Human Resource Management & Competitive Advantage

HR & Competitive Advantage
• Non-human resources—such as land, capital and equipment • Managing human resources is essential in order for a business to thrive and survive. • People determine the organization’s goals and of course people run the organization to ensure goals are met/exceeded • People are the competitive advantage to an organization’s success

• In HR we deal with issues such as pre-selection, selection, and post-selection • Pre-selection we plan—organizations decide what types of jobs are going to exist and what are the qualifications. • During the selection phase, the organization selects the employees:
– Recruiting applicants – Assessing their qualifications – Selecting those most qualified

Vision. (Mission. Strategic Business Objectives) .HRM • Post-selection phase the organization develop sound HR practices for effectively managing their key talent • The firm provides them with training and development opportunities to have the necessary skills to perform at satisfactory levels.

HRM • Chapter 3 we talk about HR Planning. electrical engineers recruitment process) .e. deployment. and utilization of its employees • The strategic planning process takes shape here • Demand and supply forecasting we determine the number and types of employees we need (i. Here managers anticipate and meet changing needs relating to acquisition.

HRM • Chapter 4 we discuss job analysis a process for gathering. analyzing and documenting information about specific jobs • Steps: --Determining job qualifications for recruitment purposes --Choosing the most appropriate selection techniques --Developing training programs .

assessment testing for administrative positions) .e.HRM • Steps: --Developing performance appraisal rating forms --Helping to determine pay rates --Setting performance standards for productivity improvement programs (i.

or nationally)/ internally • Our goal is to identify a suitable pool of applicants quickly. and legally . cost efficiently. regionally.HRM • Selection Practices we mean policies and procedures used by organizations to staff positions • Chapter 5 Recruitment to locate and attract applicants for specific positions (local.

HRM • Selection involves assessing and choosing job candidates. Again this process needs to be sound and legal • HRM Post-Selection Practices—these practices maintain or improve a company’s worker’s job performance levels: – Training & Development (Chapter 7)— planned learning experiences that teach workers to perform their current or future jobs effectively .

HRM • Training focuses on one’s current job and development focuses on possibly preparing employees for future jobs. • What is the organizational goal? The improvement of organizational performance to meet/exceed goals and objectives .

demotions. ―what of performance‖ and development plan) --Decisions on promotions. and pay raises .HRM • HRM Post-Selection Practices: --Performance Appraisal (Chapter 8)— --where we measure an employee’s job performance and communicate on an on-going basis (―how of performance‖. discharges.

such as health insurance or employee discounts --Goal is to maintain a competent and loyal workforce at an affordable cost .HRM • Compensation (Chapter 9)— --entails pay and benefits. Pay refers to the wage or salary an employee earns --Benefits are a form of compensation in addition to pay.

HRM • Productivity Improvement Programs (Chapter 10) --Tie behavior to rewards. bonuses..e. improved job satisfaction) --Goal of such programs is to motivate employees to engage in appropriate behaviors . We can have financial rewards (e. pay raises) or non-financial (i.g..

state and local laws (rights to fair and safe treatment) --selection process must be conducted by ―the book‖ (what are the needed job qualifications and choose selection methods that accurately measure those qualifications .HRM • HRM is also influenced by external factors --Legal & Environmental Issues (Chapter 2) --federal.

economic.HRM • Social. and technological events that influence HRM: --cultural diversity of workforce --work and family issues --part-time temporary workers --emphasis on quality and teamwork --mergers and acquisitions --downsizing and layoffs --rapid advances in technology --continuous quality improvement --high rate of illiteracy in the workforce .

and math skills keep up with rapidly advancing technologies (Motorola) . flextime. and job sharing --older workers through skill upgrading and training handle new techniques --educating employees on basic reading and writing. child care.HRM • How do these events influence HRM? --families-through maternity leave.

e. promotions. and overtime allocations . grievance procedures.HRM • Workplace Justice Laws (Chapter 11) – Addresses the issue of employee rights—treat workers in a non-discriminatory manner --workplace rules. disciplinary and discharge procedures • Union Influences (Chapter 12) – Adherence to written contracts (i.. discipline.

social. and political pressures on organizations to ensure the health and safety of their employees – Wellness and Employee Assistance Programs (EAP) .HRM • Safety & Health Concerns (Chapter 13) – Legal.

.HRM • International Influences (Chapter 14) – Globalization has required companies to enter foreign markets in order to compete as part of the globally interconnected set of business markets – Managers need to be more globally oriented (i.e. understanding foreign cultures and languages and the dynamics of foreign marketplaces) .

