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Chapter 1
Human Resource
Management: Gaining a
Competitive Advantage
Human Resource Management
Gaining A Competitive Advantage
THIRTEENTH EDITION
Raymond Noe, John Hollenbeck, Barry
Gerhart, Patrick Wright
© 2023 McGraw Hill, LLC. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill, LLC.
Learning Objectives
1
1-1 Discuss the roles and activities of a company’s human
resource management function.
1-2 Discuss the implications of the economy, the makeup of
the labor force, and ethics for company sustainability.
1-3 Discuss how human resource management affects a
company’s balanced scorecard.
1-4 Discuss what companies should do to compete in the
global marketplace.
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Learning Objectives
2
1-5 Identify how social networking, artificial intelligence, and
robotics are influencing human resource management.
1-6 Describe how automation using artificial intelligence and
robotics has the potential to change jobs.
1-7 Discuss human resource management practices that
support high-performance work systems.
1-8 Provide a brief description of human resource
management practices.
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Introduction
Human Resource Management (HRM):
• Plays a role in company’s survival, effectiveness, and
competitiveness.
• Refers to the policies, practices, and systems that
influence employees’ behavior, attitudes, and performance.
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Figure 1.1 Human Resource Management
Practices
Access the text alternative for slide images.
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What Responsibilities and Roles Do HR
Departments Perform?
1
High-Impact HR Functions:
• More integrated with the business.
• Skilled at attracting and retaining employees.
• Can adapt quickly.
• Identify and promote talent from within.
• Identify what motivates employees.
• Continuously building talent and skills.
LO 1-1
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What Responsibilities and Roles Do HR
Departments Perform?
2
HR Department Responsibilities.
• Outplacement.
• Labor law compliance.
• Record keeping.
• Testing.
• Unemployment compensation.
• Some aspects of benefits administration.
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Table 1.1 Responsibilities of HR
Departments
1
FUNCTION
RESPONSIBILITIES
Analysis and design
of work.
Job analysis, work analysis, job descriptions.
Recruitment and
selection.
Recruiting, posting job descriptions, interviewing, testing,
coordinating use of temporary employees.
Training and
development.
Orientation, skills training, development programs, career
development.
Performance
management.
Performance measures, preparation and administration of
performance appraisals, feedback and coaching, discipline.
Compensation and
benefits.
Wage and salary administration, incentive pay, insurance,
vacation, retirement plans, profit sharing, health and
wellness, stock plans.
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Table 1.1 Responsibilities of HR
Departments
2
FUNCTION
RESPONSIBILITIES
Employee
relations/labor relations.
Attitude surveys, employee handbooks, labor law
compliance, relocation and outplacement services.
Personnel policies.
Policy creation, policy communications.
Employee data and
information systems.
Record keeping, HR information systems, workforce
analytics, social media, intranet and Internet access.
Legal compliance.
Policies to ensure lawful behavior; safety inspections,
accessibility accommodations, privacy policies, ethics.
Support for business
strategy.
Human resource planning and forecasting, talent
management, change management, organization
development.
SOURCES: Bureau of Labor Statistics. 2019. U.S. Department of Labor, Occupational Outlook Handbook, Human
Resources Specialists; SHRM-BNA Survey No. 66. 2001. “Policy and Practice Forum: Human Resource Activities,
Budgets, and Staffs, 2000–2001.” Bulletin to Management, Bureau of National Affairs Policy and Practice Series.
Washington: Bureau of National Affairs.
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Figure 1.2 HR as a Business with Three
Product Lines
SOURCE: Adapted from Figure 1, “HR Product Lines” in E. E. Lawler, “From Human Resource Management to Organizational Effectiveness,” Human Resource
Management 44 (2005), pp. 165–69.
Access the text alternative for slide images.
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Strategic Role of the HRM Function
1
HRM Role:
• Time spent on administrative tasks is decreasing.
• Roles as a strategic business partner, change agent, and
employee advocate are increasing.
• Shared service model:
• Central place for administrative and transactional tasks.
• Includes centers of expertise or excellence, service centers,
and business partners.
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Strategic Role of the HRM Function
2
Role of Technology:
• Reducing HRM role in administrative tasks, maintaining records,
and providing self-service to employees.
• Shift to self-service gives employees access to many HR
functions.
• HR managers have more time to work with managers on
employee issues.
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Strategic Role of the HRM Function
3
Outsourcing:
• Most commonly outsourced activities:
• Benefits administration.
• Relocation.
• Payroll.
• Most common reasons for outsourcing:
• Cost savings.
• Increased ability to recruit and manage talent.
• Improved HR service quality.
• Protection of the company from potential lawsuits by standardizing
processes such as selection and recruitment.
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Strategic Role of the HRM Function
4
Strategic Role:
• Lead efforts focused on talent management and performance
management.
• Use and analyze data to make a business case for ideas and
problem solutions.
• Use people management skills across the business.
• Structure and responsibilities changing to ensure strategic role.
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Table 1.2 Questions to Ask: Is HRM
Playing a Strategic Role in the Business?
Questions to ask:
1. What is HRM doing to provide value-added services to internal clients?
2. Do the actions of HRM support and align with business priorities?
3. How are you measuring the effectiveness of HRM?
4. How can we reinvest in employees?
5. What HRM strategy will we use to get business from point A to B?
6. From an HRM perspective, what should we be doing to improve our
marketplace position?
7. What’s the best change we can make to prepare for the future?
8. Do we react to business problems or anticipate them in advance?
SOURCES: Based on S. Milligan, "HR 2025: Reach New Heights By Becoming A Trusted Advisor", H R Magazine, November/December 2018, pp.
30-38; D. Ulrich, D. Kryscynski, M. Ulrich, and W. Brockbank, Victory Through Organization (New York: McGraw-Hill Education, 2017); P.
Wright, Human Resource Strategy: Adapting to the Age of Globalization (Alexandria, V A: Society for Human Resource Management Foundation,
2008).
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Strategic Role of the HRM Function
5
Demonstrating the Strategic Value of HRM: HR Analytics and
Evidenced-Based HR.
• HR can engage in evidence-based HR.
• Requires use of HR or workforce analytics.
• Big data:
• Information merged from HR databases, corporate financial
statements, employee surveys, and other data sources.
• Results in evidence-based HR decisions.
• Show that HR practices influence the organization’s bottom line,
including profits and costs.
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Strategic Role of the HRM Function
6
The HRM Profession: Positions and Jobs.
• Primary activities involve performing the HR generalist
role.
• Fewer HR professionals involved in HR functions at the
executive level, training and development, HR consulting,
and administrative activities.
• Overall employment in HR-related positions expected to
grow by 7 percent between 2019 and 2029.
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Table 1.3 Median Salaries for HRM Positions
POSITION
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SALARY
Chief human resource officer (CHRO)
$251,000
Global HR manager
133,000
Management development manager
129,300
Health and safety manager
112,328
Employee benefits manager
104,760
HR manager
105,554
Mid-level labor relations specialist
87,700
Campus recruiter
71,161
Entry-level HRIS specialist
59,300
HR generalist
58,495
Entry-level compensation analyst
61,764
Entry-level employee training specialist
53,100
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Strategic Role of the HRM Function
7
Education and Experience.
Four-year college or graduate HR degree.
• Senior HR role:
• Developing and supporting the company culture.
• Employee recruitment, retention, and engagement.
• Succession planning.
• Designing company’s overall HR strategy.
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Strategic Role of the HRM Function
8
Education and Experience.
• Junior HR role:
• Handle transactions related to paperwork, benefits, and payroll
administration.
• Answer employee questions.
• Data management.
• Professional certification.
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Strategic Role of the HRM Function
9
Competencies and Behaviors.
• Most HRM professionals are generalists.
• Lack business acumen.
• Need nine competencies developed by SHRM.
• Primary professional organization for HRM with more than 300,000
members.
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Strategic Role of the HRM Function
10
Nine Competencies:
1. HR Technical Expertise and Practice.
• Apply principles of HRM to contribute to success of the business.
2. Business Acumen.
• Understand business functions and metrics within the organization
and industry.
3. Critical Evaluation.
• Interpret information to determine return on investment and
organizational impact in making recommendations and business
decisions.
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Strategic Role of the HRM Function
11
Nine Competencies.
4. Ethical Practice.
• Integrate core values, integrity, and accountability throughout all
organizational and business practices.
5. Global and Cultural Effectiveness.
• Manage HR both within and across boundaries.
6. Communications.
• Effectively exchange and create free flow of information with and
among various stakeholders at all levels of the organization to
produce meaningful outcomes.
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Strategic Role of the HRM Function
12
Nine Competencies.
7. Organizational Leadership and Navigation.
• Direct initiatives and processes within the organization and gain
buy-in from stakeholders.
