resources Documents financial and nonfinancial resources

required for implementation
Communication plan Notes specific tactics and responsibilities for

communicating initial details about the plan as
well as monitoring the plan and soliciting
ongoing feedback
Continuous improvement Sets up a process to review the extent to which

tactical objectives are achieved; identifies ways
to continuously improve the plan
Involving Key Stakeholders in Developing the Staffing

Plan
Key stakeholders are the people who will be affected by the
implementation of the staffing plan or whose support will be needed
for its success.
For example, a staffing plan lists a goal of decreasing attrition among

its top scientists and sales representatives. There are several
stakeholders in this example:
Scientists and sales representatives. These employees will

remain with the organization only if their personal and
professional needs are served better than they were in the past.
Sales managers in each affected division. Some sales

managers may prefer to maintain a high attrition rate to remove
low performers.
Managers of research and development. They may wish to

have some latitude in defining the criteria and processes used to
identify the top 10% of scientists to ensure that the right people
are the ones persuaded to remain with the organization.
Head of HR. This manager will want to influence how the salary
budget will be balanced if the tactics include increasing salaries.
Heads of the different divisions. They may have very different

ideas about what sorts of attrition reduction techniques will be
appropriate for their individual cultures.
The success of the staffing plan will require the support of those
expected to carry out the plan’s implementation. Therefore, it is best
to involve a variety of people in the planning process.
Consider the following stakeholders and their potential issues when

developing the staffing plan:
Organizational management:
Are they convinced of the strategic value of the staffing

plan?
Will they publicly endorse the staffing plan and encourage
the support of others?
HR management:
Is there agreement that the staffing plan will support HR’s

goals?
Does the staffing plan integrate with plans of other HR
functions?
Line management:
Are they convinced that the staffing plan will help meet their
business objectives?
Will they actively and publicly support the staffing plan?
Other organizational units:
Have the implications of the staffing plan been discussed

with them?
Has the creation of the staffing plan been synchronized with
their planning functions?
Union leadership:
Have their concerns been identified in advance to avoid

unexpected conflict?
Can the staffing plan be devised to support union goals
while still meeting organizational goals?
Identifying Resources Needed to Create the Staffing Plan

Resource requirements should be addressed during staffing plan
development so they do not surface as a surprise during
implementation. Requirements may be financial, human, or physical.
They may exist internally or may have to be obtained from external
sources. Resources usually include:
Budget—for example, fees for recruiting firms, advertising and

job posting costs.
A project schedule that meets the organization’s planning needs
but is also realistic.
A staffing plan team of sufficient size and with adequate
availability. Tasks span all aspects of the staffing plan—from
planning through implementation to assessment. Members may
perform staffing plan tasks in addition to their regular
assignments.
The knowledge required to shape the plan to specific
stakeholder circumstances—for example, previous experience
with restructuring initiatives, insight gained from a SWOT
analysis or analysis of succession plans.
Equipment, facilities, and materials—for example,
videoconferencing equipment for interviews or access fees to
premium recruitment sites/services.
Logistical support—for example, analysis and IT services.
Communicating the Staffing Plan

Communication requires particular attention in the design of a
staffing plan. Often neglected, it is essential for the plan’s long-term
success. Communication of the plan begins during the development
of the specific tactics, continues as the plan is finalized, and is used
to support the plan’s implementation. Ongoing encouragement and
support are required because the tactics are implemented by and
require the continuous insight and commitment of the affected
departments. In addition, ongoing feedback from those implementing
the plan is crucial to those responsible for developing and monitoring
the staffing plan.
Figure 24 lists the components of a communication plan.
Figure 24: Components of Communication Plan in Support

of Staffing Plan
Communication Description
Component
Audience Who requires information about the plan or its

implementation for it to be successful by country
and function?
Objectives What specific outcomes are to be achieved through

communication, and how will these ensure the
success of the staffing plan?
Required information Exactly what information must be communicated to

the various audiences?
Who will provide the information?
How does the required information vary by
country?
Modes of What type of communication will be most effective

communication (e.g., face-to-face, formal announcements, training
programs, frequent e-mail updates)?
What variations in the communication mode are
required for specific countries and cultures?
Resources What financial and nonfinancial resources must be

committed to communications for the plan to be
successful?
Are these resources available in the required
countries, or must headquarters provide them?
Communication Description
Component
Timing What schedule is required to achieve the

objectives of the communication plan?
Responsibility and Who will actually develop and deliver the required
accountability communications? Who is accountable for the
achievement of the goals of the communication
plan at different levels?
Continuously Improving the Staffing Plan

The purpose of continuous improvement is to identify opportunities
for improvement as soon as possible, to document lessons learned
from the experience, and to ensure that these lessons are used to
enhance ongoing and future staffing initiatives.
Figure 25 is a checklist for continuously improving the staffing plan.
Figure 25: Continuous Improvement Checklist for Staffing

Plans
Continuous Improvement of Staffing Plans

Continuous Improvement of Staffing Plans
Have criteria and standards been Have problem-identification and

defined for all outcomes and problem-solving processes been
processes described in the built into the plans? Are these
staffing plan? consistent with specific
Have these criteria and standards operations?
been adjusted, when necessary, Have arrangements been made to
to account for specific conditions? collect lessons learned during the
Have the processes outlined in implementation of the plan and
shared across the organization?
the plan been analyzed for
efficiency and for integration with Is an ongoing measurement
other organizational processes? function in place to monitor the
Are the related processes within quality of the plan
implementation?
other departments equally well
defined and implemented, or do Are open-ended dialogues, such
contingencies need to be as milestone meetings, a key part
developed? of the project plan?
As the staffing plan is implemented, those involved will observe the

process and look for ways to improve it.
Workforce Management Strategies

Supports strategies for restructuring the organization’s
and goals.
Coordinates with business leaders to create strategies (e.g.,
succession planning, leadership development, training) that
address the organization’s leadership needs.
Develops strategies for restructuring the organization’s
Approaches to restructuring (e.g., mergers and acquisitions,
downsizing).
Leadership development and planning (e.g., high-potential
development programs).
Succession planning programs and techniques.
Workforce planning approaches, techniques, and analyses (e.g.,
attrition, gap and solution, implementation and evaluation,
reduction in force, supply and demand, workforce profile).
Workforce Management Strategies
Organizations can use a variety of strategies to attain their strategic
goals. Some, like flexible staffing and restructuring, apply to specific
organizational needs. Others, like talent management and
succession planning, are general strategies found in most future-
oriented organizations.
The HR business partner (HR BP) who supports the operations
division of a furniture manufacturer sits through a cross-divisional
design review that evaluates the designs, production capability, and
potential market reach for a new line of office furnishings. In this
review, significant gaps in coordination and communication are
surfaced in how the organization collaborates and integrates its work
efforts.
The chief operating officer asks the VP of operations to pull together

a series of cross-divisional teams to identify and assess the risks
associated with these gaps and put practices in place to address
them. Separately, following a conversation with the VP of HR, the
HR business partner learns that the CEO wants to identify
development opportunities for recently identified high potentials (Hi-
Pos).
Because the HR BP has developed her Business Acumen and
Consultation competencies, she sees an opportunity to link what
organizational leaders see as separate business needs into one
effort that meets the objectives of both needs and minimizes stress
on the organization from extra work. The HR BP also sees a unique
chance to create excellent development opportunities for the
identified Hi-Pos. It would put them in a position to study the
organization’s integrated product development practices inclusive of
all key organizational stakeholders in the market analysis, design,
and manufacturing of new product lines.
These Hi-Pos would gain increased exposure to other organizational

elements and learn and better understand the interfaces and would
need to identify, sell, and institute new organization practices. They
would also get exposure to, and scrutiny from, the senior
management team. The senior management team, in turn, would get
fresh eyes on the problem, the chance to test and assess their
developing talent and build the talent pool, and diminish
organizational stress by addressing two business needs with one
coordinated process.
The HR BP creates a proposal and business case for aligning these

efforts that highlights the benefits of this approach and addresses
any potential challenges to it. After soliciting and obtaining support
from the HR VP, the BP gets the backing of the CEO and COO and
other organizational leaders.
Pulling together these two business needs into one effort that
addresses the needs of both highlights the HR BP’s understanding
of where business needs (the gap analysis effort) can be met by a
key HR process (developing key talent). This aligns a key
operational need with an important HR strategic process.
The HR BP demonstrates the ability to understand organizational

strategies and apply this knowledge to create a plan for effective
growth by:
Aligning HR strategy, goals, and objectives to organizational
strategy and objectives.
Evaluating all proposed business cases for HR projects and
initiatives.
Examining all organizational problems in terms of integrating HR
solutions to maximize return on investment (ROI), profit,
revenue, and strategic effectiveness.
Ensuring that the ROI for all HR initiatives adds to organizational
value.
Flexible Staff Alternatives
No workforce planning and employment strategy is complete without
consideration of flexible staffing alternatives. Also referred to as
alternative staffing, flexible staffing uses alternative recruiting
sources and workers who are not regular employees. Many staffing
approaches are possible other than conventional full-time
arrangements where the organization directly hires, supervises, and
provides compensation and benefits to regular employees.
Today’s labor market presents many situations where flexible staffing

alternatives are appropriate. Examples include:
Shortages of available workers for open positions.

Seasonal peak demands for operations.
Operational upturns and downturns that make permanent head
count impractical.
Special projects that demand specific skills.
As organizations look for cost-effective and creative ways to recruit

just-in-time talent and ensure the organization’s success and growth,
flexible staffing offers employers several desirable alternatives.
Types of Flexible or Alternative Staff

No one-size-fits-all solution to flexible staffing exists. The influence of
local laws, culture, and practices makes universal solutions
impossible. Many organizations benefit from employing a variety of
flexible staff simultaneously. Figure 26 summarizes key
characteristics for some of the more prevalent types of flexible staff,
organized according to whether the employees are on an
organization’s payroll or administration functions are outsourced to
staffing firms.
Figure 26: Types of Flexible Staff
Staff Option Description
Flexible Staffing Administration by the Organization
Temporary Employees hired to work on a specified job to supplement the

assignments regular workforce on a short-term basis or for a specific period of
time.
Temporary Employees hired to work directly on the organization’s payroll on a

employees short-term basis or for a specific period of time to rotate among
several positions or departments as needed.
On-call workers Employees who report to work only when needed.
Part-time Employees scheduled to work less than a regular workweek on an

employees ongoing basis; benefits eligibility may depend on various factors
(e.g., number of hours worked).
Job sharing The practice of having two different employees performing the tasks
of one full-time position. Each of the job-sharing partners works a
part-time schedule, but together they are accountable for the duties
of one full-time position. Communication between the two
employees is a key to success.
Staff Option Description
Seasonal workers Part-time or “casual” workers hired to perform seasonal work in a

variety of industries (e.g., agriculture, construction, tourism, and
recreation); may or may not be eligible for benefits (e.g., paid time
off).
Phased retirement Any work arrangement that falls somewhere in between full-time
retirement and working full-time; these types of programs allow
mature employees to work on a reduced or modified basis as they
approach retirement.
Flexible Staffing Administration Outsourced
Finite temporary Workers who are recruited, screened, and employed by a

help temporary help firm; the temporary firm assigns individuals to work
at client sites for a finite duration (e.g., to cover an employee’s
medical/maternity leave).
Temp-to-hire Workers hired on a temporary basis (usually through a temporary

programs firm) with the understanding that they may be offered regular
employment if they perform competently for a specified time.
Contract workers Highly skilled workers (e.g., engineers, data processing specialists)
supplied for long-term projects; under contract between the
organization and a technical services firm.
Terminology for these staffing approaches varies: temporary

workers, contingent workforce, free agents. The essential idea is to
carry human resource capacity when it can be fully used.
Types of Flexible Staffing Arrangements

Employers can define their relationship with staffing firms through
different service arrangements. The choice of a particular flexible
arrangement depends on a variety of operational, financial, and legal
factors, including:
The function to be performed.
The level of supervision required.
Time constraints.
Financial constraints.
Concerns about legal risks and liability.
Again, the influence of local laws, culture, and practices makes

universal solutions impossible.
The more prevalent flexible staffing service arrangements are

summarized in Figure 27.
Figure 27: Types of Flexible Staffing Arrangements
Service Description
Arrangement
Payrolling An organization identifies specific people and refers

them to a staffing firm, which employs them and
assigns them to work at the organization; arrangement
is usually at a lower cost than traditional (finite)
temporary help.
Employee leasing In an explicit joint venture, an organization transfers all

or professional or substantially all employees at a discrete site or
employer facility to the payroll of an employee leasing firm; the
organization PEO leases employees back to the organization while
(PEO) handling most of the HR administrative functions (e.g.,
payroll, benefits).
Service Description
Arrangement
Temp-to-lease An organization contracts with two (usually affiliated)

programs staffing firms—generally a temporary service and a
PEO; the temporary firm assigns long-term temporaries
to a client organization and, after a period of time, the
employees are promoted to lease status and become
eligible for benefits from the PEO.
Outsourcing or An independent organization with expertise in operating

managed a specific function contracts with an organization to
services assume full responsibility for the function (as opposed
to just supplying personnel); functions may be
peripheral to the core business (e.g., security, food
services) or closer to operations (such as managing all
flexible staffing programs or the IT function).
The term co-employment, or joint employment, generally

describes a situation in which an organization shares responsibility
and liability for their alternative workers with the alternative staffing
supplier. A co-employment agreement summarizes the legal
relationship, rights, and obligations for some flexible staffing
arrangements. Potential liability can vary dramatically depending
upon the nature of the staffing agreement. In traditional temporary
staffing models, the staffing firm and the client organization are most
likely viewed as co-employers or joint employers under most
employment law regulations. The less control one organization has
over the terms and conditions of employment, the more difficult it
becomes to prove that a co-employment relationship exists.
Independent Contractors
Employers often use independent contractors (also known as
consultants or freelancers) rather than employees to gain greater
workplace flexibility or manage uncertainty associated with entering
a new market. A related concept is the “economically dependent
worker,” defined as a worker who is formally self-employed but who
derives most of his or her income from one employer.
Depending on the characteristics of a particular arrangement, these

workers may be seen as employees under some countries’ laws.
They therefore create a risk of noncompliance with a country’s
employment, business, and tax laws. The penalties can be
significant. Employers may have to pay benefits retroactively to
individuals found to be de facto employees. Employers may have to
officially register their organizations in a country before using
contractors based there. If they do not, the employer may be heavily
fined, and prospects for future operation in the country may become
more uncertain.
To avoid these issues, HR and legal counsel should develop a

process and guidelines/definitions for using independent contractors
and should communicate that information clearly throughout the
organization. To reinforce the nature of the independent relationship,
the contractor should retain control (for the most part) over when,
where, and how the work is done. Contracts should avoid
requirements commonly associated with actual employment, such as
dictating the contractor’s hours of work. Payment should be tied to
deliverables rather than a schedule.
HR professionals should be wary about the protection that a contract

provides in the eyes of governments. Governments are likely to use
the appearance of the working relationship rather than the formal
terms of a contract to determine whether a worker is a regular
employee or an independent contractor—in other words, does the
contractor look and act like a de facto employee?
When possible, employers should hire employees outright or lease

them from another employer who takes responsibility for compliance
with employment regulations.
Regular audits of HR practices should include inspection of the use

of independent contractors.
HR's Role in Flexible Staffing

Once an organization decides on a flexible staffing arrangement, the
terms of the contract must be put into writing. Certainly, the
substance of any flexible staffing agreement is straightforward: to
produce skilled and qualified people to perform specific tasks. But
reaching consensus on the specific mechanics of the arrangement
requires much attention to detail.
It has been said that agreements do not create an understanding;

they record it. Thus, the best agreement is one that accurately and
precisely reflects the underlying transaction. Depending on the
staffing alternative, HR may need to work with legal counsel
experienced in writing staffing contracts when orchestrating the
terms for flexible staffing.
The terms of a flexible agreement will naturally vary depending on

the circumstances. But there are a few general guidelines that can
be helpful.
Be cautious of preprinted or standard forms. You must

understand and agree with everything in the agreement;
anything you don’t understand should be explained to your
satisfaction or it should be eliminated.
Ensure clarity. An agreement should be simple and

straightforward. Respective rights and obligations of both sides
must be defined. Ambiguous provisions subject to later
interpretation are dangerous.
Negotiate competitive pricing. Ask for volume discounts,
rebates based on use, and free value-added services.
Consider including an alternative dispute resolution (ADR)

provision. It’s wise to be prepared should disputes arise.
Include a simple opt-out procedure. Be wary of fixed-term

agreements. The organization should be able to opt out of an
agreement if dissatisfied for any reason.
Negotiate clear and precise provisions for what happens

when the agreement expires or the relationship ends.
Spelling out terms of the closing can help to prevent
unnecessary litigation.
Organizational Restructuring
Restructuring is the act of reorganizing legal, ownership,
operational, or other organizational structures. It is a proactive
adjustment to meet changing business needs.
Restructuring intersects with workforce management when an

organization makes changes in the size, number, or relationship of
departments. After restructuring, certain groups will report to different
departments; some new departments may be created while others
are disbanded.
HR plays a crucial role in restructuring, helping the organization

“right-size” resources relative to market demand or take advantage
of cost synergies after a merger, acquisition, or joint venture.
Restructuring can also release least-productive resources and cut
costs to boost profitability. Organizational effectiveness interventions
may be required to help affected employees through the period of
transition, equip them with new skills and processes, manage
changes in organizational cultures, and establish new structures
(e.g., decision making, team building).
Drivers of Restructuring
Organizations restructure for a number of reasons. Dr. Gaanyesh
Kulkarni, CEO and Principle Consultant of envertis, a Mumbai-based
consultancy, identifies four major drivers of restructuring:
Strategy. When organizations change their strategy, they may

create new divisions to facilitate new products or services or to
move into new markets. The new strategy may mean staff
increases in some areas and decreases in others, which will
then require restructuring.
Structure. Organizations may rearrange their structure to follow
a new business model, improve efficiency, or reduce costs.
Restructuring is then required to meet the needs of the new
organization.
Downsizing. Organizations commonly downsize to remain

functional during a loss of revenue. They may choose to close
departments, drop product lines, lay off staff, or sell facilities.
Restructuring may then be required to meet the needs of the
new, smaller organization.
Expansion. When an organization expands, new departments

may be required to accommodate new products or facilities. The
structure is then rearranged to include new staff and
departments.
Redistribution of Decision-Making Authority

As organizations grow larger, traditional decision-making processes
may become so cumbersome that the organizations become
dangerously slow in responding to competitive threats or
technological changes and opportunities. As a result, decision-
making authority may move downward in the organization—toward
line managers—and outward—from headquarters to field.
These shifts affect HR as well. The responsibilities in the operational
HR role will continue to be shared with line management. A variety of
activities, such as recruiting for open positions and resolving
employee complaints, are daily management functions that can often
be handled by or shared with the line manager.
The shift in responsibilities to line managers may require a matching

decentralization of HR, a sharing with line management of some of
the historical HR functions, or a relocation of many operational
activities from headquarters to regional offices.
The Extended Organization

The extended organization is becoming more common today as
supply chain partners create processes and information channels
that allow their organizations to communicate and collaborate fluidly
at many different functional points. The businesses remain separate
entities but may appear to outsiders to be one entity.
Extended organizations are formed through the use of outsourcing,

strategic alliances, or partnerships.
Key Content
HR may be involved in performing due diligence in

implementing these relationships. Due diligence is the
process of investigating a decision thoroughly before
finalizing it to identify all potential factors that could affect
the positive and negative impacts of the decision.
By practicing due diligence before implementing a supplier or partner

relationship, HR helps make sure that the other parties in the
relationship conform to international labor standards and local laws
and ethical expectations. This helps manage risk to the
organization’s reputation and its legal liability.
In strategic alliances and partnerships, HR can also help identify

competencies needed for liaison positions and consult on team-
building and communication processes.
M&A and Divestiture

Organizations may also try to enhance their productivity and
competitiveness by adding to the value of the firm (e.g., increasing
assets or accessing new markets) through merger and acquisition
(M&A) or by shedding assets that do not contribute to the bottom line
through divestiture.
In both cases, restructuring is required to align leadership and
functions.
Due Diligence in M&As

An important HR role in M&A is in the due diligence process,
identifying wide-ranging workforce issues that may result from the
change:
Structural issues, such as the duplication of work processes and

personnel, differences in organizational culture, conflicts in HR
policies and practices, the arrangement of reporting
relationships, titles, the design of how the organizations interact
with customers/clients, and the relationships with vendors
Technological considerations, such as direct product/service

provisions; mechanisms for communication and data tracking;
the use, type, and impact of each organization’s enterprise
management tools; and the ability for integration of the
technology
Financial considerations, such as the compensation structure,

union contracts, obligations to a union pension fund, stock
options, incentive plans, and the full range of benefits
administration
Legal issues, such as reporting requirements that differ by
jurisdiction or type of business, legal constraints on the closing
of facilities or elimination of redundant personnel, and benefit
and nonbenefit issues (e.g., severance and tax codes)
Because of the critical nature of the decision, due diligence

investigation for M&A and divestiture should use multiple sources
and industry and local contacts and experts.
Figure 28 lists typical factors HR should include in its due diligence

investigation. Many of these topics are the same as HR might use in
an annual survey of its workforce status.
Figure 28: HR Due Diligence Topics for M&A Strategies
HR Due Diligence Topics for M&A Strategies
Management Work environment
Talent of current managers at Employee attitudes

top and middle levels Employee engagement
Anticipated level of post-M&A
Type of worker representation and
motivation of managers
participation
Likelihood of retaining top
Rates of absenteeism and disability
management
Safety records
Management pay structure
Complaints filed with regulatory
Ability to recruit top managers
agencies
Management style
Community labor environment
Centralized vs. decentralized?
Union climate
HR Due Diligence TopicsAvailability
for M&A Strategies
of necessary skills
Paternalistic? Authoritarian? Current HR function
Collaborative? In-house or outsourced?

Distance of management style Future plan
from that of own organization HR policies and procedures
Probability that managers will
Written or unwritten policies and
be able to adapt to new style
procedures
Culture
Compatibility with own policies and
Alignment of stated values with procedures
leaders’ actions
Other required policies (such as
How things happen every day diversity in hiring)
Decision making (e.g., amount Effect of future business strategy
of autonomy, levels of approval
HR activities needed to support
required)
business strategy (examples include
“Silo” internal structure hiring and closing of operations)
Perception of internal and Hidden costs of acquisition
external customers
Special contract terms with
Learning and development management
philosophy (e.g., who receives
Benefit plans and transferability to
training, how learning is
new employees
perceived and delivered, how
much money is spent on it) Pension plan status (adequacy of
funding, distribution, retention of
Age and diversity of workers
unvested percentage)
General employee information
Separation and incentive pay plans
Types of employees (full-time,
Compensation packages
part-time)
Pending lawsuits and judgments
Local customs of employment
Retention plans, if applicable
Key Content
Throughout the M&A process, the job of HR is to maintain
focus on the “people” dimension while it conducts HR due
diligence and plans the M&A HR integration strategy,
implements, and monitors and evaluates.
Planning the M&A Process

After due diligence research, HR can begin to map and compare the
two organizations’ structures and processes and decide how to
manage differences. Key talent can be identified and plans laid for
retaining it. The HR integration plan should include:
Designating integration leaders.

Securing management support and resources.
Developing integration and communication plans, setting
measurable objectives for integration, and establishing a
realistic time line.
Implementing the M&A Plan

Since post-M&A integration generally means streamlining the
workforce and reconciling multiple compensation systems, HR
focuses on:
Communicating honestly and quickly, before incorrect rumors
spread and take hold.
Making required changes quickly—where this is possible. Part
of the due diligence process is identifying restrictions on
implementation, such as laws affecting acquired rights (existing
obligations of merged or acquired entities), workforce
terminations, and job reassignments.
Supporting efforts to blend or revise work processes—perhaps
by using cross-cultural task forces.
HR also ensures that stakeholders—such as vendors or supply

chain partners and affected communities—are included in both
planning and implementation.
After the M&A

In the period after the merger or acquisition, HR monitors for signs of
problems and responds appropriately. It implements various
initiatives, such as communicating mission and values, to build
cohesion. It begins the process of analyzing its strategy and
evaluating its success, with an eye toward identifying best practices
for future M&As.
Due Diligence in Divestiture

HR must also conduct due diligence in a divestiture. HR must
analyze the skills and functions of the divested unit and, if the
divestiture leaves a gap, determine if the cost of filling the gap
outweighs the financial benefits of the divestiture. If divestiture is
considered the better option, this is still a major change initiative and
must be approached as such. The potential loss of working
relationships and necessary changes in work processes require the
same type of planning, implementation to plan, and monitoring as
with M&As.
Reduction in Force
Reduction in force (RIF), or downsizing, refers to the termination
of employment of individual employees or groups of employees for
reasons other than performance—i.e., economic necessity or
restructuring.
The process for determining which employees will be affected by an

RIF may depend on different factors. HR professionals should be
aware of national and local labor laws and union contracts that affect
an employer’s ability to reduce the size of its workforce. Employers
usually consider skills, work record, and seniority. A straight seniority
approach is most objective but may not meet the employer’s long-
term needs. In workforce reductions that affect professional workers,
less consideration is customarily given to seniority and more is given
to the performance and skills the future organization will require.
Possible alternatives to downsizing include asking employees to

sustain pay cuts, offering voluntary termination and/or retirement
with additional benefits, or asking employees to accept a reduced
work schedule.
HR’s Role During RIF

During a RIF, HR can help the retained employees confront
challenges such as:
Diminished job security.

