Chapter 1

Human Resource
Management:
Gaining a Competitive
Advantage

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the prior written consent of McGraw-Hill Education.
 Learning Objectives
LO 1-1 Discuss the roles and activities of a companys human
resource management function.
LO 1-2 Discuss the implications of the economy, the makeup of
the labor force, and ethics for company sustainability.
LO 1-3 Discuss how human resource management affects a
companys balanced scorecard.
LO 1-4 Discuss what companies should do to compete in the
global marketplace.
LO 1-5 Identify how new technology, such as social networking, is
influencing human resource management.
LO 1-6 Discuss human resource management practices that
support high-performance work systems.
LO 1-7 Provide a brief description of human resource
management practices.

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 Introduction

Competitiveness is Human resource

a companys ability to management
maintain and gain (HRM) the policies,
market share, related practices, and
systems that
to its effectiveness, influence employees
which is determined behavior, attitudes
by whether the and performance
company satisfies the
needs of stakeholders.

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 Table 1.1
Responsibilities of HR Departments-
Functions
Analysis and design of work
Recruitment and selection
Training and development
Performance management
Compensation and benefits
Employee relations/Labor relations
Personnel policies
Employee data and information systems
Legal compliance
Support for business strategy

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HR as a Business with 3 Product Lines

Human Relations
Administrative Services and Transactions
Business Partner Services
Strategic Partner

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 Strategic Role of the HRM Function

Time spent on administrative tasks is decreasing.

HR roles as a strategic business partner, change
agent and employee advocate are increasing.
Shared service model
HR is challenged to shift focus from current
operations to future strategies and prepare non-
HR managers to develop and implement HR
practices.
This shift presents two challenges:
Self-service
Outsourcing

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 Shared Service Model

Organizes HR to It includes
control costs and centers of expertise
improve business- or excellence
relevance and service centers and
timeliness of HR business partners
practices.

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 Self-service

Self-service gives employees online

access to information about HR issues, or
apps which provide information such as
training, benefits, compensation, and
contracts; enroll online in programs and
services.

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 Outsourcing

Outsourcing is the practice of having

another company (a vendor, consultant or
third-party) provide services to save
money, spend more time on strategic
business issues, increase ability to recruit
and manage talent, improve HR service
quality, and protect the company from
potential lawsuits by standardizing
processes such as selection and
recruitment.
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 4 Reasons to Outsource HR

1. Cost savings
2. Improve HR quality
3. Recruit and manage talent
4. Protect from lawsuits

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 HRs Strategic Role

The bottom line What is HR doing

question for to ensure that the
evaluating right people with
the relationship the right skills are
between HRM doing the right
and the things in the jobs
business that are important
strategy is: for executing the
business strategy?
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 Table 1.2
HR- Playing a Strategic Role in the
Business
1. What is HR doing to provide value-added services
to internal clients?
2. Do the actions of HR support and align with
business priorities?
3. How are you measuring the effectiveness of HR?
4. How can we reinvest in employees?
5. What HR strategy will get business from point A to
B?
6. What should HR do to improve our marketplace
position?
7. Whats the best change to prepare for the future?
8. Do we react to business problems or anticipate
them in advance?
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 How is the HRM Function Changing?

HR can engage in evidence-based HR

Evidence-based HR demonstrating that HR
practices have a positive influence on the
companys bottom line or key stakeholders.
HR or Workforce Analytics is the practice of
using big data from HR databases and other
data sources to make evidence-based HR
decisions.

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HR salaries vary according to
position, experience, education,
training, location and firm size.

The primary HRM professional

organization is the Society for
Human Resource Management
(SHRM) (www.shrm.org)

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 9 Competencies for HR Professionals
1. Business Acumen
2. Critical Evaluation
3. Technical Expertise and Practice
4. Ethical Practice
5. Global and Cultural Effectiveness
6. Relationship Management
7. Communications
8. Organizational Leadership and Navigation
9. Consultation

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3 Competitive Challenges Influencing
HRM

Technology

Sustainabilit
y

Globalization

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 Sustainability includes the ability
to
succeed in a dynamic competitive environment
deliver a return to shareholders
provide high-quality products, services and
work experiences for employees
increased value placed on intangible assets
increased value placed on human capital,
social and environmental responsibility
adapt to changing characteristics and
expectations of the labor force
address legal and ethical issues
effectively use new work arrangements

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 The Sustainability Challenge

Stakeholders include shareholders,

the community, customers and all
other parties that have an interest in
seeing that the company succeeds.

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 Increased Value: Intangible Assets &
Human Capital
Intangible Assets: A type of company
asset including human capital, customer
capital, social capital, and intellectual
capital.
Knowledge Workers: Employees who
own the intellectual means of producing a
product or service.

