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Human Resource Management and the Environment

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

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

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Introduction
 Human

resource management (HRM) is the effective management of people at work  The goal: make workers more satisfied and productive  When an organization is concerned about people, its total philosophy, culture, and orientation reflect it  Every manager must be concerned with people, whether or not there is a human resources department

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Introduction
 HRM

consists of numerous activities:  Legal compliance  Job analysis  Human resource planning  Recruitment, selection,  Placement and Orientation  Performance evaluation and compensation  Training and development  Labor relations  Safety, health, and wellness

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Strategic Importance of HRM
 Today,

HRM plays a major role in:  Clarifying the firm’s human resource problems  Developing solutions for them is oriented toward:  Action  The individual  Worldwide interdependence  The future

 It

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Strategic Importance of HRM
 Strategic

HRM differs significantly from traditional

HRM  In traditional arrangements, responsibility for managing human resources lies with hr alone  In a strategic approach, people management rests with any individual who is in direct contact with workers or line managers

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Strategic Importance of HRM
Item Responsibility for human resources Traditional HRM Specialists Strategic HRM Line managers

Objective
Role of HRM area Time focus Control Culture Major emphasis Accountability

Better performance
Respond to needs Short-term results Rules, policies, position power Bureaucratic, top-down, centralization Following the rules Cost centers

Improved understanding and use of human assets
Lead, inspire, understand Short, intermediate, long term Flexible, based on human resources Open, participative, empowerment Developing people Investment in human assets

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Strategic Importance of HRM
 For

years, the HRM function was not linked to corporate profit  Organizations focused only on current performance  HR managers did not have a strategic perspective  Executives categorized HRM in a traditional manner  It was difficult to develop metrics for HRM activities of the importance of people made HRM a major player in developing strategic plans  HRM strategies must reflect the organization’s strategy regarding people, profit, and effectiveness

 Recognition

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Strategic Importance of HRM
 Key

concepts that must be applied (continued):  Train the human resources staff  Emphasize the strategic importance of HRM  Show managers that they contribute to the goals/mission of the firm

 The

actions, language, and performance of the HRM function must be:  Measured  Precisely communicated  Evaluated

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Strategic Importance of HRM
 The

era of HRM accountability resulted from:  Concerns about productivity  Organizational downsizing and redesign  An increasingly diverse workforce  The need to effectively use all organizational resources to compete in an increasingly complex and competitive world

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Strategic Importance of HRM
 For

the HRM function to be successful, managers in other functions must be knowledgeable and involved  Managers play a major role in setting the direction, tone, and effectiveness of the relationship between:
 The

employees  The firm  The work performed
 Without

managerial participation, there are likely to be major human resource problems

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HRM and Organizational Effectiveness
 For

a firm to survive and prosper, reasonable goals must be achieved in:  Performance  Legal compliance  Employee satisfaction  Absenteeism  Turnover  Training effectiveness and ROI  Grievance rates  Accident rates

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HRM and Organizational Effectiveness
 Effectiveness

is measured by the balance of such complimentary characteristics as:  Reaching goals  Employing the skills/abilities of employees efficiently  Ensuring the influx and retention of well-trained, motivated employees  Three elements needed for firms to be effective:  Mission and strategy  Organizational structure  HRM

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HRM and Organizational Effectiveness

It is important to remember that the people who do the work and create the ideas allow the organization to survive

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HRM and Organizational Effectiveness
 Changes

experienced by organizations:  Growing global competition  Rapidly expanding technologies  Increased demand for individual, team, and organizational competencies  Faster cycle times  Increasing legal and compliance scrutiny  Higher customer expectations

 The

mechanized, routine-oriented workforce is giving way to a knowledge-based workforce

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HRM and Organizational Effectiveness
 Top

management has trouble making strategic planning decisions regarding people  All other resources are evaluated in terms of money high performance management practices results in:  Profitability gains  Stock price increases  Higher company survival rates

