Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-1 Human Resource Management 11 th Edition Chapter 1 STRATEGIC HUMAN RESOURCE MANAGEMENT: AN OVERVIEW

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-2 Employer Branding Firm’s corporate image or culture Embodies values and standards that guide people’s behavior People know what company stands for, people it hires, fit between jobs and people, and results it recognizes and rewards Important in getting highest quality applicants to join firm

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-3 Employer’s Culture Is Known for Such Things As It’s fun to work at this company We have a passionate and intelligent culture There is a strong team feeling here It’s a great place to work Hopefully it will NOT be: We hate it here

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-4 External Evidence of a Great Brand Fortune magazine Best Companies to Work For Working Mother list of 100 best companies Fortune magazine list of 100 fastest-growing companies in the United States Money magazine list of 100 best places to live Business Ethics magazine list of 100 Best Corporate Citizens BusinessWeek list of 100 best small companies Computerworld list of Best Places to Work Black Enterprise list of Best Companies for Diversity

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-5 Human Resource Management Utilization of individuals to achieve organizational objectives All managers at every level must concern themselves with human resource management Five functions

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall Human Resource Management Human Resource Development Compensation Staffing Employee and Labor Relations Safety and Health Human Resource Management Functions

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-7 Staffing Job Analysis Human Resource Planning Recruitment Selection

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-8 Staffing (Cont.) Staffing - Process through which organization ensures it always has proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectives Job analysis - Systematic process of determining skills, duties, and knowledge required for performing jobs in organization

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-9 Staffing (Cont.) Human resource planning - Systematic process of matching internal and external supply of people with job openings anticipated in the organization over specified period of time Recruitment - Process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications, to apply for jobs with an organization

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-10 Staffing (Cont.) Selection - Process of choosing from a group of applicants the individual best suited for a particular position and the organization

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-11 Measuring Quality of Hire in Today’s Environment How do you measure quality of hire and set standards for new-hire performance? Quality of hire is stressed these days Developers of automatic tracking systems are actively involved in trying to come up with the answer to the question of “quality of hires” In a few years, some standards will emerge on how you measure and represent your talent management

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-12 Human Resource Development Training Development Career Planning Career Development Organizational Development Performance Management Performance Appraisal

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-13 Human Resource Development (Cont.) Training - Designed to provide learners with knowledge and skills needed for their present jobs Development - Involves learning that goes beyond today's job; more long-term focus Career planning - Ongoing process whereby individual sets career goals and identifies means to achieve them

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-14 Human Resource Development (Cont.) Career development - Formal approach used by organization to ensure that people with proper qualifications and experiences are available when needed Organization development - Planned and systematic attempts to change the organization, typically to a more behavioral environment

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-15 Human Resource Development (Cont.) Performance management - Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and ultimately, the organization Performance appraisal - Formal system of review and evaluation of individual or team task performance

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-16 Compensation Compensation - All rewards that individuals receive as a result of their employment

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-17 Compensation Direct Financial Compensation - Pay that person receives in form of wages, salaries, bonuses, and commissions Indirect Financial Compensation (Benefits) - All financial rewards not included in direct compensation such as paid vacations, sick leave, holidays, and medical insurance Nonfinancial Compensation - Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-18 Safety and Health Employees who work in safe environment and enjoy good health are more likely to be productive and yield long-term benefits to organization.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-19 Safety and Health Safety - Involves protecting employees from injuries caused by work-related accidents Health - Refers to employees' freedom from illness and their general physical and mental well being

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-20 Employee and Labor Relations In 2007: Number of workers belonging to a union rose by 311,000 to 15.7 million Union membership rate for public sector workers was 35.9 percent Union membership rate for private workforce was 7.5 percent

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-21 Employee and Labor Relations (Cont.) Business is required by law to recognize union and bargain with it in good faith if firm’s employees want union to represent them Human resource activity is often referred to as industrial relations Most firms today would rather have union-free environment

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-22 Human Resource Research Human resource research is not separate function. It pervades all HR functional areas.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-23 Interrelationships of HRM Functions All HRM functions are interrelated Each function affects other areas

