SHRM 2022 Organization

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Acknowledgments
SHRM acknowledges the contributions of its volunteer
leaders and staff members who have served as subject
matter experts for the SHRM Learning System for
SHRM‑CP/SHRM‑SCP.
Subject matter experts

Cheronn Collins, SHRM-SCP, SPHR
Independent Consultant
Gaithersburg, Maryland, U.S.
Susan K. Craft, MSHRM, SHRM-SCP, SPHR, GPHR

President, Consulting by Design of Princess Anne
Virginia Beach, Virginia, U.S
Ed Hasan, EdD, MBA, SHRM-SCP, SPHR

CEO and Managing Partner, Kaizen Human Capital
Adjunct Professor, Georgetown University
Tom O’Connor, JD, SHRM-SCP, GPHR, SPHRi

Human Resource Director, North America, BK Medical
Boston, Massachusetts, U.S.
Dr. Patricia A. Sullivan, SHRM-SCP

Leadership Coach/Culture Strategist
St. Petersburg, Florida, U.S.
Past subject matter experts

Dennis Carr, MSIR, SHRM-SCP
Chief Human Resource Officer, Lane Community College
Eugene, Oregon, U.S.
Jennifer C. Loftus, MBA, SHRM-SCP, GPHR, SPHR, PHRca, CCP,

CBP, GRP
National Director, Astron Solutions
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New York, New York, U.S.
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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 & Development,
Workforce Management, Employee & Labor Relations, and
Technology Management.
Throughout the module, brief scenarios, titled “Competency

Connection,” describe how the Behavioral Competencies listed in
the SHRM Body of Applied Skills 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 18% of the

SHRM-CP and SHRM-SCP exams.
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Structure of the HR
Function
Structure of the HR Function encompasses the

people, processes and activities involved in the
delivery of HR-related services that create and drive
organizational effectiveness.
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Proficiency Indicators:
Proficiency indicators for all HR professionals include:
Acts as HR point-of-service contact for key stakeholders
within a division or group.
Adapts work style to fit the organization’s HR service model
to ensure timely and consistent delivery of services to
stakeholders.
Analyzes and interprets key performance indicators (KPIs) to
understand the effectiveness of the HR function.
Consults with all levels of leadership and management on HR
issues.
Coordinates with other HR functions to ensure timely and
consistent delivery of services to stakeholders.
Ensures that outsourced and/or automated HR functions are
integrated with other HR activities.
Seeks feedback from stakeholders to identify opportunities to
improve HR function.
Works collaboratively with departments outside of HR to
deliver and support HR-related functions (examples include
work with IT to implement HR information system [HRIS]).
Proficiency indicators for advanced HR professionals include:

Creates long-term goals and implements changes that
address feedback from stakeholders identifying opportunities
for HR function improvements.
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Designs and oversees programs to collect, analyze and
interpret HR-function metrics to evaluate the effectiveness of
HR activities in supporting organizational success.
Designs, implements and adjusts the HR service model for
the organization to ensure efficient and effective delivery of
services to stakeholders.
Ensures that all elements of the HR function are aligned,
integrated, and provide timely and consistent delivery of
Identifies opportunities to improve HR operations by
outsourcing work or implementing technologies that automate
HR functions.
Key Concepts:
Approaches to HR function/service models (examples include
centralized, decentralized, global resources).
Approaches to HR structural models (examples include
Center of Excellence [COE], shared services, business
partners, matrix).
Elements of the HR function (examples include recruiting,
talent management, compensation, benefits).
HR staff roles, responsibilities, and functions (examples
include generalists, specialists, HR business partners).
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HR-function metrics (examples include HR staff per full-time
employee, customer satisfaction, key performance indicators,
balanced scorecard).
Outsourcing of HR functions (examples include recruiting,
benefits administration, payroll, legal, contract management,
investigations).
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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?
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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.
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Role of HR
Proficiency indicators related to this section include:

issues.
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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
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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
Analytical Aptitude skills were indispensable as well.
Strategic and Administrative Roles

of HR
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.
Aligning the HR strategy with the organization’s strategy.
Supporting other functions in their strategic roles.
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This role 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.
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 is

used to manage HR data (for example, employee records)
and create compliance reports. HR and management
software applications (for example, applicant tracking
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software, project management) increase productivity. In many
organizations, managers and employees can complete their
own transactions (for example, 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.
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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 (such as job
analysis and 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—for example, rewarding
increased customer satisfaction rather than decreased call
time or 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.
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HR’s Internal Stakeholders

Acts as HR point-of-service contact for key stakeholders
within a division or group.
issues.
Works collaboratively with departments outside of HR to
deliver and support HR-related functions (examples include
work with IT to implement HR information system [HRIS]).
Creates long-term goals and implements changes that
address feedback from stakeholders identifying opportunities
for HR function improvements.
Designs, implements and adjusts the HR service model for
the organization to ensure efficient and effective delivery of
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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.
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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.
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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
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organization. These core business functions are illustrated in
Exhibit 1.
Exhibit 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.
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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.
Exhibit 2 summarizes the information about HR and its core

business partners.
Exhibit 2: Cross-Functional Relationships with HR
Cross-Functional Relationships with HR
Executive Recruiting executive Recruiting and training

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

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

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

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

Managing labor relations in security of operations
different markets Coordinating with local
Dealing with intellectual legal, regulatory, and
property rights cultural requirements
Information Selecting the HR Using Internet and

technology information system and extranet to foster better
implementing it communication,
Using database analysis to knowledge sharing, and
support decision making coordination among
and strategic initiatives internal and external
stakeholders
Executive Management
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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—for example, 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.
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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:
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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.
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Complying with financial requirements and reporting
information to government agencies (such as 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 (such as
screening job applicants, fraud investigations), and support the
conduct of external and internal audits.
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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.
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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 (for
example, 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.
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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&)
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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 (such as 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.
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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.
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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
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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.
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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

HR can assist IT by providing a pipeline of qualified employees. In
terms of IT’s efforts to manage the organization’s technology
risks, HR can develop and communicate technology policies,
such as policies related to safeguarding the organization’s
networks from unauthorized access. In return, IT supports HR’s
technology and consults on HR’s technology projects.
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For example, in order to implement a human resources
information system (HRIS), HR needs to be an active partner with
IT from the beginning of the process, starting with a needs
analysis that informs the rest of the design and an implementation
process for the HRIS system. Following that, HR continues to
work with IT, providing input as design decisions are made and
systems are acquired, through the implementation process. HR’s
level of involvement in this process will determine how smooth the
implementation process is and how successful the HRIS system
is once implemented.
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HR Organization

Adapts work style to fit the organization’s HR service model
to ensure timely and consistent delivery of services to
stakeholders.
Ensures that outsourced and/or automated HR functions are
integrated with other HR activities.
Identifies opportunities to improve HR operations by
outsourcing work or implementing technologies that automate
HR functions.
Key concepts related to this section include:

Approaches to HR function/service models (examples include
centralized, decentralized, global resources).
Approaches to HR structural models (examples include
Center of Excellence [COE], shared services, business
partners, matrix).
Elements of the HR function (examples include recruiting,
talent management, compensation, benefits).
HR staff roles, responsibilities, and functions (examples
include generalists, specialists, HR business partners).
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Outsourcing of HR functions (examples include recruiting,
benefits administration, payroll, legal, contract management,
investigations).
41
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
42
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:
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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.
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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 Function, Service, and

Structural Models
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.
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The advantages and disadvantages of the various alternatives for
structuring the HR function are summarized in Exhibit 3.
Exhibit 3: Advantages and Disadvantages of HR Structural

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

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

each function, direct contact between HR and
business unit, or other functions and facilitates
location carrying communication and
out required responsiveness.
activities. Disadvantages: Lack of
consistency among HR policies
and standards.
46
Functional Headquarters HR is Advantages: Facilitates

staffed with consistency between
specialists who headquarters policy and
craft policies. HR practices and implementation
generalists, who in business units.
may be located Disadvantages: Can isolate
within divisions or headquarters HR from
other locales, business realities perceived by
implement these all staff and employees.
policies, adapt
them as needed,
and interact with
employees.
Dedicated Allows Advantages: Promotes
organizations with strategic alignment between
different strategies headquarters and units.
in multiple units to Disadvantages: Isolation of
apply HR expertise dedicated HR units and loss of
to each unit’s shared knowledge and
specific strategic experience; may lead to
needs. duplications and inefficiencies.
Shared Each business unit Advantages: Offers expertise

services can supplement its efficiently, reducing load of
resources by transactional activity in favor of
selecting what it value-creating activity.
needs from a menu Disadvantages: Risks
of shared HR underuse of service centers
services (usually when their existence is not
transactional) that widely known.
the units agree to
share.
47
Center of Leverages strategic Advantages: Takes advantage

excellence expertise to foster of digital communications to
(COE) growth and create networks of experts in
continuous the organization.
improvement. Disadvantages: Similar to
shared services, risks
underuse when its existence is
not widely known
Business Generalists who Advantages: Allows business

partners usually report to partners to acquire a deeper
managers outside understanding of the business
of the HR structure and enables HR to better
but indirectly report support organizational efforts.
to HR and work to Disadvantages: Can be
consult and help difficult to define roles and
link their business responsibilities for business
area to the proper partners, who may become a
areas of the HR scapegoat from employees in
department. both areas for issues that
occur.
48
Matrix HR staff report Advantages: Works well when

directly to HR pressures originate from
senior management multiple areas or when the
but also report to work is complex (such as
other departments setting benefit policies
through the senior equitably between employee
management groups in different locations).
positions. Disadvantages: Blurred
reporting relationships, time
constraints, and increased
workload may result.
Opportunity for conflict
between senior management
of HR and business areas.
Global Refers to the ability Advantages: Helps HR

resources to attain support consider all areas when
and resources from making decisions by avoiding
around the world, the tendency to consider only
often via local issues.
outsourcing. Disadvantages: Can increase
the opportunities for
miscommunication or failure to
recognize particular cultural
norms if not done carefully.
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
49
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
50
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.
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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
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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.
Center of Excellence (COE)

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.
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Business Partners
Business partners are typically embedded in different areas of the
business, reporting directly to managers within those areas and
with “dotted line” reporting retained with HR. This allows business
partners to better focus on specific business areas and tasks and
to better understand and support those areas; it provides
managers in the areas with a better understanding of the role and
capabilities of the HR function. It also increases the visibility of HR
throughout the organization.
Matrix Structures
Matrix structures allow for flexibility within the HR department and
may result in specialized working relationships designed to meet
the specific needs of the organization and its business areas. This
is distinct from the business partners concept because it involves
reporting to other business areas through the HR senior
management positions instead of reporting directly to managers in
the other business areas.
If department heads from the other business areas ask HR to do

more than it is capable of or experienced in, conflict may result.
HR employees may struggle to understand who they are
responsible to due to blurred functional reporting lines and may
experience an increased workload as a result of the arrangement.
Clearly setting expectations with the HR employees with regard to
54
expectations, responsibilities, priorities, and who to approach with
questions may help avoid some of these issues.
Outsourcing
The use of 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:

Contract management.
Payroll services.
Employee benefit programs.
Employee self-service centers.
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Investigations.
Learning and development systems, including training and
knowledge management.
Legal services.
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
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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 not only 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).
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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.).
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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.
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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
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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 Exhibit 4 for criteria to consider when
selecting a contractor.
Exhibit 4: Factors to Consider When Evaluating Third-Party

Contractors
Evaluating a Third-Party Contractor
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Evaluating a Third-Party Contractor
Scope of resources Company
Ability to meet specifications reputation/references
Results of site visit Customization options
Price Additional value-added
Commitment to quality of capability
product and service Previous/existing
Schedule relationship
Flexible contract terms
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
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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.
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Example: During the project planning process, the HRIS
project team defined benchmarks that could be used to
evaluate the system once it was implemented, for
example, percentage of errors or 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.
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Demonstrating the Value of HR

Analyzes and interprets key performance indicators (KPIs) to
understand the effectiveness of the HR function.
Designs and oversees programs to collect, analyze and
interpret HR-function metrics to evaluate the effectiveness of
HR activities in supporting organizational success.

