Lecture 1 Human Resource Management Practices Strategic Role of Human Resource Management 1-22

Human Resource Management  HRM Definition:  The policies, practices, and systems that influence employee’s behavior, attitudes and performance

Human Resource Management  HRM Mission:  To obtain develop, compensate, integrate and maintain the necessary personnel for the accomplishment of the organizations’ goals and objectives.

Sustainable Competitive Advantage Culture That Can’t be Copied Employees Who Add Value Employees Who Are Rare 4

Human Resource Management Main Practices Planning Labour Relations Job Analysis & Job Description Health & Safety Recruitment & Selection Personnel Management Rewards Training & Development Performance Appraisal

Human Resource Management Additional Practices HR Outsourcing Organisational Culture & Climate Corporate Social Responsibility Teambuilding & Empowerment Human Resource Management Leadership Style Organisational Change Knowledge Management Total Quality Management

Questions Used to Determine If Human Resources Are Playing a Strategic Role in the Business 1. What is HR doing to provide value-added services to internal clients? 2. What can the HR department add to the bottom line? 3. How are you measuring the effectiveness of HR? 4. How can we reinvest in employees? 5. What HR strategy will we use to get the business from point A to point B? 6. What makes an employee want to stay at our company? 7. How are we going to invest in HR so that we have a better HR department than our competitors? 8. From an HR perspective, what should we be doing to improve our marketplace position? 9. What’s the best change we can make to prepare for the future? Table 1.2 provides several 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 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. HRM practices are directly related to companies’ success in meeting competitive challenges. 1-7 Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-7

HRM and its Link With Various Stakeholders The Organization Productivity Profits Survival Customers Quality service Quality products Fair price Innovation Employees Compensation Satisfaction Empowerment Job security Human Resource Management Society Legal compliance Social responsibility Ethical management practices Strategic Partners (Suppliers, Joint Ventures, Unions) Fair treatment Mutual benefit Stockholders and Investors Return to sales Return to assets Return to investments

How is the HRM Function Changing ? From Personnel to HRM Time spent on administrative tasks is decreasing. HR roles as a business partner, change agent, and employee advocate are increasing. HR managers are challenged to shift focus from current operations to future strategies and prepare line managers to develop and implement HR practices. 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 provide services Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-9

HRM Important Challenges Employee engagement Self-service – giving employees online access to information about HR issues Outsourcing – the practice of having another company provide services to save money and spend more time on strategic business issues. Evidence-based HR – demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders (HR audit). Strategic Role of HR 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 provide services Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-10

Strategic Human Resource Management Linking business strategy with HR practices A set of planned HR activities helping the organization to reach its strategic goals Designing an appropriate Human Resource Strategy to achieve the best possible employee performance.

Strategy Formulation External Analysis Internal Analysis Mission Goals Opportunities Threats Mission Goals Strategic Choice Internal Analysis Strengths Weaknesses This figure illustrates the five major components of the strategic management process relevant to strategy formulation. Next, each component will be defined. Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-12

Strategy Formulation Mission is a statement of the organization's reasons for being. Goals are what the organization hopes to achieve in the medium-to long-term future. External analysis examines the organization's operating environment to identify strategic opportunities and threats. Internal analysis identifies the organization's strengths and weaknesses. Strategic choice is the organization's strategy, which describes the ways the organization will attempt to fulfill its mission and achieve its long term goals. Five components of the strategic management process relevant to strategy formulation: A mission is a statement of the organization's reasons for being. Goals are what the organization hopes to achieve in the medium-to long-term future External analysis consists of examining the organization's operating environment to identify strategic opportunities and threats. Internal analysis attempts to identify the organization's strengths and weaknesses. Strategic choice is the organization's strategy, which describes the ways the organization will attempt to fulfill its mission and achieve its long term goals. Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-13

Strategic Implementation HR Practices Recruiting Training Performance management Labor relations Employee relations Job analysis Job design Selection Development Pay structure Incentives Benefits Firm Performance Productivity Quality Profitability Human Resource Actions Behaviors Results -productivity -absenteeism - turnover Capability Skills, Abilities Knowledge Needs Skills Behavior Culture Strategic Choice This figure presents the strategic management process from strategic choice to firm performance, illustrating the relationship of HR need, practices capability and actions. Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-14

Strategic Types Porter's Strategies …competitive advantage stems from a company’s ability to create value in two ways… Cost leadership Differentiation Michael Porter has hypothesized that competitive advantage comes from creating value by: -reducing costs (overall cost leadership), or -charging a premium price for a differentiated product or service (differentiation). 15

HRM Needs According to Strategic Types Different strategies require different types of employees. Cost strategy firms seek efficiency, carefully define needed employee skills and use worker participation to seek cost-saving ideas. Differentiation firms need creative risk takers. Different strategies require different types of employees. Role Behaviors are the behaviors required of an individual in his or her role as a jobholder in a social work environment. Cost strategy firms seek efficiency and therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas. Differentiation firms need creative risk takers. 16

Strategic Decisions and their Implications for HRM IMPLICATIONS FOR HR MANAGEMENT Add new types of equipment Training Grow through acquisition Selection (from acquired firm) Training Compensation Outplacement (redundant workers) Take on additional debt to prevent takeover Compensation (reduced) Outplacement

Strategic Decisions and their Implications for HRM IMPLICATIONS FOR HR MANAGEMENT Market products internationally Selection Training Compensation Transfer Recruitment Selection Training Seek new location for manufacturing plant Pursue low-cost competitive strategy Compensation (incentives) Labor relations (agreement) Training

Questions Used to Determine If Human Resources Are Playing a Strategic Role in the Business 1. What is HR doing to provide value-added services to internal clients? 2. What can the HR department add to the bottom line? 3. How are you measuring the effectiveness of HR? 4. How can we reinvest in employees? 5. What HR strategy will we use to get the business from point A to point B? 6. What makes an employee want to stay at our company? 7. How are we going to invest in HR so that we have a better HR department than our competitors? 8. From an HR perspective, what should we be doing to improve our marketplace position? 9. What’s the best change we can make to prepare for the future? Table 1.2 provides several 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 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. HRM practices are directly related to companies’ success in meeting competitive challenges. Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-19