1-1

1-2

A Strategic Management Approach to HRM

McGraw-Hill/Irwin Human Resource Management, 10/e

2007 The McGraw-Hill Companies, Inc. All rights reserved.

1-3

Introduction
Taking

a strategic HRM approach means: Making human resources management a top priority Integrating HRM with the companys strategy, mission, and goals HRM can make significant contributions if included in the strategic planning process from the outset The strategic management process helps determine: What must be done to achieve priority objectives How they will be achieved

1-4

Introduction
Many

strategic plans use: A three to five year timeline Annual monitoring and modification

Good

HR strategy results in a fit between organizational strategy and HRM policies and programs Recruitment, selection, outsourcing, telecommuting, performance evaluation, compensation

1-5

A Model to Organize HRM

ARDM

means: Acquiring Rewarding Developing Maintaining and protecting goals of the ARDM model are: Socially responsible and ethical practices

The

1-6

A Model to Organize HRM

The

eventual success of any HRM activity is: The organization's employees are the best qualified They perform jobs that suit their needs, skills, and abilities

Matching

people and activities in order to accomplish goals is easier with a diagnostic approach

1-7

Taking a Diagnostic Approach to HRM

The

ARDM model has four specific steps: Diagnosis Prescription Implementation Evaluation Managers typically diagnose a work situation by observing and identifying key factors A prescription is then made to translate the diagnosis into action Most human resource problems are too complex to have a single correct prescription

1-8

Taking a Diagnostic Approach to HRM

Implementing

a solution is the next step, followed by

evaluation Evaluation tells managers whether improvement in the ARDM process is needed
If

an organization teaches its members to focus on ARDM plus the environment, it is likely to achieve: Socially responsible, ethical behaviors Competitive, high-quality products and services ARDM model calls for thorough, timely, and systematic review of each situation

The

1-9

External Environmental Influences

HRM

processes are influenced by both the internal and external environments External influences include: Government laws and regulations Union procedures and requirements Economic conditions The labor force HR planning must operate within: Guidelines Limits of available resources Competencies

1-10

External Environmental Influences

HRM

is one important function among others: Finance Accounting Research and development Marketing Production The interaction of these internal programs sets the tone for the entire organizational system

1-11

Government Law and Regulations

Government Hiring

regulations affect:

Promotion

diversity Downsizing Discipline Major areas of legislation and regulation include EEO and human rights legislation These directly affect recruiting, selection, evaluation, and promotion

Managing

1-12

Government Law and Regulations

EEO

and human rights legislation indirectly affects: Employment planning Orientation Career planning Training Employee development

1-13

Government Law and Regulations

Other

areas of legislation and regulation include: Employment of illegal aliens Discrimination based on sex, age, and disability Compensation regulation Benefits regulation Workers' compensation and safety laws Labor relations laws and regulations Privacy laws

1-14

Government Law and Regulations

Government

regulation has increased substantially In 1940, the U.S. Dept. of Labor administered 18 regulatory programs In 2004, it administered more than 135
And

that is just one government agency

1-15

Government Law and Regulations

Government

regulation impacts a managers job: Regulation encourages simplistic thinking on complicated issues Designing and administering regulations is complex, leading to slow decision making Regulation leads to complicated legal maneuvering Many regulations are out of date and serve little social purpose There is regulatory overlap and contradiction among regulatory agencies

1-16

The Union
A

union directly affects most aspects of HRM, including: Working conditions Wages and salaries Fringe benefits Employees rights Grievance processes Work hours There are cooperative unions and combative unions

1-17

The Union
Unions

were once concentrated in a few sectors of the economy Today, the fastest-growing sectors are the public sector and the third sector It is no longer useful to think of unionized employees as blue-collar factory workers Engineers, nurses, teachers, secretaries, salespersons, college professors, professional football players, and even physicians belong to unions

1-18

Economic Conditions
Two

economic factors affect HRM programs: Productivity The work sector of the organization is: An important part of a nation's economic condition Representative of an organizations overall efficiency The output of goods and services per unit of input (resources) used in a production process

Productivity

1-19

Economic Conditions
Before

productivity can be managed and improved, it must be measured Isolate the outputs Determine the costs that went into producing the output Compare the current year's figures with those of the previous year Productivity measures are crude and subject to short-term error, but over time can show a trend

