HUMAN RESOURCE
MANAGEMENT
MODULE 1:
GAINING A COMPETITIVE ADVANTAGE
OBJECTIVES
Identify how new
Discuss the roles and
I AM ABLE TO:
technology, such as social
activities of a company’s human
networking, is influencing
resource management function.
human resource
Discuss the implications of
management.
the economy, the makeup of the
Discuss human resource
labor force, and ethics for
management practices that
company sustainability.
support high-performance
Discuss how human resource
work systems.
management affects a
Provide a brief description
company’s balanced scorecard.
of human resource
Discuss what companies should do management practices.
to compete in the global marketplace.
INTRODUCTION
COMPETITIVENESS
Human Resource
Management (HRM)
A company’s ability to
Policies, practices,
and systems that influence
employees’ behavior,
attitudes, and performance.
maintain and gain market
share in its industry.
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What Responsibilities and Roles Do
HR Departments Perform?
Hr as Business with
Three Products
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SHARED SERVICE
MODEL
Strategic role of the
A way to organize the HR function that includes
centers of expertise, service centers, and business
partners.
HRM function
SELF - SERVICE
Giving employees online access to HR information.
OUTSOURCING
The practice of having another company pro- vide
services.
DEMONSTRATING THE STRATEGIC VALUE OF
HR:
HR ANALYTICS AND EVIDENCE-BASED HR
EvidenceBased HR
Demonstrating that human resource
HR or Workforce
Analytics
Big Data
The practice of using data from HR
Information merged from a variety of
practices have a posi- tive influence on
data- bases and other data sources to
sources, including HR databases,
the company’s bottom line or key
make evidence-based human
stakehold- ers (employees, cus-
resource decisions.
tomers, community, shareholders).
corporate financial statements, and
employee surveys, to make evidencebased HR decisions and show that HR
practices can influence the
organization’s bot- tom line.
EDUCATION AND
EXPERIENCE
THE HRM PROFESSION: POSITIONS AND JOB
•depending
HR salaries vary
on educatoon
and experience as well as
the type of industry.
The primary professional
organization for HRM is
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the
Society
Human
Resource Management
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(SHRM).
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•
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COMPETENCIES
and BEHAVIORS
03
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Competitive Challenges Influencing
Human Resource Management
• Three competitive challenges that companies now face will increase the importance
of human resource management practices:
1. Challenge of SUSTAINABILITY.
2. The GLOBAL challenge.
3. The TECHNOLOGY challenge.
These challenges are shown in Figure 1.4.
A company’s ability to meet its
needs without sacrificing the
ability of future generations to
meet their needs. needs
.
STAKE HOLDERS
• The various interest
groups who have
relationships with, and
consequently, whose
interests are tied to the
organization (e.g.,
employees, suppliers,
customers, sharehold- ers,
community).
ECONOMIC CYCLE
Increased Value Placed on Intangible
Assets and Human Capital
• Today more and more companies are interested in using intangible assets
and human capital as a way to gain an advantage over competitors. A
company’s value includes three types of assets that are critical for the
company to provide goods and services: financial assets (cash and
securities), physical assets (property, plant, equipment), and intangible
assets.
• Table 1.6 provides examples of intangible assets.
Intangible Assets
A type of company
asset including
human capital,
customer capital,
social capital, and
intellectual capital.
One way companies try to increase intangible assets is through attracting, developing, and retaining
knowledge workers.
Knowledge Workers
Employees who
own the intellectual
means of producing
a product or service.
Emphasis on Empowerment and Continuous Learning
To completely benefit from employees’ knowledge requires a management style that focuses on
developing and empowering employees.
Empowering
Giving employees
responsibility and
authority to make
decisions.
Learning Organization
A culture of lifelong learning
in which employees are
continually trying to learn new
things.
Need to Adapt to Change
Change refers to the adoption of a new idea or
behavior by a company. Technological advances,
changes in the workforce or government regulations,
globalization, and new competitors are among the
many factors that require companies to change.
Change is inevitable in companies as products,
companies, and entire indus- tries experience shorter
life cycles
Employee Engagement
Talent Management
The degree to which employees are fully
involved in their work and the strength of
their job and company commitment
A systematic planned strategic
effort by a company to attract,
retain, develop, and motivate highly
skilled employees and manager
Alternative Work Arrangements
Independent contractors, on-call workers, temporary workers, and contract
company workers who are not employed full-time by the company.