HR-function metrics (examples include HR staff per full-time
employee, customer satisfaction, key performance indicators,
balanced scorecard).
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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.
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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.
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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 Analytical Aptitude in gathering and analyzing data,
Leadership & 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 HR Performance
Measurement and Balanced
Scorecards
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
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objectives
Strengthening HR’s relationship with internal business
partners
Supporting future investment in HR programs
The process begins with establishing key performance indicators

(KPIs). 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—such as 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 or changed.
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.
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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.
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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
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HR metrics focus on traditional measures of efficiency and
effectiveness (such as budget performance, hiring ratios and
costs) as well as strategic HR activities (for example, metrics
indicating increased employee engagement, such as reduced
absenteeism or discipline issues, or reduced risk, such as
accident rates and compliance audit results).
Exhibit 5 lists common HR metrics.
Exhibit 5: Sample HR Metrics
Metric Description Possible Use
Absence Ratio of lost days to To reflect benefits of a

rate number of employees change in workplace
conditions
Accruals Comparison of To monitor expense
budget to actual accruals and make
assignee costs sure that assignment
budget and financial
goals are met
Applicant Percentage of To demonstrate
yield ratio applicants who effectiveness of
proceed to the next recruiting methods
step of the selection
process
Cost per Total costs of hiring To demonstrate
hire divided by number increased efficiencies
hired in recruitment and
hiring process
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Customer Measure of various To demonstrate

satisfaction different customer increased satisfaction
opinions across as a result of specific
services offered by program changes or
HR new service offerings
HR staff per Ratio of the number To show if HR is
full-time of HR staff retained adequately staffed to
employee to number of overall support the needs of
full-time staff retained the workforce
Human Ratio of employment- To demonstrate value
capital related expenses to of HR programs
return on revenue minus
investment nonemployment
expenses
Human Revenue minus Used comparatively to
capital nonemployment indicate increase in
value added expenses divided by employee productivity
number of full-time as the result of HR
employees activities
Key talent Percentage of key To demonstrate
retention talent retained effectiveness of
employee development
and reward strategies
Promotion Percentage of To demonstrate
pattern internal promotions effectiveness of
development programs
and strong culture
Success Proportion of To indicate
ratio selected applicants effectiveness of
who are later judged recruiting, selection,
to be successful on and orientation
the job methods
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Training Economic benefit of To demonstrate value

return on enhanced of strategic choice to
investment performance minus invest in training
costs of developing,
producing, and
delivering training
Transfer Number or To track internal
percentage of competency
employees moving development and
across divisions to global talent
new jobs management
Turnover Costs associated with When turnover rate is
costs separation, vacancy, combined with costs of
replacement, and turnover, to
training demonstrate economic
benefits of a change in
pay or benefits
Turnover Proportion of exiting When turnover rate is
rate employees to all combined with costs of
employees turnover, to
demonstrate economic
benefits of a change in
pay or benefits
Vacancy Costs of substitute To support decision to
costs labor (temporary outsource function or
workers, contractors, area and decrease
outsourcing partners) internal head count
minus wages and
benefits not paid
because vacant
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Each organization must choose the metrics that are meaningful
for its 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.
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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. Exhibit 6 lists the more common types.
Exhibit 6: Types of HR Audits
Audit Type Description
Compliance Focuses on how well the organization is

complying with current employment laws and
regulations
Best Helps the organization maintain or improve a
practices 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
specific (such as 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:
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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.
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Exhibit 7 summarizes the audit process steps.
Exhibit 7: The HR Audit Process
Audit Step Description
Determine the Identification of exactly what areas should

scope and type be targeted for review (such as
of audit. 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
questionnaire. document that elicits information during
the inquiry (for example, 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 (such as results for other
similarly sized employers, national
standards, or internal organizational data)
Provide feedback Review of data and presentation of
about the results. summarized findings and
recommendations (such as a written report
and discussions) for the organization’s HR
professionals and senior management
team
Prioritization of recommendations based
on the risk level (for example, high,
medium, and low)
Development of a time line for required
action(s)
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Audit Step Description
Develop action Development of action plans for

plans. implementing the changes suggested by
the audit, with the findings separated by
order of importance: high, medium, and
low
Foster a climate Constant observation and continuous
of continuous improvement of the organization’s policies,
improvement. procedures, and practices (such as
continuous monitoring of HR systems to
ensure that they are up-to-date and have
follow-up mechanisms)
Source: “Conducting Human Resource Audits,” SHRM
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Organizational
Effectiveness &
Development
Organizational Effectiveness & 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.
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Collects and analyzes data on the value of HR initiatives to
the organization.
Ensures that key documents and systems (examples include
job postings and descriptions, performance management
systems) accurately reflect workforce activities.
Identifies areas in the organization’s structures, processes,
and procedures that need change.
Recommends methods to eliminate barriers to organizational
effectiveness and development.
Supports change initiatives to increase the effectiveness of
HR systems and processes.

Aligns HR’s strategy and activities with the organization’s
mission, vision, values, and strategy.
Assesses organizational needs to identify critical
competencies for operational effectiveness.
Consults on, plans, and designs organizational structures
that align with the effective delivery of activities in support of
the organization’s strategy.
Designs and oversees change initiatives to increase the
effectiveness of HR systems and processes.
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Ensures that HR initiatives demonstrate measurable value to
the organization.
Establishes measurable goals and objectives to create a
culture of accountability, continuous experimentation, and
improvement.
Regularly monitors results against performance standards
and goals in support of the organization’s strategy.
Key Concepts:
Group dynamics (examples include intergroup vs. intragroup,
group formation, identity, cohesion, structure, influence on
behavior, conflict, forming/storming/norming).
Organizational analysis (examples include performance
analysis, McKinsey 7S model).
Organizational design structures and approaches (examples
include customer, functional, geographic, matrix, program).
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Organizational Effectiveness &
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 are we now?”
and “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
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interventions focus on developing more unified and focused
teams and helping dysfunctional teams move past conflict and
toward accomplishment.
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Organizational Development

improvement.

Organizational analysis (examples include performance
analysis, McKinsey 7S model).
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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-
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performing clinics were able to obtain valuable information to
bring back to their own offices.
Several months after the development of the program, the HR

professional examined the key performance indicators (KPIs) for
knowledge and experience that he had initially examined to
identify the variations that the program sought to address. Based
on the KPIs, the HR professional was able to determine that the
program was achieving its goals and no further changes were
needed.
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, Kotter’s eight-step change
model, and Lewin’s change management model. The terms may
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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.
Exhibit 8 illustrates this general concept.
Exhibit 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.
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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—the effectiveness and
efficiency in reaching goals—for the entire organization, for
its structural pieces (such as 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
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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.
A business case will likely need to be made in order to begin an

OED intervention. The business case should use data to illustrate
the need for the intervention and should outline KPIs that will be
used to track the intervention’s success at achieving its outlined
goals. OED interventions that begin based on conjecture and that
do not outline metrics are difficult to evaluate, leaving the
organization unable to determine if the intervention was actually
successful or if additional changes are needed. The goals should
work toward enabling the organization to better achieve its
strategic goals and should be determined collaboratively between
HR and the internal client needing or requesting the intervention.
The goals may also examine the efficiency of resources used to
create value.
The actual OED 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
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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
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expertise in managing workforce capabilities and productivity. HR
managers may apply OED principles to increasing the
effectiveness of the HR function.
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.
Structures that allow employees to make decisions quickly
and independently.
Remedial Interventions
Remedial interventions make changes that bring an organization
back on course toward its strategic goals. They are typically
intended/designed to resolve a problem or issue that is current or
newly discovered and to bring about a long-term positive impact
on the organization and its function. Assessing the success of a
remedial intervention can be easier than for other interventions.
Simply put, was the problem or issue resolved?
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Here are five ways in which remedial interventions can impact an
organization:
Increase efficiency.
Reduce employee burnout.
Improve product performance.
Shift from reactive to more proactive strategy.
Address budget deficits.
Characteristics of Effective OED

Interventions
Effective OED interventions share certain characteristics. Some of
these characteristics are described in Exhibit 9.
Exhibit 9: Characteristics of Effective OED Interventions
Characteristics Importance
Strategically Helps ensure that plans reinforce, complement,

aligned 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
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Producing Changes that can continue to deliver long-term

sustainable results results, perhaps because of management
preparation or group involvement and
acceptance of new processes and success
criteria
Supporting Aims at strengthening the organization in an
continuous ongoing manner by identifying weaknesses and
improvement 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 Allows for easy comparisons and collation of
tools data
Using common Avoids confusion and misunderstanding
language
Explicit Allow the validity of underlying assumptions to
assumptions be challenged
Fact-based Clarifies the difference between what is known
and what is supposed
Evidence-based Uses current best evidence to identify
problems/issues specific to the organization
through a commitment to continuous, up-to-date
information and knowledge gathering and
analysis
Oriented toward Uses systems theory to analyze problems
systems and (discussed elsewhere in further detail).
processes
Flexibility Recognizes and accepts that assumptions are
likely to change
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Multiple Provides access to diverse perspectives

perspectives
Assessing OED Interventions and

Why They Fail
OED interventions must be assessed once they are concluded, so
time must be allowed following the intervention to accurately
measure its efficacy. The measurement should use KPIs that
track the process or unit that underwent the intervention to
determine if it actually succeeded at achieving its stated goals.
Measuring too soon, or without using quantifiable data, may result
in the organization being unable to accurately determine if further
action is required to address the identified issue.
In addition to measurement of the intervention itself, the client’s

perception of the experience is also an important part of the
assessment. Clients may be surveyed or interviewed 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 (such as employees)?
Finally, HR should assess its own effectiveness and efficiency in

conducting the intervention. Did HR achieve its own quality goals
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throughout the intervention? Did members of the team execute
their roles properly? Were commitments to the client met in terms
of project deliverables (such as written reports) and promised
delivery dates?
The results of this assessment process can guide steps forward

for the organization and encourage continuous improvement for
the OED process. Not every assessment will be successful, so it
is important to remember all the difficulties 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.
Some other interventions fail because they are not based on data
but on conjecture. This happens when insufficient or inappropriate
data is collected or if no data is available.
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
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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
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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 (for example, e-mails, meetings, training
sessions, internal social media, press releases).
Communication is not aligned with organizational

realities. Messages should be honest and include the
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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.
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Improving Organizational
Performance

Collects and analyzes data on the value of HR initiatives to
the organization.
Ensures that key documents and systems (examples include
job postings and descriptions, performance management
systems) accurately reflect workforce activities.
Supports change initiatives to increase the effectiveness of
HR systems and processes.
Consults on, plans, and designs organizational structures
that align with the effective delivery of activities in support of
the organization’s strategy.
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Ensures that HR initiatives demonstrate measurable value to
the organization.
improvement.

