Lecture 3

1. Lecture 3 Strategic Human Resource Development

2. Class exercise • Have you ever trained another person? • What challenges did you experience? • Did you benefit from the training? • How did the trainee benefit from the training?

3. Learning objectives • Understand the reasons for the growing importance of SHRD • Know how to definition of SHRD • Understand the characteristics of SHRD • Understand the benefits of SHRD • Understand the practical application of SHRD • Be aware of some of the empirical evidence of the link between SHRD and organisational performance

4. The growing importance of SHRD • The competitive and volatile environment within which businesses operate is prompting senior management to take a greater interest in the development of the organisation’s human resources. • A number of possible specific triggers: • Difficulties in recruiting skilled employees - ‘the fight for talent’ • Need to develop a more flexible and adaptable skill base • Greater need to compete on the basis of talent • The need to align the potential of employees with business objectives • Greater emphasis on performance evaluation and related outcomes • The succession planning

5. Definition of SHRD • HRD is best seen as the strategic management of training, development and of management/professional education interventions, so as to achieve the objectives of the organisation while at the same time ensuring the full utilisation of the knowledge and skills of individual employees. • It is concerned with the management of employee learning for the long term keeping in mind the explicit corporate and business strategies.

6. Characteristics of SHRD • Integration with organisational missions and goals • Top management support • Environmental scanning • HRD plans and Policies • Line management commitment and involvement • Existence of complementary HRM activities • Expanded trainer role • Recognition of organisational culture • Emphasis on evaluation

7. Integration with organisational missions and goals • Integration of training and development into wider business planning. • Move from activities that are fragmented to a situation where HRD is more systematically linked to such goals or is so systematically integrated with organisational needs that it is seen as a necessity for organisational survival. • Effective HRD must be aware of mission, goals and needs of the organisation.

8. Top management support • SHRD must command the support and participation of top management. • HRD needs a higher profile. • Reality is that in many cases top management is not committed to T&D - due to not being systematically trained themselves, time constraints, HRD seen as long-term investment, benefits of T&D intangible, HRD must improve quality and market their function, management training is considered towards the bottom end of the management hierarchy.

9. Environmental scanning • SHRD function must have continuous knowledge of its external environment. • SHRD function must have the capacity to analyse the external environment in terms of the opportunities and threats which it presents in the context of both the business and HRD strategy. • Characteristics of a firm’s environment shapes HRD activities - major triggers for HRD - technological and product market changes.

10. HRD plans and policies • Formulation of basic plans and policies. • Strategic business plans must exist before SHRD plan can be developed – medium to long term focus. • Top management sanction and involvement. • If firm is dominated by short-term considerations HRD plan will also reflect this deprivation. • HRD plans are devised from both strategic plans and an analysis of internal and external environment. • HRD plan provides a link between business activities and HRD activities.

11. HRD plans and policies con’t • Policies are an essential component of the implementation phase. • Reasons why a strategic HRD function should engage in policy formulation • Ensures that supervisors, line managers and top managers are all equally aware of their HRD responsibilities and participate in HRD activities. • It provides operational guidelines for management - why it is important to invest in HRD? • Sets out for employees the different types of education, learning/ development that is important for career progression.

12. HRD plans and policies con’t • A clear policy statement helps to define the relationship that exists between the organisations objectives and its commitment to HRD. • Enhance public relations with new recruits - can see benefits on offer to them. • HRD policy can facilitate the establishment of employee career development opportunities. • Provides a guideline against which HRD activities can be evaluated.

13. Line manager commitment and involvement • Line managers often undertake a number of HR functions such as T&D • Consultation with line managers concerning areas of improvement they would like to see in employees. • Line managers becoming involved in coaching and counselling of subordinates. • Line managers learning skills being updated. • Active involvement in HRD policy and planning process. • Line managers being made responsible for the identification of HRD needs within their department.

14. Line manager commitment and involvement con’t. • The competence of the line manager is vital to a successful implementation of SHRD. • Number of problems with the relationship between the HRD function and line manager: • Ownership of HRD • Competence • Role definition

15. Existence of complementary HRM activities • Effective HRD must be a coherent package of complementary activities aimed at servicing various aspects of the employment relationship. • Some of these activities include: • HRP • Improving the quality of employees being recruited • Forging closer links with educational institutions/providers • Greater formalisation of performance management and training needs procedures • A range of career development systems both individually and organisationally focused.