Demanding Work, but with More Flexibility.
The globalization of the world economy and the development of e-commerce have made the notion of
a 40-hour work week obsolete. As a result, companies need to be staffed 24 hours a day, seven days a
week. Employees in manufacturing environments and service call centers are being asked to move from
8- to 12-hour days or to work afternoon or midnight shifts. Similarly, professional employees face long
hours and work demands that spill over into their personal lives. Notebook computers, smartphones,
and smartwatches bombard employees with information and work demands. In the car, on vacation, on
planes, and even in the bathroom, employees can be interrupted by work demands. More demanding
work results in greater employee stress, less satisfied employees, loss of productivity, and higher turnoverall of which are costly for companies
MEETING THE NEEDS OF
STAKEHOLDERS,
SHAREHOLDERS, CUSTOMERS,
EMPLOYEES, AND COMMUNITY
The Balanced Scorecard
A means of performance measurement that gives
managers a chance to look at their company from the
pe rspe c ti ve s of i nte rna l a nd ex te rna l c ustom- e rs,
e m p l oye e s, a n d s h a re h o l d e rs.
•
•
The Balanced Scorecard
should be used to:
link human resource management activi ties to the company ’s business strategy
and
evaluate the extent to which the HRM
function is helping the company meet its
s t rat e g i c o b j e c t i ve s.
THE BALANCED
SCORECARD
SOCIAL
RESPONSIBILITY
can help boost a company’s image with
customers, gain access to new markets,
and help attract and retain talented
employees.
CUSTOMER SERVICE AND QUALITY
EMPHASIS
Core values of TQM
Total Quality Management
(TQM)
A cooperative form of doing
business that relies on the talents
and capabilities of both labor and
management to continually improve
quality and productivity.
include the following:
∙ Methods and processes are designed to meet
the needs of internal and external customers.
∙ Every employee in the company receives
training in quality.
∙ Quality is designed into a product or service so
that errors are prevented from occurring rather than being detected and corrected.
∙ The company promotes cooperation with
vendors, suppliers, and customers to
improve quality and hold down costs.
∙ Managers measure progress with feedback
based on data.
CUSTOMER SERVICE AND QUALITY
EMPHASIS
01
02
03
04
Malcolm Baldrige National Quality
Award
An award established in 1987 to promote
quality awareness, to recognize quality
achievements
of U.S. companies, 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.
Lean Thinking
A process used to determine how to use less
effort, time, equipment, and space but still
meet customers’ requirements.
Changing Demographics and
Diversity of the Workforce
Examples of HR Practices That
Enhance Customer Service
Internal Labor Force
External Labor
Market
Important changes in the demographics and
diversity of the workforce (1) average age of the
workforce (2) the workforce will become more
diverse in terms of gender, race, and generations
(3) immigration will continue to affect the size and
diversity of the workforce.
How Managing Cultural Diversity
Can Provide Competitive
Advantage
MANAGING A DIVERSE
WORKFORCE
To successfully manage a diverse workforce,
managers must develop a new set of skills,
including:
1 . C o m m u n i c a t i n g e f f e c t i v e l y w i t h e m p l o ye e s f r o m a w i d e v a r i e t y
of cultural backgrounds.
2 . C o a c h i n g a n d d e v e l o p i n g e m p l o ye e s o f d i f f e r e n t a g e s ,
e d u c a t i o n a l b a c k g r o u n d s , e t h n i c i t y, p h ys i c a l a b i l i t y, a n d r a c e .
3. Providing performance feedback that is based on objective
o u t c o m e s r a t h e r t h a n v a l u e s a n d s t e r e o t yp e s t h a t w o r k a g a i n s t
women, minorities, and handicapped per - sons by prejudging
these persons’ abilities and talents.
4. Creating a work environment that makes it comfortable for
employees of all back - grounds to be creative and innovative.
5. Recognizing and responding to generational issues.
LEGAL and ETHICAL SSUES
Ethics
The fundamental principles of right
and wrong by which employees and compa- nies
interact.
