2. Human Resource Management and the Environment1
Human Resource Management and the Environment
McGraw-Hill/Irwin
Human Resource Management, 10/e
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. Objectives Define the term human resource management.
Describe the strategic importance of human resource management (HRM) activities.
Explain what career opportunities are available in the HRM field.
Discuss the role that specialists and operating managers play in performing HRM activities.
List the main objectives pursued by HRM units.

4. Introduction
Human resource management (HRM) is the effective management of people at work
The goal: make workers more satisfied and productive
When an organization is concerned about people, its total philosophy, culture, and orientation reflect it
Every manager must be concerned with people, whether or not there is a human resources department

5. Introduction HRM consists of numerous activities:
Equal employment opportunity (EEO) compliance
Job analysis
Human resource planning
Recruitment, selection, motivation, and orientation
Performance evaluation and compensation
Training and development
Labor relations
Safety, health, and wellness

6. Introduction The HRM unit is oriented toward: Action People
Global enterprise
The future

7. A Brief History of HRM
HRM can be traced to England, where craftspeople organized guilds
They used unity to improve working conditions
The Industrial Revolution in the 18th century laid the basis for a new, complex industrial society
Changing work conditions, social patterns, and labor created a gap between workers and owners
During the world wars era, scientific management, welfare work, and industrial psychology merged

8. A Brief History of HRM
Frederick W. Taylor, the father of scientific management, summarized scientific management as:
Science
Harmony
Cooperation
Maximum output
Industrial psychology, initiated in 1913, focused on:
The worker
Individual differences
The maximum well being of the worker

9. A Brief History of HRM
Personnel departments were created to deal with:
Drastic changes in technology
Organizational growth
The rise of unions
Government intervention concerning working people
Around the 1920s, more organizations noticed and acted on employee-management conflict

10. A Brief History of HRM The Hawthorne studies (1924 to 1933):
Were to determine the effects of illumination on workers and their output
Rather, it pointed out the importance of social interaction on output and satisfaction
Until the 1960s, the personnel function was concerned only with blue-collar employees
File clerk, house-keeper, social worker, firefighter, and union trouble defuser

11. Strategic Importance of HRM
Today, HRM plays a major role in:
Clarifying the firm’s human resource problems
Developing solutions for them
It is oriented toward:
Action
The individual
Worldwide interdependence
The future

12. Strategic Importance of HRM
Strategic HRM differs significantly from traditional HRM
In traditional arrangements, responsibility for managing human resources lies with different specialists in each department or division
In a strategic approach, people management rests with an individual who is in direct contact with workers or line managers

13. Strategic Importance of HRM
Investment in human assets
Cost centers
Accountability
Developing people
Following the rules
Major emphasis
Open, participative, empowerment
Bureaucratic, top-down, centralization
Culture
Flexible, based on human resources
Rules, policies, position power
Control
Short, intermediate, long term
Short-term results
Time focus
Lead, inspire, understand
Respond to needs
Role of HRM area
Improved understanding and use of human assets
Better performance
Objective
Line managers
Specialists
Responsibility for human resources
Strategic HRM
Traditional HRM
Item

14. Strategic Importance of HRM
For years, the HRM function was not linked to corporate profit
Organizations focused only on current performance
HR managers did not have a strategic perspective
Executives categorized HRM in a traditional manner
It was difficult to develop metrics for HRM activities
Recognition of the importance of people made HRM a major player in developing strategic plans
HRM strategies must reflect the organization’s strategy regarding people, profit, and effectiveness

15. Strategic Importance of HRM
Key concepts that must be applied:
Analyze and solve problems from a profit-oriented point of view
Assess and interpret costs and benefits of HRM issues
Planning models must include realistic, challenging, specific, and meaningful goals
Prepare reports on HRM solutions to problems encountered by the firm

16. Strategic Importance of HRM
Key concepts that must be applied (continued):
Train the human resources staff
Emphasize the strategic importance of HRM
Show managers that they contribute to the goals/mission of the firm
The actions, language, and performance of the HRM function must be:
Measured
Precisely communicated
Evaluated

17. Strategic Importance of HRM
The era of HRM accountability resulted from:
Concerns about productivity
Organizational downsizing and redesign
An increasingly diverse workforce
The need to effectively use all organizational resources to compete in an increasingly complex and competitive world

18. Strategic Importance of HRM
For the HRM function to be successful, managers in other functions must be knowledgeable and involved
Managers play a major role in setting the direction, tone, and effectiveness of the relationship between:
The employees
The firm
The work performed
Without managerial participation, there are likely to be major human resource problems

