Chapter 1

The Rewards
and Challenges
of Human
Resources
Management

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 Learning Outcomes
After studying this chapter, you should be able to
1. Explain how human resource managers and other managers can have
rewarding careers by helping their firms gain a sustainable competitive
advantage through the strategic utilization of people.
2. Explain how good human resource practices can help a firm’s globalization,
corporate social responsibility, and sustainability efforts.
3. Describe how technology can improve how people perform and how they
are managed.
4. Explain the dual goals HR managers have in terms of increasing
productivity and controlling costs.
5. Discuss how firms can leverage employee differences to their strategic
advantage and how educational and cultural changes in the workforce are
affecting how human resource managers engage employees.
6. Provide examples of the role and competencies of today’s HR managers
and their relationship with other managers.

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 Discussion Starter #1

Ordering kiosks like this

one in a New York City
store are likely to
replace some workers.

Will technology eliminate the need for human

resource managers?

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 1.1 Why Should You Study Human
Resources Management? Will It Pay Off?
 Human resources management (HRM) – The
process of managing human talent to achieve an
organization’s objectives
 Importance:
 Managers play a key role in selecting, training,
motivating, appraising, and promoting employees.
 Great personnel help build a business.
 Understanding HRM can help you understand your
responsibilities and rights as an employee.

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 1.1a Human Capital and
Organizational Culture
 Human capital – The knowledge, skills, and capabilities
of individuals that have economic value to an
organization
 Human capital is intangible and cannot be managed the way
organizations manage jobs, products, and technologies.
 To build human capital in organizations, managers must continue
to develop superior knowledge, skills, and experience within their
workforces and retain and promote top performers.
 Organizational culture – The shared values, beliefs,
and assumptions people in an organization have

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Figure 1.1: Overall Framework for
Human Resources Management

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 1.2a Responding Strategically to Changes
and Disruptions in the Marketplace (slide 1 of 2)
 Agility – A firm’s ability to make quick changes to gain a competitive
advantage
 HR managers cope with ever-changing business conditions by helping
redesign their firms to achieve agility.

Human Resource Managers and Business Strategies

 HR professionals can improve the top line by redesigning work to
foster innovation, by forecasting labor trends, by recruiting and
motivating employees, and by measuring their effectiveness.
 HR managers can also help their firms with business strategies, as
well as mergers, acquisitions, and ways to enter new and global
markets.

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 1.2a Responding Strategically to Changes
and Disruptions in the Marketplace (slide 2 of 2)
Human Resource Managers and Business Strategies (cont’d)
 Sometimes changing a firm’s strategy requires adjusting the labor
force.
 Downsizing – The planned elimination of jobs
 Outsourcing – Contracting outside the organization to have work done
that formerly was done by internal employees
 Offshoring – The business practice of sending jobs to other countries
 Strategic changes could be reactive or proactive.
 To provide knowledge on key business issues, companies:
 Assign HR representatives to their core business teams
 Rotate non-HR managers into HR positions and vice versa

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 1.2b Competing, Recruiting,
and Staffing Globally (slide 1 of 2)
 The integration of world economies and markets have led
companies to:
 Look for opportunities abroad
 Fend off foreign competitors domestically
 Search for the right employees
 Importing and exporting, partnerships, mergers, and acquisitions are
ways companies are preparing for globalization.
 The national identities of products are blurring.
 Numerous free-trade agreements forged between nations in the last
half century have helped quicken the pace of globalization.
 The General Agreement on Tariffs and Trade (GATT) paved the way for
the European Union and the North American Free Trade Agreement
(NAFTA).

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 1.2b Competing, Recruiting,
and Staffing Globally (slide 2 of 2)
How Globalization Affects HRM
 Issues:
 Dealing with better informed employees who are
willing to pursue global job opportunities
 Gauging the knowledge and skill base of workers
worldwide and figuring out how best to hire and train
them
 Relocating managers and training foreign managers
abroad to direct the efforts of an international
workforce

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 1.2c Setting and Achieving Corporate Social
Responsibility and Sustainability Goals
 Corporate social responsibility – The responsibility of the firm to
act in the best interests of the people and communities affected by
its activities
 Many firms have ethics codes, and some have appointed “chief ethics
officers.”
 Being ethical and socially responsible helps companies avoid lawsuits
and improve their earnings.
 Sustainability – Doing business in a way that does as little harm to
the environment and depletes as few natural resources as possible
 Achieving complete sustainability is nearly impossible, but companies
are making strides to reduce their “carbon footprints.”
 HR should spearhead the development and implementation of
corporate citizenship throughout their organizations.

