Chapter 1

Meeting
Present and
Emerging
Strategic
Human
Resource
Challenges
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Human Resource Management is a

dynamic field.
In this first chapter, we will address the
present and emerging challenges in the
field of HR and begin to address what
needs to be done to address these
issues.
Chapter one will set the stage for the
remainder of our time together as we
explore the area of human resource
management.

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Chapter Outcomes

Explain how a firms human resources

influence its performance
Describe how firms can use HR initiatives to
cope with workplace changes and trends
Distinguish between the role of a firms HR
department and the role of the firms
managers in utilizing human resources
effectively
HR Department and Managers: An
Important Partnership
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Chapter Outcomes

Formulate and implement HR strategies

that can help the firm achieve a
competitive advantage
Identify HR strategies that fit corporate
and business unit strategies
Indicate HR best practices associated
with high-performing firms

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Human Resources

Even in tough economic times

the need for talented
employees is high
Human Resources = Value of
employees

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The recent economic downturn caused an

increase in the number of qualified
workers who were seeking jobs.
However, even in this climate it is still
hard to find the right workers who fit
with the organization and have the talent
you need.
A good employee is so valuable to an
organization and that is why the term
human resource has been used over the
years.
It indicates that employees are valuable
and they are an important resource.

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Types of Employees

Manager
Line Employee
Staff Employee
Senior Employee
Junior Employee
Exempt Employees
Nonexempt Employees
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There are many different types of

employees and they all play different
roles in the organization.
Managers are people who are in charge
of others and who are responsible for the
timely and correct execution of actions
that promote their units successful
performance.
Line employees directly involved in
producing the companys good(s) or
delivering the service(s). A line manager
manages line employees.

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Staff employees are those who support

the line function.
Senior employees are those who have
been with the company longer and have
more responsibility than junior
employees.
Exempt employees (sometimes called
salaried employees) are those who do
not receive extra pay for overtime work
(beyond 40 hours per week).
Nonexempt employees are employees
who receive overtime compensation.

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Human Resource Strategy

Human Resource Strategy refers
to a firms deliberate use of
human resources to help it gain
an edge against its
competitors.

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A good firm will strategically utilize its

workforce to gain an edge over its
competitors.
By doing so it can gain in the marketplace
and have a competitive advantage in the
industry. The importance of a reliable,
effective and loyal workforce is a great
advantage to any firm.
How can a firm match their hiring
practices with their human resource
strategies to ensure that their employees
will be a good fit for their organization?

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Key HR Challenges for Managers

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Key HR Challenges:
Environmental

As a company looks at environmental challenges

it is important to keep in mind that they do
influence organizational performance even
though most are largely beyond managements
control.

Rapid Change
The Internet Revolution
Workforce Diversity
Globalization
Legislation
Evolving Work and Family Roles
Skill Shortages
Rise of the Service Sector
Natural Disasters

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Key HR Challenges: Organizational

The relationship between environmental and

organizational challenges is a one way relationship as very
few organizations can have much impact on the
environment.
Competitive Position
Decentralization
Downsizing
Organizational Restructuring
Self-Managed Work Teams
The Growth of Small Businesses
Organizational Culture
Technology
Internal and Data Security
Outsourcing
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Product Integrity
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Key HR Challenges: Individual

How the company treats its individual employees is also

likely to affect the organizational challenges discussed
e.g. if many key employees leave the firm to join
competitors, the organizations competitive position is
affected.
There is a two-way relationship between organizational
and individual challenges.

Matching People and Organizations

Ethics and Social Responsibility
Productivity
Empowerment
Brain Drain
Job Insecurity

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Overcoming Challenges

There are many challenges to overcome,

but we will discuss how a good HR
department works with managers to
provide a working environment that
meets and overcomes these challenges.

Example: Use of the internet helps in

recruitment by screening applicants and
also assists in getting the right person in
place by providing quick and reliable
background checks.

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Throughout this book we will be looking

at how an HR department can meet and
overcome these challenges with a
strong system, good practices and
supportive policies.
The internet is a great example of how
a good system can assist HR. Even
though technology can be a challenge
the proper use of it can help in the
recruiting process and screening
process.

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Strategic HR Policies:
Benefits

By creating HR policies that are

strategic in nature will help the
company utilize this resource to
achieve goals and objectives of the
organization. There are many benefits
to aligning policies with strategic
objectives.

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Strategic HR Policies: Benefits

Encouraging Proactive Behavior
Communicating Company Goals
Stimulating Critical Thinking and
Ongoing Examination of
Assumptions
Identifying Gaps Between Current
Situation and Future Vision
Encouraging Line Managers
Participation
Identifying HR Constraints and
Opportunities
Creating Common Bonds
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Strategic HR Policies: Challenges

There are also many challenges to the implementation of
strategic HR policies. These challenges include
Maintaining a Competitive Advantage
Reinforcing Overall Business Strategy
Avoiding Excessive Concentration on Day-to-Day
Problems
Develop HR Strategies Suited to Unique
Organizational Features
Coping with the Environment
Securing Management Commitment
Translating the Strategic Plan into Action
Combining Intended and Emergent Strategies
Accommodating Change
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Strategic HR: Choices

There are many strategic HR choices that can help

facilitate the strategy of the organization.
Work Flows
Staffing
Employee Separations
Performance Appraisal
Training and Career Development
Compensation
Employee Rights
Employee and Labor Relations
International Management

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1.
2.