19. HRM and Organizational Effectiveness
For a firm to survive and prosper, reasonable goals must be achieved in:
Performance
Legal compliance
Employee satisfaction
Absenteeism
Turnover
Training effectiveness and ROI
Grievance rates
Accident rates

20. HRM and Organizational Effectiveness
Effectiveness is measured by the balance of such complimentary characteristics as:
Reaching goals
Employing the skills/abilities of employees efficiently
Ensuring the influx and retention of well-trained, motivated employees
Three elements needed for firms to be effective:
Mission and strategy
Organizational structure
HRM

21. HRM and Organizational Effectiveness
It is important to remember that the people who do the work and create the ideas allow the organization to survive

22. HRM and Organizational Effectiveness
Changes experienced by organizations:
Growing global competition
Rapidly expanding technologies
Increased demand for individual, team, and organizational competencies
Faster cycle times
Increasing legal and compliance scrutiny
Higher customer expectations
The mechanized, routine-oriented workforce is giving way to a knowledge-based workforce

23. HRM and Organizational Effectiveness
Top management has trouble making strategic planning decisions regarding people
All other resources are evaluated in terms of money
Implementing high performance management practices results in:
Profitability gains
Stock price increases
Higher company survival rates

24. Objectives of the HRM Function
HRM contributions to organizational effectiveness:
Helping the organization reach its goals
Employing workforce skills and abilities efficiently
Increasing job satisfaction, self-actualization, and quality of work life

25. Objectives of the HRM Function
HRM contributions to organizational effectiveness (continued):
Communicating HRM policies to all employees
Maintaining ethical policies and socially responsible behavior
Managing change to the mutual advantage of individuals, groups, the enterprise, and the public

26. Objectives of the HRM Function
Increasing employees’ job satisfaction and self- actualization
Employees must feel that the job is right for their abilities and that they are being treated equitably
Satisfied employees are not automatically more productive
However, unsatisfied employees tend to be absent and quit more often and produce lower-quality work
Both satisfied and dissatisfied employees can perform equally in quantitative terms

27. Objectives of the HRM Function
Quality of work life (QWL) is a general concept that refers to several aspects of the job, including:
Management and supervisory style
Freedom and autonomy to make decisions on the job
Satisfactory physical surroundings
Job safety
Satisfactory working hours
Meaningful tasks
The job and work environment should be structured to meet as many workers’ needs as possible

28. Objectives of the HRM Function
Communicating HRM policies to all employees:
HRM policies, programs, and procedures must be communicated fully and effectively
They must be represented to outsiders
Top-level managers must understand what HRM can offer

29. Objectives of the HRM Function
Maintaining ethical policies and socially responsible behavior:
HRM managers must show by example that HRM activities are fair, truthful, and honorable
People must not be discriminated against
Their basic rights must be protected
These principles should apply to all activities in the HRM area

30. Objectives of the HRM Function
Trends that strain employer-employee relationships:
Telecommuting
Outsourcing HRM
Family medical leave
Child care
Spouse-relocation assistance
Pay for skills
Benefit cost-sharing
Union-management negotiation
These changes are due to the emergence of new lifestyles and an aging population

31. Objectives of the HRM Function
Managing increased urgency and faster cycle times:
Firms are placing a growing emphasis on:
Increasing customer service
Developing new products and services
Training and educating technicians, managers, and decision makers

32. Objectives of the HRM Function
Shorter cycle times mean less time to:
Train, educate, and assign managers
Solve sexual harassment complaints
Recruit and select talented people
Improve the firm’s image
Learning provides a framework for decreasing cycle time

33. Objectives of the HRM Function
Faster, more urgent management behaviors have been caused by:
Foreign and domestic competition
Technological changes
The emergence of new opportunities
Pressure to increase learning and reduce cycle time, while also reducing cost, is a competitive reality
HRM activities must be in sync with the firm’s environment

34. Who Performs HRM Activities
Two groups normally perform HRM activities:
HR manager-specialists
Operating managers
The effectiveness of the human resource declines more quickly than all other resources
An investment in people effects organizational effectiveness more than money, materials, or equipment

35. Who Performs HRM Activities
A large part of an operating manager’s day is spent:
In scheduled and unscheduled meetings
In telephone conversations
Solving problems that have a direct impact on people
In smaller organizations, the operating manager has such HRM responsibilities as:
Scheduling work
Recruitment and selection
Compensating people

