Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Managing Human Resources Today Chapter 1 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

When you finish studying this chapter, you should be able to: Answer the question, “What is human resource management?” Discuss the components of the changing environment of human resource management Describe the nature of strategic planning Give examples of human resource management’s role as a strategic partner Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

What is human resource management? Human Resource (HR) Management Refers to the practices and policies you need to carry out the personnel aspects of your management job Human resource (HR) management refers to the practices and policies you need to carry out the personnel aspects of your management job, specifically, acquiring, training, appraising, rewarding, and providing a safe, ethical and fair environment for your company’s employees Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Human Resource Management Practices and Policies Conducting job analyses Planning labor needs and recruiting job candidates Selecting job candidates Orienting and training new employees Appraising performance Managing wages and salaries Providing incentives and benefits Communicating Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

What a Manager Should Know About Equal opportunity, ethics, and affirmative action Employee health and safety, and ethical treatment Grievance and labor relations Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Why is hr management important to all managers? Personnel mistakes you don’t want to make: Having your employees not performing at peak capacity Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Personnel mistakes you don’t want to make Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Why is HR management important to all managers? (cont.) Personnel mistakes you don’t want to make: Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices Personnel mistakes you don’t want to make Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Why study this book? Can help ensure that you get results—through people If you are managing your own small business, you’ll have to be skilled at human resource management Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Line Versus Staff Authority The right to make decisions To direct the work of others To give orders Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Line Versus Staff Authority Line managers Authorized to give orders Line managers are associated with managing functions (like sales or production) that the company needs to exist Line Versus Staff Authority Line managers are authorized to give orders In charge of accomplishing the organization’s basic goals Staff managers assist and advise line managers in accomplishing these goals HR managers are generally staff managers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Line Versus Staff Authority Staff managers Assist and advise line managers in accomplishing these goals Staff managers generally run departments that are advisory or supportive, like purchasing, human resource management, and quality control Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Line Managers’ HR Responsibilities Placing the right person in the right job Starting new employees in the organization Training employees for jobs that are new to them Improving the job performance of each person Gaining creative cooperation and developing smooth working relationships Line Managers’ HR Responsibilities Placing the right person in the right job Starting new employees in the organization Training employees for jobs that are new to them Interpreting the company’s policies and procedures Controlling labor costs Protecting employees’ health and physical conditions Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Line Managers’ HR Responsibilities (cont.) Interpreting the company’s policies and procedures Controlling labor costs Developing the abilities of each person Creating and maintaining departmental morale Protecting employees’ health and physical conditions Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Typical Job Duties Recruiters Equal employment opportunity (EEO) representatives or affirmative action coordinators Job analysts Compensation managers Training specialists Human Resource Department’s Management Responsibilities Compensation and benefits Recruiting Training & development Employee relations Occupational safety and health Job analysis Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Human Resource Department Organizational Chart Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

HR in Small Business Small firms (say, with less than 100 employees) generally can’t afford a full-time human resource manager Their human resource management tends to be ad hoc and informal Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The New Human Resources Organization Transactional HR group Focuses on using centralized call centers and vendors to provide specialized support in day-to-day transactional HR activities Corporate HR group Focuses on assisting top management in “top-level” issues Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The New Human Resources Organization (cont.) Embedded HR group Assigns HR generalists to departments like sales and production to provide the assistance the departments need Centers of expertise groups Provide specialized assistance in areas such as organizational change Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Trends Influencing Human Resource Management Globalization Refers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroad HR’s Changing Environment Globalization refers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroad Formulating selection, training, and compensation policies for expatriate employees Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Trends Influencing Human Resource Management Technological advances Nature of work Critical thinking/problem solving Information technology application Service jobs Technological Advances Challenge of quickly applying technology to the task of improving operations Nature of Work Knowledge-intensive high tech jobs are replacing traditional factory jobs Two-thirds of workforce employed in producing services Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Employment Exodus: Projected Loss of Jobs and Wages Figure 1.2 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Trends Influencing Human Resource Management Growing emphasis on “knowledge workers” and human capital Human capital Refers to the knowledge, education, training, skills, and expertise of a firm’s workers Human capital refers to the knowledge, education, training, skills, and expertise of a firm’s workers Managers need new world-class HR management systems and skills to get employees to work more like committed partners Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Demographic and Workforce Trends Nontraditional workers include those who hold multiple jobs, or who are “contingent” or part-time workers, or people working in alternative work arrangements (such as a mother– daughter team sharing one flight attendant job at JetBlue airlines). Today, almost 10% of American workers—13 million people—fit this nontraditional workforce category. Of these, about 8 million are independent contractors who work on specific projects and move on once the projects are done. Demographic Groups as a Percent of the Workforce, 1986–2016 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Demographic Trends Generation Y Retirees Nontraditional workers Workers from abroad Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Gen Y May be “the most high-maintenance workforce in the history of the world” Their capacity for using information technology will also make them the most high-performing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Economic Challenges and Trends All these trends are occurring within the context of economic upheaval Challenging times mean that employers will have to be more frugal and creative in managing their human resources Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Human Resource Manager Today Focuses more on big picture issues Finds new ways to provide transactional services Manages ethics Builds high-performance work systems Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

