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Changing Nature of Human Resource Management
CHAPTER OBJECTIVES
1. Identify four major challenges currently facing organizations and managers.
2. List and define each of the seven major categories of HR activities.
3. Identify the three different roles of HR management.
4. Discuss the three dimensions associated with HR management being a strategic contributor.
5. Explain why HR professionals and operating managers must view HR management as an
interface.
6. Discuss why ethical issues and professionalism affect HR management.
SUMMARY OF THE CHAPTER
Human resource (HR) management deals with the design of formal systems in an
organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. The management of human resources means that they must be recruited,
compensated, trained, and developed.
Today’s HR management faces challenge and change across a wide range of issues. The most
commonly recognized challenges include:

Economic and technological change

Workforce availability and quality concerns

Demographics and diversity issues

Organizational restructuring
A major economic change involves the shift of jobs from manufacturing and agriculture to
service industries and telecommunications. Pressures from global competitors has had significant
impact on U.S. employers. Finally, the explosive growth of information technology, particularly
the influence of the Internet on business and in our personal lives, has forced many changes in
the business community.
Today’s significant workforce shortages have created new pressures on HR professionals to
effectively recruit and train workers. Employers are often unable to find enough qualified
workers for the growing number of “knowledge jobs”. Educational systems, especially those
serving minorities, fail many times to meet the basic literacy and mathematical skills needs of
today’s workforce. To meet this challenge, HR management must actively partner with public
school systems, more accurately assess current and future knowledge and skills requirements,
ensure training opportunities are available for all employees, not just managers and professionals,
and increase the use of technology and other individualized training methods.
Contingent workers are a major part of today’s workforce. This new reliance on “contingent
workers”, i.e., temporary workers, independent contractors, lease employees, and part-timers,
significantly changes the way human resources are managed.
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Employees today are more diverse than ever. Women are in the workforce in much greater
numbers. The average age of the workforce is considerable older than before and the racial/ethnic
mix is undergoing rapid change. Asian and Hispanic workers are increasing in greater numbers
than African-Americans and all of the so-called minority workers are increasing in greater
numbers than whites.
All of these changes create new pressures on HR professionals to ensure that diverse groups
are managed and treated equitably in organizations. Diversity training has become an essential
part of an organization’s training efforts rather than the “nice to have” category it once had. All
of the classic HR functions now need realignment in order to effectively respond to changing
workforce needs. Other workforce changes include the aging of the workforce, balancing work
and family, and redefining the “traditional” family.
Organizational restructuring include issues such as downsizing, rightsizing, mergers,
reengineering, and job redesign. The dichotomy of today’s workforce is seen in the fact whereas
many large firms have cut jobs and reduced their workforces, many smaller firms have continued
to create jobs. This environment creates a new HR challenge much discussed in today’s media:
how to deal with the human consequences of change.
The central focus of HR management is enhancing organizational performance through
activities focusing on productivity, service, and quality. The productivity of human resources in
an organization is affected significantly by management efforts, programs, and systems. The
quality of products and services also affects an organization’s long-term success and because
people produce an organization’s products and services, HR management considerations must be
included when identifying service blockages and operational processes.
HR management consists of several groups of interlinked activities which are:
*
HR Planning and Analysis
*
Equal Employment Opportunity
*
Staffing
*
HR Development
*
Compensation and Benefits
*
Health, Safety, and Security
*
Employee and Labor/Management Relations
Additionally, external environmental forces such as legal, political, economic, social,
cultural, and technological also are important.
HR management is undergoing transition because organizations themselves are changing.
Even terminology is changing. “Personnel” has, for the most part, become “human resources
management”. Traditionally, HR has been viewed as the “employee advocate” in organizations
with little understanding of the organization’s business realities.
In fact, HR plays a valuable role as the “champion” for employees and employee issues. HR
professionals spend considerable time on HR “crisis management” dealing with both work and
non-work related employee problems. An important facet of employee advocacy is the assurance
of fair and equitable treatment regardless of a person’s background or circumstances. Absent this
perspective, organizations would face even more lawsuits and regulatory problems than they do
now.