Organizational design structures and approaches (examples
include customer, functional, geographic, matrix, program).
101
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
Analytical Aptitude help there. Global Mindset 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
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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
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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 (for example, equipment, facilities, budgets)
and organizational knowledge and expertise.
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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.
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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).
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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. 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.
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When decisions are made, they can be communicated and
implemented quickly.
Chain of command refers to the line of authority in 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.
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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.
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.
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.
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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.
Exhibit 10 illustrates a functional structure. In this example, all

employees—no matter what products they are working on—report
to a single location.
Exhibit 10: 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
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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.
Exhibit 11 illustrates a product structure.
Exhibit 11: 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
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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.
Exhibit 12 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.
Exhibit 12: Geographic Organization
Matrix Structures
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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
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programs end, employees return to their functions and wait for
reassignment to new projects.
There are advantages and disadvantages to each type of

organizational structure, as shown in Exhibit 13.
Exhibit 13: Advantages and Disadvantages of

Organizational Structures
Type of Advantages Disadvantages

Structure
Functional Easy to understand Weaker customer or

Specializations product focus
develop Potentially weak
Economies of scale communication among
functions
Easier communication
within functions Weak grasp of broader
organizational issues
Clear career paths
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

Adapted to local scale
practices Potential issues with
Quicker response time consistency across
regions (for example,
Cross-functional
practices, values,
communication
strategic focus)
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Type of Advantages Disadvantages
Structure
Matrix Combination of cross- Complex reporting

disciplinary structures
capabilities and Potential for conflicts
perspectives between functions and
Availability of best projects over
global talent resources
Flexibility and agility Potential cultural
conflicts on teams
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 Exhibit 14.
Exhibit 14: RACI Chart
Activity John Mary Team George

leaders
Documenting Responsible Accountable Consulting Informed
changes
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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.
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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.
Performance Gap Analysis

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
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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 (such as mentored job experience or
training in leadership, relationship management, and
communication skills.)
Activities designed to develop organizational talent are shown in

Exhibit 15.
Exhibit 15: Talent Development Interventions
Activity Tasks
Identify the talent Ensure that the current job descriptions

needs of the accurately reflect the work to be done to
organization. What achieve organizational objectives, and
is essential to meet prepare job descriptions for any anticipated
the overall positions.
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.
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Activity Tasks
Develop existing Determine if adequate staffing exists or if

staff. 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
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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 (for example, the expressions and metaphors
commonly used) and leadership and decision-making styles
(such as autocratic, participative); mapping communication
paths and choices; identifying meaningful objects, stories,
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people, and behaviors (for example, 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:
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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.
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Improving Team Performance


Group dynamics (examples include intergroup vs. intragroup,
group formation, identity, cohesion, structure, influence on
behavior, conflict, forming/storming/norming).
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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
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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.
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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.
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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
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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 Exhibit 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
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“outsiders.” This can sometimes take a negative form; “group
think” 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.
Exhibit 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
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role in helping the group move as quickly as possible through the
common reactions to change and become fully productive again.
Team Structure and Group

Dynamics
Teams may take various forms throughout an organization,
depending on the needs of the organization and the goal of the
team. Group dynamics may take place at two levels: intergroup
and intragroup.
Team Structure
Teams may take various forms throughout an organization,
depending on the needs of the organization and the goal of the
team. Team structure can be shaped along three different criteria:
diversity of skill, dispersion of authority, and longevity or
permanence.
Skill diversity describes the amount of difference between the

knowledge, skills, and abilities of the members of a team. A
team of merchandisers, for example, is likely to have a low
amount of skill diversity and the team members will be largely
interchangeable in their duties. A cross-functional team
assembled for a new product launch is likely to have a high
amount of skill diversity, as members are likely to have skills
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including sales and marketing, product design, visual
merchandising, logistics, and finance.
Authority dispersion refers to where the power to make

decisions is concentrated on the team. If there is a defined
team leader, such as in a marketing department, authority
dispersion tends to be low. Lower-ranking members of the
team may have some decision-making authority, but ultimate
authority, including the ability to override others’ decisions, is
vested with a single person—a senior director or vice
president. Teams with high authority dispersion don’t have a
strong defined leader with override authority and collaborate
to make decisions based on the input of the group at large.
For example, an automobile design team may work to reach
consensus on many design features instead of vesting a
single individual with the decision-making responsibility.
Permanence refers to the typical longevity of a team. Major

organizational structures like HR and marketing typically
remain a core function of a business on a permanent or semi-
permanent basis, giving them high permanence. In contrast,
task forces assembled to address a specific issue may last
only days or weeks, giving them low permanence.
Group Dynamics
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Group dynamics may take place at two levels: intergroup and
intragroup. Intragroup dynamics are between members of a
group; intergroup dynamics are between two different groups. We
largely discuss intragroup dynamics, but be aware that intergroup
dynamics can also impact how groups interact.
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
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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 offline discussions 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, it 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
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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.
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
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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
(such as 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.
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Workforce Management
Workforce Management refers to HR practices and
initiatives that allow the organization to meet its talent
needs and close critical gaps in competencies.
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Administers and supports approaches to ensure the
organization’s long-term leadership needs are met.
Assesses the competencies needed to support and grow the
organization, and identifies gaps and misalignment of staffing
levels.
Forecasts future workforce needs and plans strategies to
develop workforce competencies that support the
organization’s goals and objectives.
Implements approaches to ensure that appropriate workforce
staffing levels and competencies exist to meet the
Provides employees with continuous learning opportunities,
including opportunities for upskilling and reskilling.
Supports strategies for restructuring the organization’s
workforce.

Coordinates with business leaders to create strategies that
address the organization’s leadership needs.
Develops strategies for restructuring the organization’s
workforce.
Develops strategies to maintain a robust workforce that has
the talent to carry out the organization’s current and future
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strategy and goals.
Evaluates how the organization’s strategy and goals align
with future and current staffing levels and workforce
competencies.
Key Concepts:
Approaches to restructuring and downsizing (examples
include mergers and acquisitions, reduction in force, layoffs,
furloughs).
Best practices and techniques for knowledge management,
retention and transfer (examples include benchmarking,
thought leadership).
Non-traditional staffing methods (examples include gig
workers, remote workers, seasonal workers, contract
workers, interns).
Succession planning programs and techniques (examples
include mentorship, cross-training, 9-box grid).
Techniques for organizational gap analysis (examples include
examination of HR records, interviews, focus groups,
surveys, exit interviews, digital skills assessments).
Workforce planning approaches, techniques and analyses
(examples include forecasting, build/buy/borrow/bridge
strategies, attrition, gap and solution, supply and demand,
workforce profile, upskilling and reskilling employees,
138
redesigning jobs, robotics, identifying high-potential
employees, identifying high-performance employees).
139
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 (such as talent management and knowledge
management) and short-term strategies to address identified gaps
(such as temporary and contingency workers, outsourcing, and
workforce resizing).
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Workforce Planning

Assesses the competencies needed to support and grow the
organization, and identifies gaps and misalignment of staffing
levels.
Forecasts future workforce needs and plans strategies to
develop workforce competencies that support the
strategy and goals.
Evaluates how the organization’s strategy and goals align
with future and current staffing levels and workforce
competencies.

Techniques for organizational gap analysis (examples include
examination of HR records, interviews, focus groups,
surveys, exit interviews, digital skills assessments).
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Workforce planning approaches, techniques and analyses
(examples include forecasting, build/buy/borrow/bridge
strategies, attrition, gap and solution, supply and demand,
workforce profile, upskilling and reskilling employees,
redesigning jobs, robotics, identifying high-potential
employees, identifying high-performance employees).
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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
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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
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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.
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A workforce analysis typically includes six areas: strategic focus,
supply analysis, demand analysis, gap analysis, solution analysis,
and evaluating workforce planning impact.
A workforce profile is an important part of a workforce analysis.

It identifies the current make-up of the employees in terms of their
demographics, skills, competencies, and performance levels. The
profile also includes information such as employees’ expected
retirement dates, their pay grades, and other factors that help
explain the workforce’s composition. The profile allows HR
departments to better identify their hiring needs and plan for the
future. As you can see in Exhibit 17, the workforce profile
provides much of the information needed to complete the supply
analysis.
Exhibit 17 illustrates the workforce analysis process and the key

questions addressed at each stage.
Exhibit 17: Workforce Analysis Process
1. Strategic What industries or direction are we striving to enter

Focus over the next one to three years?
What are the strengths and weaknesses of the
What can and
current workforce?
can’t we do?
What do we Are there current external forces impacting our
need to business (new technology, environmental, global
consider? issues, etc.)?
2. Supply Where does the current workforce support business

Analysis needs today and in the future?
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Where are we Where does the current workforce not meet
now? What business needs today and in the future?
do we have? How can high-potential and high-performing
employees be empowered to address business
strategy?
How well do we understand the skills and
competencies of each employee?
What workforce profile concerns do we have?
In what areas is turnover negatively impacting our
business objectives?
3. Demand What workforce competencies will be required to
Analysis meet anticipated external demand and conditions?
How many employees will be required to meet
Where do we
demand? In what time frame and in what areas of
want to be?
the organization?
What do we
need? Will we be able to acquire the right talent at the right
levels and at the right cost?
4. Gap What necessary competencies do not currently exist
Analysis in the workforce?
Does the workforce size require change? By how
What is
much?
lacking? What
knowledge, What parts of the organization are most vulnerable
skills, or to gaps in competency and/or staffing level?
abilities
currently exist
and are
needed in the
future?
5. Solution How much money will be allocated to staffing future

Analysis competencies?
Should we build, buy, or borrow the talent?
What can we
afford? How Will we look internally or externally to fill vacancies?
will we get What sources should we use?
what we Can the gaps be filled by workers in the local area,
need? or will we have to seek applicants elsewhere?
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What level of applicants are we seeking to fill
vacancies? Is it best to hire people at a full
performance level, or should we seek entry-level
candidates and train/develop them?
Are the needed competencies specialized? Do they
require individuals with advanced training?
Will we need the competencies short-term or long-
term? Full-time or part-time?
What are the costs versus the benefits of the
recruitment strategy?
6. Evaluating How will success be measured?
Workforce In what parts of workforce planning are we
Planning successful?
Impact What are the challenges stopping us from meeting
How did we goals?
do? What What workforce planning initiatives need to be
needs to be revamped?
done next?
Staffing Supply Analysis

After identifying and assessing the organization’s strategic focus,
the workforce analysis process moves on to 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
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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 and managers are encouraged
to look for:
Overstaffing that results in a poor ratio of revenue per
employee.
Opportunities to build talent to improve effectiveness,
efficiency, and impact.
Elevating employee skills and/or maximizing time.
Revamping work processes or organizational structure.
Building commitment to agility/flexibility in all positions to
meet changing production requirements.
Technology that is changing how each job is completed
(artificial intelligence, robotics) and how talent can be
identified, managed, and stored (applicant tracking systems,
skill banks).
The result of this analysis is a more accurate rubric showing the

resources required to produce a specified amount of revenue. If
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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 Analytical
Aptitude competency in the HR Competencies module: trend
analysis and ratio analysis. An additional tool specific to workforce
management is turnover analysis.
Turnover Analysis
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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.
Exhibit 18 shows monthly separations and total workforce

numbers for one year at a medical supplies wholesaler, ABC
Medical.
Exhibit 18: Separations at ABC Medical
Month A (separations) B (total workforce)
January 15 250
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
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Month A (separations) B (total workforce)
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 (such as

