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Human Resource Management: Gaining a Competitive Advantage

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1 Human Resource Management: Gaining a Competitive Advantage
Chapter 01 Human Resource Management: Gaining a Competitive Advantage Chapter I discusses the roles, skills and practices of a company’s human resource management (HRM) function, implications of the economy, the makeup of the labor force, and ethics for company sustainability. It discusses how HRM affects a company’s balanced scorecard, what companies should do to compete in the global marketplace, how technology such as social networking is influencing HRM and what HRM practices support high-performance work systems. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2 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 Human Resources will be referred to as HR and Human Resource Management as HRM. After reading this chapter, you should be able to: Discuss the roles and activities of a company’s human resource management function Discuss the implications of the economy, the makeup of the labor force, and ethics for company sustainability Discuss how human resource management affects a company’s balanced scorecard Discuss what companies should do to compete in the global marketplace Identify the characteristics of the workforce and how they influence human resource management Discuss human resource management practices that support high-performance work systems Provide a brief description of human resource management practices 1-2

3 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. Competitiveness refers to a company’s ability to maintain and gain market share in its industry. Competitiveness is related to company effectiveness, which is determined by whether the company satisfies the needs of stakeholders (groups affected by business practices). Important stakeholders include stockholders, who want a return on their investment; customers, who want a high-quality product or service; and employees, who desire interesting work and reasonable compensation for their services. Human resource management refers to the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. --Many companies refer to HRM as involving “people practices." 1-3

4 HRM Practices Figure 1.1 emphasizes that there are several important HRM practices. The strategy underlying these practices needs to be considered to maximize their influence on company performance. As the figure shows, HRM practices include analyzing and designing work, determining human resource needs (HR planning), attracting potential employees (recruiting), choosing employees (selection), teaching employees how to perform their jobs and preparing them for the future (training and development), rewarding employees (compensation), evaluating their performance (performance management), and creating a positive work environment (employee relations). 1-4

5 Responsibilities of HR Departments
Employment and Recruiting Training and Development Compensation Benefits Employee Services Employee and Community Relations Personnel Records Health and Safety Strategic Planning Table 1.1 shows the responsibilities of HR departments. The HR department is solely responsible for outplacement, labor law compliance, record keeping, testing, unemployment compensation, and some aspects of benefits administration. The HR department is most likely to collaborate with other company functions on employment interviewing, performance management and discipline, and efforts to improve quality and productivity. Large companies are more likely than small ones to employ HR specialists, with benefits specialists being the most prevalent. Other common specializations include recruitment, compensation, and training and development. Many different roles and responsibilities can be performed by the HR department depending on the size of the company, the characteristics of the workforce, the industry, and the value system of company management. 1-5

6 HR as a Business with 3 Product Lines
Administrative Services and Transactions: Compensation, Hiring, and Staffing Emphasis: Resource Efficiency and Service Quality (traditional View) Business Partner Services: Developing Effective HR Systems, Implementing Plans, Talent Management Emphasis: Knowing & Influencing Strategic Partner: Contributing To Business Strategy Emphasis: Knowledge of HR and the Competition One way to think of the roles and responsibilities of HR department is to consider HR as a business within the company with three product lines. Administrative Services and Transactions: Compensation, hiring and staffing • Emphasis: Resource efficiency and service quality. 2. Business Partner Services: Developing effective HR systems and helping implement business plans, talent management. • Emphasis: Knowing the business and exercising influence—problem solving, designing effective systems to ensure needed competencies. 3. Strategic Partner: Contributing to business strategy based on considerations of human capital, business capabilities, readiness, and developing HR practices as strategic differentiators • Emphasis: Knowledge of HR and of the business, the competition, the market, and business strategies. 1-6

7 6 HR Competencies Credible Activist Cultural Steward Talent Manager/
Business Ally Strategic Architect Operational Executor Talent Manager/ Organizational Designer Six competencies are needed for the HR profession. 1. Credible activist: delivers results with integrity, shares information, builds trusting relationships, and influences others, providing candid observation, taking appropriate risks. 2. Cultural steward: facilitates change, develops and values the culture, and helps employees navigate the culture. 3. Talent manager/organizational designer: develops talent, designs reward systems, and shapes the organization. 4. Strategic architect: recognizes business trends and their impact on the business, practice evidence-based HR, and develops people strategies that contribute to the business strategy. 5. Business Ally: understands how the business makes money and the language of the business. 6. Operational executor: implements workplace policies, advances HR technology, and administers day-to-day work of maintaining people. 1-7