8. Consultation.
• Provide guidance to stakeholders such as employees and leaders
seeking expert advice on a variety of circumstances and situations.
9. Relationship Management.
• Manage interactions with and between others with specific goal of
providing service and organizational success.
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Competitive Challenges Influencing
Human Resource Management
1
Competing Through Environment, Social, and Governance
(ESG) Practices.
• Sustainability:
• Company’s ability to meet its needs without sacrificing the ability of
future generations to meet their needs.
• Company must meet stakeholders’ needs.
• ESG practices must be part of company’s business model to gain
competitive advantage and reduce legal risks.
LO 1-2
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Figure 1.4 Competitive Challenges
Influencing U.S. Companies
Access the text alternative for slide images.
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Competitive Challenges Influencing
Human Resource Management
2
Deal with the Workforce and Employment Implications of the
Economy:
• Skill demands for jobs have changed.
• Remaining competitive in global economy requires demanding
work hours and changes in traditional employment patterns.
• Companies give more attention to HR practices that influence
their ability to attract and retain employees.
• The U.S. economy in 2020 shrank for the first time since 2008.
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Table 1.4 Highlights of Employment
Projections to 2029
HIGHLIGHTS
•
An increase of 6 million jobs is expected between 2019 and 2029. This results from
employment growing from 162.8 million to 168.8 million by 2029.
•
The labor force is expected to increase by 8.0 million (from 163.5 million in 2019 to
171.5 million in 2029).
•
Today, 93% of U.S. jobs are nonagricultural wage and salary jobs: 13% are in goodsproducing industries (mining, construction, manufacturing); 80% are in service-providing
industries; and 1.4% in agriculture, forestry, fishing, and hunting. The distribution of jobs
across industries is projected to be similar in 2029.
•
46.5 million job openings are expected, with more than three-fourths resulting from the
need to replace workers who retire or leave an occupation.
•
Most new jobs added between 2019 and 2029 will be in service-providing occupations.
•
Of the 30 fastest-growing occupations, almost half are related to health care and related
occupations (such as home health-care aid, personal care aids, physicians assistants,
and nurse practitioners). Other occupations are energy-related or in computer and
information technology.
SOURCES: Bureau of Labor Statistics, U.S. Department of Labor, “Table 2.1, Employment by Major Industry Sector," https://www.bls.gov/emp/tables/employment-by-major-industrysector.htm, accessed March 18, 2021; Bureau of Labor Statistics, U.S. Department of Labor, “Employment Projections: 2019-2029,” September 20, 2020, www.bls.gov/emp, accessed
March 18, 2021.
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Competitive Challenges Influencing
Human Resource Management
3
Understand and Enhance the Value Placed on Intangible
Assets and Human Capital.
• Three types of assets:
1. Financial assets (cash and securities).
2. Physical assets (property, plant, equipment).
3. Intangible assets (human capital, customer capital,
social capital, intellectual capital).
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Table 1.6 Examples of Intangible Assets
Human capital.
Social capital.
• Tacit knowledge.
• Education.
• Corporate culture.
• Management philosophy.
• Management practices.
• Informal networking systems.
• Coaching/mentoring
relationships.
• Work-related know-how.
• Work-related competence.
Customer capital.
• Customer relationships.
• Brands.
• Customer loyalty.
• Distribution channels.
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Intellectual capital.
• Patents.
• Copyrights.
• Trade secrets.
• Intellectual property.
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Competitive Challenges Influencing
Human Resource Management
4
Understand and Enhance the Value Placed on Intangible
Assets and Human Capital.
• Knowledge workers.
• Contribute specialized knowledge.
• Training Options:
• Upskilling or reskilling current employees.
• Hire and train employees who lack the complete skill set.
• Partner with local, federal and state sponsored and funded
organizations.
• Train hard-to-employ individuals.
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Competitive Challenges Influencing
Human Resource Management
5
Emphasize Empowerment and Continuous Learning:
• Give employees responsibility and authority.
• Hold them accountable.
• Employees share in the rewards and losses.
• Learning organization.
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Competitive Challenges Influencing
Human Resource Management
6
Adapt to Change:
• Inevitable.
• Employees expected to take more responsibility for own
careers.
• Challenge is how to build a committed, productive workforce.
• Employees manage change through agility.
• Changes in the employment relationship.
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Competitive Challenges Influencing
Human Resource Management
7
Maximize Employee Engagement:
• Passionate about their work.
