Human Resource Management:

Gaining a Competitive Advantage

Chapter 01

Human Resource Management: Gaining

a Competitive Advantage

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives
 Discuss roles and activities of HRM function
 Discuss implications of the economy, makeup of the
labor force and ethics for company sustainability
 Discuss how HRM affects a balanced scorecard
 Discuss what companies should do to compete in global
marketplace
 Identify how technology such as social networking is
influencing HRM
 Discuss HRM practices that support high-performance
work systems
 Provide a brief description of HRM practices

1-2
 Introduction

Competitiveness – a company’s ability to

maintain and gain market share.
Human resource management (HRM) – the
policies, practices, and systems that influence
employees’ behavior, attitudes and performance.

1-3
HRM Practices

1-4
 Responsibilities of HR Departments
1. Employment and Recruiting
2. Training and Development
3. Compensation
4. Benefits
5. Employee Services
6. Employee and Community Relations
7. Personnel Records
8. Health and Safety
9. Strategic Planning

1-5
HR as a Business with 3 Product Lines

Business
Partner
Services

Strategic Partner

Human
Resources

1-6
6 HR Competencies

1-7
 Strategic Role of the HRM Function
Time spent on administrative tasks is decreasing.
HR roles as a strategic business partner, change agent and
employee advocate are increasing.
HR is challenged to shift focus from current operations to
future strategies and prepare non-HR managers to develop
and implement HR practices.
This shift presents two challenges:
Self-service
Outsourcing

1-8
 Shared Service Model

Shared Service Model is a way to organize the HR

function that includes centers of expertise or
excellence, service centers and business
partners to help control costs and improve
business-relevance and timeliness of HR
practices.

1-9
 How is the HRM Function Changing?

As part of its strategic role, HR can engage in

evidence-based HR.
Evidence-based HR – demonstrating that HR
practices have a positive influence on the
company’s bottom line or key stakeholders.

1-10
 The HRM Profession

HR salaries vary according to position,

experience, education, training, location and firm
size.

The primary professional organization for HRM

is the Society for Human Resource
Management (SHRM) (www.shrm.org)

1-11
 3 Competitive Challenges
Influencing HRM

Technology

Sustainability

1-12
 The Sustainability Challenge

Sustainability is the ability of a company to

survive and succeed in a dynamic competitive
environment.

Stakeholders include shareholders, the

community, customers and all other parties that
have an interest in seeing that the company
succeeds.

1-13
 The Sustainability Challenge
Sustainability includes the ability to:
deliver a return to shareholders
provide high-quality products, services and
work experiences for employees
increase value placed on intangible assets,
human capital and social responsibility
adapt to changing characteristics and
expectations
of the labor force
address legal and ethical issues
effectively use new work arrangements

1-14
 Economy- Implications for HR
Structure of the economy
Development and speed of social media
Growth in professional and service occupations
 Skill demands for jobs are changing
Knowledge is becoming more valuable
Intangible assets
Knowledge workers
Empowerment
Learning organization
Social collaboration and social networking technology

1-15
The Sustainability Challenge

1-16
 Common Themes of Employee Engagement

 Pride and satisfaction with employer and job

 Opportunity to perform challenging work

 Recognition and positive feedback from contributions

 Personal support from manager

 Effort above and beyond the minimum

 Understanding link between one’s job and company’s mission

 Prospects for future growth with the company

 Intention to stay with the company

1-17
 Talent Management

Talent management is the systematic planned

strategic effort by a company to use bundles of
HRM practices including acquiring and assessing
employees, learning and development, performance
management , and compensation to attract, retain,
develop, and motivate highly skilled employees and
managers.
Growth of contingent workers and part-time
employees

1-18
 The Balanced Scorecard
The balanced scorecard provides a view of
the company from the perspective of internal
and external customers, employees and
shareholders.
The balanced scorecard should be used to:
Link HRM activities to the company’s business
strategy.
Evaluate the extent to which HR is helping meet the
company’s strategic objectives.

1-19
 The Balanced Scorecard

 How do customers see us?

 What must we excel at?
 Can we continuously improve and create value?
 How do we look to shareholders?

