The Challenge of Human Resources Management Human Resource Management Snell • Bohlander Copyright © 2007 Thomson/South-Western. All rights reserved.

Objectives After studying this chapter, you should be able to: Identify how firms gain sustainable competitive advantage through people. Explain how globalization is influencing human resources management. Describe the impact of information technology on managing people. Identify the importance of change management. State HR’s role in developing intellectual capital. Differentiate how TQM and reengineering influence HR systems. Copyright © 2007 Thomson South-Western. All rights reserved.

Objectives (cont’d) After studying this chapter, you should be able to: Discuss the impact of cost pressures on HR policies. Discuss the primary demographic and employee concerns pertaining to HRM. Provide examples of the roles and competencies of today’s HR managers. Copyright © 2007 Thomson South-Western. All rights reserved.

Why Study Human Resources Management Human Resources Management (HRM) The process of managing human resources (human capital and intellectual assets) to achieve an organization’s objectives. “Why Study HRM?” Staffing the organization, designing jobs and teams, developing skillful employees, identifying approaches for improving their performance, and rewarding employee successes—all typically labeled HRM issues—are as relevant to line managers as they are to managers in the HR department. Copyright © 2007 Thomson South-Western. All rights reserved.

Competitive Advantage through People Core Competencies Integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers. Sustained competitive advantage through people is achieved if these human resources: Have value. Are rare and unavailable to competitors. Are difficult to imitate. Are organized for synergy. Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–1 Overall Framework for Human Resource Management Copyright © 2007 Thomson South-Western. All rights reserved.

Competitive Challenges and Human Resources Management The most pressing competitive issues facing firms: Going global Embracing new technology Managing change Managing talent, or human capital Responding to the market Containing costs Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 1: Going Global Globalization The trend toward opening up foreign markets to international trade and investment Impact of globalization “Anything, anywhere, anytime” markets Partnerships with foreign firms Lower trade and tariff barriers NAFTA, EU, APEC trade agreements WTO and GATT Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 1: Going Global (cont’d) Corporate Social Responsibility The responsibility of the firm to act in the best interests of the people and communities affected by its activities Impact on HRM Different geographies, cultures, laws, and business practices Issues: Identifying capable managers and workers Developing foreign culture and work practice training programs. Adjusting compensation plans for overseas work Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 2: Embracing New Technology Knowledge Workers Workers whose responsibilities extend beyond the physical execution of work to include planning, decision making, and problem solving. Knowledge-Based Training Online instruction “Just-in-time” learning via the Internet on company intranets Copyright © 2007 Thomson South-Western. All rights reserved.

Influence of Technology in HRM Human Resources Information System (HRIS) A computerized system that provides current and accurate data for the purposes of control and decision making. Benefits: Store and retrieve of large quantities of data. Combine and reconfigure data to create new information. Institutionalization of organizational knowledge. Easier communications. Lower administrative costs, increased productivity and response times. Copyright © 2007 Thomson South-Western. All rights reserved.

Highlights in HRM 2 Most Common HR Information Systems Applications Payroll 76.7% Benefits administration 57.1 Benefits enrollment 41.4 Recruiting—applicant tracking 39.1 Personnel administration 39.1 Training and development 31.6 Employee self-service 24.8 Manager self-service 18.0 Other 3.8 Source: “How HR Managers Use Technology Applications to Control HR Department Costs,” Human Resource Department Management Report, no. 4–5 (May 2004). Copyright © 2007 Thomson South-Western. All rights reserved.

