3 When you finish studying this chapter, you should be able to: Answer the question, “What is human resource management?”Discuss the components of the changing environment of human resource management.Describe the nature of strategic planning.Give examples of human resource management’s role as a strategic partner.
4 What is Human Resource Management? Human resource (HR) managementrefers to the practices and policies you need to carry out the personnel aspects of your management jobHuman resource (HR) management refers to the practices and policies you need to carry out the personnel aspects of your management job, specifically, acquiring, training, appraising, rewarding, and providing a safe, ethical and fair environment for your company’s employees
5 Human Resource Management Conducting job analysesPlanning labor needs and recruiting job candidatesSelecting job candidatesOrienting and training new employeesManaging wages and salaries
6 Human Resource Management (cont.) Providing incentives and benefitsAppraising performanceCommunicatingTraining and developingBuilding employee commitment
7 What a Manager Should Know About Equal opportunity, ethics, and affirmative actionEmployee health and safety, and ethical treatmentGrievance and labor relations
8 Why Is HR Management Important to All Managers? Personnel mistakes you don’t want to make:Having your employees not performing at peak capacityHiring the wrong person for the jobExperiencing high turnoverFinding employees not doing their bestHaving your company taken to court because of your discriminatory actionsPersonnel mistakes you don’t want to makeHiring the wrong person for the jobExperiencing high turnoverFinding employees not doing their bestHaving your company taken to court because of your discriminatory actionsHaving your company cited under federal occupational safety laws for unsafe practicesAllowing a lack of training to undermine your department’s effectivenessCommitting any unfair labor practices
9 Why Is HR Management Important to All Managers? (cont.) Personnel mistakes you don’t want to make:Having your company cited under federal occupational safety laws for unsafe practicesAllowing a lack of training to undermine your department’s effectivenessCommitting any unfair labor practicesPersonnel mistakes you don’t want to makeHiring the wrong person for the jobExperiencing high turnoverFinding employees not doing their bestHaving your company taken to court because of your discriminatory actionsHaving your company cited under federal occupational safety laws for unsafe practicesAllowing a lack of training to undermine your department’s effectivenessCommitting any unfair labor practices
10 Line Versus Staff Authority the right to make decisions, to direct the work of others, and to give orders
11 Line Versus Staff Authority (cont.) Line managersauthorized to give ordersLine managers are associated with managing functions (like sales or production) that the company needs to existLine Versus Staff AuthorityLine managers are authorized to give ordersIn charge of accomplishing the organization’s basic goalsStaff managers assist and advise line managers in accomplishing these goalsHR managers are generally staff managers
12 Line Versus Staff Authority (cont.) Staff managersassist and advise line managers in accomplishing these goalsStaff managers generally run departments that are advisory or supportive, like purchasing, human resource management, and quality control
13 Line Managers’ HR Responsibilities Placing the right person in the right jobStarting new employees in the organizationTraining employees for jobs that are new to themImproving the job performance of each personGaining creative cooperation and developing smooth working relationshipsLine Managers’ HR ResponsibilitiesPlacing the right person in the right jobStarting new employees in the organizationTraining employees for jobs that are new to themInterpreting the company’s policies and proceduresControlling labor costsProtecting employees’ health and physical conditions
14 Line Managers’ HR Responsibilities (cont.) Interpreting the company’s policies and proceduresControlling labor costsDeveloping the abilities of each personCreating and maintaining departmental moraleProtecting employees’ health and physical conditions
15 Human Resource Department’s Management Responsibilities Compensation and benefitsRecruitingTraining and developmentJob analysisEqual employment opportunityLabor relationsHuman Resource Department’s Management ResponsibilitiesCompensation and benefitsRecruitingTraining & developmentEmployee relationsOccupational safety and healthJob analysis
17 HR in Small BusinessSmall firms generally don't have the critical mass required for a full-time human resource manager.Their human resource management tends to be “ad hoc and informal.”
18 HR’s Changing RoleThe metamorphosis of personnel into human resource management reflects the fact that in today’s business environment, highly trained and committed employees are often a firm’s main real sustainable competitive advantage.
19 HR’s Changing Environment Globalizationrefers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroadHR’s Changing EnvironmentGlobalization refers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroadFormulating selection, training, and compensation policies for expatriate employees
20 HR’s Changing Environment Technological advancesNature of workservice jobsoutsourcinghuman capitalTechnological AdvancesChallenge of quickly applying technology to the task of improving operationsNature of WorkKnowledge-intensive high-tech jobs are replacing traditional factory jobsTwo-thirds of workforce employed in producing services
22 HR’s Changing Environment Growing emphasis on “knowledge workers” and human capitalHuman capitalrefers to the knowledge, education, training, skills, and expertise of a firm’s workersHuman capital refers to the knowledge, education, training, skills, and expertise of a firm’s workersManagers need new world-class HR management systems and skills to get employees to work more like committed partners
23 Demographic and Workforce Trends Labor force growth is not expected to keep pace with job growthLabor force is getting olderShift to nontraditional workersNontraditional workers include those who hold multiple jobs, or who are “contingent” or part-time workers, or people working in alternative work arrangements (such as a mother– daughter team sharing one flight attendant job at JetBlue airlines). Today, almost 10% of American workers—13 million people—fit this nontraditional workforce category. Of these, about 8 million are independent contractors who work on specific projects and move on once the projects are done.
