1
Chapter
1
2
Gaining a Competitive
Advantage
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
Chapter
1
3
Gaining a Competitive
Advantage
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
.
Introduction
4
refers to a company’s ability to maintain
and gain market share in its industry
 Competitiveness
 It
is related to company effectiveness
 Human
resource management refers to the policies,
practices, and systems that influence employees’ behavior,
attitudes, and performance
 Many
companies refer to HRM as involving “people
practices"
.
5
Responsibilities of HR Departments
 Employment
and recruiting
 Training and development
 Compensation
 Benefits
 Employee Services
 Employee and community relations
 Personnel records
 Health and safety
 Strategic planning
What Roles Do
HR Departments Perform?
Strategic Partner
Administrative
Expert
Human
Resources
Change Agent
Employee
Advocate
6
How is the HRM Function
Changing?
7
 The
amount of time that the HRM function devotes to
administrative tasks is decreasing and its roles as a strategic
business partner, change agent, and employee advocate are
increasing
 In shifting the focus from current operations to strategies
for the future and preparing non-HR managers to develop
and implement HR practices, HR managers face two
important challenges:
 Self-service
refers to giving employees online access to
information about HR issues
 Outsourcing refers to the practice of having another company
provide services
The HRM Profession
8
 HR
salaries vary depending on education and experience as
well as the type of industry
 HR
specialists
 HR generalists
 College degrees are held by the vast majority of HRM
professionals
 Professional certification is less common than membership in
professional associations
 The
primary professional organization for HRM is the
Society for Human Resource Management (SHRM)
Competitive Challenges
Influencing HRM
 Three
competitive
challenges that
companies now face will
increase the importance
of HRM practices:
The Challenge of
Sustainability
The Global
Challenge
The Technology
Challenge
9
The Sustainability Challenge

10
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
 Sustainability includes the ability to:
 deal
with economic and social changes,
 engage in responsible and ethical business practices,
 provide high quality products and services, and
 put in place methods to determine if the company is meeting
stakeholders’ needs
The Sustainability Challenge
 The
11
changing structure of the economy
 Impact
of September 11, 2001
 The competition for labor
 Skill
demands for jobs are changing
 Knowledge is becoming more valuable
 Intellectual
capital refers to the creativity, productivity, and service
provided by employees
 Knowledge workers are employees who contribute to the company
not through manual labor but through a specialized body of
knowledge
 Empowerment means giving employees responsibility and
authority to make decisions regarding all aspects of product
development or customer service
The Sustainability Challenge
 A learning
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organization embraces a culture of lifelong
learning, enabling all employees to continually acquire and
share knowledge
 The psychological contract describes what an employee
expects to contribute and what the company will provide to
the employee for these contributions
 Alternative work arrangements include independent
contractors, on-call workers, temporary workers, and
contract company workers
The Balanced Scorecard
13
 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.
 Measures
of human resource practices primarily relate to
productivity, people, and processes.
The Balanced Scorecard
14
Customer
How do customers see us?
Time, quality, performance,
service, cost.
Internal
What must we excel at?
Processes that influence customer
satisfaction, availability of
information on service and/or
manufacturing processes.
Innovation
and Learning
Can we continue to improve
and create value?
Financial
How do we look to
shareholders?
Improve operating efficiency,
launch new products, continuous
improvement, empowering of
workforce, employee satisfaction.
Profitability, growth, shareholder
value.
Customer Service and
Quality Emphasis
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 Total
Quality Management (TQM) is a company-wide
effort to continuously improve the ways peoples, machines,
and systems accomplish work
 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
Customer Service and
Quality Emphasis
 Malcolm
Baldrige National Quality Award
 established in 1987 to promote quality
awareness, to recognize quality
achievements, and to publicize successful
quality strategies.
 ISO 9000:2000
 quality standards adopted worldwide.
 Six Sigma process
 system of measuring, analyzing, improving,
and controlling processes once they meet
quality standards.
16
Changing Demographics
Diversity of the Workforce
 Internal
17
labor force is the labor force of current
employees.
 External labor market includes persons actively seeking
employment.
 The U.S. workforce is becoming increasingly diverse.
 Women
 Minorities
 Disabled
workers
 Immigrants
Managing a Diverse Workforce
18
 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.
Legal and Ethical Issues
19
 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”
 The Sarbanes-Oxley Act of 2002 sets strict rules for
corporate behavior and sets heavy fines for noncompliance,
especially in regards to accounting practices
Legal and Ethical Issues
 Human
resource managers must satisfy
three basic standards for their practices
to be considered ethical:
 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
equitably and fairly
20
The Global Challenge
 Companies
21
are finding that to survive they must compete in
international markets as well as fend off foreign
corporations’ attempts to gain ground in the U.S.
 Every business must be prepared to deal with the global
economy. This is made easier by technology.
 Offshoring refers to the exporting of jobs from developed
countries to less developed countries.
 Many companies are entering international markets by
exporting their products overseas, building manufacturing
facilities in other countries, entering into alliances with
foreign companies, and engaging in e-commerce
The Technology Challenge
 Technology
22
has reshaped the way we play,
plan our lives, and where we work
 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
The Technology Challenge

23
Advances in technology have:
changed how and where we work,
 resulted in high-performance models of 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,
 increased the availability of Human Resource Information Systems
(HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and
distribute HR information,
 increased the availability of e-HRM, which is the processing and
transmission of digitalized information used in HRM,
 increased the competitiveness of high performance work systems.

Meeting Competitive Challenges
24
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
Meeting Competitive Challenges
25
Through HRM Practices
 Managing
internal and external environmental factors allows
employees to make the greatest possible contribution to company
productivity and competitiveness
 Customer needs for new products or services influence the
number and type of employees businesses need to be successful
 Besides interesting work, pay and benefits are the most important
incentives that companies can offer employees in exchange for
contributing to productivity, quality, and customer service
 Human resource management practices of both managers and the
human resource function must be aligned and contribute to the
company’s strategic goals