High-Performance Work System An integrated set of human resource management policies and practices that together produce superior employee performance The basic aim here is to install human resource systems—in recruiting, screening, training, appraisal, and compensation, for instance—so that the company generates more job applicants, screens candidates more effectively, provides more and better training, links pay more explicitly to performance, and provides a safer work environment. In this way the human resource team can make a measurable contribution to the company’s bottom line. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Sample Metrics—IBM Human resource managers need access to the performance measures (or “metrics”), as well as to comparable, benchmark-able figures from similar firms. For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8% There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees IBM’s Randall MacDonald needed $100 million from IBM to reorganize its HR operations, and he emphasized human resource metrics in requesting those funds. He told top management, “I’m going to deliver talent to you that’s skilled and on time and ready to be deployed. I will be able to measure the skills, tell you what skills we have, what [skills] we don’t have [and] then show you how to fill the gaps or enhance our training.”33 Human resource managers such as MacDonald need access to the performance measures (or “metrics”), as well as to comparable, benchmark-able figures from similar firms. For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8%. There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees (the ratio tends to be lower in retailing and distribution firms, and higher in public, state organizations).34 Employers can request customized benchmark comparisons (for training hours, and tests administered, for instance) from services such as the Society for Human Resource Management’s Human Capital Benchmarking Service, and its database of over 1,500 organizations.35 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The HR Scorecard HR scorecard Shows the quantitative standards, or “metrics,” the firm uses to measure HR activities, to measure the employee behaviors resulting from these activities, and to measure the strategically relevant organizational outcomes of those employee behaviors Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The Human Resource Manager Today Understands evidence-based human resource management Can measure HR performance Has new proficiencies Has HR certification Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategic Planning and Strategic Human Resource Management Main responsibility facing human resource managers is to institute policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic goals Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategic Planning and Strategic Human Resource Management Strategy The company’s plan for how it will balance its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategy and HR—Albertson’s Albertson’s human resource management team chose a computer system from Unicru of Portland, Oregon, that collects and analyzes the information entered by applicants online It ranks applicants based on the extent to which they exhibit the customer-focused traits that predict success in retail jobs and helps track candidates throughout the screening process Strategy and HR Example As in many firms today, Albertson’s Markets faced competitive pressures from firms like Wal-Mart and from food stores from abroad. Albertson’s top management therefore relied on the firm’s human resource managers to be partners in helping the firm achieve its strategic goals. Among other things, reducing personnel-related costs and improving Albertson’s performance meant hiring employees who had a customer-focused approach, as well as reducing turnover, improving retention, and eliminating time-consuming manual processes and procedures for store managers. Working with its information technology department, Albertson’s human resource management team chose a computer system from Unicru of Portland, Oregon (www.unicru.com). The system collects and analyzes the information entered by applicants online and at kiosks. It ranks applicants based on the extent to which they exhibit the customer-focused traits that predict success in retail jobs, helps track candidates throughout the screening process, and does other things, such as track reasons for departure once applicants are hired. Human resource managers were able to present a compelling business case to illustrate the new system’s return on investment. Working as a partner in Albertson’s strategy design and implementation process, the HR team thus contributed in a significant way to achieving Albertson’s strategic goals.25 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategies in Multiple-Business Firms Figure 1.4 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Basics of Strategic Planning Corporate-level strategy Identifies the portfolio of businesses that comprise the company and the ways in which these businesses relate to each other Diversification, vertical integration, consolidation, geographic expansion For example, a diversification strategy implies that the firm will expand by adding new product lines. A vertical integration strategy means the firm expands by, perhaps, producing its own raw materials, or selling its products direct. Consolidation— reducing the company’s size—and geographic expansion—for instance, taking the business abroad—are some other corporate strategy possibilities. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Basics of Strategic Planning Business-level/competitive strategy Identifies how to build and strengthen the business’s long-term competitive position in the marketplace Cost leadership, differentiation, focusers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Basics of Strategic Planning Functional strategies Identify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goals Functional strategies Identify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goals Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

HR and Competitive Advantage Factors that allow an organization to differentiate its product or service from those of its competitors to increase market share Managers use several competitive strategies to achieve competitive advantage. One, cost leadership, means the enterprise aims to become the low-cost leader in an industry. Wal-Mart is a typical industry cost leader: It maintains its competitive advantage in part through its satellite-based distribution system. In a differentiation competitive strategy, a firm seeks to be unique in its industry along dimensions that are widely valued by buyers Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategic Human Resource Management Formulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aim Strategic Human Resource Management The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Strategic Human Resource Management HR strategies Refers to the specific human resource function courses of action the company pursues to achieve its aims Strategic Human Resource Management The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

HR’s Role in Formulating Strategy A firm’s HR team is in a good position to supply competitive intelligence, such as details regarding competitors’ incentive plans and information about pending labor laws It is also in the best position to give advice about the company’s internal human strengths and weaknesses Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Linking Corporate and HR Strategies Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Figure 1.5

Strategy and the Basic HR Process Figure 1.6 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Copyright All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall