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I. Strategic behavior of organizations A. HRM trends.

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1 I. Strategic behavior of organizations A. HRM trends.
OS /15/08 I. Strategic behavior of organizations A. HRM trends. B. Theories of strategy C. Application: jetBlue Airways.

2 Trends in Human Resource Management
Change in the labor force (i.e., people who are willing and able to work) High performance work systems Focus on strategy Technological change in HRM Change in the employment relationship

3 Change in the U.S. Labor Force
Areas of skill deficiencies: mathematical, verbal, interpersonal skills. The workforce is aging. Between , the fastest growing age groups are ees ages 55 and older. The workforce is growing more diverse. The 2012 workforce is expected to be 66% white, 15% Hispanic (any race), 12% black, and 7% Asian and other minorities. At present, women comprise 47% of the workforce. At present, 61% of mothers with a child under the age of 3 are working.

4 Minorities are the fastest growing segment of the U.S. workforce:

5 Working Mothers

6 High Performance Work Systems
Require: Knowledge workers: ees whose main contribution to the firm is specialized knowledge. Ee empowerment: giving ees responsibility and authority to make decisions. Teamwork: assignment of work to groups of ees with various skills who interact to assemble a product or provide a service.

7 Change in the Employment Relationship
New psychological contract Traditional: ee contributes time, effort, skills, abilities, and loyalty; firm provides job security and opportunities for promotion. New: ee contributes top performance, current skills, and longer hours; firm provides flexible schedules, more ee control over how accomplish work, training and development, and financial incentives.

8 The Behavior of Organizations: Two Perspectives
1) Firm behavior is a function of environmental pressures (sociology) 2) Firm behavior is a function of the goals and actions of the firm (economics, business strategy).

9 Strategy Plan for meeting broad goals such as profitability, quality, and market share. 3 Levels: Firm / organization Business unit Function / department

10 Three HRM Strategy Theories
Contingency perspective Best practices Resource-based

11 Contingency Perspective
Organizations will be most successful when strategies “fit” environments. Organizations will be most successful when HR strategies “fit” organizational strategies. Firms should tailor HR activities.

12 Diagram of the Contingency Perspective
Organizational Strategies Consistency Environment Fit Fit Improved Firm Performance HR Strategies Consistency Consistency The success of HR strategies depends on the situation or context in which they are used. An HR strategy’s effect on firm performance is always dependent on how well it fits with other factors. This slide depicts the key factors that firms should consider in determining which HR strategies will have positive impact on firm performance: organizational strategies, environment, organizational characteristics, and organizational capabilities. Fit Fit Organizational Characteristics Organizational Capabilities Consistency

13 How to Interpret the Diagram
Contingency Perspective says that firms that match their HR activities / strategies to the 4 boxes (organizational strategies, environment, organizational characteristics, organizational capabilities) will be more successful than those that do not.

14 Examples Organizational Strategies Business Environment
JetBlue Airlines – Wegmans Food Markets – customer service, high quality goods, variety of products Business Environment Wegmans Food Markets – competition from low cost providers, poor economy, good reputation

15 Examples Organizational Characteristics Organizational Capabilities
JetBlue Airlines – Wegmans Food Markets – growing/expanding, retail food industry, privately-held Organizational Capabilities Wegmans Food Markets – excellent reputation as employer and as grocery store, ability to attract and retain high quality workers

16 If you fully understand the contingency perspective …
You should be able to give examples of the “four boxes.” You should be able to think of HR activities that would “fit” or match the “four boxes.” For example, Wegman’s strategy of providing a excellent customer service should lead it to select new employees based upon their degree of interest in solving customer problems.

17 Best Practices Approach
Some practices work better than others (e.g., variable pay bonuses for managers). Some practices are more progressive than others (e.g., paid family leave). Firms should imitate HRM leaders.

18 Resource-Based Approach
Invent unique practices or combinations of practices. Or … imitate successful practices in other companies and tailor to your firm and integrate it with your firm’s systems.

19 How to Assess A Firm’s Human Resource Strategy:
The combination of HR practices used by a firm. Company statements regarding mission, values, strategies, and references to its workers.

20 Terms You Should Know Psychological contract Knowledge workers
Ee empowerment Strategy

21 You Should be Able To … Know basic statistics about the changing demographics of the U.S. workforce. Identify and discuss key environmental trends affecting HR. Explain in depth and using examples the contingency theory of strategy. Explain and compare the three theories of strategy.

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