1-20
 Customer Service and Quality
Total Quality Management (TQM) Core Values
• Methods and processes are designed to meet internal and
external customers’ needs.
• Every employee receives training in quality.
• Promote cooperation with vendors, suppliers and
customers.
• Managers measure progress with feedback based on data.
• Quality is designed into a product or service so that errors
are prevented rather than being detected and corrected.

1-21
 Customer Service and Quality

Malcolm Baldrige National Quality Award

ISO 9000:2000
Six Sigma Process
Lean Thinking

1-22
 Changing Demographics
Workforce Diversity

Internal labor force - current employees

External labor market - persons outside the
firm actively seeking employment
U.S. workforce is aging rapidly
Increased workforce diversity
Influence of immigration

1-23
 Managing a Diverse Workforce
To manage a diverse workforce, managers must develop new
skills to:
 Communicate, coach and develop employees from a variety
of cultural and educational backgrounds, ethnicity, age,
ability and race.
 Provide performance feedback based on objective
outcomes.
 Create a work environment that makes it comfortable for
employees of all backgrounds to be creative and innovative.
 Recognize and respond to generational issues.

1-24
 Legal and Ethical Issues

5 legal areas that influenced HRM :

1. Equal employment opportunity legislation
2. Employee safety and health
3. Employee pay and benefits
4. Employee privacy
5. Job security

1-25
 Legal and Ethical Issues
 Ethics - the fundamental principles by which employees and
companies interact

 Ethical HR practices:
 HRM practices must result in the greatest good for the largest
number of people
 Employment practices must respect basic human rights of
privacy, due process, consent, and free speech
 Managers must treat employees and customers equitably and
fairly
 Managers must develop and distribute a Code of Ethics, policies,
processes and procedures, audit and train employees

1-26
 4 Principles of Ethical Companies
1. Successful companies, in relationships with customers,
vendors and clients, emphasize mutual benefits.

2. Employees assume responsibility for the actions of the

company.

3. Companies have a sense of purpose or vision the

employees value and use in their day-to-day work.

4. They emphasize fairness; another person’s interests count

as much as their own.

1-27
 The Global Challenge

To survive companies must deal with the global

economy, compete in and develop global markets
and prepare employees for global assignments.
Offshoring – exporting jobs from developed
countries to less developed countries
Onshoring – exporting jobs to rural parts of the
United States

1-28
 Technology Challenge

 The overall impact of the Internet

 The Internet has created a new business

model – e-commerce – for conducting
business transactions and relationships
electronically.

 Social networking

1-29
 The Technology Challenge
Advances in technology have:
changed how and where we work
resulted in high-performance work systems
increased the use of teams to improve
customer service and product quality
changed skill requirements
increased working partnerships
led to changes in company structure and
reporting relationships

1-30
 High-Performance Work Systems

 Work in teams, virtual teams’ and partnerships

 Changes in skill requirements
 Changes in company structure and reporting relationships
 Increased use and availability of e-HRM and Human
Resource Information Systems (HRIS)

 HRM practices support high-performance work systems

through staffing, work design, training, compensation and
performance management.

1-31
 Meeting 4 Competitive Challenges
Through HRM Practices

HRM practices that help companies deal with the

four competitive challenges can be grouped into
four dimensions:

1. The HR environment
2. Acquiring and preparing HR
3. Assessment and development of HR
4. Compensating HR

1-32
 Meeting Competitive Challenges
Through HRM Practices

 Managing internal and external environmental

factors allows employees to make the greatest
possible contribution to company productivity and
competitiveness.
 Customer needs for new products or services
influence the number and type of employees
businesses need to be successful.

1-33
 Meeting Competitive Challenges
Through HRM Practices
 Managers need to ensure that employees have the
necessary skills to perform current and future jobs.
 Besides interesting work, pay and benefits are
the most important incentives that companies can
offer employees in exchange for contributing to
productivity, quality, and customer service.
 Create pay systems, reward employee contributions and
provide benefits

1-34
 Summary
 HR has three product lines: administrative services, business partner
services, and strategic services.

 To successfully manage HR, individuals need personal credibility, business

and technology knowledge, understanding of business strategy, and ability
to deliver HR services.

 HR management practices should be evidence-based.

 HR practices are important for helping companies deal with sustainability,

globalization, and technology challenges.

 HR managers must address global and technology challenges.

1-35