HRM gaining a competitive advantage noe ch001

• Competitiveness – a company’s ability to maintain and gain market share • Human resource management – the policies, practices, and systems that influence employees’ behavior, attitu

Human Resource Management:

Gaining a Competitive Advantage

Chapter 1

Human Resource Management:

Gaining a Competitive

Advantage

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

• 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

Human Resource Management Practices

Responsibilities of HR Departments

1 Employment and Recruiting

2 Training and Development

HR as a Business with 3 Product Lines

Administrative

Services and

Transactions

Business Partner Services

Strategic Partner Human

Resources

6 Competencies for the HR Profession

How is the HRM Function Changing?

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.

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?

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

The HRM Profession

• 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)

3 Competitive Challenges

Influencing HRM

Global

Sustainability Technology

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

The Sustainability Challenge

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

• social responsibility

– Adapt to changing characteristics and expectations of the labor force

– Address legal and ethical issues

– Effectively use new work arrangements

The Sustainability Challenge

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

The Sustainability Challenge

2 Changes in Employment Expectations:

1 Psychological Contract

2 Alternative Work Arrangements

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

1 Pride in employer

2 Satisfaction with employer

3 Satisfaction with the job

4 Opportunity to perform challenging work

5 Recognition and positive feedback from contributions

6 Personal support from manager

7 Effort above and beyond the minimum

8 Understanding the link between one’s job and the company’s mission

9 Prospects for future growth with the company

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.

The Balanced Scorecard

 How do customers see us?

 What must we excel at?

 Can we continuously improve and

create value?

 How do we look to shareholders?

Customer Service and Quality

Total Quality Management (TQM)

Core values of TQM include:

• 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.

Customer Service and Quality Emphasis

Malcolm Baldrige National Quality Award

ISO 9000:2000

Six Sigma Process

Lean Thinking

Changing Demographics

Workforce Diversity

• Internal labor force is the labor force of

current employees

• External labor market includes persons

actively seeking employment

• U.S workforce is aging rapidly

• Increased Workforce Diversity

• Influence of Immigration

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.

Legal and Ethical Issues

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

Legal and Ethical Issues

 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

4 Principles of Ethical Companies

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.

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

Technology Challenge

 The overall impact of the Internet

 The Internet has created a new

business model – e-commerce,

conducting business transactions and

relationships electronically

The Technology Challenge

• 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

The Technology Challenge

Advances in technology have increased:

 use and availability of Human Resource

Information Systems (HRIS)

 use and availability of e-HRM

 competitiveness in high performance work

systems

High-Performance Work Systems

 Increased Use and Availability of e-HRM and

Human Resource Information Systems.

Meeting 4 Competitive Challenges

Through HRM Practices

HRM practices that help companies deal with the four competitive 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

Meeting Competitive Challenges

Through HRM Practices

Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity

Meeting Competitive Challenges

Through HRM Practices

Managers need to ensure that employees

have the necessary skills to perform current

and future jobs

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

 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