24 Gen YMay be “the most high maintenance workforce in the history of the world”Their capacity for using information technology will also make them the most high-performing
25 The Strategic Role of Human Resource Management Main responsibility facing human resource managers is to institute policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic goals
26 The Strategic Role of Human Resource Management (cont.) Strategythe company’s plan for how it will balance its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage
27 HR’s Role in Executing Strategy Study found that mergers and/or acquisitions in which the human resource teams had been involved were more likely to have been successfulStudy found that mergers and/or acquisitions in which the human resource teams had been involved (for instance in assessing and providing advice regarding employee attitudes, helping plan and lead the integration of the compensation and benefits plans) were more likely to have been successful
28 Strategy and HR – Albertson’s Albertson’s human resource management team chose a computer system from Unicru of Portland, Oregon that collects and analyzes the information entered by applicants online.It ranks applicants based on the extent to which they exhibit the customer-focused traits that predict success in retail jobs and helps track candidates throughout the screening process.Strategy and HR ExampleAs in many firms today, Albertson’s Markets faced competitive pressures from firmslike Wal-Mart and from food stores from abroad. Albertson’s top management thereforerelied on the firm’s human resource managers to be partners in helping the firmachieve its strategic goals.Among other things, reducing personnel-related costs and improving Albertson’sperformance meant hiring employees who had a customer-focused approach, as well asreducing turnover, improving retention, and eliminating time-consuming manualprocesses and procedures for store managers.Working with its information technology department, Albertson’s human resourcemanagement team chose a computer system from Unicru of Portland, Oregon(www.unicru.com). The system collects and analyzes the information entered by applicantsonline and at kiosks. It ranks applicants based on the extent to which they exhibitthe customer-focused traits that predict success in retail jobs, helps track candidatesthroughout the screening process, and does other things, such as track reasons fordeparture once applicants are hired. Human resource managers were able to presenta compelling business case to illustrate the new system’s return on investment.Working as a partner in Albertson’s strategy design and implementation process, theHR team thus contributed in a significant way to achieving Albertson’s strategicgoals.25
29 Two Strategic Human Resource Challenges Focus on boosting competitiveness, reducing costs, and improving employee performanceBe more involved in both formulating and implementing company strategyMost firms’ strategies increasingly stress building organizational competitiveness and performance.HR must be more involved in designing—not just implementing—companies’ strategies.
31 Basics of Strategic Planning Corporate-level strategyidentifies the portfolio of businesses that comprise the company and the ways in which these businesses relate to each otherFor example, a diversification strategy implies that the firm will expand by adding new product lines. A vertical integration strategy means the firm expands by, perhaps, producing its own raw materials, or selling its products direct. Consolidation— reducing the company’s size—and geographic expansion—for instance, taking the business abroad—are some other corporate strategy possibilities.
32 Basics of Strategic Planning Business-level/competitive strategyidentifies how to build and strengthen the business’s long-term competitive position in the marketplace
33 HR and Competitive Advantage “any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share”Managers use several competitive strategies to achieve competitive advantage. One, cost leadership, means the enterprise aims to become the low-cost leader in an industry. Wal-Mart is a typical industry cost leader: It maintains its competitive advantage in part through its satellite-based distribution system. In a differentiation competitive strategy, a firm seeks to be unique in its industry along dimensions that are widely valued by buyers
34 Basics of Strategic Planning Functional strategiesidentify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goalsFunctional strategiesIdentify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goals
35 Strategic Human Resource Management formulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aimsStrategic Human Resource ManagementThe linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility
37 HR’s Role in Formulating Strategy HR participates by supplying information regarding the company’s internal human strengths and weaknesses
38 High-Performance Work System an integrated set of human resource management policies and practices that together produce superior employee performanceThe basic aim here is to install human resource systems—in recruiting, screening, training, appraisal, and compensation, for instance—so that the company generates more job applicants, screens candidates more effectively, provides more and better training, links pay more explicitly to performance, and provides a safer work environment. In this way the human resource team can make a measurable contribution to the company’s bottom line.
39 Measuring HR Performance Employers expect their human resource management teams to provide measurable evidence of their effectiveness.
40 Sample Metrics - IBMHuman resource managers need access to the performance measures (or “metrics”), as well as to comparable, benchmark-able figures from similar firms.For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8%.There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees.IBM’s Randall MacDonald needed $100 million from IBM to reorganize its HRoperations, and he emphasized human resource metrics in requesting those funds. He toldtop management, “I’m going to deliver talent to you that’s skilled and on time and readyto be deployed. I will be able to measure the skills, tell you what skills we have, what[skills] we don’t have [and] then show you how to fill the gaps or enhance our training.”33Human resource managers such as MacDonald need accessto the performance measures (or “metrics”), as well as to comparable, benchmark-ablefigures from similar firms. For example, median HR expenses as a proportion of companies’total operating costs average about 0.8%. There tends to be between 0.9 and1.0 human resource staff persons per 100 employees (the ratio tends to be lower inretailing and distribution firms, and higher in public, state organizations).34 Employerscan request customized benchmark comparisons (for training hours, and tests administered,for instance) from services such as the Society for Human ResourceManagement’s Human Capital Benchmarking Service, and its database of over 1,500organizations.35
41 The HR Scorecard HR scorecard shows the quantitative standards, or “metrics,” the firm uses to measure HR activities, and to measure the employee behaviors resulting from these activities, and to measure the strategically relevant organizational outcomes of those employee behaviors
42 HR and Technology Self-service Call centers Productivity improvement Outsourcing
44 HRISHR portals provide employees with a single gateway to all HR informationStreamline the HR process and enable HR managers to focus more on strategic issues
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