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Human Resource Management:Gaining a Competitive Advantage
Chapter 1
Human Resource Management: Gaining a Competitive
Advantage
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Learning Objectives• Discuss roles and activities of a company’s HRM function
• Discuss implications of the economy, makeup of the labor force, and ethics for company sustainability
• Discuss how HRM affects a company’s balanced scorecard
• Discuss what companies should do to compete in the global marketplace
• Identify the characteristics of the workforce and how they influence HRM
• Discuss HRM practices that support high-performance work systems
• Provide a brief description of HRM practices
1-2
Introduction
• Competitiveness – a company’s ability to maintain and gain market share
• Human resource management – the policies, practices, and systems that influence employees’ behavior, attitudes, and performance
.1-3
Human Resource Management Practices
1-4
Responsibilities of HR Departments
1. Employment and Recruiting2. Training and Development3. Compensation4. Benefits5. Employee Services6. Employee and Community Relations7. Personnel Records8. Health and Safety9. Strategic Planning
1-5
HR as a Business with 3 Product Lines
AdministrativeServices and Transactions
Business Partner Services
Strategic Partner
HumanResources
1-6
6 Competencies for the HR Profession
1-7
How is the HRM Function Changing?P9
Time spent on administrative tasks is decreasing.HR roles as a strategic business partner, change agent, and employee advocate are increasing.
HR managers are 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 important challenges:– Self-service – giving employees online access to
information about HR issues– Outsourcing – the practice of having another company
provide services to save money and spend more time on strategic business issues.
1-8
How is the HRM Function Changing?
• As part of its strategic role, one of the key contributions that HR can make is to engage in evidence-based HR.
• Evidence-based HR – demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders.(see P15)
1-9
P15
• Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeeds
1-10
Questions Used to Determine If Human Resources Are Playing a Strategic Role in the Business
1. What is HR doing to provide value-added services to internal clients?2. What can the HR department add to the bottom line?3. How are you measuring the effectiveness of HR?4. How can we reinvest in employees?5. What HR strategy will we use to get the business from point A to point B?6. What makes an employee want to stay at our company?7. How are we going to invest in HR so that we have a better HR
department than our competitors?8. From an HR perspective, what should we be doing to improve our
marketplace position?9. What’s the best change we can make to prepare for the future?
1-11
The HRM Profession P12
• HR salaries vary depending on education and experience as well as the type of industry
• The primary professional organization for HRM is the Society for Human Resource Management (SHRM), P13
1-12
3 Competitive Challenges Influencing HRM
Global
Sustainability
Technology
1-13
1) The Sustainability Challenge
• Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment.
1-14
The Sustainability Challenge P14
Sustainability includes the ability to: • provide a return to shareholders• provide high-quality products, services and
work experiences for employees• increase value placed on intangible assets
and human capital, (see P19)• social responsibility– Adapt to changing characteristics and expectations of
the labor force– Address legal and ethical issues– Effectively use new work arrangements
1-15
Also, The Sustainability Challenge,P19
The changing structure of the economySkill demands for jobs are changingKnowledge is becoming more valuable
– Intangible assets -- human capital, customer capital, social capital, and intellectual capital
– Knowledge workers – employees who contribute to the company through a specialized body of knowledge
– Empowerment – giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service
Learning organization 1-16
The Sustainability Challenge,P22
Changes in Employment Expectations:
1. Psychological Contract (see Book) Expected and provided
1-17
Concerns with Employee EngagementEmployee engagement - degree to which employees are fully involved
in their work and strength of their commitment.
10 Common Themes of Employee Engagement,P23, at least 2 reasons
1 Pride in employer2 Satisfaction with employer3 Satisfaction with the job4 Opportunity to perform challenging work5 Recognition and positive feedback from contributions6 Personal support from manager7 Effort above and beyond the minimum8 Understanding the link between one’s job and the company’s mission9 Prospects for future growth with the company10 Intention to stay with the company
1-18
The Balanced Scorecard,P27
• The balanced scorecard gives managers the opportunity to look at the company from the perspective of internal and external customers, employees and shareholders.
Internal=co-workers external=customers• The balanced scorecard should be used to:
– Link human resource management activities to the company’s business strategy.
– Evaluate the extent to which the human resource function is helping the company’s meet it’s strategic objectives.
1-19
The Balanced Scorecard questions
How do customers see us? What must we excel at? Can we continuously improve and
create value? How do we look to shareholders?
1-20
Customer Service and QualityTotal Quality Management (TQM),P30
An effort to improve the ways, people, machines and systems accomplish work.
1-21
Customer Service and QualityTotal Quality Management (TQM),P30Core values of TQM include: (3)
• 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 from occurring rather than being detected and corrected.
1-22
Customer Service and Quality Emphasis
Malcolm Baldrige National Quality Award
ISO 9000:2000
Six Sigma Process
Lean Thinking
1-23
Changing Demographics Workforce Diversity,P36
• Internal labor force is the labor force of current employees
• External labor market includes persons actively seeking employment
• U.S. workforce is aging rapidly,P34• Increased Workforce Diversity,P36• Influence of Immigration,P36
1-24
Managing a Diverse Workforce
To successfully manage a diverse workforce, managers must develop a new set of skills including:
Communicate, coach and develop employees from a variety of backgrounds
Provide performance feedback that is 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.
1-25
Legal and Ethical Issues,P40-41
5 areas of the legal environment that have influenced HRM over the past 25 years: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
1-26
Legal and Ethical Issues,P41
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 Example: workdays(Monday-Sunday), fuxicom?
1-27
4 Principles of Ethical Companies,P41
1. Successful companies, in their 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.
1-28
2) The Global ChallengeTo survive companies must compete in
international markets.Be prepared to deal with the global
economy.
Offshoring – exporting jobs from developed countries to less developed countries
Onshoring – exporting jobs to rural parts of the United States, China
1-29
3) Technology Challenge
The overall impact of the Internet
The Internet has created a new business model – e-commerce, conducting business transactions and relationships electronically, examples:
B2B, B2C, B2G and so on (9 business models)
1-30
P49
• Advances in technology have:–changed how and where we work–resulted in high-performance work
systems–increased the use of teams to improve
customer service and product quality–changed skill requirements–increased working partnerships–led to changes in company structure
and reporting relationships
1-31
Advances in technology have increased:
use and availability of Human Resource Information Systems (HRIS)
use and availability of e-HRM E=electronic
1-32
e-HRM= processing and transmission of digital information, P51
Human resources information systems (HRIS)= computer system used to acquire, store, retrieve, and distribute information related to HR
1-33
Meeting Competitive Challenges Through HRM Practices
HRM practices that help companies deal with the challenges can be grouped into four dimensions:
1. The HR environment2. Acquiring and preparing HR3. Assessment and development of HR4. Compensating HR
1-34
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. (1)
Customer needs for new products or services influence the number and type of employees businesses need to be successful. (2)
1-35
Meeting Competitive Challenges Through HRM Practices
Managers need to ensure that employees have the necessary skills to perform current and future jobs. (3)
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
1-36
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.
1-37