Managing Human Resources through Strategic Partnerships Chapter 1 Managing Human Resources through Strategic Partnerships

Chapter Outline THE STRATEGIC IMPORTANCE OF MANAGING HUMAN RESOURCES Satisfying Multiple Stakeholders Owners and Investors Customers Society Other Organizations Organizational Members (The Employees) Creating Win-Win Situations GAINING AND SUSTAINING A COMPETITIVE ADVANTAGE Employees Who Are a Source of Added Value Employees Who Are Rare A Culture That Can’t Be Copied A FRAMEWORK FOR MANAGING HUMAN RESOURCES THROUGH STATEGIC PARTNERSHIPS The Importance of the External and Organizational Environments Human Resource Management Activities Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Chapter Outline (cont’d) THE HR TRIAD Line Managers Have Always Been Responsible HR Professionals Provide Special Expertise Employees Share Responsibility LOOKING AHEAD: FOUR SPECIAL CHALLENGES THE HR TRIAD: Roles and Responsibilities for Managing Human Resources Managing Teams Managing Diversity Managing Globalization Managing Change SUMMARY Projects to Extend Your Learning CASE STUDY: Managing Human Resources at Barden Bearings Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Strategic Importance of Managing Human Resources “The industrial revolution was about economies of scale. The internet revolution will be about economies of skill and how you empower people.” John Chambers CEO Cisco Systems Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Satisfying Multiple Stakeholders “Chief executives should heed the interests of various stakeholders including shareholders, customers, suppliers, and the employees.” Sidney Harman CEO, Harman International Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Stakeholders and Examples of Their Objectives Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Satisfying Multiple Stakeholders Organizations must satisfy multiple stakeholders Effective HRM contributes to stakeholder satisfaction Stakeholders Individuals or groups that have interests, rights or ownership in an organization and its activities Primary stakeholders Those whose concerns the organization must address in order to ensure its own survival. Success is defined by how effectively these groups are served. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Owners and Investors “It truly is a new economy and the rules aren’t written. We have to learn as we go and lend based on intellectual and intangible assets.” Susan M. Smith CEO, Royal Bank Growth Company “It is no accident that the best places to work are also the places that make the most money.” Gordon Bethune Former CEO, Continental Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Owners and Investors (cont’d) Old economy: Investors focused on measuring tangible assets in order to determine a firm’s value. New economy: Investors recognize that intangible assets can be just as valuable as tangible assets. Reputation as an employer-of-choice, depth of employee talent and loyalty, and the firm’s ability to innovate and change. Studies have shown that effective HR practices can positively affect the bottom line. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Relationship between Quality of HRM Activities and Market Value EX 1.2 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Stakeholder Groups Customers Organizational Members (The Employees) Employees can have a direct impact on customer satisfaction. Understanding the customer’s perspective Organizational Members (The Employees) Employees themselves are a stakeholder group that cares about: Pay and benefits Quality of work life Employability Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Stakeholder Groups (cont’d) Society Legal compliance: legitimacy and community support Community relations: public opinion and expectations Social Responsiveness in HRM Type of employees the company chooses to hire Criteria used to evaluate their performance The scheduling and coordinating of activities within work units Compensation practices in paying employees for time spent in the community (voluntary labor). Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Stakeholder Groups (cont’d) Other Organizations Suppliers Physical and human resources Unions Adversarial to collaborative, problem-solving relationship with management Alliance Partners Achieve common goals Influence government actions Collaborate on research Establish joint ventures Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Stakeholders and HRM Win-Win situations HRM can create synergies from the diverse concerns of various stakeholders. Properly managing human resources can provide solutions to how best to satisfy the objectives of multiple stakeholders, even when the objectives seem to conflict. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Gaining and Sustaining a Competitive Advantage Sustainable Competitive Advantage When a company’s advantage is difficult for competitors to understand and copy. How firms can use HRM to gain sustainable competitive advantage: Maximize the value added by all employees— especially by “core” employees Acquire employees who are rare (high quality) Develop a strong culture that can’t be copied. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

A Framework for Managing Human Resources through Strategic Partnerships EX 1.3 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The External Environment Globalization of business Labor market conditions and trends Economic and political trends Technology Cultural differences Local, national and multinational conditions Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Organizational Environment Organizational characteristics that shape HRM practices: Leadership approach of top management Company culture Technology Business strategy Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Human Resource Management Activities Human Resource Management (HRM) Activities The formal HRM policies developed by the company as well as the actual ways these policies are implemented in the daily practices of supervisors and managers. Formal Policies Statements of expectations and aspirations Are modified and influenced by daily practices. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Human Resource Policies and Practices HR planning for alignment and change Job analysis and competency modeling Recruiting and retaining qualified employees Selecting employees to fit the job and the organization Training and developing a competitive workforce Developing an approach to total compensation Measuring performance and providing feedback Using performance-based pay to enhance motivation Providing benefits and services Promoting workplace safety and health Unionization and collective bargaining Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

The Human Resources Triad “Human Resources are too important to be left to the HR department.” HR has specialized and technical knowledge. HR Professionals Line Managers All Other Employees Line managers have always been responsible. Employees share responsibility. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 8