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.
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Analyzing trends in turnover rates for particular geographic
locations or occupational categories.
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.
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This information can be gathered using research into industry
standards and benchmarks (such as productivity and revenue-
generation rules of thumb) as well as the Analytical Aptitude
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
Exit interviews and surveys to determine where employees
are identifying issues, including those that cause turnover
Digital skills assessments to determine the ability of the
workforce to continue to be productive as technologies
advance or are added
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
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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
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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 Exhibit 19.
Exhibit 19: Examples of Staffing Gaps
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Type of Staffing Description
Gap
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- Organizational learning is not occurring.
sharing 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.
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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?
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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. For
example, a shipping company has set a goal of all senior
managers working in their China office to speak Chinese. After a
review, they find that only 15% of the managers in China have an
appropriate level of fluency. Therefore, there is an 85% staffing
gap that will need to be addressed.
High-priority gaps identified in the workforce analysis process are

the basis for creating longer-term workforce planning strategies
and for defining (near-future) tactical objectives.
Staffing Solution Analysis and

Staffing Plan
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Solution Analysis
The solution analysis 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,” “borrow,” or “bridge” 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. This may include up-skilling
employees, or enabling them to learn new skills to improve
their performance in their current jobs.
“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.
“Bridging” is similar to building but with a focus on providing
training in areas adjacent to employees’ current roles to
enhance the value they can create. This may include re-
skilling employees to help them learn the skills needed to
prepare them to move into different position or jobs.
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In addition to these approaches and the tools associated with
them, organizations may look to other tools. Job redesign may
adjust the responsibilities associated with a certain role, allowing
employees to expand their skills and area of influence while also
addressing gaps identified during the workforce analysis.
Companies may also turn to robotics to fill in labor gaps, where
the technology is sufficient and affordable enough. They can also
work to identify and develop high-potential employees and better
use employees who are already considered high-performance.
Labor market trends should be considered during solution

analysis. For example, the U.S. Department of Labor’s 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.
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.
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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.
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.
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?
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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?
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.
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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
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feedback from those implementing the plan is crucial to those
responsible for developing and monitoring the staffing plan.
Exhibit 20 lists the components of a communication plan.
Exhibit 20: 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 Exactly what information must be
information 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

communication effective (for example, face-to-face, formal
announcements, training programs,
frequent e-mail updates)?
What variations in the communication
mode are required for specific countries
and cultures?
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Communication Description
Component
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?
Timing What schedule is required to achieve the

objectives of the communication plan?
Responsibility and Who will actually develop and deliver the
accountability required communications? Who is
accountable for the achievement of the
goals of the communication plan at
different levels?
Evaluating Workforce Planning

Impact
The final stage in the workforce analysis process involves
evaluating the impact of the process and considering how to
improve it.
The final stage in the workforce analysis process involves

evaluating the impact of the process and considering how to
improve it.
The purpose of continuous improvement is to create a mindset of

ongoing process improvement: evaluating the current state of a
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program, plan, or policy based on the desired state, result, or
impact; identifying opportunities for improvement as soon as
possible; documenting lessons learned from the experience; and
ensuring that these lessons are used to enhance ongoing and
future initiatives.
The SMARTER goal acronym is used in organizations to improve

the way goals are planned and evaluated. SMARTER (specific,
measurable, achievable, relevant, time-based, evaluated, and
revised) goals focus on both results and continuous improvement.
Identifying what success looks like early on will allow project
managers to understand when goals are accomplished and when
action needs to be revisited because the goal is no longer
appropriate, relevant, or prioritized.
With numerous variables impacting business goals and direction,

HR will be most effective if it focuses on both continuous
improvement activities and specific and measurable objectives
that can be identified when complete. Using the “evaluated” and
“revised” parts of the SMARTER concept leads to a continuously
improving mindset.
Continuously Improving the Staffing Plan

As the staffing plan is implemented, those involved will observe
the process and look for ways to improve it.
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Exhibit 21 is a checklist for continuously improving the staffing
plan.
Exhibit 21: Continuous Improvement Checklist for Staffing

Plans
Continuous Improvement of Staffing Plans

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

Supports strategies for restructuring the organization’s
workforce.
Coordinates with business leaders to create strategies that
address the organization’s leadership needs.
Develops strategies for restructuring the organization’s
workforce.
strategy and goals.

Approaches to restructuring and downsizing (examples
include mergers and acquisitions, reduction in force, layoffs,
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furloughs).
Non-traditional staffing methods (examples include gig
workers, remote workers, seasonal workers, contract
workers, interns).
Succession planning programs and techniques (examples
include mentorship, cross-training, 9-box grid).
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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).
171
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.
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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 Staffing 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.
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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. Exhibit 22 summarizes
key characteristics for some of the more prevalent types of
flexible staff, organized according to whether the employees are
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on an organization’s payroll or administration functions are
outsourced to staffing firms.
Exhibit 22: Types of Flexible Staff
Staff Option Description
Flexible Staffing Administration by the Organization

Temporary Employees hired to work on a specified job to
assignments supplement the regular workforce on a short-term
basis or for a specific period of time.
Temporary Employees hired to work directly on the
employees organization’s payroll on a short-term basis or for a
specific period of time to rotate among several
positions or departments as needed.
Remote Employees who do not work from a main office
workers location.
Interns Professional learning experience that offers
meaningful, practical work related to a student’s field
of study or career interest. An internship gives a
student the opportunity for career exploration and
development; they can also learn new skills. It offers
the employer the opportunity to bring new ideas and
energy into the workplace, develop talent, and
potentially build a pipeline for future full-time
employees.
On-call Employees who report to work only when needed.
workers
Part-time Employees scheduled to work less than a regular
employees workweek on an ongoing basis; benefits eligibility
may depend on various factors (such as number of
hours worked).
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Staff Option Description
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.
Seasonal Part-time or “casual” workers hired to perform
workers seasonal work in a variety of industries (for example,
agriculture, construction, tourism, and recreation);
may or may not be eligible for benefits (such as paid
time off).
Phased Any work arrangement that falls somewhere in
retirement 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 Workers who are recruited, screened, and employed
temporary by a temporary help firm; the temporary firm assigns
help individuals to work at client sites for a finite duration
(such as to cover an employee’s medical/maternity
leave).
Temp-to-hire Workers hired on a temporary basis (usually through
programs a temporary firm) with the understanding that they
may be offered regular employment if they perform
competently for a specified time.
Contract May include highly skilled workers (for example,
workers engineers, data processing specialists) supplied for
long-term projects under contract between the
organization and a technical services firm or gig
workers who contract independently and provide
varying levels of skills.
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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 Exhibit 23.
Exhibit 23: Types of Flexible Staffing Arrangements
Service Description
Arrangement
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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 In an explicit joint venture, an organization
leasing or transfers all or substantially all employees at
professional a discrete site or facility to the payroll of an
employer employee leasing firm; the PEO leases
organization employees back to the organization while
(PEO) handling most of the HR administrative
functions (for example, payroll, benefits).
Temp-to-lease An organization contracts with two (usually
programs affiliated) 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 An independent organization with expertise in
or managed operating a specific function contracts with an
services organization to assume full responsibility for
the function (as opposed to just supplying
personnel); functions may be peripheral to the
core business (for example, 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
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responsibility and liability for its 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
179
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.
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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.
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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.
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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 (for example, 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
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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.
Another driver in today’s workplace environment is technology—

including robotics and artificial intelligence (AI). Robotics and AI
can have an impact on organizational as well as job redesign.
Whole departments may be eliminated or initiated if certain
technological changes are made, and often employee re-skilling
and up-skilling are priorities to close the skill gap in the workforce.
Both re-skilling and up-skilling may be initiated by the organization
or by an individual employee. Organizations that recognize that
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technology, robotics, AI, and so forth are changing the ways in
which organizations will do business in the future will first identify
what skills are needed to leverage the new technology and then
create an appropriate up-skilling/re-skilling strategy.
Redistribution of Decision-Making Authority

As an organization grows larger, traditional decision-making
processes may become so cumbersome that the organization
becomes 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.
M&A and Divestiture
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Organizations may also try to enhance their productivity and
competitiveness by adding to the value of the firm (such as
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.
Key Content
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, local
laws, and ethical expectations. This helps manage risk to the
organization’s reputation and its legal liability.
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In the context of M&A, HR focuses on 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 (such as severance and tax
codes)
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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.
Exhibit 24 lists typical factors HR should include in its due

diligence investigation. Many of these topics are the same as
those HR might use in an annual survey of its workforce status.
Exhibit 24: HR Due Diligence Topics for M&A Strategies
HR Due Diligence Topics for M&A Strategies
Management Work environment

Talent of current managers Employee attitudes
at top and middle levels Employee engagement
Anticipated level of post- Type of worker representation
M&A motivation of and participation
managers Rates of absenteeism and
Likelihood of retaining top disability
management Safety records
Management pay structure Complaints filed with
Ability to recruit top regulatory agencies
managers Community labor
Management style environment
Centralized vs. Union climate
decentralized? Availability of necessary skills
Paternalistic? Current HR function
Authoritarian?
In-house or outsourced?
Collaborative?
Future plan
Distance of management
style from that of own HR policies and procedures
organization Written or unwritten policies
Probability that managers and procedures
will be able to adapt to
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Compatibility
HR Due Diligence Topics with own policies
for M&A Strategies
and procedures
new style
Other required policies (such
Culture as diversity in hiring)
Alignment of stated values Effect of future business
with leaders’ actions strategy
How things happen every
HR activities needed to
day
support business strategy
Decision making (for
(examples include hiring and
example, amount of
closing of operations)
autonomy, levels of
Hidden costs of acquisition
approval required)
“Silo” internal structure Special contract terms with
Perception of internal and management
external customers Benefit plans and
Learning and development transferability to new
philosophy (for example, employees
who receives training, how Pension plan status
learning is perceived and (adequacy of funding,
delivered, how much distribution, retention of
money is spent on it) unvested percentage)
Age and diversity of Separation and incentive pay
workers plans
General employee Compensation packages
information Pending lawsuits and
judgments
Types of employees (full-
time, part-time)
Local customs of
employment
Retention plans, if
applicable
Key Content
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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
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(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
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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—for example,
economic necessity or restructuring. This may take the form of
permanent or temporary layoffs in certain divisions or locations or
across the entire organization.
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 or to take furloughs without pay, offering
voluntary termination and/or retirement with additional benefits, or
asking employees to accept a reduced work schedule.
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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
are 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.
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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 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 (for example, bulges in the size of certain
194
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 are critical
aspects of an organization’s talent management strategy.
Members of a specific talent pool (for example, 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
195
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, it can quickly draw on
these resources to fill in or supplement workforce gaps in
times of organizational crisis.
196
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 that 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
197
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
198
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
199
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
200
element in business continuity planning in the event of an
emergency or business interruption.
Exhibit 25 compares succession planning and replacement

planning.
Exhibit 25: Succession vs. Replacement Planning
Variable Succession Planning Replacement Planning
Time frame 12–36 months 0–12 months