Increased workload.
Different work assignments.
Changed organizational priorities.
Departure of leaders/managers who once defined the
organization’s character.
Departure of long-term employees who were knowledgeable
about operations.
Loss of colleagues, possibly friends (“survivor guilt”).
Fear that their own jobs may be in jeopardy, causing them to
look for other employment.
HR’s Role After RIF

HR can take the following measures after the RIF:
Clearly communicate the rationale for the new goals and

structures.
Provide employees with specific examples of behaviors that are
appreciated as well as what will not be tolerated.
Ensure that the transition period is short; the longer things get
dragged out, the more likely employees are to view the situation
as leadership failure.
Support leaders and managers in leading by example and
helping employees see how new challenges can be met.
Clearly define job definitions and responsibilities.
Realign rewards as necessary to support organizational goals.
Talent Management
Talent management refers to the development and integration of
HR processes that attract, develop, engage, and retain the
knowledge, skills, and abilities of employees that will meet current
and future organizational needs. The purpose of talent management
is to increase workplace productivity by supporting the recruitment,
development, engagement, and retention of high-value employees.
Effective talent management therefore requires:

Understanding the implications of the organization’s business
strategy in terms of required competencies. Talent management
is a strategic approach to managing human capital and as such
must be aligned with the organization’s strategy and strategic
business goals. It should be perceived as a long-term and
continuous process that is most effective when it is an
integrated effort and is perceived as continuous and dynamic,
always evolving with the strategic direction of the organization.
Tracking external conditions that affect the availability of talent,
such as highly competitive job markets, demographic conditions
(e.g., bulges in the size of certain population age ranges), or
changes in technology that call for new knowledge and skills.
Reflecting the organization’s values and commitment to
diversity, equity, and employee development. An effective talent
management strategy is shaped by an organization’s:
Expectations regarding the differentiation of talent.
Overall philosophy regarding integration versus local
differentiation.
View of the role that line leaders have in the development of
people.
Philosophy regarding the movement of people across
borders, businesses, and functions.
View of the role of diversity in staffing strategy.
Beliefs about hiring for potential versus hiring for position.
Committing to creating a positive workplace and an engaged
workforce.
Talent Pools
The creation and management of formal talent pools is a critical
aspect of an organization’s talent management strategy. Members of
a specific talent pool (e.g., high-potential employees or potential
global assignees) are employees who meet a set of formal
identification criteria. These employees typically receive specialized
development and enrichment experiences above those associated
with traditional employee development.
A growing number of organizations are investing in the development

of sophisticated applications, such as applicant tracking systems and
talent management suites, to help them stay in touch with and
develop strong relationships with both internal and external members
of essential talent pools.
Talent pools:
Represent an essential component of strategic business

planning. When talent management is carefully aligned with
long-term business and strategic planning, the organization can
develop a well-planned approach to giving employees who have
specific skill sets the developmental experiences they need to
prepare them for the future.
Allow the organization to maximize and more effectively target
employee and career development efforts.
Can be a useful tool for identifying and cataloging the
developmental experiences of employees who are candidates
for future international assignments.
Represent a valuable resource during crisis management. When
an organization makes the effort to identify and catalog critical
skill sets and experiences, they can quickly draw on these
resources to fill in or supplement workforce gaps in times of
organizational crisis.
Some additional uses for talent pools include the following:
Talent pools can be used to help organizations identify and

recognize the value of solid performers—those individuals who
keep the organization running on a daily basis but are not
typically singled out for recognition or special development
experiences because they are not part of or have not expressed
interest in specialized talent pools.
Defined talent pools may aid in clarifying or guiding
compensation decisions to be sure key talent (including high
potentials and leadership candidates) is rewarded and
motivated.
Talent pools represent an additional contributor to effective
knowledge management, especially in global organizations.
Talent pools of functional experts and historians serve a vital
function in preserving essential knowledge and proprietary
information.
Talent management resources can be directed broadly—for

example, to develop high-potential employees throughout the
organization. Alternatively, employers may choose to target their
talent management initiatives at pivotal or key talent pools,
employees who will have the most impact on the organization’s
success in implementing its strategy and achieving its goals.
Developing pivotal talent requires a deep understanding of the

organization’s strategy and what types of activities have the greatest
impact on measurable success and then focusing development
efforts on the employees performing those activities. For example, if
an organization creates its competitive advantage primarily by
regularly introducing innovative products, HR may discover that the
organization’s pivotal talent pool is employees involved in designing
and developing those products. Alternatively, an organization that
competes on the basis of premium service to its high-value
customers may focus its talent management on the employees who
interact with customers.
Key Content
As part of their talent management responsibilities, human

resource professionals must be able to anticipate the future
talent needs of the organization and foresee what the
potential employee pool will look like when those
organizational needs become a reality. Used appropriately,
talent pools can be created and developed to fill the gaps
between the talent that the organization will need and the
talent that is likely to be available.
Measuring Talent Management Effectiveness

All talent management programs should be evaluated on a regular
basis to ensure the effectiveness of each program in helping to
maintain a high-performance workforce. Methods for measuring
talent management effectiveness include:
Evaluating the percentage of positions for which there are

internal successors.
Comparing the number of external hires to internal promotions.
Evaluating the differentiation of pay between performance
levels.
Identifying high-potential employees and reviewing their
corresponding retention rates.
Tracking retention and turnover rates at all levels of the
organization.
Successful practices should be identified and repeated.
Succession Planning
Succession planning is an important talent management strategy
to help identify and foster the development of high-potential
employees. Succession plans focus on positions that are the most
critical to the future needs of the organization. The goal is to “keep
talent in the pipeline” and have people in place for future roles in the
organization.
It is important to recognize that succession planning, like other

aspects of talent management, applies to employees at all levels of
the organization. It should not be applied exclusively to senior
management.
Succession planning must be closely tied to and aligned with several
other human resource management functions, including:
Career management. Succession plans help to ensure that

individuals in specific talent pools obtain the insights,
awareness, and field experience necessary to make ongoing
contributions to the organization.
Training and learning. Structured training experiences provide

the knowledge and skills necessary for success in various
positions on the career advancement ladder.
Performance management. Succession planning must also be

carefully aligned with the organization’s performance
management process to ensure that future managers and
functional experts receive the ongoing developmental feedback,
critical evaluation, and mentoring required to maintain their
professional development.
Succession planning is a strategy that targets long-range needs and

focuses on the cultivation of talent to satisfy those needs.
Replacement planning concentrates on immediate needs and a
“snapshot” assessment of the availability of qualified backup for
individuals in key positions. Replacement planning is an important
element in business continuity planning in the event of an
emergency or business interruption.
Figure 29 compares succession planning and replacement planning.
Figure 29: Succession vs. Replacement Planning
Variable Succession Planning Replacement Planning
Time frame 12–36 months 0–12 months
Readiness Candidate with the best Best candidate available

development potential
Commitment Merely possibilities until Designated preferred

level vacancies occur replacement candidate
Planning Pool of talented candidates Vertical lines of succession

focus with capabilities for several within units or functions
assignments
Planning Specific plans and goals set Usually informal, status

development for the individual report on strengths and
weaknesses
Flexibility Flexible plans that are Limited by plan structure;

intended to promote however, in practice has a
development and thinking great deal of flexibility
about alternatives
Plan basis Result of input and discussion Each manager’s best

among multiple managers judgment based on
observation and
experience
Evaluation Multiple evaluations by Observation of

different managers on performance on the job
different assignments; testing over time; demonstrated
and broadening early in competence; progress
career through the unit
An important aspect of retention is to retain high performers in the
organization. Succession planning demonstrates to employees that
the organization has an interest in their knowledge and skills and is
committed to their career development. By identifying crucial job
skills, knowledge, social relationships, and organizational practices
and passing those on through succession planning, employers help
to ensure the seamless movement of talent within the organization.
Succession planning also has the potential to help organizations

withstand times of demographic change and talent scarcity.
Succession planning enables organizations to harvest critical
organizational knowledge so it can be shared with subsequent
generations of workers.
Succession Planning Process

An effective succession plan process incorporates seven
components, as shown in Figure 30.
Figure 30: Components of Successful Succession Plans
Components of Successful Succession Plans

Components of Successful Succession Plans
Visible support from senior Use of succession planning to

leadership and all members of top reinforce organizational culture
management Process that focuses heavily but
Clearly defined leadership criteria not exclusively on leadership
Defined plan to find, retain, and development
motivate future leaders and high- Process that is a real
potential employees organizational priority
Simple, easy-to-follow,
measurable process
Careful thought should be given to selecting candidates for

succession planning so that individuals with development potential
are chosen. Although succession plans typically identify current
management employees, nonmanagement employees who show
promise should not be overlooked.
Once candidates have been selected, well-conceived training and

development are critical to preparing candidates to step in and take
charge of the targeted positions. HR has an important role in
determining the most efficient and cost-effective method(s) to
develop employees for the future.
Developing future leaders may include in-house training, mentoring,

coursework from outside sources, or special projects specifically
designed for the employee. Whichever techniques are chosen, the
training should be aligned with the succession plan and the overall
organizational strategy.
Common mistakes made in succession planning include:
Basing future staffing needs on only past or current

experiences.
Developing succession plans in isolation.
Making it a once-a-year event instead of an ongoing
management activity.
Evaluating Succession Planning Effectiveness

As with all planning activities, succession planning must be
evaluated to determine its effectiveness.
At the onset of succession planning, standards should be

established about what success looks like and metrics identified as
to how program success will be measured. Standards and metrics
used to evaluate succession planning will vary but should generally
attempt to assess:
Employee satisfaction with personal development initiatives.

Management satisfaction with employee performance and job
readiness.
The extent of goals achieved and the time to full-function
attainment.
Changes in organizational management are inevitable. Positions

become vacant due to retirement, resignation, death, new business
opportunities, terminations due to employee performance, or other
reasons. Succession planning helps to provide continuity in
leadership and avoid extended and costly vacancies in key positions.
Knowledge Management

and goals.

Best practices and techniques for knowledge management,
retention, and transfer.
Knowledge Management
Knowledge management (KM) is the process of creating,
acquiring, sharing, and managing knowledge to augment individual
and organizational performance. Effective knowledge management
can maintain organizational effectiveness as the workforce changes
over time.
An HR manager hears about friction between the operations and
quality control (QC) departments in the organization. Calling on his
Relationship Management competency, the HR manager realizes
that a group meeting with both leaders will not be productive. So the
manager interviews each separately about possible causes for the
poor relationship and then objectively analyzes their responses.
Behind their answers, the HR manager sees a tendency for both
areas to control information tightly. Operations believes that QC’s
involvement always increases their work, and so they tend to
withhold information about iterations of designs and trial results. QC
believes that operations will select only the data they want and so
presents only summaries of results from their reviews.
The HR manager works with the department managers and

employees from both groups to better understand the situation and
their concerns/perspectives on sharing information outside their
departments. The Communication competency supports this task.
The HR manager applies his Consultation competency to his sense

of the situation and proposes a formal knowledge management
system to capture vital operations and quality control information and
explains the benefits of using the system to the department
leaders. The system would provide QC with a more complete picture
of the design process and operations with a more detailed
understanding of the quality tests being applied and their results. It
would also allow the departments to schedule their work more
efficiently.
To develop the knowledge management system, the HR manager

utilizes techniques to address the hesitancy of and reduce the
conflict between the two departments (using the Consultation skills
related to managing change). A workshop is held with respected
employees from each department who have been identified as
having good relationship skills. The team identifies and agrees on
system objectives and criteria. Gradually the departments begin to
trust each other.
Knowledge Management Systems
In today’s complex and highly competitive environment, an
organization must capture, house, and share its knowledge,
information, practices, and policies. It is equally important to prevent
the knowledge loss that can occur through layoffs, retirements,
reassignments, and voluntary resignations.
Knowledge management programs typically focus on two key

elements:
Expertise sharing and organizational learning

Knowledge retention and the reduction of knowledge loss due to
employee attrition
HR professionals play a key role in fostering KM. They instill a

knowledge-sharing attitude in new employees and use training and
performance management systems to encourage creativity,
innovation, and knowledge transfer.
There are many types of information that can be the focus of

organizational KM efforts, such as:
Leadership characteristics and behaviors.

Supplier management information and techniques.
Process control in operations.
Information management practices, techniques, and
specifications.
Problem-solving techniques.
Innovation best practices.
People commitment procedures, policies, and practices.
Customer satisfaction practices, programs, skills, and
techniques.
New product, service, or technology launch and introduction
practices.
Change management practices and capabilities.
Establishing a Formal Knowledge

Management System
Knowledge management systems in organizations tend to be either
informal or formal. Informal systems arise as employees and teams
gain experience and develop the ability to recognize and identify
critical information, best practices, and experiences. While informal
systems are very influential and important to organizations, they tend
to be based on personal networks and consist heavily of personal
contact information. Formal systems are characterized by a
structured, formal procedure for capturing information and a specific
repository for the information that is gathered.
Figure 31 describes the steps to create a formal KM system.
Figure 31: Steps to Create a Formal Knowledge

Management System
Step Description
1 Inventory This step involves cataloging the organization’s

knowledge collection of tangible assets. Collections often
assets. include white papers, proposals, presentations,
business and marketing plans, and growth and
expansion plans. Some components of
information systems (e.g., connections and lists of
employees with specific skills, experiences, and
assignment responsibilities) are also commonly
added to the inventory.
2 Create a Typically, an organization’s library or knowledge

knowledge repository is available over its intranet or through
repository and a dedicated application. The access tool must be
directory. quick and easy to use and have a powerful
search capability. More sophisticated systems,
such as human capital management systems,
may offer the ability to forecast information for
new projects and assign team members based on
skill and experience matches.
3 Encourage This step involves implementing communication,

system use. training, and other processes designed to ensure
cultural applicability and overall acceptance of the
system. If the system is not perceived as
essential to the successful operation of the
organization, its success is uncertain.
4 Update the While keeping the database up-to-date often

system. represents a challenge for the organization,
continuous updates are essential to ensure the
integrity and credibility of the system.
Uses of Knowledge Management
Systems
Organizations adopt and use KM systems in a variety of ways:
KM systems have been implemented by law enforcement

agencies to manage large volumes of information while
streamlining and systematizing each step of criminal
investigations.
A growing number of retailers such as Walmart are mining their

knowledge databases to identify consumer buying trends. By
identifying items that consumers frequently purchase at the
same time, retailers can create point-of-purchase and other
product promotions to spur sales of multiple products.
Pharmaceutical companies such as Eli Lilly often use

knowledge management systems to help them manage the
exceptionally long product development and approval cycles
that are typical in this industry. A knowledge management
system can help ensure that critical information gathered during
the early years of an investigational compound’s development
flows through the organization and is accessible at the time of
regulatory approval and eventual product launch.
Consulting firms such as McKinsey & Company and Bain &
Company have created knowledge databases to capture
experiences and organizational learning from every assignment.
The Accenture Delivery Suite benefits from Accenture’s

collective experience and translates that knowledge into a set of
proven methods, tools, metrics, and architectures. The model is
global and collaborative. It establishes a common language and
environment that helps Accenture’s professionals to begin
contributing immediately and to continually improve the
organization’s practices.
A Willamette University case study on the International

Federation of Red Cross and Crescent Societies (IFRC) notes
that member societies derive their value from a deep knowledge
of their locales and stakeholders. This knowledge allows the
organizations to respond quickly during disasters. Every
engagement is a chance to acquire and distribute additional
information. To capture this information, teams file “after action
reports” that focus on lessons learned and best practices.
Details from operations are compiled in a Disaster Management
Information System, which provides access to data in real time
to all IFRC members. This knowledge bank helps societies
prepare for foreseeable disasters, such as seasonal flooding or
drought, and respond more effectively to unique crises, such as
refugee movements or natural disasters like tsunamis.
Critical Success Factors for

Knowledge Management Systems
Organizations that excel at knowledge management focus on
several key factors:
Creating an environment and structure that encourage the

capture of best practices and facilitate sharing and cross-
fertilization
Recognizing that information must travel within and be
retained in the organization
Appreciating the role and importance of personal networks in
knowledge and information transfer
Establishing a knowledge-friendly, data-sharing culture
(Individuals across cultures and across hierarchical levels
must feel encouraged to share their knowledge and ideas.)
Seeing where knowledge exists and where it is liable to be lost

or underutilized
Helping people develop information management and data
access skills
Addressing the “What’s in it for me?” question (Those who

“borrow” knowledge from the system should also “deposit”
knowledge. In other words, employees should be both givers
and takers of knowledge. Seeing the process as reciprocal and
mutually rewarding encourages its use and vitality.)
Developing criteria to define and measure successful KM

projects
Identifying and addressing multicultural challenges, such as

multiple languages within the organization and different
preferences for screen design
Social Sharing of Knowledge

Most employees recognize that much of what they need to perform
better, improve their skills, and gain more knowledge is around them
all the time: learning by observing colleagues, receiving coaching
from a supervisor, and having access to proven ideas and best
practices as well as simply getting on-the-job experience every day.
Knowledge transfer is especially important and is an attractive
opportunity in a global organization. Knowledge moves throughout
the organization in a social manner as employees transfer into new
positions or locations and form new work relationships. Their
experiences may increase the organization’s understanding of local
laws and business practices, local market needs and competitive
dynamics, and the strengths and development needs of local
workers.
Many organizations use some type of human resource information

system to manage assignments and track assignees. Organizations
that have these systems in place may be able to expand or modify
them so they can be used to capture and manage the knowledge
gained.
The challenge for employers is to transform the inherently ad hoc

nature of this social learning and knowledge transfer into something
with more structure and rigor. Social networking and collaboration
technologies can be used to create learning and knowledge
management opportunities.
Social learning doesn’t necessarily require technology-based tools.

Coaching and mentoring programs are social learning opportunities
that require planning and time from supervisors but little capital
investment. They can also support employees who don’t fit the
typical knowledge worker profile.
By building social learning solutions, an organization can leverage

the biggest database of all—the collective experience of people both
within and outside their own organization. Social learning can turn an
entire organization into a unified learning team.
Functional Area #9: Employee and
Labor Relations
Employee and Labor Relations refers to any dealings

between the organization and its employees regarding the
terms and conditions of employment.
Supports interactions with union and other employee
representatives.
Supports the organization’s interests in union-management
activities.
Assists and supports the organization in the collective
bargaining process.
Participates in or facilitates alternative dispute resolution (ADR)
processes (e.g., arbitration, mediation).
Makes recommendations for addressing other types of
employee representation (e.g., governmental, legal).
Develops and implements workplace policies, handbooks, and
codes of conduct.
Provides guidance to employees on the terms and implications
of their employment agreement and the organization’s policies
and procedures (e.g., employee handbook).
Consults managers on how to supervise difficult employees,
handle disruptive behaviors, and respond with the appropriate
level of corrective action.
Conducts investigations into employee misconduct and
suggests disciplinary action when necessary.
Manages employee grievance and discipline processes.
Resolves workplace labor disputes internally.

Manages interactions and negotiations with union and other
employee representatives (e.g., governmental, legal).
Serves as the primary representative of the organization’s
interests in union-management activities (e.g., negotiations,
dispute resolution).
Manages the collective bargaining process.
Consults on and develops an effective organized labor strategy
(e.g., avoidance, acceptance, adaptation) to achieve the
organization’s desired impact on itself and its workforce.
Educates employees, managers, and leaders at all levels about
the organization’s labor strategy (e.g., avoidance, acceptance,
adaptation) and its impact on the achievement of goals and
objectives.
Educates employees at all levels about changes in the
organization’s policies.
Coaches and counsels managers on how to operate within the
parameters of organizational policy, labor agreements, and
employment agreements.
Oversees employee investigations and discipline.
Employee and Labor Relations
An organization’s success in benefiting from its extensive investment
in its human resources depends on its ability to manage the
employment relationship. This relationship may be individual—
between the employer and individual employees—or it may be
collective—between one or more employers, groups of employees,
and third parties. These third parties can include labor organizations
(e.g., labor/trade unions, works councils) and government agencies
(e.g., departments/ministries of labor).
The employment relationship is affected by history, culture, laws,

ethical systems, economic conditions, and industry practices. Within
these constraints, HR plays a critical role:
Helping to create and communicate a positive employee

relationship, including ensuring productive resolution of
workplace disputes and employee discipline
Developing and implementing the organization’s employee and
labor relations strategy
Supporting the organization’s relationship with third parties (e.g.,
contract negotiation and administration, compliance with labor
laws)
The Employment Relationship

Develops and implements workplace policies, handbooks, and
codes of conduct.
Provides guidance to employees on the terms and implications
of their employment agreement and the organization’s policies
and procedures (e.g., employee handbook).
Educates employees at all levels about changes in the
organization’s policies.

Employment rights, standards, and concepts (e.g., labor rights,
living wage and fair wage concepts, standard workday),
according to the International Labor Organization (ILO).
Types and development of compliance and ethics programs
(e.g., design, implementation, performance measures).
The Employment Relationship
The characteristics of the employment relationship are influenced by
a country’s economic history and conditions, culture and institutions,
industrial practices, and individual employer values. HR’s task is to
navigate through those influences and help shape a relationship with
employees that contributes to the organization’s success and
complies with ethical standards, local laws, and cultural norms.
Managing the employment relationship calls on many HR behavioral
competencies in addition to the knowledge competency HR
Expertise (especially familiarity with applicable laws). As the
following example shows, HR professionals must apply Leadership
and Navigation, Ethical Practice, Communication, and Relationship
Management competencies to many situations involving the
employment relationship.
A student employee who worked in the Academic Services area of

the Athletics Department reported an incident to an academic
counselor. While she was working in the football area, she passed
an assistant coach. The assistant coach knew her only casually but
touched her hair and said, “Hey, that’s for good luck.” The student
employee did not respond but later raised the issue as a problem
with one of the academic counselors. The counselor told her she
should report it to human resources.
The male HR director met with the student but had very little
knowledge of the incident. He brought in a female HR professional
staff member to add perspective and to witness the interview. After
listening to the student employee’s description of the incident, the
HR director asked her what she felt would be the best outcome and
specifically asked her if she wanted to lodge a formal complaint. She
responded that she did not wish to make a complaint but she felt that
her person had been violated and that something should be done.
In case the action might constitute harassment, the HR director

interviewed the assistant coach. The assistant coach was surprised
and offered to apologize to the student. The HR director and the
coach discussed why the student might have been offended by
being touched by someone she didn’t know. The coach agreed that
he had assumed his action was acceptable based on his and the
student’s shared race, but he understood now how it could have
been perceived and agreed that it was not appropriate.
The HR director decided that the incident did not rise to the level of
sexual harassment and took no formal action against the coach. The
director talked to the student again about what he had learned in his
conversation with the coach. He explained his reasoning for not
reprimanding the coach for sexual harassment but did note that the
incident and the interviews had been documented. He forwarded the
coach’s offer to apologize in person. The student was upset that HR
had interviewed the coach. The HR director explained the
institution’s ethical and possibly legal obligation to investigate the
incident once it had been brought to HR’s attention. This required
gathering facts and talking to everyone involved. The student
remained upset, however.
The HR director documented the matter fully in a memo. A few

weeks later the student employee’s parents contacted the university
president’s office to complain about the handling of the incident. All
documentation was provided to the president’s office. The matter
eventually was dropped, but it remained a difficult situation that the
HR director would look back on often and try to learn from.
Sometimes employee disputes cannot be resolved to everyone’s
satisfaction, but the HR director had made an honest effort to protect
both sides and the institution in the conflict. Still, could he have
approached the situation differently?
International Labor Standards
Fundamental to the employee relationship of the 21st century are
basic employee and employer rights that have been described in a
large body of international standards and agreements.
These ethical principles reflect and, in some cases, have influenced

local employment laws and regulations. Rights and responsibilities
related to employment are defined at the constitutional level, in
statutes, and in regulations implementing statutes. Workforce laws
and regulations address many facets of the workplace relationship,
including individual and collective rights. Since employment laws
may vary significantly in detail as well as philosophy, HR
professionals should be familiar with the employment-related laws in
the geographical areas in which their organizations operate. These
laws may regulate such issues as wages and hours, benefits, and
conditions (e.g., antidiscrimination, health and safety) that are
described in other Functional Areas in this Learning System.
Even if these standards are not reflected in a nation’s employment

laws, they set a recognized bar that ethical employers strive to
reach. International standards are especially significant to global
organizations developing or trying to apply standards across their
organizations.
The definition and recognition of basic worker rights has been an
issue for more than a century. Efforts have been made by
international institutions to establish recognized expectations of
employee rights and employer responsibilities—international labor
standards. These standards reflect a consensus about the rights of
the employee and the responsibilities of the employer. Meeting these
standards is a concern for all employers but a special challenge for
global employers or businesses with global supply chains.
International Labour Organization

The standards issued by the International Labour Organization (ILO)
capture key issues related to employee rights. They are accepted as
standards by other international groups such as the World Trade
Organization and have provided models for national labor statutes.
The ILO is a specialized agency of the United Nations
headquartered in Geneva. It evolved from the Commission on
International Labor Legislation, which was formed in 1919 as a result
of the Treaty of Versailles following World War I. The ILO
membership includes governments (currently 187 member states),
employers, and worker groups. Together, these constituents shape
policies and programs related to four strategic objectives:
Promote rights at work.

