Human Resource Management

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Human Resource Management
Gaining a Competitive Advantage

Chapter 1

Human Resource Management:

Gaining a Competitive Advantage

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Learning Objectives

After reading this chapter, you should be able to:

Discuss the roles and activities of a company’s 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 company’s 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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Competitiveness – a company’s 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



Employee services

Employee and community relations

Personnel records

Health and safety

Strategic planning

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What Roles Do
HR Departments Perform?


Partner Services




Services and Transactions

Strategic Partner

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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 company’s 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


The Global


The Technology


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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 company’s business strategy.

Evaluate the extent to which the human resource function is helping the company’s meet it’s 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