HRM • Who is responsible for Developing & Implementing HRM Practices? – Most companies have an HRM department but there is a shared partnership with the line organization (Reviews HR Models) – Effective managers attempt to solve HR problems by: --providing input into the selection decisions --trying to supervise people in a way that creates a team feeling .

HRM – Effective managers attempt to solve HR problems by: --providing training and coaching --providing opportunities for employee advancement --providing flexible scheduling for students and other part time workers .

coaching.HRM • HR consults to the line organization • Managers carry out many procedures and methods devised by HR professionals: --Interview job applicants --Provide orientation. and onthe-job training --Provide and communicate job performance ratings --Recommend salary increases .

HRM • Managers carry out many procedures and methods devised by HR professionals: --Carry out disciplinary procedures --Investigate accidents --Settle grievance issues • Gaining a competitive advantage: --Cost leadership strategy—firm provides the same services or products as its competitors. but produces them at a lower cost (Class discussion) .

HRM • Gaining a competitive advantage: – Product differentiation—occurs when a firm produces a product or service that is preferred by buyers: --creating a better quality product or service than it’s competitors --providing innovative products or services that are not offered by its competitors --choosing a superior location—one more accessible to customers --promoting and packaging its product to create the perception of higher quality .

HRM As A Competitive Advantage • 1994 study examined the HRM practices and productivity levels of 968 firms across 35 industries – Effectiveness of each company’s set of HRM practices was rated based on the presence of such things as: • • • • Incentive plans Employee grievance systems Formal performance appraisal systems Workers participation in decision making .

g.HRM: Competitive Advantage • Strong link between HR competitiveness and productivity --one standard deviation in HRM ratings translated to a productivity difference of 5%. Means that a company with a high HRM effectiveness ratings (e. 86th percentile) out-produced the ―average‖ company by 5% ..

HRM: Competitive Advantage • Another study conducted by Chris Ryan and Associates evaluated the impact of a broad range of HRM practices on shareholder return. Found that 15-30% of the total value of a company could be attributed to the quality of HRM practices • Where is the greatest impact? – Providing employees with effective orientation training – Letting employees know what is expected of them – Discharging employees that are chronically poor performers .

create competitive advantage . which.HRM: Competitive Advantage • Discuss Model on Linking HRM Practices to Competitive Advantage • Direct Path—the way HRM practice is carried out can have an immediate impact on competitive advantage • Indirect Path—an HRM practice can impact competitive advantage by causing certain outcomes. in turn.

selection. training and compensation—all big expenses for a firm – Service industries 70% of their budget is made up of payroll .HRM: Competitive Advantage • Firms can achieve cost leadership through the use of effective HRM practices – HRM costs through recruitment.

HRM: Competitive Advantage • Indirect Impact of HRM practices: – HRM practices------Employment centered outcomes – Employment-centered outcomes--Organization-centered outcomes – Organization-centered outcomes— Competitive advantage .

and act as a good corporate citizen . and abilities an employee has that the job requires – Motivation—is the employee willing to exert the necessary effort to perform the job well – Work-related attitudes—is the employee satisfied with their job. skills.HRM: Competitive Advantage • Employee-centered outcomes: – Competence—knowledge. committed to the organization.

• Output refers to the quantity. legal compliance. quality. and company reputation or image. and innovativeness of the product or service offered by the firm • Retention rates reflect the amount of employee turnover a firm experiences . employee retention.HRM: Competitive Advantage • Employee-centered outcomes--organization-centered outcomes – Organization centered outcomes consist of output.

HRM: Competitive Advantage Organization centered outcomes: • Retention rates reflect the amount of employee turnover a firm experiences • Legal compliance concerns the issue of whether the firm’s HRM practices conform to the requirements imposed by the various employment laws • Company reputation concerns how favorably ―outsiders‖—potential applicants and customers— view the organization .

HRM: Competitive Advantage • What drives employee retention?: – Career growth and learning opportunities – Fair pay – Company pride/organizational commitment – Employee empowerment – High involvement HR systems—let employees use skills as they see fit or provide financial incentives .

e. and training costs of a new employee) . e-learning vs.HRM: Competitive Advantage • Organization-Centered Outcomes--Competitive Advantage – Most common ways to cut HRM costs is to employ technology to replace some of the more expensive HR professional-delivered services (i. selection.. in class training) – Low turnover of employees you will have better customer retention (recruiting.

. their impact may not be as favorable by competitors due to interrelated system (i. incentive pay system may only work when used in conjunction with selection practices that favor hiring risk takers.e. (Marriott Case Revisited) .HRM: Competitive Advantage • Management of HR is less susceptible to imitation therefore competitive advantage achieved through HRM practices is likely to be more sustainable: – Competitors rarely have access to a firm’s HRM practices – Even when practices are visible.

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