Encourage decent employment opportunities.
Enhance social protection.
Strengthen dialogue on work-related issues.
Labor standards are developed through a complex process involving

research and analysis, reports, comment or discussion sessions,
drafts, revisions, and finally adoption as conventions by at least two-
thirds of member nations. Member nations are obligated to submit a
convention to their own law-making bodies to enact related
legislation and/or to ratify the convention. (In some cases, members
may not ratify the convention but still enact legislation reflecting the
standard’s objectives.)
The ILO has identified eight core labor standards:
“Freedom of Association and Protection of the Right to

Organize,” prohibiting interference from public authorities and
the requirement of authorization by employers
“Right to Organize and Collective Bargaining,” protecting
workers from retaliation and obligating employers to negotiate
with unions
“Forced Labor,” prohibiting forced and compulsory labor, except
for military service, prison, and emergencies (e.g., war, natural
disaster)
“Abolition of Forced Labor,” prohibiting forced labor as a means
of political coercion or punishment, retaliation for strikes,
workforce mobilization, labor discipline, and discrimination
“Minimum Age,” prohibiting the hiring of children too young to
have completed compulsory schooling and limiting employment
in hazardous work to those 18 and over
“Worst Forms of Child Labor,” prohibiting any work likely to be
harmful to the health, safety, and morals of children
“Equal Remuneration,” requiring equal pay and benefits for men
and women
“Discrimination,” prohibiting discrimination in hiring, training, and
working conditions and requiring employers to promote equality
of opportunity and treatment
Employer Rights Under the Law

Employer rights have not received as much attention on the
international stage as employee rights. There have been
international treaties on intellectual property and copyright/patent
protection, but employer rights are more often defined in local laws
and individual and group employment contracts.
In general, employers are allowed to direct the work of employees

and conduct their organizations as long as they comply with relevant
laws and contracts (individual or group). They have the right to
protect the organization’s assets from damage (e.g., from theft or
loss of reputation), and they have the right to benefit from work
performed by employees, unless contracts define other
arrangements.
Intellectual Property
Intellectual property (IP) is the ownership of innovation by an
individual or business enterprise. In an enterprise, IP is the product
of employee creativity and enterprise resources. It can represent a
considerable part of the value of a commercial enterprise,
particularly in technology and communication companies. IP includes
patented, trademarked, or copyrighted property, such as inventions
and processes, graphical images and logos, names, indications of
geographic origin, architectural designs, and literary and artistic
works.
IP also includes trade secrets and proprietary or confidential

information that are not specifically protected under patent,
trademark, and copyright law. This type of IP could include
statements of strategy, secret recipes, lists of customers or prices,
employee work product, and financial information.
Protecting their rights can cause employers to become involved in
physical and logical security (e.g., restricted access to or use of
data) and surveillance practices (through video cameras, restricted
Internet traffic, or searches of social media sites). Although they
have the right to protect their assets and secure work for which they
have paid, employers should be aware that these rights may—
depending on applicable law—conflict with employees’ rights to
privacy and freedom of expression. Employer practices have been
limited by laws or legal decisions in many countries.
HR plays a direct role in protecting employer rights by making sure

that work obligations are communicated through employee
handbooks, policies, and practices and understood by employees
and by including appropriate language in employment agreements,
such as nondisclosure requirements.
Employment Contracts
Employer and employee rights and responsibilities are defined and
agreements may be documented through employment contracts.
Employers may contract with individual employees and with
organized groups of employees. Contracts with organized labor
groups are discussed later in this Functional Area.
Employment contracts are the norm in many countries, although
their forms and requirements may vary. Some countries penalize
employers for not providing written contracts within a certain length
of time; others accept a paycheck stub as recognition of
employment.
In some cases, depending on applicable law, the absence of a

written contract may give rise to an implied contract. It is often to the
employer’s benefit to avoid implied contracts since they may include
more generous dismissal compensation.
Employments contracts must be formally amended. An employer

seeking to change employment terms for workers after a purchase or
merger may be restricted by acquired rights laws—unless the
employer can prove economic hardship. For example, in the United
Kingdom, both national law and the EU Acquired Rights Directive
(2001/23/EC) require an employer to demonstrate “economic,
technical, or organizational” reasons for changes in employment or
termination; an employer faces penalties if the reasons given are
proven to be false. The strategy of amending contracts by firing and
rehiring under new terms may not be legally defensible and may be
considered unfair dismissal.
Key Content
Contracts with international assignees and global
employees should specify which country’s laws will apply to
the contract and what jurisdiction will be applied in the
event of litigation.
Employment at-Will
In the U.S., unlike other countries, most employees work on an at-
will basis. Employment at-will is not a federal law but a principle
derived from common law (judgments rendered by various courts). It
has, however, been restricted by statutory actions at the state level.
HR professionals must be familiar with local legal status.
The principle of employment at-will (EAW) means that employers

have the right at any time, with or without prior notice, to hire, fire,
demote, or promote whomever they choose for no reason or any
reason. Similarly, employees have the right to quit a job at any time
for any reason, with or without prior notice. The concept of
employment at-will is usually reinforced in employee handbooks and
is included in other employment documents such as offer and
acceptance letters as well as performance management documents.
This includes documents related to disciplinary matters.
One could argue that employment at-will has endured in the U.S.
because statutory law and judicial decisions have stepped in to
define certain protections for both sides. These exemptions are
recognized on a state level. The most widely recognized exemptions
include the following.
Public policy exemptions. Employees may not be fired without

cause if this would violate state or federal laws. Terminations
that can be proven to be in violation of a federal
antidiscrimination law (e.g., the Americans with Disabilities Act)
would not be protected under the at-will doctrine. For example,
an employee cannot be fired for talking to other employees
about work conditions, forming a union, or whistleblowing
(reporting an employer’s illegal activity to authorities), which are
protected activities.
Implied contract exemptions. Implied contracts (i.e., not

written) are difficult to prove but can be created through certain
employer actions, promises, or statements made by individuals
or the organization as a whole. For example, promises in an
employee handbook that employees will be fired only for good
cause can be interpreted as an implied contract.
Covenant of good faith and fair dealing exemption. This
applies in only a few states. It restricts actions that are seen as
unjust or malicious.
In general, in the U.S. employment contracts are offered only to

high-value employees, such as high-level and key personnel (e.g.,
those involved in creating strategy and products). In these cases, the
costs of filling positions might be very high. Contracts may also be
used to attract talent with special provisions or to restrict employees’
ability to use confidential information.
Post-Employment Agreements
Post-employment agreements, intended to be legally binding and
usually signed at hiring, aim at safeguarding the employer’s right to
protect its business by restricting the employee’s behavior during
and after employment.
A common form of post-employment agreement, especially in

knowledge industries, is the non-disclosure agreement (NDA), in
which the employee agrees not to discuss knowledge gained during
employment. This can include knowledge related to patented
products, business models and strategies, customer information, or
privileged information such as test results or pending litigation. The
agreement usually specifies a period of time during which the
employee is barred from disclosure. It generally does not restrict use
of information that is considered commonly known.
Some employers require that employees sign a non-compete

agreement (NCA) as a condition of employment. A non-compete
agreement prevents an employee from leaving to work for one of the
employer’s competitors. The agreement may specify a period of time
and a geographical range within which the employee is barred from
working for a competitor.
Post-employment agreements have advantages and disadvantages.

When they are carefully written to restrict truly proprietary
information—and when they are legal in the jurisdiction—they can
protect the employer against risks of loss. When an NDA or NCA is
vague or overly broad in terms of the information it restricts (e.g., an
NDA that prohibits an employee from discussing the corporate
culture or an NCA that prohibits an entry-level employee from
seeking similar employment elsewhere), they can become
problematic:
Subsequent employers may counter-sue an employer seeking

to enforce an NCA.
Local jurisdictions and governments may look unfavorably on
what they perceive as infringing on an employee’s right to work
and freedom of speech. NCAs have been accused of lowering
wages (since employees cannot leave for similar employment)
and discouraging entrepreneurship. NCAs may be illegal or
severely restricted in some jurisdictions.
They may damage an employer’s ability to attract and retain
talent. Young, highly skilled employees may see an NDA/NCA
requirement as disqualifying a potential employer. Some
employees may leave certain markets in search of jurisdictions
that are less accepting of restrictions.
Employers should carefully consider whether these agreements are

necessary for all employees…or necessary at all for their
businesses. Boilerplated agreements should probably be avoided in
favor of more targeted and negotiated agreements.
Employee Relationship Strategy

An organization’s employee relations (ER) strategy should include:
Alignment with the organizational strategy, showing how the ER

strategy will help the organization achieve its long-term goals.
Alignment with employment laws and business practices. In

some areas and industries, organizations cannot choose to
avoid working with works councils and labor unions. Consulting
with these third-party representatives may be required by law or
be a traditional feature of an industry’s or nation’s employee
relations.
A vision describing the type of workplace culture the leaders

hope to create.
The values upon which the strategy is built—for example,

respect, teamwork, mindfulness of strategically defined issues
such as customer focus, quality improvement, or safety. In the
same way that organizational business strategies must be in
alignment with the organization’s culture, the ER strategy must
fit the organization’s values and beliefs. If not, the organization
must commit to the process of changing its culture to one that is
consistent with the ER strategy.
Goals, for example:

Develop a constructive and compliant relationship with labor
organizations in the workplace.
Implement communication plans that enable timely sharing
of critical information or facilitate early resolution of ER
issues.
Initiatives (a set of action plans to achieve the organization’s
goals), for example:
Implementing an audit program to make management’s
actions more transparent and to increase responsibility for
decisions.
Assembling a joint management-employee task force to
define vehicles and events to improve communication
between leadership and employees.
The organization must communicate the ER strategy to employees—

through, for example, new-hire materials, employee handbooks, or
annual and functional meetings. Managers and supervisors must
understand the ER strategy and their role in implementing it on a
daily basis.
Workplace Policies
Key to the employment relationship is the employer’s clear
communication of policies, often through an employee handbook or
manual. Employee performance management, discipline, and
termination should involve the employee’s understanding of the
employer’s promises (e.g., work terms, complaint procedures) and
expectations of employee conduct (e.g., compliance with
antiharassment or substance use policies). In a workplace regulated
by union contracts, the contract supersedes the employee
handbook, but handbooks are still often used to clarify expectations.
A policy is a broad statement that reflects an organization’s

philosophy, objectives, or standards concerning a particular set of
management or employee activities. Policies reflect the employer’s
employee relationship strategy. They are general in nature and are
expressed through more specific procedures and work rules.
Properly conceived and implemented, policies are intended to help

management and employees make intelligent decisions—decisions
consistent with those policies. In that respect, policies provide a
basis for HR management practices and a framework within which
these practices are established.
While policies may be written down in a physical or online handbook,

they may also be unwritten—communicated by word or action.
Policies, written or unwritten, are not permanent. The organization

needs to periodically review policies and revise those that are
obsolete. However, numerous and frequent changes in policies may
indicate management problems.
HR’s Role in Policies and Procedures

HR’s role is not necessarily to develop workplace policies or
procedures. In some instances, HR:
Supports the development of policies by the organization’s

leaders. Some policies, such as discipline and discharge, are
driven by the organization’s culture, and the role of HR may be
to help leaders apply the organization’s values to employment
issues and determine policy positions.
Facilitates development of procedures by other departments.
Some departments assume the responsibility for many of their
own department-level policies and procedures, while others will
request HR support to develop consistent and thorough policies
and procedures.
Supports communication of policies throughout the organization.
HR needs to ensure that managers are clear about the intent
and/or specific terms of the policies and how to communicate
and enforce them. As warranted, HR should provide related
training for managers.
Developing Policies and Procedures in Global Organizations

Global HRM emphasizes the need for policies that are consistent,
fair, and transparent throughout the organization. However, the
realities of a global organization—with its global workforce, globally
mobile employees, and different locations around the world—
challenge the notions of consistency and fairness. Fully standardized
policies and procedures are not always possible because of the
need for legal compliance and cultural adaptation. If standardization
is achieved, the policies may not be fair for all.
At the same time, lack of consistency and fairness in a global

organization can be problematic. If global assignees find different
expectations and treatment in their assignments, the discrepancies
can lead to conflicts that harm retention of valuable employees. In a
global electronic environment, stories of personal experiences can
spread quickly and undermine the organization’s image with its
employees.
Employee Handbooks
Since employee handbooks are often used during employee
onboarding and performance management activities, HR is often
directly involved in creating them.
Policies should be developed with a goal of communicating

effectively with employees. They should be available in the language
of the employee and in a form of media universally available. For
example, employers should not rely solely on an electronic
document posted to the organization’s website if some employees
don’t have electronic access. Organization of topics should be clear,
and wording should be simple and direct. If employees cannot read,
other means must be used to convey the information and confirm
understanding.
Employers in a union environment address the issue of handbooks

differently. A policy handbook may be used to outline policies that
apply to all employees without exception. They may describe, for
example, access to federally mandated rights (e.g., family leave) and
restrictions on illegal behavior (e.g., sexual harassment, violence,
illegal drug use). The collective bargaining agreement or labor
contract serves as a description of the terms and conditions of
employment for employees covered by the agreement. A separate
handbook may be created if the workplace includes nonunion
employees. It sets out terms and conditions of employment but
makes clear that it applies only to employees not covered under a
collective bargaining agreement.
Figure 32 summarizes key points in developing effective employee

handbooks.
Figure 32: Tips for Creating Effective Employee Handbooks
Tips for Creating Effective Employee Handbooks

Tips for Creating Effective Employee Handbooks
Make sure the handbook reflects Focus on policy and policy-related

your organization. Look at procedures. Avoid job-related
templates and, if available, procedures or rules.
handbooks for other Include procedures for reporting
organizations as a guide, but
and/or resolving policy and work
aim for a complete and accurate
rule violations.
reflection of your organization’s
Be realistic in expectations. Policy
policies.
should be consistently enforced,
Align your handbook with local
and consistent enforcement is
laws and regulations. For
difficult when policies are overly
example, a statement that the
restrictive and/or culturally
handbook does not create a
misaligned.
contract is necessary in the U.S.
Keep it short, comprehensible to
to maintain an at-will
employment relationship. the average reader, and
unambiguous.
Involving Managers and Supervisors

Managers and supervisors must understand the organizational ER
strategy and how that strategy is aligned with specific management
practices—for example, how creating trust requires that managers
and supervisors behave in an open, fair, and consistent manner. In a
workplace with organized labor groups, managers and supervisors
should be able to explain the organization’s labor strategy and
posture. They should understand contract terms and procedures
completely.
Selection and promotion criteria for supervisory and managerial

positions should include competent communication skills, emotional
intelligence, and ethical behavior (e.g., avoiding discriminatory and
harassing behaviors).
Managers and supervisors should receive training on the

organization’s policies and procedures, especially regarding the
handling of conflict and discipline and development opportunities—
perhaps by being mentored by experienced managers and
supervisors. Most importantly, their performance evaluations should
include metrics that demonstrate an ability to fulfill the ER strategy in
daily work with employees.
Labor Relations

representatives.
activities.
Assists and supports the organization in the collective
bargaining process.
Consults on and develops an effective organized labor strategy
(e.g., avoidance, acceptance, adaptation) to achieve the
organization’s desired impact on itself and its workforce.
Educates employees, managers, and leaders at all levels about
the organization’s labor strategy (e.g., avoidance, acceptance,
adaptation) and its impact on the achievement of goals and
objectives.
Manages the collective bargaining process.

Types and structures of organized labor (e.g., unions, works
councils, trade union federations, other employee collectives).
Unionization approaches, methods, and management (e.g.,
acceptance, avoidance strategies).
Techniques for grievance and complaint resolution.
Approaches to union-organization relations (e.g., collective
bargaining, contract negotiation, contract administration
process).
Labor Relations
Labor relations refers to the way organizations manage their
relationships with employees as a collective group rather than
individually. Frequently this relationship involves third parties—
employee representatives (e.g., labor/trade unions, works councils,
and professional associations) and institutions that interject
themselves into the employer-employee relationship (e.g.,
government ministries that monitor compliance with labor laws or
international organizations that define labor standards). HR
professionals must be familiar with these third parties, with their
organization’s chosen labor strategy, and with the role of HR in
developing and implementing labor contracts.
The chief human resources officer (CHRO) at an automaker just
participated with the senior management team in developing the
strategic plan. One key element includes contract negotiations with
all unions in the company’s different locations. Some recent
negotiations have been unduly long and disruptive.
In order to better prepare for these talks, the CHRO applied the
Business Acumen, Relationship Management, and Critical
Evaluation competencies. The CHRO:
Met with key executives to understand their priorities and goals.
Conducted an HR SWOT (strengths, weaknesses,
opportunities, threats) analysis to review lessons learned from
recent negotiations and possible hot buttons in the near future.
Established a contract negotiation mission and vision for the
negotiating teams.
Conducted an HR analysis to identify any gaps in information or
details related to the union contracts.
Determined if there are any critical people issues (e.g., wages,
hours, benefits) that can be anticipated.
Developed goals and solutions in anticipation of the unions’
requests.
By proceeding through the HR strategic process highlighted above,

the CHRO will be well prepared to carry forward the organization’s
position and efficiently and effectively improve both the negotiation
process and its results.
Labor or Trade Unions
Key Content
A labor union or trade union is a group of workers who

coordinate their activities to achieve common goals (e.g.,
better wages, hours, or working conditions; job security;
training) in their relationship with an employer or group of
employers. Members elect representatives to interact with
management. In some countries, trade unions may include
managers and professionals as well as skilled and unskilled
workers.
Unions may be a well-established feature of an organization’s

workplace and industry, and the task of HR is primarily to support the
organization’s union relations strategy and administer contracts.
In other workplaces, unions may be seeking the right to represent

employees, either for the first time in the workplace or in place of
another union. In these cases, HR professionals should become
familiar with the local process of unionization, which can vary
significantly in different countries. The process may include
certification of the union by a government ministry, definition of work
units and employees covered, and/or elections. Elections may be
preceded by extensive campaigns with the involvement of third
parties, such as national labor and employer groups and
social/religious groups.
HR professionals should be familiar with the requirements unions

must fulfill before they are allowed to represent employees in
bargaining. They should also ensure that managers and supervisors
are aware of any regulations limiting management’s speech and
behavior during this period. Again, regulations will vary by country,
but essentially they reflect international labor standards in prohibiting
employers from interfering with employees’ rights to organize, from
intimidating or bribing employees to deter them from joining/forming
a union, and from retaliating against employees for their involvement
in organizing.
At the same time, managers and supervisors should be aware of

employers’ rights during organizing campaigns. HR can assist in one
of management’s primary rights: the right to communicate to
employees its reasons for preferring to remain union-free.
Types of Unions
Unions vary in structure. They may represent:
Single enterprises, a model seen in Japan. For example, all the
employees of an employer, regardless of job type or skills, may
be represented by a single enterprise union. These enterprise-
level unions may join a larger national or industrial
confederation.
Specific trades or crafts, such as a union representing electrical,
chemical, or atomic workers.
A national union. In many countries different trade or craft
unions join national federations of unions. The confederation
may be tight or loose.
An industry union that represents workers from different
employers within a certain industry, such as steel or auto
manufacturing.
Large or global employers may interact with all types of unions. Their
workforces may be represented by multiple trade unions; they may
bargain with national or industry unions.
At the level of a work unit, employees choose representatives by

election. These individuals may be called union representatives or
union/shop stewards. In a very large employer there may be multiple
work units, distinguished by type of work or location. There are
additional regional, national, and international levels in the union
hierarchy. Members pay fees that support different union activities,
such as organizing, research, bargaining, political action, retired
member services (e.g., health care, pension management), and a
variety of services designed to attract members.
Understanding Individual Labor/Trade Unions

Organized labor environments and individual unions can vary
significantly. Briscoe, Schuler, and Claus (in the 2008 edition of
International Human Resource Management) identify six
characteristics that HR professionals should try to identify in labor
groups with whom their organizations interact:
Level at which bargaining occurs. Is the employer bargaining

individually or as part of an industry association? Is the union
representing an enterprise or an entire industry?
Focus of bargaining topics. What is considered a fair topic for

labor negotiations? In some countries bargaining will be
restricted to wages and benefits, while bargaining in other
countries will focus on broader social issues. Some unions in
developing economies have focused on social topics, such as
antidiscrimination, environmental actions, and HIV/AIDS
treatment and prevention.
Union penetration or density. These terms refer to the
percentage of workers that belong to a union. The rates differ
widely among countries, especially in countries where union
members retain membership after retiring. One must be careful
here when considering union density. There is not always a
direct relationship between the number of members a union has
and its ability to shape agreements, since employees who are
not members of a union may still be covered by a collective
bargaining agreement.
Membership. Is membership in a union compulsory? Do

employees join a union as individual members, as in a trade
union for skilled workers? Or is membership aligned with
employment by a specific organization? (In other words, if you
work for organization A, do you have to join union Y?) Are
managers allowed to be members? In terms of membership,
unions can represent low-skilled workers and highly skilled
professionals. This can affect negotiating topics and style.
Relationship with management. Is the relationship historically

stormy or more cooperative?
Role government will play. How likely is the government to

become involved in the labor relationship? What may trigger its
intervention? What concerns will it bring to the table?
In addition to understanding the individual labor relationship, HR

professionals should also understand and monitor the external
forces that can influence that relationship—such as economic
performance and trends, politics, laws, and technology.
Labor Relations Strategies

The labor relations strategy addresses the organization’s approach
to third-party workforce representation.
There are three generic labor strategies: acceptance, avoidance,

and adaptation.
“Acceptance” Labor Strategy

Organizations may accept unionization for good reasons. In some
countries, third parties—both labor unions and works councils—may
be well established historically and culturally and well protected
legally. Unions may be the norm in certain industries. Some
organizations may find the costs of fighting unionization efforts to be
too high or too distracting.
“Avoidance” Labor Strategy

Employers may choose to avoid unionization because of the
additional cost of managing a unionized workforce (especially one
with multiple unions), the loss of flexibility in management decisions,
and the increased time required to make and implement strategic
decisions. In some industries or markets, a unionized workforce may
be seen as a competitive disadvantage. An organization seeking to
avoid unionization can decrease the appeal of unions and/or remain
vigilant and active in resisting unionization efforts.
The appeal of unions can be blunted by addressing the major

reasons why employees consider joining unions—by offering
competitive wages and benefits, cultivating trust and mutual respect,
making sure employees are treated fairly and with transparency,
maintaining a safe working environment, and fostering two-way
communication with employees. It is important to communicate why
the organization prefers to remain union-free.
Organizations can also train managers and supervisors to be vigilant

for signs of unionizing activity and to respond quickly to actions,
representing the employer’s interests within the existing labor
statutes.
“Adaptation” Labor Strategy

When a workplace is already unionized, the employer can define the
type of relationship they want with third-party representatives:
confrontational or collaborative. A confrontational relationship—
involving difficult contract bargaining, contention over administration
of agreements, and, if legally possible, seeking to oust or replace the
union—offers an employer the possibility of greater control over
labor decisions. It also means, however, investment of time and
resources in implementing the strategy and increased risk of
operational disruptions.
With a collaborative union relationship, some organizations have

found that unions and works councils help organize their relationship
with employees, especially with large and complex bodies of
employees. By collaborating with and involving unions, employers
may also lower employees’ resistance to necessary changes and
implement change initiatives more easily. A union structure may also
provide an acceptable way to resolve grievances and conflicts.
A more collaborative labor-management relationship is generally

characterized by:
A greater acceptance of labor-management partnerships.

