1. Human Resource Management GAINING A COMPETITIVE ADVANTAGE Fourth Edition Raymond A. Noe The Ohio State University John R. Hollenbeck Michigan State University Barry Gerhart Vanderbilt University Patrick M. Wright Cornell University Irwin/McGraw-Hill Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Objectives After reading this chapter, you should be able to: Chapter 1.Discuss the roles and activities of a company’s activities of a company’s human resource function. 2.Discuss the implications of the new economy and e-business for HRM practices 3.Discuss how human resource practices affect a company’s balanced scorecard. 4.Discuss what companies should do to be competitive in the global marketplace 5.Identify the characteristics of the work force and how they influence human resource management practices. 6.Discuss human resource practices that support high- performance work systems. 7.Provide a brief description of human resource management practices. Human Resource Management: Gaining a Competitive Advantage 1

3. Introduction Competitiveness – a company’s ability to maintain and gain market share Human resource management – the policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

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

5. What Competencies Do HR Professionals Need?

6. Competitiveness and HRM Competitiveness- refers to the company’s ability to maintain and gain market share in its industry. HRM- refers to policies, practices and systems that influence employees behaviors, attitudes and performance. Effective HRMCompany PracticesPerformance affects 1-2

7. HR Function in Transition AdministrativeStrategic FunctionBusiness Partner 1-3

8. Competitive Challenges Influencing HRM Competing in the New Economy The Global Challenge The Challenge of Meeting Stakeholders’ Needs The High Performance Work System Challenge 1-4

9. Competing in the New Economy Develop an E-Business Competition of Labor Knowledge Value Increase Required Skills 1-5

10. Competing in the New Economy Employment Relationship Changes More Flexibility Included in Demanding Work Ways of to Win the War for Talent 1-6

11. Competing Through Globalization Expand into foreign markets. HRM practices that create competitiveness in foreign markets. Prepare employees to work in foreign locations. 1-7

12. Competing by Meeting Stakeholders’ Needs 1-8

13. How is the HRM Function Changing? Time spent on administrative tasks is decreasing and its roles as a strategic business partner, change agent, and employee advocate are increasing This shift presents two important challenges: Self-service – giving employees online access to information about HR issues Outsourcing – the practice of having another company provide services

14. How is the HRM Function Changing? 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.

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

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

17. The Sustainability Challenge The changing structure of the economy Skill demands for jobs are changing Knowledge is becoming more valuable Intangible assets -- human capital, customer capital, social capital, and intellectual capital Knowledge workers – employees who contribute to the company through a specialized body of knowledge Empowerment – giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service Learning organization

18. The Sustainability Challenge Changes in Employment Expectations: Psychological contract Alternative work arrangements

19. Competing by Meeting Stakeholders’ Need The balanced scorecard Meeting customer needs for quality Labor force of economy Legislation and litigation Ethical considerations 1-9

20. The Balanced Scorecard The balanced scorecard gives managers the opportunity to look at the company from the perspective of internal and external customers, employees and shareholders. The balanced scorecard should be used to: Link human resource management activities to the company’s business strategy. Evaluate the extent to which the human resource function is helping the company’s meet it’s strategic objectives.

21. Pengertian Balanced Scorecard merupakan contemporary management tool yang digunakan untuk mendongkrak kemampuan organisasi dalam melipatgandakan kinerja keuangan Balanced scorecard terdiri dari dua kata; Scorecard (kartuskor)yakni kartu yang digunakan untuk mencatat skor hasil kerja seseorang, skor apa yang akan dicapai di masa depan dibandingkan dengan hasil kinerja sesungguhnya Balanced (berimbang) yakni berimbang antara keuangan dan non keuangan, jangka pendek dan panjang, intern dan ekstern.

22. Sejarah Balanced Scorecard Pada awalnya mengatasi problem tentang kelemahan sistem pengukuran kinerja eksekutif yang berfokus pada aspek keuangan Selanjutnya, mengalami perkembangan implementasinya yakni sebagai pendekatan dalam penyusunan rencana strategik Pendekatan balanced scorecard untuk mewujudkan kinerja keuangan, dihasilkan oleh akibat diwujudkannya kinerja dalam pemuasan kebutuhan customer, pelaksanaan proses bisnis/intern yang produktif dan cost-effective, dan atau pembangunan personel yang produktif dan berkomitmen

23. The Balanced Scorecard How do customers see us? What must we excel at? Can we continue to improve and create value? How do we look to shareholders?

24. Visi: Menjadi institusi pilihan dalam penyediaan jasa Pendidikan di Indonesia TujuanPertumbuhan labaJasa UnggulTeknologi UnggulSDM Profesional Perspektif Differentiation Strategy Low Cost Strategy Keuangan Customer Proses Bisnis/ Intern Pembelajaran dan Pertumbuhan Pertumbuhan ROI Pertumbuhan Pendapatan Berkurangnya Biaya Meningkatnya Kepercayaan Customers Kecepatan Layanan Quality Relationship dengan customers Meningkatnya Kualitas Proses Layanan Customer State of the art technology Terintegrasinya Proses layanan customers Meningkatnya Komitmen Personel Meningkatnya Kapabilitas Personel

25. Principles of Total Quality Management 1-10 1. Customer Focus 6. FEEDBACK 5. Fact-based decision-making 5. Fact-based decision-making 4. employee’s expertise 4. employee’s expertise TRANSFORMATION PROCESS 2. focus on process 3. prevention vs. inspection TRANSFORMATION PROCESS 2. focus on process 3. prevention vs. inspection

26. Concepts of TQM Continuous improvement Employee empowerment Benchmarking Just-in-time (JIT) Taguchi concepts Knowledge of TQM tools

27. Continuous Improvement Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names Kaizen (Japanese) Zero-defects Six sigma © 1984-1994 T/Maker Co.