• Committed to the company and its mission.
• Work hard to contribute.
• Measured with attitude or opinion surveys.
• Focus on employee experience.
• Employee value proposition (EVP).
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Table 1.7 Common Themes of Employee
Engagement
COMMON THEMES OF EMPLOYEE ENGAGEMENT
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 one’s job and company’s mission.
9. Prospects for future growth with the company.
10. Intention to stay with the company.
SOURCES: Based on R. Vance, Employee Engagement and Commitment (Alexandria, V A: Society for Human Resource Management, 2006); T.
Lytle, “The Engagement Challenge,” H R Magazine, October 2016, pp. 52–58.
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Competitive Challenges Influencing
Human Resource Management
8
Manage Talent:
• Acquiring and assessing employees.
• Learning and development.
• Performance management.
• Compensation.
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Competitive Challenges Influencing
Human Resource Management
9
Consider Nontraditional Employment and the Gig
Economy:
• Between 20 and 35% of total U.S. workforce.
• Workers set own schedule and do not work for a company.
• Offers flexibility.
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Competitive Challenges Influencing
Human Resource Management
10
Provide Flexibility to Help Employees Meet Work and Life
Demands.
• 46% of employees work more than 45 hours per week.
• Both the company and employees can benefit.
• Desire to continue working remotely post-pandemic.
• Companies’ policies on remote work vary.
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Competitive Challenges Influencing
Human Resource Management
11
Meet the Needs of Stakeholders, Shareholders, Customers,
Employees, and Community.
• Demonstrate performance to stakeholders: the balanced
scorecard.
• Being customer-focused.
• Improving quality.
• Emphasizing teamwork.
• Reducing new product and service development times.
• Managing for the long term.
LO 1-3
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Table 1.8 The Balanced Scorecard
QUESTIONS
ANSWERED
EXAMPLES OF CRITICAL
BUSINESS INDICATORS
Customer
How do customers
see us?
Time, quality, performance,
service, cost
Employee satisfaction with HR
department services; Employee
perceptions of the company as
an employer
Internal
What must we
excel at?
Processes that influence
customer satisfaction,
availability of information on
service, and/or manufacturing
processes
Training costs per employee,
turnover rates, time to fill open
positions
Innovation and
learning
Can we continue to
improve and create
value?
Improve operating efficiency,
launch new products,
continuous improvement,
empowering of workforce,
employee satisfaction
Employee/skills competency
levels, engagement survey
results, change management
capability
Financial
How do we look to
shareholders?
Profitability, growth,
shareholder value
Compensation and benefits per
employee, turnover costs, profit
per employee, revenue per
employee
PERSPECTIVE
CRITICAL HR INDICATORS
SOURCES: Based on K. Thompson and N. Mathys, “The Aligned Balanced Scorecard,” Organizational Dynamics 37 (2008), pp. 378–93; B. Becker, M. Huselid,
and D. Ulrich, The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press, 2001).
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Competitive Challenges Influencing
Human Resource Management
12
Demonstrate Social Responsibility.
• Helps boost company’s image with customers.
• Helps gain access to new markets.
• Helps attract and retain talented employees.
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Competitive Challenges Influencing
Human Resource Management
13
Emphasize Customer Service and Quality.
• Total quality management (TQM) five core values:
1. Methods and processes are designed to meet internal and
external customers’ needs.
2. Every employee receives training in quality.
3. Managers measure progress with feedback based on data.
4. Promote cooperation with vendors, suppliers and customers.
5. Quality is designed into a product or service so that errors are
prevented rather than being detected and corrected.
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Competitive Challenges Influencing
Human Resource Management
14
Malcolm Baldrige National Quality Award.
• Competition that promotes quality.
ISO (International Organization for Standardization) 9000
Standards.
• International standards of quality.
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Competitive Challenges Influencing
Human Resource Management
15
Six Sigma:
• Process of measuring, analyzing, improving, and controlling
processes.
Lean Thinking and Process Improvement.
• Do more with less effort, equipment space, and time.
• Improve quality of employees’ work experiences.
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Competitive Challenges Influencing
Human Resource Management
16
Recognize and Capitalize on the Demographics and
Diversity of the Workforce.
• Internal labor force.
• External labor market.
• Average age of workforce will increase.
• Increased workforce diversity.
• Immigration will affect size and diversity.