An increased willingness to share power.
More open and candid sharing of information.
Joint decision making on issues of common concern.
“Win-win” bargaining techniques.
Shared responsibility and accountability for results.
HR can help create and promote an organizational perspective that

values positive and productive relations between management and
union representatives. This may mean winning management support
for this approach and educating management about the costs and
benefits of a cooperative relationship. HR can develop policies that
reflect this perspective, work with local HR to implement these
policies, and manage conflicts with local laws and cultural practices.
Employers have a right to conduct their businesses and protect their

assets within the restrictions of labor laws. However, exercising
these rights does not have to necessitate a hostile relationship with
unions in the workplace. Figure 33 presents several possible
strategies for improving the employer-union relationship.
Figure 33: Strategies for Improving Employer-Union

Relations
Strategies for Improving Employer-Union Relations

Strategies for Improving Employer-Union Relations
Comply with applicable Implement joint study groups to

international standards and local solve common problems.
laws governing unionization and Treat union members equitably
other worker rights.
and respectfully.
Comply with local regulations
Demonstrate genuine
regarding informing and involving
appreciation for employees’
workers.
interest and involvement in
Develop fair grievance and workplace issues.
alternative dispute resolution Consult with union leaders to
procedures with built-in appeals
defuse problems before they
mechanisms. These should be
become grievances.
regionally appropriate and
available to all employees,
regardless of union membership.
Global Labor Relations Strategies

The labor relations strategy in a multinational enterprise is more
complex, since labor laws, local cultures, and the characteristics of
workforces may vary in different areas of operation. Organizations
must choose whether to adopt a unified, headquarters-defined
strategy or to allow local operations to develop and pursue individual
labor strategies. Some organizations establish benchmarks in one
location that are then used for negotiating agreements in other
locations.
The organization’s strategy is also shaped by key differences in its

operations and culture, including the following:
The extent to which the enterprise’s production is
integrated among its subsidiaries. Some global enterprises
are structured to be interdependent. For example, a Japanese
electronics manufacturer relies on components (circuit boards,
power supplies, LED displays) that are manufactured by
subsidiaries in other countries. Subassembly and final assembly
are done by separate subsidiaries located regionally. It is to the
enterprise’s benefit to consider the interrelationship of workforce
relations at each subsidiary, because a breakdown in one area
can disrupt the entire production chain. Management may
assume a more centralized strategy.
An enterprise’s cultural attitude toward workforce relations

and experience with labor/trade unions. Some studies have
suggested that national origin can affect the global enterprise’s
default position on working with unions and works councils.
These positions may be on a spectrum of “adversarial” at one
end, “jointness” at the other end, and “arm’s length” in the
middle. The labor relations strategy of a global enterprise
originating in the United States, where an adversarial or arm’s-
length union relationship often prevails, will probably vary
greatly from one originating in a European country, in which
management and HR have more experience with the
participative model of works councils and codetermination. The
U.S. multinational Walmart maintains a nonunion stance as a
corporate policy. However, it has had to adapt to new markets
where unions are the norm, such as China.
The relationship between the originating company and its

subsidiaries. A locally responsive global enterprise may allow
each subsidiary to develop its own strategy, while a
standardized global enterprise may develop a more uniform
industrial relations strategy. For example, imagine an Indian
holding company that has a Thailand subsidiary specializing in
resort property management and a Singaporean subsidiary
specializing in high-tech, sophisticated agricultural commodities
brokering. The first subsidiary deals primarily with service
industry unions, while the second works with a variety of unions
representing more-skilled workers. The two organizations have
different sector profit levels and different labor pool conditions.
The global enterprise may opt, for good reasons, to allow each
subsidiary to craft its own labor strategy. In addition, the maturity
and significance of the subsidiary can affect the relationship. An
organization is more likely to be involved in workforce relations
with a newly acquired or poorly performing subsidiary. It is more
likely to impose its home-country approach to workforce
relations on subsidiaries if the subsidiaries represent a small
part of its revenue.
In the fourth edition of International Human Resource Management,
Dennis Briscoe, Randall Schuler, and Ibraiz Tarique describe seven
different approaches to managing the workforce relationship that
global enterprises may develop based on these differences. Like the
enterprise’s global strategy, the options lie on a continuum between
two points: locally responsive (in this case, hands-off) and
centralized or standardized (in this case, managing local conditions
with headquarters-derived policy). Most global organizations will craft
a global HR strategy for workforce relationships that falls somewhere
between these two positions.
The seven options are:
Hands-off. In this locally responsive strategy, the workforce

relationship is entirely locally managed.
Monitor. Headquarters tracks local management decisions and

demonstrates its interest and concerns, but it leaves decisions
to be made locally.
Guide and advise. Headquarters offers more advice and tries

to apply global policies to local practices, but it still leaves
decisions at the local level.
Strategic planning. The employee relations strategy is
developed with an understanding of variation among workforces
throughout the enterprise. Policies are set globally, but practices
are developed locally. Practices must conform to the global
policies.
Set limits and approve exceptions. Some local adaptations

may be made but only after review and approval by
headquarters HR.
Integration of headquarters and line management in field.

Labor decisions are made jointly.
Manage locally from headquarters. In the centralized or

standardized alternative, local HR staff simply implement,
without change, headquarters-developed HR policies and
practices.
These strategies require different levels of headquarters familiarity

with local labor conditions and practices. HR practitioners who have
global responsibilities should rely on the expertise of labor relations
specialists in the countries in which they operate.
Collective Bargaining
Collective bargaining is the process by which management and
union representatives negotiate the employment conditions for a
particular bargaining unit. Bargaining may follow the recognition of a
union’s right to represent a work unit, or it may be triggered by the
expiration of an existing contract. Bargaining covers items such as
wages, benefits, and working conditions and may include other
matters deemed important by the members. As has been mentioned
previously, bargaining may occur between individual employers and
unions or multi-employer groups and trade union associations. The
process may be centralized at the national level, with government
participation.
The combined factors influencing collective bargaining may be

generally categorized as:
Legal and regulatory factors—government regulations that make

collective bargaining agreements compulsory for employers or
enforceable.
Bargaining precedents—factors during the bargaining process
that led to previous agreements and/or the existing agreement.
Public and employee opinion—public sentiments about the
organization and the union and what employees deem to be
pertinent.
Economic conditions—the state of the local and national
economies.
Figure 34 visualizes how these various factors impact the collective

bargaining process. Collective bargaining subjects refer to topics that
will be addressed in the contract. National labor laws specify which
topics are mandatory, discretionary, or specifically prohibited.
Figure 34: Factors Affecting the Collective Bargaining Process
Contract Negotiation Process

The negotiating process is designed to balance the rights and
interests of employees, the union, and management through a two-
way flow of communication. The negotiating team for collective
bargaining is usually composed of a small group of management and
union officials.
The general process followed is that the union submits a contract

proposal to the employer. The employer then has a certain amount
of time to respond to the proposal and to negotiate its terms. In Chile
if an employer does not respond to the proposal within a certain time
frame, the proposed contract is automatically enacted. In the U.S.
the failure of either side to negotiate in good faith (i.e., actively work
toward agreement) is considered an unfair labor practice.
The goal of contract negotiations is to arrive at a workable contract

that is mutually acceptable to both the union and the organization.
Both parties have a responsibility to establish a contract that will
contribute to an ongoing constructive relationship that fosters
effective resolution of issues. The first contract is generally the most
difficult to negotiate, as the parties work together to develop the
collective bargaining agreement. In subsequent years, they revise
and build upon the contract, attempting to clarify ambiguous issues
and address new issues of interest to the parties.
If the sides cannot agree, outside mediation and arbitration may be

used. In some countries these dispute mechanisms are mandatory.
Mediators and arbitrators may be neutral parties or, in some
countries, government panels or labor tribunes.
Mediation (also known as conciliation) is a method of nonbinding

dispute resolution involving a third party who tries to help the
disputing parties reach a mutually agreeable decision. It is aimed at
keeping labor and management negotiators talking so they can
voluntarily reach a settlement. Mediators have no power to compel
the two parties to reach an agreement. Instead, they seek to find
common ground and persuade the parties that it is in their best
interest to reach an agreement without resorting to a strike.
Arbitration is a negotiated procedure in which labor and

management agree to submit disputes to an impartial third party and
abide by the arbitrator’s decision. The arbitration process is more
informal than court proceedings. As a result, it can usually
concentrate on key issues and resolve disputes faster than litigation.
It is designed to permit uninterrupted operations during the existence
of a contract and to substitute for the historical remedy—a union
strike or an employer lockout.
If negotiations are successful, the result is a contract or collective

bargaining agreement (CBA). The CBA governs the day-to-day
relationship of the employer and the employees in the bargaining
unit for the period of time it specifies. Contract provisions are
enforceable through internal grievance and arbitration procedures,
labor tribunals, or, in some countries, the courts.
HR’s Role in Collective Bargaining

HR professionals play a valuable role in improving the quality of the
contract. Based on their experience and knowledge of relevant
metrics, they can:
Suggest work processes that are most cost-effective and

identify management proposals that may be ineffective in terms
of creating a productive workplace (e.g., job restructuring that
increases stress).
Contribute suggestions based on HR’s understanding of
employee needs. In some cases, nonmonetary concessions can
be as significant to employee groups as wages and benefits.
Analyze contract language to identify potential
misunderstandings or difficulties in administration that could
result in grievances later.
Provide negotiators with data about employee demographics
and payroll and benefits costs that can be used to analyze the
cost implications of proposals and concessions.
Identify unintended consequences of contract provisions so that
they can be more fully considered. For example, an employer’s
offer might not be economically sustainable over the life of the
contract, or it might be too low, encouraging other employers
who are not locked into multiyear contracts to lure employees
away with higher wages once the contract has been approved.
Identify clauses from preceding contracts that may be in conflict
with new employment laws.
Union Contract Administration and

Enforcement
HR is directly involved in contract administration and enforcement,
as the abstractions of the legal document are applied to the
complicated situations that can arise in the workplace. HR does what
it can to make sure that the contract provisions are met. This may
include educating managers and supervisors about new contract
provisions, specific ways in which their actions should reinforce the
contract, and how to proceed if questions or problems arise.
Effective education may prevent many grievances from occurring.
It is also important for HR professionals to develop good working

relationships with union representatives, to the same extent that they
would develop relationships with managers. Good relationships
make communication and conflict resolution easier.
Handling Grievances
A contract almost always includes a formal grievance procedure.
This process provides an orderly way to resolve the inevitable
differences of opinion in regard to the union contract that develop
during the life of the agreement.
Keep in mind that many union grievances arise when contracts have
not addressed issues specifically or when one or both sides have
misunderstood or miscommunicated policies. To avoid grievances of
this sort, both management and union representatives should
evaluate the workplace for potential problems and address these
issues before they become problems, know the labor agreement in
its entirety, including past practices and local memoranda of
understanding, and know the employees and their problems.
Some grievances address possible violations of the terms of the

contract, but many result from perceived unfair treatment of an
employee by management with regard to disciplinary actions,
privileges associated with seniority, or unfair and discriminatory
treatment (e.g., bullying by a supervisor).
The Grievance Process

The employee grievance process involves several steps. Although
the process may vary somewhat from contract to contract and from
country to country, the following represents the general steps.
Immediate supervisor. Employees who feel mistreated or think

that their contract rights have been violated file a grievance with
the immediate supervisor. At this point, the filing of the
grievance may be written or oral; most grievances are written.
The supervisor must attempt to accurately determine the reason
for the grievance and try to solve the problem. Supervisors and
union representatives or stewards can work together to solve
the problem. If the union representative agrees that no valid
grievance has occurred, the process ends.
Next level. If the employee, supervisor, and union

representative cannot solve the problem together, the formal
written grievance proceeds to the next level in the hierarchy—
the intermediate supervisor, department head, or unit manager
and a higher-level union official. To promote free discussion, the
employee with the grievance is usually not present and is
represented by the union. It is, therefore, important for both
sides to fully document their facts and their positions.
Higher-level management. If the grievance is not resolved

within the time period set under the union contract, it usually
goes to the next level, where, on the union side, a member of
the grievance committee or a representative from the union
structure is involved. In some organizations, the complaint can
go only as high as the local manager; in others, it can go all the
way to top organizational officials. If the grievance is not
resolved within the time period set under the union contract, it
usually moves to the final stage.
Third-party determination. If the grievance is still not settled, a

neutral outside arbitrator may be called in to settle the issue. At
this stage, the highest levels of each side are usually
represented. For the employer, this may include the vice
president for HR (or equivalent) and/or legal counsel. For the
union, this may include the local union president, a national
union representative, or legal counsel.
Figure 35 provides some helpful guidelines for employers in handling

grievances.
Figure 35: Guidelines on Handling Grievances
Handling Grievances Do’s Handling Grievances Don’ts
Do investigate and handle each Don’t make arrangements with

case as though it may eventually individual employees that are
result in an arbitration hearing. inconsistent with the labor
Do require the union to identify agreement or that exclude the
participation of a union
specific contract provisions
representative.
allegedly violated.
Handling Grievances Do’s Handling Grievances Don’ts
Do comply with the contractual Don’t hold back the remedy if the
time limits for handling the employer is wrong.
grievance. Don’t admit to the binding effect
Do visit the work area related to of a past practice.
the grievance. Don’t relinquish to the union your
Do determine whether there were rights as a manager.
any witnesses. Don’t settle grievances on the
Do examine the employee’s basis of what is “fair.” (Use the
personnel record. labor agreement as your only
Do fully examine prior grievance standard.)
records. Don’t bargain over items not
Do comply with regulations covered by the contract.
regarding the presence and Don’t give long, written grievance

involvement of union answers.
representatives in meetings with Don’t trade a grievance
employees.
settlement for a grievance
Do treat the union representative withdrawal (or try to make up for a
as your equal. bad decision in one grievance by
Do hold your grievance bending over backward in
another).
discussions privately.
Don’t deny grievances on the
Do fully inform your own
premise that your “hands have
supervisor of grievance matters.
been tied by management.”
Do have at least two management
Don’t agree to informal
representatives present.
amendments in the contract.
Do document all grievance
Don’t establish a pattern of
meetings; take copious notes.
practices that have the effect of
creating a right not specifically
included in the contract.
Works Councils
Key Content
Works councils are permanent bodies composed of

workforce members that represent employees, generally on
a local or organizational level. Their primary purpose is
information and consultation—to receive from employers
and to convey to employees information that might affect
the workforce and the health of the enterprise. Works
councils are not involved in contract negotiation, which is
conducted by unions. The closeness of the relationship
between a works council and a related union can vary by
country. Unions may support the election of certain
members to councils.
Works councils evolved primarily in Germany during the 20th

century. The councils were intended to cooperate with management
to increase efficiency, promote harmony in the workplace, provide a
means of addressing grievances, supervise compensation, promote
safety and health, and help administer welfare programs. They have
become a common feature of the European workplace,
institutionalized by local regulations that require employers of certain
sizes to establish councils. Other countries have works councils as
well, including Argentina, Bangladesh, Japan, Thailand, and South
Africa.
Key Content
There are no works councils in the U.S. because they are

seen as violations of Section 8(a)(2) of the National Labor
Relations Act, which prohibits company-dominated unions.
When carefully managed, employee participation programs
can be used to increase involvement of employees in the
organization’s operations—for example, handling
grievances or recommending safety policies.
The level of involvement in the organization’s affairs and cooperation

with management by the works councils varies by organization and
country. In some cases, works councils may actually participate in
employment-related decisions. On a national level (for example,
Germany), works councils may form constituencies to elect
representatives to national legislatures. Works councils also may be
associated with an entire industry or occupational group.
Works councils might be seen as complementary to unions, barred

from negotiating but empowered to apply contracts at a workplace
level and to contribute to a workplace’s cultural and social life.
Members of a works council are not necessarily union members, and
the relationship between a works council and a union operating in
the same workplace may vary. In one instance a works council may
be an extension of a union presence, while in another workplace the
works council may operate independently of the union. Often,
however, information gathered through the works council is used
during union-employer negotiations. Many unions see works councils
as competitors, a force contributing to the weakening of labor unions.
Works Councils Structures
Key Content
Works councils are distinguished by their composition,

which can include:
Both management and worker representatives.

Only worker representatives who are overseen by a
member of management.
Only worker representatives with no management
oversight.
The number of works council members generally varies with the
number of local employees. These positions are filled through an
election process, and worker representatives typically are afforded
significant employment protections. Employers generally must
advise works councils of proposed management decisions, actively
seek their input, and carefully consider their views before taking any
action. Those in Germany and the Netherlands are required not only
to consult with works councils in this way but also to obtain their
agreement before implementation. In some countries, such as
Germany, works councils also must be kept apprised of the general
conditions, financial status, and future plans of the enterprise.
Codetermination and the Works Council

In some countries, the role of the works council extends beyond
information and consultation. Employees may actually participate in
business decision making.
Key Content
Codetermination is a form of corporate governance that

requires a two-tiered corporate board structure—a typical
management board and a supervisory board—that allows
management and employees to participate in strategic
decision making. Codetermination rights can be extensive
and provide a means for employees to influence
managerial decisions.
Codetermination topics include anything that affects workers, such

as changes in structure, working conditions, employee relations,
working hours, occupational safety and health, HR policies and
practices, and compensation.
There are three models of codetermination:
Dual system. In addition to the typical management board,

there is a supervisory board. Depending on the size of the
employer, as many as half of the supervisory board members
may be workers. Because this supervisory board has the
authority to accept or reject the management board’s decisions,
organizations are essentially prohibited from implementing
workplace changes without employee consent.
Single-tier system. There is only one board of directors, but

employee representatives are included as members.
Mixed system. Employee representatives are included, but they

are only advisors (i.e., in a nonvoting capacity).
HR's Relationship with Works Councils
Because requirements and practices vary from one location to
another, HR professionals must consider the employer’s
responsibilities with respect to works councils in each country in
which the organization operates.
It is important to understand:
Whether a works council is mandated by statute and, if so,

under what circumstances.
The procedures for forming a works council.
The scope of the employer’s obligations with respect to works
councils (e.g., the types of issues about which a works council
must be consulted, whether agreement is required, and the
timing of such consultation in relation to planned
implementation).
As with unions, works councils offer an avenue for addressing

difficult organizational challenges and finding solutions that avoid
workforce disruptions. Organizations should also consider the
potential for engaging with works councils proactively when issues
and business decisions address the future welfare of both the
employer and the employees, such as the need for expansion,
downsizing, transfer, or outsourcing. Works councils can be ways to
develop options, to gather reactions from employee representatives
to plans, and to use their input to adjust solutions and evaluate
outcomes. HR professionals can work toward establishing
collaborative and trusting relationships with works councils that may
be needed in the future.
Governments and Other Third-Party

Labor Groups
Complicating the employment relationship further is the potential
presence of groups beyond the employer and the employees’
elected representatives. For example, there may be:
Employer or industry associations. In some countries,

contracts may be negotiated at a multi-employer level. The
contracts may be at an industry level (e.g., steel manufacturers)
or at a national level. For example, in the trucking and hospitality
industries in the U.S., employers and unions may engage in
industry-wide or regional negotiations on a single contract. In
the construction industry, a general contractor may negotiate a
project labor agreement (PLA) with multiple trade groups. A
PLA requires specific contractors to accept certain conditions in
project contracts, such as paying a fair wage and contributing to
health insurance, pension, and training funds.
National governments and agencies. To a certain extent,
national governments are always a part of the labor relationship
in that they legislate and regulate aspects of the employee
relationship and the employers’ relationship with unions and
works councils. Tripartism—a collaboration of governments,
employers, and unions—is the norm in many countries. During
wars, governments have stepped in to prevent disruption of
critical production (e.g., to prevent coal mining strikes in the U.S.
during World War II). During economic crises, governments may
intervene to protect employees’ social welfare, taking steps to
increase hiring, encourage employers to provide some levels of
employment during retrenchments, or invest in skills
development.
International groups. In response to the global recession

starting in 2008 to 2009, the ILO—with governments,
employers, and employee groups—created a Global Jobs Pact,
which issued recommendations for steps that all parties could
take to meet the economic crisis. Governments could invest in
jobs and provide social protections, while employers could
recommit to ILO labor standards and apply flexible work
arrangements, such as rotating workers into jobs.
Local governments, nongovernmental organizations,
religious institutions, and community groups. These groups
are usually more active at a local level, applying pressure on
social justice issues and helping to support social programs
during economic crises. In the Philippines, the national
government includes such groups as social partners in its efforts
to address employment levels. These organizations may also
provide representatives to national-level task forces and
arbitration groups on employee relations issues.
Organized Labor Actions and
Unfair Labor Practices

representatives.
activities.

Causes of and methods for preventing and addressing strikes,
boycotts, and work stoppages.
Unfair labor practices, according to the ILO.
Organized Labor Actions and Unfair
Labor Practices
The labor relationship is subject to adverse events. Unions may
undertake actions to influence contracts or protest conditions. Both
employers and unions must comply with labor laws that prohibit
certain actions that are called unfair labor practices.
The Leadership and Navigation competency means that an HR
professional must be ready to steer the HR function toward the
strategic goals that senior management has set. But the “leadership”
part of this competency obligates HR professionals to speak up to
make sure that the organization has chosen the best strategic goals
and has avoided the risks that come with management-union
conflict. Consider this example.
A satellite communications firm is approaching renegotiation of the

labor contract with workers who perform highly technical assembly
and testing work.
Senior management is primarily composed of engineers who have

risen through the managerial ranks. They tend to see the union
workers as less-skilled and less-critical participants in producing the
firm’s value. Management appears willing to implement a harsh labor
strategy that the CHRO knows may lead to work stoppages.
The CHRO is attending a strategy session and listens carefully to the

positions of those in the room. Asked what HR will do to implement
the strategy, the CHRO says that HR will, of course, do what it can to
support whatever strategy is decided. However, the CHRO points out
that management’s perception of the value of the union workers is
not accurate. Although they are not engineers, it would not be easy
to replace them. The union will not be as ready to concede as
management assumes. The CHRO recommends developing and
analyzing potential contracts in preparation for contract negotiations
and adopting a more win-win approach.
The CHRO has demonstrated the Leadership and Navigation

competency by showing the courage to challenge management
when intended actions may harm the organization.
Organized Labor Actions
The term industrial actions, from British usage, includes various
forms of collective employee actions (or “concerted activities,” in
U.S. parlance) taken to protest work conditions or employer actions.
The term also includes employer actions taken in response to
employee actions.
Collective employee actions intend to interfere with an employer’s

ability to fulfill its commercial interests. Actions can be undertaken by
unions (or labor groups in the absence of a recognized union) for a
number of reasons:
To call for increased wages and benefits. Tough economic

conditions that increase employee indebtedness, unrealistic
expectations, or anger over discrepancies between
compensation for high-level managers and employees can
intensify union demands in this area.
To call attention to violations of contract terms, unfair treatment,
unfair labor practices, or poor working conditions.
To protest proposed changes in work rules, such as how
promotions or grievances are handled or work schedules are
made.
To protest the way in which workers are identified for retention
or termination during a downsizing.
To pressure an employer to negotiate a contract.
To resist a proposed contract perceived as unfair (perhaps
because it contains “clawback” provisions that will result in
economic loss to employees).
To compete with other unions for the right to represent workers.
Various forms of employee collective industrial actions are listed in

Figure 36.
Figure 36: Examples of Employee Collective Industrial

Actions
Action Description
General strike Work stoppage.
Sit-down strike Refusal by workers to work; also refusal by workers

to leave their workstations, making it impossible for
the employer to use replacement workers.
Sympathy strike Action taken in support of another union that is

striking the employer. Contracts may include
provisions prohibiting sympathy strikes.
Wildcat strike Work stoppages at union contract operations that

have not been sanctioned by the union.
Secondary actionor Attempt by a union to influence an employer by

boycott putting pressure on another employer—for
example, a supplier.
Work-to-rule Situation in which workers slow processes by

performing tasks exactly to specifications or
according to job or task descriptions.
Action Description
Overtime ban Similar to work-to-rule. Employees refuse to work

any overtime, adhering to the hours stipulated in
the contract.
Picketing Positioning of employees at the place of work

targeted for the action for the purpose of protest.
Picketing can be used for similar purposes as
strikes, but there is no work stoppage. In some
cases, picketers may illegally interfere with
commerce at the employer’s site.
The primary form of industrial action taken by employers is the

lockout, during which the employer shuts down operations to prevent
employees from working.
The legality of these actions can vary globally, and the conditions
under which an action may be taken may be precisely regulated. In
some countries strikes may not be allowed as long as a contract is in
force. Certain types of actions may not be allowed at all. Employers
may or may not be able to hire replacement workers.
HR’s Role in Preventing or Mitigating the Effects of Work

Actions
Ideally, HR can help avert work actions through its counsel to
management, communicating the perspective of employees and the
importance of compliance with contracts, and improving the quality
of supervision. Because the tenor of the management-employee
relationship contributes to industrial actions, HR trains managers and
supervisors to avoid bullying and retaliation, to communicate, and to
engage in constructive conflict resolution.
However, organizations must be prepared for industrial actions. HR

works with management and other functions to prepare strategies to
mitigate the effects of a strike. Preparations can involve:
Training managers to identify and report signs of union strike

campaigns and employee/union unfair labor practices.
Organizing and training managers to take the place of workers.
Identifying and arranging for contingent workers if using
replacement workers is legal.
Educating managers and supervisors about what they can and
cannot do, thus helping avoid unfair labor practices.
When a strike occurs, HR must implement contingency plans, deliver

training, and arrange payment to replacement workers. If and when
employees return to work, HR monitors the atmosphere in the
workplace and intervenes to help resolve lingering conflicts
associated with the strike.
Unfair Labor Practices

An unfair labor practice (ULP) is a violation of employee rights as
defined in a country’s labor statutes. In general, these rights relate to
the core principles of the ILO on the right to organize and bargain
collectively. Specifically, however, local labor laws can define
procedures for recognizing a union, conducting a union election, and
the behavior of both management and labor during organizing
campaigns and work actions.
ULPs can be committed by employers and unions, and they can

occur without the presence of a union. For example, interfering with
an employee’s speech about organizing is an employer ULP that
occurs without the presence of a union.
Charges of unfair labor practices are commonly heard by labor

boards, commissions, or tribunals. Employers can be fined or
ordered to negotiate, to refrain from the practices in question, or to
make public admission of wrongful actions. Unions may be ordered
to desist from committing the action.
Figure 37 provides examples of commonly recognized types of ULPs

by employers and employees/unions.
Figure 37: Employer and Employee/Union ULPs
Employer ULPs Employee/Union ULPs

Employer ULPs Employee/Union ULPs
Interfering with an employee’s right Conspiring with employers to

to join a union. This could include discriminate against employees
bribing employees not to vote for or on the basis of union
join a union or eliminating or membership.
threatening to eliminate jobs in Interfering with freedom of
some manner.
speech or coercing or fining
Discriminating among workers employees.
based on union membership, either Failing to respond to member
to discourage or require
complaints.
membership, or based on
Refusing to bargain in good
employee complaints.
faith.
Refusing to bargain with a
Requiring unreasonable or
recognized union or provide
information material to negotiations. discriminatory membership fees.
Refusing to enforce contract Directing prohibited work

provisions. actions.
Controlling or intervening in union

operations.
HR’s Role in Preventing Unfair Labor Practices

HR should make sure that all managers and supervisors understand
guaranteed employee and employer rights, the terms of union
contracts, and the concept of an unfair labor practice. Training can
be provided to illustrate specific speech and behaviors that are
allowed or prohibited by local laws—for example, asking questions
that could be interpreted as spying on union activities or treating
employees in a way that could suggest preferential treatment for
employees who are not members of the union.
Dispute Resolution and Employee
Discipline

Consults managers on how to supervise difficult employees,
handle disruptive behaviors, and respond with the appropriate
level of corrective action.
Participates in or facilitates alternative dispute resolution (ADR)
processes (e.g., arbitration, mediation).
Conducts investigations into employee misconduct and
suggests disciplinary action when necessary.
Oversees employee investigations and discipline.

