HUMAN RESOURCE

MANAGEMENT
SECOND EDITION

AN EXPERIENTIAL APPROACH

B E R N A R D I N R U S S E L L
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C H A P T E R

HRM IN A CHANGING ENVIRONMENT

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Chapter 1 Human Resource Management in a Changing Environment

Objectives

1. Increasing importance of HRM

2. Discrepancy between practice and research

3. Activities of HRM in context of eight domains:

4. Employee involvement in HRM programs

5. Trends

6. Measurement in HRM
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Figure 1.1: A Model of the HR-Shareholder Value Relationship

Employee
Skills
Design of Productivity
Business Human Employee Improved Profits Market
and Strategic Resource Motivation Creativity Operating and
Value
Initiatives Management Performance Growth
System Job Design Discretionary
& Work Effort
Structures

Source: Becker, B.E., Huselid, M.A., Pickus, P.S. and Spratt, M.F. (1997). HR as a source of shareholder value: Research and recommendations.
Human Resource Management 36, 39-48. Copyright 1997. Reprinted with permission John Wiley & Sons, Inc. 605 Third Ave., New
York, NY 10157-0228.
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Figure 1.2 Sample of Discrepancies Between Academic Research Findings and
HRM Practices

Academic Research Findings HRM Practice

Recruitment
Use of Yield Ratios Less than 5% use yield ratios
Less than 20% know how
Staffing
Realistic Job Previews Less than 5 % use RJP in
high turnover jobs
Weighted Application Blanks Less than 10% know what a
WAB is; less than 1% use
Structured, behavioral, or 18% use structured interviews
situational interviews
Statistical Models Less than 5% use actuarial
No Graphology Use is on the increase

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Figure 1.2 Sample of Discrepancies Between Academic Research
Findings and HRM Practices (continued)

Academic Research Findings HRM Practice

Performance Appraisal
No Traits More than 75% use traits
Train Raters Less than 24% train raters
Accountable for appraisals Less than 30% of managers are evaluated
on appraisals given

Compensation
Merit pay not in base More than 75% tie merit into base pay
Gainsharing Less than 5% use it

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Figure 1.3: Major Domains/Activities of Human Resource Management

Organizational Design Staffing

• HR planning • Recruiting/interviewing/hiring

• Job analysis • Affirmative action

• Job design • Promotion/transfer/separation

• Work teams (Sociotechnical • Induction/orientation

systems)
• Employee selection methods
• Information systems

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Figure 1.3: Major Domains/Activities of Human Resource Management
(continued)

Employee Training and Employer/Employee Relations

Organizational Development
• Management/supervisory development
• Career planning/development
• Employee assistance/counseling
programs
• Skill training, nonmanagement
• Retirement preparation programs
• Attitude surveys
• Labor relations
• Collective bargaining
• Employee grievances
• Alternative dispute resolution
• Attitude surveys
• Employee
communications/publications

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Figure 1.3: Major Domains/Activities of Human Resource
Management (continued)

Productivity Improvement Programs Reward Systems and Benefits

• TQM programs • Safety programs/OSHA compliance

• Health/medical services
• Quality circles • Complaint/disciplinary procedures
• Compensation administration
• Productivity/enhancement programs • EEO compliance
• Wage/salary administration· Insurance
• Suggestion systems benefits administration
• Unemployment compensation
administration
• Teambuilding
• Pension/profit sharing plans
• Outplacement services

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Figure 1.3: Major Domains/Activities of Human Resource
Management (continued)

Health and Safety

Performance Appraisal and
Management
• OSHA compliance

• Management appraisal/MBO
• Accident prevention

• Customer-focused performance
• Stress reduction
appraisal

• Wellness programs

• Employee assistance/counseling
programs

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Figure 1.4: Contemporary Trends That Affect HRM

Trend 1: Concern over productivity

Trend 2: The need to be flexible in response to changing business

environments

Trend 3: Increasing international competition and the expanding global

economy

Trend 4: Increase litigation related to HRM

Trend 5: Changing characteristics of the workforce

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Figure 1.5: Unique Challenges in International Joint Ventures

HR Activity HRM Challenge

Staffing Host country may demand staffing policies contrary to maximizing profits.
Decision making Conflicts among diverse constituent groups; complexity of decision
processes.
Communication Interpersonal problems due to geographical dispersion and cultural
differences.
Compensation Perceived and real compensation differences.
Career planning Perceptions regarding value of overseas assignments; difficulties
in reentry.
Performance management Differences in standards; difficulties in measuring performance
across countries.
Training Special training for functioning in international joint ventures (IJV) structure.

Source: Adapted from O. Shenkar and Y. Zeira, Human resource management in international joint ventures: Directions for research. Academy
of Management Review, 12, 1987, 546-557. Reprinted with permission.
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Table 1.1.1 Most Common Private Sector Problems

More common problems in service organizations are marked by an asterisk (*).

Ensuring compliance with regulatory agencies and laws (EEOC, new ADA
requirements, OSHA)
Employee staffing and EEO*
Training management and effectiveness
Effective customer service*
Job dissatisfaction/employee attitudes
Preemployment screening
Need for methods to improve performance*
Lack of employee motivation*
Negligent hiring
Ineffective performance appraisals*
Increasing levels of teamwork
Recruitment and retention*
Health care costs
Establishment of drugfree workplace policy
Pension plans
Effective pay for performance systems*
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Table 1.1.1 (continued)
Most Common Public Sector Problems
Workload increase/workforce freeze and reduction
Excessive health care costs and sick leave
Training program evaluation
EEO compliance --- new ADA regulations
Affirmative action programs --- line management resistance
Computer reporting programs
Competitive salaries
Benefit administration
Computer training
Safety programs
Greater technical skills
Incentive compensation program
Insufficient funding
Child care
Terminating employees
Injury compensation costs
Union demands
Invalid performance appraisals
Ineffective pay for performance
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Chapter 1 Important Terms

• Productivity • Staffing

• Productivity growth rate • Reward systems, benefits, and

compliance
• Malcolm Baldrige National Quality
Awards • Employee and organizational
development
• Diversity
• Performance management
• Structural unemployment
• Effectiveness
• Job skills gap
• Efficiency
• Organization design
• Effectiveness criteria
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