Wednesday, January 8, 2014

Chapter 1 - HRM: Gaining a Competitive Advantage

Brief Notes:
- Competitiveness - is a company’s ability to maintain and gain market share in its industry.
- It is related to company effectiveness, such as providing high quality products to
consumers, satisfying the needs of the stakeholders - return on investment, satisfying
employees - interesting work and compensation, and community - minimize pollution.
HRM Practices

Analysis and design of work

HR planning - is determining human resources

Recruiting - is attracting potential employees

Selection - is choosing employees

Training and Development - is teaching employees how to do the job

Compensation - rewarding employees

Performance management - evaluating their performances

Employee Relation - is creating a positive work environment

Company Performance - if all of these HRM practice applied effectively, then it will positively enhance
the company;s performance and create a favourable reputation.

- HRM - refers to policies, practices, and systems that influence employees’ behaviour, attitudes
and performance.
Responsibilities of HR Departments

Employment and recruiting - interviewing, recruiting, testing

Training and development

Compensation - wages and salary, job description, job evaluation

Benefits

Employee services - employee assistance programs, outplacement services, relocation services

Employee and community relations - compliance with employment law, discipline, labour relations

Personal records - information systems, records

Health and Safety - safety inspection, drug testing, health, wellness

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Responsibilities of HR Departments

Strategic planning - international human resources, forecasting, planning, mergers and acquisitions

- HR is only responsible of outplacement, compliance with employment, laws, record keeping,

testing, unemployment compensation and some benefits.

6 Competencies of HR Profession

Credible Activist - delivers results with integrity, shares info, builds trusting relationships

Cultural Steward - facilities change, develops and value the culture

Talent Manager / Organizational Designer - develops talent, design reward system

Strategic Architect - recognizes business trends and their impacts on the business, provide
evidence-base HR.

Businesses Ally - understand how the business makes money

Operational Executor - implements workplace policies, advances HR technology

- HR managers face two important challenges:

- Shifting their focus from current operations to strategies for the future.
- Preparing non-HR managers to develop and implement human resource practices.
- Evidence-based HR - refers to demonstrating that HR practices have a positive influence on
the company’s bottom line or key stakeholders (employees, customers, community and
shareholders)

- It requires collecting data on metrics such as productivity, turnover, accident, employee

attitudes and medical costs. Collection of data is mandatory because it helps in HR decision
making.

- Three competitive challenges influencing HRM practices are:

- The challenge of sustainability

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- Sustainability - is the ability of a company to survive and exceed in a dynamic
competitive environment, based on an approach to organizational decision making that
considers the company’s ability to make a profit without sacrificing the resources of its
employees, the community or environment.

- Its success relies on how well the company meet the need of its stakeholders (employees,
customers, community and shareholders). Ex: employees jobs are protected in economic
downturns.

- A company’s value include 3 types of assets: 1)Financial assets, 2)Physical assets, and
3)Intangible assets.

- Intangible assets - include human capital, customer capital, social capital, and
intellectual capital. They are responsible of company’s competitive advantage.

- Human capital examples - tacit knowledge, education, work-related know how

- Customer capital examples - customer relationships, brands, customer loyalty
- Social capital example - corporate culture, management philosophy
- Intellectual capital example - copyrights, patents, trade secrets
- Companies need to adapt to change. Change refers to the adoption of a new idea or
behaviour by a company. Ex: technological advances, changes in workforce or
government regulations, globalization.

- Psychological contract - describes what an employee expects to contribute and what the
company will provide to the employee for these contributions.

- Since companies cannot provide employment security thus employees demand

employability - which is that employees want their company to provide training and job
experiences to help ensure that employees can find other employment opportunities.

- Employee Engagement - refers to the degree to which employees are fully involved in
their work and the strength of their commitment to their job and the company.

- Employees who are fully engaged and committed to the company who they work for
give companies a competitive advantage (higher productivity, lower turnover, better
customer service) over their competitors.

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- Talent management - refers to a systematic planned strategic effort by companies to
attract, retain, develop, and motivate highly skilled employees and managers.

- Challenge - identifying employees with managerial talent and developing them for
managerial position.

- Alternative work arrangements - include the hiring of independent contractors, on-call

workers, temporary workers, and contract company workers.

- HR professionals challenge is to provide more flexible schedules, protect employees free

times, and use employee work time more productively.

Meeting 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
- Community - wants the company to contributes to activities and projects and minimize
pollution.

- Balance scorecard - its a way to measure the performance for stakeholders. Its a measurement
that gives managers a chance to look at their company from the perspectives of internal and
external customers. employees and shareholders.

- Its important because it highlights the features that company must improve to be
competitive. Ex: improving quality, customer focused, reducing new product, etc.

- Balance scorecard should be used to 1) link HRM activities to the company’s business
strategy and 2) evaluate the extent to which the HRM function is helping the company meet
its strategic objectives.

