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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.

Learning Objectives
Discuss 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 highperformance work systems

Provide a brief description of HRM practices


Competitiveness a companys ability to
maintain and gain market share.

Human resource management (HRM) the

policies, practices, and systems that influence employees behavior, attitudes and performance.


HRM Practices


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

HR as a Business with 3 Product Lines

Business Partner Services

Strategic Partner

Human Resources


6 HR Competencies
Credible Activist

Cultural Steward

Talent Manager/ Organizational Designer

Strategic Architect

Business Ally

Operational Executor


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 Outsourcing


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.


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?


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. Whats the best change to prepare for the


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 companys bottom line or key stakeholders.


The HRM Profession

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

The primary professional organization for

HRM is the Society for Human Resource Management (SHRM) (


3 Competitive Challenges Influencing HRM



The Sustainability Challenge

Sustainability is 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.


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 force address legal and ethical issues effectively use new work arrangements

Economy- Implications for HR

Structure 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 valuable Intangible assets Knowledge workers Empowerment

Learning organization Social collaboration and social networking


The Sustainability Challenge

Psychological Contract

Alternative Work Arrangements

Changes in Employment Expectations


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 ones job and companys mission Prospects for future growth with the company Intention to stay with the company


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


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

Link HRM activities to the companys business
strategy. Evaluate the extent to which HR is helping meet the companys strategic objectives.


The Balanced Scorecard

How do customers see us?
What must we excel at? Can we continuously improve and create

How do we look to shareholders?


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.


Customer Service and Quality

Malcolm Baldrige National Quality Award

ISO 9000:2000
Six Sigma Process

Lean Thinking


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


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.


Legal and Ethical Issues

5 legal areas that influenced HRM :
1. 2. 3. 4. 5.
Equal employment opportunity legislation Employee safety and health Employee pay and benefits Employee privacy 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

Data-security practices and protecting intellectual property


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 Managers must develop and distribute a Code of Ethics, policies, processes and procedures, audit and train employees

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 persons interests

count as much as their own.


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


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


The Technology Challenge

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


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


High-Performance Work Systems

Work in teams, virtual teams and partnerships Changes in skill requirements Changes in company structure and reporting

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.


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. 2. 3. 4.

The HR environment Acquiring and preparing HR Assessment and development of HR Compensating HR


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.


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


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.