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HR management has three roles in an organization: administrative, operational, and strategic.
The administrative role focuses heavily on processing and record keeping. While this role must
be performed efficiently, it sometimes leads to the conclusion that HR is simply a paper shuffler.
HR’s operational activities are tactical in nature. They address compliance requirements,
interviewing and selection, training, safety, and wage and salary administration among other
things. HR professionals typically must be able to design and implement operational policies and
programs in an organization.
Organizational human resources have grown as a strategic emphasis because the effective use
of people in an organization can provide a competitive advantage, both domestically and abroad.
HR’s strategic role emphasizes people as valuable resources representing significant
organizational investments. It focuses on the longer-term implications of HR issues.
One of the most important shifts in the past few years has been the recognition of HR as a
strategic business partner. This role has several facets including enhancing organizational
performance, involvement in strategic planning, decision making on mergers, acquisitions, and
downsizing, organizational redesign, and financial accountability for HR results. To be strategic
contributors, HR professionals must measure what their activities produce as organizational
results, specifically as a return on its HR investments.
Another goal for those focusing on HR management, as well as operating executives and
managers, is to enhance the human capital of the organization, that is, the total value of human
resources to an organization. HR’s role is to ensure that all people, regardless of their
circumstances or backgrounds, are provided opportunities to develop their capabilities.
As a strategic business partner, HR is responsible to ensure an adequate supply of people
with the capabilities needed to fill organizational jobs. As skills shortages increase, the ability to
attract people with the requisite skills to the organization requires more creative planning. Also,
HR activities in organizations must be revised in order to retain employees. These activities
include developing existing human resource capabilities, identifying and rewarding performance,
delivering cost-effective compliance systems, ensuring legal compliance, and demonstrating
administrative efficiency.
HR management, as a specialized function, began its formal emergence in organizations
shortly before 1900. As organizations grew, functions such as purchasing and personnel began to
be performed by specialists. The passage of several major labor laws in the 1930s led to the
growth of labor unions which expanded the responsibilities of the personnel function in many
organizations. During the 1940s and 1950s, personnel’s s staff functions continued to increase.
Between the 1960s and the 1980s, increased social legislation forced dramatic changes in HR.
Organizational restructuring and benefits cost containment issues had a profound effect on HR.
in the 1990s, the change is toward increased strategic roles for HR. Economic pressures, skilled
labor shortages, and other complex HR challenges lie ahead.
Cooperation between people who specialize in HR management and other managers is
critical to organizational success. This cooperation requires contact, or interface, between the two
groups. HR management is a concern of both the managers and the HR unit in an organization.
As an organization grows, so does the need for a separate HR department. In a growing
number of organizations, some specialty HR activities are being contracted to outside providers
and consultants.
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Ethical issues in HR management have proliferated, and must be faced in all types and sizes
of organizations. Ethical issues are ones that pose fundamental questions about fairness, justice,
truthfulness, and social responsibility.
The effective management of human resources requires professionals. There are several
levels of HR jobs ranging from executive to clerical in nature. Preparation for a career in HR
includes broad and specialized education, experience, professional involvement, and
certification.