36. Who Performs HRM Activities
As the organization grows, the operating manager’s HR work may be shifted to HRM specialists
HR specialists are found in organizations with to 150 employees
A HR department is typically created when the number of employees reaches 200 to 500

37. Outsourcing
Outsourcing HRM activities is growing in popularity because of:
Downsizing
Rapid growth or decline of business
Globalization
Increased competition
Restructuring

38. Outsourcing Some executives assume that outsourcing can: Reduce costs
Improve flexibility
Permit the hiring of specialized expertise
The choice to outsource HRM activities is being made with little empirical support

39. Interaction of Operating & HR Managers
With both operating managers and HR specialists making HRM decisions, there can be conflict
They have different orientations and objectives
Conflict is worse if joint decisions must be made on:
Discipline
Physical working conditions
Termination
Transfer
Promotion
Employment planning

40. Interaction of Operating & HR Managers
Operating managers and HR specialists can also differ on:
How much authority employees have over job design
Labor relations
Organizational planning
Rewards, such as bonuses and promotions

41. Interaction of Operating & HR Managers
The roles of HRM and operating managers have been impacted by:
Sweeping changes in business
Globalization
Technology
Demography
People don’t leave companies, they leave managers
HRM can help managers do a better job

42. Interaction of Operating & HR Managers
HRM is often seen as a company policeman
It is also seen as inflexible and over-attentive to detail
HRM specialists are encouraged to:
Analyze every activity and prove its added value
Understand the business
Become a strategic partner with line managers
Seek out operating managers
Help managers avoid problems
Be flexible and open to the ideas of others

43. Necessary HRM Competencies
Record keeping
Training/development
Accounting/finance
Employment law
Benefit design
Recruiting/staffing
Compensation design
Leadership
Forecasting
Problem solving
Technology
Communication

44. HRM’s Place in Management
The HR department must be a proactive, integral part of management and strategic planning
Ascertain specific organizational needs for the use of its competence
Evaluate the use and satisfaction among other departments
Educate management and employees about the availability and use of HRM services
HRM strategic plans must build on the firm's strengths

45. HRM’s Place in Management
To develop a competitive advantage over other firms:
Organizations must create value in a way that is rare and difficult for competitors to imitate
These things must become so important and effective that every unit in the firm knows they are needed for success:
The compensation system
Training opportunities
Diversity management programs

46. HRM’s Place in Management
HR executives must educate other departments about the human resource implications of decisions
This requires being familiar with other aspects of the organization, including:
Investments
Advertising
Marketing
Production control
Computer utilization
Research and development

47. HR Department Operations
Most organizations keep HR units small
About 150 people maximum
The number of HR specialists to operating employees (personnel ratio) varies by industry:
The national average is 1 specialist to 100 employees
Construction, agriculture, retail, wholesale, and services have fewer specialists than average
Public utilities, durable goods manufacturing, banking, insurance, and government have an above-average ratio

48. HRM Strategy
A firm's HRM strategy integrates major objectives, policies, and procedures into a cohesive whole
A well-formulated HRM strategy aggregates and allocates a firm's resources on the basis of:
The organization’s internal strengths and weaknesses
Changes in the environment
The anticipated actions of competitors

49. Clarifying Meaningful HRM Objectives
The objectives of an organization or department are the goals it seeks to achieve
Most objectives are stated in very general terms, from which more specific statements are developed
These plans are called policies and procedures or rules

50. Clarifying Meaningful HRM Objectives
Strategy: The plan that integrates major objectives
More specific
Objectives: Goals that are specific and measurable
More specific
Policies: Guides to decision making
More specific
Procedures/Rules: Specific directions for decision making

51. HRM Policy
A policy is a general guide that expresses limits within which action should occur
Policies arise from past or potential problems
They free managers from making certain decisions
They ensure some consistency in behavior
They allow managers to concentrate on decisions in which they have the most experience and knowledge
For some organizations, the next step is to develop procedures and rules

52. HRM Procedures Procedures (rules) are a specific direction to action
In large organizations, procedures are collected and put into manuals called standard operating procedures (SOPs)
Organizations must ensure that consistent decision making flows from a well-developed, but not excessive, set of policies and procedures
Procedures should be developed for only the most vital areas

53. Organization of an HR Department
In most organizations, the chief HR executive reports to the top manager
In medium- and small-sized organizations, HRM and another function may be in a single department
In nonprofit organizations, HRM is typically a unit in the business office
HR specialists are usually located at the headquarters of an organization