1. Human Resource Management: Gaining a Competitive Advantage Chapter 1 Human Resource Management: Gaining a Competitive Advantage Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Learning Objectives Discuss roles and activities of a company’s HRM function Discuss implications of the economy, makeup of the labor force, and ethics for company sustainability Discuss how HRM affects a company’s balanced scorecard Discuss what companies should do to compete in the global marketplace Identify the characteristics of the workforce and how they influence HRM Discuss HRM practices that support high-performance work systems Provide a brief description of HRM practices 1-2

3. Introduction Competitiveness – a company’s ability to maintain and gain market share Human resource management – the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. 1-3

4. Human Resource Management Practices 1-4

5. Responsibilities of HR Departments 1.Employment and Recruiting 2.Training and Development 3.Compensation 4.Benefits 5.Employee Services 6.Employee and Community Relations 7.Personnel Records 8.Health and Safety 9.Strategic Planning 1-5

6. HR as a Business with 3 Product Lines Administrative Services and Transactions Business Partner Services Strategic Partner Human Resources 1-6

7. 6 Competencies for the HR Profession 1-7

8. How is the HRM Function Changing?P9  Time spent on administrative tasks is decreasing. HR roles as a strategic business partner, change agent, and employee advocate are increasing.  HR managers are challenged to shift focus from current operations to future strategies and prepare non-HR managers to develop and implement HR practices.  This shift presents two important challenges: –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. 1-8

9. How is the HRM Function Changing? As part of its strategic role, one of the key contributions that HR can make is to engage in evidence-based HR. Evidence-based HR – demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders.(see P15) 1-9

10. P15 Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeeds 1-10

11. 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? 1-11

12. The HRM Profession P12 HR salaries vary depending on education and experience as well as the type of industry The primary professional organization for HRM is the Society for Human Resource Management (SHRM), P13 1-12

13. 3 Competitive Challenges Influencing HRM Global Sustainability Technology 1-13

14. 1) The Sustainability Challenge Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment. 1-14

15. The Sustainability Challenge P14 Sustainability includes the ability to: provide a return to shareholders provide high-quality products, services and work experiences for employees increase value placed on intangible assets and human capital, (see P19) social responsibility –Adapt to changing characteristics and expectations of the labor force –Address legal and ethical issues –Effectively use new work arrangements 1-15

16. Also, The Sustainability Challenge,P19  The changing structure of the economy  Skill demands for jobs are changing  Knowledge is becoming more valuable –Intangible assets -- human capital, customer capital, social capital, and intellectual capital –Knowledge workers – employees who contribute to the company through a specialized body of knowledge –Empowerment – giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service  Learning organization 1-16

17. The Sustainability Challenge,P22 Changes in Employment Expectations: 1.Psychological Contract (see Book) Expected and provided 1-17

18. Concerns with Employee Engagement Employee engagement - degree to which employees are fully involved in their work and strength of their commitment. 10 Common Themes of Employee Engagement,P23, at least 2 reasons 1Pride in employer 2Satisfaction with employer 3Satisfaction with the job 4Opportunity to perform challenging work 5Recognition and positive feedback from contributions 6Personal support from manager 7Effort above and beyond the minimum 8Understanding the link between one’s job and the company’s mission 9Prospects for future growth with the company 10Intention to stay with the company 1-18

19. The Balanced Scorecard,P27 The balanced scorecard gives managers the opportunity to look at the company from the perspective of internal and external customers, employees and shareholders. Internal=co-workers external=customers 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. 1-19

20. The Balanced Scorecard questions  How do customers see us?  What must we excel at?  Can we continuously improve and create value?  How do we look to shareholders? 1-20

21. Customer Service and Quality  Total Quality Management (TQM),P30  An effort to improve the ways, people, machines and systems accomplish work. 1-21

22. Customer Service and Quality  Total Quality Management (TQM),P30  Core values of TQM include: (3) Methods and processes are designed to meet internal and external customers’ needs. Every employee receives training in quality. Promote cooperation with vendors, suppliers, and customers. Managers measure progress with feedback based on data. Quality is designed into a product or service so that errors are prevented from occurring rather than being detected and corrected. 1-22

23. Customer Service and Quality Emphasis  Malcolm Baldrige National Quality Award  ISO 9000:2000  Six Sigma Process  Lean Thinking 1-23

24. Changing Demographics Workforce Diversity,P36 Internal labor force is the labor force of current employees External labor market includes persons actively seeking employment U.S. workforce is aging rapidly,P34 Increased Workforce Diversity,P36 Influence of Immigration,P36 1-24

25. Managing a Diverse Workforce To successfully manage a diverse workforce, managers must develop a new set of skills including:  Communicate, coach and develop employees from a variety of backgrounds  Provide performance feedback that is based on objective outcomes  Create a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative.  Recognize and respond to generational issues. 1-25

26. Legal and Ethical Issues,P40-41  5 areas of the legal environment that have influenced HRM over the past 25 years: 1.Equal employment opportunity legislation 2.Employee safety and health 3.Employee pay and benefits 4.Employee privacy 5.Job security  Women and minorities still face the “glass ceiling”  Sarbanes-Oxley Act of 2002 1-26

27. Legal and Ethical Issues,P41  Ethics - the fundamental principles by which employees and companies interact  Ethical HR practices:  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 and customers equitably and fairly  Example: workdays(Monday-Sunday), fuxicom? 1-27

28. 4 Principles of Ethical Companies,P41 1.Successful companies, in their relationships with customers, vendors, and clients, emphasize mutual benefits. 2.Employees assume responsibility for the actions of the company. 3.Companies have a sense of purpose or vision the employees value and use in their day-to-day work. 4.They emphasize fairness; another person’s interests count as much as their own. 1-28

29. 2) The Global Challenge  To survive companies must compete in international markets.  Be prepared to deal with the global economy.  Offshoring – exporting jobs from developed countries to less developed countries  Onshoring – exporting jobs to rural parts of the United States, China 1-29

30. 3) Technology Challenge  The overall impact of the Internet  The Internet has created a new business model – e-commerce, conducting business transactions and relationships electronically, examples:  B2B, B2C, B2G and so on (9 business models) 1-30

31. P49 Advances in technology have: –changed how and where we work –resulted in high-performance 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 1-31

32. Advances in technology have increased:  use and availability of Human Resource Information Systems (HRIS)  use and availability of e-HRM  E=electronic 1-32

33.  e-HRM= processing and transmission of digital information, P51  Human resources information systems (HRIS)= computer system used to acquire, store, retrieve, and distribute information related to HR 1-33

34. Meeting Competitive Challenges Through HRM Practices HRM practices that help companies deal with the challenges can be grouped into four dimensions: 1.The HR environment 2.Acquiring and preparing HR 3.Assessment and development of HR 4.Compensating HR 1-34

35. 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. (1)  Customer needs for new products or services influence the number and type of employees businesses need to be successful. (2) 1-35

36. Meeting Competitive Challenges Through HRM Practices  Managers need to ensure that employees have the necessary skills to perform current and future jobs. (3)  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.  Create pay systems, reward employee contributions and provide benefits 1-36

37. Summary  HR has three product lines: administrative services, business partner services, and strategic services.  To successfully manage HR, individuals need personal credibility, business and technology knowledge, understanding of business strategy, and ability to deliver HR services.  HR management practices should be evidence-based.  HR practices are important for helping companies deal with sustainability, globalization, and technology challenges.  HR managers must address global and technology challenges. 1-37