BA 105 Chapter 1 PowerPoint - Week 1

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Chapter 1
Human Resource Management:
Gaining a Competitive
Advantage

©McGraw-Hill Education.
Learning Objectives
LO1-1 Discuss the roles and activities of a company’s human resource
management function.
LO1-2 Discuss the implications of the economy, the makeup of the
labor force, and ethics for company sustainability.
LO1-3 Discuss how human resource management affects a company’s
balanced scorecard.
LO1-4 Discuss what companies should do to compete in the global
marketplace.
LO1-5 Identify how social networking, artificial intelligence, and robotics
is influencing human resource management.
LO1-6 Discuss human resource management practices that support
high-performance work systems.
LO1-7 Provide a brief description of human resource management
practices.

Introduction
Human Resource Management
• plays a role in a company’s survival, effectiveness, and
competitiveness
• refers to the policies, practices, and systems that
influence employees’ behavior, attitudes, and
performance

Figure 1.1 Human Resource Management
Practices
Jump to long description in
appendix

What Responsibilities and Roles Do HR
Departments Perform? 1 of 2
HRM is a means to contribute to
• profitability
• quality
• other business goals
LO 1-1

What Responsibilities and Roles Do HR
Departments Perform? 2 of 2
High-Impact HR functions
• more integrated with the business
• more skilled at attracting and retaining employees
• can adapt quickly
• identify and promote talent from within
• identify what motivates employees
• continuously building talent and skills

Table 1.1
Responsibilities of HR Departments
Analysis and design of work
Recruitment and selection
Training and development
Performance management
Compensation and benefits
Employee relations/Labor relations
Personnel policies
Employee data and information systems
Legal compliance
Support for business strategy

Figure 1.2 HR as a Business with Three
Product Lines 1 of 3
1. Administrative Services and Transactions
Compensation, hiring, staffing
• Emphasis: Resource efficiency and service quality

2. Business Partner Services
Developing effective HR systems and helping
implement business plans, talent management.
• Emphasis: Knowing the business and exercising
influence – problem solving, designing effective
systems to ensure needed competencies

3. Strategic Partner
Contributing to the business strategy based on
considerations of human capital, business capabilities,
readiness, and developing HR practices as strategic
differentiators
• Emphasis: Knowledge of HR and of the business,
competition, the market, and business strategies

Strategic Role of the HRM Function 1 of 12
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
• Includes centers of expertise or excellence, service centers,
and business partners
• Central place for administrative and transactional tasks

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 issues
• HR managers have more time to work on employee
issues

Outsourcing
Most commonly outsourced activities
• Benefits administration (e.g., flexible spending accounts,
health plan eligibility status)
• Relocation
• Payroll
Most common reason 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

Strategic Role
• Lead efforts focused on talent management and
performance management
• Take the lead in helping companies attract, develop,
and retain talent in order to create global workforces
• Use and analyze data to make a business case for
ideas and problem solutions

Table 1.2 Questions to Ask: Is HRM Playing
a Strategic Role in the Business?
1. What is HR doing to provide value-added services to internal
clients?
2. Do the actions of HR support and align with business priorities?
3. How are you measuring the effectiveness of HR?
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 HR 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?

Demonstrating the Strategic Value of HRM: HR
Analytics and Evidenced-Based HR
• HR can engage in evidence-based HR
• Requires the use of HR or Workforce Analytics
• Big data
• Information merged from HR databases, corporate financial
statements, employee surveys, and other data sources
• Result in evidence-based HR decisions
• Show that HR practices influence the organization’s bottom
line, including profits and costs

The HRM Profession: Positions and Jobs
• Primary activities involve performing the HR
generalist role
• Fewer HR professionals are involved in the HR
function at the executive level of the company,
training and development, HR consulting, and
administrative activities

Table 1.3 Median Salaries for HRM Positions
POSITION SALARY
Top HR executive $240,206
Global HR manager 121,095
Management development manager 117,114
Health and safety manager 101,872
Employee benefits manager 95,244
HR manager 95,267
Mid-level labor relations specialist 83,974
Campus recruiter 64,725
Entry-level HRIS specialist 54,233
HR generalist 51,180
Entry-level compensation analyst 56,267
Entry-level employee training specialist 48,286
SOURCE: Based on data from Salary Wizard, http://swz.salary.com, accessed February 23, 2017.

