Chapter 1

STRATEGIC HUMAN RESOURCE

MANAGEMENT:
AN OVERVIEW

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 HR Branding
• Firm’s corporate image or culture
• Embodies values and standards that guide
peoples’ behavior
• People know what company stands for,
people it hires, fit between jobs and
people, and results it recognizes and
rewards
• Important in getting highest quality
applicants to join firm
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 Strategic Human Resource
Management
• Utilization of individuals to
achieve organizational objectives
• All managers at every level must
concern themselves with human
resource management
• Five functions of HR,M

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Human Resource Management Functions

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1. Staffing

• Job Analysis
• Human Resource Planning
• Recruitment
• Selection

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 Staffing (Cont.)
• Staffing - Process through which
organization ensures it always has proper
number of employees with appropriate
skills in right jobs at right time to achieve
organizational objectives
• Job analysis - Systematic process of
determining skills, duties, and knowledge
required for performing jobs in
organization

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 Staffing (Cont.)
• Human resource planning - Systematic process
of matching the internal and external supply of
people with job openings anticipated in the
organization over a specified period of time .
• Recruitment - Process of attracting individuals
on a timely basis, in sufficient numbers, and with
appropriate qualifications, to apply for jobs with
an organization

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 Staffing (Cont.)
• Selection - Process of choosing from a
group of applicants the individual best
suited for a particular position and the
organization

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 2. Human Resource
Development
• Training
• Development
• Career Planning
• Career Development
• Organizational Development
• Performance Management
• Performance Appraisal
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 Human Resource Development
(Cont.)
• Training - Designed to provide learners
with knowledge and skills needed for their
present jobs
• Development - Involves learning that goes
beyond today's job; it has more long-term
focus
• Career planning - Ongoing process
whereby individual sets career goals and
identifies means to achieve them
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 Human Resource Development
(Cont.)
• Career development - Formal approach
used by organization to ensure that people
with proper qualifications and experiences
are available when needed
• Organization development - Planned
process of improving organization by
developing its structures, systems, and
processes to improve effectiveness and
achieving desired goals

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 Human Resource Development
(Cont.)
• Performance management - Goal-oriented
process directed toward ensuring
organizational processes are in place to
maximize productivity of employees, teams,
and ultimately, the organization
• Performance appraisal - Formal system of
review and evaluation of individual or team
task performance

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 3. Compensation

Compensation -
All rewards that
individuals receive
as a result of their
employment

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 Compensation (cont...)

• Direct Financial Compensation - Pay that

person receives in form of wages, salaries,
bonuses, and commissions.
• Indirect Financial Compensation (Benefits) - All
financial rewards not included in direct
compensation such as paid vacations, sick
leave, holidays, and medical insurance.
• Nonfinancial Compensation - Satisfaction that
person receives from job itself or from
psychological and/or physical environment in
which person works.
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4. Safety and Health

Employees who work

in safe environment
and enjoy good health
are more likely to be
productive and yield
long-term benefits to
organization.

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 Safety and Health (cont...)
• Safety - Involves protecting employees
from injuries caused by work-related
accidents
• Health - Refers to employees' freedom
from illness and their general physical and
mental well being

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 5. Employee and Labor
Relations
• Private-sector union membership has fallen from
39 percent in 1958 to 7.8 percent in 2005.
• Business is required by law to recognize a union
and bargain with it in good faith if the firm’s
employees want the union to represent them
• Human resource activity is often referred to as
industrial relations
• Most firms today would rather have a union-free
environment

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Human Resource Research

• Human resource
research is not
separate function.
• It pervades all HR
functional areas.

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Interrelationships of HRM
Functions

• All HRM functions

are interrelated
• Each function affects
other areas

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Dynamic Human
Resource
Management
Environment

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 Environment of Human Resource Management

Unions EXTERNAL ENVIRONMENT Society

Technology
INTERNAL ENVIRONMENT
Legal Considerations

Marketing Operations
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Unanticipated Events
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Emp Relati
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Human
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Management
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Economy

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Other

Shareholders
Finance Functional

Com
Safety and
Health Areas

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Customers Competition Labor Market
 Labor Market

• Potential employees
located within
geographic area
from which
employees are
recruited
• Always changing

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Legal Considerations

• Federal, state
and local
legislation
• Court decisions
• Presidential
executive orders

