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CHAPTER ONE
Meeting Present and Emerging
Strategic Human Resource Challenges
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Chapter Objectives
 Review Key Environmental
Challenges (external)
 Review Key Organizational
Challenges (internal)
 Review Individual
Challenges
 Discuss Planning and
Implementing HR Policies –
from a Strategic Prospective
 Link HR Strategies and
Firm’s Performance
 Briefly Look at Best HR
Practices
 Review Key Terms
 Brain Drain
 Decentralization
 Downsizing
 Environmental Challenges
 Exempt Employees (salaried)
 Human Resource Strategies (HRS)
 Human Resource Tactic
 Human Resources (HR)
 Line Employees
 Managers
 Nonexempt Employees
 Outsourcing
 Staff Employees
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Key Terms
Human Resources (HR) - people who work in an
organization (personal/associates/employees)
Human Resource Strategies (HRS) – the deliberate
use a company‟s human resources to gain a
competitive advantage in the marketplace
Human Resource Tactics – policies or procedures
put in place to gain that advantage


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More Terms
 Managers – person who is in charge of others and is responsible
for the timely and correct execution of actions that promote his or
hers unit‟s success
 Line Employees – employees that directly produces a company‟s
goods or delivers a company‟s services
 Staff Employees - employees that support the line employees
 Exempt Employees (salaried) – employees that do not receive
extra pay for overtime (work beyond 40-hours per week)
 Nonexempt Employees – workers that do receive overtime
compensation




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Environmental Challenges
Environmental Challenges: forces external to a firm –
influence behavior but largely beyond management‟s
control
Rapid Change
The Internet Revolution
Workforce Diversity
Globalization
Legislation
Work/Life Balance
Skill Shortages & the Rise of the Service Sector
Natural Disasters

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Organizational Challenges
Organizational Challenges – concerns that are internal to a
company – effective mangers identify these issues and deal with
them before they become a major issue for the company. This
requires a company be proactive rather than reactive when dealing
with HR issues
 Competitive Position
 Decentralization
 Downsizing
 Organizational Restructuring
 Self-Managed Work Teams
 The Growth of Small Businesses
 Organizational Culture
 Technology
 Data Security
 Outsourcing

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Individual Challenges
 Individual Challenges – address the issues relevant to
individual employees
Matching People and Organizations
Ethics and Social Responsibility
Productivity
Empowerment
Brain Drain
Job Insecurity
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Strategic Human Resource Planning
 To be successful firms must align their HR
strategies with:
Their organization’s overall strategies
The environment
Their organization’s characteristics
Their organization’s capabilities
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Strategic Human Resource Planning
- The Benefits
 Encouragement of Proactive Rather Than Reactive
Behavior
 Explicit Communication of Company Goals
 Stimulation of Critical Thinking and Ongoing
Examination of Assumptions
 Identification of Gaps Between Current Situation
and Future Vision
 Encouragement of Line Managers’ Participation
 Identification of HR Constraints and Opportunities
 Creation of Common Bonds

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Strategic HR Planning -
The Challenges
 Maintaining a Competitive Advantage
 Reinforce Overall Business Support
 Avoiding Excessive Concentration on Day-to-Day
Problems
 Developing HR Strategies Suited to Unique
Organizational Features
 Coping with the Environment
 Securing Management Commitment
 Translating the Strategic Plan into Action
 Combining Intended and Emergent Strategies
 Accommodating Change

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HR Strategies & Company Strategies
Best Fit
Fit - refers to the compatibly between the HR strategies
and other important aspect the organization

Evolutionary Business Strategy
(flexibility, quick response, entrepreneurship, risk-sharing, decentralization)
vs.
Steady-State Strategy
(efficiency, detailed work planning, internal grooming of employees for promotion,
long-term career development, centralization)
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Defender Strategy
(conservative businesses operating in a stable environment)
 Work Flows
 Detailed work planning
 Explicit job descriptions
 Staffing
 Internal recruitment
 HR department makes selection
decision
 Formal hiring process
 Employees Separations
 Hiring Freeze
 Concern for terminated workers
 Preferential rehiring policy

 Performance Appraisal
 Uniform appraisal procedure
 Used as a control devise
 High dependence on superior
 Training
 Individual training
 On-the job training
 Job-specific training
 “Make” Skills
 Compensation
 Fixed pay
 Seniority based pay
 Centralized pay decisions
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Prospector Strategy
(growth firms emphasizing innovation, new products and first to market)
 Work Flows
 Innovation
 Flexibility
 Broad job classes
 Staffing
 External recruitment
 Coworkers makes selection decision
 Emphasis on „fit‟ of coworkers with
culture
 Informal hiring and socialization of
new employees
 Employees Separations
 Layoffs
 Recruit as needed
 Individuals are on their own

 Performance Appraisal
 Customized appraisals
 Used as departmental tool
 Multiple inputs for appraisals
 Training
 Team-based or cross-functional
training
 External training
 “Buy” skills
 Compensation
 Individual-based pay
 Performance-based pay
 Decentralized pay decisions

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HR Strategies & the Environment -
Best Fit
 Degree of Uncertainty
 How much accurate information you have to make decisions
 Volatility
 How often does your environment changes
 Magnitude of Change
 How drastic are the changes when they occur
 Complexity
 Sheer number of elements in the environment that effect the company
and the industry (individually or together)

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HR Strategies & Organizational Characteristics
Best Fit
 The Production Process for Converting Inputs into
Output
 Routine vs. non-routine product production
 The Firm’s Market Posture
 Low-rate of growth/narrow market vs. wide market segment and high
sales growth
 The Firm’s Overall Managerial Philosophy
 Autocratic leadership style/formal hiring procedures vs. risking taking
and supervisors having a major role in hiring procedures
 The Firm’s Organizational Structure
 Highly formalized HR systems vs. less regimented
 The Firm’s Organizational Culture
 Moral commitment vs. entrepreneurial climate

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HR Strategies & Organizational Capabilities
Best Fit
Leveraging your firms distinctive competencies
to give your company a competitive advantage:
Technical abilities
Management Systems
Reputation

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HR Best Practices
 Employment Security
 Selectivity in Recruiting
 High Wages
 Incentive Pay
 Employee Ownership
 Information Sharing
 Participation & Empowerment
 Self-managed Teams
 Training & Skills Development
 Cross-Utilization and Cross-training
 Promotion from Within