CHAPTER OUTLINE
Learning Objectives
HR Transitions: HR Management Contributes to Organizational Success
HR MANAGEMENT CHALLENGES
Economic and Technological Change
Occupational Shifts
Global Competition
Workforce Availability and Quality
Workforce Quality Deficit
Growth in Contingent Workforce
Demographics and Diversity
Racial/Ethnic Diversity
Aging of the Workforce
Balancing Work and Family
Organizational Restructuring
HR MANAGEMENT ACTIVITIES
HR Planning and Analysis
Equal Employment Opportunity
Staffing
HR Development
Compensation and Benefits
Health, Safety, and Security
Employee and Labor/Management Relations
HR MANAGEMENT IN TRANSITION
HR as Employee Advocate
Administrative Role of HR Management
Operational Role of HR Management
Strategic Role of HR Management
HR MANAGEMENT AS STRATEGIC BUSINESS CONTRIBUTOR
Enhancing Organizational Performance
Involvement in Strategic Planning
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Decision-Making on Mergers, Acquisitions, and Downsizing
Redesigning Organizations and Work Processes
Ensuring Financial Accountability for HR Results
Expanding Human Capital
Attracting and Retaining Human Resources
HR Perspective: Workforce Availability—Tight Now and Getting Worse
Developing Human Resource Capabilities
Identifying and Rewarding Performance
Delivering Cost-Effective Compliance Systems
Ensuring Legal Compliance
Demonstrating Administrative Efficiency
MANAGING HR ACTIVITIES
Evolution of HR Management
1930s to 1950s
1960s to 1980s
1990s
Organizing the HR Unit
HR Management Costs
Decentralizing HR Activities
Outsourcing HR Activities
HR Perspective: Research on HR Outsourcing
Ethics and HR Management
What Is Ethical Behavior? [BNA: Ethics policy]
Responding to Ethical Situations
HR Perspective: SHRM Code of Ethics
Ethical Issues in HR Management
HR MANAGEMENT COMPETENCIES AND CAREERS
Knowledge of Business and Organization
Influence and Change Management
Specific HR Knowledge and Expertise
Professional Involvement
Certification
SUMMARY
REVIEW AND DISCUSSION QUESTIONS
TERMS TO KNOW
Using the Internet: Outsourcing
Case: Remedy for HR Management
NOTES
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STUDY QUESTIONS
Matching Questions
Match the key term from the list below with its most appropriate definition.
a. Operational activities
h. HR planning and analysis
b. Interfaces
i. Business process reengineering
c. HR specialist
j. HR generalist
d. Outsourcing
k. Downsizing
e. Compensation
l. Human capital
f. Strategic role
m. Ethics
g. Human Resource Management
1. Managers attempt to anticipate forces that will impact the future supply of and demand for
employees.
2. The design of formal systems to ensure the effective and efficient use of human talent to
accomplish organizational goals.
3. Areas of contact between the HR unit and managers within the organization.
4. Rewards people for performing organizational work through pay, incentives, and benefits.
5. The total value of organizational human resources.
6. The fundamental rethinking and redesign or work to improve cost, service, and speed.
7. An HR practitioner with responsibility for performing a variety of activities.
8. An HR practitioner with in-depth knowledge and expertise in a limited area.
9. Emphasizes that the people in an organization are valuable resources representing a
significant investment of organizational efforts.
10. Activities that are tactical in nature.
11. A strategy to reduce costs, most often through a reduction in payroll.
12. Deals with what “ought” to be done.
13. Contracting with another organization to provide operations that were previously handled
internally.
True/False Questions
1. The strategic role of HR management emphasizes that the people in an organization are
valuable resources representing significant organizational investments.
2. Ways to prepare for a career in HR include higher education, experience, professional
involvement, and certification.
3. Staffing emphasizes the recruitment and selection of the human resources for an organization.
4. Unit labor costs have risen dramatically since the advent of downsizing.
5. Concern about employee rights and privacy protection must be incorporated into HR policies
and practices.
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6. Ethics is not a major concern for HR Managers.
7. Cost savings associated with outsourcing often are over estimated.
8. Equal employment compliance affects all HR activities.
9. HR specialists are more often found in small organizations.
10. “Outplacement” is a concept whereby small organizations contract out their HR activities to a
firm of consultants.
11. Enlightened managers do not regard employees as “human resources” because this would
dehumanize people.
12. HR’s responsibility for ensuring legal compliance includes the area of health benefit
portability.
13. Increased legal requirements and constraints have had very little impact on HR departments.
14. “Liking to work with people” is a major qualification necessary for success in HR.
15. Human resource management is often seen as concerned only with administrative activities.
16. HR management is a concern of both the managers and the HR unit in an organization.
Idea Completion Questions
1. There are three roles associated with the management of human resources in organizations.
These roles are _____, _____, and _____.
2. The interface concept recognizes that HR management is a concern of both the _____ and the
_____ in an organization.
3. As a response to ethical situations, many organizations have established a _____, and conduct
_____ for all employees.
4. HR management is composed of seven groups of interlinked activities. These groupings are:
_____, _____, _____, _____, _____, _____, and _____.
5. Increasingly today, work in an organization is done by _____, _____, _____, and others who
are not employees of the organization.
