1. Building Human Capital
OS352 HRM
Fisher
August 28, 2003

2. Agenda SAP update Review goals of HRM Why manage human resources?
Linking HRM and strategy

3. SAP update Everyone will be getting new log-on information
Maintenance being done this week
System will be available starting Monday
Self-study materials will be available on my website
Tutorial next week
Form your groups for Exercise 1 accordingly!

4. Goals of HRM
Ensure the organization has the workforce required to create products/services
Establish and administer personnel policies
Ensure compliance with labor laws

5. Strategy and human capital
Overall, strategy involves developing and sustaining a competitive advantage
Source of value
Rare
Difficult to copy
Highly skilled, motivated employees can meet these resource characteristics
Human capital

6. Developing human capital
How do each of these systems contribute to the development of human capital?
Recruitment
Selection
Training
Performance management
Compensation
Retention is key

7. Human Resource Strategy
A firm’s deliberate use of human resources to help it gain or maintain an edge against its competitors in the marketplace.

8. HR can respond to strategy…
Three general business strategies
Operational excellence
Product leadership
Customer intimacy
How would HR respond to each strategy?
Based on Beatty, R.W., Huselid, M.A., & Schneier, C.E. (2003). New HR Metrics: Scoring on the Business Scorecard. Organizational Dynamics, 32,

9. ….or inform strategy
Organization’s internal strengths and weaknesses often inform strategic decisions
Identify areas of competitive advantage
Core skill areas
Corporate culture
Labor/management relations
Use those to inform strategic decisions

10. HR responds to external forces
Labor market demands
Competitors’ actions
Regulatory environment
Industry best practices

11. But must also consider internal factors
Best practices may not be effective due to characteristics of the organization
Industry
Size
History
Culture
Need to tailor HR activities
HR activities must be aligned

12. Measuring Outcomes
How do we know if the HR function is operating effectively?
What kinds of outcomes could we measure?

13. For next class Read Noe pages 49-55, 527-531 How is IT affecting HR?
Enterprise resource planning systems (such as SAP)
Other types of technology