Sarbanes-Oxley Act of 2002
A congressional act passed in response to illegal
and unethical behavior by managers and
executives. The act sets stricter rules for business;
especially accounting practices including requiring
more open and con- sistent disclosure of financial
data, CEOs’ assurance that the data is completely
accurate, and provisions that affect the employee–
employer relationship (e.g., development of
a code of conduct for senior financial officers).
PRINCIPLES OF ETHICAL
COMPANIES
Ethical HR practices:
First, HRM practices must result in the greatest good for the larg- est
number of people. Second, employment practices must respect basic
human rights of privacy, due process, consent, and free speech. Third,
managers must treat employees and customers equitably and fairly.
THE GLOBAL CHALLENGE
Entering International Markets
exporting their products
overseas, building manufacturing
facilities or service centers in
other countries, entering into
alliances with foreign companies,
and engaging in e-commerce.
OFFSHORING
Exporting jobs
from developed
to less
developed
countries.
RESHORING
Moving jobs from
over- seas to the
U.S.
LO 1-5
Identify how new technology, such
as social networking, is influencing
human resource management.
THE TECHNOLOGY CHALLENGE
Technology has reshaped the way we play, communicate,
plan our lives, and where we work. Many companies'
business models include e-commerce which allows
consumers to purchase products and services online. The
Internet is a global collection of computer networks that
allows users to exchange data and information.
Social Networking
Advances in sophisticated technology along with reduced costs
are changing many aspects of human resource management.
Social networking refers to websites such as Facebook, Twitter,
and LinkedIn, and wikis and blogs that facilitate social interaction
between people around shared interests. Technology has made
possible mobile technology such as personal digital assistants
(PDAs), iPads, and iPods.
Table 1.13 Potential Uses of Social Networking
Social networking can be
used for communication,
decentralized decision
making, and collaboration.
It can be useful for
employees to share
knowledge and ideas with
their peers and managers.
Employees from the
Millennial or Gen-Y
generations have learned
to use social networking
tools throughout their
lives.
Despite its potential advantages,
many companies are uncertain
as to whether they should
embrace social networking.
Some fear social networking will
result in employees wasting
time or offending co-workers.
Others believe the benefits of
allowing employees to access
social networks at work
outweigh the risks. Social
networking has become the
electronic substitute for
daydreaming at one's desk.
Robots, tracking systems, radio
frequency identification, and
nanotechnology are making work
more automated. Unlike humans,
robots have been unable to make
the distinctions between fabric
types and weights and irregular
clothes sizes that are needed to
neatly fold clothes. Technology
has also made it easier to monitor
environmental conditions and
employees and operate
equipment.
Amelia is a computer that learns from
textbooks, transcriptions of conversations,
and other texts. She can provide the correct
answer because prior to working on her own
she has worked alongside a human
customer service rep listening to every
support request received and the answers
given. Amelia helps to automate tasks, but
she is not alive. However, she does have
three emotional states, arousal, dominance,
and pleasure, which are influenced by how
customers communicate with her.
Wearable Intelligence gives
employees hands-free, voiceactivated access to procedures
and checklists. Bank of America
asked call center employees to
wear badges that contained
sensors to record their
movements and tone of
conversations. The data showed
that the most productive
employees belonged to cohesive
teams.
Use of HRIS, Mobile Devices, Cloud
Computing, and HR Dashboards
Use of HRIS, Mobile Devices, Cloud
Computing, and HR Dashboards
Human Resource Information System (HRIS)
Mobile Devices
A system used to acquire,
Equipment such as smartphones
store, manipulate, analyze,
and tablet computers that provide
retrieve, and distribute HR
employees with anytime, anywhere
access to HR applications and
information.
other work-related information.
HR Dashboard
Cloud Computing
HR metrics such as productivity and
absenteeism that are accessible by
employees and managers through
the company intranet or human
resource information system.
A computing system that
provides information technology
infrastructure over a network in a
self-service, modifiable, and ondemand model.
High-Performance Work Systems and Virtual Teams
Work systems that
maximize the fit
between
the company’s social
system and technical
system.
➢ High-performance
work systems maximize the fit
between the company’s social system (employees) and
its technical system.