Readiness Candidate with the best Best candidate
development potential available
Commitment Merely possibilities until Designated preferred
level vacancies occur replacement
candidate
Planning Pool of talented Vertical lines of
focus candidates with succession within
capabilities for several units or functions
assignments
Planning Specific plans and goals Usually informal,
development set for the individual status report on
strengths and
weaknesses
Flexibility Flexible plans that are Limited by plan
intended to promote structure; however, in
development and practice has a great
thinking about deal of flexibility
alternatives
Plan basis Result of input and Each manager’s best
discussion among judgment based on
multiple managers observation and
experience
201
Variable Succession Planning Replacement Planning
Evaluation Multiple evaluations by Observation of

different managers on performance on the
different assignments; job over time;
testing and broadening demonstrated
early in career competence;
progress 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 Exhibit 26.
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Exhibit 26: Components of Successful Succession Plans
Components of Successful Succession Plans

Visible support from senior Use of succession planning
leadership and all members to reinforce organizational
of top management culture
Clearly defined leadership Process that focuses heavily
criteria but not exclusively on
Defined plan to find, retain, leadership development
and motivate future leaders Process that is a real
and high-potential organizational priority
employees
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.
Development approaches may include in-house training,

mentoring, cross-training, coursework from outside sources, or
special projects specifically designed for the employee.
203
Organizations may also deploy a nine-box grid, which groups
employees into one of nine categories depending on whether they
are considered low, medium, or high potential and low, medium,
or high performance. By examining the example in Exhibit 27, you
can see how a decision could be made based on a completed
nine-box grid.
Exhibit 27: Example of Nine-Box Grid
From “Succession Planning: What Is a Nine-Box Grid?”, SHRM
A nine-box grid can also be used as part of talent

management/pool discussions, helping to assess employees’
ability to contribute to the organization now and in the future. Note
204
that organizations may choose to use different numbers or labels
to represent each box on the grid. Using the example given in
Exhibit 27, the grid functions the same for both succession
planning and talent management: Any employee who fits in boxes
1, 4, or 7 is underperforming and should be the recipient of extra
training or other talent management and development attention.
Employees who fall into boxes 3, 6, and 9 are high performers. An
employee who falls into box 9 is the one who is most ready or
suited to fulfill a role now. Depending on the long-term plan of the
organization, however, it might not be essential for an employee
to fit in box 9 in order to fill an upcoming opening; incorporating
time and space for training and skills acquisition can be part of an
HR plan. That is to say, employees who fall into certain boxes
now can be groomed for future roles and promotion with the
appropriate application of training and talent development.
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.
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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.
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Knowledge Management


Best practices and techniques for knowledge management,
retention and transfer (examples include benchmarking,
thought leadership).
207
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
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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

uses 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
209
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 (KM) 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.
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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 and Critical
Success Factors
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.
Exhibit 28 describes the steps to create a formal KM system.
Exhibit 28: Steps to Create a Formal Knowledge

Management System
Step Description
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Step Description
1 Inventory This step involves cataloging the

knowledge organization’s collection of tangible
assets. assets. Collections often include white
papers, proposals, presentations,
business and marketing plans, and
growth and expansion plans. Some
components of information systems
(such as 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
repository and intranet or through a dedicated
directory. application. The access tool must be
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
system use. communication, 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.
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Step Description
4 Update the While keeping the database up-to-date

system. often represents a challenge for the
organization, continuous updates are
essential to ensure the integrity and
credibility of the system.
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
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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 in order
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 or mentor, 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
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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
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both within and outside their own organization. Social learning
can turn an entire organization into a unified learning team.
An organization must have strategies in place for gathering

knowledge from employees who will soon leave (due to
retirement, for example). This can be done in a number of ways,
depending on how much time is available, perhaps through
mentoring employees who will remain after the departure or
succeed the departing employee or even interviews with a
relevant department head who can then pass this knowledge on
to a successor in the vacated role.
Organizations may also choose to share knowledge outwardly

into their larger community. Benchmarking is recognized as a best
practice for companies looking to improve their performance and
ensure that their processes meet global best practices to the
extent possible. But benchmarking would not be possible if high-
performing organizations did not share information for others to
compare against.
Thought leadership is another way that individuals and

organizations may choose to share knowledge outwardly.
Thought leaders, generally speaking, use their knowledge to
influence their industry by transferring the knowledge to the
industry and the general public. Motivations for doing so may vary
from person to person and organization to organization.
Individuals who act as thought leaders may increase visibility in
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their organization and industry, leading to promotion and job
opportunities. Organizations that prioritize green initiatives may
magnify their impact by influencing other organizations in the
industry to change their procedures to be more environmentally
friendly. They may also increase their brand perception, which in
turn may increase sales, or help drive technological innovations
that end up increasing profitability over time.
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Employee & Labor
Relations
Employee & Labor Relations refers to any interactions

between the organization and its employees regarding
the terms and conditions of employment.
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Advises 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.
Develops and implements workplace policies, handbooks,
and codes of conduct.
Manages employee grievance and discipline processes.
Provides guidance to employees on the terms and
implications of their employment agreement and the
organization’s policies and procedures (examples include
employee handbook, code of conduct).
Resolves workplace labor disputes internally.
Supports interactions and negotiations with employee
representatives (examples include organized labor,
governmental, legal).

Coaches and counsels managers on how to operate within
the parameters of organizational policy, labor agreements,
and employment agreements.
Consults on and develops an effective organized labor
strategy to achieve the organization’s desired impact on itself
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and its workforce.
Educates employees at all levels about changes in the
organization’s policies.
Educates employees, managers, and leaders at all levels
about the organization’s labor strategy and its impact on the
achievement of goals and objectives.
Manages interactions and negotiations with employee
Oversees employee investigations and progressive
disciplinary actions.
Serves as the primary representative of the organization’s
interests in activities related to organized labor management
(examples include negotiations, dispute resolution).
Key Concepts:
Approaches to retaliation prevention (examples include open
door policy, open communication, non-retaliation policy,
whistleblower protection, documentation).
Causes of (examples include unfair labor practices, economic
grievances) and methods for preventing and addressing
(examples include strike response plan, hiring temporary
workers, protection of non-striking employees, supply chain
contingency plans) strikes, lockouts and boycotts
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Employment rights, standards and concepts (examples
include labor rights, living wage and fair wage concepts,
standard workday, unfair labor practices), according to the
International Labour Organization (ILO).
Progressive disciplinary procedures and approaches
(examples include counseling, performance improvement
plan, corrective action, verbal warning, demotion,
termination).
Techniques for grievance and complaint resolution (examples
include grievance procedure, investigation, appeal).
Techniques for workplace investigations (examples include
consistency, interview plan, summary report).
Types and development of compliance and ethics programs
(examples include design, implementation, required postings,
performance measures).
Types of alternative dispute resolution (ADR) (examples
include mediation, arbitration) and their advantages and
disadvantages.
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Employee & 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 (for example, labor/trade unions, works councils)
and government agencies (for example, 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
(for example, contract negotiation and administration,
compliance with labor laws)
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The Employment Relationship

Develops and implements workplace policies, handbooks,
and codes of conduct.
and its workforce.
Educates employees at all levels about changes in the
organization’s policies.
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Employment rights, standards and concepts (examples
include labor rights, living wage and fair wage concepts,
standard workday, unfair labor practices), according to the
International Labour Organization (ILO).
Types and development of compliance and ethics programs
(examples include design, implementation, required postings,
performance measures).
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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 & 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
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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
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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. The
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international standards reflect a consensus about the rights of the
employee and the responsibilities of the employer.
The ethical principles embodied in the standards 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
living wages, the length of a standard workday, overtime
regulations, benefits, and working conditions (for example,
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. For example, providing workers in each
country or region with an appropriate living wage is not only the
just thing to do but can also pay dividends in attracting top talent
and improving the organization’s reputation (at home and
abroad). International standards are especially significant to
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global organizations developing or trying to apply standards
across their organizations.
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
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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 (for
example, 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
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“Discrimination,” prohibiting discrimination in hiring, training,
and working conditions and requiring employers to promote
equality of opportunity and treatment
Additional standards have been issued by the ILO in relation to

wages and working time, specifically to ensure that member
nations commit to enacting legislation that provides workers with
living wages and that employees are not expected to work over-
long hours, which might be detrimental to their health.
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. Laws in some areas may also
mandate that materials are posted for employees to see that
describe employees’ legal rights with regard to employment
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laws, including things such as wages and the right to
organize.
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.
A compliance and ethics program that includes:

Participation by the board and senior management in order
to establish a “tone at the top” and to empower and provide
resources to those individuals who are tasked with
managing relevant day-to-day tasks and responsibilities. A
chief compliance officer should also be appointed to take
the lead in upholding the organization’s integrity.
Compliance risk assessments, including appropriate
information sharing and training to ensure that compliance
officers are kept up-to-date on regulations and relevant
laws.
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Procedures for meeting workplace posting requirements.
Monitoring and testing mechanisms to maintain the
effectiveness of the program overall and implement
adjustments when called for.
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.
Details of identified and agreed-upon performance measures,

complete with a robust feedback mechanism.
Initiatives for implementation (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.
Implementing a reward system for employees who deliver
exceptional results based on employee goals (devised in
consultation with the employees).
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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 (for example, work terms, complaint
procedures) and expectations of employee conduct (for example,
ethics, compliance with policies such as antiharassment or
substance use). 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.
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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
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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.
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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 (such
as family leave) and restrictions on illegal behavior (such as
sexual harassment, violence, or 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
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conditions of employment but makes clear that it applies only to
employees not covered under a collective bargaining agreement.
Exhibit 29 summarizes key points in developing effective

employee handbooks.
Exhibit 29: Tips for Creating Effective Employee

Handbooks
Tips for Creating Effective Employee Handbooks

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

240
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 (for example, labor/trade unions, works
councils, and professional associations) and institutions that
interject themselves into the employer-employee relationship (for
example, 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 CEO of a grocery store chain has been informed that there is
a unionization effort underway at a store location. The CEO is
concerned about the potential impacts to the business from a
financial standpoint as well as any other areas that may be
impacted. She asks HR to look into the details of the unionization
effort and identify potential outcomes associated with it.
The chief human resources officer (CHRO) creates a team to

examine comparable unionization efforts in other companies in
the industry. The team applies the Business Acumen,
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Relationship Management, and Analytical Aptitude competencies
to analyze the potential outcomes associated with both success
and failure of the unionization effort.
As a result, the HR team is able to show expected labor cost

increases associated with a successful unionization effort along
with potential ancillary effects on productivity and sales. It is also
able to share potential effects associated with a failed union effort,
such as those on morale and turnover of portions of the
workforce. With this information, the CEO is able to direct a data-
based organizational response to the unionization effort.
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 (for
example, 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.
242
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. 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.
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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.
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
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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
245
forces that can influence that relationship—such as economic
performance and trends, politics, laws, and technology.
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 (examples include 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
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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 (for example, 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,
247
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.
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Organized Labor Actions and
Unfair Labor Practices

and its workforce.
249
250
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 & 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
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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 & 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.
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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 Exhibit 30.
Exhibit 30: Examples of Employee Collective Industrial
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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 Attempt by a union to influence an
action or employer by putting pressure on another
boycott 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.
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.
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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.
Preventing or Mitigating the Effects

of Work Actions
HR plays a key role in attempting to avert 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.
Strikes may arise for many reasons, including economic

grievances and unfair labor practices.
255
Economic Grievances
Economic grievances arise from employees’ desire for increased
wages and better benefits and working conditions. These often
stem from impasses during negotiations between organized labor
and employers over new contracts and extensions.
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. 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.
256
Exhibit 31 provides examples of commonly recognized types of
ULPs by employers and employees/unions.
Exhibit 31: Employer and Employee/Union ULPs
Employer ULPs Employee/Union ULPs

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

Organizations must be prepared for work actions. HR works with
management and other functions to prepare strategies to mitigate
the effects of a strike. Preparations can involve:
Developing a strike response plan.
Creating a supply chain contingency plan to prevent and
react to supply and transportation issues caused by labor
actions upstream or downstream, such as strikes occurring at
major ports.
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.
Setting policies to protect workers who do not take part in a
strike or labor action.
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.
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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.
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Dispute Resolution and
Employee Discipline

Conducts investigations into employee misconduct and
suggests disciplinary action when necessary.
Manages employee grievance and discipline processes.
Oversees employee investigations and progressive
disciplinary actions.

