Human Resource Management: Gaining a Competitive Advantage Chapter Human Resource Management: Gaining a Competitive Advantage McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc All rights reserved 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 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 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 Human Resource Management Practices 1-4 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 1-5 HR as a Business with Product Lines Business Partner Services Administrative Services and Transactions Strategic Partner Human Resources 1-6 Competencies for the HR Profession 1-7 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 1-8 Questions Used to Determine If Human Resources Are Playing a Strategic Role in the Business What is HR doing to provide value-added services to internal clients? What can the HR department add to the bottom line? How are you measuring the effectiveness of HR? How can we reinvest in employees? What HR strategy will we use to get the business from point A to point B? What makes an employee want to stay at our company? How are we going to invest in HR so that we have a better HR department than our competitors? From an HR perspective, what should we be doing to improve our marketplace position? What’s the best change we can make to prepare for the future? 1-9 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 1-10 Customer Service and Quality Emphasis Malcolm Baldrige National Quality Award ISO 9000:2000 Six Sigma Process Lean Thinking 1-21 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 1-22 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 1-23 Legal and Ethical Issues 5 areas of the legal environment that 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” Sarbanes-Oxley Act of 2002 1-24 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 1-25 Principles of Ethical Companies Successful companies, in their relationships with customers, vendors, and clients, emphasize mutual benefits Employees assume responsibility for the actions of the company Companies have a sense of purpose or vision the employees value and use in their day-to-day work They emphasize fairness; another person’s interests count as much as their own 1-26 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 1-27 Technology Challenge The overall impact of the Internet The Internet has created a new business model – e-commerce, conducting business transactions and relationships electronically 1-28 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 and reporting relationships 1-29 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 1-30 High-Performance Work Systems Work in Teams -Virtual Teams Changes in Skill Requirements Working in Partnerships Changes in Company Structure and Reporting Relationships Increased Use and Availability of e-HRM and Human Resource Information Systems 1-31 Meeting Competitive Challenges Through HRM Practices HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions: The HR environment Acquiring and preparing HR Assessment and development of HR Compensating HR 1-32 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 1-33 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 1-34 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 1-35 [...]... human capital • social responsibility – Adapt to changing characteristics and expectations of the labor force – Address legal and ethical issues – Effectively use new work arrangements 1-14 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... 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) 1-11 3 Competitive Challenges Influencing HRM Technology Sustainability Global 1-12 The Sustainability Challenge • Sustainability refers to the ability of a company to survive and succeed in a dynamic... 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 1-23 Legal and... Challenges Through HRM Practices HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions: 1 2 3 4 The HR environment Acquiring and preparing HR Assessment and development of HR Compensating HR 1-32 Meeting Competitive Challenges Through HRM Practices Managing internal and external environmental factors allows employees to make the greatest possible... Information Systems (HRIS) use and availability of e -HRM competitiveness in high performance work systems 1-30 High-Performance Work Systems Work in Teams -Virtual Teams Changes in Skill Requirements Working in Partnerships Changes in Company Structure and Reporting Relationships Increased Use and Availability of e -HRM and Human Resource Information Systems 1-31 Meeting 4 Competitive Challenges... Ethical Issues 5 areas of the legal environment that have influenced HRM over the past 25 years: 1 2 3 4 5 Equal employment opportunity legislation Employee safety and health Employee pay and benefits Employee privacy Job security Women and minorities still face the “glass ceiling” Sarbanes-Oxley Act of 2002 1-24 Legal and Ethical Issues Ethics - the fundamental principles by which employees and... competitive environment • Stakeholders refers to shareholders, the community, customers, and all other parties that have an interest in seeing that the company succeeds 1-13 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... Understanding the link between one’s job and the company’s mission Prospects for future growth with the company Intention to stay with the company 1-17 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... 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 1-26 The Global Challenge To survive companies must compete in international markets Be prepared to deal with... 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 1-15 The Sustainability Challenge 2 Changes in Employment Expectations: 1 Psychological Contract 2 Alternative Work Arrangements