Computer-integrated manufacturing uses robots
and computers to automate the manufacturing
process. The computer allows the production of
different products simply by reprogramming the
computer. As a result, laborer, material handler,
operator/assembler, and maintenance jobs may be
merged into one position.


Refer to teams that are separated by time,
geographic distance, culture, and/or
organizational boundaries and that rely almost
exclusively on technology (e-mail, Internet,
videoconferencing) to interact and complete
their projects
Virtual teams can be formed within one
company whose facilities are scattered
throughout the country or the world.

Art & Logic software developers all work remotely from across
the U.S. and Canada from home offices, rented office space, or
at a co-working Facility. Their clients represent a diverse set of
industries, including education, aero- space, music technology,
consumer electronics, entertainment, and financial services. The
project teams work on the most unusual and difficult problems,
which developers at other companies have failed to solve. Art &
Logic tries to accommodate the unique schedule and work-style
requirements of its developers, but its work is highly
collaborative within project teams. Every project consists of at
least a project manager/developer and has a maximum of five
to seven developers.
The HRM practices involved include employee selection,
performance management, training, work design, and
compensation.
Table 1.14.


Research studies suggest that highperformance work practices are usually
associated with increases.
Research also suggests that it is more
effective to improve HRM practices as a
whole,rather than focus on one or two
isolated practices (such as the pay
system or selection system).

•
EXAMPLE
HindlePower is a manufacturer of battery chargers. Most of
HindlePower’s 75 employees work in the factory as
assemblers. There is no time clock. Employees don’t abuse
the policy—hours in the factory consistently reach 97% to
100% of full time. Hindle established a program called the
Professional Manufacturing Team, which pairs training with
employee involvement in designing more efficient
processes. Employees are responsible for completing all of
the courses and when they do they are designated as a
manufacturing professional.
•
At Chrysler Dundee Engine plant, hourly
employees rotate jobs and shifts, giving the
company greater flexibility and employees more
family time. The plant’s culture emphasizes
problem solving and the philosophy that
anyone can do anything, anytime, anywhere.
Every employee is either a team member or a
team leader. Rotating jobs helps keep
employees motivated and reduces injuries. A
performance management system, accessible
on personal computers, alerts employees to
delays or breakdowns in productivity.
Employees are empowered to fix problems not
just managers or engineers.

Employees often have responsibility for hiring and firing
team members and can make decisions that influence
profits. As a result, employees must be trained in principles
of employee selection, quality, and customer service. They
need to understand financial data so they can see the link
between their performance and company performance.



In high-performance work systems, previously established
boundaries between managers and employees, employees and
customers, employees and vendors, and the various functions
within the company are abandoned
Employees, managers, vendors, customers, and suppliers
work together to improve service and product quality and to
create new products and services.
Line employees are trained in multiple jobs, communicate
directly with suppliers and customers, and interact frequently
with engineers, quality experts, and employees from other
functions.
High Performance Work Systems (HPWS) have become highly
important as a source of competitive advantage in today's
competitive business environment. Human resource
management capabilities are important for attracting, selecting,
retaining, motivating and developing the workforce in an
organization.
SUMMARY
➢ HR has three product lines: administrative services, business
partner services, and strategic services.
➢ To successfully manage HR, individuals need personal
credibility, business and technology knowledge,
understanding of business strategy, and ability to deliver HR
services.
➢ HR management practices should be evidence-based.
➢ HR practices are important for helping companies deal with
sustainability, globalization, and technology challenges.
➢ HR managers must address global and technology
challenges.
Human resource management refers to the
process of recruiting and developing a company’s
workforce. The HR department is concerned with
identifying talent gaps in a company, advertising
for positions, evaluating potential candidates, and
hiring top talent.
Human resource management does not just handle
the recruitment of new employees; it also oversees
redundancy for companies that want to downsize.
HR management also oversees orientation
programs to introduce new employees to the
company’s goals, objectives, and policies. Overall,
human resource management guarantees the
smooth running of employees within a company.
1.1 Explain why all managers need to understand the basics of HRM.
In a modern organization, human resources are one of the primary means of
creating a competitive advantage for the organization, because the ways we
manage people directly affects their performance. Companies with the highest
employee engagement over a 10-year period achieved 65% greater share-price
increase; 15% greater employee productivity; 30% greater customer
satisfaction; plus other significant advantages over their less engaged
competitors.67 HRM provides all managers with tools to engage their employees
and as a result increase employee productivity and company profitability.
1.2 Discuss how HRM helps meet management challenges to improve
organizational revenues.
Today’s HR department acts as a productivity center rather than a cost center,
enhancing the profitability of the company by improving employee productivity.
HRM practices primarily help to improve organizational efficiency. Employees
become more efficient if they are used correctly, which means that managers
don’t use up their time (the valuable resource that we get from employees) in an
inefficient manner. HR also assists in managing technology for efficiency, and
managing the four dependent variables that concern line managers.
1.3 Describe the major HRM discipline areas.
The legal environment: EEO and diversity management. This discipline deals with equal opportunity laws and
regulations as well as management of a diverse workforce.
Staffing. This discipline manages the processes involved in job analysis, recruiting, and selection into the
organization.
Training and development. This discipline has responsibility for the training processes within the organization,
for developing curricula and lesson plans, and for delivery of training courses. It is also involved with
development of talent within the company to provide a group of employees who will be able to move into more
senior positions that become vacant.
Employee relations. This area involves the coaching, counseling, and discipline processes, along with
employee communication and stress management. It is also typically responsible for the management of job
satisfaction and employee engagement.
Labor and industrial relations. This discipline works with the laws and regulations that control the
organization’s relationships with its workforce. It also works with any union-management contracts, including
but not limited to union votes, grievances, contract negotiations, and bargaining with union representatives.
Compensation and benefits. This discipline works with pay of various types and with benefits packages, all of
which are designed to attract and keep the right mix of employees in the organization. It also deals directly with
all of the federal and state compensation laws to ensure compliance.
Safety and security. This discipline works to ensure that the environment on the job is safe for all workers so
that on-the-job injuries and illnesses are minimized to the greatest extent possible. It also involves managing
the organization’s planning for securing the workforce, both from being harmed by other people and from
natural disasters such as earthquakes or tornados.
Ethics and sustainability. This discipline bears responsibility for seeing to it that the organization acts in an
ethical and socially responsible manner, to minimize harm to the environment and its various stakeholders. It
involves managing the sustainability efforts in the organization to minimize the depletion of worldwide
resources caused by the organization carrying out its processes.
1.4 Recall the primary difference between line and staff managers by their major
HR responsibilities.
The HR staff have the primary responsibility of developing the policies and
programs with its HR disciplines for everyone in the organization to implement
on a daily basis. The line managers are responsible for implementing the HR
policies and all other processes within their departments.
1.5 Summarize the major HRM skill sets.
The HRM skill sets include technical skills, interpersonal skills, conceptual and
design skills, and business skills. Technical skills include the ability to use
specialized knowledge, methods, and techniques to perform a
task. Interpersonal skills provide the ability to understand, communicate, and
work well with individuals and groups through developing effective
relationships. Conceptual and design skills provide the ability to evaluate a
situation, identify alternatives, select an alternative, and implement a solution to
the problem. Finally, business skills provide analytical and quantitative skills,
including the in-depth knowledge of how the business works and of its
budgeting and strategic planning processes.
1.6 Identify the most common HRM certification programs and their parent
organizations.
The primary certifications are carried out by SHRM, ATD, HRCI, and WorldatWork.
SHRM’s “competency-based” certification programs include the SHRM Certified
Professional and Senior Certified Professional (SHRM-CP and SHRM-SCP). ATD
training and development certifications include the Certified Professional in Learning and
Performance (CPLP) and the Human Performance Improvement (HPI) certification.
HRCI maintains certification programs for Professional in Human Resources (PHR), a
senior version (SPHR), and a global version (GPHR). Finally, certifications from
WorldatWork include Certified Compensation Professional (CCP), Certified Benefits
Professional (CBP), Global Remuneration Professional (GRP), and others.
