Human Resource Management:Gaining a Competitive

Advantage

Chapter 01

Human Resource Management: Gaining a Competitive

Advantage

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning ObjectivesDiscuss roles and activities of HRM function

Discuss implications of the economy, makeup of the labor force and ethics for company sustainability

Discuss how HRM affects a balanced scorecard

Discuss what companies should do to compete in global marketplace

Identify how technology such as social networking is influencing HRM

Discuss HRM practices that support high-performance work systems

Provide a brief description of HRM practices1-2

Introduction

Competitiveness – a company’s ability to maintain and gain market share.

Human resource management (HRM) – the policies, practices, and systems that influence employees’ behavior, attitudes and performance.

1-3

HRM Practices

1-4

Responsibilities of HR Departments

1. Employment and Recruiting

2. Training and Development

3. Compensation

4. Benefits

5. Employee Services

6. Employee and Community Relations

7. Personnel Records

8. Health and Safety

9. Strategic Planning

1-5

HR as a Business with 3 Product Lines

AdministrativeServices and Transactions:

Compensation, Hiring, and Staffing

Emphasis: Resource

Efficiency andServiceQuality

(traditionalView)

Business Partner Services:

DevelopingEffective HRSystems,

ImplementingPlans, TalentManagement

Emphasis:Knowing &InfluencingBusiness

StrategicPartner:

ContributingTo Business

Strategy

Emphasis:Knowledge of

HR and theCompetition

1-6

6 HR Competencies

Credible ActivistCultural

Steward

Business Ally

StrategicArchitect

Operational

Executor

Talent Manager/

Organizational

Designer

1-7

Strategic Role of the HRM Function

Time spent on administrative tasks is decreasing.

HR roles as a strategic business partner, change agent and employee advocate are increasing.

HR is challenged to shift focus from current operations to future strategies and prepare non-HR managers to develop and implement HR practices.

This shift presents two challenges:Self-service – giving employees more direct

access to HR information (training, benefits, etc.)

Outsourcing – third party or consultant provides HR services (payroll, benefits, etc.)

1-8

Shared Service Model

Shared Service Model is a way to organize the HR function that includes centers of expertise or excellence, service centers and business partners to help control costs and improve business-relevance and timeliness of HR practices.

1-9

How is the HRM Function Changing?

As part of its strategic role, HR can engage in evidence-based HR.

Evidence-based HR – demonstrating that HR practices have a positive influence on the company’s bottom line or key stakeholders.

1-10

HR Playing a Strategic Role in the Business?

1. What is HR doing to provide value-added services to internal clients?

2. What can HR add to the bottom line?

3. How are you measuring HR effectiveness?

4. How can we reinvest in employees?

1-11

Questions, cont.

5. What HR strategy will get the business from point A to point B?

6. What makes an employee want to stay?

7. How will we invest in HR for a better HR department than competitors have?

8. What should we be doing to improve our marketplace position?

9. What’s the best change to prepare for the future?

1-12

The HRM Profession

HR salaries vary according to position, experience, education, training, location and firm size. See: and Also

The primary professional organization for HRM is the Society for Human Resource Management (SHRM) (www.shrm.org)

1-13

McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved 14

3 Competitive Challenges Influencing HRM

Globalization

Sustainability

Technology

1-15

McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved 16

The Sustainability Challenge

Sustainability is the company’s ability to make a profit without sacrificing the resources of its employees, the community, or the environment; the ability of a company to survive and succeed in a dynamic competitive environment.

Stakeholders include shareholders, the community, customers and all other parties that have an interest in seeing that the company succeeds.

1-17

The Sustainability Challenge

Sustainability includes the ability to:deliver a return to shareholders provide high-quality products,

services and work experiences for employees

increase value placed on intangible assets, human capital and social responsibility

adapt to changing characteristics and expectations

of the labor forceaddress legal and ethical issueseffectively use new work

arrangements 1-18

Economy- Implications for HRStructure of the economy

Development and speed of social media

Growth in professional and service occupations

Skill demands for jobs are changing

Knowledge is becoming more valuableIntangible assetsKnowledge workersEmpowerment

Learning organizationSocial collaboration and social networking

technology

1-19

The Sustainability Challenge

Psychological

Contract – what

employers and

employees bring

to the relations

hip

Alternative Work Arrangements

Changes in

Employment

Expectations

1-20

Common Themes of Employee Engagement

Pride and satisfaction with employer and job

Opportunity to perform challenging work

Recognition and positive feedback from contributions

Personal support from manager

Effort above and beyond the minimum

Understanding link between one’s job and company’s mission

Prospects for future growth with the company

Intention to stay with the company

1-21

Talent Management

Talent management is the systematic planned strategic effort by a company to use bundles of HRM practices including acquiring and assessing employees, learning and development, performance management , and compensation to attract, retain, develop, and motivate highly skilled employees and managers.

