1. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-1 Human Resource Management Chapter Two HR Challenges, Strategic HRM and Competitive Advantage

2. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-2 HR Challenges Organizational demands—strategy, culture, employee concerns Environmental influences—labor force trends, globalization, technology, ethics and social responsibility Regulatory issues—legislation protecting rights of individuals and the company with regard to employment processes

3. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-3 Meeting Organizational Demands Factors inherent within a company that influence how employees are managed These include: Strategy Company characteristics Organizational culture Employee concerns

4. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-4 Strategy A plan for achieving a competitive advantage Influences how employees add value Impacts types of jobs employees perform Affects attitudes and behaviors employees display

5. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-5 Strategic Human Resources Management MissionGoals External Environment Analysis Strategic Choice Internal Environment Analysis HR Needs Skills Behaviours Culture HR Practices Compensation Job AnalysisJob Design Recruitment&Selection TrainingPerformance Labor Relations, employee relations HR Capability Skills Abilities Knowledge HR Actions Behaviours Results (Productivity, Absenteesim, Turnover) Performance Productivity Quality Profitability Stratey Formulation Strategy Implementation Strategy Evaluation Emergent Strategies

6. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-6 Linking Corporate and HR Strategies Dow Chemical USA: Keith R. McKennon, President “ To succeed in today’s dynamic environment, we must be good at preparing our people for change- in the marketplace and in the workforce. A diverse team of Dow people must be recruited, trained and mobilized to assure those skills that will best meet customer needs. To do this we will tie our HR plans ever more closely to capital planning and the strategic thrusts of our business” Shell Oil Company: F.H. Richardson, President and CEO “The process of HRM is an integral part of our company’s strategic planning efforts. Key business plans, as well as the external environment, are considered in light of hr implications. The process includes strategic evaluation sessions focusing on hr issues. Chrysler Motors Corporation: Robert A. Lutz, President “ At Chrysler, we see the role of HR as twofold- to provide leadership and programs that contribute importantly to the direction and performance of the corporation, and to promote a participative work environment that results in enhanced employee job satisfaction and the production of quality goods and services.

7. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-7 Strategic Challenges Company’s strategy influences types of jobs needed Low-cost leader, example: Wal-Mart Differentiation, example: Nordstrom Four-star restaurant vs. fast food

8. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-8 Cost Leadership Strategy Offering the lowest costs for products and services Focus on efficiencies and cost reductions Minimize overhead and costs Economies of scale are realized Only one cost leader in an industry

9. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-9 Differentiation Strategy Providing something unique for which customers are willing to pay Unique product may include features, location, innovation, reputation, status, customer service or quality Offering something competing firms do not provide and customers value

10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-10 Low-Cost Strategy and Managing Employees Jobs are narrow in focus and emphasize standardized and repetitive actions Behaviors are fairly well understood Individuals are hired with basic skills Employees trained to understand expectations Employees paid based on jobs they perform

11. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-11 Low-Cost Strategy and Managing Employees Cost Leadership High concern for quantity Short term focus To be comfortable with stability Risk averse Relatively repetitive behaviours Behaviours performed independently Internal promotion Worker participation, employee ideas

12. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-12 Differentiation Strategy and Managing Employees Jobs geared toward creativity or customer service Employees hired with specific skills and new perspectives Jobs require cooperation, creativity and knowledge sharing Pay based on individual potential or team accomplishments

13. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-13 Differentiation Strategy and Managing Employees Differentiation Creative & cooperative Long term focus Tolerance for ambiguity Risk taker Find people from outside

14. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-14 HR and Competitive Advantage Competitive advantage Any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share. Price Speed Quality Service Innovation Superior human resources are an important source of competitive advantage

15. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-15 Company Characteristics Size Resources available Degree of autonomy and discretion Differences in job tasks Employee attitudes and behaviors

16. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-16 Company Size Small businesses: Have generated 60-80% of new jobs in past 10 years Hire 40% of high-tech workers Represent over 99% of all employers Have line managers perform the HR functions Are challenged to provide competitive wages, benefits and training Enable each employee to directly impact company’s success

17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-17 Young companies: -focus on growth and survival -face pressure to hire people to help the company grow Mature companies: -focus on customer retention and future opportunities -have more resources and established policies and procedures -are more bureaucratic Stages of Development

18. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-18 Organizational Culture Set of underlying values and beliefs employees share Unwritten yet understood Represents beliefs of company’s founders and key leaders Influences how employees do their jobs Can assist in attracting and retaining employees

19. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-19 Organizational Culture Assumptions, values and beliefs of a company that affect how employees behave Informal or unwritten Observed in how employees talk to one another Seen in employees’ interaction with customers Bureaucratic cultures value rules, formalization, hierarchy Entrepreneurial cultures value creativity, knowledge exchange, innovation Other cultures value competition, teamwork, cooperation, fun

20. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-20 What Shapes Culture? Values and beliefs of a company’s founders Important decisions made in company’s history HR practices that signal values and behavior Management practices and actions Mergers and acquisitions Strong cultures provide clear, consistent signals Weak cultures are ambiguous and lack a clear message

21. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-21 Employee Concerns Single parents; caring for aging parents Dual career; balancing demands of work and personal lives Attracted by flexible scheduling, family- friendly benefits and telecommuting

22. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-22 Employee Concerns Psychological Contract—Perceived obligations employees believe they owe their company and the company owes them Includes pay, benefits and training in exchange for commitment and performance Governs how employees evaluate company decisions and how they act on the job

23. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-23 Work/Life Balance Demands of work and personal lives 60% of mothers in U.S. workforce have children under the age of 3 57% of workforce are dual-career households Many caring for older family members or dealing with traffic and long commutes Flexible work schedules, telecommuting, family-friendly benefits help attract and retain employees

24. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-24 Justice Employees expect to be treated fairly: Distributive justice: Fairness in what individuals receive for their efforts Compensation for time and effort put into jobs Procedural justice : Determination that the process used to make decisions, rewards, and resolution of disputes is viewed as fair

25. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-25 Interactional Justice How employees feel they are treated by managers and supervisors When employees perceive company is not meeting its obligations, they respond by: Speaking up Silence Neglect Leaving Destructive behaviors

26. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-26 Environmental Influences

27. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-27 Labor Force Trends Diverse in race, gender and age Number of women expected to grow 9% from 2006 to 2016 Fastest-growing group: Hispanics and Asians Size of group 55-and-older increasing dramatically Influences how companies recruit/select

28. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-28 Environmental Influences Aging Workforce

29. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-29 Aging Workforce Baby boomers are approaching retirement There is competition for a limited supply of workers to replace them Some companies are recruiting older workers who bring experience and skills to workplace

30. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-30 Demographic Diversity Number of women expected to grow 9% from 2006 to 2016 Fastest-growing group: Hispanics and Asians Foreign-born population in the U.S. has increased 57% from 1990 to 2000 Companies must manage diversity to leverage the benefits and eliminate bias and discrimination

31. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-31 Technology Requires many employees to possess basic computer proficiency Challenges privacy issues and potential misuse by employees Broadens access to recruit employees from larger market Enables virtual workforce

32. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-32 Technology Increased reliance on the Internet Some computer proficiency may be required in all jobs Broadens recruitment efforts beyond local market Enables virtual workforce—telecommuting, videoconferencing, e-mail Can also negatively affect the emotional connection employees feel to co-workers and the company

33. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-33 Globalization Blurs country boundaries in business activities Enables international joint ventures and partnerships Challenges companies with differences in values and beliefs Encourages offshoring—sending work once performed domestically to other countries for lower costs

34. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-34 Globalization Influenced by trade agreements: NAFTA, EU, APEC Blurs country boundaries in business activities Enables international joint ventures and partnerships

35. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-35 Managing Employees in a Global Environment Cultural differences affect HR and management practices and activities International experiences may benefit companies entering new markets and in building relationships with stakeholders

36. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-36 Ethics and Social Responsibility Companies and their management being held accountable for ethical behavior Corporate policies and procedures spell out ethical behavior Annual training required of employees Social Responsibility takes ethics to a new level

37. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-37 Ethics and Social Responsibility Involves how companies behave toward their stakeholders Includes consistent monitoring of all facets of operations Can help foster positive reputation and consumer support Companies rated as best corporate citizens financially outperform their counterparts

38. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-38 Pressure Points for Unethical Behavior

39. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-39 How to Encourage Ethical Behavior Appoint an “ethics officer” Monitor aspects of company’s value system Provide ethics training Perform background checks on incoming employees Devote time at meetings to talk about ethics Have a written code of conduct

40. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall1-40 Regulatory Issues Employee Health&Safety regulations Turkish Labour Law