The Challenge of Human

Resources Management

Managing Human Resources

Bohlander • Snell 14th edition

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All rights reserved. The University of West Alabama
 Objectives
After studying this chapter, you should be able to:

1. Identify how firms gain sustainable competitive

advantage through people.
2. Explain how globalization is influencing human
resources management.
3. Describe the impact of information technology on
managing people.
4. Identify the importance of change management.
5. State HR’s role in developing intellectual capital.
6. Differentiate how TQM and reengineering influence
HR systems.
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 Objectives (cont’d)
After studying this chapter, you should be able to:

7. Discuss the impact of cost pressures on HR

policies.
8. Discuss the primary demographic and employee
concerns pertaining to HRM.
9. Provide examples of the roles and competencies of
today’s HR managers.

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 Why Study Human Resources
Management
• Human Resources Management (HRM)
 The process of managing human resources (human capital
and intellectual assets) to achieve an organization’s
objectives.
• “Why Study HRM?”
 Staffing the organization, designing jobs and teams,
developing skillful employees, identifying approaches for
improving their performance, and rewarding employee
successes—all typically labeled HRM issues—are as
relevant to line managers as they are to managers in the HR
department.

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 Competitive Advantage through People
• Core Competencies
 Integrated knowledge sets within an organization that
distinguish it from its competitors and deliver value to
customers.
• Sustained competitive advantage through people is
achieved if these human resources:
 Have value.
 Are rare and unavailable to competitors.
 Are difficult to imitate.
 Are organized for synergy.

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 Figure 1–1 Overall Framework for Human Resource Management

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 Competitive Challenges and Human
Resources Management
• The most pressing competitive issues facing firms:
1. Going global
2. Embracing new technology
3. Managing change
4. Managing talent, or human capital
5. Responding to the market
6. Containing costs

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 Challenge 1: Going Global
• Globalization
 The trend toward opening up foreign markets to
international trade and investment
• Impact of globalization
 “Anything, anywhere, anytime” markets
 Partnerships with foreign firms
 Lower trade and tariff barriers
 NAFTA, EU, APEC trade agreements
 WTO and GATT

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 Challenge 1: Going Global (cont’d)
• Corporate Social Responsibility
 The responsibility of the firm to act in the best interests of
the people and communities affected by its activities
• Impact on HRM
 Different geographies, cultures, laws, and business
practices
 Issues:
 Identifying capable managers and workers
 Developing foreign culture and work practice training
programs.
 Adjusting compensation plans for overseas work

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 Challenge 2: Embracing New Technology
• Knowledge Workers
 Workers whose responsibilities extend beyond the physical
execution of work to include planning, decision making,
and problem solving.
• Knowledge-Based Training
 Online instruction
 “Just-in-time” learning via the Internet
on company intranets

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 Influence of Technology in HRM
• Human Resources Information System (HRIS)
 A computerized system that provides current and accurate
data for the purposes of control and decision making.
 Benefits:
 Store and retrieve of large quantities of data.
 Combine and reconfigure data to create new information.
 Institutionalization of organizational knowledge.
 Easier communications.
 Lower administrative costs, increased productivity and
response times.

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 Highlights in HRM 2

Most Common HR Information Systems Applications

Payroll 76.7%
Benefits administration 57.1
Benefits enrollment 41.4
Recruiting—applicant tracking 39.1
Personnel administration 39.1
Training and development 31.6
Employee self-service 24.8
Manager self-service 18.0
Other 3.8

Source: “How HR Managers Use Technology Applications to Control HR Department

Costs,” Human Resource Department Management Report, no. 4–5 (May 2004).

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 HRM IT Investment Factors
• Fit of the application to the • Time required to implement
firm’s employee base. and train staff members to
• Ability to upgrade Increased use HRIS
efficiency and time savings • Initial and annual
• Compatibility with current maintenance costs
systems • Training time required for
• Availability of technical HR and payroll
support

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 Challenge 3: Managing Change
• Types of Change
 Reactive change
 Change that occurs after external forces have already affected
performance
 Proactive change
 Change initiated to take advantage of targeted opportunities
• Managing Change through HR
 Formal change management programs help to keep
employees focused on the success of the business.

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 Challenge 3: Managing Change (cont’d)
• Why Change Efforts Fail:
1. Not establishing a sense of urgency.
2. Not creating a powerful coalition to guide the effort.
3. Lacking leaders who have a vision.
4. Lacking leaders who communicate the vision.
5. Not removing obstacles to the new vision.
6. Not systematically planning for and creating short-term
“wins.”
7. Declaring victory too soon.
8. Not anchoring changes in the corporate culture.