1-20

Economic Conditions
Suggested

solutions for increasing productivity: Reduce government controls Develop more favorable income tax incentives Reindustrialize the business-industrial complex

Reducing

legislative controls can adversely affect the quality of life and society for decades to come Toxic waste, radiation, air pollution, and other forms of destruction must be carefully controlled

1-21

Economic Conditions
Managers

can influence productivity through sound HRM programs Diagnosis, prescription, implementation, and evaluation Recruitment and selection Motivational and compensation techniques Training and development

1-22

The Work Sector of HRM

60

percent of HR specialists work in the private sector 30 percent work in the public sector; 10 percent work in the third sector Private- and third-sector HRM are structured similarly HRM in the public sector is structurally different A manager moving from the private or third sector to the public sector finds a more complicated job Politicians, the public, special interest groups, and reporters all exert outside pressure

1-23

Competitiveness
At

the macroeconomic level, competitiveness is: The degree to which a nation can, under free and fair market conditions, produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens If you substitute organization for nation, and employees for citizens, you have the definition of organizational competitiveness

1-24

Competitiveness
At

the organizational level, competitiveness is an important issue How effectively do workers produce the product? How good is the quality of the services or goods? Can employees handle new technology and produce the product at lower costs? Does the firm have the human resources needed to increase manufacturing to a global level? Will the push to work harder and faster raise turnover, absenteeism, and the number of defects?

1-25

Competitiveness

competitive advantage means having a superior marketplace position relative to competitors A sustainable competitive advantage means dealing effectively with employees, customers, suppliers, and competitors The way HRM activities are implemented and modified can provide competitive advantages

1-26

Competitiveness
Activities

that can enhance and sustain competitive advantage: Employment security Selective recruiting High wages Incentive pay Employee ownership Information sharing Participation and empowerment Teams and job redesign

1-27

Competitiveness
Activities

that can enhance and sustain competitive advantage (continued): Training as skill development Cross-utilization and cross-training Symbolic egalitarianism Wage compression Promotion from within Long-term perspective Measurement of practices Overarching philosophy

1-28

Competitiveness
Competitors

can adopt and/or improve on successful HRM activities A firm with fair and equitable treatment of human resources is less susceptible to losing its competitive advantage A few HRM activities can be copied, but imitation of an entire culture and system of HRM is difficult

1-29

Composition & Diversity of Labor Force

The

labor force of the United States comprises all people age 16 years or older who are: Not in the military Employed or actively seeking work of 2004, over 146 million Americans were in the workforce

As

1-30

Women in the Workforce

In

2002, about 47 percent of the full-time U.S. workforce consisted of women This is a 235 percent increase since 1947 The number of married male employees has increased by only 30 percent

Women

should have equal job opportunities However, they still face workplace discrimination

There

are signs that more women will have professional jobs

1-31

Minorities in the Workforce

The

situation for racial and ethnic minorities in the U.S. is similar to that for women Few Hispanics, African-Americans, or Native Americans are found in high-status, high-paying jobs Historically, the most recent immigrant groups take the lowest-level jobs Minorities were living in the U.S. long before the immigrants arrived

1-32

Older Employees
The

percent of older employees is growing One of the toughest employment problems today is the older employee who loses a job through no personal fault Higher insurance premiums for older employees make them more costly to employ we age, we lose some of our faculties This is an ongoing process The key is to match employees with jobs

As

1-33

Older Employees
Contrary

to stereotypes: Employees 45+ have no more accidents than younger ones Until age 55, absenteeism rates are the same or lower Employees under 35 have the worst accident rate When total performance is considered, older employees are just as effective as younger ones

1-34

Employment Projection
The

ten fastest-growing occupations: Computer software, engineers, applicants Computer support specialists Computer software, engineers, systems software Network and computer system administrators Network systems and data communication analysts Desktop publishers Database administrators Personal and home care aides Computer systems analysts Medical assistants

1-35

Geographic Location of the Organization

The

location of the organization influences hiring practices and HRM activities Rural versus urban International versus local Education Behavior Legal-political factors Economics Inter-cultural training

1-36

Internal Environmental Influences

HRM

programs are influenced by: Strategy Goals Organizational culture Nature of the task Work groups The leaders style and experience

1-37

Strategy
A

strategy: Indicates what an organization's key executives hope to accomplish in the long run Is concerned with competition and aligning the resources of the firm

Some

companies believe long-term success is linked to helping employees achieve work-life balance

