 Why HR Management is important to all managers?

 It is easier to answer this by listing some of the personnel mistakes you don’t want to make while
managing.
 For example, you don’t want to:
 Hire the wrong person for the job;
 Experience high staff turnover;
 Have your people not doing their best;
 Waste time with useless interviews;
 Have your company taken to the court because of discriminatory actions;
 Why HR Management is important to all managers? (Cont’d…)
 Have your company cited under federal occupational safety laws for unsafe practices;
 Have your employees think their salaries are unfair and inequitable relative to others in the
organization;
 Allow a lack of training to undermine your department’s effectiveness; and
 Commit any unfair labour practices
 Four competitive challenges influencing HRM
 Four competitive challenges influencing HRM
1. Competing in the new economy
2. Competing through high-performance work systems
3. Competing by meeting stakeholders’ needs
4. Competing through Globalization
 1. Competing in the new economy
 Several changes in the economy have important implications for HRM.
 For example: some key labour statistics about the economy and the workforce influencing HRM in US:
 The economy is expected to add 20 million new jobs
 70% of the fastest-growing occupations require post-secondary education and training.
 There will be shortage of 4.6 million workers, of which 3.5 million will need college-level skills.
 38% of job applicants tested for basic skills lack the reading, writing, and math skills needed for
the job they are seeking.
 Immigration will add over one million persons to the workforce each year through 2006.
 The projected median age of the labour force by 2010 is 40.
 Reference: US Bureau of Labor Statistics website, http://stats.bls.gov
1. Competing in the new economy
(cont’d…)
 Changing in the new economy includes
 The changing structure of the economy;
 The development of e-business; and
 More growth in professional and service occupations.
 Growth in these occupations mean:
 Skill demands for jobs have changed;
 Increased value placed on knowledge:
 Intellectual capital – creativity, productivity, and service provided by employees
 Knowledge workers – employees who own the means of producing a product or service.
Such employees can’t simply be ordered to perform tasks; rather, they must share
knowledge (with their managers e.g. information about customers) and collaborate on
solutions. The term coined by Peter Drucker in 1959.
 Empowerment – giving employees responsibility and authority to make decisions
regarding all aspects of product development or customer service.
 1. Competing in the new economy
(cont’d…)
 Skill requirements
 Changes in the employment relationship
  Psychological contracts – expectations of employee contributions and what the
company will provide in return.
 Alternative work arrangements – independent contractors, on- call workers, temporary
workers, and contract company workers who are not full-time employed by the
company.
 Demanding work, but with more flexibility
 The globalization of the world economy and the development of e-commerce have
made the notion of a 40-hour work week obsolete.
 As a result, companies need to be staffed 24x7.
 Side-effects: More demanding work results in greater employee stress, less-satisfied
employees, loss of productivity, and higher turnover – all of which are costly for
companies.
 1. Competing in the new economy
(Summary)
 Two Key points
 Increased value is placed on knowledge
 Development of e-business
 2. Competing through high-performance work systems
 Definition: Work systems maximize the fit between the company’s social system (employees) and its
technical system.
 The main challenge is how to integrate technology and structure to gain a competitive advantage – that
is, competing through high-performance work systems.
 Technological advances in manufacturing, transportation, telecommunications, and microprocessors are
changing how work is performed, managers’ and employees’ roles, and organizational structure.
 Technology has made HR information databases more available and accessible and had created a need to
develop HRM practices that integrate technology with people.
 Major emphasis:
 Change in employees’ work roles and skill requirements
 Increase in the use of teams to perform work
 Changes in the nature of managerial work
 Changes in company structure.
 Increased availability of HRM databases (Human Resource Information System - HRIS)
 e-HRM – “the processing and transmission of digitized information used in HRM”
 2. Competing through high-performance work systems (cont’d…)
Q. How HRM practices support high-performance work systems?
 Teams perform work.
 Employees participate in selection.
 Employees receive formal performance feedback and are actively involved in performance
improvement process
 On-going training is emphasized and rewarded.
 Employees’ rewards and compensation relate to the company’s financial performance.
 Equipment and work processes are structured and technology is used to encourage maximum
flexibility and interaction among employees.
 Employees participate in planning changes in equipment, layouts, and work methods.
 Work design allows employees to use a variety of skills.
 Employees understand how their job contribute to the finished product or service.
 2. Competing through high-performance work systems
(Summary)
 Two Key points
 Change employees’ and managers’ work role
 Integrate technology and social work systems
 3. Competing by meeting stakeholders’ needs
  Key concept: Company effectiveness and competitiveness are determined by whether the company
satisfies the needs of stakeholders.
 Stakeholders include:
 Shareholders (who want a return on their investment);
 Customers (who want a high-quality product or service);
 Employees (who desire interesting work and reasonable compensation for their services);
 The community (which wants the company to contribute to activities and projects and minimize
pollution of the environment);
 and other stakeholders e.g. auditors, loan-donors, banks, government agencies, etc.
 3. Competing by meeting stakeholders’ needs (cont’d…)
The Balanced Scorecard:
measuring performance to stakeholders.
 The balanced scorecard gives managers an indication of performance of a company based on the degree
to which stakeholder needs are satisfied;
 It depicts the company from the perspective of customers, employees and shareholders.
 It is important because it brings together most of the feature that a company needs to focus on to be
competitive.
 These include:
 Being customer focused;
 Improving quality;
 Emphasizing team work;
 Reducing new product and service development times; and
 Managing for the long term.
