© 2010 South-Western, a part of Cengage Learning All rights reserved.

Chapter Objectives After studying this chapter, you should be able to Identify how firms gain a sustainable competitive advantage through people. Explain how globalization is influencing human resources management. Describe the impact of information technology on managing people. Identify the importance of change management. Describe HR’s role in developing intellectual capital. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Chapter Objectives (cont’d) After studying this chapter, you should be able to Explain how TQM, Six Sigma, and reengineering affect HR systems. Discuss how cost pressures affect HR policies. Discuss the primary demographic and employee concerns pertaining to HRM. Provide examples of the roles and competencies of today’s HR managers. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Why Study Human Resources Management Human Resources Management (HRM) The process of managing human resources (human capital and intellectual assets) to achieve an organization’s objectives. “Why Study HRM?” Staffing the organization, designing jobs and teams, developing skillful employees, identifying approaches for improving their performance, and rewarding employee successes—all typically labeled HRM issues—are as relevant to line managers as they are to managers in the HR department. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Overall Framework for Human Resources Management FIGURE 1.1 Overall Framework for Human Resources Management © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Competitive Challenges and Human Resources Management The most pressing competitive issues facing firms: Competing, recruiting, and staffing globally Embracing new technology Managing change Managing talent, or human capital Responding to the market Containing costs © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 1: Competing, Recruiting, and Staffing Globally Globalization The trend toward opening up foreign markets to international trade and investment Impact of Globalization “Anything, anytime, anywhere” markets Partnerships with foreign firms Lower trade and tariff barriers NAFTA, EU, APEC trade agreements WTO and GATT © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 1…(cont’d) Corporate Social Responsibility (CSR) The responsibility of the firm to act in the best interests of the people and communities affected by its activities Globalization’s Impact on HRM Different geographies, cultures, laws, and business practices Issues: Identifying capable managers and workers Developing foreign culture and work practice training programs. Adjusting compensation plans for overseas work © 2010 South-Western, a part of Cengage Learning. All rights reserved.

1 A Guide to HR Internet Sites HR professionals can access the following Web sites for current information related to human resources. Codes of Conduct Asia-Pacific Economic Cooperation Forum Business Code of Conduct (http://www.cauxroundtable.org/ APECForumBusinessCodeofConduct.html) Caux Round Table Principles for Business (http://www.cauxroundtable.org/principles.html) Fair Labor Association Workshop Code of Conduct (http://www.fairlabor.org) Global Sullivan Principles (http://www.thegsp.org) ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (http://www.ilo.org) OECD Guidelines for Multinational Enterprises (www.oecd.org/daf/investment/guidelines) OECD, Principles of Corporate Governance (http://www.oecd.org) Rules of Conduct on Extortion and Bribery in International Business Transactions (International Chamber of Commerce, http://www.iccwbo.org) United Nations Universal Declaration of Human Rights (http://www.un.org) © 2010 South-Western, a part of Cengage Learning. All rights reserved.

1 A Guide to HR Internet Sites (cont’d) General AFL-CIO (http://www.aflcio.org/home.htm)—Union news, issue papers, press releases, links to labor sites. American Management Association (http://www.amanet.org/index.htm)—AMA membership, programs, training, and so on. FedWorld (http://www.fedworld.gov)—A gateway to many government Web sites. HR Professional’s Gateway to the Internet (http://www.hrprosgateway.com)—Links to HR-related Web pages. Occupational Safety and Health Resources (http://www.osh.net)—OSHA-related sites, government pages, resources, and so on. Society for Human Resource Management (http://www.shrm.org)—Current events, information, connections, and articles. Telecommuting, Telework, and Alternative Officing (http://www.gilgordon.com)—Telecommuting and flexible hours. Training & Development Resource Center (http://www.thetrainingworld.com)—Job mart, training links, and T&D electronic mailing list links. U.S. Department of Labor (http://www.dol.gov)—Job bank, labor statistics, press releases, grants, and contract information. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 2: Embracing New Technology Knowledge Workers Workers whose responsibilities extend beyond the physical execution of work to include planning, decision making, and problem solving. Knowledge-Based Training Online instruction “Just-in-time” learning via the Internet on company intranets Virtual learning © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Influence of Technology in HRM Human Resources Information System (HRIS) A computerized system that provides current and accurate data for the purposes of control and decision making. Benefits: Automation of routine tasks, lower administrative costs, increased productivity and response times. Self-service access to information and training for managers and employees Online recruiting, screening, and pretesting of applicants Training, tracking, and selecting employees based on their record of skills and abilities Organization-wide alignment of “cascading” goals © 2010 South-Western, a part of Cengage Learning. All rights reserved.