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 Challenge 4: Managing Talent, or Human
Capital
• Human Capital
 The knowledge, skills, and capabilities of individuals that
have economic value to an organization.
 Valuable because capital:
 is based on company-specific skills.
 is gained through long-term experience.
 can be expanded through development.

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 Challenge 5: Responding to the Market
• Total Quality Management (TQM)
 A set of principles and practices whose core ideas include
understanding customer needs, doing things right the first
time, and striving for continuous improvement.
• Six Sigma
 A process used to translate customer needs into a set of
optimal tasks that are performed in concert with one
another.

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 Challenge 5: Responding to the Market
(cont’d)
• Reengineering and HRM
 Fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in cost,
quality, service, and speed.
 Requires that managers create an environment for change.
 Depends on effective leadership and communication processes.
 Requires that administrative systems be reviewed and modified.

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 Challenge 6: Containing Costs
• Downsizing
 The planned elimination of jobs (“head count”).
 Layoffs
• 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.

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 Figure 1–2 Estimated Number and Types of U.S. Jobs Moving Offshore by 2015

Source: Near-Term Growth of Offshoring Accelerating, Forester Research, Inc., May 2004.
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 Challenge 6: Containing Costs (cont’d)
• Employee Leasing
 The process of dismissing employees who are then hired by
a leasing company (which handles all HR-related activities)
and contracting with that company to lease back the
employees.

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 Challenge 6: Containing Costs (cont’d)
• Hidden Costs of Layoff
 Severance and rehiring costs
 Accrued vacation and sick day payouts
 Pension and benefit payoffs
 Potential lawsuits from aggrieved workers
 Loss of institutional memory and trust in management
 Lack of staffers when the economy rebounds
 Survivors who are risk-averse, paranoid, and political

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 Challenge 6: Containing Costs (cont’d)
• Benefits of a No-Layoff Policy
 A fiercely loyal,more productive workforce
 Higher customer satisfaction
 Readiness to snap back with the economy
 A recruiting edge
 Workers who aren’t afraid to innovate, knowing their jobs
are safe.

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 Figure 1–3 U.S. Productivity/Output per Worker

Source: Derived from U.S. Department of Commerce data

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 Figure 1–4 Productivity Enhancements

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 Highlights in HRM 4

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 Figure 1–5 Growth of the U.S. Minority Population

Source: U.S. Census Bureau

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 Figure 1–6 Labor Force and Gender Distributions

LABOR FORCE PARTICIPATION

RATE BY SEX, PROJECTED
1950–2012
Continuing a historical trend, the
labor force participation rate for
men will decline as the rate for
women increases.

LABOR FORCE GROWTH BY

SEX, PROJECTED 2002–2012
The number of women in the
labor force is expected to grow at
a higher rate than that for men.
Source: U.S. Department of Labor
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 Figure 1–7 Education Pays

Source: U.S. Department of Labor

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 Figure 1–8 Model of Diversity Management Strategy

Source: Reprinted by permission of Elsevier from “Managing for Effective Workforce Diversity” by Kathleen
Iverson from The Cornell Hotel and Restaurant Administration Quarterly 41, no. 2 (April 2000): 31–38.
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 Highlights in HRM 5

Source: Survey data from Gail Robinson and Kathleen Dechant, “Building a Business Case for Diversity,” Academy of
Management Executive 11, no. 3 (August 1997): 21–31; permission conveyed through the Copyright Clearance Center, Inc.

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 Cultural Changes

Employee Concern for

Rights Privacy

Cultural
Changes

Balancing Work Attitudes

and Family towards Work

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 Qualities of Human Resources Managers
• Responsibilities • Competencies
1. Advice and counsel 1. Business mastery
2. Service 2. HR mastery
3. Policy formulation and 3. Change mastery
implementation 4. Personal credibility
4. Employee advocacy

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 Figure 1–9 Human Resource Competency Model

Source: Arthur Yeung, Wayne Brockbank, and Dave Ulrich, “Lower Cost, Higher Value: Human Resource Function in Transformation.” Reprinted
with permission from Human Resource Planning, Vol. 17, No. 3 (1994). Copyright 1994 by The Human Resource Planning Society, 317 Madison
Avenue, Suite 1509, New York, NY 10017, Phone: (212) 490-6387, Fax: (212) 682-6851.
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 Key Terms
• corporate social • knowledge workers
responsibility • managing diversity
• downsizing • offshoring
• employee leasing • outsourcing
• globalization • proactive change
• human capital • reactive change
• human resources information • reengineering
system (HRIS)
• Six Sigma
• human resources
management (HRM) • total quality management
(TQM)

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