CHAPTER 1
HUMAN RESOURCE MANAGEMENT:
GAINING A COMPETITIVE ADVANTAGE
INTRODUCTION
 Competitiveness - refers to a company’s ability to
maintain and gain market share in its industry.
 Human resource management (HRM) refers to the
policies, practices, and systems that influence
employees’ behavior, attitudes, and performance.
o Many companies refer to HRM as involving
“people practices"
HUMAN RESOURCE MANAGEMENT PRACTICES
RESPONSIBILITIES OF HR DEPARTMENTS
 Employment and Recruiting
 Training and development
 Compensation
 Benefits
 Employee Services
 Employee and community relations
 Personnel records
 Health and Safety
 Strategic Planning
ROLES OF HR DEPARTMENTS TO PERFORM
HR AS A BUSINESS WITH THREE PRODUCT LINES
HOW IS THE HRM FUNCTION CHANGING?
 The amount of time that the HRM function devotes
to administrative tasks is decreasing, and its roles as
a strategic business partner, change agent, and
employee advocate are increasing.
 In shifting the focus from current operations to
strategies for the future and preparing non-HR
managers to develop and implement HR practices,
HR managers face two important challenges:
o Self-service refers to giving employees
online access to information about HR
issues
o Outsourcing refers to the practice of having
another company provide services
DEMONSTRATING THE STRATEGIC VALUE OF HR
 Evidence-based HR refers to the demonstration
that human resources practices have a positive
influence on the company’s bottom or key
stakeholders (employees, customers, community,
shareholders).
 HR or workforce analytics refers to the practice of
using quantitative methods and scientific methods
to analyze big data.
o Big data refers to information merged from
human resource databases, corporate
financial statements, employee surveys, and
other data sources to make evidence-based
human resource decisions and show that
HR practices influence the organization’s
bottom line, including profits and costs.
THE HRM PROFESSION: POSITIONS & JOBS
 HR salaries vary depending on education and
experience as well as the type of industry.
o HR specialists
o HR generalists
o College degrees are held by the vast
majority of HRM professionals
o Professional certification is less common
than membership in professional
associations
 The primary professional organization for HRM is
the Society for Human Resource Management
(SHRM)
COMPETITIVE CHALLENGES INFLUENCING HRM