28. Shewhart’s PDCA Model 4.Act1.Plan 3.Check 2.Do Identify the improvement and make a plan Test the planIs the plan working Implement the plan

29. Employee Empowerment Getting employees involved in product & process improvements 85% of quality problems are due to process & material Techniques Support workers Let workers make decisions Build teams & quality circles © 1995 Corel Corp.

30. Quality Circles Group of 6-12 employees from same work area Meet regularly to solve work-related problems 4 hours/month Facilitator trains & helps with meetings © 1995 Corel Corp.

31. Benchmarking Selecting best practices to use as a standard for performance Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark

32. Resolving Customer Complaints Best Practices Make it easy for clients to complain Respond quickly to complaints Resolve complaints on the first contact Use computers to manage complaints Recruit the best for customer service jobs

33. Just-in-Time (JIT) Relationship to quality: JIT cuts cost of quality JIT improves quality Better quality means less inventory and better, easier-to-employ JIT system

34. Just-in-Time (JIT) ‘Pull’ system of production/purchasing Customer starts production with an order Involves ‘vendor partnership programs’ to improve quality of purchased items Reduces all inventory levels Inventory hides process & material problems Improves process & product quality

35. Just-In-Time (JIT) Example Scrap Work in process inventory level (hides problems) Unreliable Vendors Capacity Imbalances

36. Tools for TQM Quality Function Deployment House of Quality Taguchi technique Quality loss function Pareto charts Process charts Cause-and-effect diagrams Statistical process control

37. Customer Service and Quality Emphasis Total Quality Management (TQM) Core values of TQM include: designing methods and processes to meet the needs of internal and external customers all employees receive training in quality promotion of cooperation with vendors, suppliers, and customers management gives feedback on progress

38. Established in 1988 by the U.S. government Designed to promote TQM practices Some criteria Senior executive leadership; strategic planning; management. of process quality Quality results; customer satisfaction Recent winners Corning Inc.; GTE; AT&T; Eastman Chemical. Malcom Baldrige National Quality Award

39. Categories and Point Values: Malcolm Baldrige Award 1-11 Business Results - 450 points Customer Focus - 80 points & Market Focus Process Management - 100 points HRD & Management - 100 points Leadership - 110 points Information Analysis - 80 points Strategic Planning - 80 points Total points = 1000

40. ISO 9000 It was developed by the International Organization for Standardization in Geneva, Switzerland. It is the name of a family of standards that includes requirements such as how to establish quality standards and document work processes to help workers understand quality system requirements. It has been adopted as a quality standard in nearly 100 countries. 1-12

41. EC Environmental Standard ISO 14000 Core Elements: Environmental management Auditing Performance evaluation Labeling Life-cycle assessment

42. International Quality Standards Industrial Standard Z8101-1981 (Japan) Specification for TQM ISO 9000 series (Europe/EC) Common quality standards for products sold in Europe (even if made in U.S.) ISO 14000 series (Europe/EC) Standards for recycling, labeling etc. ASQC Q90 series; MILSTD (U.S.)

43. Six Sigma Process The Six Sigma Process System of measuring, analyzing, improving, and then controlling processes once they have been brought within the narrow Six Sigma quality tolerances or standards. Objective is to create a total business focus on serving the customer—that is, deliver what customers really want when they want it. 1-13

44. Composition of the Labor Force Internal Labor Force – the labor force of the current employees External Labor Force – persons actively seeking employment Managing Diversity To successfully manage a diverse workforce, managers much develop a new set of skills. Many US companies have already made a commitment to ensuring that diversity in their workforce is recognized and effectively used for competitive advantage. 1-14

45. HIGH-PERFORMANCE Work System Challenge Change in work roles & skills Use of teams Change in nature of managerial work Change in company structures Availability of HRM databases and e-HRM Increased competitiveness 1-15

46. Dimensions of HR Practices Managing the HR Environment Acquiring and Preparing HR Assessing and Developing HR Compensating HR COMPETITIVENESS 1-16

47. Changing Demographics Diversity of the Workforce Internal labor force is the labor force of current employees External labor market includes persons actively seeking employment The U.S. workforce is aging rapidly

48. Managing a Diverse Workforce To successfully manage a diverse workforce, managers must develop a new set of skills, including: Communicating effectively with employees from a wide variety of cultural backgrounds Coaching and developing employees of different ages, educational backgrounds, ethnicity, physical ability, and race Providing performance feedback that is based on objective outcomes Creating a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative

49. Legal and Ethical Issues Five main areas of the legal environment have influenced HRM over the past 25 years 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

50. Legal and Ethical Issues 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

51. The Global Challenge To survive companies must compete in international markets Be prepared to deal with the global economy. Offshoring – exporting of jobs from developed countries to less developed countries Onshoring – exporting jobs to rural parts of the United States

52. 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

53. The Technology Challenge Advances in technology have: increased the use and availability of Human Resource Information Systems (HRIS) increased the use and availability of e-HRM increased the competitiveness in high performance work systems

54. Meeting Competitive Challenges Through HRM Practices HRM practices that help companies deal with the four competitive challenges can be grouped into four dimensions The human resource environment Acquiring and preparing human resources Assessment and development of human resources Compensating human resources

55. 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

56. 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