HRM IT Investment Factors Fit of the application to the firm’s employee base. Ability to upgrade Increased efficiency and time savings Compatibility with current systems Availability of technical support Time required to implement and train staff members to use HRIS Initial and annual maintenance costs Training time required for HR and payroll Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 3: Managing Change Types of Change Reactive change Change that occurs after external forces have already affected performance Proactive change Change initiated to take advantage of targeted opportunities Managing Change through HR Formal change management programs help to keep employees focused on the success of the business. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 3: Managing Change (cont’d) Why Change Efforts Fail: Not establishing a sense of urgency. Not creating a powerful coalition to guide the effort. Lacking leaders who have a vision. Lacking leaders who communicate the vision. Not removing obstacles to the new vision. Not systematically planning for and creating short-term “wins.” Declaring victory too soon. Not anchoring changes in the corporate culture. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 4: Managing Talent, or Human Capital The knowledge, skills, and capabilities of individuals that have economic value to an organization. Valuable because capital: is based on company-specific skills. is gained through long-term experience. can be expanded through development. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 5: Responding to the Market Total Quality Management (TQM) A set of principles and practices whose core ideas include understanding customer needs, doing things right the first time, and striving for continuous improvement. Six Sigma A process used to translate customer needs into a set of optimal tasks that are performed in concert with one another. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 5: Responding to the Market (cont’d) Reengineering and HRM Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed. Requires that managers create an environment for change. Depends on effective leadership and communication processes. Requires that administrative systems be reviewed and modified. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 6: Containing Costs Downsizing The planned elimination of jobs (“head count”). Layoffs Outsourcing Contracting outside the organization to have work done that formerly was done by internal employees. Offshoring The business practice of sending jobs to other countries. Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–2. Estimated Number and Types of U. S Figure 1–2 Estimated Number and Types of U.S. Jobs Moving Offshore by 2015 Source: Near-Term Growth of Offshoring Accelerating, Forester Research, Inc., May 2004. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 6: Containing Costs (cont’d) Employee Leasing The process of dismissing employees who are then hired by a leasing company (which handles all HR-related activities) and contracting with that company to lease back the employees. Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 6: Containing Costs (cont’d) Hidden Costs of Layoff Severance and rehiring costs Accrued vacation and sick day payouts Pension and benefit payoffs Potential lawsuits from aggrieved workers Loss of institutional memory and trust in management Lack of staffers when the economy rebounds Survivors who are risk-averse, paranoid, and political Copyright © 2007 Thomson South-Western. All rights reserved.

Challenge 6: Containing Costs (cont’d) Benefits of a No-Layoff Policy A fiercely loyal,more productive workforce Higher customer satisfaction Readiness to snap back with the economy A recruiting edge Workers who aren’t afraid to innovate, knowing their jobs are safe. Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–3 U.S. Productivity/Output per Worker Source: Derived from U.S. Department of Commerce data Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–4 Productivity Enhancements Copyright © 2007 Thomson South-Western. All rights reserved.

Highlights in HRM 4 Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–5 Growth of the U.S. Minority Population Source: U.S. Census Bureau Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–6 Labor Force and Gender Distributions LABOR FORCE PARTICIPATION RATE BY SEX, PROJECTED 1950–2012 Continuing a historical trend, the labor force participation rate for men will decline as the rate for women increases. LABOR FORCE GROWTH BY SEX, PROJECTED 2002–2012 The number of women in the labor force is expected to grow at a higher rate than that for men. Source: U.S. Department of Labor Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–7 Education Pays Source: U.S. Department of Labor Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–8 Model of Diversity Management Strategy Source: Reprinted by permission of Elsevier from “Managing for Effective Workforce Diversity” by Kathleen Iverson from The Cornell Hotel and Restaurant Administration Quarterly 41, no. 2 (April 2000): 31–38. Copyright © 2007 Thomson South-Western. All rights reserved.

Highlights in HRM 5 Source: Survey data from Gail Robinson and Kathleen Dechant, “Building a Business Case for Diversity,” Academy of Management Executive 11, no. 3 (August 1997): 21–31; permission conveyed through the Copyright Clearance Center, Inc. Copyright © 2007 Thomson South-Western. All rights reserved.

Attitudes towards Work Balancing Work and Family Cultural Changes Employee Rights Concern for Privacy Attitudes towards Work Balancing Work and Family Cultural Changes Copyright © 2007 Thomson South-Western. All rights reserved.

Qualities of Human Resources Managers Responsibilities Advice and counsel Service Policy formulation and implementation Employee advocacy Competencies Business mastery HR mastery Change mastery Personal credibility Copyright © 2007 Thomson South-Western. All rights reserved.

Figure 1–9 Human Resource Competency Model Source: Arthur Yeung, Wayne Brockbank, and Dave Ulrich, “Lower Cost, Higher Value: Human Resource Function in Transformation.” Reprinted with permission from Human Resource Planning, Vol. 17, No. 3 (1994). Copyright 1994 by The Human Resource Planning Society, 317 Madison Avenue, Suite 1509, New York, NY 10017, Phone: (212) 490-6387, Fax: (212) 682-6851. Copyright © 2007 Thomson South-Western. All rights reserved.

Key Terms corporate social responsibility downsizing employee leasing globalization human capital human resources information system (HRIS) human resources management (HRM) knowledge workers managing diversity offshoring outsourcing proactive change reactive change reengineering Six Sigma total quality management (TQM) Copyright © 2007 Thomson South-Western. All rights reserved.