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-24 Dynamic Human Resource Management Environment

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-25 Environment of Human Resource Management EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT 1 Human Resource Management Other Functional Areas OperationsMarketing Finance Legal Considerations Economy Technology Society Shareholders Unions Customers CompetitionLabor Market Human Resource Development Compensation Staffing Employee and Labor Relations Safety and Health Unanticipated Events

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-26 Labor Market Potential employees located within geographic area from which employees are recruited Always changing

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-27 Legal Considerations Federal, state and local legislation Court decisions Presidential executive orders

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-28 Society No longer content to accept, without question, the actions of business Ethics - Discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation Corporate social responsibility - Implied, enforced or felt obligation of managers to serve or protect interests of groups other than themselves

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-29 Unions Group of employees who have joined together for purpose of dealing collectively with their employer Becomes a third party when dealing with the company

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-30 Shareholders Owners of corporation Because they have invested money in firm, they may at times challenge programs considered by management to be beneficial to organization

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-31 Competition Firms may face intense competition in both their product or service and labor markets Must maintain a supply of competent employees Bidding war often results

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-32 Customers People who actually use firm’s goods and services Management has task of ensuring its employment practices do not antagonize members of market it serves Workforce should be capable of providing top- quality goods and services

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-33 Technology The world has never before seen technological changes occur as rapidly as they are today. Created new roles for HR professionals Additional pressures on them to keep abreast of technology In 2008 survey of CEOs worldwide, 83% ranked change as most important issue confronting their organization

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-34 Cyberwork Possibility of never-ending workday BlackBerrys, cell phones, text messaging, and create endless possibilities for communication Some workers believe their employer wants them available 24/7

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-35 Economy In general, when economy is booming, it is often more difficult to recruit qualified workers. When a downturn is experienced, more applicants are typically available.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-36 Unanticipated Events Occurrences in external environment that could not be foreseen Every disaster, whether manmade or by nature, requires a tremendous amount of adjustment with regard to human resource management

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-37 HR’s Changing Role: Questions That Are Being Asked Can some HR tasks be performed more efficiently by line managers or outside vendors? Can some HR tasks be centralized or eliminated altogether? Can technology perform tasks that were previously done by HR personnel? Many HR departments continue to get smaller.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-38 HR’s Changing Role: Who Performs Human Resource Management Tasks? Human Resource Managers HR Outsourcing HR Shared Service Centers Professional Employer Organization (Employee Leasing) Line Managers

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-39 Human Resource Manager Historically, the human resource manager was responsible for each of the five HR functions Acts in advisory or staff capacity Works with other managers to help them deal with human resource matters Today HR departments continue to get smaller because others are accomplishing certain functions

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-40 HR Outsourcing Transfers responsibility to an external provider Market for HR outsourcing is growing dramatically

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-41 Ways HR Outsourcing is Done Discrete services Multi-process services Total HR outsourcing

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-42 Discrete Services One element of business process or single set of high-volume repetitive functions is outsourced to a third- party Large majority of companies outsource transactional HR activities, such as 401(k) administration

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-43 Multi-Process Services Complete outsourcing of one or more human resource processes Example: Procter & Gamble outsources entire training operations

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-44 Total HR Outsourcing Transfer majority of HR services to third party Example: Whirlpool Corporation signed 10-year deal to outsource HR business processes for 68,000 employees to Convergys Corporation Total outsourcing is difficult to accomplish

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-45 HR Shared Service Centers (SSCS) Takes routine, transaction-based activities that are dispersed and consolidates them in one location

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-46 Professional Employer Organization (Employee Leasing) Company that leases employees to other businesses

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-47 Professional Employer Organization (Cont.) Company releases its employees who are then hired by PEO PEO pays the employees PEO is employees’ legal employer and has rights to hire, fire, discipline, and reassign an employee Charges a fee of from 2-7% of the customer’s gross wages