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Competitive Challenges Influencing
Human Resource Management
17
Aging of the Workforce:
• Labor force participation of those 55 years and older expected
to grow.
• HRM issues such as career plateauing, retirement planning, and
retraining older workers.
The Multigenerational Workforce:
• Five generations.
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Figure 1.5 Comparison of the Age Distribution
of the 2019 and 2029 Labor Forces
SOURCE: U.S. Bureau of Labor Statistics, “Employment Projections, Civilian Labor Force, by Age, Sex, Race, and Ethnicity,” https://www.bls.gov/emp/tables/civilian-labor-forcesummary.htm, accessed February 13, 2021.
Access the text alternative for slide images.
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Table 1.10 Generations in the Workforce
YEAR BORN GENERATION
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AGES
1925 to 45
Traditionalists
Silent Generation
>76
1946 to 64
Baby Boomers
57 to 75
1965 to 80
Generation X
41 to 56
1981 to 95
Millennials
Generation Y
Echo Boomers
26 to 40
1996
Generation Z
<25
48
Competitive Challenges Influencing
Human Resource Management
18
A Workforce of Mixed Gender, Race, and Nationality.
• Diversity of workforce increasing.
• Immigration is contributing.
• Percentage of highly skilled immigrants now exceeds percentage of
low-skilled immigrants.
• Legal versus illegal immigration.
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Figure 1.6 The U.S. Workforce, 2029
SOURCE: K. Dubina, J. Kim, E. Rolen, & M. Rieley, “Projections Overview and Highlights, 2019-2029,” Monthly Labor Review, U.S. Bureau of Labor
Statistics, September 2020, https://doi.org/10.21916/mlr. 2020.21.
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Competitive Challenges Influencing
Human Resource Management
19
Legal Issues:
• Employment laws and regulations.
• Eliminating discrimination and harassment.
• Health care coverage.
• Immigration.
• Data security practices and protecting intellectual property.
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Competitive Challenges Influencing
Human Resource Management
20
Ethical Issues:
• Ethics are the fundamental principles of right and wrong.
• 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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Figure 1.7 Principles of Ethical Companies
Access the text alternative for slide images.
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Competitive Challenges Influencing
Human Resource Management
21
Ethical Issues.
• HR managers must satisfy these standards for their practices to
be considered ethical:
1. HRM practices must result in greatest good for largest number of
people.
2. Employment practices must respect basic human rights of privacy,
due process, consent, and free speech.
3. Managers must treat employees and customers equitably and
fairly.
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Competitive Challenges Influencing
Human Resource Management
22
Competing through Globalization.
• U.S. businesses must:
• Develop global markets.
• Use their practices to improve global competitiveness.
• Better prepare employees for global assignments.
LO 1-4
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Competitive Challenges Influencing
Human Resource Management
23
Competing through Globalization.
• Entering International Markets.
• Exporting products overseas.
• Building manufacturing facilities or service centers in other
countries.
• Entering into alliances with other companies.
• Engaging in e-commerce.
• Offshoring and reshoring.
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Competitive Challenges Influencing
Human Resource Management
24
Competing through Technology.
• Social networking:
• Facilitates communication, decentralized decision making, and
collaboration.
• Artificial intelligence and robotics:
• Provide skills that are difficult to find.
• Perform some job tasks previously completed by employees.
• May eliminate some jobs.
LO 1-5 & 1-6
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Competitive Challenges Influencing
Human Resource Management
25
Competing through Technology.
• High-performance work systems.
• Maximize the fit between employees and technology.
• Employees, managers, vendors, customers, and suppliers work
together.
• Virtual teams:
• Formed within one company or via partnerships with suppliers or
competitors.
LO 1-7
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Competitive Challenges Influencing
Human Resource Management
26
Competing through Technology.
• Use HRIS, mobile devices, cloud computing, and HR
dashboards:
• HRIS stores large quantities of employee data.
• Mobile devices increasingly used to provide employees with
anytime, anywhere access to HR applications.
• Cloud computing allows companies to lease software and
hardware.
• HR dashboard provides access to important HR metrics for
workforce analytics.
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Meeting Competitive Challenges through
HRM Practices
Three Challenges:
1. Globalization.
2. Sustainability.
3. Technology.
LO 1-8
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Figure 1.8 Examples of How HRM Practices Can
Help Companies Meet Competitive Challenges
Access the text alternative for slide images.
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Figure 1.9 Major Dimensions of HRM Practices
Contributing to Company Competitiveness
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