8 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 – giving employees more direct access to HR information (training, benefits, etc.) Outsourcing – third party or consultant provides HR services (payroll, benefits, etc.) The amount of time that the HRM function devotes to administrative tasks is decreasing and its roles as a strategic business partner, change agent, and employee advocate are increasing. In shifting the focus from current operations to strategies for the future and preparing non-HR managers to develop and implement HR practices, HR managers face two important challenges: Self-service refers to giving employees online access to information about HR issues. Outsourcing refers to the practice of having another company (a vendor, consultant or third-party) provide services to save money and spend more time on strategic business issues. 1-8

9 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. 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. Centers of expertise or excellence include HR specialists such as staffing or training. Service centers are a central place for administration and transactional tasks such as enrolling in training programs or benefits that employees and managers can access online. Business partners are HR staff members who work with managers on strategic issues such as creating new compensation plans or development programs for preparing high–level managers. 1-9

10 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. As part of its strategic role, one of the key contributions that HR can make is to engage in evidence-based HR. Evidence-based HR – demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders. It requires using HR or workforce analytics that uses quantitative and scientific methods to analyze data from HR decisions, financial statements, employee surveys and other data-sources to make evidence-based HR decisions and show that HR influences the organization’s “bottom-line” including profits and costs. 1-10

11 HR Playing a Strategic Role in the Business?
What is HR doing to provide value-added services to internal clients? What can HR add to the bottom line? How are you measuring HR effectiveness? How can we reinvest in employees? Table 1.2 provides questions that managers can use to determine if HRM is playing a strategic role in the business. If these questions have not been considered, it is highly unlikely that (1) the company is prepared to deal with competitive challenges or (2) human resources are being used to help a company gain a competitive advantage. The bottom line for evaluating the relationship between human resource management and the business strategy is to consider this question: “What is HR doing to ensure that the right people with the right skills are doing the right things in the jobs that are important for the execution of the business strategy?” Why have HRM roles changed? Managers see HRM as the most important lever for companies to gain a competitive advantage over both domestic and foreign competitors. 1-11

12 Questions, cont. What HR strategy will get the business from point A to point B? What makes an employee want to stay? How will we invest in HR for a better HR department than competitors have? What should we be doing to improve our marketplace position? What’s the best change to prepare for the future? Managers see HRM as the most important lever for companies to gain a competitive advantage over both domestic and foreign competitors. HRM practices are directly related to companies’ success in meeting competitive challenges. 1-12

13 The HRM Profession HR salaries vary according to position, experience, education, training, location and firm size. See: and Also The primary professional organization for HRM is the Society for Human Resource Management (SHRM) (www.shrm.org) HR salaries vary depending on education and experience as well as the type of industry. --College degrees are held by the vast majority of HRM professionals. --Professional certification is less common than membership in professional associations. The primary professional organization for HRM is the Society for Human Resource Management (SHRM). 1-13

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15 3 Competitive Challenges Influencing HRM
Technology Sustainability Figure 1-4. Three competitive challenges that companies now face will increase the importance of HRM practices: The Challenge of Sustainability – includes providing a return to shareholders, providing high quality products and services and experiences for employees, social responsibility, and effectively using new work arrangements. The Global Challenge - In order to survive, U.S. companies must improve HRM practices, develop global markets and better prepare employees for global assignments. The Technology Challenge –Along with advances in technology such as use of social networking tools and development of HR dashboards and use of HR analytics, companies change employees’ and managers’ work roles, create high performance work systems, and develop e-commerce to compete through technology. Globalization 1-15

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17 The Sustainability Challenge
Sustainability is the company’s ability to make a profit without sacrificing the resources of its employees, the community, or the environment; 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. Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment. Sustainability includes the ability to deal with economic and social changes, practice environmental responsibility, engage in responsible and ethical business practices, provide high-quality products and services, and put in place methods to determine if the company is meeting stakeholders’ needs. Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeeds. 1-17

18 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 Sustainability includes the ability to provide a return to shareholders provide high-quality products, services, and work experiences for employees increase value placed on intangible assets and 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 1-18