Key Roles for the HR Department and the HR Leader EX 1.4 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Key Roles for the HR Department and the HR Leader EX 1.4 cont’d Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Key HR Competencies Major types of competencies that HR professionals need in order to be effective: Strategic understanding and contribution (43%) Personal credibility (23%) HR delivery (18%) Business acumen (11%) HR technology (5%) Note: percentages indicate weighted impact on business performance Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Ethical Behavior HR profession’s code of ethics HR professionals must regard the obligation to implement public objectives and protect the public interest as more important than blind loyalty to an employer’s preferences. Expectations Understand problems and maintain professionalism Maintain high standards of honesty and integrity Respect the dignity of all employees Assure that the organization respects the public and its employees Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals PROFESSIONAL RESPONSIBILITY Core Principle: As HR professionals, we are responsible for adding value to the organizations we serve and contributing to the ethical success of those organizations. We accept professional responsibility for our individual decisions and actions. We are also advocates for the profession by engaging in activities that enhance its credibility and value. Guidelines Adhere to the highest standards of ethical and professional behavior. Measure the effectiveness of HR in contributing to or achieving organizational goals. Comply with the law. Work consistent with the values of the profession. Strive to achieve the highest levels of service, performance and social responsibility. Advocate for the appropriate use and appreciation of human beings as employees. Advocate openly and within the established forums for debate in order to influence decision-making and results. EX 1.5 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals PROFESSIONAL DEVELOPMENT Core Principle: As professionals we must strive to meet the highest standards of competence and commit to strengthen our competencies on a continuous basis. Guidelines Pursue formal academic opportunities. Commit to continuous learning, skills development and application of new knowledge related to both human resource management and the organizations we serve. Contribute to the body of knowledge, the evolution of the profession and the growth of individuals through teaching, research and dissemination of knowledge. Pursue certification such as CCP, CEBS, PHR, SPHR, etc. where available, or comparable measures of competencies and knowledge. EX 1.5 cont’d Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals ETHICAL LEADERSHIP Core Principle: HR professionals are expected to exhibit individual leadership as a role model for maintaining the highest standards of ethical conduct. Guidelines Be ethical; act ethically in every professional interaction. Question pending individual and group actions when necessary to ensure that decisions are ethical and are implemented in an ethical manner. Seek expert guidance if ever in doubt about the ethical propriety of a situation. Through teaching and mentoring, champion the development of others as ethical leaders in the profession and in organizations. EX 1.5 cont’d Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals FAIRNESS AND JUSTICE Core Principle: As HR professionals, we are ethically responsible for promoting and fostering fairness and justice for all employees and their organizations. Guidelines Respect the uniqueness and intrinsic worth of every individual. Treat people with dignity, respect and compassion to foster a trusting work environment free of harassment, intimidation, and unlawful discrimination. Ensure that everyone has the opportunity to develop their skills and new competencies. Assure an environment of inclusiveness and a commitment to diversity in the organizations we serve. Develop, administer and advocate policies and procedures that foster fair, consistent and equitable treatment for all. Regardless of personal interests, support decisions made by our organizations that are both ethical and legal. Act in a responsible manner and practice sound management in the country(ies) in which the organizations we serve operate. EX 1.5 cont’d Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Four Special HRM Challenges Managing Teams Managing Diversity Managing Globalization Managing Change Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Managing Teams Teams help satisfy customers by achieving: Improved on-time results delivery Improved customer relations Innovation in products and services Improved product quality Cost reductions and improved efficiency HR managers are still learning about what makes teams work! Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 11

Managing Teams (cont’d) Working on teams helps satisfy employees by: Facilitating management development and career growth Reinforcing or expanding informal networks in the organization Improving employees’ understanding of the business Increasing employee ownership, commitment, and motivation Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 11

Why Organizations Use Work Teams THE MOST COMMON REASONS FOR HAVING EMPLOYEES WORK IN TEAMS TO SATISFY EMPLOYEES Improve on-time delivery of results Improve customer relations Facilitate innovation in products and services Improve quality Reduce costs and improve efficiency TO SATISFY CUSTOMERS Facilitate management development and career growth Reinforce or expand Improve employees’ understanding of the business informal networks in the organization Increase employee ownership, commitment, and motivation EX 1.6 Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

Managing Diversity Diversity management practices must be sensitive to issues of: Religion, sexual orientation, marital and family status, age, and various other “unifying life experiences,” as well as gender and ethnicity. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 12

Managing Globalization Aspects of Globalization Exporting Overseas manufacturing Transnational firms Challenge Developing an approach to managing human resources that works at home as well as abroad. Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 13

Managing Change Issues in managing change Shortages of qualified employees New technologies Changing laws and regulations Mergers and structural changes Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved. 14

TERMS TO REMEMBER HR profession’s code of ethics HR triad Human resource management (HRM) activities Human resource management (HRM) system Human resource (HR) professionals Human resources Intangible human assets Society for Human Resource Management (SHRM) Stakeholders Sustainable competitive advantage Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.