© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1

Gaining a Competitive Advantage  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 Chapter 1 2

 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 Gaining a Competitive Advantage. 3 Chapter 1

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Introduction  Competitiveness refers to a company’s ability to maintain and gain market share in its industry  It is related to company effectiveness  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" 4.

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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 5

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin What Roles Do HR Departments Perform? 6 Administrative Expert Change Agent Strategic Partner Employee Advocate Human Resources

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin How is the HRM Function Changing?  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 7

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The HRM Profession  HR salaries vary depending on education and experience as well as the type of industry  HR specialists  HR generalists  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) 8

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Competitive Challenges Influencing HRM  Three competitive challenges that companies now face will increase the importance of HRM practices: 9 The Global Challenge The Challenge of Sustainability The Technology Challenge

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Sustainability Challenge  Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment  Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeeds  Sustainability includes the ability to:  deal with economic and social changes,  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 10

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Sustainability Challenge  The changing structure of the economy  Impact of September 11, 2001  The competition for labor  Skill demands for jobs are changing  Knowledge is becoming more valuable  Intellectual capital refers to the creativity, productivity, and service provided by employees  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 11

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Sustainability Challenge  A learning organization embraces a culture of lifelong learning, enabling all employees to continually acquire and share knowledge  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 12

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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.  Measures of human resource practices primarily relate to productivity, people, and processes. 13

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Balanced Scorecard Customer Internal Innovation and Learning Financial How do customers see us? What must we excel at? Can we continue to improve and create value? How do we look to shareholders? Time, quality, performance, service, cost. Processes that influence customer satisfaction, availability of information on service and/or manufacturing processes. Improve operating efficiency, launch new products, continuous improvement, empowering of workforce, employee satisfaction. Profitability, growth, shareholder value. 14

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Customer Service and Quality Emphasis  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 15

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Customer Service and Quality Emphasis  Malcolm Baldrige National Quality Award  established in 1987 to promote quality awareness, to recognize quality achievements, and to publicize successful quality strategies.  ISO 9000:2000  quality standards adopted worldwide.  Six Sigma process  system of measuring, analyzing, improving, and controlling processes once they meet quality standards. 16

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Changing Demographics Diversity of the Workforce  Internal labor force is the labor force of current employees.  External labor market includes persons actively seeking employment.  The U.S. workforce is becoming increasingly diverse.  Women  Minorities  Disabled workers  Immigrants 17

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Managing a Diverse Workforce  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.  Creating a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative. 18

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Legal and Ethical Issues  Five main areas of the legal environment have influenced HRM over the past 25 years  Equal employment opportunity legislation  Employee safety and health  Employee pay and benefits  Employee privacy  Job security  Women and minorities still face the “glass ceiling”  The Sarbanes-Oxley Act of 2002 sets strict rules for corporate behavior and sets heavy fines for noncompliance, especially in regards to accounting practices 19

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Legal and Ethical Issues  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 equitably and fairly 20

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Global Challenge  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 U.S.  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.  Many companies are entering international markets by exporting their products overseas, building manufacturing facilities in other countries, entering into alliances with foreign companies, and engaging in e-commerce 21

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Technology Challenge  Technology has reshaped the way we play, plan our lives, and where we work  The overall impact of the Internet  The Internet has created a new business model – e-commerce – in which business transactions and relationships can be conducted electronically 22

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin The Technology Challenge  Advances in technology have:  changed how and where we work,  resulted in high-performance models of 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,  increased the availability of Human Resource Information Systems (HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and distribute HR information,  increased the availability of e-HRM, which is the processing and transmission of digitalized information used in HRM,  increased the competitiveness of high performance work systems. 23

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Meeting Competitive Challenges Through HRM Practices  HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions  The human resource environment  Acquiring and preparing human resources  Assessment and development of human resources  Compensating human resources 24

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 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  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  Human resource management practices of both managers and the human resource function must be aligned and contribute to the company’s strategic goals 25