Multiple Choice Questions
1. A major economic change altering employment and occupational patterns in the
United States is the shift of jobs from _____ to _____.
a. hi tech and defense, education and research
b. telecommunications and small business, military and manufacturing
c. manufacturing and agriculture, service industries and telecommunications
d. education and service industries, transportation and telecommunications
e. service industries and agriculture, military and research
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2. A point of contact on HR activities between the HR unit and the managers within the
organization is a(n)
a. dualism.
b. definition of personnel management.
c. interface.
d. idea.
3. _____ deals with the design of formal systems to ensure the effective and efficient use of
human talent to accomplish organizational goals.
a. Employee relations
b. Personnel management
c. Human resource management
d. Organizational development
e. Labor relations
4. _____ is the fundamental rethinking and redesign of work processes to improve cost, service,
and speed.
a. Downsizing
b. Outsourcing
c. Restructuring
d. Reengineering
e. Outplacement
5. A person responsible to perform a variety of HR activities is considered a(n)
a. personnel manager.
b. HR specialist.
c. personnel consultant.
d. HR generalist.
e. human relations specialist.
6. HR management began its growth as a specialized function in organizations about
a. 1900.
b. 1920.
c. 1940.
d. 1960.
e. 1980.
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7. The strategic role of HR began to emerge about
a. 1920.
b. 1940.
c. 1960.
d. 1980.
e. 1990.
8. Workforce diversity projections suggest that by the year 2006, about ______ percent of the
U.S. labor force will be members of a racial minority.
a. 10
b. 16
c. 28
d. 38
e. 44
9. In the decade leading up to the year 2000, which of the following industries are declining?
a. health care
b. computer processing
c. manufacturing
d. service
e. Both a. and d.
10. In order to develop more “family friendly” policies and benefits for their employees,
employers are
a. maintaining references on child-care providers.
b. permitting work-at-home options.
c. establishing on-site child-care and elder-care facilities.
d. both a and c.
e. all of the above.
11. Viewing human resources in the same context as the financial, technological, and other
resources that are managed by organizations, is an example of the _____ of HR management.
a. operational role
b. personnel function
c. global nature
d. strategic role
e. traditional role
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12. The HR activity most frequently outsourced is
a. recruiting.
b. employee survey.
c. EAP/wellness program.
d. benefits administration.
e. training and development.
13. Which choice below is NOT a dimension associated with ethical issues as identified in your
text?
a. Ethical decisions have consequences beyond the decisions themselves.
b. Various alternatives exist in most decision-making situations.
c. The consequences of decisions with ethical dimensions often are not known.
d. Decisions always have legal consequences.
e. Decisions often affect the personal lives of employees, their families, and others.
14. Recruiting and selecting employees for current openings is an example of the ________ role
of human resource management activities.
a. operational
b. personnel
c. global
d. strategic
15. To be strategic contributors, HR professionals must
a. count the activities and tasks performed.
b. develop new HR programs.
c. measure what their activities produce in terms of organizational results.
d. ensure compliance with legal and regulatory requirements.
e. implement effective benefits cost containment procedures.
16. The administrative role of HR management includes responsibilities for
a. compliance with equal employment opportunity requirements.
b. filling job openings.
c. addressing safety problems.
d. participating in organizational planning efforts.
e. processing benefits claims.
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17. _____ are (is) the foundation for the staffing function.
a. Job specifications
b. Job descriptions
c. Orientation
d. Recruiting
e. Job analysis
18. The HR professional’s legal compliance responsibilities do NOT include
a. sexual harassment prevention.
b. safety and health management.
c. pension compliance reporting.
d. new employee orientation.
e. union contract grievances.