 Implementing

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Objectives of the HRM Function

 HRM

contributions to organizational effectiveness:  Helping the organization reach its goals  Employing workforce skills and abilities efficiently  Increasing job satisfaction, self-actualization, and quality of work life

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Objectives of the HRM Function
 HRM

contributions to organizational effectiveness (continued):  Communicating HRM policies to all employees  Maintaining ethical policies and socially responsible behavior  Managing change to the mutual advantage of individuals, groups, the enterprise, and the public

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Objectives of the HRM Function
 Increasing

employees’ job satisfaction and selfactualization  Employees must feel that the job is right for their abilities and that they are being treated equitably  Satisfied employees are not automatically more productive
 However,

unsatisfied employees tend to be absent and quit more often and produce lower-quality work

 Both

satisfied and dissatisfied employees can perform equally in quantitative terms

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Objectives of the HRM Function
 Quality

of work life (QWL) is a general concept that refers to several aspects of the job, including:  Management and supervisory style  Freedom and autonomy to make decisions on the job  Satisfactory physical surroundings  Job safety  Satisfactory working hours  Meaningful tasks  The job and work environment should be structured to meet as many workers’ needs as possible

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Objectives of the HRM Function
 Communicating

HRM policies to

all employees:  HRM policies, programs, and procedures must be communicated fully and effectively  They must be represented to outsiders  Top-level managers must understand what HRM can offer

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Objectives of the HRM Function
 Maintaining

ethical policies and socially responsible

behavior:  HRM managers must show by example that HRM activities are fair, truthful, and honorable  People must not be discriminated against  Their basic rights must be protected
 These

principles should apply to all activities in the HRM area

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Objectives of the HRM Function
 Trends

that strain employer-employee relationships:  Telecommuting  Outsourcing HRM  Family medical leave  Child care  Spouse-relocation assistance  Pay for skills  Benefit cost-sharing  Union-management negotiation

 These

changes are due to the emergence of new lifestyles and an aging population

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Objectives of the HRM Function
 Managing

increased urgency and faster cycle

times:  Firms are placing a growing emphasis on:  Increasing customer service  Developing new products and services  Training and educating technicians, managers, and decision makers

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Objectives of the HRM Function
 Shorter

cycle times mean less time to:  Train, educate, and assign managers  Solve sexual harassment complaints  Recruit and select talented people  Improve the firm’s image

 Learning

provides a framework for decreasing cycle time

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Objectives of the HRM Function
 Faster,

more urgent management behaviors have been caused by:  Foreign and domestic competition  Technological changes  The emergence of new opportunities

 Pressure

to increase learning and reduce cycle time, while also reducing cost, is a competitive reality  HRM activities must be in sync with the firm’s environment

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Who Performs HRM Activities
 Two

groups normally perform HRM activities:  HR manager-specialists  Operating managers

 The

effectiveness of the human resource declines more quickly than all other resources  An investment in people effects organizational effectiveness more than money, materials, or equipment

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Who Performs HRM Activities
A

large part of an operating manager’s day is spent:  In scheduled and unscheduled meetings  In telephone conversations  Solving problems that have a direct impact on people

 In

smaller organizations, the operating manager has such HRM responsibilities as:  Scheduling work  Recruitment and selection  Compensating people

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Who Performs HRM Activities

 As

the organization grows, the operating manager’s HR work may be shifted to HRM specialists  HR specialists are found in organizations with 100 to 150 employees  A HR department is typically created when the number of employees reaches 200 to 500

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Outsourcing
 Outsourcing

HRM activities is growing in popularity

because of:  Downsizing  Rapid growth or decline of business  Globalization  Increased competition  Restructuring

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Outsourcing
 Some

executives assume that outsourcing can:  Reduce costs  Improve flexibility  Permit the hiring of specialized expertise