- Social responsibility - can help boost a company’s image with customers, gain access to new
markets, and help attract and retain talented employees. Ex: RBC Blue Water Project

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- Total quality management (TQM) - is a cooperative companywide effort to continuously
improve the way people, machines and systems accomplish work.

- One way to improve customer satisfaction is to improve the quality of employee work
experiences, an HRM responsibility. Highly satisfies employees provide high quality
service to customers.

- Two important changes in the demographics and diversity of the workforce are projected. 1)
The average age of the workforce will increase. 2) The workforce will become more diverse in
terms of tender, range of abilities, and racial composition. as immigrations and other factors
affect the size and diversity of workforce.

- Aging of workforce - many will work because they haven't set aside enough for retirement.
Many will retire.

- Increased diversity of the workforce - # of women working outside home, employment rate
for aboriginal people, employment people with disabilities and immigrant living here, all
has increased.

- Since the workforce is changing rapidly, thus HRM systems should be free of bias and
should capitalize the groups that will contribute to improving quality, customer service,
product development and market share.

Meeting the Needs of Stakeholders:

- Five main areas of legal environment have influenced HRM.

1. Employment equity legislation

2. Employment health and safety

3. Compensation and benefits

4. Employee privacy

5. Job security

- HRM practices must satisfy three basic standards for their practices to be considered
ethical:

1. HRM practices must result in the greatest good for the largest number of people.

2. Employment practice must practice basic human rights of privacy, due process,
consent and free speech.

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3. Managers must treat employees and customers equitably and fairly.

- The global challenge - to increase the competitiveness and value, business are increasing
their global presence. Technology has made things easier because through internet and
emails, data can be transferred anywhere in the world.

- Cultural understanding can sometimes becomes a problems. However, to solve these

problems, companies are taking creative approaches. Ex: IBM - invest in IBM corporate
Service Program - the goal of program is to develop a leadership team that learns about the
needs and culture of the countries and providing valuable community service, in which
IBM is doing business.

- Offshoring - refers to the exporting of jobs from developed countries to countries where
labour and other costs are lower.

- Jobs are off shored due to labour costs.

- The technology challenge - technology has changed the way we play, communicate, plan
our lives, and where we work.

- e-commerce - internet created this business model, in which business transactions and
relationships can be conducted electronically.

- High-performance work systems - maximize the fit between the company’s social system
(employees) and its technical systems. Ex: compute-integrated manufacturing uses robots
and computers to automate the manufacturing process.

- Technology makes customer service guidelines accessible to employees. Therefore, this

means more responsibility for the employers to satisfy their customer needs.

- Virtual teams - refer to teams that are separated by time, geographic distance, culture,
and/or organizational boundaries and rely almost exclusively on technology (e-mail,
internet, videoconferencing) for interaction between team members.

- It can be formed within one company. Also company may use virtual teams in
partnership with suppliers or competitors.

- Interpersonal skills such as negotiations, conflict management, and problem solving skills
are more important than fine motor skills. Employees should be trained to develop these
skills. Also, skill requirement changes as new technology is introduced, thus new skills
should be developed to cope with these changes.

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- Traditional design of organization structure (mangers to employees) isn't effective anymore
thus now employees, managers, customers, and vendors all work together to improve
services and products quality. Therefore, now employers talk directly with customers,
suppliers, etc.

- Electronic HRM (e-HRM) - refers to the processing and transmission of digitized

information used in HRM, including text, sound, and visual images from one computer to
another. Ex: capital one uses an audio learning program through iPod.

- Human Resource Information System (HRIS) - is a system used to acquire, store,

manipulate, analyze, retrieve and distribute information related to a company’s human
resources.

- HRIS can support strategic decision making, help the company avoid lawsuits, etc.
- HRM practices that support high-performance work system include employee selection,
performance management, training, work design, and compensation. These practices are
designed to give employees skills, incentives, knowledge and autonomy.

- High performance = increase in productivity and long-term financial performance

Questions Use to Determine if HR are Playing a Strategic Role in Business

What is HR doing to provide value-added services to internal clients?

What can the HR department ass to the bottom line?

How are you measuring the effectiveness of HR?

How can we reinvest in employees?

What HR strategy will we use to get the business from point A to point B?

What makes an employee want to stay at our company?

How are we going to invest in HR so that we have a better HR department than our competitors?

From an HR perspective, what should we be doing to improve our marketplace position?

What’s the best change we can make to prepare for the future?

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- Transformational activities create long-term capability and adaptability for the firm.

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Categories of HRM Activities and Percentages of Time Spent on Them

Transformational (5-15%) - knowledge management, strategic redirection and renewal, cultural change,
management development
Traditional (15-30%) - recruitment and selection, training, performance management, compensation,
employee relations
Transactional (65-75%) - benefits administration, record keeping, employee services

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