19 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 The economy has implications for HR: The competition for labor – affected by the growth and decline of industries and availability of number and skills of persons. Also, skill demands for jobs are changing. Knowledge is becoming more valuable. --Intangible assets refer to a type of company asset including human capital, customer capital, social capital, and intellectual capital --Knowledge workers are employees who contribute to the company not through manual labor but through a specialized body of knowledge --Empowerment means giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service A learning organization embraces a culture of lifelong learning, enabling all employees to continually acquire and share knowledge. Improvements in product or service quality do not stop when formal training is completed. Employees need to have the financial, time, and content resources (courses, experiences, development opportunities) available to increase their knowledge. Managers take an active role in identifying training needs and helping to ensure that employees use training in their work. Also, employees should be actively encouraged to share knowledge with colleagues and other work groups across the company using and the Internet. For a learning organization to be successful requires that teams of employees collaborate to meet customer needs. Managers need to empower employees to share knowledge, identify problems, and make decisions. This allows the company to continuously experiment and improve. Social collaboration and social networking technology contribute to the learning organization. 1-19

20 The Sustainability Challenge
Psychological Contract – what employers and employees bring to the relationship Alternative Work Arrangements Changes in Employment Expectations Changes in Employment Expectations: The need for companies to make rapid changes is reshaping the employment contracts. The psychological contract describes what an employee expects to contribute and what the company will provide to the employee for these contributions. Alternative work arrangements include independent contractors, on-call workers, temporary workers, and contract company workers. In the new economy a new type of psychological contract is emerging. The competitive business environment demands frequent changes in the quality, innovation, creativeness, and timeliness of employee contributions and the skills needed to provide them. This has led to company restructuring, mergers and acquisitions, layoffs, and longer hours for many employees. Companies demand excellent customer service and high productivity levels. Employees are expected to take more responsibility for their own careers, from seeking training to balancing work and family. In exchange for top performance and working longer hours without job security, employees want companies to provide flexible work schedules, comfortable working conditions, more autonomy in accomplishing work, training and development opportunities, and financial incentives based on how the company performs. Employees realize that companies cannot provide employment security, so they want employability—that is, they want their company to provide training and job experiences to help ensure that employees can find other employment opportunities. The HRM challenge is how to build a committed, productive workforce in turbulent economic conditions that offer opportunity for financial success but can also quickly turn sour, making every employee expendable. Learning Organization Employees are continually trying to learn new things. Psychological Contract Expectations of employee contributions and what the company will provide in return. Employee engagement refers to the degree to which employees are fully involved in their work and the strength of their commitment to their job and the company. Employees who are engaged in their work and committed to the company they work for give companies competitive advantage including higher productivity, better customer service, and lower turnover. 1-20

21 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 Employee engagement - degree to which employees are fully involved in their work and strength of their commitment. Employees’ engagement is influenced by how managers treat employees as well as human resource practices such as recruiting, selection, training and development, performance management, work design, and compensation. Employees who are engaged in their work and committed to the company they work for give companies competitive advantage including higher productivity, better customer service, and lower turnover Companies measure employees’ engagement levels with attitude or opinion surveys. Although the types of questions asked on these surveys vary from company to company, research suggests the questions generally measure these common themes. 1-21

22 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 Alternative work arrangements 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. This means recognizing that all HR practices are related and aligned with business needs, and help the organization manage talent to meet business goals. Contingent workers and part-time employees can be less expensive than full-time employees and help avoid layoffs. 1-22

23 McGraw-Hill/Irwin ©2012 The McGraw-Hill Companies, All Rights Reserved

24 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. The balanced scorecard gives managers the opportunity to look at the company from the perspective of internal and external customers, employees and shareholders. The balanced scorecard should be used to: -- Link human resource management activities to the company business strategy. -- Evaluate the extent to which the human resource function is helping the company’s meet its strategic objectives. Measures of human resource practices primarily relate to productivity, people, and processes. 1-24

25 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? To show that HRM activities contribute to a company’s competitive advantage, managers need to consider these questions and be able to identify critical indicators or metrics related to HR. Examples are provided in the Table 1.8. 1-25

26 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. Customer excellence requires attention to product and service features as well as to interactions with customers. Total Quality Management (TQM) is a company-wide effort to continuously improve the ways peoples, machines, and systems accomplish work. Core values of TQM include: Designing methods and processes to meet the needs of internal and external customers All employees receive training in quality Promotion of cooperation with vendors, suppliers, and customers Management gives feedback on progress 1-26