 The

choice to outsource HRM activities is being made with little empirical support

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Interaction of Operating & HR Managers
 With

both operating managers and HR specialists making HRM decisions, there can be conflict  They have different orientations and objectives is worse if joint decisions must be made on:  Discipline  Physical working conditions  Termination  Transfer  Promotion  Employment planning

 Conflict

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Interaction of Operating & HR Managers
 Operating

managers and HR specialists can also

differ on:  How much authority employees have over job design  Labor relations  Organizational planning  Rewards, such as bonuses and promotions

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Interaction of Operating & HR Managers
 The

roles of HRM and operating managers have been impacted by:  Sweeping changes in business  Globalization  Technology  Demography  People don’t leave companies, they leave managers  HRM can help managers do a better job

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Interaction of Operating & HR Managers
 HRM

is often seen as a company policeman  It is also seen as inflexible and over-attentive to detail

 HRM

specialists are encouraged to:  Analyze every activity and prove its added value  Understand the business  Become a strategic partner with line managers  Seek out operating managers  Help managers avoid problems  Be flexible and open to the ideas of others

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Necessary HRM Competencies
Communication Problem Technology Forecasting Compensation

solving

Leadership

design

Recruiting/staffing
Employment

 Benefit

design

law

Accounting/finance

Training/development Record

keeping

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HRM’s Place in Management
 The

HR department must be a proactive, integral part of management and strategic planning
Ascertain

specific organizational needs for the use of its competence Evaluate the use and satisfaction among other departments Educate management and employees about the availability and use of HRM services
 HRM

strategic plans must build on the firm's strengths

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HRM’s Place in Management
 To

develop a competitive advantage over other firms:  Organizations must create value in a way that is rare and difficult for competitors to imitate things must become so important and effective that every unit in the firm knows they are needed for success:  The compensation system  Training opportunities  Diversity management programs

 These

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HRM’s Place in Management
 HR

executives must educate other departments about the human resource implications of decisions  This requires being familiar with other aspects of the organization, including:
 Investments

 Advertising
 Marketing  Production

control  Computer utilization  Research and development

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HR Department Operations
 Most

organizations keep HR units small  About 150 people maximum

 The

number of HR specialists to operating employees (personnel ratio) varies by industry:  The national average is 1 specialist to 100 employees
 Construction,

agriculture, retail, wholesale, and services have fewer specialists than average  Public utilities, durable goods manufacturing, banking, insurance, and government have an above-average ratio

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HRM Strategy
A

firm's HRM strategy integrates major objectives, policies, and procedures into a cohesive whole  A well-formulated HRM strategy aggregates and allocates a firm's resources on the basis of:  The organization’s internal strengths and weaknesses  Changes in the environment  The anticipated actions of competitors

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Clarifying Meaningful HRM Objectives
 The

objectives of an organization or department are the goals it seeks to achieve  Most objectives are stated in very general terms, from which more specific statements are developed  These plans are called policies and procedures or rules

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Clarifying Meaningful HRM Objectives
Strategy: The plan that integrates major objectives
More specific

Objectives: Goals that are specific and measurable
More specific

Policies: Guides to decision making
More specific

Procedures/Rules: Specific directions for decision making

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HRM Policy
A

policy is a general guide that expresses limits within which action should occur  Policies arise from past or potential problems  They free managers from making certain decisions  They ensure some consistency in behavior  They allow managers to concentrate on decisions in which they have the most experience and knowledge some organizations, the next step is to develop procedures and rules

 For

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HRM Procedures
 Procedures

(rules) are a specific direction to action  In large organizations, procedures are collected and put into manuals called standard operating procedures (SOPs)  Organizations must ensure that consistent decision making flows from a well-developed, but not excessive, set of policies and procedures  Procedures should be developed for only the most vital areas

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Organization of an HR Department
 In

most organizations, the chief HR executive reports to the top manager  In medium- and small-sized organizations, HRM and another function may be in a single department  In nonprofit organizations, HRM is typically a unit in the business office  HR specialists are usually located at the headquarters of an organization