1.7 Explain the practitioner’s model for HRM and how it applies to this book.
The practitioner’s model shows the relationships between each of the functions and disciplines
within HRM. On the first level are the items that are absolutely critical to the organization if it is
going to continue to operate (and stay within federal and state laws while doing so) and be
stable and successful for a significant period of time. The second level encompasses those
things that are required to identify the kinds of jobs that must be filled and then recruit and select
the right types of people into those jobs so the company can maximize productivity over the long
term. These items will allow the organization to get its work done successfully over long periods
of time. In the third tier, we concern ourselves with management of the human resources that we
selected in the second level. We have to get them training to do their jobs and allow them to
perform those jobs for a period of time. We then have to appraise their performance and, if
necessary, correct behaviors that are not allowing them to reach their maximum potential. As
this is occurring, we need to ensure that we maintain positive relationships with our employees
so they remain engaged and productive. In the fourth tier, we want to make sure we reward our
workforce reasonably through fair and reasonable compensation planning to minimize
unnecessary turnover and dissatisfaction. In the last tier, we provide for employee safety and
health, and also turn our attention to organizational ethics and the issues surrounding global
business operations because these issues will allow us to sustain our workforce and continue to
thrive.
Meeting Competitive Challenges
through HRM Practices
We have discussed the global, stakeholder,
new economy, and high-performance work
system challenges U.S. companies are facing.
We have emphasized that management of
human resources plays a critical role in
determining companies’ success in meeting
these challenges. HRM practices have not
traditionally been seen as providing
economic value to the company. Economic
value is usually associated with equipment,
technology, and facilities.
However, HRM practices have been shown to
be valuable. Compensation, staffing, training
and development, performance
management, and other HRM practices are
investments that directly affect employees’
motivation and ability to provide products and
services that are valued by customers.
Research has shown that companies that
attempt to increase their competitiveness by
investing in new technology and becoming
involved in the quality movement also invest
in state-of-the-art staffing, training, and
“
Managing the Human Resource
Environment
Managing internal and external
environmental factors allows
employees to make the greatest
possible contribution to company
productivity and competitiveness.
Creating a positive environment for
human resources involves
∙ Linking HRM practices to the
company’s business objectives—that is,
strategic human resource
management.
∙ Ensuring that HRM practices comply
with federal, state, and local laws.
∙ Designing work that motivates and
satisfies the employee as well as
maximizes customer service, quality,
and productivity
Acquiring and Preparing Human Resources
Customer needs for new products or services
influence the number and type of employees
businesses need to be successful.
Terminations, promotions, and retirements
also influence human resource requirements.
Managers need to predict the number and
type of employees who are needed to meet
customer demands for products and
services. *Managers must also identify
current or potential employees who can
successfully deliver products and services.
This area of human resource management
deals with
∙ Identifying human resource requirements—
that is, human resource planning, recruiting
employees, and selecting employees.
∙ *Training employees to have the skills
needed to perform their jobs
”
Assessment and Development of Human
Resources
“
Managers need to ensure that employees have the
necessary skills to perform current
and future jobs. As we discussed earlier, because of
new technology and the quality
movement, many companies are redesigning work
so that it is performed by teams.
As a result, managers and employees may need to
develop new skills to succeed in
a team environment. Companies need to create a
work environment that supports
employees’ work and nonwork activities. This area
of human resource management
addresses
∙ Measuring employees’ performance.
∙ Preparing employees for future work roles and
identifying employees’ work interests, goals, values,
and other career issues.
Creating an employment relationship and work
environment that benefits both the company and
the employee.
Compensating Human Resources
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. Also, pay
and benefits are used to reward
employees’ membership in the company
and attract new employees. The positive
influence of new work designs, new
technology, and the quality movement on
productivity can be damaged if employees
are not satisfied with the level of pay and
benefits or believe pay and benefits are
unfairly distributed. This area of human
resource management includes
”
∙ Creating pay systems.
∙ Rewarding employee contributions.
∙ Providing employees with benefits.
Special Issues
In some companies, employees are represented by a labor union.
Managing human resources in a union environment requires knowledge
of specific laws, contract administration, and the collective bargaining
process.
Many companies are globally expanding their business through joint
ventures, mergers, acquisitions, and establishing new operations.
Successful global expansion depends on the extent to which HRM
practices are aligned with cultural factors as well as management of
employees sent to work in another country. Human resource
management practices must contribute to organizational effectiveness.
Human resource management practices of both managers and the
human resource function must be aligned and contribute to the
company’s strategic goals.
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