Human Resource Management: Gaining a Competitive Advantage Chapter 01 Human Resource Management: Gaining a Competitive Advantage McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Discuss roles and activities of HRM function Discuss implications of the economy, makeup of the labor force and ethics for company sustainability Discuss how HRM affects a balanced scorecard Discuss what companies should do to compete in global marketplace Identify how technology such as social networking is influencing 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 (HRM) – the policies, practices, and systems that influence employees’ behavior, attitudes and performance. 1-3

HRM 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 3 Product Lines Partner Services Strategic Partner Administrative Services and Transactions Human Resources 1-6

6 HR Competencies Credible Activist Cultural Steward Talent Manager/ Business Ally Strategic Architect Operational Executor Talent Manager/ Organizational Designer Six competencies are needed for the HR profession. 1. Credible activist: delivers results with integrity, shares information, builds trusting relationships, and influences others, providing candid observation, taking appropriate risks. 2. Cultural steward: facilitates change, develops and values the culture, and helps employees navigate the culture. 3. Talent manager/organizational designer: develops talent, designs reward systems, and shapes the organization. 4. Strategic architect: recognizes business trends and their impact on the business, practice evidence-based HR, and develops people strategies that contribute to the business strategy. 5. Business Ally: understands how the business makes money and the language of the business. 6. Operational executor: implements workplace policies, advances HR technology, and administers day-to-day work of maintaining people. 1-7

Strategic Role of the HRM Function Time spent on administrative tasks is decreasing. HR roles as a strategic business partner, change agent and employee advocate are increasing. HR is 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 challenges: Self-service Outsourcing 1-8

Shared Service Model Shared Service Model is a way to organize the HR function that includes centers of expertise or excellence, service centers and business partners to help control costs and improve business-relevance and timeliness of HR practices. 1-9

HR Playing a Strategic Role in the Business? What is HR doing to provide value-added services to internal clients? What can HR add to the bottom line? How are you measuring HR effectiveness? How can we reinvest in employees? 1-10

Questions, cont. What HR strategy will get the business from point A to point B? What makes an employee want to stay? How will we invest in HR for a better HR department than competitors have? What should we be doing to improve our marketplace position? What’s the best change to prepare for the future? 1-11

How is the HRM Function Changing? As part of its strategic role, HR can engage in evidence-based HR. Evidence-based HR – demonstrating that HR practices have a positive influence on the company’s bottom line or key stakeholders. 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. It requires using HR or workforce analytics that uses quantitative and scientific methods to analyze data from HR decisions, financial statements, employee surveys and other data-sources to make evidence-based HR decisions and show that HR influences the organization’s “bottom-line” including profits and costs. 1-12

The HRM Profession HR salaries vary according to position, experience, education, training, location and firm size. The primary professional organization for HRM is the Society for Human Resource Management (SHRM) (www.shrm.org) 1-13

3 Competitive Challenges Influencing HRM Technology Sustainability Globalization 1-14

The Sustainability Challenge Sustainability is the ability of a company to survive and succeed in a dynamic competitive environment. Stakeholders include shareholders, the community, customers and all other parties that have an interest in seeing that the company succeeds. 1-15

The Sustainability Challenge Sustainability includes the ability to: deliver a return to shareholders provide high-quality products, services and work experiences for employees increase value placed on intangible assets, human capital and social responsibility adapt to changing characteristics and expectations of the labor force address legal and ethical issues effectively use new work arrangements 1-16

Economy- Implications for HR Structure of the economy Development and speed of social media Growth in professional and service occupations Skill demands for jobs are changing Knowledge is becoming more valuable Intangible assets Knowledge workers Empowerment Learning organization Social collaboration and social networking technology 1-17

The Sustainability Challenge Psychological Contract Alternative Work Arrangements Changes in Employment Expectations 1-18

Common Themes of Employee Engagement Pride and satisfaction with employer and job Opportunity to perform challenging work Recognition and positive feedback from contributions Personal support from manager Effort above and beyond the minimum Understanding link between one’s job and company’s mission Prospects for future growth with the company Intention to stay with the company 1-19

Talent Management Talent management is the systematic planned strategic effort by a company to use bundles of HRM practices including acquiring and assessing employees, learning and development, performance management , and compensation to attract, retain, develop, and motivate highly skilled employees and managers. Growth of contingent workers and part-time employees 1-20

The Balanced Scorecard The balanced scorecard provides a view of the company from the perspective of internal and external customers, employees and shareholders. The balanced scorecard should be used to: Link HRM activities to the company’s business strategy. Evaluate the extent to which HR is helping meet the company’s strategic objectives. 1-21

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? 1-22

Customer Service and Quality Total Quality Management (TQM) Core Values 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 rather than being detected and corrected. 1-23

Customer Service and Quality Malcolm Baldrige National Quality Award ISO 9000:2000 Six Sigma Process Lean Thinking 1-24

Changing Demographics Workforce Diversity Internal labor force - current employees External labor market - persons outside the firm actively seeking employment U.S. workforce is aging rapidly Increased workforce diversity Influence of immigration 1-25

Managing a Diverse Workforce To manage a diverse workforce, managers must develop new skills to: Communicate, coach and develop employees from a variety of cultural and educational backgrounds, ethnicity, age, ability and race. Provide performance feedback 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. 1-26

Legal and Ethical Issues 5 legal areas that influenced HRM : 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 Federal health care legislation Companies which employ unlawful immigrants or abuse laborers Data-security practices and protecting intellectual property 1-27

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 Managers must develop and distribute a Code of Ethics, policies, processes and procedures, audit and train employees 1-28

4 Principles of Ethical Companies Successful companies, in 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. 1-29

The Global Challenge To survive companies must deal with the global economy, compete in and develop global markets and prepare employees for global assignments. Offshoring – exporting jobs from developed countries to less developed countries Onshoring – exporting jobs to rural parts of the United States 1-30

Technology Challenge The overall impact of the Internet The Internet has created a new business model – e-commerce – for conducting business transactions and relationships electronically. Social networking 1-31

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 1-32

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 HR Dashboard Metrics 1-33

High-Performance Work Systems Work in teams, virtual teams’ and partnerships Changes in skill requirements Changes in company structure and reporting relationships Increased use and availability of e-HRM and Human Resource Information Systems (HRIS) HRM practices support high-performance work systems through staffing, work design, training, compensation and performance management. 1-34

Meeting 4 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 1-35

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. 1-36

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 1-37

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. 1-38