Chapter 1 The Rewards and Challenges of Human Resources Management

Learning Outcomes Explain how human resources managers and other managers can have rewarding careers by helping their firms gain a sustainable competitive advantage through the strategic utilization of people Explain how good human resources practices can help a firm’s globalization, corporate-social responsibility, and sustainability efforts Describe how technology can improve how people perform and are managed

Learning Outcomes Explain the dual goals HR managers have in terms increasing productivity and controlling costs Discuss how firms can leverage employee differences to their strategic advantage and how educational and cultural changes in the workforce are affecting how human resources manager engage employees Provide examples of the roles and competencies of today’s HR managers and their relationship with other managers

Human Resources Management Process of managing human talent to achieve an organization’s objectives Importance Managers play a key role in selecting, training, motivating, appraising and promoting employees Good personnel help build business Helps understand one’s rights and responsibilities as an employee

Human Capital and HRM Human capital: Knowledge, skills, and capabilities of individuals that have economic value to an organization Intangible and cannot be managed the way organizations manage jobs, products, and technologies Organizations should utilize employee knowledge and invest in their development

Figure 1.1 - Overall Framework of Human Resource Management

Responding Strategically to Changes in the Marketplace Making adjustments in labor force Downsizing: Planned elimination of jobs Outsourcing: Hiring outside the company to perform processes previously done within the firm Offshoring: Sending jobs to other countries Implementing cost-cutting strategies Enhancing benefit programs Improving quality Expanding market shares and product lines

Responding Strategically to Changes in the Marketplace People resist change as it involves modifying or abandoning familiar ways of working To manage change, executives and managers have to: Envision the future Communicate vision to the employees Set clear expectations for performance Develop capabilities to execute by reorganizing people and reallocating assets Make an investment in implementing and sustaining the change

Responding Strategically to Changes in the Marketplace Organization that successfully engineers change: Links it to the business strategy Shows how it creates quantifiable benefits Engages key employees, customers, and suppliers early Makes an investment to implement and sustain it Strategic changes could be proactive or reactive To provide knowledge on core business issues, companies: Assign HR representatives to core business teams Rotate non-HR managers into HR positions and vice versa

Competing, Recruiting, and Staffing Globally Integration of world economies and markets have led companies to: Look for opportunities abroad Fend off foreign competitiors domestically Search for the right employees Companies are making it possible for people to buy anything, anytime, anywhere Companies of all sizes are engaging in partnerships, mergers, and acquisitions

Competing, Recruiting, and Staffing Globally National identities of products are blurring Lower trade barriers with free-trade agreements General Agreements on Tariffs and Trade (GATT) paved the way for North American Free Trade Agreement (NAFTA) and European Union GATT was replaced by the World Trade Organization (WTO)

Competing, Recruiting, and Staffing Globally Issues in HRM due to globalization Dealing with better informed employees who are willing to pursue global job opportunities Gauging the knowledge and skill base of workers worldwide Understanding how to hire and train them Relocating and training foreign managers abroad to direct the efforts of an international workforce

Setting and Achieving Corporate Social Responsibility and Sustainability Goals Corporate social responsibility: Responsibility of the firm to act in the best interests of the people and communities affected by its activities Improves company’s earnings and helps avoid lawsuits Sustainability: Ability to produce a good or service without damaging the environment or depleting a resource Companies are making strides to reduce their carbon footprints HR should spearhead the development and implementation of corporate citizenship

Technology Challenges Organizations are taking advantage of information technology advancements Collaborative software: Allows workers to interface and share information with one another electronically Shift from touch labor to knowledge workers Knowledge workers: Workers whose responsibilities extend beyond the physical execution of work to include planning, decision-making, and problem-solving Companies spend on training and virtual learning

Technology Challenges Human resources information system (HRIS) Provides current and accurate data for purposes of control and decision-making Used to: Automate payroll processing and administer benefits program Access employee records Recruit, screen, and pretest applicants online Train, track, and select employees Open source HRIS software can be good low cost solution for startups and small businesses

Productivity and Cost Challenges - Maximizing Productivity Productivity - Output gained from a fixed amount of inputs Can be increased by: Reducing inputs Adding more human and physical capital to the process Additional productivity will have to come from: Enhanced ability of employees Motivation Work environment

Productivity and Cost Challenges - Managing the Size of the Workforce Should match the firm’s demand requirements, strategic decision, and competition Offshoring - Aids quicker delivery of products Outsourcing - Helps reduce costs and focus on important activities Nearshoring: Bringing jobs closer to domestic countries

Productivity and Cost Challenges - Managing the Size of the Workforce Homeshoring: Outsourcing work to domestic workers who work out of their homes Furloughing: Practice of requiring employees to take time off for either no pay or reduced pay Hiring part-time employees

Productivity and Cost Challenges - Managing Pay and Benefits Concerns - High health care costs and compliance with new health reforms Companies are charging higher premiums to cover spouses Provide employees a set amount to purchase health insurance on their own Employee leasing: Dismissing employees who are then hired by a leasing company and contracting with that company to lease back the employees Provides benefits that small companies cannot afford

Responding to the Demographic and Diversity Challenges of the Workforce HR managers analyze the capabilities of demographic groups and how well each is represented in fast-growing and slow-growing occupations Forecast trends to support organizational strategies Labor force participation rate - Number people employed or actively looking for work Ethnic and racial differences Age and gender distribution

Figure 1.2 - Labor Force Participation Rates of Workers of Hispanic origin versus Non-Hispanic Origin

Figure 1.3 - Labor Force Participation Rates of Workers in the Labor Force by Their Ages

Figure 1.4 - Labor Force Participation Rates by Gender

Adapting to Educational Shifts Affecting the Workforce Education attainment of the labor force has risen dramatically Helps a person stay out of the ranks of the unemployed American students are said to lag behind in math and science test scores HR managers have to find strategies to help their firms compete, despite challenges

Adapting to Cultural and Societal Changes Affecting the Workforce Culture and society affect one’s behavior on the job and the environment within the organization Influences reactions to: Work assignments Leadership styles Reward systems HR policies should be adjusted to cope with ongoing changes Changing employee rights Heightened privacy concerns of employees

Adapting to Cultural and Societal Changes Affecting the Workforce Employers are implementing privacy policies, limit the use of social security numbers and conduct background checks Excessive monitoring could lead to ligation Changing attitudes toward work and how they relate to employee engagement Employees are focused on finding interesting work and pursuing multiple careers Employee engagement: Extent to which employees are enthused about their work and committed to it Balancing work and family

Role of HR Managers and T heir Partnership with Other Managers HR managers help firms choose the best strategies to compete globally Select ideal HR systems, maximize productivity and manage benefits Successful organizations combine the experience of line managers with the expertise of HR managers To develop and utilize the talents of employees to their greatest potential Line managers: Non-HR managers who are responsible for overseeing the work of other employees

Role of HR Managers and Their Partnership with Other Managers Responsibilities of human resources managers Strategic advice and counsel Service Policy formulation and implementation Employee advocacy

Figure 1.7 - Human Resource Competency Model