Approaches to retaliation prevention (examples include open
door policy, open communication, non-retaliation policy,
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whistleblower protection, documentation).
Progressive disciplinary procedures and approaches
(examples include counseling, performance improvement
plan, corrective action, verbal warning, demotion,
termination).
Techniques for workplace investigations (examples include
consistency, interview plan, summary report).
Types of alternative dispute resolution (ADR) (examples
include mediation, arbitration) and their advantages and
disadvantages.
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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
262
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 Analytical
Aptitude 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
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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.
264
Disciplining Employees
Disciplinary action may target violations of the organization’s
values (examples include sexual harassment, discrimination, or
threatening behavior) as well as 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.
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.
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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.
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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
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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 (which
states that employers can hire, fire, demote, or promote
employees for any reason and that employees can quit a job at
any time), 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
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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.)
Exhibit 32 lists seven basic tests often used in judicial hearings to

determine if an employee has been wrongfully disciplined or
terminated.
Exhibit 32: Providing Due Process in Employee Discipline
Tests of Due Process in Disciplining Employees
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Tests of Due Process in Disciplining Employees
An employee is informed of The employee has a right to
the employer’s question the evidence and
expectations and the defend himself or herself.
process and consequences The employee has a right to
attached to failure to meet appeal the disciplinary
those expectations. decision.
The disciplinary actions are A constructive discipline
consistent and predictable. process is used.
The employer’s decision is The employee is considered
based on factual evidence. as an 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:
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Positive punishment or an added requirement—for example,
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—
for example, 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 (for example, 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
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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
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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
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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, demotion, 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 of 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
274
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 Exhibit 33 can help HR professionals

implement termination decisions more effectively.
Exhibit 33: Terminating Employment for Discipline Reasons
Terminating Employment for Discipline Reasons

Never summarily discharge. Always conduct a “final filter”
It is prudent for an employer review. Review the
to never terminate on the investigator’s findings and
spot even if the employee recommendations to
has seemingly made a determine if they are
dischargeable offense. First complete, accurate, etc.,
complete a thorough and before making a final
objective investigation. decision. Make sure that
Depending upon the recommendations are
seriousness of the consistent with previous
investigation, the employee similar situations.
may be “suspended subject Pinpoint the basis of the
to discharge pending further discharge. The discharge
investigation.” reason(s) must be carefully
Make sure your investigation identified and articulated.
is thorough, complete, and Most employers orally
well documented. The communicate this
employee’s supervisor and information and then
department manager and/or document it in writing.
human resources staff are
275
normally involved.Employment
Terminating Collect for Discipline Reasons
evidence on both sides.
Whenever possible, inform
Conduct employee
the employee in person of
interviews. During interviews
the decision to terminate
with the employee, the
and the reason. An
approach should be
organization should have a
investigative, not adversarial
clear policy on who makes
or accusatory.
the decision to terminate
Do not delay. Investigations
and how an employee is
should begin as soon as
informed of the decision.
possible, be conducted
Supervisors should consult
deliberately but with
with HR about any potential
dispatch, and the results
termination. It is advisable
communicated to the
that the supervisor’s
employee as soon as
manager approve the
possible.
termination.
Be alert to possible
reactions. 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:
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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.
Dispute Resolution
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
277
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
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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
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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
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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.
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. This should be recognized in
any antiretaliation policy.
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 consistent,
fair, thorough, and culturally appropriate. To conduct effective
investigations, HR professionals should consider the steps
described in Exhibit 34.
Exhibit 34: Conducting an Investigation
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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.
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.
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Step Action
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 consistency and 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.
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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.
Exhibit 35 lists the range of ADR options that are available to

organizations.
Exhibit 35: Forms of ADR
ADR Option Description
Open-door Encourages employees to meet with an

policy immediate 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.
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Single Identifies a specific individual chosen by senior

designated management to conduct investigations and
officer dispute resolution. The credibility of this
individual may depend on the credibility of
management.
Chosen Permits an employee to select an arbitrator
officer 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).
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*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.
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.
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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 (for example, 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
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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.
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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.
Exhibit 36 provides some helpful guidelines for employers in

handling grievances.
Exhibit 36: Guidelines on Handling Grievances
Handling Grievances Do’s Handling Grievances Don’ts

Do investigate and handle Don’t make arrangements
each case as though it may with individual employees
eventually result in an that are inconsistent with the
arbitration hearing. labor agreement or that
Do require the union to exclude the participation of a
identify specific contract union representative.
provisions allegedly violated. Don’t hold back the remedy
Do comply with the if the employer is wrong.
contractual time limits for Don’t admit to the binding
handling the grievance. effect of a past practice.
Do visit the work area Don’t relinquish to the union
related to the grievance. your rights as a manager.
Do determine whether there Don’t settle grievances on
were any witnesses. the basis of what is “fair.”
Do examine the employee’s (Use the labor agreement as
personnel record. your only standard.)
Do fully examine prior Don’t bargain over items not
grievance records. covered by the contract.
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Handling Grievances Do’s Don’t give
Handling long, written
Grievances Don’ts
grievance answers.
Do comply with regulations
Don’t trade a grievance
regarding the presence and
settlement for a grievance
involvement of union
withdrawal (or try to make
representatives in meetings
up for a bad decision in one
with employees.
grievance by bending over
Do treat the union
backward in another).
representative as your
Don’t deny grievances on
equal.
the premise that your “hands
Do hold your grievance
have been tied by
discussions privately.
management.”
Do fully inform your own
Don’t agree to informal
supervisor of grievance
amendments in the contract.
matters.
Don’t establish a pattern of
Do have at least two
practices that have the effect
management
of creating a right not
representatives present.
specifically included in the
Do document all grievance contract.
meetings; take copious
notes.
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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.
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Coordinates and manages vendors implementing HR
technology solutions.
Develops and implements organizational standards and
policies for maintaining confidentiality of candidate and
employee data, and limiting access as appropriate.
Implements and uses technology solutions that support or
facilitate delivery of effective HR services and storage of
critical candidate and employee data.
Implements technology that integrates with and complements
other enterprise information systems, software and
technology.
Provides guidance to stakeholders on effective standards
and policies for the use of technologies in the workplace.
Uses technologies in a manner that protects workforce data.
Uses technologies to collect, access, and analyze data and
information, in order to understand business challenges and
recommend evidence-based solutions.

Assesses and implements automation technologies that
augment human talent.
Collaborates with business leaders to define the role of
digitalization in the overall business, new products or
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services, new markets, and growth strategy.
Designs and implements technology systems that optimize
and integrate HR functional areas.
Develops and implements technology-driven self-service
approaches that enable managers and employees to perform
self-service and people management functions.
Evaluates and selects vendors to provide HR technology
solutions.
Evaluates, advocates for, implements and retires technology
solutions to achieve HR’s strategic direction, vision and
goals.
Key Concepts:
Approaches to electronic self-service for HR and people
management functions (examples include scheduling,
timekeeping, contact information updates, benefit
enrollment).
Social media management (examples include internal social
media platforms, social media policy, branding).
Data and information management (examples include data
integrity, confidentiality, security, disclosure, backups, cloud-
based software, cybersecurity, data retention).
HR software and technology (examples include applicant
tracking system [ATS], human resource information system
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[HRIS], learning management system [LMS], performance
management system, big data analytics software,
collaboration software, blockchain, artificial intelligence [AI],
machine learning).
Standards and policies for technology use (examples
include bring-your-own-device policy, offsite network access
policy, websites, computers for personal activity, internet
messaging, corporate and personal e-mail).
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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 (for example, automated messaging,
project management or presentation software), and to develop
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policies that protect data belonging to the employee and to the
organization.
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HR and Technology

Uses technologies to collect, access, and analyze data and
information, in order to understand business challenges and
recommend evidence-based solutions.

Approaches to electronic self-service for HR and people
management functions (examples include scheduling,
timekeeping, contact information updates, benefit
enrollment).
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machine learning).
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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 & 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
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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.
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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-
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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 (for example, 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

work with IT and 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 (such as a sudden increase in
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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
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HR should work with IT professionals to select technology that
meets the needs of not only HR but also the organization. This
will allow HR professionals to ensure that the technology that is
chosen will support areas such as analysis, confidentiality,
security, collaboration, increases in productivity, artificial
intelligence, and accessibility. 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.
Exhibit 37 shows the basic components of information systems.
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Exhibit 37: 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 (for example, 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 (for example,
video cards, displays, printers), and controls system
resources. Application software offers specific functionality
(for example, project management software that includes
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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 to become adept at 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
applications 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.
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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—
such as 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)—
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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 to be 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 of the compatibility
of the product you are purchasing with the organization’s current
system.) 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 (time
and money).
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 IT should be called upon to help
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determine which is the best product for HR’s needs in addition to
helping with the implementation and support of the product.
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 reasons HR must 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 data storage, processing
time, or bandwidth that it uses. The service manages and
maintains the hardware and guarantees its security.
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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?
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—that is,
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.
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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 Exhibit 38.
Exhibit 38: General HR Technology Applications
Core Applications Talent Management

Applications
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Core Applications Talent Management
Applications
Employee records Talent acquisition
Collaboration software Applicant tracking systems
Payroll Recruiting (posting jobs to
Artificial intelligence different recruitment
Blockchain channels)
Time and attendance Pre-hire assessment and
Shift management screening
(managing scheduled time Onboarding (tracking
off and assigning sufficient completion of required
workers with the required actions)
skills to each work period) Performance management
Benefits administration Succession planning
Communications (could Compensation management
include employee surveys) (internal review for
Data analysis consistency, external
Project management comparisons)
Report generation (including Learning management
graphical representation of system (tracking employee
analysis results) completion of required
training)
Strategic workforce planning
Machine learning
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
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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 (for
example, glasses, a watch) that have sensors, computing
capacity, and the ability to link to a remote network. The
names of current devices tend to be prefaced with “smart”
(for example, smartglasses, smartclothing, smartwatches).
From an HR perspective, wearable technology can be used
to encourage healthy behaviors (for example, fitness
trackers), to increase productivity by freeing employees’
hands (for example, smartglasses), and to monitor
employees’ health and safety in stressful physical conditions
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(for example, wearable location and vital signs monitoring).
When information is gathered and stored, issues can arise
about employee data privacy and security. HR should check
with local and national laws to determine what data can and
cannot be gathered and stored.
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.
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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.
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Virtualization may allow the creation of aural or visual
“representatives” who can communicate easily with users.
It should be noted that there is a difference between artificial

intelligence and machine learning, which is a distinct subset of AI.
Where AI is a technology that enables a machine to simulate
human behavior, machine learning is a technology that enables a
machine to simulate human learning, gradually improving the
accuracy of a specific set of work or an algorithm. Machine
learning is, effectively, a part of AI that is focused on improving
accuracy and identifying patterns.
Though common discussion often focuses on the ability of AI to

replace the need for humans to complete certain tasks, it has
tremendous potential to augment the abilities of humans in
existing roles as well.
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
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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
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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.
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IT Purchasing Process