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 Video Highlight #1
Today, many chefs are using their restaurants to push for
sustainability and for social change. Ben Shewry is one of
those chefs. Shewry, who owns the restaurant Attica in
Melbourne, Australia, is regarded among the best in the
world. Shewry has made his menu into an example of how
sustainable ingredients can be made delicious.

“A Sustainable Chef”

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 1.3 Technology Challenges (slide 1 of 4)
 Advancements in information technology have
enabled organizations to take advantage of the
information explosion.
 Computer networks
 “Cloud computing”
 Document-sharing platforms
 Videoconferencing
 Social media networking

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 1.3 Technology Challenges (slide 2 of 4)
From Touch Labor to Knowledge Workers
 Technology—and automation in particular—have
reduced the number of jobs that require tasks and little
skill and have increased the number of jobs that require
considerable skill.
 Knowledge workers – Workers whose responsibilities extend
beyond the physical execution of work to include planning,
decision-making, and problem-solving
 There has been an increase in knowledge-based training and
virtual learning.

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 1.3 Technology Challenges (slide 3 of 4)
Technology’s Effect on HRM
 Human resources information system (HRIS) – A
computerized system that provides current and accurate
HR-related data for purposes of control and decision-
making
 Used to:
 Automate payroll processing and administer benefits program
 Access employee records
 Recruit, screen, and pretest applicants online
 Train, track, and promote employees

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 1.3 Technology Challenges (slide 4 of 4)
Technology’s Effect on HRM (cont’d)
 Big data – A buzzword that describes the massive amounts of data
available online and offline today that can be “crunched” to make
decisions
 Workforce (HR) analytics – The process of gathering and
analyzing data to improve a firm’s human resources management
 An HRIS should provide HR personnel with analytical information
that helps them to analyze, refine, and better implement a firm’s
strategic direction.
 Includes:
 Forecasting personnel needs
 Planning for career and employee promotions
 Evaluating the impact of the firm’s policies

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 1.4a Maximizing Productivity
 Productivity – “The output gained from a fixed
amount of inputs”
 Organizations can increase their productivity
either by reducing their inputs or by increasing
the amount that employees produce by adding
more human and/or physical capital to the
process.
 Additional productivity will have to come from
the enhanced ability of employees, their
motivation, and their work environment.
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 1.4b Managing the
Size of the Workforce
 Managing productivity involves matching the size of the workforce to
the firm’s demand requirements given technology, the firm’s
strategic direction, and global competition.
 To manage the size of the workforce, many companies are using:
 Offshoring
 Outsourcing
 Nearshoring – Occurs when a firm relocates jobs abroad to nations
closer to its domestic market
 Homesharing – The practice of outsourcing work to domestic workers
who work out of their homes
 Downsizing
 Furloughing – A situation in which an organization asks or requires
employees to take time off for either no pay or reduced pay
 Part-time or contract employees
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 1.4c Managing Pay and Benefits
 Companies are trying numerous approaches to manage
pay and benefits.
 Charging employees higher premiums to cover spouses
 Giving employees a set amount of money to purchase health
insurance on their own
 Employee leasing – The process of eliminating the jobs of
employees who are then hired by a leasing company and
contracting with that company to lease back the employees
 Hiring freelancers, part-time employees, independent
contractors, and consultants

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 1.5a Responding to the Demographic and
Diversity Challenges of the Workforce (slide 1 of 2)
 To forecast trends to support the strategies of
their organizations, HR managers frequently
analyze the capabilities of different demographic
groups and how well each is represented in fast-
and slow-growing occupations.
 The labor force participation rate—the number of
people employed or actively looking for work—is
declining in the United States, and is predicted
to continue to fall due to declining birth rates and
the aging U.S. population.
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 Figure 1.2: U.S. Labor Force
Participation Rates over Time

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 1.5a Responding to the Demographic and
Diversity Challenges of the Workforce (slide 2 of 2)
Ethnic and Racial Diversity in the Workforce
 U.S. workers are becoming more diverse.