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 Society
• No longer content to accept, without
question, the actions of business
• Ethics - Discipline dealing with what is
good and bad, or right and wrong, or
with moral duty and obligation
• Social responsibility - Implied,
enforced or felt obligation of
managers to serve or protect interests
of groups other than themselves
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 Unions

• Group of employees
who have joined
together for purpose of
dealing collectively with
their employer
• Become a third party
when dealing with the
company

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 Shareholders
• Owners of corporation
• Because they have invested money
in firm, they may at times challenge
programs considered by
management to be beneficial to
organization

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Competition
• Firms may face
intense competition in
both their product or
service and labor
markets
• Must maintain a
supply of competent
employees
• Bidding war often
results

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Customers

• People who actually use firm’s

goods and services
• Management has task of
ensuring its employment
practices do not antagonize
members of market it serves
• Workforce should be capable of
providing top-quality goods and
services
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 Technology
• The world has never before seen
technological changes occur as
rapidly as they are today.
• Created new roles for HR
professionals
• Additional pressures on them to
keep abreast of technology

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Economy

• In general, when
economy is booming, it is
often more difficult to
recruit qualified workers.
• When a downturn is
experienced, more
applicants are typically
available.
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 Unanticipated Events
• Occurrences in the external
environment that could not be
foreseen
• Every disaster, whether manmade or
by nature, requires a tremendous
amount of adjustment with regard to
human resource management

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 Cyberwork
• Possibility of never-ending workday
• BlackBerrys, cell phones, text
messaging, and e-mail create
endless possibilities for
communication
• Some workers believe their
employer wants them available 24/7

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 HR’s Changing Role: Questions
That Are Being Asked
• Can some HR tasks be performed more
efficiently by line managers or outside
vendors?
• Can some HR tasks be centralized or
eliminated altogether?
• Can technology perform tasks that were
previously done by HR personnel?
• Many HR departments continue to get
smaller
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 HR’s Changing Role:
Who Performs Human
Resource Management Tasks?
• Human Resource Managers
• HR Outsourcing
• HR Shared Service Centers
• Professional Employer Organization
(Employee Leasing)
• Line Managers
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Human Resource Manager

• Acts in advisory or staff capacity

• Works with other managers to
help them deal with human
resource matters
• Today HR departments continue
to get smaller because others are
accomplishing certain functions

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HR Outsourcing
• Transfers
responsibility to an
external provider
• Market for HR
outsourcing is
growing dramatically

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Ways HR Outsourcing is Done

• Discrete services
• Multi-process
services
• Total HR outsourcing

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 Discrete Services
• One element of business process or
single set of high-volume repetitive
functions is outsourced to a third-
party
• Large majority of companies
outsource transactional HR activities,
such as 401(k) administration

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Multi-process Services
• Complete outsourcing of
one or more human
resource processes
• Example: Procter &
Gamble outsourced
entire training
operations

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 Total HR Outsourcing
• Transfer majority of HR services to
third party
• Example: Whirlpool Corporation
signed 10-year deal to outsource HR
business processes for 68,000
employees to Convergys Corporation

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HR Shared Service Centers
(SSCS)

Takes routine,
transaction-based
activities that are
dispersed and
consolidates them in
one location

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 Professional Employer
Organization (Employee Leasing)

Company that
leases employees
to other
businesses.

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 Professional Employer
Organization (Cont.)
• Company releases its employees who are
then hired by PEO
• PEO pays the employees
• PEO is the employees’ legal employer and
has the rights to hire, fire, discipline, and
reassign an employee
• Charges a fee of from 1 to 4 percent of the
customer’s gross wages
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Line Managers Performing
HR Tasks

• Involved with human resources

by nature of their jobs
• Line managers are now
performing some duties typically
done by HR

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 HR as a Strategic Partner
• HR executives must
understand complex
organizational design
• Sharp deviation from
what has traditionally
been an administrative
type role for HR

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 Strategic Activities CEOs Want
from HR
• Make workforce strategies integral to
company strategies and goals
• Leverage HR’s role in major change
initiatives
• Earn the right to a seat at the corporate
table
• Understand finance and profits
• Help line managers achieve their goals
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 Human Capital Metrics