Coordinates and manages vendors implementing HR
technology solutions.
Implements technology that integrates with and complements
other enterprise information systems, software and
technology.
Designs and implements technology systems that optimize
and integrate HR functional areas.
Evaluates and selects vendors to provide HR technology
solutions.
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Evaluates, advocates for, implements and retires technology
solutions to achieve HR’s strategic direction, vision and
goals.
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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 (for example, 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 & 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
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what comparable HR organizations were using—an example of
the Analytical Aptitude 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
Mindset).
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
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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. The acquisition of HR
technology will follow a process similar to that for other types of
purchasing. HR should be familiar with any organizational
procurement process that defines steps to be taken and conveys
authority to make purchases. HR should also work with the IT
department to discern any specific requirements it may have for
technology purchases. HR should gauge the readiness of
potential technology users to 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. This means identifying needs and requirements,
evaluating offerings, developing a business case, implementing
the change, and evaluating the new technology’s contributions
against original criteria.
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
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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.
HR should secure IT’s involvement early on. This 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 needs, 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
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experts. If practical, HR may want to assemble an acquisition
team that represents these different stakeholders’ perspectives.
Exhibit 39 lists some questions that must be answered during the

assessment.
Exhibit 39: 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?
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 (for
example, 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?
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Assessing Technology Needs
Organization’s How does this technology align with the

needs organization’s 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. Exhibit 40 shows how the organization’s priorities
for flexibility and control can affect technology options.
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Exhibit 40: Acquisition Options in Technology Purchases
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
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technologies or with social media platforms. Will the SaaS
solution fulfill those needs?
HR should explore with an IT consultant whether to use an

integrated solution (such as 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.
Exhibit 41 compares the advantages and disadvantages of each

option.
Exhibit 41: Advantages and Disadvantages of Integrated vs. Best-

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

Offerings
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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
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the organization’s needs and requirements. Features should not
be added without good reason.
Select a Technology Provider and Create a

Business Case
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.
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.
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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 as to 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
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vendor’s fulfillment of commitments and response to reported
problems.
The assessment process should also consider the cost of

operation and the projected life span of systems following their
implementation and on an ongoing basis. Retiring systems along
appropriate time lines can generate cost savings and ensure that
technical capabilities continue to match organizational needs as
those needs grow and change.
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Managing Technology
Opportunities and Risks

Develops and implements organizational standards and
policies for maintaining confidentiality of candidate and
employee data, and limiting access as appropriate.
Provides guidance to stakeholders on effective standards
and policies for the use of technologies in the workplace.
Uses technologies in a manner that protects workforce data.

Social media management (examples include internal social
media platforms, social media policy, branding).
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machine learning).
Standards and policies for technology use (examples
include bring-your-own-device policy, offsite network access
policy, websites, computers for personal activity, internet
messaging, corporate and personal e-mail).
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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
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then appeared on the employee’s time line, 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.
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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 (such as file false credit applications).
Payroll records can be erased or altered, disrupting work and
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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 (such as
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
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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 (such as 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
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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
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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.
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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
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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.
Exhibit 42 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.
Exhibit 42: GDPR and HR Practices
GDPR Theme HR Responses
Transparency (how Update privacy notices to employees and

data will be used) applicants that seek explicit permission to
use data.
Individual rights of Define who owns data (the
access to and control employee/applicant, the organization, the
over data vendor) and who has a business right to
use it.
Ensure that HR can reply promptly to
employee requests to access or correct
data.
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GDPR Theme HR Responses
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
minimization retention limits.
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 Implement data security measures.
(intentional or Develop and implement data breach
accidental, through policies to ensure reporting of breaches
external hacking or within 72 hours.
internal actions, such Review post-employment agreements
as accidental e- regarding use of organizational data.
mailing of employee
data)
Accountability Maintain comprehensive records for
authorities.
Conduct an assessment of current practices
(such as employee monitoring and
background checks).
Implement training and governance
systems (internal data protection officer,
audits, disciplinary guidelines).
347
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
348
applicants derived from 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,
349
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.
Creating policies around remote access of company
networks, including VPNs (virtual private networks), to
promote security.
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.
350
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
351
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, internet messaging, and social sites), limiting
the employer’s liability (for example, 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 (for
example, 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 (including IT approval,
configuring of all applications that access the network, and
review and confirmation of adequate security tools).
Clarify financial arrangements (such as reimbursement for

using a personal mobile device) and legal rights (including
the right to wipe or erase a device without liability for the
employee’s personal data).
352
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 applicable 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 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.
There are a number of business and other more practical, value-

added uses of social media. For example, organizations review
comments on social networks by customers and employees to
understand the perspectives of these important stakeholders. HR
353
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. Internal networks may assist with fostering a
desired workplace culture and increase visibility of employees
across the organization. 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.
In order to protect both the organization and its employees,