Growth of contingent workers and part-time employees

Alternative work arrangements1-22

McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved 23

The Balanced Scorecard

The balanced scorecard provides a view of the company from the perspective of internal and external customers, employees and shareholders.

The balanced scorecard should be used to:Link HRM activities to the company’s

business strategy.Evaluate the extent to which HR is

helping meet the company’s strategic objectives.

1-24

The Balanced Scorecard

How do customers see us?

What must we excel at?

Can we continuously improve and create value?

How do we look to shareholders?

1-25

Customer Service and Quality

Total Quality Management (TQM) Core Values• Methods and processes are designed to meet

internal and external customers’ needs.• Every employee receives training in quality.• Promote cooperation with vendors, suppliers and

customers.• Managers measure progress with feedback

based on data.• Quality is designed into a product or service so

that errors are prevented rather than being detected and corrected.

1-26

Customer Service and Quality

Malcolm Baldrige National Quality Award

ISO 9000:2000

Six Sigma Process

Lean Thinking

1-27

Changing Demographics Workforce Diversity

Internal labor force - current employees

External labor market - persons outside the firm actively seeking employment

U.S. workforce is aging rapidly

Increased workforce diversity

Influence of immigration

1-28

Managing a Diverse Workforce

To manage a diverse workforce, managers must develop new skills to:

Communicate, coach and develop employees from a variety of cultural and educational backgrounds, ethnicity, age, ability and race.

Provide performance feedback based on objective outcomes.

Create a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative.

Recognize and respond to generational issues.

1-29

McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved 30

Legal and Ethical Issues

5 legal areas that influenced HRM :1. Equal employment opportunity legislation2. Employee safety and health3. Employee pay and benefits4. Employee privacy5. Job security

Women and minorities still face the “glass ceiling”

Sarbanes-Oxley Act of 2002

Federal health care legislation

Companies which employ unlawful immigrants or abuse laborers

Data-security practices and protecting intellectual property

1-31

Legal and Ethical Issues

Ethics - the fundamental principles by which employees and companies interact

Ethical HR practices: HRM practices must result in the greatest good for

the largest number of people Employment practices must respect basic human

rights of privacy, due process, consent, and free speech

Managers must treat employees and customers equitably and fairly

1-32

4 Principles of Ethical Companies

1. Successful companies, in relationships with customers, vendors and clients, emphasize mutual benefits.

2. Employees assume responsibility for the actions of the company.

3. Companies have a sense of purpose or vision the employees value and use in their day-to-day work.

4. They emphasize fairness; another person’s interests count as much as their own.

1-33

The Global Challenge

To survive companies must deal with the global economy, compete in and develop global markets and prepare employees for global assignments.

Offshoring – exporting jobs from developed countries to less developed countries

Onshoring – exporting jobs to rural parts of the United States

1-34

Technology Challenge

The overall impact of the Internet

The Internet has created a new business model – e-commerce – for conducting business transactions and relationships electronically.

Social networking

1-35

The Technology Challenge

Advances in technology have:changed how and where we workresulted in high-performance work systems

increased the use of teams to improve customer service and product quality

changed skill requirementsincreased working partnershipsled to changes in company structure and reporting relationships

1-36

The Technology Challenge

Advances in technology have increased: use and availability of Human Resource

Information Systems (HRIS) use and availability of e-HRM competitiveness in high-performance

work systems HR Dashboard Metrics

1-37

High-Performance Work Systems

Work in teams, virtual teams’ and partnerships

Changes in skill requirements

Changes in company structure and reporting relationships

Increased use and availability of e-HRM and Human Resource Information Systems (HRIS)

HRM practices support high-performance work systems through staffing, work design, training, compensation and performance management.

1-38

McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved 39

Meeting 4 Competitive Challenges Through HRM

Practices

HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions:

1. The HR environment2. Acquiring and preparing HR3. Assessment and development of HR4. Compensating HR

1-40

Meeting Competitive Challenges Through HRM

Practices

Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity and competitiveness.

Customer needs for new products or services influence the number and type of employees businesses need to be successful.

1-41

Meeting Competitive Challenges Through HRM

Practices

Managers need to ensure that employees have the necessary skills to perform current and future jobs.

Besides interesting work, pay and benefits are the most important incentives that companies can offer employees in exchange for contributing to productivity, quality, and customer service. Create pay systems, reward employee

contributions and provide benefits

1-42

Summary

HR has three product lines: administrative services, business partner services, and strategic services.

To successfully manage HR, individuals need personal credibility, business and technology knowledge, understanding of business strategy, and ability to deliver HR services.

HR management practices should be evidence-based.

HR practices are important for helping companies deal with sustainability, globalization, and technology challenges.

HR managers must address global and technology challenges.

1-43