1-38

Goals
Organizational

goals differ within and among

departments Most departments have similar goals Differences arise from the importance placed on the goals In organizations where profits take precedence, HRM goals receive little attention This results in effectiveness problems (absenteeism, performance decrements, high grievance rates)

1-39

Goals

Diversity

refers to any mixture of themes characterized by differences and similarities Diversity in organizations is more than demographics Dealing with workforce diversity means focusing on the collective picture of differences and similarities

1-40

Goals
Wisconsin

Power and Light uses a six-step approach to diversity training: Form a diversity steering team Create a diversity training team Select a diversity training project manager Complete a cultural audit Design a training program Implement and evaluate the training

1-41

Organization Culture
A

firm's organizational culture is shown by: The way it does business How it treats customers and employees The autonomy or freedom that exists in the departments or offices The degree of loyalty expressed by employees

1-42

Organization Culture
Organization

culture represents the perceptions held by the employees There is no one "best" culture for the development of human resources can: Impact behavior, productivity, expectations Provide a benchmark for standards of performance

Culture

1-43

Nature of the Task

HRM is the effective matching of the nature of the task (job) with the nature of the employee

1-44

Nature of the Task

Job

factors that attract or repel workers: Degree of knowledge and ability to use information Degree of empowerment Degree of physical exertion Degree of environmental unpleasantness Physical location of work Time dimension of work Human interaction on the job Degree of variety in the task Task identity Task differences and job design

1-45

Work Group
An

employees experiences are largely influenced by the work group A group is two or more people who: Consider themselves a group Work interdependently to accomplish a purpose Communicate and interact with one another on a continuous basis In many cases, work next to each other

1-46

Work Group

An

effective group is one in which: Members function and act as a team Members participate fully in group discussion Group goals are clearly developed Resources are adequate to accomplish group goals Members furnish suggestions leading to achievement of goals

1-47

Work Group
Most

most effective work groups: Are small (7 to 14 members) Have stable membership
Have

Members:

eye contact and work closely together Have similar backgrounds Depend on the group to satisfy their needs
Effective

groups support management and the organization's goals, unless it conflicts with their own

1-48

Work Group

Changing the group's norms and behavior requires: The manager's leadership The manager's power to reward or discipline The transfer of some group members groups are directly related to the success of HRM activities If a group opposes HRM programs, it can ruin them Consider permitting work-group participation in designing and implementing HRM

Work

1-49

Leaders Style and Experience

The

experience and leadership style of the operating manager directly affects HRM activities Orchestrating the skills, experiences, personalities, and motives of individuals Facilitating interaction within work groups Providing direction, encouragement, and authority to evoke desired behaviors Reinforcing desirable behavior

1-50

Strategic HRM: A Key to Success

Three

levels of strategy apply to HRM activities: Strategic (long term) Managerial (medium term) Operational (short term) HRM activities are: Employee selection/placement Rewards Appraisal Development

The

1-51

Strategic HRM: A Key to Success

Strategic Growth

HRM planning leads to:

Profits
Survival Planning

also: Expands awareness of possibilities Identifies strengths and weaknesses Reveals opportunities Points to the need to evaluate the impact of internal and external forces

1-52

Strategic HRM: A Key to Success

Organizational

strategic plans permit HR to prepare for internal and external environment changes Each organization should adopt a strategy that best fits its goals, environment, resources, and people An organization must match its: Strategic plan Employees' characteristics HRM activities

1-53

Strategic HRM: A Key to Success

The

days of viewing HRM as only a highly specialized and technical staff are over HRM must be involved in all aspects of an organization's operation It must make everyday contributions to the organization programs must be: Comprehensive Adapted to the organization's culture Responsive to employee needs

HRM

1-54

Strategic Challenges Facing HRM

Global

competition has become intense HRM professionals are now being asked to optimize the skills, talents, and creativity of every employee Failure to do so will mean the firm cannot compete in a globally interconnected world

1-55

Strategic Challenges Facing HRM

Technology

trends: Growth in knowledge needs Shift in human competencies Global market connection Business streamlining Rapid response Quicker innovation Quality improvement Industrial revolution

1-56

Building a Cooperative Workforce

The

U.S. workforce is changing in dramatic ways: There is a slower increase in the number of Caucasian workers than other groups By 2006, white males will no longer dominate the workforce Women are entering the workforce in record numbers The number of Hispanic, Asian, and older workers will continue to rise

