HUMAN RESOURCE MANAGEMENT:GAINING COMPETITIVE ADVANTAGE

CHAPTER 1

Topics to be covered: The New People Economy The Competitive Advantage of Firms Human resource Objectives: Serving Multiple Stakeholders Competitive Challenges influencing Human Resource Management Meeting the Competitive Challenges through HRM Practices The Scope of Personnel & Human Resource Management HRM Practices that enhance competitive advantage

THE NEW PEOPLE ECONOMY Major Changes in the Business:

Free movement of capital

Technology is no longer the preserve of a few companies Unrestricted flow of information Globalization is creating one all quality standards The world economy is increasingly becoming service oriented

Are Making Knowledge Vital: Continuous innovation is impossible without knowledge assets Nothing but knowledge can generate originality of service Only knowledge enables customer needs to be anticipated It needs knowledge to leverage all organizational capabilities Knowledge is the core competence for coping with change

So People are crucial: The exclusive source of knowledge for organization is people Individual knowledge is the starting point for organizational knowledge The knowledge pool of each individual cannot be replicated Only people can spread knowledge sources across the company It is only people who can convert knowledge into efficient action

To every operation: Product design is an outcome of sustained personal innovation Manufacturing is the result of teamwork applied to technology Marketing is the sum of people devised service added to products

The Competitive Advantage of Firms

Competitiveness refers to companys ability to maintain & gain share in its industry. Competitiveness refers to company effectiveness, which is determined by whether the company satisfies the need of stakeholders. These stakeholders include stockholders, 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 and the community which wants the company to contribute to to activities & projects and minimize pollution of the environment.

The basic unit of analysis for understanding competition is the industry. An industry is a group of competitors producing products or services that compete directly with each other.

THE FIVE COMPETITIVE FORCES THAT DETERMINE INDUSTRY COMPETITION

THREAT OF NEW ENTRANTS

BARGAINING POWER OF SUPPLIERS

RIVALRY AMONG EXISTING COMPETITORS

BARGAINING POWER OF BUYERS

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

COMPETITIVE ADVANTAGE C O M P T I T I V E S C O P E

Lower Cost

Differentiation

Broad Target

COST LEADERSHIP

DIFFERENTIATION

Narrow Target

COST FOCUS

FOCUSED DIFFERENTIATION

SOURCES OF COMPETITIVE ADVANTAGE

SUPPORT ACTIVITI -ES

FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT

TECHNOLOGY DEVELOPMENT PROCUREMENT

INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING LOGISTICS & SALES AFTER SALES SERVICE

PRIMARY ACTIVITIES

HR Practices
Pre Selection Practices

Employee-Centered Outcomes

Organization-Centered Outcomes

Competitive Advantage

HR Planning Job Analysis

Selection practices

Recruitment Selection
Post-Selection Practices Training Development Performance Appraisal Compensation

Competence Motivation Work related attitudes

Output Retention Legal Compliance Company Image

Cost leadership Product Differentiation

Practices Affected by External Factors Union Health & Safety Workplace Safety

A MODEL LINKING HRM PRACTICES TO COMPETITIVE ADVANTAGE

Strategic Partners

Organization

Shareholders & Investors

HUMAN RESOURCE MANAGEMENT

Society

Employees

Customer s

HUMAN RESOURCE OBJECTIVES: SERVING MULTIPLESTAKEHOLERS

COMPETITIVE CHALLENGES INFLUENCING HUMAN RESOURCE MANAGEMENT:

Global Challenges Expand into foreign markets Prepare employees to work in foreign locations Quality Challenges Meet customers' service and product needs

Business Competitiveness
Social Challenges
Managing cultural diversity

High-Performance Work System Challenges Change employees and managers work roles Integrate technology and social systems

Global Challenges

Quality Challenges

HR Practices
HR Strategy is matched to business strategy Work is performed by teams Par Systems reward skills and accomplishments Selection System is job related and legal 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 & values of diverse workforce are valued

High Performance Work System Challenges

Social Challenge

Dimensions of HRM Practices

Managing the external environment Assessing work & work outcomes Acquiring human resources Developing Compens human ating resources human resources

C O M P E T I T I V E N E S S

PERSONNEL MANAGEMENT Vs HRM

Reactive,servicing role Emphasis on implementation of procedures Specialist Department Focus on Employees needs in their own right Employees seen as a cost to be controlled Presumption of union management conflicts Preference for collective bargaining of pay and conditions supporting change Serving other departments Challenging business goals in light of effects on employees

Proactive, innovative role Emphasis on Strategy Focus on employees requirements in light of business needs Employees seen as investment to be nurtured as well as cost to be controlled Conflicts dealt with team leaders within their teams management led-planning if people resources and employment conditions Contributing added value to the business Stimulating change Total commitment to business goals

HRM PRACTICES THAT ENHANCE COMPETITIVE ADVANTAGE:

Employment Security Selectivity in Recruiting High Wages Incentive Pay Employee Ownership Information Sharing Participation & Empowerment Teams & Job Redesign Training & Skill Development

 Cross Utilization and cross-training Symbolic Egalitarianism Wage Compression Promotion from within Long-term perspective Measurement of Practices Overarching Philosophy