Human Resource Management

Gaining a Competitive Advantage

Chapter 1
Human Resource Management:
Gaining a Competitive Advantage

McGraw-Hill/Irwin 2008 The McGraw-Hill Companies, All Rights Reserved 1-1

Learning Objectives

After reading this chapter, you should be able to:

Discuss the roles and activities of a companys human
resource management function
Discuss the implications of the economy, the makeup of
the labor force, and ethics for company sustainability
Discuss how human resource management affects a
companys balanced scorecard
Discuss what companies should do to compete in the
global marketplace
Identify the characteristics of the workforce and how they
influence human resource management
Discuss human resource management practices that
support high-performance work systems
Provide a brief description of human resource
management practices

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Introduction

Competitiveness a companys
ability to maintain and gain market
share
Human resource management
the policies, practices, and systems
that influence employees behavior,
attitudes, and performance

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.
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

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 What Roles Do
HR Departments Perform?

Business
Partner Services

Administrative
Services and Transactions Human Strategic Partner
Resources

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What Competencies Do HR
Professionals Need?

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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

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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 companys
bottom line or key stakeholders.

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The HRM Profession

HR salaries vary depending on education

and experience as well as the type of
industry

The primary professional organization for

HRM is the Society for Human Resource
Management (SHRM)

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Competitive Challenges
Influencing HRM
Three competitive challenges that
companies now face will increase the
importance of HRM practices:

The Challenge of
Sustainability

The Global
Challenge

The Technology
Challenge

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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

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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

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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
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The Sustainability Challenge

Changes in Employment Expectations:

Psychological contract

Alternative work arrangements

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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
companys business strategy.
Evaluate the extent to which the human resource
function is helping the companys meet its
strategic objectives.

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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?

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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

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Customer Service and
Quality Emphasis
Malcolm Baldrige National
Quality Award

ISO 9000:2000

Six Sigma process

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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

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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
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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

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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

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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

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The Technology Challenge

The overall impact of the

Internet
The Internet has created a
new business model e-
commerce in which
business transactions and
relationships can be
conducted electronically

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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

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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

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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
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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

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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

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