HR CAPABILITIES

Session 6
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How would HR capabilities be linked to

organizational performance?
• Links to other capabilities?
• Links to performance?
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Linked to organizational capabilities-

• Capability audit- understanding underlying people skills
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What are the key HR

assets/resources?
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Levels of capabilities
1. The linkage between the HR policies, tools
and practices
2. HR capabilities that are indicated by a
reputation (with a lag)
3. Indicated by outcome measures such as
metrics of HR performance
if the firms do well in the HR variables, they would be able to
manage organizational performance as well as ensure
maximum performance from the individuals in the
organizations
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Resources
• Human capital
• HR Practices,
• Organizational routines and processes- including
learning routines
• Intellectual capital including knowledge
• Organizational climate
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Desired outcomes
- Best places to work
- High employee productivity
- High employee engagement
- High organization performance induced by improvement in
innovation and efficiently and other metrices
- Manage performance of a firm, leverage technology and
maintain levels on parameters such as safety and
sustainability, and also create resources across both
permanent and temporary and full time/ at home employees
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Human capital
• Individual competencies- to innovate, network,
perform required tasks
• Attitude
• Types of employees- temporary vs permanent,
generalists vs specialists, ability to manage at
different scales, top management team- Infosys
• Employee capabilities impacted by variables such
as job satisfaction and training that are impacted
by HR practices
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People management practices-

systems
• Formal vs informal
• Stock vs flow
• Standard systems- staffing, training, rewards, appraisal,
participation, recognition, communication,
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Standard systems- staffing

• Employer brands
• Cost per Hire: (Advertising + Agency Fees + Employee
Referrals + Travel cost of applicants and staff +
Relocation costs + Recruiter pay and benefits) ÷
Number of Hires
• Time to fill: Total days elapsed to fill requisitions ÷
Number hired
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Standard systems- training

• Training Investment Factor: Total training cost
÷ Headcount
• Resources- linkage with external training
bodies, internal training structure/resources
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Standard systems- rewards

• Health Care Costs per Employee -Total cost of health
care ÷ Total Employees
• HR Expense Factor- HR expense ÷ Total operating
expense
• Workers’ Compensation Cost per Employee: Total
WC cost for Year ÷ Average number of employees
• Capabilities for rewarding compensation at
different levels
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Standard systems- appraisal

• Human Capital ROI: Revenue − (Operating Expense −
[Compensation cost + Benefit cost]) ÷ (Compensation
cost + Benefit cost)
• Human Capital Value Added: Revenue − (Operating
Expense − ([Compensation cost + Benefit Cost]) ÷
Total Number of FTE
• Revenue Factor: Revenue ÷ Total Number of FTE

• Systems for appraisal at different levels

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Standard systems- participation

• Absence Rate:[(Number of days absent in month) ÷ (Average
number of employees during mo.) × (number of workdays)] × 100
• Turnover Costs: Cost to terminate + Cost per hire + Vacancy Cost
+ Learning curve loss
• Turnover Rate: [Number of separations during month ÷ Average
number of employees during month] × 100
• Processes for engagement and performance management
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Standard systems- recognition

• Systems of reward
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Standard systems- communication

• Capturing voices of different stakeholders
• Processes for communication- special/routine
• Capability of managers to communicate
• Capability to use different media
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Organizational routines and

processes
• Processes,
• routine activities,
• organization level processes- such as Strat plan syst
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Organizational climate
• Impacted by Culture, Control systems
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Role in strategy implementation

• Execution may require something more than alignment
(eg cross functional linkages, going beyond silo functional
thinking)
• Making agile adjustments- going beyond the plan
• Quality of internal communication- do all frontline staff
understand the new strategy
• Systems rewarding team performances and agility
• Decentralized leadership- hence focus on leadership
development
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Nature of leadership
• Thought leadership- executing growth, market insight,
strategic (long term) orientation
• People and organizational leadership- change,
organizational capability, team leadership, collaborating
and influencing
• Business leadership- Customer impact, results orientation
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HR requirements in international
strategy
• Competencies and skills
• Role of coaching and mentoring
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Coaching and mentoring leaders for growth

• Mentoring
• Transformational role?
• Altering expectations of followers?
• Introducing to network?
• Coaching- individual, group and team level
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Location of HR capabilities
• Within the functional domain of HRM
• Within line managers
• As a separate shared function- with options
• be an extension of the HRM department
• as an infrastructure
• located within one of the business units,
• an internal joint venture
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HR capabilities- impact of
technology
• Intranet-based employee portals through which employees
can self-service HR transactions.
• The availability of centralized call centers staffed with HR
specialists.
• Increased efficiency of HR operations.

• The development of data warehouses of HR-related

information.
• The ability to outsource HR activities to specialist service
providers.