Approaches to retaliation prevention.
Techniques for disciplinary investigations.
Techniques for grievance and complaint resolution.
Types of alternative dispute resolution (ADR) (e.g. mediation,
arbitration) and their advantages and disadvantages.
Disciplinary procedures and approaches.
Dispute Resolution and Employee
Discipline
Complaints arise frequently in the workplace. When they cannot be
resolved by employees and supervisors or managers, complaints
may be formally lodged, and HR professionals are often called upon
to assist with dispute resolution. This requires skills in
communication and conflict resolution and knowledge of
investigation practices and disciplinary systems. If complaints are
filed outside the organization, it may also require interacting with
third parties, such as lawyers or government agencies.
Because an organization’s HR department is small and often
overburdened, the HR director has supported decentralization of
several tasks. One such task is investigations. If the issue seems
minor, the investigation is handled by a program manager. If the
investigation carries significant possible liability for the organization,
however, the HR director leads it.
In a recent incident, due to workload, the HR director allowed

program management to investigate a claim of racial
hostility/discrimination. The issue seemed clear-cut enough; the
actions either happened or did not. However, what the HR director
did not know is that the program manager had ulterior motives and
the subsequent report to the HR director was not true.
As a result of the program manager’s investigation report, the HR

director supported the termination of what seemed to be an
inappropriate, perhaps racist, employee. However, because the
terminated employee’s unemployment insurance claim was denied,
the employee contacted the HR director. The employee was able to
provide proof that the program manager’s report was false and that
the termination was unfair.
The HR director then launched an investigation and concluded that

the story, as presented by the program manager, was indeed not
true. The terminated employee was offered an opportunity to
reinstate. The program manager who lied was terminated. And HR is
reviewing its investigation policies with the likely outcome of moving
investigations back into the HR office.
Termination is obviously a serious issue for an organization. HR

professionals must demonstrate Ethical Practice and Critical
Evaluation to be fair and objective to all parties.
Workplace Conflict
Workplace conflicts can arise in a variety of forms and for a variety of
reasons. HR may be an indirect participant, acting on behalf of the
organization, or a direct participant, working to resolve disputes
within the function itself.
Employees may bring disputes with other employees to supervisors

or managers for resolution—disputes that may be driven by different
opinions about the work itself or personal differences or offensive
behaviors. Some of these disputes may be successfully resolved by
the supervisor or manager. Some, however, may be escalated to HR
for investigation and action.
Employees may make complaints about employers. Employees may

charge that they are not being treated fairly or that work conditions
are unacceptable. Employers may complain that employees are not
fulfilling the terms of employment or have become disruptive and
potentially harmful to other employees. In a unionized environment,
these disputes are handled according to grievance procedures in the
collective bargaining agreement. In nonunionized environments, HR
is often involved in early responses to the dispute. Unresolved
disputes may become complaints to third parties as employees seek
resolution through litigation or complaints to government agencies.
HR professionals attempt to investigate and resolve these conflicts
by using their Communication and Relationship Management
competencies, their emotional intelligence, and their understanding
of dispute resolution techniques.
Multicultural Aspects of Conflict Resolution

Across cultures, employees value transparency and fairness in
conflict resolution. However, HR practitioners should be aware of the
cultural differences in their organizations and the cultural
misunderstandings or biases that may drive conflicts in a global
organization and complicate the resolution of conflicts.
Cultures differ in their appetites and tolerances for conflict. Members

of some cultures try to avoid direct conflict, while others feel
comfortable with it and use it as a tool to resolve disagreements. In
some cultures employees may be reluctant to express disagreement.
It takes skill to recognize when these differences are interfering with
identifying and resolving conflicts in a mutually satisfying way.
Cultural differences also affect the way in which the existence of

conflict is acknowledged and then resolved. Resolution of a conflict
in some cultures must be done privately, to save the disputants’
dignity or “face.” Cultural rules will also affect the choice of a third-
party judge. In some cultures, a well-respected elder with ties to both
sides is most effective, while in other cultures an effective mediator
must be perceived as powerful and assertive.
Dispute Resolution
Note first that conflict resolution is a high-risk activity, and the
following information is not intended to make HR professionals
expert in this skill. Practitioners are advised to seek opportunities to
deepen their understanding of conflict management techniques and
to practice them in low-risk settings.
The first stage of dispute resolution is usually an informal meeting of

the employee or employees with their immediate manager. It is
important that the manager listen carefully and ask questions so that
the manager fully understands the issue. This is necessary to
resolve the dispute, but it also signals to the employee that the
complaint is being taken seriously. If a resolution can be reached,
the manager clarifies key points and gains the employee’s
agreement. If the matter cannot be resolved immediately, the
manager explains the next steps—for example, plans to investigate
the complaint further—and commits to meeting again.
If the dispute cannot be resolved at this first level, it is escalated to a

more formal meeting, perhaps with a higher level of management or
an internal dispute resolution body such as a panel of peers. The
meeting should be private and confidential. It focuses on presenting
and confirming facts (perhaps through witnesses). The meeting may
conclude with a resolution or with a commitment to further
investigation or additional dispute resolution processes.
All those involved commit to:
Listening.
Managing their own emotions.
Agreeing on goals.
Focusing on issues and facts rather than personalities.
Considering all perspectives.
Engaging in problem solving and exploring alternative solutions
together.
Reaching agreement on next steps.
The final step in this process is to communicate to the employee the

results of any investigation and management’s decision. If the
employee is not satisfied with the outcome, the dispute may be
escalated to the next level of management or to dispute resolution by
a neutral third party.
Workplace Retaliation
Retaliation in the workplace occurs when an employer, employment
agency, or labor organization takes an adverse action against an
employee—often as a result of a conflict or complaint. In some
cases, retaliation may be a form of unlawful discrimination. Good
follow-through in managing conflicts and complaints involves taking
steps to prevent or reduce the likelihood of a retaliation charge or
lawsuit.
To prevent retaliation, employers should take the following steps:
Adopt and disseminate a strong antiretaliation policy. While

this policy can be referenced in the organization’s
antidiscrimination and antiharassment policies, a separate
antiretaliation policy may be more effective. It should make clear
that the organization will not tolerate retaliatory conduct,
including such conduct based on an employee’s opposition to
job discrimination or harassment or participation in
discrimination complaint proceedings.
Inform employees about the process for reporting alleged

retaliation. The organization’s antiretaliation policy should state
to whom employees report retaliation. For example, employees
could be instructed to go to anyone in their chain of command or
the organization’s HR office.
Train managers on retaliation. Individuals accused of
discrimination or other unlawful behavior may lash out at the
accuser or witnesses. Managers should be trained on
acceptable and unacceptable responses to protected activity
under the antidiscrimination laws.
Remind supervisors of the organization’s policy. Make sure

that supervisors understand the organization’s policy prohibiting
retaliation against complainants or witnesses. Inform
supervisors that they will be subject to disciplinary action if they
retaliate against individuals who make a complaint against them
or who provide information related to a complaint.
Monitor the treatment of employees. Monitor the treatment of

employees who have made complaints or who have provided
information related to complaints to ensure that they are not
subjected to retaliation. Carefully scrutinize any proposed
adverse action against a complainant or witness to ensure that it
is based on a legitimate and not retaliatory reason.
Investigate allegations and take corrective action if

necessary. Investigate allegations of retaliation and take prompt
corrective action when retaliation occurs. Retaliation should be
stopped even if it is not significant enough to violate federal or
local law to prevent it from escalating to those levels.
Conducting Investigations
HR may be responsible for conducting investigations of employee
complaints that may result in discipline or discharge, or HR may be
responsible for making sure that investigations are fair, thorough,
and culturally appropriate. To conduct effective investigations, HR
professionals should consider the steps described in Figure 38.
Figure 38: Conducting an Investigation
Step Action
1 Ensure confidentiality. The employer should explain to those involved in the

complaint that all information will be kept confidential to the extent possible in
an investigation.
2 Provide protection. Provide interim protection against continued harassment

or retaliation. This may require voluntary changes of schedule, leaves, or
transfers.
3 Select the investigator. This individual should be able to work objectively and
should have experience in investigation and knowledge of the law in this area.
The investigator should communicate well, be observant and discreet, and
pay attention to details. Investigators may be internal or external to the
organization. A team with diverse skills and background may be used if their
activities are well coordinated.
4 Create a plan. Develop a plan for gathering evidence and conducting

interviews.
5 Develop interview questions. Questions should be designed to encourage

communication and focus on critical points.
Step Action
6 Conduct interviews. The investigator should never offer opinions and should
maintain objectivity. Observations should be recorded. Follow-up questions
will be important in gathering evidence.
7 Make a decision. After a thorough gathering of evidence, the investigator

recommends action based on the evidence and the organization’s policies and
processes.
8 Close the investigation. Communicate the decision to the complainant and

the accused. Make sure that the complainant feels comfortable about
returning to work. Take necessary steps, which may include correcting the
behavior and making sure that it does not recur, providing damages to the
complainant if appropriate, and changing policies and training as needed to
prevent recurrence.
9 Develop written summary of investigation results. The report should

document both what investigatory actions were taken and what information
was collected. Relevant policies should be cited. Conclusions should be
described as well as employer actions taken as a result of the investigation.
The effectiveness of investigations may help protect the organization

from costly employee litigation or actions by local governments but
also contributes to a more positive workplace and a stronger
employee brand.
Third-Party or Alternative Dispute Resolution

Third-party resolution, also referred to as alternative dispute
resolution (ADR) in some countries, uses an intermediary to create
solutions and dispel conflict. This method can have varying degrees
of neutrality and formality as well as complexity. In some Asian
cultures, an intermediary may be chosen who knows both parties
well, can hear both sides, and can gain agreement on a solution,
while in other cultures the intermediary is not familiar with either
party.
The simplest forms of ADR could include an open-door policy (in

which a superior helps resolve a conflict without potential
repercussions for the employee), a panel of trusted and respected
superiors, or a panel of peers. An ombudsperson system can help
start the process: A designated person gathers evidence and brings
the complaint to management for action. More complex processes
are formal mediation, which uses an outside expert in negotiation to
help sides find common ground, and arbitration, in which both sides
agree to abide by the decision of an arbitrator.
Figure 39 lists the range of ADR options that are available to

organizations.
Figure 39: Forms of ADR
ADR Option Description
Open-door Encourages employees to meet with an immediate

policy supervisor or manager to discuss workplace problems; in
some environments, it allows employees to approach
anyone in the chain of command. An open-door policy
might be seen as preemptive or preventive ADR.
Ombudsperson Designates a neutral third party (from either inside or

outside the organization) to investigate employee
complaints confidentially and help mediate disputes. The
ombudsperson may draw an opinion and may bring the
dispute before management but is usually not
empowered to settle grievances. The ombudsperson may
advance unresolved disputes to other forms of ADR.
Single Identifies a specific individual chosen by senior

designated management to conduct investigations and dispute
officer resolution. The credibility of this individual may depend
on the credibility of management.
Chosen officer Permits an employee to select an arbitrator from a group

of individuals. This allows employees to feel some control
over their futures.
Peer review Establishes a panel of employees (or employees and

managers) trained to work together to hear and resolve
employee complaints. The panel may be led by an HR
professional. It may not change organization policy but
sometimes may recommend changes to policy. Peer
review is sometimes limited to suspensions and
discharges.
Mediation* Uses a neutral third person trained in mediation

techniques to help both sides assess the strengths and
weaknesses of their positions. The goal is to negotiate a
mutually acceptable, voluntary settlement. The mediator
acts more as a facilitator of agreement than as a judge
making a decision. A settlement cannot be imposed on
either side.
Arbitration* Submits disputes to one or more impartial persons who

listen to both sides and make a final determination.
Arbitration may be binding (parties agree to be bound by
the arbitrator’s decision) or nonbinding (parties may seek
other means of resolution, including litigation).
*Some employers require that employees agree in writing to using mediation

or arbitration as a condition of employment, before the need for ADR arises.
Not all of the ADR options listed are legal or culturally acceptable in
every country. It may be helpful in some instances to work with legal
counsel and local experts to develop dispute resolution policies.
Key Content
HR practitioners should remember that methods of dispute

resolution (such as formal grievance procedures) may be
defined in collective bargaining agreements. In these
cases, HR, managers, and supervisors must apply the
grievance process as it is defined in the labor contract.
Agency Complaints and Litigation

In some cases, employee and union complaints may be made to
governmental or statutory agencies, and internal resolution will no
longer be an option for the organization. The external body will study
the evidence presented and render binding legal decisions. This
possible course of action underscores the need for robust internal
conflict reporting and resolution systems that offer an alternative to
external resolutions.
A survey by attorneys for the global law firm Proskauer Rose LLP
studied external dispute resolution in seven countries (Brazil, China,
France, Germany, South Africa, Spain, and the U.K.) and found both
similarities and differences. Generally, the process begins with
conciliation (generally through mediation) and proceeds to litigation if
necessary. Conciliation efforts may continue during litigation.
Specialized employment courts are often used, although some
issues may be forwarded to civil courts. Country laws may tend to
give an advantage to one party (employer or employee). Employers
may be required to produce complaint-related material. If they are
found responsible, employers rarely have to pay punitive damages,
but they may have to rehire an employee and pay back wages to the
date of termination.
Depending on the organization and other legal or cultural factors,

HR’s role in responding to complaints and litigation may be more
active or passive. HR may play a lead role in resolving issues such
as representing the company in mediation or grievances, or they
may influence or decide resolution strategies and settlement
activities. Alternatively, HR may be asked to play a more passive role
—for example, by providing records and access to witnesses.
HR practitioners need to work closely with their organization’s
leaders and perhaps legal counsel before issues arise so that they
understand the complaint process, the organization’s obligations and
rights, and what actions HR should take as soon as a complaint has
been made. Responses can vary depending on local laws and
practices.
Disciplining Employees
Disciplinary action may target violations of the organization’s values
(examples include sexual harassment, discrimination, or threatening
behavior) but also violations of local norms and practices that
threaten the harmony of the workplace. The word “discipline” comes
from the Latin word “disciplina,” which originally meant “instruction”
or “knowledge” rather than “punishment.” The emphasis in discipline
may be seen then as corrective rather than punitive—focused on
changing behavior rather than simply punishing it. However,
employees must be clear about how they have failed to conform to
the rules, why the rules are meaningful, what behavior will be
expected in the future, and what consequences will occur if they
repeat the behavior.
HR must be aware of certain workplace behaviors that are protected

from disciplinary action by local law and make sure that managers
and supervisors are aware of these exceptions. For example, many
occupational health and safety laws specify that employees may not
be disciplined for refusing to work under unsafe conditions or for
reporting these conditions—referred to as whistleblowing.
Whistleblowing may be seen as disloyalty meriting discharge in
some cultures, but in some countries whistleblowers are protected
against dismissal that is directly related to the whistleblowing activity.
Disciplinary systems in global organizations must produce prompt,

focused, and consistent discipline that is delivered in a manner that
is legally compliant and culturally sensitive. Few employers enjoy
potentially confrontational situations, and, in certain cultures,
managers may prefer to avoid these conflicts entirely. However,
managers and supervisors must remember that:
Infractions such as tardiness and absenteeism or disrespectful

behavior to superiors and coworkers damage the work
environment for all employees and harm the employer brand
and workplace productivity.
Failure to apply rules consistently to all employees may be
grounds for a legal finding of unjust dismissal and trigger
financial penalties. It will also undermine perceptions of the
employer’s fairness and employees’ trust.
Lack of consistency in discipline will become quickly apparent in
a multinational organization with its global teams and assignees.
Whether or not employees have defined legal rights guaranteed by a

union contract, organizations should treat all their employees
equitably and fairly. Disciplinary procedures should ensure that
employees have the opportunity to explain and defend their actions
against charges of violation or misconduct. It is a good business
practice for an employer to do the following:
Produce persuasive evidence of the employee’s culpability or

negligence.
Give the employee a fair opportunity to present his or her side of
the story.
Determine a penalty appropriate for the given offense.
Impose discipline that is consistent with the treatment that
others have received for similar infractions.
Incorporate HR review of all material/serious disciplinary actions
to make sure that discipline is consistent with similar historical
cases and that it does not violate union contracts, employment
or other laws, or cultural norms.
Preventing Disciplinary Situations

The goal in disciplining employees is to avoid having to discipline
employees in the first place. It makes more sense to shape behavior
in the desired manner from the beginning and thus minimize the
need for disciplinary action. The organization can take preventive
measures such as the following:
Review codes of conduct before implementing them. HR

may be able to identify obstacles to compliance and adjust the
work environment or the code/expectations in a proactive
manner. This is especially important when applying a
headquarters code to global operations.
Set clear expectations. Employees and managers need to

have the same expectations. Job descriptions need to contain
enough detail so that the employee knows what he or she is
supposed to do and the level at which he or she needs to
perform.
Behave consistently. Actions and decisions should be based

on policies, procedures, and work rules. These may be written
or expressed in other ways—for example, through management
example or training. Managers and supervisors can review
records of similar situations in the past.
Establish a climate of communication. Establishing and
supporting an ongoing climate of two-way communication
between employee and supervisor is critical. Sometimes
communication can lead to solutions. For example, a manager
may learn that a repeatedly tardy employee has unusually
heavy family obligations.
Maintain an open-door policy. Bottom-to-top communication

can be further enhanced through an open-door policy.
Again, managers should be aware that cultural differences will affect

the degree to which employees seek communication with superiors.
In addition, employment law may influence practices. In the U.S., for

example, because of the employment at-will principle, managers and
supervisors may be encouraged to use discretion (and consistent
treatment) rather than rely on a highly specific and written policy.
Policies dictating that all infractions will be dealt with in an identical
manner could create the appearance of an implied contract and
constitute an exception to employment at-will. In other countries,
past practices may affect future agreements.
Providing Due Process

A disciplinary action is intended to protect the organization’s
resources from risks posed by an employee’s actions—which can be
lost productivity, low quality of products or services, higher
equipment costs, and negative impacts on other employees—but to
do so in a way that provides due process to the employee being
disciplined.
Providing due process is an issue of justice and consistency (and is

therefore affected by the organization’s culture), but it may also be a
legal issue. Failure to provide due process in any termination that
does not involve a summary offense can be used in legal complaints
by employees who charge that they have been unjustly terminated.
(A summary offense is not preceded by any of the usual warning
steps in the discipline process. If the employee is found, after
investigation and hearing, to have committed the offense, the
employee is subject to immediate termination or sanction.)
Figure 40 lists seven basic tests often used in judicial hearings to

determine if an employee has been wrongfully disciplined or
terminated.
Figure 40: Providing Due Process in Employee Discipline
Tests of Due Process in Disciplining Employees

Tests of Due Process in Disciplining Employees
An employee is informed of the The employee has a right to

employer’s expectations and the question the evidence and defend
process and consequences himself or herself.
attached to failure to meet those The employee has a right to appeal
expectations.
the disciplinary decision.
The disciplinary actions are
A constructive discipline process is
consistent and predictable.
used.
The employer’s decision is
The employee is considered as an
based on factual evidence.
individual.
Constructive Discipline
The type and severity of disciplinary action depend on the type and
frequency of the offense. Some actions merit immediate dismissal.
For example, if an employee were to threaten a supervisor physically
or intimidate the supervisor with a weapon, the employee would
most likely be immediately suspended and possibly terminated,
pending investigation. Other actions call for constructive discipline.
Constructive discipline (also called progressive discipline) is a

form of corrective action that implements increasingly severe
penalties. It may involve punishment, but the punishment is intended
to shape behavior rather than to inflict economic, psychological, or
social pain. Constructive discipline applies B. F. Skinner’s
reinforcement theory of human behavior. An employer can provide
Positive punishment or an added requirement—e.g., an
employee may be required to complete a performance
improvement plan or attend counseling for anger management.
Negative punishment or the removal of a valued stimulus—e.g.,
withholding a promotion or training opportunity, imposing a
suspension without pay.
The choice of punishment must be based on the incident and its

impact on the organization and other employees.
There is another Skinnerian technique called extinction—eliminating

a behavior by never rewarding it. In a workplace, ignoring a behavior
is not a recommended solution to changing problematic conduct. It
exposes an organization to significant ethical and legal risks.
In some countries, employers may be legally obligated to use

constructive discipline, and employees who can show that their
treatment did not conform to the employer’s policy, union
agreements, and/or legal requirements for termination may be
entitled to some form of redress (e.g., compensation, reversal of
punishments imposed by the employer).
However, constructive discipline offers benefits beyond legal

compliance. It can help defend the employer against costly civil suits
charging unfair and capricious behavior. It can also give employees
who offer value to the organization a second chance to align their
behavior with the organization’s expectations. In this case, both the
employer and the employee win.
Constructive Discipline Process

The constructive disciplinary action generally begins with the least
severe response and moves to a more severe response. Systems
may vary, however, in the number of steps or chances the employee
receives, the use of written or verbal warnings (written
documentation is valued in litigious cultures), and the time frame
used to calculate the number of repeated infractions. For example,
some organizations will set a time limit for a repeated infraction. If
the employee does not commit an infraction again within this time
period, the process is considered ended. Some systems count only a
repetition of the same infraction, while others may add any infraction
against work rules to the disciplinary situation. Systems may also
include some mechanism for employee appeal—for example,
through a panel of peers.
In an environment that does not legally stipulate a set procedure for

discipline, the typical sequence of constructive disciplinary actions is
as follows:
1. Verbal counseling, problem-solving, and open dialogue.
The mildest type of disciplinary action can increase
understanding among everyone involved, reduce workplace
tension, and open up communication. It is advisable to have the
discussion as soon as possible after becoming aware of the
problem. The goal is to resolve the problem before it worsens.
2. First formal warning. An official, formal warning should first be

made—orally or in writing, according to local business practices
and legal requirements. Managers should set clear expectations
for the employee’s behavior. Discussions should be held in
private. A public reprimand, especially in certain cultures,
embarrasses the employee and his or her coworkers. The
manager often loses the trust and respect of all who observe the
public reprimand. Managers need to be specific about the
performance issue and what needs to be done to correct it.
3. Second warning. If the employee fails to correct the

problematic behavior or commits another infraction, another
warning may be issued. This is optional; some systems do not
include a second warning. If the first warning was oral, the
second warning may be in writing to document the disciplinary
process. Both the problem and the needed correction should be
described in specific, objective terms. The tone should be
professional. If warranted, an employee may be put on
probation. A copy of this written warning with the employee’s
signature should be kept in the personnel files.
4. Final warning. The final written warning should include a

deadline for improvement and time off, if warranted. Disciplinary
time off or suspension may be with or without pay. (Note that
local law and collective bargaining agreements may restrict
employers’ disciplinary options.) This final written warning
should clearly state that continuation of the documented issue(s)
will lead to termination. The employee should sign a form
acknowledging that she or he has read and understands the
terms of the written warning (even if she or he does not agree
with them).
5. Discharge or termination. Discharge is the last resort, used for

repeated occurrences or severe violations.
If the discipline process has been effective and the employee has
changed the problematic behavior, managers should review the
situation several months later and check that the improvement has
continued and that there has been no retaliation of management
against the employee or the employee against other employees. The
matter should be checked again after another few months. Only at
that point can the matter be considered truly resolved.
Terminating Employment for Disciplinary Reasons

Termination has serious consequences for the employee but also for
the organization. It can disrupt workplace harmony and damage
engagement and productivity. It can also—even when handled well
—lead to costly litigation. However, avoiding termination can
introduce the same risks. This is a situation then that requires careful
thought and judgment.
Using the advice in Figure 41 can help HR professionals implement

termination decisions more effectively.
Figure 41: Terminating Employment for Discipline Reasons
Terminating Employment for Discipline Reasons

Terminating Employment for Discipline Reasons
Never summarily discharge. It is Always conduct a “final filter”

prudent for an employer to never review. Review the investigator’s
terminate on the spot even if the findings and recommendations to
employee has seemingly made a determine if they are complete,
dischargeable offense. First accurate, etc., before making a
complete a thorough and objective final decision. Make sure that
investigation. Depending upon the recommendations are consistent
seriousness of the investigation, with previous similar situations.
the employee may be “suspended Pinpoint the basis of the
subject to discharge pending
discharge. The discharge
further investigation.”
reason(s) must be carefully
Make sure your investigation is identified and articulated. Most
thorough, complete, and well employers orally communicate
documented. The employee’s this information and then
supervisor and department document it in writing.
manager and/or human resources Whenever possible, inform the
staff are normally involved. Collect
employee in person of the
evidence on both sides.
decision to terminate and the
Conduct employee interviews. reason. An organization should
During interviews with the have a clear policy on who makes
employee, the approach should the decision to terminate and how
be investigative, not adversarial or an employee is informed of the
accusatory. decision. Supervisors should
Do not delay. Investigations consult with HR about any
potential termination. It is
should begin as soon as possible,
advisable that the supervisor’s
be conducted deliberately but with
manager approve the termination.
dispatch, and the results
communicated to the employee as Be alert to possible reactions.
soon as possible. Plan for possible employee
reactions, such as violence,
vandalism, or theft.
HR's Role in the Disciplinary Process

HR must ensure that policies on discipline are legally compliant,
defensible, and culturally sensitive. In addition, HR professionals can
take steps to ensure that employees understand work rules and
expectations and that managers and supervisors are properly trained
to deliver discipline in a manner that is organizationally and
individually effective.
To fulfill this responsibility, HR can:
Ensure that the organization’s code of conduct reflects the

organization’s values and complies with applicable laws and that
the code is publicized adequately throughout the organization.
Involve local HR in identifying local issues to be addressed in
the code because of local laws or customs.
Ensure training of all managers and supervisors—the key
players in ensuring effective, appropriate, fair, and consistent
discipline.
Monitor compliance with policy and local practices.
Functional Area #10: Technology
Management
Technology Management involves the use of existing, new,

and emerging technologies to support the HR function, and
the development and implementation of policies and
procedures governing the use of technologies in the
workplace.
Implements and uses technology solutions that support or
facilitate delivery of effective HR services and storage of critical
employee data.
Implements HR information systems (HRIS) that integrate with
and complement other enterprise information systems.
Develops and implements organizational standards and policies
for maintaining confidentiality of employee data.
Uses technologies in a manner that protects workforce data.
Provides guidance to stakeholders on effective standards and
policies for the use of technologies in the workplace (e.g., social
media, corporate and personal e-mail, internet messaging).
Coordinates and manages vendors implementing HR
technology solutions.
Uses technologies that collect, access, and analyze data and
information, in order to understand business challenges and
recommend evidence-based solutions.

