Creating Value through Human Resources Chapter 1

Learning Objectives After reading this chapter you should be able to: Describe organizational success and the role of human resource management from the organizational life cycle and stakeholder perspectives.   List the core functions of human resource management. Explain what human resource professionals do to help create successful organizations.

Learning Objectives Identify important labor trends that are affecting organizations and their human resource practices.   Explain how effective human resource management requires a combination of strategic and functional perspectives.

What is Human Resources and Why learn about HR? Human resource management focuses on the people side of the organization. Why learn about Human Resource Management? One reason, it that studies have shown that organizations with strong human resources practices create more satisfied employees, who in turn work harder to satisfy customers. This translates into giving the organization a competitive advantage- simply put HR can affect an organizations bottom line. Human resource management focuses on people in organizations. People are a major component of any organization, so it follows that organizations with more productive employees tend to be more successful. Employee productivity increases when organizations hire and motivate employees effectively. Good human resource practices create more satisfied employees, who in turn work harder to satisfy customers. Thus giving the organization a competitive advantage. [i]

Why learn about Human Resource? Human resource skills are useful not only for the individual aspiring to be a human resource professionals but for everyone who has responsibility for leading and managing others in the organization. Human resource skills will help you hire, manage, and motivate employees more effectively. These skill are universal and can be applied to any organization. Human resource skills are useful not only to human resource professionals but also to everyone who has responsibility for leading and managing others. Even if you don’t plan to work either as a human resource specialist or as a manager, learning the concepts of human resource management will help you to understand why the place where you work do much of what they do.

Does effective HR increase Organizational Success? Yes, Studies have shown that organizations are more successful when they have good human resource practices. The workforce is more stable-fewer people leave the organization, employee satisfaction is high and they feel empowered in their work. The goal of human resource management is, of course, to make organizations more effective. A starting point for learning about the field of human resource management is to explore the concept of organizational success. We know that some organizations are more successful than others. Can differences in human resource management explain why?

How is Organizational Success Determined? The textbook views Organizational Success through two perspectives: Success at various stages of the Life Cycle. Success from the Stakeholder viewpoint. Before you start this slide present this scenario to your students. Think about success for you as an individual. Being successful now doesn’t guarantee you will be successful in ten years. Having just enough money to buy pizza and books may equal success when you are 20. But probably that isn’t enough when you are 30. Similarly, the life cycle approach to organizational success suggests that measures of effectiveness change as an organization grows. At the heart of this model of success is the organizational life cycle, a series of stages through which an organization moves during its lifetime.

HR and the Life Cycle of the Organization The organizational life cycle, is a series of stages through which an organization moves during its lifetime. The stages of growth begin when the organization is founded and end when it ceases to exist. The four common stages in the organizational life cycle: the entrepreneurial stage, the communal stage, the formalization stage, and the elaboration stage Stages of growth begin when the organization is founded and end when it ceases to exist. Since goals and objectives change as the organization moves from stage to stage, the nature and meaning of success also change. The four common stages in the organizational life cycle: the entrepreneurial stage, the communal stage, the formalization stage, and the elaboration stage.

Human Resources across the Organizational Life Cycle

Success from Stakeholder Perspectives The second view of organizational success is from the stakeholders view point. Stakeholders are defined as individuals or groups of people who can affect or who are affected by an organization. But this definition presents a problem can anyone tell what it is? It is vary broad and could include almost anyone. Primary stakeholders are employees, customers, and owners (shareholders). Stakeholders are defined as individuals or groups of people who can affect or who are affected by an organization . Research suggests that employees, customers, and owners (shareholders) are the primary stakeholders. Their participation is crucial for the survival of the organization. Society as a collective group is also seen by many as an important stakeholder.