 3. Competing by meeting stakeholders’ needs
(cont’d…)
The Balanced Scorecard
 3. Competing by meeting stakeholders’ needs (cont’d…)
A) Meeting customer needs for QUALITY
 Total Quality Management (TQM)
 A co-operative form of doing business that relies on the talents and capabilities of both labour
and management to continually improve quality and productivity.
 Six Sigma process
 A system of measuring, analyzing, improving, and then controlling processes once they meet
quality standards.
 ISO quality standards
 Malcolm Baldrige National Quality Award (MBNQA)
 An award established in 1987 to promote quality awareness, to recognize quality achievements
US companies, and to publicize successful quality strategies.
 Charter Mark
 the UK Government's national standard for excellence in customer service.
 3. Competing by meeting stakeholders’ needs (cont’d…)
B) Composition of the labour force
 Internal labour force (labour force of current employees)
 External labour market (persons outsides the firm actively seeking employment)
 Managing Diversity
C) Legislation and litigation (5 main areas of legal environment)
 Equal Employment Opportunity (EEO) legislation
 Employee health, safety, and environment (HS&E)
 Employee pay and benefits
 Employee privacy
 Job security
D) Ethical consideration (HR managers must satisfy 3 basic standards…)
 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.
 3. Competing by meeting stakeholders’ needs (Summary)
 Two key points
 Provide a return to shareholders
 Provide high-quality products, services, and work experience for employees
 4. Competing through Globalization
 Companies are finding that to survive they must compete in international markets. For this, businesses
must need to do the following:
 Development of global markets
 Competitiveness in global markets through HRM practices
 Challenge: to understand cultural differences and invest in human resources (e.g. ‘Investor in
People’ (IiP))
 Preparing employees for international assignments
 Managing the change process
 4. Competing through Globalization
(Summary)
 Two key points
 Expand into global markets
 Prepare employees to work in foreign locations
 How HRM practices can help companies meet these four competitive challenges?
 HRM Practices
 HRM Strategy is matched to business strategy.
 Knowledge is shared.
 Work is performed by teams.
 Pay systems reward skills and accomplishments.
 Selection system is job-related and legal.
 Flexibility is where and when work is performed.
 HRM Practices (cont’d…)
 Work attitudes of employees are monitored.
 Continuous learning environment is created.
 Discipline system is progressive.
 Customer satisfaction and quality are evaluated in the performance management system.
 Skills and values of a diverse workforce is valued and used.
 Technology is used to reduce the time for administrative tasks and to improve HR efficiency and
effectiveness.
 Key definitions
 Three distinct functions of an HR Manager
 Three distinct functions of an
HR Manager
1. A line function:
 The HR manager directs the activities of the people in his or her own department and in related service
areas (like the plant cafeteria).
 In other words, he or she exerts line authority with the HR department.
 While they generally can’t wield line authority outside HR, they are likely to exert implied authority. This
is because line managers know HR has top management’s ear in areas like testing and affirmative actions.
 Three distinct functions of an
HR Manager (cont’d…)
2. A coordinate function:
HR managers also coordinate personnel activities, a duty often referred to as ‘functional control’. Here the HR
manager and department act as the “right arm of the top executive” to ensure that line managers are
implementing the firm’s HR objectives, policies, and procedures (e.g. adhering to the firm’s discrimination policies,
etc.)
 Three distinct functions of an
HR Manager (cont’d…)
3. Staff (assist and advise) functions:
Assisting and advising line managers is the heart of the HR manager’s job. The HR manager assists in strategy
design and execution by helping the CEO to better understand the personnel’s aspects of the company’s strategic
options. It administers the various benefits programmes such as health and accident insurance, retirement,
vacation, and so on. It helps line managers comply with equal employment and occupational safety laws, and plays
an important role in handling grievances and labour relations.
(to be continued…)
 Three distinct functions of an
HR Manager (cont’d…)
 It carries out an innovator role, by providing “up-to-date information on current trends and new methods of
solving problems”-such as today’s interest in instituting systems for measuring HRM’s strategic impact.
 It plays an employee advocacy role: it helps define how management should be treating employees, make sure
employees have the mechanisms required to contest unfair practices, and representing the interest of employees
within the framework of its primary obligation to senior management.
 Eight main functions of HRM
 HR Planning, managing workflow & conducting job analysis
 Understanding EEO and legal environment
 Establish relationship between corporate strategies and Strategic HRM
 Recruitment and Selection
 Orienting, training and developing employees
 Performance appraisal and management
 Managing employees career
 Pay for performance, financial incentives, compensation, benefits and services.
 Four descriptions of the HRM units
 Four descriptions of the HRM units
1. It is action-oriented: Effective HRM focuses on action rather than on record keeping, written procedure, or
rules. Certainly, HRM uses rules, records, and policies, but its stresses action. HRM emphasizes the solution of
employment problems to help achieve organizational objectives and facilitates employees’ development and
satisfaction.
 Four descriptions of the HRM units
(cont’d…)
2. It is people-oriented: Whenever possible, HRM treats each employee as an individual and offers services and
programs to meet the individual’s needs.
3. It is globally-oriented: This is an activity which is being practiced efficiently and continuously in many
organizations.
4. It is future-oriented: Effective HRM is concerned with helping an organization achieve its objectives in the future
by providing competent and well-motivated employees. Thus, human resources need to be incorporated into an
organization’s long-term strategic plans.
 Society for Human
Resource Management (www.shrm.org)
 Society for Human Resource Management (SHRM)
 World’s largest HRM association with more than 225,000 professionals and student members throughout
the world.
 It is the primary professional organization for HRM.
 It provides education and information services, conferences and seminars, government and media
representation, and online services and publications (such as HR Magazine)