Evaluates and implements technology solutions that support the
achievement of HR’s strategic direction, vision, and goals.
Evaluates and selects vendors to provide HR technology
solutions.
Designs and implements technology systems that optimize and
integrate HR functional areas.
Develops and implements technology-driven approaches to self-
service that enable managers and employees to perform basic
people-related transactions (e.g., scheduling, timekeeping,
compensation administration, benefit enrollment, information
changes).
Technology Management
Technology makes it easier for HR professionals to work productively
and rationally—to gather, organize, and share information and to use
that data to detect patterns and causes and make more informed,
evidence-based decisions.
Managing HR technology is a good application for the goals of risk

management—to maximize opportunities for positive outcomes and
to minimize the chances for negative outcomes. The technology
purchasing process can improve HR productivity and services, but
only if it is planned and managed well. Deployed technology, such as
employee and manager self-service and mobile computing, can
increase the organization’s productivity and enable HR
recommendations to management that demonstrate HR’s value to
the organization. However, technology also creates vulnerabilities as
it gathers, stores, and transmits data. Employee data privacy can be
compromised, and the organization’s information and processes can
be exposed to unauthorized access, tampering, and theft.
HR professionals are not expected to become IT experts, but they

must know enough to work with IT to integrate and support HR
information systems (HRIS), to take advantage of labor-saving
workplace technology (e.g., automated messaging, project
management or presentation software), and to develop policies that
protect data belonging to the employee and to the organization.
HR and Technology

employee data.
Implements HR information systems (HRIS) that integrate with
and complement other enterprise information systems.
Uses technologies that collect, access, and analyze data and
information, in order to understand business challenges and
recommend evidence-based solutions.
Designs and implements technology systems that optimize and
integrate HR functional areas.
Develops and implements technology-driven approaches to self-
service that enable managers and employees to perform basic
people-related transactions (e.g., scheduling, timekeeping,
compensation administration, benefit enrollment, information
changes).

Approaches to electronic self-service for basic HR and people
management functions (e.g., scheduling, timekeeping, benefit
enrollment).
Data and information management (e.g., data integrity,
confidentiality, security, disclosure).
HRIS capabilities and use.
Software for recruiting and applicant tracking.
HR and Technology
HR professionals can benefit from technologies such as human
resource information systems (HRIS) in many areas of their work.
Understanding a few basic concepts about information systems can
help HR professionals see opportunities and anticipate technological
issues.
The role of HR is to find ways to translate the organization’s strategic
vision into action targeted at achieving goals. The HR practitioner in
this example combines business and competitor knowledge
(Business Acumen), technological expertise, and leadership skills
(Leadership and Navigation) to shift perceptions about the
opportunities provided by social media.
Due to a retirement, an organization has its first new chief executive

officer in 37 years. The new female CEO was promoted from within
and wants to jump-start her tenure and legacy with an aggressive
social media strategy. In particular, she wants the organization to
connect with an employee and customer demographic that has been
elusive: Millennials. As part of this plan, the CEO hires a new tech-
savvy practitioner to be the senior vice president (SVP) of HR and
sets an aggressive KPI to recruit no less than 75% of all new job
applicants using only social media.
To date, the organization has had no direct social media presence.

The organization’s legal and IT departments had convinced the
leadership team that there were too many risks associated with
using social media. As a result, the organization’s policy has been to
prohibit all employees from using or accessing social media while at
work. The new HR SVP quickly realizes that until the organization’s
leadership team understands the current online candidate
experience benchmarked against that of industry peers, they will not
be able to appreciate the lost business opportunity.
The HR SVP creates a workshop for the executive committee that

goes through, as a group, step-by-step, the actual online candidate
experience of four benchmarked organizations, plus their own. The
executives are also shown a public website that compiles data and
ranks organizations (including theirs) as employers of choice based
upon information submitted by current and former employees. Lastly,
the HR SVP presents a summary of information sourced from the
other organizations’ annual reports, which includes estimates of their
employee and customer demographics and direct references to their
successes or challenges associated with using social media.
By tangibly demonstrating a real-life candidate experience using the
social media interface of competitors, the new SVP of HR is able to
show the executive team what a successful social media experience
is, the risks associated with blocking employees’ social media
access, and the risks associated with not proactively utilizing social
media.
Big Data and HR
The term “big data” came into use at the end of the 20th century to
describe the explosion of data that could be captured and stored as
the result of computing and communication advances. The era of big
data has impelled HR professionals to become more knowledgeable
about and better users of technology.
Three features of big data have changed technology requirements

for organizations.
Volume. Datasets have grown so large that new tools are
required to store, access, and analyze them. Storage using
cloud computing services—in which data is saved to remote
servers that are connected through the Internet—has become a
popular way to manage increasing amounts of data.
Velocity. Data can flow into a system so quickly that its currency
becomes an issue. Data analysis now requires real-time or
almost real-time information. Data must be updated frequently
or continuously throughout all points in the system.
Variety. Data is not only numbers now. It may be still images,
videos, or audio recordings. It may be imported from social
media, mobile phones, or sensors (e.g., wearable technology
such as badges). Systems must be capable of taking in these
diverse forms and integrating them for storage and access.
Big data makes it more possible to see patterns and trends, to create
models that isolate possible causes and predict outcomes. Reliable,
current, and analyzable data helps HR professionals to make
decisions based on facts or evidence and to objectively measure the
effectiveness of their actions.
To capitalize on the promise of big data, HR professionals must

gather the right data at the right intervals. Systems must be capable
of taking in and refreshing diverse forms of information, and they
must be scalable—capable of growing in capacity with greater
efficiency. Systems must offer various analytical tools, because the
value of data lies not in the size of the database but in the quality of
its analysis. For example, employee profiles can be analyzed to
correlate performance level and tenure with different variables, such
as level and type of education, location, or personality assessments.
The findings can be used to detect problems (e.g., a sudden
increase in turnover in one location), to predict surpluses and deficits
in workforce needs (both numbers and competencies), or to improve
candidate selection criteria.
Key Content
According to Alec Levenson in “The Promise of Big Data for

HR,” HR professionals need to expand and improve what
they know about their organizations and business
environments, and he identifies three ways big data can
help:
Collecting new data. New data collection about

when, where, and how employees do their jobs to
provide business process insights, reduce errors, and
increase efficiencies.
Using existing data more effectively. To better
understand employee engagement and motivation and
why employees do what they do.
Better strategic analysis. Mapping how information
flows in organizations and the relationships that
people rely on to do their work.
Key Issues in Acquiring Technology

In some instances, IT departments will take the lead in providing
technology that meets the organization’s standards, but often HR will
work with IT experts to select technology that meets their needs. In
addition, HR professionals may want to add tools that increase their
productivity—tools that support mobility and collaboration. HR
professionals should be aware of basic information system
terminology and key issues that affect the choice of technology and
the ability to use it successfully.
Information System Components

An information system (IS) can be defined simply as a way to
collect, organize, store, analyze, and share data. Understanding the
components of information systems can make HR departments
better purchasers of technology. It can also help HR professionals
communicate their needs to the IT function.
Figure 42 shows the basic components of information systems.
Figure 42: Basic Components of Information Systems
The presentation tier is the user interface with the system, the
point at which the user can enter requests and receive
responses. The interface may be a traditional computer monitor
or a mobile device. It should incorporate a level of security to
control access. It should be adaptable to users with different
physical abilities (e.g., sight, hearing, physical movement).
The logic tier (or business tier) is composed of system software

and application software that enable operations. System
software includes the operating system, which runs the interface
with the presentation tier (or user), moves data back and forth
between the data tier and software, manages communication
with hardware components (e.g., video cards, displays,
printers), and controls system resources. Application software
offers specific functionality (e.g., project management software
that includes budgeting and scheduling tools); it must be
customized to communicate with the system software.
Application software may be located on the computer’s hard
drive or on-premises server. It may also be located on a public
network—the Internet—and accessed via the cloud. The most
effective software uses easy-to-interpret graphic displays and
interface techniques such as drag-and-drop and click-and-paste.
HR professionals should aim at becoming adept in using the
many applications that can make their jobs easier—from
standard word processing, spreadsheet, graphics and
presentations, e-mail, and task management programs to voice
and graphic recognition.
The data tier stores the information that will be used by the
application tier to respond to user queries. Data can be stored
on local drives, removable devices, and servers. The servers
may be on-premises or remote, accessed over special private
lines or over the Internet/cloud. One of the challenges in
designing information systems is minimizing the time
applications must spend waiting for responses to data requests.
Another challenge is the currency of the information in the
system. This depends on how frequently data is updated—
whether it is done in batches (usually at low-traffic or low-use
times) or continuously. A continuously updated system is
desirable but can run the risk of being frustratingly slow for
users.
The communications tier enables sharing of data and

applications by networking a computer (or mobile device) with
other computers or servers. Networks can be private—e.g., local
area networks, privately operated clouds, or virtual private
networks (VPNs). VPNs can be used to extend secure and
private local networks to remote users by means of public
networks. This allows an employee to work remotely on a
supported digital device. Public networks are created via the
Internet/cloud.
Integration
Integration refers to the extent to which the users in a system can
share the same data. Enterprise resource planning (ERP) systems
are designed to allow the different parts of an organization to access
the same data and perform more efficiently. For example, operations
can see sales forecasts and orders and schedule work, logistics
departments can visualize the progress of orders, and customer
relationship management teams can access customer histories,
profiles, and current order information. The ERP vendor guarantees
integration among its products. In other words, the payroll application
can communicate with the centralized database.
Over time ERP products or suites have incorporated more

organizational functions, including HR. An entire organization may
select an ERP that includes an HR information system (HRIS)—a
type of technology that supports HR functions and enables HR to
gather, store, maintain, retrieve, revise, analyze, and report HR data.
Some HR users may find ERP solutions too limited, however. The
applications are designed for a generalized user and may not serve
unique situations or satisfy user preferences. For these users, there
are a host of HR technology products, called “best of breed” (BOB)
systems. However, these products will be able to communicate with
the organization’s database with only varying degrees of success.
(And claims of compatibility should not be accepted without
demonstration.) This could mean having to manually add relevant
organizational data to the system’s database, which consumes
resources and can introduce errors. The vendor or the organization’s
own IT function could also create a unique software bridge to the
database, but this is also resource-intensive.
In addition, individual HR departments or professionals may find

general productivity applications (not specifically designed for HR)
that they would like to integrate with their work environments. Again,
these products’ compatibility with common ERP or BOB applications
varies, and again IT may be called upon to help implement and
support these applications.
In the end, an organization may have an ERP, the HR function may

have a BOB system, and individual departments may have
purchased specific applications for their own use. Achieving security,
consistency, control, and integration becomes even more
challenging. This is one of the reason’s HR needs to develop a
collaborative relationship with the organization’s IT function. It is in
the interests of both functions to assess the benefits and risks of
technology purchases.
Scalability
Big data and increased automation and self-service capabilities have
created an issue of scalability—how to increase the amount of data
stored without increasing processing time and how to manage
capacity. Minimizing processing time is a technical design challenge;
increasing capacity is an economic challenge. It is difficult to build
capacity for future needs without creating waste in current practices.
This has been the appeal of cloud computing. The service subscriber
pays only for the amount of memory, processing time, or bandwidth
that it uses. The service manages and maintains the hardware and
guarantees its security.
The cloud offers flexibility and cost savings. It is the simplest way for
mobile users to access the organization’s data, and it saves the
organization the considerable cost of purchasing servers and
creating data centers or server rooms.The economic advantages of
cloud computing must be weighed, however, against its risks. Is a
cloud storage service provider equipped to prevent the loss of data
(through contingent backup systems, for example) and to block
unauthorized access to stored data? Will security patches be applied
promptly and updated as required?
Security
Maintaining the security of the organization’s data and work
processes is a constant concern. It affects the design of systems, the
choice of equipment and software, operating and maintenance
processes, and policies aimed at supporting secure practices. When
acquiring technology, users may be concerned about:
Security vulnerabilities created through integration. For

example, organizations must be confident that vendors
accessing the organization’s systems can access only certain
areas and that only vendors can access information—i.e., a
back door does not exist in the application to allow unauthorized
access by unknown parties.
Managing users’ security levels. For example, users may be
assigned graduated levels of security that provide them access
only to specified areas in the information system.
Governance. Technology should be able to document all
transactions and in this way reveal who has accessed the
system, when they accessed it, and what they did.
HR Technology Applications
HR can apply current technology products to most of its core and
talent management functions. The breadth of these applications is
shown in Figure 43.
Figure 43: General HR Technology Applications
Core Applications Talent Management

Applications
Employee records Talent acquisition
Payroll Applicant tracking systems
Time and attendance Recruiting (posting jobs to

Shift management (managing different recruitment channels)
scheduled time off and assigning Pre-hire assessment and

sufficient workers with the screening
required skills to each work Onboarding (tracking
period)
completion of required actions)
Benefits administration
Performance management
Communications (could include
Succession planning
employee surveys)
Compensation management
Data analysis
(internal review for consistency,
Project management external comparisons)
Report generation (including Learning management system
graphical representation of (tracking employee completion of
analysis results) required training)
Strategic workforce planning
These software products can:
Automate complex processes and allow HR professionals to

focus on more strategic and tactical work. Applicant tracking
systems (ATS) receive and store applications, review
applications and résumés using key words, send responses,
and arrange interviews and additional screening. They can
include recruiting applications, posting openings on various job
sites and social media. Applicant progress through the process
can be visualized. Some products can integrate with other
applications, such as career management programs, reaching
appropriate internal candidates directly, or workforce plans,
identifying some candidates who may meet future needs.
Produce data that can be used for other applications. For

example, skill profiles in employee data records can be used to
identify employees who possess the types of skills and
knowledge the organization will require. HR’s talent
management programs may focus on these individuals to
ensure that they are engaged and retained and perhaps to
develop them for leadership positions.
Wearable technology can automate the capture of employee

data. It usually takes the form of clothing or accessories (e.g.,
glasses, a watch) that have sensors, computing capacity, and
the ability to link to a remote network. Current devices tend to be
prefaced with “smart” (e.g., smartglasses, smartclothing,
smartwatches). From an HR perspective, wearable technology
can be used to encourage healthy behaviors (e.g., fitness
trackers), to increase productivity by freeing employees’ hands
(e.g., smartglasses), and to monitor employees’ health and
safety in stressful physical conditions (e.g., wearable location
and vital signs monitoring). When information is gathered and
stored, issues can arise about employee data privacy and
security.
Support data analysis to assess the effectiveness and

efficiency of HR activities. For example, ATS dashboards and
analytics can show key performance metrics, such as time-to-
hire.
Support compliance-related activities. ATS can measure

compliance with internal hiring goals and legal requirements and
issue reports on diversity in recruiting and hiring.
Software as a Service
HR technology can be purchased outright (as a stand-alone
application or part of an HRIS), or it can be purchased through a
subscription. Software as a service (SaaS) is software that is
owned, delivered, and managed remotely by one or more providers.
The software is delivered over the Internet, rather than installed on a
computer, to contracted customers at any time, on a pay-for-use
basis or as a subscription based on use metrics. SaaS applications
typically run over the cloud, which means that users need only
Internet access and a compatible browser in order to access the
software.
An SaaS application is delivered to multiple customers

simultaneously and securely. A customer can order additional
capacity, add-on components, or features. Regular software updates
can be applied relatively seamlessly by the SaaS provider, helping to
ensure that customers have the most recent version with the most
current maintenance and the latest enhancements. These needs are
fulfilled without the technical or licensing barriers common to
installed software.
SaaS can save organizations—especially small and medium-size

organizations—time, money, and resources.
Artificial Intelligence and HR

The use of artificial intelligence (AI)—the ability of a computer to
imitate human thought and behavior—will continue to evolve and will
deliver new capabilities to HR technologies:
Self-learning machines may change their behavior based on the

responses they receive. Rather than merely following
programmed instructions (such as one would see in a defined
branching tree of questions and answers in a voice answering
system), they will begin to develop models and apply them to
individual situations. This can improve the experience of
customer help lines.
These machines may be equipped with optical and speech
recognition, which will enhance their learning but also make
them more accessible to users with physical restrictions.
Virtualization may allow the creation of aural or visual
“representatives” who can communicate easily with users.
Self-Service Technologies
Self-service technologies can reduce the transactional work of HR.
Employee Self-Service Technologies

Employee self-service (ESS) technologies provide employees with
access to their personal HR data and the ability to handle many
questions and job-related transactions that otherwise would fall to
management or administrative staff. An ESS can guide a new hire
through the onboarding process, delivering required
communications, facilitating security processes, and allowing him or
her to enroll in benefits. Existing employees can log time and
schedule vacations, file expense reports, update personal
information, manage their performance reviews and career
development plans, and access organizational information (such as
learning and career opportunities). For employees, this means
improved visibility of important information and increased
convenience; for organizations, this translates to significant cost
savings and efficiencies. HR head count is often reduced.
Employees access self-service through web pages on the

organization’s intranet—”portals” that may be customized to users or
user groups and that may be connected with vendor sites, such as
firms managing retirement plans. The portals may be managed by
vendors, reducing the burden on HR and IT. Their 24/7 availability—
accessible at all hours, every day of the week—appeals to today’s
workers, who may engage with the ESS in their spare time from
remote locations. It also serves the needs of organizations with a
workforce spread over time zones and limited access to local HR
services.
Manager Self-Service Technologies

Manager self-service (MSS) websites provide managers with access
to current data on their employees and budgets and allow them to
perform for themselves transactions that previously required HR’s
implementation. This eliminates rounds of e-mails and allows the
manager to make a change and move on.
Through an MSS portal, managers may:
View information and create reports on the employees working

for them. For example, managers might use MSS to prepare for
and complete performance appraisal documentation for
subordinates, to authorize leaves, or to create a report
summarizing information about their staff.
Complete transactions such as authorizing pay raises,
promoting employees, approving leave requests, or changing an
employee’s classification. Portals may be customized to allow
managers to perform only certain actions. Actions can trigger
automatic notices to relevant departments, such as payroll.
Manage functions such as performance management,
succession planning, and onboarding.
As with ESS, when managers handle transactions, there are cost

savings for HR and improved efficiencies for the manager and the
organization. In addition, employee data is more secure since it
remains inside the secure system and not in unsecured e-mails or
paper spreadsheets. HR organizations that have implemented MSS
technologies also report improved relations with internal clients.
Managers see HR less as a transactional tool and more as a
strategic resource.
IT Purchasing Process

Coordinates and manages vendors implementing HR
technology solutions.
employee data.
Evaluates and selects vendors to provide HR technology
solutions.

Policies and procedures for procurement.
IT Purchasing Process
Technology can be an asset or a loss, depending on how
thoughtfully HR professionals carry out the process for acquiring it.
The process begins with identifying the needs that can be solved
through the technology and then proceeds through developing
requirements, identifying and assessing offerings, developing a
business case, and implementing the new technology.
The HR function in an energy company was performing many talent-
related activities (e.g., performance management, training
assignments and tracking, succession planning) manually—as
paperwork. Managers and staff found the process time-consuming,
inefficient, prone to errors, and not transparent. The lack of
transparency led to fears of bias and weak employee engagement.
In addition, the process did not provide accurate and timely reporting
for follow-up or strategic decision making.
Calling on the Leadership and Navigation competency, the HR

professional assigned to address the issue set out to find a sponsor
in the organization who would promote the investment to senior
management. With a sponsor in place, the HR professional
researched the HRIS products on the market, comparing them to
what comparable HR organizations were using—an example of the
Critical Evaluation competency.
Having selected likely vendors, the HR professional worked with

them to demonstrate the products to decision makers. The HR
professional emphasized in the business case for the investment the
savings from the efficiency the HRIS would provide but also the
effect that improved transparency and ethical conduct would have on
the organization’s culture (Ethical Practice and Global and Cultural
Effectiveness).
When the purchase was approved and made, the HR professional

worked with the vendor to “brand” self-service portals in a way that
would help employees accept the technology more readily. The HR
professional revised HR’s policies and procedures to reflect the
changed processes and prepared a communication campaign to
support a successful launch and widespread employee acceptance
of the change (the Communication and Consultation competencies).
Developing a Process for Purchasing
Technology
The process for acquiring and implementing HR technology depends
on the scope of the technology. Is the product an HRIS that will be
integrated with internal databases and external vendors, or is it a
simple application that requires no integration and has only one
user? The steps taken will also depend on the organization’s culture
and processes. Is there a process for procurement that defines steps
and conveys authority to make purchases? Is there an IT
department, and does it specify requirements for technology
purchases? Does the organization have a brand that it wants to
apply to all its internal and external communications? How readily do
the users accept change?
The process must therefore be customized to the situation. Still, the

acquisition of technology—no matter its size or complexity—will
benefit from a systematic approach that minimizes mistakes and
waste.
IT as a Partner
The IT function or provider is an integral partner in the acquisition
process. First, the function is a key source of information about the
organization’s current technology and the requirements and
capabilities of many technology products. They know how to
research technology. Second, IT has its own needs that may be
affected by HR’s technology. IT leaders want to know how a
purchased technology will affect the organization’s information
system. Will it create conflicts or security vulnerabilities? Will it
overburden servers? Third, IT will be instrumental in providing the
necessary technical support for implementing and maintaining the
technology.
Securing IT’s involvement early on can make the process itself more
smooth and more efficient and can improve the quality and
effectiveness of the selected technology.
Conduct a Technology Needs

Assessment
The first step in selecting technology is to define what HR wants the
technology to do. How will the technology improve service and/or
productivity? Available technology should not define needs. The fact
that there is technology that can perform a certain task does not
mean that it is needed or that it is the right solution. So the process
must start with an internal assessment.
To assess need, HR should identify all stakeholders, since their
involvement throughout the process will support a good decision.
Stakeholders include those signing off on procurement, HR staff and
employees who will be using the technology, IT who will be involved
in implementing the technology, and possibly compliance experts. If
practical, HR may want to assemble an acquisition team that
represents these different stakeholders’ perspectives.
Figure 44 lists some questions that must be answered during the

assessment.
Figure 44: Assessing Technology Needs
Assessing Technology Needs
HR’s Needs What HR objectives is the technology aligned with?