Stakeholder Groups - Employees Employees make up an important group of stakeholders. They complete tasks to make goods and services, an influence the organization’s ability to achieve its objectives. Human resources department plays a major role in ensuring that the organization complies with employment and safety laws, help design work tasks and programs which reduce turnover. Employees make up an important group of stakeholders. Because employees complete tasks to make goods and services, they obviously influence the organization’s ability to achieve its objectives. Their lives are also obviously influenced by the organization. Meeting the needs of employees is a critical component of organizational success. Many human resource practices protect the interests of employees. For instance, the human resource department often plays a major role in ensuring that the organization complies with employment and safety laws. A number of these laws are designed to make sure the organization treats employees fairly. Helping design work tasks to make them more enjoyable is another way human resource management makes life better for employees. Good human resource practices reduce employee turnover, which happens when employees quit and take jobs elsewhere. Low turnover is a strong sign that employees’ needs are being met. People are less likely to look for new work opportunities when they are satisfied with their current jobs.

Stakeholder Groups - Customers Research supports the notion that good human resource management improves customer satisfaction, largely through customers’ interactions with employees. This can be seen in the following ways: Employees tend to treat customers the same way they believe managers treat them. Employees who feel the organization values them and treats them with respect, reproduce these good attitudes and behaviors in their interactions with customers. Employees who feel management doesn’t care about them, are less likely to be positive and helpful to customers. Research evidence strongly supports the notion that good human resource management improves customer satisfaction, largely through customers’ interactions with employees. Employees tend to treat customers the same way they believe managers treat them. If employees feel the organization values them and treats them with respect, they reproduce these good attitudes and behaviors in their interactions with customers. If employees believe management doesn’t care about them, they are less likely to be positive and helpful to customers. Human resource practices that demonstrate care and concern for employees thus translate into increased customer satisfaction. Hiring and keeping skilled employees can also improve customer satisfaction.

Stakeholder Groups – Owners (shareholders) Owners’ chief concern is the organization’s profits, and the extent to which the organization returns profits. Research show organizations where employees who have better skills, are well paid, and feel their jobs are secure have higher individual performance, which translates into desirable improvements like growth in sales. Owners influence organizations by determining who leads and makes decisions. Owners’ chief concern is the organization’s profits, and the extent to which the organization returns profits and provides owners with money influences them in many ways. Organizations are more profitable when they assure high levels of employee skill by properly designing jobs, carefully selecting employees, and providing useful training. Effective practices also motivate employees by carefully measuring performance, making fair promotion decisions, and linking pay to performance. Employees who have better skills, are well paid, and feel their jobs are secure have higher individual performance, which translates into desirable improvements like growth in sales.

Stakeholder Groups-Society Organizations affect society through their environmental practices, as well as their support of community charities and other such activities such as United Way activities. Political and social forces can strongly influence organizations-OHSA Organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. Organizations affect society through their environmental practices, as well as their support of community charities and other such activities. On the other hand, various political and social forces can strongly influence organizations. Talk about the effect on the U.S. automobile industry of changes in attitudes toward large automobiles Organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. Effective human resource management within the organization results in other benefits to society. It provides employees with open channels of communication, which can reduce instances of unethical corporate behavior. Skilled and motivated employees also produce goods and services that help make the world a better place.