2 Automation of Talent Management Functions © 2010 South-Western, a part of Cengage Learning. All rights reserved.

HRM IT Investment Factors Fit of the application to the firm’s employee base. Ability to upgrade Increased efficiency and time savings Compatibility with current systems Availability of technical support Time required to implement and train staff members to use HRIS Initial and annual maintenance costs Training time required for HR and payroll © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 3: Managing Change Types of Change Reactive change Change that occurs after external forces have already affected performance Proactive change Change initiated to take advantage of targeted opportunities Managing Change through HR Formal change management programs help to keep employees focused on the success of the business. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 3: Managing Change (cont’d) Why Change Efforts Fail: Not establishing a sense of urgency. Not creating a powerful coalition to guide the effort. Lacking leaders who have a vision. Lacking leaders who communicate the vision. Not removing obstacles to the new vision. Not systematically planning for and creating short-term “wins.” Declaring victory too soon. Not anchoring changes in the corporate culture. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 4: Managing Talent, or Human Capital The knowledge, skills, and capabilities of individuals that have economic value to an organization. Valuable because capital: is based on company-specific skills. is gained through long-term experience. can be expanded through development. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 5: Responding to the Market Total Quality Management (TQM) A set of principles and practices whose core ideas include understanding customer needs, doing things right the first time, and striving for continuous improvement. Six Sigma A process used to translate customer needs into a set of optimal tasks that are performed in concert with one another. HR facilitates organizational development of Six Sigma. HR helps balance the opposing needs for order and control with the needs for growth and creativity. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 5: Responding to the Market (cont’d) Reengineering and HRM Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed. Requires that managers create an environment for change. Depends on effective leadership and communication processes. Requires that administrative systems be reviewed and modified. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 6: Containing Costs Downsizing The planned elimination of jobs (“head count”). Layoffs Outsourcing Contracting outside the organization to have work done that formerly was done by internal employees. Offshoring (Global Sourcing) The business practice of sending jobs to other countries. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 6: Containing Costs (cont’d) Hidden Costs of a Layoff Severance and rehiring costs Accrued vacation and sick day payouts Pension and benefit payoffs Potential lawsuits from aggrieved workers Loss of institutional memory and trust in management Lack of staffers when the economy rebounds Survivors who are risk-averse, paranoid, and political © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 6: Containing Costs (cont’d) Benefits of a No-Layoff Policy A fiercely loyal,more productive workforce Higher customer satisfaction Readiness to snap back with the economy A recruiting edge Workers who aren’t afraid to innovate, knowing their jobs are safe. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

FIGURE 1.2 Estimated Number and Types of U.S. Jobs Estimated to Move Offshore between 2010 and 2015 © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Challenge 6: Containing Costs (cont’d) Employee Leasing The process of dismissing employees who are then hired by a leasing company (which handles all HR-related activities) and contracting with that company to lease back the employees. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Productivity Enhancements FIGURE 1.3 Productivity Enhancements © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Demographic and Employee Concerns Demographic Changes More diverse workforce Ethnic and cultural challenges Aging workforce More educated workforce Necessity of basic skills training Managing Diversity Being aware of characteristics common to employees, while also managing employees as individuals © 2010 South-Western, a part of Cengage Learning. All rights reserved.

3 Social Issues in HRM Changing Demographics: The coming decades will bring a more diverse and aging workforce to developed countries such as the United States. This has major implications for all aspects of HRM because it alters traditional experience and expectations regarding the labor pool. Among the issues in this area are: • Globalization • Diversity strategies • Shrinking pool of skilled entry-level workers • Social Security and retirement issues • Rising health care costs for employees • Continual skills development and retraining • Outsourcing, offshoring, and the use of temporary and part-time employees Employer/Employee Rights: This area reflects the shift toward organizations and individuals attempting to define rights, obligations, and responsibilities. Among the issues here are: • Relationship employment versus transactional-based employment • Concern for the privacy of employees • Whistle-blowing • Comparable worth • Employer-employee ethics • Legal compliance • Mandated benefits Attitudes toward Work and Family: Because of the increase of working women as well as employee mobility and a growing concern about family issues, there is demand for recognizing and supporting family-related concerns. Among the issues are: • Day care and elder care • Parental leave • Flextime • Telecommuting • Alternative work schedules • Job sharing • Job rotation © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Composition of U.S. Population FIGURE 1.4 Composition of U.S. Population © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Labor Force and Gender Distributions FIGURE 1.5 Labor Force and Gender Distributions © 2010 South-Western, a part of Cengage Learning. All rights reserved.

FIGURE 1.6 Education Pays © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Model of Diversity Management Strategy FIGURE 1.7 Model of Diversity Management Strategy © 2010 South-Western, a part of Cengage Learning. All rights reserved.

4 Why Diversity? The primary business reasons for diversity management include . . . © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Impact of Cultural Changes Jobs and Organizations Employee Rights Concern for Privacy Attitudes towards Work Balancing Work and Family © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Qualities of HR Managers Responsibilities Advice and counsel Service Policy formulation and implementation Employee advocacy Competencies Business mastery HR mastery Change mastery Personal credibility © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Human Resource Competency Model FIGURE 1.8 Human Resource Competency Model © 2010 South-Western, a part of Cengage Learning. All rights reserved.

Society for Human Resource Management 5 SHRM Code of Ethical and Professional Standards in Human Resource Management Society for Human Resource Management CODE PROVISIONS Professional Responsibility Core Principle As HR professionals, we are responsible for adding value to the organizations we serve and contributing to the ethical success of those organizations. We accept professional responsibility for our individual decisions and actions. We are also advocates for the profession by engaging in activities that enhance its credibility and value. Intent To build respect, credibility and strategic importance for the HR profession within our organizations, the business community, and the communities in which we work. To assist the organizations we serve in achieving their objectives and goals. To inform and educate current and future practitioners, the organizations we serve, and the general • public about principles and practices that help the profession. To positively influence workplace and recruitment practices. To encourage professional decision-making and responsibility. To encourage social responsibility. © 2010 South-Western, a part of Cengage Learning. All rights reserved.

corporate social responsibility downsizing employee leasing globalization human capital human resources information system (HRIS) human resources management (HRM) knowledge workers managing diversity offshoring outsourcing proactive change reactive change reengineering Six Sigma total quality management (TQM) © 2010 South-Western, a part of Cengage Learning. All rights reserved.