What problems does it solve, or what opportunities
does it allow HR to capture?
What does the technology have to do or produce?
What are the budget and technical constraints?
What compliance issues may exist?
Assessing Technology Needs
Users’ Needs How will the user interact with the technology? What
does the user need to understand, see, and do?
What will restrict use of the technology (e.g., literacy,
color perception, hearing, high-speed access, fear of
technology)?
Are there different types of users who need to see or do
different things or who may have different levels of
access to data?
What data does the user need to access? Where is it
located?
Organization’s How does this technology align with the organization’s
Needs current strategy?
How does it align with the organization’s current and
future needs?
What is the organization’s risk appetite? How much
control does the organization prefer to exert over its
activities?
Prioritize Technology Requirements

The needs assessment should generate a list of requirements, which
can be used to review available technology solutions and narrow
options. Figure 45 shows how the organization’s priorities for
flexibility and control can affect technology options. The choices
frequently present tradeoffs. Direct ownership of hardware or
software increases control, which can be an issue for organizations
that must minimize risks to operations and security. However, it
decreases flexibility and agility—the ability to change technology
quickly and with lower costs. For example, HR may decide to
investigate SaaS solutions because the organization is undergoing
rapid growth and change. A solution for today may not meet
tomorrow’s needs. However, the SaaS solution must include a
customizable interface so that it can align with the organization’s
culture (or multiple subcultures). The technology may also need to
be compatible with existing internal or vendor technologies or with
social media platforms. Will the SaaS solution fulfill those needs?
Figure 45: Acquisition Options in Technology Purchases

HR should explore with an IT consultant whether to use an
integrated solution (e.g., an ERP HRIS that performs multiple
functions and can serve multiple HR departments in different
locations) or to use multiple smaller best-of-breed (BOB) systems,
each supporting a different HR department or performing a single
task.
Figure 46 compares the advantages and disadvantages of each

option.
Figure 46: Advantages and Disadvantages of Integrated vs. Best-of-

Breed Solutions
Advantages Disadvantages
Integrated Solutions
Feature a common interface “look and Offer minimal customization options;

feel” across applications, making because of their large scale and
learning and transitions for users easier. integrated nature, it can be prohibitively
Use integrated data and technological expensive to customize or to maintain
customizations as new versions of the
infrastructure, reducing the need to
underlying package are released.
manage multiple architectures.
Do not necessarily offer the best
Provide greater ease of integrating data
solutions in each functional area.
from multiple HR functions.
Are challenging to upgrade, because a
Reduce the complexity of vendor
change to one function may have
management, because there is only one
dramatic impacts on others.
vendor.
Slow down the introduction of new
Can be less expensive per application to
features and upgrades due to
implement than BOB.
complexity.
Best-of-Breed Solutions
Advantages Disadvantages
Can develop a “best fit” solution for each Pose difficulties in integrating data
functional area. across applications.
Provide quicker implementation, Present increased learning curves for
because the system is simpler and each application because of the lack of
affects fewer employees. consistent interface.
Do not lock into a single vendor for all Require careful management of
needs. relationships with multiple vendors,
Allow vendors to be more responsive to which can be challenging.
user needs. Demand interoperability among different
Make it possible to purchase only the applications, which may not be easy.
functionality needed.
The issue of the compatibility of the organization’s ERP platform with

best-of-breed applications should be discussed thoroughly with the
IT function or provider. What integration is required to perform the
desired work processes? The issue may become even more
complicated and costly if a purchased BOB product needs to be
customized to perform certain functions or to integrate with the
organization’s platform. This will require IT collaboration with the
vendor and considerable IT support when the BOB product vendor
issues an upgrade.
When choosing between an integrated and best-of-breed solution, it

is also important to decide how to deliver the technology. Three
approaches are:
On-premises. With the on-premises approach, the organization
purchases and installs hardware and software on internal
machines, supported by internal IT staff or an IT vendor. It is
critical to discuss with IT its ability and willingness to
accommodate and support the technology.
Hosted. In the hosted approach, applications are purchased

and installed for the organization, but they are located at the
vendor’s site and supported by external IT staff.
Software as a service. With SaaS, the firm does not purchase

or install any software. Instead, the organization subscribes to
software that has been developed for multiple users and that
runs on the vendor’s hardware. It is accessed through the cloud.
Define Performance Objectives

The acquisition will be evaluated against the performance objectives.
For example:
What is the targeted budget?

What is the targeted date for launching the technology?
What level of traffic must the technology support?
What capabilities will the technology provide (e.g., types of
transactions, navigation parameters [the number of clicks
required to navigate to the desired information, etc.], integration
with other technologies, reports, speed of transactions)?
What are the responsibilities of HR, the organization, and the
vendor?
These objectives may be revised before a vendor is selected, based

on what is learned during the next phase of the selection process.
Identify Technology Providers and

Assess Offerings
There are a number of ways to research possible providers before
contacting vendors:
Do an Internet search and review general articles and vendor

websites.
Review analyst reports. Your organization may subscribe to
reports from Gartner or similar analysts who publish thorough
background information on product areas and reviews of
specific products.
Ask for recommendations from HR colleagues in other
organizations.
Contact existing vendors with good records of service to see if
they offer a product with the needed features.
Attend HR professional meetings and technology trade shows.
There may be presentations about the needed technology
and/or vendor booths.
Once several good options have been identified, HR should have an

open and honest discussion about requirements and restrictions with
the vendors. A good vendor wants to understand the customer’s
situation clearly. Recommending a product that will not serve the
customer’s needs serves neither the customer nor the vendor.
At this point, the performance criteria for an effective product may

have changed. This is fine as long as the changes still align with the
organization’s needs and requirements. Features should not be
added without good reason.
Select a Technology Provider

A request for proposal describing HR’s requirements is distributed to
several providers. In responding, providers should conduct
demonstrations of the product, with specific references as to how HR
will use it.
Providers are selected using the same process used in outsourcing

other HR services. Criteria are selected and weighted by importance,
and each provider is scored. The criteria should include more than
cost and product features. The provider’s willingness to provide
support, especially during the implementation phase, is critical.
Create a Business Case for

Technology Acquisition
If the cost of the technology is significant, HR will in all likelihood
need to secure approval from management. This will require
developing a business case to win management agreement for the
investment of the organization’s resources. The organization’s
leaders will be primarily interested in how the purchase aligns
strategically with the organization’s and HR’s objectives, what
capabilities it is adding, how it affects the organization’s level of risk,
and what type of return the organization will receive for its
investment.
Figure 47 shows an example involving the acquisition of employee

self-service technology. It compares the current costs for HR to
interact with managers to make changes in employee data and the
projected costs of purchasing ESS to run on a server located in-
house and supported by IT. The costs include all sources of labor,
ancillary costs associated with the technology (e.g., necessary staff
training, support, communication), and equipment costs (e.g., the
server). The potential of the purchase can be seen in several ways:
Return on investment (ROI) projects the value of an investment

compared to the alternative. The formula is the gain from the
investment minus the cost of the investment, divided by the cost
of the investment. In this case, the gain is the difference
between the costs of operating without and with the ESS, or
$1,835. Applying the formula, the ROI is .91 ($1,835 minus
$20,915, divided by $20,915). Any ROI below one represents
potential savings. So, from the perspective of ROI, the
investment is promising.
Payback period shows how long it will take for the organization
to recoup its investment. In this case, the cost of implementing
the ESS is divided by the monthly cost of operating without the
ESS ($20,915 divided by $1,896). The investment will be
recouped within 11 months.
Potential monthly savings will be small the first year but will
increase over time.
Monthly operating costs currently are $1,896. With ESS, the
monthly costs the first year would be $1,743, for a monthly
savings of $153.
Monthly savings will increase after the first year, since the
costs of the ESS system are expected to be $1,340 for
support and $1,138 for labor (estimated to be half of the first
year’s labor cost). The monthly cost of operating the ESS is
estimated to be $207, compared to $1,896 without an ESS.
This means that the organization could save $20,268 in year
2, or a monthly savings for the ESS system of $1,689.
Figure 47: Economic Analysis of ESS Purchase
HR Costs without ESS HR Costs with In-House ESS
Employee equivalent hours/year: Product: $6,300

$6,000 Support (first year): $1,340
Manager hours/year: $8,500 Implementation and training: $7,500
HR hours/year: $8,250 Server: $3,500
Total annual costs: $22,750 Year 1 labor costs (10% of existing): $2,275
Monthly costs: $1,896 Year 1 total costs: $20,915
Year 1 monthly costs = $1,743
ROI (first year) = 0.91
Payback period = 11 months
Year 1 monthly savings = $153

Year 1 annual savings = $1,835
Monthly costs: $1,896 Year 2 total costs: $2,478

Year 2 monthly costs = $207
Year 2 monthly savings = $1,689

Year 2 annual savings = $20,268
Implement and Assess New
Technology
Depending on the complexity of the technology, it may be
implemented through a test in one part of the organization and then
introduced broadly throughout the organization. Testing offers
opportunities to correct the product and to strengthen the training
(since common user problems and challenges can be detected
during the test). The test may also create an opportunity to build
acceptance of the new technology by a core group of influencers.
The task of introducing new technology involves HR professionals’

change management skills. Initial resistance can be modified by
showing the technology’s benefits and providing sufficient training,
support, and time for the HR staff or the users of the new technology
to become confident of their abilities. HR should gather feedback
continuously after implementation and communicate with
stakeholders how their feedback will be incorporated.
After an appropriate time, the project should be assessed against the

original criteria. This may involve collecting more accurate and
complete data about the costs of the technology during this early
period and recalculating savings. Stakeholder attitudes should also
be surveyed. If the purchase involved a continuing relationship with a
vendor, that relationship should be assessed as well. For example,
HR professionals might consider the vendor’s fulfillment of
commitments and response to reported problems.
Managing Technology
Opportunities and Risks

Develops and implements organizational standards and policies
for maintaining confidentiality of employee data.
Uses technologies in a manner that protects workforce data.
Provides guidance to stakeholders on effective standards and
policies for the use of technologies in the workplace (e.g., social
media, corporate and personal e-mail, internet messaging).

Policies and practices for technology and social media use (e.g.,
bring-your-own-device, websites, computers for personal
activity).
Data and information management (e.g., data integrity,
confidentiality, security, disclosure).
Managing Technology Opportunities
and Risks
Technology can make work easier and can help HR professionals be
more productive and effective, but it also introduces risks that must
be anticipated and controlled. Among these risks is that of
noncompliance with new data privacy regulations. HR professionals
can manage the opportunities and risks that technology presents by
assisting in developing and implementing policies and procedures
about its use and communicating possible threats and good “digital
hygiene” to all employees.
The corporate office for a wholesale distributor began receiving calls
from news agencies and animal rights activists concerning
information on social media about one of the distributor’s employees.
It seemed the agencies and animal rights groups had been made
aware of content on social media indicating that the employee had
committed an act of animal cruelty. The animal rights activists were
demanding that the employee be immediately terminated.
The issue was a Facebook post that showed an image of a dog

being abused. The person posting the image had tagged the
employee in the photo—mistakenly, as it turned out. The image then
appeared on the employee’s timeline, and visitors to the employee’s
page accused the employee of being involved in unethical breeding
practices. Soon, the accusers turned on the employee’s employer
(identified in his profile), charging that the company was condoning
this type of behavior because the employee had not been
immediately fired, without further investigation.
A senior HR manager decided to put the employee on paid leave

pending further investigation. The investigation soon uncovered the
mistakes and confirmed that the employee had no connection with
the disturbing incident...or in fact any knowledge of it or the people
involved. This was confirmed during an investigation by the local
police.
The challenge now was to repair the damage to the organization’s

and the employee’s reputation. The HR manager met with social
media consultants to develop a campaign to present the truth.
The HR manager was tempted to listen to public demands and fire

the employee immediately. But, as a leader and a model for ethical
behavior, it was important to stay calm, not get drawn into the
emotion of the situation, and avoid making a snap decision. And
being knowledgeable about the importance of strategic
communication, the manager was able to take steps to protect both
the employee’s and the company’s reputation.
Risks Posed by Technology in the
Workplace
The opportunities and risks associated with technology are many
and varied, but they can be grouped into three general categories:
Data and system security. Data collection fuels workplace

transactions and improves productivity, service, and decision
making. Because of this, data is among an organization’s most
important assets. And, as such, it must be protected from
unauthorized access and use.
Data privacy. Data collection, storage, and use must be
transparent and compliant with government guidelines.
Social and ethical implications. The collection of data leads to
the question of how the data will be used. The incorporation of
data technology into the workplace introduces the issue of
equity.
Data and System Security

Security ranks as a top priority for any HRIS. Data is vulnerable to
theft, corruption, and misuse. Systems can be damaged or
manipulated. For example, employee data can be stolen and used to
commit fraud (e.g., file false credit applications). Payroll records can
be erased or altered, disrupting work and defrauding the
organization. Security access records can be altered, allowing
breaches of the organization’s physical facilities or its information
systems. Proprietary information can be stolen.
The sources of these security threats may be internal or external to

the organization. The risk may occur as the result of deliberate
intention, or it may occur unintentionally—the result of carelessness
or ignorance.
The organization’s security measures must address:
Exposure of electronically stored sensitive data (e.g., personal

or benefits information).
Loss of sensitive personnel data.
Unauthorized updates of key data.
While data security is a complex task that is perpetual and unending,

general security protections involve:
Limiting logical and physical access to databases and systems.

Encrypting data that is being transmitted over the Internet or is
stored on system servers.
Protecting against hacking and social engineering.
Limiting Logical and Physical Access to Data and Systems

Access to databases and systems can be restricted, for example,
with firewalls, which are software and/or hardware intended to filter
incoming and outgoing communication according to preset rules.
Access to databases containing employee data or to the payroll
system may be restricted to only certain job classifications or
individuals. The system can create an auditable digital trail of
transactions. Computers with access to data and systems can be
secured with passwords or biometric controls (e.g., thumb prints),
and employees can be trained to increase their awareness of the
vulnerability created by unlocked computers. Passwords can be
strengthened and changed more often.
Encryption
Encryption is the conversion of data into a format that protects or
hides its natural presentation or intended meaning. Encryption
software can be used with stored or transmitted data. Software can
also alert users when there has been an effort to decrypt data.
You are probably already familiar with a form of Internet encryption.

When a website URL has an “https” prefix (for Hypertext Transfer
Protocol-Secure), it offers a higher level of security by encrypting
transmitted data. An icon showing a padlock indicates that a site is
secure.
Managers of HR technology should discuss encryption protection
with their IT consultants. Users, especially mobile computing users,
need to be aware of the value of encryption and alert to unsecured
sites.
Hacking
Hacking refers to the act of attempting to access data without
permission. Once the system has been breached, data can be
stolen, deleted, altered, or corrupted. The entire system can be held
for ransom during a ransomware attack. It can be disabled by
flooding an access point with demands for service (a denial-of-
service attack). Malware can be inserted that changes software
processes or destroys data.
Access can be obtained by exploiting weaknesses in the system,

such as a firewall that has not been updated, or through the use of
surveillance software, which can capture passwords. Social
engineering attacks can also capture data that can be used to
access systems. Social engineering, in a computer context, refers
to tricking a user into sharing information—such as passwords, e-
mail addresses, or identification numbers—that can then be used to
access systems.
Some of the most common social engineering tactics include:

Phishing. E-mails, phone calls, texts, or instant messages that
ask for information or ask the user to click an embedded link.
Spear phishing attacks use known data about the user to
create the air of legitimacy. For example, a bogus e-mail may be
sent from the address of an executive in one’s own organization.
The address may have been netted by scanning the Internet for
publicly available information.
Fake e-cards or job opening information. E-mails pretending

that an attachment is an electronic greeting card or information
about a job opening from a friend or some other trustworthy
source when the attachment actually contains a harmful
program that could infect your computer.
Phony security alerts. E-mails or pop-up windows claiming to

be from a trusted source and warning that your computer is at
risk of being infected or hacked. A link or attachment that is
supposed to fix the problem will infect your computer.
“Click this link” scams. E-mails or social networking sites

enticing you to click a link in order to take advantage of a great
offer, see a picture or video, claim an award or reward, and so
forth. While the links often look legitimate, they take you to a
harmful website and steal your information or infect your
computer.
User education is key to protecting against these threats. Some

cybersecurity services provide user training, including simulated
phishing e-mails. If users respond to the fake e-mail, they receive
corrective feedback immediately. If they correctly report the e-mail as
a phishing attack, they receive positive feedback.
User training should emphasize the following practices:
Never disclose a password to anyone, even if the source seems

legitimate.
Do not give private information to anyone you do not know or
who does not have a legitimate need for it (in person, over the
phone, via e-mail or the Internet).
Click links only from trusted sources. Never click a link from a
source you are unfamiliar with unless you have a way to
independently verify that it is safe.
Delete unsolicited e-mails; do not open, forward, reply to, or
click links or attachments in them.
Assess the request and investigate if it seems unusual. For
example, a request from your CEO for employee data may
seem plausible, but if it has never happened before, a phone
call should be made to the CEO’s office.
Data Privacy
As the importance of data has grown, so has public uneasiness
about the amount of data that is being collected about individuals
and transactions and how it might be used. Reflecting this concern,
governments have enacted laws and regulations regarding the
collection, storage, sharing, and use of data.
The European Union (EU) has taken the lead in regulating data
privacy. The General Data Protection Regulation (GDPR), passed in
2016 and implemented in 2018, has become a benchmark against
which organizations design and assess their data practices. This is
in part because of its breadth—the GDPR can affect any HR
organization that processes employee data in an EU country even if
it is not headquartered in the EU—and because of its significant
penalties for noncompliance—up to 4% of annual turnover (or
revenue) or 20 million euros, whichever is higher. The GDPR is also
comprehensive in its treatment of the issue.
Figure 48 lists some effects of the GDPR on HR practices. One of

the most important practices HR can implement is a compliance
audit of all the processes using employee/applicant data. The audit
should also include the preparedness of HR staff to comply with data
privacy regulations.
Figure 48: GDPR and HR Practices
GDPR Theme HR Responses
Transparency (how data will Update privacy notices to employees and applicants
be used) that seek explicit permission to use data.
Individual rights of access Define who owns data (the employee/applicant, the
to and control over data organization, the vendor) and who has a business right
to use it.
Ensure that HR can reply promptly to employee
requests to access or correct data.
Legality of processing Remove use of and references to “employee consent to
data use” in handbook and agreements. (These
agreements are not sufficient. Data use must be based
in the law.)
Document valid legal grounds for all data processing
activities.
Data quality and Formalize internal and vendor data retention limits.
minimization
Develop and implement policies on data collection and
retention.
Data sharing Implement data sharing agreements with internal
functions and outside vendors.
Data transfers Map internal flow of data to identify data that falls within
GDPR rules.
Data breaches (intentional Implement data security measures.
or accidental, through
Develop and implement data breach policies to ensure
external hacking or internal
reporting of breaches within 72 hours.
actions, such as accidental
e-mailing of employee data) Review post-employment agreements regarding use of
organizational data.
GDPR Theme HR Responses
Accountability Maintain comprehensive records for authorities.

Conduct an assessment of current practices (e.g.,
employee monitoring and background checks).
Implement training and governance systems (internal
data protection officer, audits, disciplinary guidelines).
Social and Ethical Dimensions of Workplace Technology

Equal access to data has been an issue since technology was first
introduced in the workplace. Internet access over mobile devices has
expanded digital access, but it can still be an issue for job applicants
and remote workers. Recruiting strategies that rely exclusively on the
Internet may be unfair to applicants with housing challenges and
without continuous access to the Internet and e-mail. Self-service
employee portals may disadvantage remote workers with slower
Internet connections. Some digital content may not be accessible to
employees or applicants with sight or hearing difficulties.
Searches of social media gives prospective employers the ability to

uncover more information about job applicants, but is using this
information fair? Is the information complete and accurate? Is it
being interpreted without bias? Should the applicant be given the
opportunity to explain evidence used to discredit an application?
Employee records contain extensive historical data. Can the
organization ensure that stored data about an employee will not be
used to discriminate against him or her? Will information about
health problems or family status interfere with opportunities for
promotion?
A more challenging issue now is the use of artificial intelligence in

HR applications. AI may recommend options to employees or
applicants based on an algorithm or mathematical formula based on
predictive analytics. On its face, an algorithm appears completely
objective, but algorithms can be based on inaccurate and limited
data, intentional bias, or unintentional or blind bias. For example,
employees may see different internal job opportunities depending on
their location or age or background.
Policies on Employees’ Use of

Technology
In Smart Policies for Workplace Technologies, Lisa Guerin notes that
many organizations do not recognize the need for workplace
technology policies or erroneously think that existing policies
address new technologies. She advises that procrastinating on
drafting or updating technology policies puts an organization at risk,
exposing organizational assets and creating the potential for legal
issues.
Content in this section examines effective technology workplace

policies and approaches in the areas of collaboration, employees
working on their own devices, and social networks.
Managing Collaboration Risks

Many organizations have introduced practices designed to maintain
structure while, as much as reasonably possible, allowing for the
natural aspects of human interaction in collaboration to come out.
Some of these effective practices include:
Setting meetings at times that can accommodate the most

participants.
Creating meeting agendas with estimates of time allocated to
each topic.
Providing the host of a meeting with full control over the
technological tools being used.
Using overlapping technologies (groupware, VoIP, a web
browser, smartphones, etc.) concurrently to help ensure multiple
means of participant access.
Recording discussions/meetings to allow stakeholders unable to
participate in real time to access and review the outcomes.
Using passcodes to ensure that only invitees are able to gain
access and participate.
Including hierarchies of authority access (read/write) to source
documents to protect the source’s integrity while tracking any
changes made or proposed.
Including legal disclaimers in all documents/projects that outline
the rights and responsibilities of the participants.
Balancing the need for security and rights protection with user-
friendly accessibility.
“Bring Your Own Device”

Digital devices have proliferated, and the concepts of the workplace
and work hours have become looser in many nations. It was
probably inevitable that employees would want to use their own
devices to work and communicate when they are not in the office.
The “bring your own device” (BYOD) practice has become an issue
of convenience for employees as well as employers and, many
would argue, an opportunity for increased productivity. In exchange
for employees’ using their own devices, organizations may commit
their IT functions to support these myriad devices.
Many organizations have resisted allowing BYOD because of the

drain on expensive IT time and because of security threats that
insufficiently protected devices can pose. In addition, there may be
legal considerations for the employer regarding compensating
employees for hours worked outside of the workplace and for
retrieving and/or protecting proprietary information retained on
employees’ personal devices.
It would be naive, however, to assume that employees are obeying

prohibitions against BYOD completely. Many IT experts believe that
organizations will benefit from developing realistic BYOD policies
that allow employees to use their personal digital devices to access
the organization’s network but define certain restrictions on the use
of personal devices.
A BYOD policy might:
Restrict the use of personal devices while the employee is

working in the workplace during the employee’s work hours.
This is aimed at limiting loss of productivity (from checking
personal e-mail and social sites), limiting the employer’s liability
(e.g., if the employee uses the device for illegal or unethical
purposes, such as texting while driving or viewing pornography),
and protecting the employer’s assets and the privacy of other
employees (e.g., from unrestricted use of the device’s web
cam). The policy should illustrate permitted and non-permitted
uses.
State which devices will be supported by IT and the
requirements for using the device (e.g., IT approval and
configuring of all applications that access the network, review
and confirmation of adequate security tools).
Clarify financial arrangements (e.g., reimbursement for using a

personal mobile device) and legal rights (e.g., the right to wipe
or erase a device without liability for the employee’s personal
data).
Define security measures—for example, requiring adequate

password protection, prohibiting downloading applications
without IT approval, prohibiting accessing the virtual private
network with a personal device.
HR must add to its organizational exit checklist the need to remove

access ability from the exiting employee’s devices. HR should also
work with the organization’s legal counsel to ensure that the policy
and practices do not violate any state or local laws, such as those
related to password privacy.
Workplace Use of Social Networks

Social networks generally refer to the online clustering of
individuals in groups with common or shared interests. Social
networking services (SNSs) or social networking sites connect
individuals with similar interests regardless of their geographic
locations. The sites allow users to create profiles and interact with
others in a variety of ways (such as the exchange of private or public
messages). A variety of tools may be embedded in social network
sites, including e-mail, blogs, instant messages, text, podcasts,
photographs, and videos.
Numerous experts have suggested that the use of the word “social”
in social media is unfortunate as it discounts the business and other
more practical, value-added uses of the technology. For example,
organizations review comments on social networks by customers
and employees to understand the perspectives of these important
stakeholders. HR professionals may make use of social networks to
advertise their organization’s job opportunities and to create
employer brands. They may use professional networks to remain
current with HR trends and ideas and to exchange best practices
with other HR professionals. They may use social networks located
on the organization’s own information system to create project teams
or groups of learners. Networks improve communication and
collaboration.
While social networks create opportunities, they also create risks for
the organization and for individual employees. The organization risks
damage to its reputation when employees post damaging remarks
about the organization or its customers or when they disclose
proprietary information. There is also the issue of the organization’s
responsibility to protect its employees from the actions and speech
of other employees—for example, from an employee disparaging or
intimidating another employee or from an employee disclosing
another employee’s private information.
The risks posed by information posted on social networks have led

some employers to commit acts that could violate individuals’
privacy. In 2013, for example, some employers (particularly in the
United States) began asking job candidates to supply their social
media passwords so that the employer could review their online
profiles. This triggered a global discussion about the legality and
ethics of such practices. Since that time many jurisdictions have
introduced laws protecting candidates and employees from being
forced to provide such information.
A better solution is to develop a thorough and well-understood social

network policy that applies to both employer and employees.
Developing Social Network Policies