16. Expanded trainer role • Number of deficiencies of trainers: • Many training specialists don’t view their activities as cutting edge - low status of T&D function. • HRD function a number of role conflicts. • HRD specialists are poor at marketing their services. • HRD specialists limited perceptions of their role - maintenance of status quo. • SHRD requires a considerable role change - marketing benefits of HRD, proactivity, HRD as central to the achievement of organisational objectives and developing a more strategic role rather than being simply learning specialists.

17. Recognition of organisational culture • The need to match corporate strategy and culture - very little literature concerning the link to HRD. • Ogbonna and Wilkinson - HRD function has a key role in maintaining and changing corporate culture. • Peters and Waterman - HRD function cannot ignore the prevailing and desired culture. • Culture must be viewed as central to the function of HRD. • The transmission of culture is important part of HRD.

18. Emphasis on evaluation • Criteria of suitability - measure how far HRD activities fit the situation identified in the strategic analysis. • Criteria of feasibility - how feasible HRD plans and policies are in practice? • Criteria of acceptability -whether the consequences of the proceeding strategy are acceptable.

19. Strategic HRD process: Garavan (2007)

20. Benefits of SHRD • Greater extrinsic and intrinsic job satisfaction • Fewer accidents, lower labour turnover and less absenteeism • Greater customer satisfaction • Improved job performance and enhancement of career opportunities • Shorter learning times and more effective use of resource and less wastage of materials • The creation of a learning organisation that is flexible

21. Experiences contributing to strategic thinking among HRD’s, Goldman 2008 • General work experience • Becoming a CEO • Being mentored • Being challenges by a key colleague • Monitoring results • Doing strategic planning • Spearheading a major growth initiative • Dealing with a threat to organisational survival • Networking

22. Trends In Australian Human Resource Development Practice (McGraw and Peretz 2011, APJHR) • This research charts the evolution of Human Resource Development (HRD) in Australian organisations over a critical thirteen year period and analyses the effect of the company size, industry sector and ownership pattern on HRD practices. • Seven sub-indices and one overall index of HRD were constructed to monitor the level of ‘sophistication’ over time in different aspects of HRD practice and explore the ‘performance’ versus ‘learning’ dichotomy established in the HRD literature.

23. McGraw and Peretz (2011) Findings • Five key conclusions: • there was no consistent evidence of a widespread linear increase in the sophistication of HRD practices in Australian organisations over the period 1996-2009. Although the overall HRD index indicates a decrease in the level of sophistication in Australian organisations, the individual HRD indices provide evidence of different patterns as some practices have increased whilst others have decreased in sophistication over time. • there was no significant pattern of difference between public and private companies’ HRD practices over time.

24. McGraw and Peretz (2011) Findings Five key conclusions: • the HRD practices of large companies were generally more sophisticated than those of SMEs over the survey period. • the level of sophistication of HRD practices by industry sector has shown relative change, with one sector – Energy, Civil Engineering and Mining – increasing in sophistication while all others declined over the 13-year period. The most pronounced declines were in Manufacturing and Services. • there is an overall shift in HRD focus away from learning orientated processes and towards those focused around individual performance.

25. Sablok, Bartram, Boyle and Burgess (2017) Human Resource Development practices, Managers and Multinational Enterprises in Australia: thinking globally, acting locally • This paper explored the HRD practices of MNEs operating in Australia as a way of understanding the value that MNEs place on investment in their human capital, in particular their managerial talent. • Drawing on a representative sample of 211 multinational companies, the study focused on investigating training and development expenditure, management development strategies, talent management and succession planning policies.

26. Sablok, Bartram, Boyle and Burgess (2017) Continued: • The findings suggest that less than 20 per cent of MNEs operating in Australia are investing more than four per cent of their annual pay bill on training and development. • Furthermore, almost a quarter of firms invest less than one per cent in training and development.

27. Sablok, Stanton, Bartram, Boyle and Burgess 2017, more findings • The findings suggested that most MNEs invest in their managers and those with high potential through the use of management development programs, talent management strategies and succession planning. • A number of factors influence such investment and these include, • employment size and the company’s global strategy, • the position of the subsidiary in the company’s global value chain, • the presence of a global HR committee which includes an Australian representative and the firm’s overall business strategy.

28. Sablok, Stanton, Bartram, Boyle and Burgess 2017, more findings • Australian MNEs were less likely to use management development or talent management programs for senior management or high performing staff relative to US MNEs.

29. Summary • Understand the reasons for the growing importance of SHRD • Know how to define of SHRD • Understand the characteristics of SHRD • Understand the benefits of SHRD • Understand the practical application of SHRD • Be aware of some of the empirical evidence of the link between SHRD and organisational performance