Published on January 9, 2009
Slide 1: HR STRATEGY:Driving Value to the Business Professor Scott A. Snell Director, Executive Education Center for Advanced Human Resource Studies (CAHRS) Cornell University Slide 2: Step 1: Value Proposition Step 2: Core Competence Step 3: HC Architecture Step 4: Strategic Alignment HR STRATEGY 1 2 3 4 Step 1:VALUE CREATION : Step 1:VALUE CREATION Management guru Peter Drucker once said… “…The essence of a business is outside itself.” Was he talking about value? 1 2 3 4 Slide 4: benefits costs VALUE = Low High Benefits Costs Low High Area of Sustainable Value Firms can revolutionize their industries by creating a different value proposition. Slide 5: Service Value Output Value Stakeholder 1: Retail Customers STARBUCKS Stakeholder 2: Benefits Costs Benefits Costs How does Starbucks create service value for retail customers? - benefits - costs How does Starbucks create output value for retail customers? - benefits - costs NOTE: Although customer value creation is critical, it is not the only element of value creation.Can the following be balanced/integrated? : NOTE: Although customer value creation is critical, it is not the only element of value creation.Can the following be balanced/integrated? Serving customers? Making a profit? Increasing shareholder wealth? Good environment for employees? Slide 7: Employee Value Shareholder Value Customer Value Where’s the Value? Customer’s willingness to buy Price of product/service Cost of product/service Employee’s opportunity cost Who captures the value if a customer would pay $8 for a pie... ...and the baker charges $6... ...but labor costs are only $3... ...and the employee would have worked for $2? Value Creation Slide 8: Starbucks Value Partitioning What do they do? How do they do it? CUSTOMER WILLINGNESS TO BUY SHAREHOLDER VALUE EMPLOYEE OPPORTUNITY COSTS How does Starbucks increase customer willingness to buy? How does it maximize shareholder value? How does it decrease employee opportunity costs? Step 2:CORE COMPETENCE : Step 2:CORE COMPETENCE …is a bundle of people, processes, and systems that enables a company to provide value to customers. Hamel and Prahalad 1 2 3 4 STARBUCKS : STARBUCKS Description: PROCESS(SYS) RELATIONSHIPS SKILLS VALUE CREATION Benefits : Costs IMPLICATIONS FOR HR Perform Improve Supply chain Blending/roasting In-store operations Customer service Customer service Barrista loyalty Supplier R&D Customer service Operations Supply chain Quality, available (Price) Quality, available (Price) Quality, speed (Price) Engage “3rd place” (Price) Helpful, engaged Service, new prod (Price) Reliable, quality Price New product (Price) Fun, engaged On-time, safety Price (No frills) Price Step 3:HUMAN CAPITAL ARCHITECTURE : Step 3:HUMAN CAPITAL ARCHITECTURE “We need to think of talent management, not as filling jobs, but as creating the competitive potential of tomorrow.” —J. Hofmeister (Royal Dutch Shell) 1 2 3 4 Slide 12: B C D A R&D Manufacturing Operations Distribution Sales Sales TMT HR R&D Diagnostics Fin Customer Service Mfg R&D R&D Partners Low VALUE high Low UNIQUE high Mapping Skill Areas at BIOTECH HR Legal MIS Laboratory Services Fin Quality TMT Core Compulsory Idiosyncratic Ancillary Customer Service Diagnostics R&D Partners R&D Partners R&D Partners R&D Partners Step 4:STRATEGIC ALIGNMENT : Step 4:STRATEGIC ALIGNMENT 1 2 3 4 Are the organization’s people, processes, and systems supporting strategic priorities and value propositions? Slide 14: Starbucks Coffee Financial Objectives Measures Vision & Strategy Human Capital Objectives Measures Process Objectives Measures Customer Objectives Measures Drivers Leadership Structure Technology Workflow Staffing Training Rewards HRM System Slide 15: Step 1: Value Proposition Step 2: Core Competence Step 3: HC Architecture Step 4: Strategic Alignment HR STRATEGY 1 2 3 4
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