27 Customer Service and Quality
Malcolm Baldrige National Quality Award ISO 9000:2000 Six Sigma Process Lean Thinking The emphasis on quality is seen in the following: Malcolm Baldrige National Quality Award was established in 1987 to promote quality awareness, to recognize quality achievements, and to publicize successful quality strategies. The categories of examination include: leadership, measurement, analysis and knowledge, strategic planning, workforce, operations, customer focus and design improvement. ISO 9000:2000 quality standards adopted worldwide. Six Sigma process system of measuring, analyzing, improving, and controlling processes once they meet quality standards. Lean thinking is a way to do more with less effort, time, equipment, and space, but still provide customers with what they need and want. Part of lean thinking includes training workers in new skills or how to apply old skills in new ways so they can quickly take over new responsibilities or use new skills to help fill customer orders. 1-27

28 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 Internal labor force is the labor force of current employees External labor market includes persons actively seeking employment The U.S. workforce is aging rapidly. The diversity of the workforce is expected to increase. Due to immigration, Hispanics and Asians have been the fastest growing groups in the labor force. The heterogeneous composition of the workforce challenges companies to create HRM practices that ensure that the talents, skills and values of all employees are fully utilized to help deliver high-quality products and services. Because the workforce is predicted to become more diverse in terms of age, ethnicity, and racial background, it is unlikely that one set of values will characterize all employees. Worker performance and learning are not adversely affected by aging. Disabled workers can also be a source of competitive advantage. 1-28

29 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. To successfully manage a diverse workforce, managers must develop a new set of skills, including: Communicating effectively with employees from a wide variety of cultural and educational backgrounds, ethnicity, age, ability and race. Coaching and developing employees of different ages, educational backgrounds, ethnicity, physical ability, and race. Providing performance feedback that is based on objective outcomes. Recognizing and responding to generational issues. Understanding diversity is important for tapping all employees’ creative, cultural, and communication skills and using those skills to provide competitive advantage. Personality differences between the generations can potentially cause problems. Creating a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative is a necessity. 1-29

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31 Legal and Ethical Issues
5 legal areas that influenced HRM : Equal employment opportunity legislation Employee safety and health Employee pay and benefits Employee privacy Job security Women and minorities still face the “glass ceiling” Sarbanes-Oxley Act of 2002 Federal health care legislation Companies which employ unlawful immigrants or abuse laborers Data-security practices and protecting intellectual property There are five main areas of the legal environment that influence HRM: Equal employment opportunity legislation Employee safety and health Employee pay and benefits Employee privacy Job security The Sarbanes-Oxley Act of 2002 sets strict rules for corporate behavior and sets heavy fines for noncompliance, especially in regard to accounting practices. Federal health care legislation means that companies need to ensure that HR professionals are working with legal counsel and benefits experts to understand the details and implications of the new law, conducting cost analysis to determine the financial impact of the new law on the business and helping determine if health care will be provided and what form it will take. Scrutiny of companies that employ unlawful immigrants or abuse laborers will increase. Data-security practices and protecting intellectual property will increase as concerns due to publication of classified documents by WikiLeaks and Wall Street among others. Women and minorities still face the “glass ceiling.” 1-31

32 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 Human resource managers must satisfy three basic standards for their practices to be considered ethical: 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. Ethical principles should be considered in making business decisions and interacting with clients and customers. Develop and distribute a Code of Ethics, policy, process and procedures, audit and train employees. 1-32

33 4 Principles of Ethical Companies
Successful companies, in relationships with customers, vendors and clients, emphasize mutual benefits. Employees assume responsibility for the actions of the company. Companies have a sense of purpose or vision the employees value and use in their day-to-day work. They emphasize fairness; another person’s interests count as much as their own. Ethical, successful companies can be characterized by four principles. First, in their relationships with customers, vendors, and clients, these companies emphasize mutual benefits. Second, employees assume responsibility for the actions of the company. Third, such companies have a sense of purpose or vision the employees value and use in their day-to-day work. Finally, they emphasize fairness; that is, another person’s interests count as much as their own. 1-33

34 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 Companies are finding that to survive they must compete in international markets as well as fend off foreign corporations’ attempts to gain ground in the United States, develop global markets and prepare employees for global assignments. Every business must be prepared to deal with the global economy. This is made easier by technology. Offshoring refers to the exporting of jobs from developed countries to less developed countries. Onshoring refers to exporting jobs to rural parts of the United States. 1-34