The Chain of Success

Core Human Resource Functions Ask the question What does HR provide to the organization? See if students can brainstorm some ideas, the one they are probably most familiar with would probably be employment. Then mention that the Society for Human Resource Management (SHRM), the professional organization for HR professionals) has identified six broad functional areas of human resource management (core functions). Bring them up one by one and discuss with students. Strategic management focuses on planning how the organization will produce and market goods and services For the company opening a new plant, human resource data can help determine if employees have the skills needed to carry out the new processes. For the hotel, human resource data can identify training needs that could result from focusing on a different type of customer. Workforce planning and employment consists of designing jobs and then placing people in them. Human resource specialists do everything from placing employment advertisements to conducting interviews to making final selection decision. Human resource development is the function of assuring that employees learn the knowledge, skills, and abilities required for current and future performance. . Surveys and assessments provide information about areas where training might be needed. Individual employees receive performance appraisals and develop individualized plans for improvement. The human resource department also uses assessment information to design formal training and development programs. Compensation and benefits by managing salary and insurance plans. Most human resource departments also take primary responsibility for payroll activities like preparing and distributing paychecks. Administering benefits like health insurance can be quite complicated and usually requires a number of technical contributions from human resource professionals Employee and labor relations. In organizations whose employees are represented by labor unions, much of this function is directed toward working with the unions. The human resource department plays a major role in negotiating terms of union contracts, which define not only pay levels but also work rules and procedures. Human resource specialists also coordinate procedures for filing and resolving employee grievances. When labor unions are not present, the human resource department works directly with managers and employees to ensure fair treatment of workers. Occupational health and safety promotes the physical and mental well being of people in the workplace. Because important laws govern workplace health and safety, carrying out this function requires specialized knowledge of government regulations. Human resource departments often take the lead in developing plans for reducing accidents. They also establish procedures to make sure that employees wear proper safety equipment.

What is the role of the HR Professional? To help other mangers in the organization to; Learn and improve methods for hiring employees, understanding HR law, assessing training needs, and making pay and reward decisions. The emphasis is on helping the managers themselves develop better human resource skills. Acquire the skills and knowledge of their profession. Thus becoming a functional expert to the organization. To fulfill the role of employee advocate. They look out for the interests of employees by advocating issues to management and helping employees who are experiencing problems which might be affecting them at work. Human resource roles involve people and processes. Interactions with people define many of the roles of human resource professionals. Part of the human resource professional role is spending time interacting with employees individually. employees usually contact an organization’s human resource department with questions about retirement benefits, health concerns, and harassment policies. Another part of the human resource role focuses on developing organizational processes aimed at hiring and motivating talented workers. Human resource specialists contribute in these roles through activities such as placing recruiting advertisements, helping develop compensation plans, and creating performance measures.

Human Resource Roles Source: Figure based on information from Dave Ulrich, Human Resource Champions: (Boston: Harvard Business Press, 1997); and Dave Ulrich and Wayne Brockbank, The HR Value Proposition (Boston, Harvard Business Press, 2005).

Typical Job Description of a HR Specialist

HR Competencies

HR Competencies Business Competencies Business Process Reengineering – Lean Six Sigma Change Management Cost-Benefit Analysis Customer Relations Financial Management Marketing Negotiating Organization Awareness (Organization Behavior) Organizational Needs Assessment Project Management Strategic Human Resource Practices coupled with Strategic Planning Talk about the various HR Job Titles and the competencies needed to enter the field Job Titles: Entry Level Titles Human Resources Generalist, Staffing Specialist, Wage and Salary Analyst, Benefits Analyst, Labor Relations Specialist, Employee Development Specialist, and HRIS Specialist

HR Competencies Technical HR Competencies Legal Environment of HR Compensation and Benefits Performance Management Rewards and Recognition including succession planning Staffing and Recruiting Training and Development including career development Discipline and Adverse Action Appeals, Grievances and Litigation

HR Competencies Professional Competencies Coaching and Mentoring Communication Conflict Management Decision-Making Ethics Facilitation Interpersonal Relations Problem-Solving Self and Time Management Teamwork The use of Technology

Current Trends and HR Workforce diversity particularly older workers, women, and members of minorities. Job growth is expected in the fields of health care, education, and human resource management-service sector Globalization will require human resource departments to create processes that effectively manage people working in various foreign countries Discuss how older workers will be staying longer in the workforce or returning to the workforce as part time workers to supplement their retirement income. You may want to ask the question Is it time to retire, retirement?

Labor Force by Age Source: Information from U.S. Department of Labor Bureau of Labor Statistics Web site, http://www.bls.gov/oco/oco2003.htm.

Trends in Occupations Source: Information from U.S. Department of Labor Bureau of Labor Statistics Web site, http://www.bls.gov/oco/oco2003.htm.