organizations should develop a thorough and well-understood
social network policy that applies to both the employer and the
employees.
354
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 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.
355
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 (including
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.
356
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.
357
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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.
Co-employment
Situation in which an organization shares responsibility and
liability for its alternative workers with an alternative staffing
supplier; also known as joint employment.
Constructive discipline
376
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.
Encryption
Conversion of data into a format that protects or hides its
natural presentation or intended meaning.
Enterprise resource planning (ERP)
377
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.
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.
378
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.
Joint employment
Situation in which an organization shares responsibility and
liability for its 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
379
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.
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
380
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
381
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.
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)
382
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 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
383
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
384
individual needs.
Workforce profile
Part of workforce analysis that identifies the current make-up of
employees in terms of their demographics, skills,
competencies, performance levels, expected retirement dates,
pay grades, and other factors that help explain the workforce’s
composition.
Work-to-rule
Situation in which workers slow processes by performing tasks
exactly to specifications or according to job or task descriptions.
385
Index
A
Accounting function [1]
Acquisitions [1]
Administrative HR role [1]
ADR
See: Alternative dispute resolution
AIArtificial intelligence [1] , [2]
Alternative dispute resolution
Arbitration [1]
Chosen officer in ADR [1]
Mediation [1]
Ombudspersons [1]
Open-door policies [1]
Peer review [1]
Applicant tracking systems [1]
Arbitration [1]
Artificial intelligence [1] , [2]
ATSApplicant tracking systems [1]
Audit process
Collect data step in audit process [1]
Audits
HR audits [1]
386
Balanced scorecard
HR balanced scorecard [1]
Best-of-breed applications [1] , [2]
Best practices audits [1]
Big data [1]
Board of directors [1]
Boycotts [1]
Bring your own device policies [1]
Business tier in information systemsLogic tier in information
systems [1]
BYOD policiesBring your own device policies [1]
C
Centers of excellence [1]
Centralized HR structure [1]
Chain of command [1]
Chosen officer in ADR [1]
Cloud computing [1] , [2]
Co-employment [1]
COEs
See: Centers of excellence
Collaboration risks [1]
Collect data step in audit process [1]
Compliance audits [1]
Conciliation
See: Mediation
Conflict [1]
Conflict resolution [1] , [2]
Constructive discipline [1]
387
Constructive discipline process [1]
Continuous improvement [1]
Core business functions
Accounting function [1]
Board of directors [1]
Executive management [1]
Finance function [1]
Information technology function [1]
Marketing function [1]
Operations function [1]
Research and development function [1]
Sales function [1]
Cosourcing [1]
Customer organizational structure [1]
D
Data access [1]
Data analysis tools
Regression analysis [1]
Data and system security [1] , [2]
Data privacy [1]
Data tier in information systems [1]
Decentralized HR structure [1]
Decision-making authority [1] , [2]
Dedicated HR structure [1]
Demand analysis (workforce analysis) [1] , [2]
Departmentalization [1]
Discipline
See: Employee discipline
388
Dispute resolution
See: Conflict resolution
Divestiture [1]
Downsizing
See: Reductions in force
Due diligence [1]
Due process [1]
E
Employee discipline
Constructive discipline [1]
Employee handbooks [1]
Employee relations strategy [1]
Employee self-service technologies [1]
Employee turnover rate [1]
Encryption [1]
Enterprise resource planning [1]
ERPEnterprise resource planning [1]
ER strategyEmployee relations strategy [1]
ESSEmployee self-service technologies [1]
Executive management [1]
F
Finance function [1]
Flexible staffing [1]
Forecasts
Judgmental forecasts [1]
389
Statistical forecasts [1]
Formalization [1]
Forming stage of team development [1]
Functional HR structure [1]
Functional organizational structure [1]
Function-specific audits [1]
G
Gap analysis (skills) [1]
Gap analysis (workforce analysis) [1] , [2]
GDPRGeneral Data Protection Regulation [1]
General Data Protection Regulation [1]
Generalists [1]
General strikes [1]
Geographic organizational structure [1]
Grievance procedure [1]
Grievances [1]
Group dynamics [1]
Growth strategies
Acquisitions [1]
Mergers [1]
H
Hacking [1]
HandbooksEmployee handbooks [1]
Hierarchy layers [1]
HR audits
390
Best practices audits [1]
Compliance audits [1]
Function-specific audits [1]
Strategic audits [1]
HR balanced scorecard [1]
HR business partners [1] , [2]
HR information system [1]
HRISHR information system [1]
HR metrics
Employee turnover rate [1]
HR performance measurement [1]
HR role
Administrative HR role [1]
Operational HR role [1]
Strategic HR role [1]
HR structures
Centers of excellence [1]
Centralized HR structure [1]
Decentralized HR structure [1]
Dedicated HR structure [1]
Functional HR structure [1]
Matrix HR structure [1]
Shared services HR structure [1]
HR team
Generalists [1]
HR business partners [1] , [2]
Leaders on HR team [1]
Managers on HR team [1]
Specialists [1]
Human resource information systemHR information system [1]
391
I
Independent contractors [1]
Industrial actionsOrganized labor actions [1] , [2]
Information systems
Data tier in information systems [1]
Logic tier in information systems [1]
Information technology function [1]
Integration of information systems [1]
Investigations
Investigations of employee complaints [1]
Investigations of employee complaints [1]
Involuntary terminations
Reductions in force [1]
ISInformation systems [1]
IT function
See: Information technology function
IT purchasing processTechnology acquisition process [1]
J
Joint employment
See: Co-employment
Judgmental forecasts [1]
K
Knowledge management systems [1] , [2]
Knowledge transfer [1]
392
L
Labor actionsOrganized labor actions [1] , [2]
Labor standards [1]
Labor unions [1]
Layoffs
Leaders on HR team [1]
Legal concepts
Due process [1]
Line units [1]
Lockouts [1]
Logic tier in information systems [1]
M
M&As
See: AcquisitionsMergers
Manager self-service technologies [1]
Managers on HR team [1]
Marketing function [1]
Matrix HR structure [1]
Matrix organizational structure [1]
Mediation [1]
Mergers [1]
Metrics
HR metrics [1]
MSSManager self-service technologies [1]
Multiple linear regression [1]
393
N
Nine-box grid [1]
Norming stage of team development [1]
O
Objectives
SMARTER objectives [1]
Technology performance objectives [1]
OED intervention assessment [1]
OED interventions
Organizational interventions [1]
Proactive interventions [1]
Remedial interventions [1]
Team interventions [1]
Ombudspersons [1]
Open-door policies [1]
Operational HR role [1]
Operations function [1]
Organizational and effectiveness interventions
See: OED interventions
Organizational culture requirements [1]
Organizational design [1] , [2]
Organizational interventions [1]
Organizational models [1]
Organizational structures
Customer organizational structure [1]
Functional organizational structure [1]
Geographic organizational structure [1]
394
Matrix organizational structure [1]
Product organizational structure [1]
Organized labor actions
Boycotts [1]
General strikes [1]
Lockouts [1]
Picketing [1]
Secondary action [1]
Sit-down strikes [1]
Sympathy strikes [1]
Wildcat strikes [1]
Work-to-rule [1]
Outsourcing [1]
Outsourcing process [1] , [2]
P
Peer review [1]
Performance measurement
HR performance measurement [1]
Performance requirements
Organizational culture requirements [1]
Process requirements [1]
Technology requirements [1]
Performing stage of team development [1]
Picketing [1]
PLAProject labor agreement [1]
Policies and procedures [1]
Proactive interventions [1]
Process requirements [1]
395
Product organizational structure [1]
Progressive discipline
See: Constructive discipline
Project labor agreement [1]
R
R&D function
See: Research and development function
RACI charts [1]
Reductions in force [1]
Regression analysis
Multiple linear regression [1]
Simple linear regression [1]
Remedial interventions [1]
Replacement planning [1]
Research and development function [1]
Restructuring [1]
Retaliation [1]
RIFs
Risk
Technology risks [1]
S
SaaSSoftware as a service [1]
Sales function [1]
Scalability (information systems) [1]
396
Secondary action [1]
Shared services HR structure [1]
Simple linear regression [1]
Simulations [1]
Sit-down strikes [1]
SMARTER objectives [1]
Social engineering [1]
Social knowledge sharing [1]
Social networks [1]
Software
Software as a service [1]
Software as a service [1]
Span of control [1]
Specialists [1]
SpecializationWork specialization [1]
Staffing
Flexible staffing [1]
Staffing plan [1] , [2]
Staff units [1]
Statistical forecasts
Regression analysis [1]
Simulations [1]
Storming stage of team development [1]
Strategic audits [1]
Strategic HR role [1]
Succession planning [1]
Supply analysis (workforce analysis) [1] , [2]
Sympathy strikes [1]
397
T
Talent management [1]
Talent pools [1]
Team building [1]
Team formation process
Forming stage of team development [1]
Norming stage of team development [1]
Performing stage of team development [1]
Storming stage of team development [1]
Team interventions [1]
Teams [1] , [2] , [3] , [4]
Technology acquisition [1]
Technology acquisition process [1]
Technology performance objectives [1]
Technology policies
Bring your own device policies [1]
Technology requirements [1]
Technology risks
Collaboration risks [1]
Hacking [1]
Social engineering [1]
Technology tools
Technology tools for HR [1]
Technology tools for HR
Manager self-service technologies [1]
Technology tools used in total rewards
Terminations [1]
Third-party contractors [1]
398
Third-party dispute resolution
See: Alternative dispute resolution
Third-party labor groups [1]
Trade unionsLabor unions [1]
Turnover [1]
Turnover analysis [1]
U
ULPsUnfair labor practices [1]
Unfair labor practices [1]
Unit interventionsTeam interventions [1]
W
Wearable technology [1]
Whistleblowing [1]
Wildcat strikes [1]
Workforce analysis [1] , [2]
Workforce analysis process
Demand analysis (workforce analysis) [1] , [2]
Gap analysis (workforce analysis) [1] , [2]
Supply analysis (workforce analysis) [1] , [2]
Workforce planning [1]
Workforce profile [1]
Work specialization [1]
Work-to-rule [1]
399
Table of Contents
License Agreement 2
Acknowledgments 3
Introduction to Organization Domain 5
Structure of the HR Function 7
Proficiency Indicators: 8
Key Concepts: 9
Structure of the HR Function 11
Role of HR 13
Role of HR 14
Strategic and Administrative Roles of HR 15
Operational Role of HR 17
HR’s Internal Stakeholders 19
HR’s Internal Stakeholders 20
HR and the Organization’s Core Functions 22
Executive Management 26
Finance and Accounting Functions 28
Marketing and Sales Functions 31
Research and Development Function 33
Operations Function 35
Information Technology Function 36
HR Organization 40
HR Organization 42
HR Team Members 43
HR Function, Service, and Structural Models 45
Outsourcing 55
Demonstrating the Value of HR 65
Demonstrating the Value of HR 66
Importance of HR Performance Measurement and Balanced
68
Scorecards
400
HR Metrics 71
HR Audits 75
Organizational Effectiveness & Development 80
Key Concepts: 82
Organizational Effectiveness & Development 83
Organizational Development 85
Organizational Development 86
Organizational Theories 87
OED Interventions 89
Characteristics of Effective OED Interventions 93
Assessing OED Interventions and Why They Fail 95
Improving Organizational Performance 100
Improving Organizational Performance 102
Organizational Interventions 103
Structural Characteristics in Organizational Design 106
Departmentalization and Types of Structures 109
Aligning Roles and Responsibilities in New Organizational
115
Structures
Performance Gap Analysis 117
Improving Team Performance 123
Improving Team Performance 124
Team or Unit Interventions 127
Team Formation Process 128
Team Structure and Group Dynamics 130
Team Building 133
Workforce Management 136
Key Concepts: 138
Workforce Management 140
Workforce Planning 141
Workforce Planning 143
401
Workforce Planning Process 144
Staffing Supply Analysis 148
Staffing Demand Analysis 153
Staffing Gap Analysis 156
Staffing Solution Analysis and Staffing Plan 159
Evaluating Workforce Planning Impact 166
Workforce Management Strategies 169
Workforce Management Strategies 171
Flexible Staffing Alternatives 173
Organizational Restructuring 182
Talent Management 194
Succession Planning 199
Knowledge Management 207
Knowledge Management 208
Knowledge Management Systems 209
Establishing a Formal Knowledge Management System and
211
Critical Success Factors
Social Sharing of Knowledge 214
Employee & Labor Relations 218
Key Concepts: 220
Employee & Labor Relations 222
The Employment Relationship 223
The Employment Relationship 225
International Labor Standards 227
Employee Relationship Strategy 231
Labor Relations 240
Labor Relations 241
Labor or Trade Unions 242
Governments and Other Third-Party Labor Groups 246
Organized Labor Actions and Unfair Labor Practices 249
Organized Labor Actions and Unfair Labor Practices 251
402
Organized Labor Actions 252
Preventing or Mitigating the Effects of Work Actions 255
Dispute Resolution and Employee Discipline 260
Dispute Resolution and Employee Discipline 262
Workplace Conflict 263
Disciplining Employees 265
Dispute Resolution 277
Technology Management 291
Key Concepts: 293
Technology Management 295
HR and Technology 297
HR and Technology 299
Big Data and HR 301
Key Issues in Acquiring Technology 303
HR Technology Applications 311
IT Purchasing Process 319
IT Purchasing Process 321
Developing a Process for Purchasing Technology 322
Conduct a Technology Needs Assessment 324
Prioritize Technology Requirements 326
Identify, Select, and Implement 331
Managing Technology Opportunities and Risks 336
Managing Technology Opportunities and Risks 338
Risks Posed by Technology in the Workplace 340
Policies on Employees’ Use of Technology 349
Bibliography 358
Glossary 376
Alternative dispute resolution (ADR) 376
Arbitration 376
Center of excellence (COE) 376
Artificial intelligence (AI) 376
403
Chain of command 376
Cloud computing 376
Co-employment 376
Constructive discipline 376
Cosourcing 377
Dedicated HR 377
Departmentalization 377
Downsizing 377
Due diligence 377
Encryption 377
Enterprise resource planning (ERP) 377
Formalization 378
Functional HR 378
Functional structure 378
Geographic structure 378
Grievance procedure 378
Hacking 378
HR audit 378
Human resource information system (HRIS) 379
Independent contractors 379
Industrial actions 379
Information system (IS) 379
Joint employment 379
Judgmental forecasts 379
Knowledge management (KM) 379
Labor union 379
Line units 380
Lockout 380
Matrix structure 380
Mediation 380
Organizational development 380
Outsourcing 380
Picketing 380
Policy 381
404
Product structure 381
Project labor agreement (PLA) 381
Reduction in force (RIF) 381
Regression analysis 381
Replacement planning 381
Restructuring 381
Secondary action 382
Shared services HR model 382
Simulations 382
Sit-down strike 382
Social engineering 382
Social networks 382
Software as a service (SaaS) 382
Span of control 383
Staff units 383
Succession planning 383
Sympathy strike 383
Talent management 383
Trade union 383
Turnover 383
Turnover rate 384
Unfair labor practice (ULP) 384
Whistleblowing 384
Wildcat strike 384
Workforce analysis 384
Workforce management 384
Workforce planning 384
Workforce profile 385
Work-to-rule 385
Index 386
405

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1

Subject matter experts

Susan K. Craft, MSHRM, SHRM-SCP, SPHR, GPHR

Ed Hasan, EdD, MBA, SHRM-SCP, SPHR

Tom O’Connor, JD, SHRM-SCP, GPHR, SPHRi

Dr. Patricia A. Sullivan, SHRM-SCP

Past subject matter experts

Jennifer C. Loftus, MBA, SHRM-SCP, GPHR, SPHR, PHRca, CCP,

Throughout the module, brief scenarios, titled “Competency

While this module includes legal content, it should not be

The content in the domain accounts for 18% of the

Structure of the HR Function encompasses the

Proficiency indicators for advanced HR professionals include:

To do this, HR professionals must understand the structure of

Equipped with a knowledge of its own capabilities and its

Proficiency indicators related to this section include:

The HR professional was hired to support a growing company

The HR professional was nervous to jump into her workforce

She chose to tackle a specific task first: figuring out a time-

In delivering value, the HR professional approached her position

Strategic and Administrative Roles

HR’s strategic role includes:

Using technology to capture and analyze data.

Using technology to reduce transactional time. HRIS is

Focusing on core capabilities. Tasks that are low in

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

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

HR and the Organization’s Core

Exhibit 1: Core Business Functions

Organizations today realize that the most effective

Exhibit 2 summarizes the information about HR and its core

Exhibit 2: Cross-Functional Relationships with HR

Cross-Functional Relationships with HR

Executive Recruiting executive Recruiting and training

Finance and Coordinating requirements Providing training

Marketing Aligning Promoting sharing of

Research Developing talent pool with Promoting processes

Operations Developing staffing plans Ensuring physical

Information Selecting the HR Using Internet and

Executive management commonly includes an individual who

How HR Interacts with Executive Management

Finance and Accounting Functions

Finance focuses on how the organization uses its financial assets

Accounting focuses on tracking financial transactions and

The finance and accounting functions are challenged by changes

How HR Interacts with Finance and Accounting

Marketing is responsible for positioning (marketing) and selling

Marketing strategies are often characterized as “push” or “pull”:

How HR Supports Marketing and Sales

Sales may look to HR to design compensation systems that

R&D also exists in the public sector, in the form of national

Some organizations conduct R&D in a centralized manner (for

R&D spending is not directly related to levels of innovation and

How HR Supports R&D