Building Human Capital OS352 HRM Fisher August 28, 2003

Agenda SAP update Review goals of HRM Why manage human resources? Linking HRM and strategy

SAP update Everyone will be getting new log-on information Maintenance being done this week System will be available starting Monday Self-study materials will be available on my website Tutorial next week Form your groups for Exercise 1 accordingly!

Goals of HRM Ensure the organization has the workforce required to create products/services Establish and administer personnel policies Ensure compliance with labor laws

Strategy and human capital Overall, strategy involves developing and sustaining a competitive advantage Source of value Rare Difficult to copy Highly skilled, motivated employees can meet these resource characteristics Human capital

Developing human capital How do each of these systems contribute to the development of human capital? Recruitment Selection Training Performance management Compensation Retention is key

Human Resource Strategy A firm’s deliberate use of human resources to help it gain or maintain an edge against its competitors in the marketplace.

HR can respond to strategy… Three general business strategies Operational excellence Product leadership Customer intimacy How would HR respond to each strategy? Based on Beatty, R.W., Huselid, M.A., & Schneier, C.E. (2003). New HR Metrics: Scoring on the Business Scorecard. Organizational Dynamics, 32, 107-121.

….or inform strategy Organization’s internal strengths and weaknesses often inform strategic decisions Identify areas of competitive advantage Core skill areas Corporate culture Labor/management relations Use those to inform strategic decisions

HR responds to external forces Labor market demands Competitors’ actions Regulatory environment Industry best practices

But must also consider internal factors Best practices may not be effective due to characteristics of the organization Industry Size History Culture Need to tailor HR activities HR activities must be aligned

Measuring Outcomes How do we know if the HR function is operating effectively? What kinds of outcomes could we measure?

For next class Read Noe pages 49-55, 527-531 How is IT affecting HR? Enterprise resource planning systems (such as SAP) Other types of technology