Age Distribution of the Workforce

 Many babyboomers (individuals born between 1946 and 1964) are
remaining in the labor force due to advances in medicine that keep
them healthier, an increase in the official retirement age (from 65 to
67), and economic factors.

Gender Distribution of the Workforce

 The number of women joining the U.S. labor force has tapered off
some in recent years and is expected to continue to do so.

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Figure 1.3: Labor Force Participation Rates of Workers
of Hispanic Origin versus Non-Hispanic Origin

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Figure 1.4: Labor Force Participation Rates of
Workers in the Labor Force by Their Ages

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 Figure 1.5: Labor Force
Participation Rates by Gender

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 Video Highlight #2
In this video, Beth Brooke, Ernst & Young’s global
sponsor for Diversity and Inclusiveness, discusses
the state of women in the workforce and as global
consumers.

“Women as an Emerging Powerhouse”

Copyright ©2019 Cengage. All Rights Reserved.

 1.5b Educational Shifts
Affecting the Workforce
 The educational attainment of the U.S. labor
force has risen dramatically.
 Challenges:
 American students are said to lag behind in math and
science test scores.
 American adults score low on literacy, math, and
computer skills tests.
 HR managers have to find strategies to help
their firms compete, despite these challenges.

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Figure 1.6: Earnings and Unemployment Rates
of Full-Time U.S. Workers by Education

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 1.5c Adapting to Cultural and Societal
Changes Affecting the Workforce (slide 1 of 4)
Changing Employee Rights
 Laws affecting employee rights are continually
changing.
 Equal employment opportunities
 Union representation
 A safe and healthy work environment
 Unemployment and health care benefits
 Regulation of pension plans
 Equal pay for equal work

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 1.5c Adapting to Cultural and Societal
Changes Affecting the Workforce (slide 2 of 4)
Privacy Concerns of Employees
 Employers are:
 Implementing privacy policies
 Limiting the use of social security numbers on employment forms
 Restricting access to employee files
 Conducting background checks on employees
 Contracting with outside firms that specialize in identity theft to
prevent the abuse of employee information
 Using the global positioning system (GPS) and smartphone
applications to monitor employees
 Scrutinizing information employees post on the Web and social
media

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 1.5c Adapting to Cultural and Societal
Changes Affecting the Workforce (slide 3 of 4)
Changing Attitudes Toward Work and How They Relate to
Employee Engagement
 Many employees, especially younger ones, believe satisfaction in
life is more likely to result from balancing their work challenges and
rewards with those in their personal lives.
 Employees today are focused on finding interesting work and are
more inclined to pursue multiple careers.
 Employee engagement – The extent to which employees are
enthused about their work and committed to it
 A growing number of firms are focusing on how employee engagement
can be achieved.

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 1.5c Adapting to Cultural and Societal
Changes Affecting the Workforce (slide 4 of 4)
Balancing Work and Family
 Employees are working more hours than they have at
any time since 1973.
 Competitive organizations are finding it advantageous to
provide employees with more family-friendly options,
such as telecommuting, flexible work hours, day care,
elder care, job sharing, and assistance with family
problems.
 Companies with programs such as these calculate that accommodating
their employees’ individual needs and circumstances is a powerful way
to attract and retain top-caliber people.

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1.6 The Role HR Managers Play and Their
Partnership with Other Managers
 By staying abreast of workforce trends and developments and
gathering and analyzing data, HR managers help their firms choose
the best strategies for competing globally, selecting ideal HR
systems, maximizing productivity, and managing benefits.
 Line managers – Non-HR managers who are responsible for
overseeing the work of other employees
 Successful organizations combine the experience of line managers with
the expertise of HR managers to develop and utilize the talents of
employees to their greatest potential.
 There are different types of HR managers that specialize in different
functions.

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 1.6a Responsibilities of
Human Resource Managers
 The major activities for which HR managers are
typically responsible include:
 Strategic advice and counsel
 Service
 Policy formulation and implementation
 Employee advocacy

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Figure 1.8: Human Resource
Competency Model

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