3.
4.
5.

6.

7.
8.

Work Flows can help manage the balance of efficiency & control vs.
innovation & flexibility.
Staffing works both internally with supervisors making hiring decisions
and externally with the HR department makes hiring decisions.
Coordinating these two efforts with strategic goals can assist in making
the right hire.
Performance Appraisal can be customized & developmental vs. uniform
& control-oriented.
Training & Career Development can shift to be individual, OTJ & jobspecific vs. team-based, external & generic .
Compensation can use either fixed or job- based pay vs. variable or
individual- based pay depending on the strategic goals of the
organization.
Employee Rights can shift from an emphasis on discipline & informal
ethical standards vs. emphasis on prevention & explicit ethical
standards.
Employee & Labor Relations can move from top down communication
& union suppression to the use of feedback & union acceptance.
International Management can work from creating a global company
culture with universal company policies towards adapting to local
cultures and country-specific policies.

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Selecting HR Strategies

A firms strategic choices are the

options they have available to them
when designing its human resource
system.

When an organization fits their system

with the organizational strategies,
characteristics, capabilities and the
outside environment it should lead to
improved firm performance.
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Selecting HR Strategies

To increase firm performance

HR strategies should fit with
other aspects of the organization

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HR Strategies: Fit with

Organizational Strategies
Corporate Strategies

Evolutionary
Steady State

Porters Business Unit Strategies

Cost leadership
Differentiation
Focus

Miles and Snows Business

Strategies
Defender
Prospector

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The strategies employed by human resources need to fit with

organizational strategies.
Evolutionary is the aggressive acquisitions of new businesses,
even if unrelated. HR emphasis on flexibility, quick response,
entrepreneurship, risk sharing, and decentralization.
Steady state is a strategy to avoid acquiring firms outside
their industry or companies that are very different from them.
The HR emphasis is on efficiency, control, centralization and
long-term career development of employees.
Porters Business Unit strategies include cost leadership,
differentiation and focus. The Cost leadership approach gains
competitive advantage through lower costs. The HR emphasis
is on efficient, low-cost production, highly structured
procedures, and discourages creativity and innovation.
Differentiation works to create a product or service that is
perceived as being unique. HR will emphasize innovation,
flexibility, and renewal of the workforce by attracting new
talent from other firms. Focus combines low cost and
differentiation to serve narrow target market better than other
firms. HR will need to emphasize a cross between those
described for low-cost producers and differentiators.
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The Defender has conservative business units that

prefer to maintain a secure position in relatively
stable product or service areas. With the HR
emphasis on control and structure, and policies
designed to foster long-term employee attachment.
Prospector approach is interested in growth and
innovation, development of new products, and an
eagerness to be the first in new-product or market
areas. The HR emphasis is on policies that foster
creativity and adaptability, staffing and
employee separation policies that focus on the
external labor market; customized, participative
employee appraisals used for multiple purposes
(including employee development);training
strategies targeting broad skills; and a
decentralized compensation system that rewards
risk taking and performance.
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HR Strategies: Fit with

Environment
The human resource strategy
needs to not only fit with
organizational strategies but the
external environment as well.
There are four major dimensions
that we can use to evaluate the
environment.
They are: degree of uncertainty,
magnitude of change,
complexity, and volatility.

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HR Strategies: Fit with

Environment

If the environment ranks high on these four dimensions an

organization will need HR strategies that promote flexibility,
adaptability, quick response, transferability of skills, the ability
to secure external talent when needed, and risk sharing with
employees (variable pay).
If the environment ranks low on the four dimensions the
organization will need HR strategies that allow for an orderly,
rational, and routine approaches to dealing with a relatively
predictable and stable environment

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HR Strategies: Fit with Organizational

Characteristics
To be effective HR strategies need to fit
the organizations personality. There are
number of areas that should be analyzed
when trying to match organizational
personality and HR policies.
These include the production process, the
market posture/position of the firm, their
overall managerial philosophy and the
structure and culture of the organization. F

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HR Strategies: Fit with Organizational

Characteristics

For example, if production is routine,

market is stable, the org. is highly
structured and managements
philosophy & culture emphasize control
and are averse to risk, HR strategies
should emphasize control and stability.

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HR Strategies: Fit with Organizational

Capabilities

HR strategies will be most effective when

they fit with organizational capabilities.
The distinctive competencies of the firm
give it the competitive edge they need to
succeed. HR strategies should help to
exploit these competencies and utilize
the skills present in their people.
How important is it that human resources
has a role in setting the strategy of the
firm?

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HR Strategies: Fit with Organizational

Capabilities

Distinctive Competencies

Competitive edge

HR Strategies should:
Help firm exploit its competencies
Assist the firm to help use its HR skills
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HR and Managers: A
Partnership
Role of HR Department is to
support the managers HR
responsibilities
HR Audit:
Conduct periodically
Evaluates how effective firm is at
using human resources
Often is an opportunity to evaluate
the human resource department as
well
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Summary and Conclusions

Many challenges in HRM

Plan and Implement HR in a
strategic manner

Policies and procedures should be

congruent

Select strategies that increase

performance
HR department and management
share an important partnership
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All rights reserved. No part of this publication

may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording,
or otherwise, without the prior written
permission of the publisher. Printed in the
United States of America.

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