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-48 Advantages of PEO’s Often enjoy economies of scale that permit them to offer wider selection of benefits at considerably lower costs Workers frequently have greater opportunities for job mobility If client organization suffers a downturn, the leasing company offers job security PEO can handle compliance requirements of programs such as 401(k) programs

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-49 Line Managers Performing HR Tasks Involved with human resources by nature of their jobs Line managers are now performing some duties typically done by HR

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-50 HR as a Strategic Partner HR executives must understand complex organizational design Sharp deviation from what has traditionally been an administrative-type role for HR

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-51 Strategic Activities CEOs Want from HR Make workforce strategies integral to company strategies and goals Leverage HR’s role in major change initiatives Earn the right to a seat at the corporate table Understand finance and profits Help line managers achieve their goals

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-52 Strategic Activities CEOs Want from HR (Cont.) HR professionals must integrate goals of HR with goals of the organization Must focus on expanding its strategic and high-level corporate participation with an emphasis on adding value HR must demonstrate that it can produce a return on investment for its programs

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-53 Questions to Be Answered to Determine if HR Is Involved Strategically Is HR present at mergers and acquisitions planning meetings, strategy reviews, and restructuring discussions? Does HR provide an annual report on its ROI? Does HR lead the people strategy? Has it developed performance indicators for the success of that strategy?

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-54 Questions to Be Answered to Determine if HR Is Involved Strategically (Cont.) Is HR rated by its customers? Does the organization conduct strategic versus entitlement employee surveys? Are employee and other survey initiatives linked to customer and financial metrics? Is there an ROI process to evaluate HR initiatives connected to the business strategy?

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-55 Strategic HR Audit If HR professionals are to achieve the level of respect they desire, they must be subjected to the audit process Auditors should document if HR activities are being accomplished in an optimum manner

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-56 Human Capital Metrics Measures of HR performance

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-57 Examples of HR Metrics Time to fill open positions HR headcount ratios Administrative cost per employee Turnover cost Training return on investment Quality of hire

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-58 HR Scorecard Report card of effectiveness of specific person Metrics that will best suit each company depend on variety of factors

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-59 Human Resource Designations

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-60 Human Resource Executives, Generalists, and Specialists Vice President, Human Resources Vice President, Industrial Relations Manager, Compensation Manager, Staffing Manager, Training and Development Benefits Analyst Executive: Generalist: Specialist:

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-61 Characteristics of an HR Executive Performs one or more HR functions A top-level manager Reports directly to CEO or head of major division

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-62 Characteristics of an HR Generalist Often an executive Performs tasks in various HR- related areas Involved in several, or all, of the five HRM functions

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-63 Characteristics of an HR Specialist May be an HR executive, manager, or non-manager Typically concerned with only one of the five functional areas

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-64 Evolution Of Human Resource Management

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-65 Traditional Human Resource Function in Large Firm Separate sections were often created Placed under an HR Manager Each HR function may have a supervisor & staff HR Manager works closely with top management in formulating policy

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-66 Traditional Human Resource Functions in a Large Firm President and CEO Vice President, Marketing Vice President, Operations Vice President, Finance Vice President, Human Resources Manager, Training and Development Manager, Compensation Manager, Staffing Manager, Safety and Health Manager, Labor Relations

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-67 Evolution of Human Resource Management First edition text was titled Personnel: The Management of Human Resources, and focus was more on personnel as staff or advisory function Title has changed to Human Resource Management with more general management focus

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-68 Other Name Changes Personnel Administrator changed its name to HR Magazine Personnel to HR Focus Personnel Journal to Workforce Management Today, the people who perform HR tasks are certainly different than they were even a decade ago

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-69 The Evolving HR Organization HR Outsourcing HR Shared Service Centers Professional Employer Organization Line Manager Evolve to make HR more strategic

A Possible Evolving HR Organization Example President and CEO Vice President, Operations Vice President, Strategic Human Resources Vice President, Finance Director of Safety and Health Training & Development (Outsourced) Compensation (Shared Service Centers) Staffing (Line Managers, Use of Applicant Tracking Systems) Vice President, Marketing 1-70