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Empowerment and Continuous
Learning

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 Employee Engagement Themes

1. Pride in employer
2. Satisfaction with employer
3. Satisfaction with the job
4. Opportunity to perform challenging work
5. Recognition and positive feedback
6. Personal support from manager
7. Effort above and beyond the minimum
8. Understand link between ones job and companys
mission
9. Prospects for future growth with the company
10.Intention to stay with the company
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 Talent Management
Talent management is the systematic planned
strategic effort to use bundles of HRM practices
acquiring and assessing employees, learning and
development, performance management and
compensation to attract, retain, develop and
motivate highly-skilled employees and managers.

Alternative work arrangements include

independent contractors, on-call workers,
temporary workers, and contract company
workers.

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 Balanced Scorecard and Social
Responsibility
Balanced scorecard provides a view of the
company from the perspective of internal
and external customers, employees and
shareholders and is used to:
1. Link HRM activities to companys business
strategy.
2. Evaluate extent HR helps meet companys
strategic objectives.

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 Social Responsibility and
Sustainability
Social responsibility can help boost a companys
image with customers, gain access to new
markets, and help attract and retain talented
employees.
Companies try to meet shareholder and general
public demands that they be more socially,
ethically and environmentally responsible.
Helping to protect the planet can also save
money.
Sustainability is an important part of many
companies business strategy.
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 To identify HR related critical
indicators
or metrics, ask:

1. How do our customers see us?

2. What must we excel at?
3. Can we continue to improve and
create
value?
4. How do we look to shareholders?

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Total Quality Management (TQM) 5 Core
Values

1. Methods and processes are designed to meet

internal and external customers needs.
2. Every employee receives training in quality.
3. Promote cooperation with vendors, suppliers
and customers.
4. Managers measure progress with feedback
based on data.
5. Quality is designed into a product or service
so that errors are prevented rather than
being detected and corrected.
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 Customer Service and Quality

Malcolm Baldrige National Quality

Award

ISO 9000:2000

Six Sigma Process

Lean Thinking

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 Changing Demographics and Workforce
Diversity
Internal labor force - current employees
External labor market - persons outside
the firm actively seeking employment.
Average age of workforce will increase.
Increased workforce diversity
Immigration will affect size and diversity
Generational difference with five generations.
Gender and racial composition of the workforce

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 Legal Issues
1. Employment laws and regulations
2. Eliminating discrimination and harassment
3. Workplace safety
4. Data security practices and protecting
intellectual property
5. Electronic monitoring
6. Employee privacy rights, intellectual property
rights and social media
7. Federal health care legislation
8. Companies that employ unlawful immigrants or
abuse laborers

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 Ethical Issues
Ethics - fundamental principles of right and
wrong by which employees and companies
interact
Ethical HR practices must:
1. Result in greatest good for largest number of
people
2. Respect basic human rights of privacy, due
process, consent and free speech
3. Managers must treat employees and
customers equitably and fairly and develop and
distribute a Code of Ethics, policy, process and
procedures, audit and train employees
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 Sarbanes-Oxley Act of 2002

Sets strict rules for corporate behavior

and sets heavy fines and prison terms for
noncompliance

Imposes criminal penalties for corporate

governing and accounting lapses
including retaliation against whistle-
blowers reporting violations of Security
and Exchange Commission rules.

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 4 Principles of Ethical Companies

1. Emphasize mutual 3. Sense of purpose

benefits in or vision valued
customer, vendor, and used by
client and employees.
community 4. Emphasize
relationships. fairness in
2. Employees take treatment of
responsibility for employees,
company actions. customers,
vendors and
clients.
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 Global Challenges
Offshoring- =
exporting jobs Companies
from less must compete
developed in and
develop global
countries
markets and
+ prepare
employees for
Reshoring- global
moving jobs assignments.
from overseas
to U.S.
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 35

Technology Challenge

Advance
Technologies

Social Networking

Internet

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 HRIS, Cloud Computing, and HR
Dashboards

HR Information Systems (HRIS)

Advances in technology have
increased:
HR Dashboard Metrics
Cloud Computing

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 Work teams, virtual teams and partners.
Changes in skill requirements, new
technology, company structure and
reporting relationships.
Support high-performance work
systems through staffing, work design,
training, compensation and performance
management.

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 38

Meeting Competitive Challenges

Through HRM

Dimensions of HRM Practices

Managing the HR environment
Acquiring and preparing HR
Assessment and development of HR
Compensating HR

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 39

Dimensions of HRM Practices

Managing environmental factors allows
employees to make a greater contribution to
company productivity and competitiveness.
HRM measures performance, creates an
employment relationship and mutually beneficial
work environment and designs pay, benefit and
reward systems.
Customers needs for new products or services
influence the number and type of employees
needed. HRM determines employee requirements
and training.

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 Summary

HR helps companies deal with sustainability,

globalization, and technology challenges and should
be evidence-based.
HR has three product lines: administrative, business
partner and strategic services.
HR managers need credibility, understanding of
business, technology and business strategy, and
ability to deliver HR services.

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