THE SUSTAINABILITY CHALLENGE
 Sustainability refers to the ability of a company to
survive and succeed in a dynamic competitive
environment.
 Stakeholders refers to shareholders, the
community, customers, and all other parties that
have an interest in seeing that the company
succeeds.
 Sustainability includes the ability to:
o deal with economic and social changes
o engage in responsible and ethical business
practices
o provide high quality products and services,
and
o put in place methods to determine if the
company is meeting stakeholders’ needs
 The changing structure of the economy
o Impact of September 11, 2001
o The competition for labor
 Skill demands for jobs are changing
 Knowledge is becoming more valuable
o Intellectual capital refers to the creativity,
productivity, and service provided by
employees
o Knowledge workers are employees who
contribute to the company not through
manual labor but through a specialized
body of knowledge
o Empowerment means giving employees
responsibility and authority to make
decisions regarding all aspects of product
development or customer service
 A learning organization embraces a culture of
lifelong learning, enabling all employees to
continually acquire and share knowledge
 The psychological contract describes what an
employee expects to contribute and what the
company will provide to the employee for these
contributions
 Alternative work arrangements include
independent contractors, on-call workers,
temporary workers, and contract company workers
THE BALANCED SCORECARD
 The balanced scorecard gives managers the
opportunity to look at the company from the
perspective of internal and external customers,
employees and shareholders.
 The balanced scorecard should be used to:
o Link human resource management activities
to the company’s business strategy.
o Evaluate the extent to which the human
resource function is helping the company’s
meet it’s strategic objectives.
 Measures of human resource practices primarily
relate to productivity, people, and processes.
CUSTOMER SERVICE AND QUALITY EMPHASIS
 Total Quality Management (TQM) is a company-
wide effort to continuously improve the ways
peoples, machines, and systems accomplish work
 Core values of TQM include:
o designing methods and processes to meet
the needs of internal and external
customers
o all employees receive training in quality
o promotion of cooperation with vendors,
suppliers, and customers
o management gives feedback on progress
 Malcolm Baldrige National Quality Award
o established in 1987 to promote quality
awareness, to recognize quality
achievements, and to publicize successful
quality strategies.
 ISO 9000:2000
o quality standards adopted worldwide.
 Six Sigma process
o system of measuring, analyzing, improving,
and controlling processes once they meet
quality standards.
MANAGING A DIVERSE WORKFORCE
 Internal labor force is the labor force of current
employees.
 External labor market includes persons actively
seeking employment.
 The U.S. workforce is becoming increasingly
diverse.
o Women Minorities
o Disabled workers
o Immigrants
CHANGING DEMOGRAPHICS DIVERSITY OF THE
WORKFORCE
To successfully manage a diverse workforce, managers
must develop a new set of skills, including:
1. Communicating effectively with employees from a
wide variety of cultural backgrounds.
2. Coaching and developing employees of different
ages, educational backgrounds, ethnicity, physical
ability, and race.
3. Providing performance feedback that is based on
objective outcomes.
4. Creating a work environment that makes it
comfortable for employees of all backgrounds to be
creative and innovative.
5. Recognizing and responding to generational issues.
LEGAL AND ETHICAL ISSUES
 Five main areas of the legal environment have
influenced HRM over the past 25 years
o Equal employment opportunity legislation
o Employee safety and health
o Employee pay and benefits
o Employee privacy
o Job security
 Women and minorities still face the “glass ceiling”
 The Sarbanes-Oxley Act of 2002 sets strict rules for
corporate behavior and sets heavy fines for
noncompliance, especially in regards to accounting
practices
 Human resource managers must satisfy three basic
standards for their practices to be considered
ethical:
o HRM practices must result in the greatest
good for the largest number of people
o Employment practices must respect basic
human rights of privacy, due process,
consent, and free speech
o Managers must treat employees equitably
and fairly
THE GLOBAL CHALLENGE
 Companies are finding that to survive they must
compete in international markets as well as fend off
foreign corporations’ attempts to gain ground in the
U.S.
 Every business must be prepared to deal with the
global economy. This is made easier by technology.
 Offshoring refers to the exporting of jobs from
developed countries to less developed countries.
 Many companies are entering international markets
by exporting their products overseas, building
manufacturing facilities in other countries, entering
into alliances with foreign companies, and engaging
in e-commerce
THE TECHNOLOGY CHALLENGE
 Technology has reshaped the way we play, plan our
lives, and where we work
o The overall impact of the Internet
o The Internet has created a new business model
– e-commerce – in which business transactions
and relationships can be conducted
electronically
 Advances in technology have:
o changed how and where we work,
o resulted in high-performance models of work
systems,
o increased the use of teams to improve
customer service and product quality,
o changed skill requirements,
o increased working partnerships,
o led to changes in company structure and
reporting relationships,
o increased the availability of Human Resource
Information Systems (HRIS),
o which are used to acquire, store, manipulate,
analyze, retrieve, and distribute HR information,
o increased the availability of e-HRM, which is the
processing and transmission of digitalized
information used in HRM,
o increased the competitiveness of high
performance work systems.
EXAMPLES OF HOW HRM PRACTICES CAN HELP
COMPANIES MEET COMPETITIVE CHALLENGES

MEETING COMPETITIVE CHALLENGES THROUGH HRM

PRACTICES

 HRM practices that help companies deal with the

four competitive challenges can be grouped into
four dimensions
o The human resource environment
o Acquiring and preparing human resources
o Assessment and development of human
resources
o Compensating human resources

 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

 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

 Human resource management practices of both

managers and the human resource function must
be aligned and contribute to the company’s
strategic goals