1-57

Building a Cooperative Workforce

The

changing look, age, and needs of the workforce have resulted in more concern about: Child care Elder care Diversity understanding and training

Understanding

diversity is an obvious need Most firms are not yet "diversity-friendly The negative financial impact can be significant There will be increased demand for fair, ethical, and prompt handling of diversity issues

1-58

Caliber of the Workforce

Recruiting

and developing skilled labor is important A growing number of jobs require higher levels of education, language, math, and reasoning skills Strategic HR planning models must carefully weigh deficiencies and shortages in skills

The

skills gap impacts more than HRM

societies must face the consequences of not having the workforce needed to compete in a global economy

Whole

1-59

Restructuring and Downsizing

Facts

about downsizing: Half of all downsized firms end up with at least as many employees again within a few years Downsizing in manufacturing is not new It is positively correlated to foreign competition It encourages firms to reduce their costs Profits increase in the short-run, but not productivity It leads to lower compensation/wages within the downsized firm

1-60

Restructuring and Downsizing

Restructuring

means changing the reporting and authority relationships within a firm

Downsizing

is a reduction in a company's workforce Downsizing has a human face and can result in stressrelated health problems

There

is a growing sense that job security is a thing of the past

1-61

Contingent Workers
Contingent

workers include: Temporaries Part-timers Contract or leased workers Others who are hired to handle extra tasks or workloads

The

number of contingent workers has increased steadily since the early 1970s

1-62

Contingent Workers
Outsourcing

means hiring another firm to do work This includes HRM activities The outsource firm provides the employees to complete the job

Professional

employee organizations (PEOs) are growing in popularity because they can: Save a firm money Reduce its risks Improve efficiency Allow the company to focus on its core business

1-63

People & the HRM Diagnostic Framework

Employees

are the most important concern in the diagnostic model Even the best HRM activities can backfire if adjustments for individual differences arent built in People differ in their: Abilities Attitudes and preferences Styles Intellectual capacities Ways of doing the job

1-64

Abilities of Employees
Abilities

or skills are classified as: Mechanical Motor coordination Mental Creative

Abilities

that are the result of genetic factors can rarely be changed through training Abilities such as interpersonal skills and leadership are more subject to change

1-65

Employee Attitudes and Preferences

An

attitude is: A characteristic, long-lasting way of thinking, feeling, and behaving toward an object, idea, person, or group

preference means: Evaluating an object, idea, or person in a positive or negative way

1-66

Employee Attitudes and Preferences

Work: Allows

for the expression of both aggressive and pleasure-seeking drives Offers a way to channel energy Provides income Offers a justification for existence Is a way to achieve self-esteem and self-worth
The

amount of energy directed toward work is related to the amount directed to family, interpersonal relations, and recreation

1-67

Motivation of Employees
Motivation

is a set of attitudes that predisposes a person to act in a specific, goal-directed way It is an inner state that energizes, channels, and sustains human behavior to achieve goals Work motivation channels a person's behavior toward work and away from recreation or other areas of life The motivation to work changes as other life activities change

1-68

Motivation of Employees

Managers

who can determine the work motivations of employees will make better HRM decisions Work-oriented, hard working employees are usually motivated by incentive compensation systems Those consciously motivated to do a better job benefit from performance evaluation techniques

1-69

Personality of Employees
Personality

is how a person thinks and behaves It includes the person's: Traits Values Because each employee Motives has a unique personality, Genetic blue print it is unlikely that a single set of HRM activities or Attitudes leadership approaches Emotional reactivity will be equally successful Abilities for all employees Self-image Intelligence Visible behavior patterns

1-70

Personality of Employees
Behavioral

scientists have found that: The employee is both rational and intuitive A person acts in response to internal inclinations, choices, and environmental influences

Each

person is unique and acts/thinks in a certain way because of: Personality Abilities Attitudes Motives

1-71

Desirable End Results

HRM

must make decisions and solve problems in a socially responsible and ethically sound way It must help the firm satisfy its customers and employees It is a demanding job, but an exciting challenge

1-72

Comments to Reflect On
Organizational

effectiveness is critically influenced by HR management practices Improvements in productivity, quality, and customer satisfaction typically depend on changes in multiple management systems HR management systems drive behavior; they must align with other management systems It is hard to improve organizational performance without paying attention to HR management The HR department must be a central player in a company's competitive efforts