Policies and practices related to the use of social networks can help
to provide a balance between a congenial workplace where talent is
prized and one that protects the organization’s proprietary
information, security, and legal interests and the privacy and well-
being of other employees.
Employment law expert Lisa Guerin advises HR professionals who

want to develop policies on social networks to:
Identify key risks. For example, patient privacy may be a key

risk for a health-care provider.
Review the organization’s employee handbook for related

policies and practices and to determine if they are working and
whether employees have to sign an acknowledgment.
Discuss risks and concerns with the organization’s IT function or

consultant.
Consult with the organization’s legal counsel on key compliance

issues.
Align the proposed policy with the organization’s culture and its
stated values. An overly restrictive policy can damage the
organization’s relationship with its employees.
Develop written policies and secure thorough review and
commitment from leaders. Policies could include:
Prohibitions about the use of the organization’s resources

(technology and time) and the organization’s right to
monitor. For example, the organization may reserve the
right to monitor all technology use and communications
made, accessed, sent, or received on the organization’s
equipment, from office-based hardware to employer-
provided devices (such as cell phones and mobile
computing devices).
Prohibitions from posting or disclosing any confidential,
proprietary, or intellectual property information.
Situations requiring employer approval for postings
regarding the employer’s facilities, products, or services.
Rules about personal endorsement of the organization’s
products or services.
Rules for personal posts about colleagues (e.g., zero
tolerance of sexual harassment, cyberbullying, or threats).
Statement that employees will be held accountable for any
violation of laws and policies (including anonymous
postings).
Communicate the policies and require acknowledgment

signatures for them.
Enforce the policies consistently, for both employees and
management.
Keep the policies up-to-date and revise as necessary.
Key Content
Situations can and do arise that require an organization to

read or monitor employee e-mails, Internet browsing
histories, blogs, and so forth. The best strategy here is to
tell employees ahead of time that their communications
may be read or tracked. Notifying employees about
potential monitoring may serve as a deterrent for
inappropriate communications. Employees’ legal right to
communication privacy is partially determined by how much
privacy they expect to have. If an organization tells
employees that their communications are not private, it may
be problematic for them to contest confidentiality.
Enforcing the social network use policy will be made easier if the
organization has assigned monitoring duties to a specific individual,
a social media content reviewer. This individual can scan the site
continuously and remove offensive or proprietary content promptly
and can also direct interesting comments or ideas to the appropriate
people in the organization.
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Glossary
Alternative dispute resolution (ADR)
Umbrella term for the various approaches and techniques, other
than litigation, that can be used to resolve a dispute.
Arbitration
Method of dispute resolution by which disputing parties agree to
be bound by the decision of one or more impartial persons to
whom they submit their dispute for final determination.
Center of excellence (COE)

An organizational structure that leverages staff expertise in certain
areas to improve the entire organization’s strategic performance.
Artificial intelligence (AI)

Ability of a computer to imitate human thought and behavior.
Chain of command
Line of authority within an organization.
Cloud computing
Style of computing in which scalable IT-enabled capabilities are
delivered as a service using Internet technologies.
Codetermination
Form of corporate governance that requires a typical management
board and a supervisory board and that allows management and
employees to participate in strategic decision making.
Co-employment
Situation in which an organization shares responsibility and liability
for their alternative workers with an alternative staffing supplier;
also known as joint employment.
Collective bargaining
Process by which management and union representatives
negotiate the employment conditions for a particular bargaining
unit for a designated period of time
Conciliation
Method of nonbinding dispute resolution by which a neutral third
party tries to help disputing parties reach a mutually agreeable
decision; also called mediation
Constructive discipline
Form of corrective discipline that implements increasingly severe
penalties for employees.
Cosourcing
Arrangement in which an enterprise and a vendor share different
tasks within a larger complex, often strategic responsibility.
Dedicated HR
HR structural alternative that allows organizations with different
strategies in multiple units to apply HR expertise to each unit’s
specific strategic needs.
Departmentalization
Way an organization groups jobs to coordinate work.
Downsizing
Termination of employment of individual employees or groups of
employees for reasons other than performance, for example,
economic necessity or restructuring; also known as reduction in
force (RIF).
Due diligence
Process of investigating a decision thoroughly before finalizing it to
identify all potential factors that could affect the positive and
negative impacts of the decision.
Employment at-will
Principle of employment in the U.S. that employers have the right
to hire, fire, demote, and promote whomever they choose for any
reason unless there is a law or contract to the contrary and that
employees have the right to quit a job at any time.
Encryption
Conversion of data into a format that protects or hides its natural
presentation or intended meaning.
Enterprise resource planning (ERP)

Business management software, usually a suite of integrated
applications, that a company can use to collect, store, manage
and interpret data from many business activities.
Firewalls
Software and/or hardware that filters incoming and outgoing
communication according to preset rules.
Formalization
Refers to the extent to which rules, policies, and procedures
govern the behavior of employees in an organization.
Functional HR
HR structural alternative in which headquarters HR specialists
craft policies and HR generalists located within divisions or other
locales implement the policies, adapt them as needed, and
interact with employees.
Functional structure
Organizational structure in which departments are defined by the
services they contribute to the organization’s overall mission, such
as marketing and sales, operations, and HR.
Geographic structure
Organizational structure in which geographic regions define the
organizational chart.
Grievance procedure
Orderly way to resolve differences of opinion.
Hacking
Act of deliberately accessing computer data without permission.
HR audit
Systematic and comprehensive evaluation of an organization’s HR
policies, practices, procedures, and strategies.
Human resource information system (HRIS)

Information technology framework and tools for gathering, storing,
maintaining, retrieving, revising, and reporting HR data.
Independent contractors
Self-employed individuals hired on a contract basis for specialized
services.
Industrial actions
Various forms of collective employee actions taken to protest work
conditions or employer actions.
Information system (IS)

Way to collect, organize, store, analyze, and share data.
Intellectual property (IP)

Ownership of innovation by an individual or business enterprise;
includes patented, trademarked, or copyrighted property.
Joint employment
Situation in which an organization shares responsibility and liability
for their alternative workers with an alternative staffing supplier;
also known as co-employment.
Judgmental forecasts
Use of information from past and present to predict future
conditions.
Knowledge management (KM)

Process of creating, acquiring, sharing, and managing knowledge
to augment individual and organizational performance.
Labor union
Group of workers who coordinate their activities to achieve
common goals in their relationship with an employer or group of
employers; also called trade union.
Line units
Work groups that conduct the major business of an organization.
Lockout
Action of an employer to shut down operations to prevent
employees from working.
Matrix structure
Organizational structure that combines departmentalization by
division and function to gain the benefits of both; results in some
employees reporting to two managers rather than one, with neither
manager assuming a superior role.
Mediation
Method of nonbinding dispute resolution by which a neutral third
party tries to help disputing parties reach a mutually agreeable
decision; also called conciliation.
Non-compete agreement (NCA)
Common form of post-employment agreement that prevents
employee from leaving to work for one of employer’s competitors.
Non-disclosure agreement (NDA)

Common form of post-employment agreement, especially in
knowledge industries, in which employee agrees not to discuss
knowledge gained during employment.
Organizational development
Process of enhancing the effectiveness and efficiency of an
organization and the well-being of its members through planned
interventions.
Outsourcing
Process by which an organization contracts with third-party
vendors to provide selected services/activities instead of hiring
new employees.
Picketing
Positioning of employees at a place of work targeted for the action
for the purpose of protest.
Policy
Broad statement that reflects an organization’s philosophy,
objectives, or standards concerning a particular set of
management or employee activities.
Product structure
Organizational structure in which functional departments are
grouped under major product divisions.
Project labor agreement (PLA)

Agreement that requires specific contractors to accept certain
conditions in project contracts, such as paying a fair wage and
contributing to health insurance, pension, and training funds.
Reduction in force (RIF)

Termination of employment of individual employees or groups of
employees for reasons other than performance, for example,
economic necessity or restructuring; also known as downsizing.
Regression analysis
Statistical method used to predict a variable from one or more
predictor variables.
Replacement planning
“Snapshot” assessment of the availability of qualified backup for
key positions.
Restructuring
Act of reorganizing the legal, ownership, operational, or other
structures of an organization.
Secondary action
Attempt by a union to influence an employer by putting pressure
on another employer, for example, a supplier.
Service-level agreement (SLA)
Part of a service contract where the service expectations are
formally defined.
Shared services HR model

HR structural alternative in which centers with specific areas of
expertise develop HR policies in those areas; each unit can then
select what it needs from a menu of these services.
Simulations
Representations of real situations; give organizations the
opportunity to speculate as to what would happen if certain
courses of action were pursued.
Sit-down strike
Refusal by workers to work; also refusal by workers to leave their
workstations, making it impossible for the employer to use
replacement workers.
Social engineering
In a computer context, tricking a user into sharing information that
can then be used to access systems.
Social networks
Online clustering of individuals in groups with common or shared
interests.
Software as a service (SaaS)

Software that is owned, delivered, and managed remotely and
delivered over the Internet to contracted customers on a pay-for-
use basis or as a subscription based on use metrics.
Span of control
Refers to the number of individuals who report to a supervisor.
Staff units
Work groups that assist line units by providing specialized
services, such as HR.
Succession planning
Process of implementing a talent management strategy for
identifying and fostering the development of high-potential
employees or other job candidates who, over time, may move into
leadership positions of increased responsibility.
Sympathy strike
Action taken in support of another union that is striking the
employer.
Talent management
Development and integration of HR processes that attract,
develop, engage, and retain the knowledge, skills, and abilities of
employees that will meet current and future organizational needs.
Trade union
Group of workers who coordinate their activities to achieve
common goals in their relationship with an employer or group of
employers; also called labor union.
Turnover
Act of replacing employees leaving an organization; attrition or
loss of employees.
Turnover rate
Annualized formula that tracks number of separations and total
number of workforce employees per month.
Unfair labor practice (ULP)

Violation of employee rights; act prohibited under labor relations
statutes.
Whistleblowing
Reporting of an organization’s violations of policies and processes
by employees.
Wildcat strike
Work stoppages at union contract operations that have not been
sanctioned by the union.
Workforce analysis
Systematic approach to anticipate human capital needs and data
HR professionals can use to ensure that appropriate knowledge,
skills, or abilities will be available when needed to accomplish
organizational goals and objectives.
Workforce management
All activities needed to ensure that workforce size and
competencies meet the organization’s strategic needs.
Workforce planning
Activities needed to ensure that workforce size and competencies
meet current and future organizational and individual needs.
Works councils
Groups that represent employees, generally on a local or
organizational level, for the primary purpose of receiving from
employers and conveying to employees information about the
workforce and the health of the enterprise.
Work-to-rule
Situation in which workers slow processes by performing tasks
exactly to specifications or according to job or task descriptions.
Index
A
absence rate [1]
acceptance labor strategy [1]
access, limiting [1]
accounting/finance [1] , [2]
accruals [1]
acquired rights laws [1]
acquisition [1]
adaptation labor strategy [1]
administrative human resources role [1]
ADR (alternative dispute resolution) [1]
AI (artificial intelligence) [1] , [2]
alternative dispute resolution [1]
alternative staffing [1]
applicant tracking systems [1]
applicant yield ratio [1]
application software [1]
arbitration [1] , [2]
artificial intelligence [1] , [2]
ATS (applicant tracking systems) [1]
at-will employment [1]
audits, human resources [1]
authority [1]
avoidance labor strategy [1]
B
balanced scorecard [1]
bargaining topics [1]
best of breed HRIS solutions [1]
best practices audits [1]
big data [1]
boards of directors [1] , [2]
BOB (“best of breed”) HRIS solutions [1]
boycotts [1]
bring your own device [1]
budgets [1]
business case for technology acquisition [1]
business tier [1]
BYOD (bring your own device) [1]
C
career management [1]
CBA (collective bargaining agreement) [1]
centers of excellence [1]
centralized human resources structure [1]
chain of command [1]
chosen officer in alternative dispute resolution [1]
click this link scams [1]
cloud computing [1] , [2]
codetermination [1]
co-employment [1]
COEs (centers of excellence) [1]
collaboration [1]
collective bargaining
agreement [1]
contract negotiation [1]
human resources role in [1]
communications tier [1]
community groups, relation to labor unions [1]
compliance audits [1]
conciliation [1]
conflict resolution [1]
constructive discipline [1]
contractors
independent [1]
third-party [1]
contracts
administration/enforcement of [1]
employment [1]
grievance procedures [1]
negotiation of [1] , [2]
contract workers [1]
core capabilities [1]
core organizational functions [1]
cosourcing [1]
cost per hire [1]
covenant of good faith and fair dealing exemption to employment
at-will [1]
culture
culture:conflict management [1]
organizational, interventions for [1]
customer structure [1]
D
data
privacy [1]
security [1]
tier [1]
decentralized human resources structure [1]
decision-making authority [1] , [2]
dedicated human resources structure [1]
demand analysis [1] , [2]
departmentalization [1]
discharge [1]
discipline of employees [1]
dispute resolution [1]
divestiture [1]
downsizing [1]
due diligence [1]
due process [1]
dysfunctional roles in groups [1]
E
EAW (employment at-will) [1]
employee complaints, investigation of [1]
employee discipline [1]
employee engagement/retention [1]
employee handbooks [1]
employee leasing [1]
employee relations
global [1]
role of managers/supervisors [1]
strategies [1]
employee self-service technologies [1]
employer associations, relation to labor unions [1]
employer rights [1]
employment at-will [1]
employment contracts [1]
employment relationship [1] , [2]
encryption [1]
enterprise resource planning [1]
ERP (enterprise resource planning) [1]
ESS (employee self-service) technologies [1]
ethical/social implications of technology [1]
executive management [1] , [2]
expansion [1]
extended organizations [1]
F
finance/accounting [1] , [2]
finite temporary help [1]
firewalls [1]
flat organizations [1]
flexible staffing [1]
flow analysis [1]
forecasts in workforce analysis [1] , [2] , [3]
formalization [1]
forming stage in teams [1]
functional human resources structure [1]
functional organizational structure [1]
function-specific audits [1]
G
gap analysis [1] , [2]
GDPR (General Data Protection Regulation, European Union) [1]
General Data Protection Regulation (European Union) [1]
generalists, human resources [1]
general strikes [1]
geographic structure [1]
global labor strategies [1]
governments
relation to labor unions [1]
role in employee/union complaints [1]
grievances [1]
group dynamics [1]
H
hacking [1]
handbooks, employee [1]
hierarchy, layers of [1]
HRIS (human resource information systems) [1]
human capital return on investment [1]
human capital value added [1]
human resource information systems [1]
human resources and works councils [1]
human resources audits [1]
human resources business partners [1]
human resources centralized [1]
human resources decentralized [1]
human resources dedicated [1]
human resources functional [1]
human resources metrics [1]
human resources performance, evaluation of [1]
human resources role
administrative [1]
human resources role:contract negotiations [1]
human resources role:employee discipline [1]
human resources role:flexible staffing [1]
human resources role:industrial actions [1]
human resources role:litigation [1]
human resources role:organizational effectiveness/development
[1]
human resources role:policies/procedures [1]
human resources role:unfair labor practices [1]
human resources role:workforce management [1]
operational [1]
strategic [1]
human resources service culture [1]
human resources strategy [1]
human resources structure [1] , [2]
human resources team [1]
human resources technology [1] , [2]
human resources value, demonstrating [1]
I
ILO (International Labour Organization) labor standards [1]
implied contract exemptions to employment at-will [1]
incentive systems [1]
independent contractors [1]
industrial actions [1]
industry associations, relation to labor unions [1]
information systems [1]
information technology function [1] , [2] , [3]
integration of technology [1]
intellectual property [1]
international groups, relation to labor unions [1]
international labor standards [1]
International Labour Organization labor standards [1]
investigations of employee complaints [1]
IP (intellectual property) [1]
IS (information systems) [1]
IT (information technology) function [1] , [2] , [3]
J
job sharing [1]
joint employment [1]
judgmental forecasts [1]
K
kay talent pools [1]
key performance indicators [1]
key talent retention [1]
KM (knowledge management) [1] , [2]
knowledge gaps [1]
knowledge management [1] , [2]
knowledge transfer [1]
KPIs (key performance indicators) [1]
L
labor relations [1]
labor standards [1]
labor unions
characteristics [1]
global [1]
membership [1]
strategies in response to [1]
types [1]
layers of hierarchy [1]
leaders in human resources team [1]
learning [1]
line units [1]
logic tier [1]
M
managed services [1]
manager self-service technologies [1]
managers in human resources team [1]
marketing and sales [1] , [2]
matrix structure [1]
McKinsey 7-S Framework [1]
mechanistic organizations [1]
mediation [1] , [2]
merger/acquisition [1]
metrics [1]
MSS (manager self-service) technologies [1]
multiple linear regression [1]
N
NCAs (non-compete agreements) [1]
NDAs (non-disclosure agreements) [1]
needs analysis/assessment
needs analysis/assessment:outsourcing [1]
needs analysis/assessment:technology purchases [1]
negotiation of contracts [1] , [2]
networks, social [1]
NGOs (nongovernmental organizations), relation to labor unions
[1]
non-compete agreements [1]
non-disclosure agreements [1]
nongovernmental organizations, relation to labor unions [1]
norming stage in teams [1]
O
objectives, tactical [1]
ombudsperson [1]
on-call workers [1]
open-door policy in alternative dispute resolution [1]
operational human resources role [1]
operations function [1] , [2]
organic organizations [1]
organizational culture interventions [1]
organizational design
departmentalization [1]
roles and responsibilities [1] , [2]
structural characteristics [1]
organizational effectiveness/development
assessment of [1]
failure of [1]
human resources role [1]
interventions [1]
organizational interventions [1]
proactive [1]
remedial [1]
team interventions [1]
unit interventions [1]
organizational interventions [1]
organizational strategy [1]
organizational structure [1]
organizational theories [1]
outsourcing [1] , [2]
P
part-time employees [1]
payback period [1]
payrolling [1]
peer review [1]
PEOs (professional employer organizations) [1]
performance building [1]
performance management [1]
performance measures for human resources [1]
performance objectives for technology acquisition [1]
performing stage in teams [1]
phased retirement [1]
phishing [1]
picketing [1]
pivotal talent pools [1]
policies
technology [1]
workplace [1]
post-employment agreements [1]
presentation tier [1]
privacy, data [1]
proactive organizational effectiveness/development interventions
[1]
problem-solving session in constructive discipline process [1]
process interventions [1]
product structure [1]
professional employer organizations [1]
promotion pattern [1]
public policy exemptions to employment at-will [1]
R
RACI matrixes [1]
R and D (research and development) [1] , [2]
redistribution of decision-making authority [1]
reductions in force [1]
regression analysis [1]
religious institutions, relation to labor unions [1]
remedial organizational effectiveness/development interventions
[1]
replacement planning [1]
requests for proposals [1]
requirements in technology acquisition [1]
research and development [1] , [2]
restructuring [1]
retaliation in workplace [1]
retirement, phased [1]
return on investment [1] , [2]
RFPs (requests for proposals) [1]
RIFs (reductions in force) [1]
ROI (return on investment) [1]
roles/responsibilities in organizational structure [1]
S
SaaS (software as a service) [1] , [2]
sales and marketing [1] , [2]
scalability of technology [1]
seasonal workers [1]
secondary actions [1]
security of information technology systems [1] , [2]
See [1] , [3]
See under [1]
self-service technologies [1]
service-level agreements [1]
shared services human resources model [1]
simple linear regression [1]
simulations [1]
single designated officer in alternative dispute resolution [1]
sit-down strikes [1]
skill gaps [1]
SLAs (service-level agreements) [1]
social engineering [1]
social ethical implications of technology [1]
social networks [1]
social roles in groups [1]
software applications for human resources [1]
software as a service [1] , [2]
solution analysis [1] , [2]
span of control [1]
specialists, human resources [1]
specialization [1]
staffing
alternative [1]
flexible [1]
plan [1]
staff units [1]
stakeholders
internal [1]
stakeholders:staffing plan [1]
standards, labor [1]
statistical forecasts [1]
storming stage in teams [1]
strategic audits [1]
strategic human resources role [1]
strategy
human resources [1]
organizational [1]
strikes [1]
succession planning [1]
success ratio [1]
supply analysis [1] , [2]
sympathy strikes [1]
system software [1]
T
tactical objectives [1]
talent acquisition [1]
talent management [1]
talent pools [1]
task roles in groups [1]
teams
building [1]
formation [1]
interventions [1]
technology
acquiring [1] , [2]
applications [1]
assessment of [1]
big data [1] , [2]
ethical implications [1]
implementation of [1]
integration [1]
interventions [1]
policies [1]
providers [1]
risks [1]
scalability [1]
security [1]
social implications [1]
technology:human resources [1] , [2]
temporary assignments [1]
temporary employees [1]
temp-to-hire programs [1]
temp-to-lease programs [1]
termination [1]
third-party conflict resolution [1]
third-party contractors [1]
training [1]
training return on investment [1]
transactional time, reduction of [1]
transfer [1]
turnover
analysis [1]
costs [1]
rate [1] , [2]
U
ULPs (unfair labor practices) [1]
unfair labor practices [1]
union density [1]
union penetration [1]
unit interventions [1]
V
vacancy costs [1]
value of human resources [1]
verbal counseling session in constructive discipline process [1]
W
warnings in constructive discipline process [1]
whistleblowing [1]
wildcat strikes [1]
workforce analysis
demand analysis [1] , [2]
gap analysis [1] , [2]
solution analysis [1] , [2]
supply analysis [1] , [2]
workforce management
flexible staffing [1]
restructuring [1]
staffing plan [1]
succession planning [1]
talent management [1]
workforce planning [1]
workforce planning [1]
workplace retaliation [1]
works councils [1]
work specialization [1]
work-to-rule [1]

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Introduction to Organization

Throughout the module, brief scenarios, titled “Competency

While this module includes legal content, it should not be construed

Structure of the HR Function encompasses the people,

Proficiency indicators for advanced HR professionals include:

To do this, HR professionals must understand the structure of their

Equipped with a knowledge of its own capabilities and its

HR leaders must also measure the effectiveness of the services HR

Proficiency indicators related to this section include:

Key concepts related to this section include:

The HR professional was hired to support a growing company with

The HR professional was nervous to jump into her workforce

In delivering value, the HR professional approached her position as

HR’s strategic role includes:

Participation in creating the organization’s strategy. This

Supporting other functions in their strategic roles. For

This strategic role shapes HR’s administrative and operational roles.

Using technology to capture and analyze data. Technology,

Using technology to reduce transactional time. HRIS

Focusing on core capabilities. Tasks that are low in strategic

HR can transform these operational activities by aligning them with

Knowledge management can help the organization capture

Targeted talent acquisition and development focus on

Incentive systems can be designed to promote rather than

Employee engagement programs target increased

Developing an HR Service Culture

Imagine that HR is asked to conduct an organizational development

The most complete answer can follow a common tool used in

Strategy. A customer-centric culture is a necessary part of HR’s

Shared values. HR leaders communicate to function members

Structure. HR leaders must take steps to change HR’s

Systems. Systems support the way people do their jobs.

To deliver better service, HR may implement a process

Staff. Ability to deliver customer service is a criterion for

Skills. HR leaders undertake to assess the competencies

Style of leadership. Leaders must model in all their actions the

Proficiency indicators related to this section include:

The HR leader meets individually with the division heads

HR then conducts one-on-one meetings and facilitates a group

The HR leader demonstrates the ability to manage interactions with

Figure 1: Core Business Functions

Organizations today realize that the most effective

Because its mission as a core function is to deliver the talent and

Facilitate the high degree of cross-functional understanding and

Figure 2 summarizes the information about HR and its core business

Figure 2: Cross-Functional Relationships with HR

Cross-Functional Relationships with HR

Executive Recruiting executive candidates in highly Recruiting and training

Finance and Coordinating requirements of different Providing training related to

Marketing Aligning incentive/compensation Promoting sharing of

Research Developing talent pool with requisite Promoting processes that

Operations Developing staffing plans Ensuring physical security

Executive management commonly includes an individual who holds

The heads of the organization’s financial operations and day-to-day

How HR Interacts with Executive Management

Finance and Accounting Functions

Finance focuses on how the organization uses its financial assets to

Supporting operations and strategic initiatives through the

Accounting focuses on tracking financial transactions and reporting

Tracking revenue and expenses through accounting. Accounting