Human Resource Management: Gaining a Competitive Advantage

The greatest tragedy… is not the destruction of our natural resources, though that tragedy is great. The truly great tragedy is the destruction of our human resources by our failure to fully utilize our abilities, which means that most men and women go to their graves with their music still in them. Oliver Wendell Holmes; Professor at Harvard, 1809-1894

Introduction Competitiveness – a company’s ability to maintain and gain market share Human resource management – 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" .

Human Resource Management 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).

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 This slide 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.

HR as a Business with 3 Product Lines Human Resources Business Partner Services Strategic Partner Administrative Services and Transactions The newer HR products—business partner services and the strategic partner role—are the HR functions that are being challenged by top managers to deliver. One way to think the roles and responsibilities of HR department is to consider HR as a business within the company with three product lines. 1. Administrative Services and Transactions: Compensation, hiring and staffing • Emphasis: Resource efficiency and service quality. 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, competition, the market, and business strategies

6 Competencies for the HR Profession Figure 1.3 shows the six competencies that 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: develop talent, design reward systems, and shapes the organization. 4. Strategic architect: recognizes business trends and their impact on the business, 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.

How is the HRM Function Changing? 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. 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.

The HRM Profession HR salaries vary depending on education and experience as well as the type of industry The primary professional organization for HRM is the Society for Human Resource Management (SHRM) 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)

Competitive Challenges Influencing Human Resource Management Challenge of Sustainability The Global challenge The Technology challenge

Competing Through Sustainability Provide a return to shareholders Provide high-quality products, services, and work experience for employees Increased value placed on intangible assets and human capital Social and environmental responsibility Adapt to changing characteristics and expectations of the labor force Legal and ethical issues Effectively use new work arrangements

Competing Through Globalization Expand in to foreign markets Prepare employees to work in foreign location

Competing Through Technology Change employees’ and managers’ work roles Create high-performance work systems through integrating technology and social systems Development of e-commerce and e-HRM

Top 10 Knowledge and skills Expected to increase in Importance

Concerns with Employee Engagement Employee engagement - degree to which employees are fully involved in their work and strength of their commitment. 10 Common Themes of Employee Engagement Pride in employer Satisfaction with employer Satisfaction with the job Opportunity to perform challenging work Recognition and positive feedback from contributions Personal support from manager Effort above and beyond the minimum Understanding the link between one’s job and the company’s mission Prospects for future growth with the company Intention to stay with the company 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 10 common themes illustrated in this slide.

The Balanced Scorecard 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’s business strategy. Evaluate the extent to which the human resource function is helping the company’s meet it’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’s business strategy. -- Evaluate the extent to which the human resource function is helping the company’s meet it’s strategic objectives. Measures of human resource practices primarily relate to productivity, people, and processes.

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 1.9 in the text.

Managing a Diverse Workforce To successfully manage a diverse workforce, managers must develop a new set of skills including: Communicate, coach and develop employees from a variety of backgrounds Provide performance feedback that is 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 backgrounds 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. Diversity is important for tapping all employees’ creative, cultural, and communication skills and using those skills to provide competitive advantage. Creating a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative

4 Principles of Ethical Companies Successful companies, in their 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. 117 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.

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

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 Technology is pushing the boundaries of artificial intelligence, speech synthesis, wireless communications, and networked virtual realityAdvances 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

High-Performance Work Systems Work in Teams - Virtual Teams Changes in Skill Requirements Working in Partnerships. Changes in Company Structure and Reporting Relationships. Increased Use and Availability of e-HRM and Human Resource Information Systems. 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 Teams that 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, are influencing training, development, work design, recruiting, and other aspects of HR. with one or more other companies.

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