35 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 Technology has reshaped the way we play, plan our lives, and where we work. The Internet has created a new business model – e-commerce – in which business transactions and relationships can be conducted electronically. Seventy-nine percent of adults, approximately 178 million, go online, spending an average of 11 hours a week on the Internet. Seventy-two percent access the Internet from home, while 37 percent do so from work. Social networking in general facilitates communication, decentralized decision making and collaboration. 1-35

36 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 Advances in technology have: changed how and where we work. resulted in high-performance work systems, which maximize the fit between the company’s social system and technical system. 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. 1-36

37 The Technology Challenge
Advances in technology have increased: use and availability of Human Resource Information Systems (HRIS) use and availability of e-HRM competitiveness in high-performance work systems HR Dashboard Metrics Technology is pushing the boundaries of artificial intelligence, speech synthesis, wireless communications, and networked virtual reality. Advances in technology have: increased the use and availability of Human Resource Information Systems (HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and distribute HR information . increased the use and availability of e-HRM, which is the processing and transmission of digitalized information used in HRM increased the competitiveness in high-performance work systems. Increased use of HR Dashboard Metrics such as productivity and absenteeism that are accessible by employees and managers through the company internet or HRIS. 1-37

38 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. New technology causes changes in skill requirements and work roles and often results in redesigning work structures (e.g., using work teams). High-performance work systems maximize the fit between the company’s social system (employees) and its technical system. Work teams involve employees with various skills who interact to assemble a product or provide a service. Work teams may assume many of the activities usually reserved for managers, including selecting new team members, scheduling work, and coordinating activities with customers and other units in the company. High-performance work systems have implications for employee selection and training. Virtual teams are separated by time, geographic distance, culture and/or organizational boundaries and rely exclusively on technology for interaction between team members. Employees need job-specific knowledge and basic skills to work with the equipment created with the new technology. Besides changing the way that products are built or services are provided within companies, technology has allowed companies to form partnerships. Electronic human resource management (e-HRM) refers to the processing and transmission of digitized information used in HRM, including text, sound, and visual images from one computer or electronic device to another. New technologies and advances in software, including avatars, collaborative social networks, and mobile technologies such as personal digital assistants and iPods and iPads, etc. are influencing training, development, work design, recruiting, and other aspects of HR. with one or more companies. As illustrated in Table 1.13 HRM practices support high-performance work systems through staffing, work design, training, compensation and performance management.. 1-38

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40 Meeting 4 Competitive Challenges Through HRM Practices
HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions: The HR environment Acquiring and preparing HR Assessment and development of HR Compensating HR HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions: A. Managing the Human Resource Environment—HRM practices should be linked to strategy, legal compliance must be assured, and work should be designed to maximize employee effectiveness and motivation. B. Acquiring and Preparing Human Resources—Human resource planning must occur, employees must be recruited and placed in appropriate jobs, methods of employee selection must be determined, and employees having skills to perform particular jobs must be ensured. C. Assessment and Development of Human Resources—This area of HRM deals with measuring employee performance, preparing employees for future work roles, identifying and responding to employee interests, and creating a beneficial and effective work environment. D. Compensating Human Resources—Appropriate pay systems must be developed, employee contributions must be rewarded, and employees must be provided with benefits. 1-40

41 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. 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. •Linking HRM practices to the company’s business objectives—that is, strategic human resource management. • Ensuring that HRM practices comply with federal, state, and local laws. • Designing work that motivates and satisfies the employee as well as maximizes customer service, quality, and productivity. 1-41

42 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 Managers need to ensure that employees have the necessary skills to perform current and future jobs. • Measuring employees’ performance. • Preparing employees for future work roles and identifying employees’ work interests, goals, values, and other career issues. • Creating an employment relationship and work environment that benefits both. 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. 1-42

43 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. To successfully manage human resources, individuals need personal credibility, business knowledge, understanding of the business strategy, technology knowledge, and the ability to deliver HR services. Human resource management practices should be evidence- based, that is, based on data showing the relationship between the practice and business outcomes related to key company stakeholders (customers, shareholders, employees, community). In addition to contributing to a company’s business strategy, human resource practices are important for helping companies deal with sustainability, globalization, and technology challenges. Global challenges include entering international markets, immigration, and offshoring. Technology challenges include using new technologies to support flexible and virtual work arrangements, high-performance work systems, and developing effective e-HRM practices and human resource information systems. 1-43


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