19. Attracting and retaining human resources is an application of HR’s _____ role.
a. administrative
b. strategic
c. operational
d. functional
e. business
20. HR’s training and development responsibilities begin with
a. job-skill training.
b. employee development.
c. retraining.
d. orientation
e. counseling
21. The “traditional family” represent only _____ or less of today’s U.S. households.
a. 50%
b. 40%
c. 30%
d. 20%
e. 10%
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22. It is projected that by 2020, about _____ of the U.S. population will be 65 or older.
a. 10%
b. 20%
c. 30%
d. 40%
e. 50%
23. _____ is the total value of human resources to the organization.
a. Human capital
b. Human resources
c. Labor relations
d. Employee relations
e. None of the above
24. The responsibility for the effective use of human resources is integral to
a. the HR manager.
b. all managers
c. HR consultants.
d. staffing specialists.
e. none of the above.
25. According to your text, the HR function least likely to be outsourced is
a. pension administration.
b. pre-employment testing.
c. recruiting.
d. background/reference checks.
e. training and development.
26. According to Human Resources for the Next Century, the traditional HR function of _____
will shift to _____ as an emerging practice.
a. strategic, administrative
b. proactive, reactive
c. people as investments, people as expenses
d. production focus, service focus
e. none of the above
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27. The following guide(s) is (are) suggested as a response to an ethical situation:
a. Does the behavior or result achieved comply with all applicable laws, regulations, and
government codes?
b. Does the behavior or result achieved comply with all organizational standards of ethical
behavior?
c. Does the behavior or result achieved comply with professional standards of ethical
behavior?
d. All of the above
e. a. and b. above.
28. Many organizations “rightsize” by
a. eliminating layers of management.
b. closing facilities.
c. merging with other organizations.
d. outplacing workers.
e. all of the above.
29. A complete understanding of strategic sources of competitive advantages for human
resources must include
a. a sophisticated human resource information systems capability.
b. a comprehensive sales and marketing plan.
c. analyses of the internal strengths and weaknesses of the organization’s human resources.
d. analyses of external market forces that affect the organization’s business plan.
e. a mission, vision, and values statement.
30. Variable pay programs, such as gainsharing and team based incentives,
a. can be effective without the need for detailed design and development.
b. directly link rewards to organizational performance goals.
c. emphasize base pay as a pay component.
d. exclusively feature incentive pay components.
e. are designed to recognize length of service over job performance.
Essay Questions
1. Discuss some of the major ethical issues faced by HR management in the 1990s. What are the
possible consequences of making unethical HR decisions? How can an organization encourage
ethical HR decision making?
2. Describe some of the external forces that will challenge an organization leading into the new
millennium. How will some of these forces influence HR management?
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3. Distinguish between HR management’s operational and strategic roles. Why are they both
important in today’s organizations?
4. Define the interface concept, and explain its use as it applies to HR management.
5. List and describe the seven HR management activities. Discuss how these activities may be
performed differently in settings other than large private-sector organizations.
Chapter 1
ANSWER KEY
Matching
1.
h
6.
i
11. k
True/False
1.
T
6.
F
11. F
16. T
2.
7.
12.
g
j
m
3.
8.
13.
b
c
d
4.
9.
e
f
5.
10.
l
a
2.
7.
12.
T
T
T
3.
8.
13.
T
T
F
4.
9.
14.
F
F
F
5.
10.
15.
T
F
T
Idea Completion
1. administrative; operational; strategic
2. operating managers; HR unit.
3. code of ethics; training programs
4. HR planning and analysis; equal employment opportunity; staffing; HR development;
compensation and benefits; health, safety, and security; employee and labor/management
relations
5. contract workers; consultants; temporary workers
Multiple Choice
1.
c
2.
c
3.
c
4.
d
5.
d
6.
a
7.
d
8.
c
9.
c
10.
e
11.
d
12.
c
13.
d
14.
a
15.
c
16.
e
17.
e
18.
d
19.
b
20.
d
21.
e
22.
b
23.
a
24
b
25.
c
26.
d
27.
d
28.
e
29.
c
30.
b
Essay Answer Guidelines
1. Ethics and HR Management, pp 30-32
2. HR Management Challenges, pp 4-10
3. HR Management in Transition, pp 13-16
4. Managing HR Activities, pp 22-32
5. HR Management Activities, pp 10-13
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