Measures of HR
performance

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 Examples of HR Metrics
• Time to fill open positions
• HR headcount ratios
• Administrative cost per employee
• Turnover cost
• Training return on investment
• Cost per employee for HR administration
ranges from $1,200 - $1,600

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HR Scorecard
• Report card of
effectiveness of
specific person
• Metrics that will best
suit each company
depends on variety
of factors

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Human Resource
Designations

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 Human Resource Executives,
Generalists, and Specialists
Vice President, Vice President,
Human Industrial
Resources Relations

Manager,
Manager, Manager,
Training and
Compensation Staffing
Development
Executive:
Benefits Generalist:
Analyst Specialist:
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 Characteristics of an HR
Executive

• Performs one or more HR functions

• A top-level manager
• Reports directly to CEO or head of
major division
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 Characteristics of an HR
Generalist

• Often an executive

• Performs tasks in various HR related

areas
• Involved in several, or all, of the five
HRM functions
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 Characteristics of an HR
Specialist

• May be an HR executive, manager, or

non-manager
• Typically concerned with only one of
the five functional areas
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 Evolution Of Human
Resource Management

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 Traditional Human Resource
Function in Large Firm
• Separate sections were often created
• Placed under an HR Manager
• Each HR function may have a supervisor
& staff
• HR Manager works closely with top
management in formulating policy

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 Traditional Human Resource Functions
in a Large Firm
President
and CEO

Vice President,
Vice President, Vice President, Vice President,
Human
Marketing Operations Finance
Resources

Manager, Manager, Manager,

Manager, Manager,
Training and Safety and Labor
Compensation Staffing
Development Health Relations

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The Evolving HR Organization

HR Outsourcing
HR Shared Service
Centers
Professional Employer
Organization
Line Manager

Evolve to make HR
more strategic
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 A Possible Evolving HR
Organization Example

President
and CEO

Vice
Director
Vice President, Vice Vice
of Safety
President, Strategic President, President,
and
Operations Human Finance Marketing
Health
Resources

Staffing (Line
Training & Compensation
Managers, Use of
Development (Shared Service
Applicant Tracking
(Outsourced) Centers)
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 A Global Perspective: British and
American Culture Are Different
• United Kingdom might seem to require less
adjustment for Americans than countries such as
China
• Assumption can set up Americans for difficulty,
disappointment and underachievement
• Sports metaphors may confuse Britons
• Example: “step up to the plate,” “cover all the
bases,” “I’ll touch base with you,” “ballpark
figure,” “off the wall” and “out in left field.”

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 Organization of
Human Resource Management
10th Edition
PART I. INTRODUCTION
• Chapter 1: Strategic Human Resource
Management: An Overview
PART II. HR ETHICAL, LEGAL, AND SOCIAL
CONSIDERATIONS
• Chapter 2: Business Ethics and Corporate
Social Responsibility
• Chapter 3: Workforce Diversity, Equal
Employment Opportunity, and Affirmative
Action
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 Organization of
Human Resource Management
10th Edition (Cont.)
PART III. STAFFING
• Chapter 4: Job Analysis, Strategic
Planning, and Human Resource
Planning
• Chapter 5: Recruitment
• Chapter 6: Selection

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 Organization of
Human Resource Management
10th Edition (Cont.)
PART IV. HUMAN RESOURCE
DEVELOPMENT
• Chapter 7: Training and Development
• Appendix Chapter 7: Career Planning and
Development
• Chapter 8: Performance Management and
Appraisal

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 Organization of
Human Resource Management
10th Edition (Cont.)
PART V. COMPENSATION AND BENEFITS
• Chapter 9: Compensation
• Chapter 10: Benefits, Nonfinancial
Rewards, and Other Compensation I
ssues
PART VI. SAFETY AND HEALTH
• Chapter 11: A Safe and Healthy Work
Environment
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 Organization of
Human Resource Management
10th Edition (Cont.)
PART VII. EMPLOYEE AND LABOR RELATIONS
• Chapter 12: Labor Union and Collective
Bargaining
• Appendix Chapter 12: History of Unions in the
United States
• Chapter 13: Internal Employee Relations
PART VIII. OPERATING IN A GLOBAL
ENVIRONMENT
• Chapter 14: Global Human Resource
Management

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© 2008 by Prentice Hall 1-66