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 the company’s overall HR strategy

Education and Experience continued
• Junior HR role
• Handle transactions related to paperwork, benefits and
payroll administration
• Answering employee questions
• Data management
• Professional certification

Competencies and Behaviors
Most HRM professionals are generalists
Lack business acumen
Need nine competencies developed by SHRM

Nine Competencies
1. HR Technical Expertise and Practice
Apply the principles of HRM to contribute to the 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

Nine Competencies continued
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 a free flow of information with
and among various stakeholders at all levels of the organization
to produce meaningful outcomes

Nine Competencies continued
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 the specific
goal of providing service and organizational success

Figure 1.4
Competitive
Challenges
Influencing U.S.
Companies
appendix

Competitive Challenges Influencing Human
Resource Management 1 of 25
Competing Through Sustainability
Sustainability relates to social responsibility
Also refers to the company’s ability to meet its needs
without sacrificing the ability of future generations to
meet their needs
• Company must meet the needs of stakeholders
LO 1-2

Sustainability includes the ability to
Deal with economic and social changes
Practice environmental responsibility
Engage in responsible and ethical business practices
Provide high-quality products and services
Put in place methods to determine if the company is
meeting stakeholders’ needs

Deal with the Workforce and Employment
Implications of the Economy
• Skill demands for jobs have changed
• Remaining competitive in a global economy requires
demanding work hours and changes in traditional
employment patterns
• The economy is not growing although unemployment
rate is below 5%
• Wage growth has been uneven
• Labor productivity fell in 2009

HR practices that enhance labor productivity
Improving the design of work and the use of technology
Upskilling employees through training
Managing performance and compensation to incentivize
and motivate workers to work smarter and harder
Raising pay and focus on learning

Labor Force and Employment Characteristics
• Population is the most important factor in determining
the size and composition of the labor force
• Growth is slowing
• Labor force is aging
• Diversity is increasing
• Service sector is growing
• Education is important to meet job requirements
• Shortage of qualified candidates

Understand and Enhance the Value Placed on
Intangible Assets and Human Capital
Three types of assets
• Financial assets (cash and securities)
• Physical assets (property, plant, equipment)
• Intangible assets

Table 1.6 Examples of Intangible Assets 1 of 2
Human capital
• Tacit knowledge
• Education
• Work-related know-how
• Work-related competence
Customer capital
• Customer relationships
• Brands
• Customer loyalty
• Distribution channels

Table 1.6 Examples of Intangible Assets 2 of 2
Social capital
• Corporate culture
• Management
philosophy
• Management
practices
• Informal networking
systems
• Coaching/mentoring
relationships
Intellectual capital
• Patents
• Copyrights
• Trade secrets
• Intellectual property

Understand and Enhance the Value Placed on
Intangible Assets and Human Capital continued
Knowledge workers
• Contribute specialized knowledge
• Share knowledge and collaborate on solutions
• In demand because companies need their skills and jobs
requiring them are growing

Emphasize Empowerment and Continuous
Learning
Give employees responsibility and authority
Hold them accountable
Employees share in the rewards and losses
Learning organization

Adapt to Change
• Inevitable
• Employees expected to take more responsibility for
their own careers
• Challenge is how to build a committed, productive
workforce

Maximize Employee Engagement
Passionate about his or her work
Committed to the company and its mission
Works hard to contribute
Measured with attitude or opinion surveys

Table 1.7 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

Manage Talent
• Acquiring and assessing employees
• Learning and development
• Performance management
• Compensation

Consider Nontraditional Employment and the
Gig Economy
• Between 20-35% of the total U.S. workforce
• Workers set their own schedule and do not work for a
company
• Offers flexibility

Provide Flexibility to Help Employees Meet Work
and Life Demands
• 46% of employees work more than 45 hours per week
• Only half of employees in the U.S. believe they have
the flexibility they need to successfully manage their
work and personal or family lives
• Solution: flexible work schedules, work-at-home
arrangements, protecting employees’ free time, and
more productively using employees’ work time

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

Table 1.8 The Balanced Scorecard
PERSPECTIVE QUESTIONS
ANSWERED
EXAMPLES OF CRITICAL
BUSINESS INDICATORS
CRITICAL HR 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

Demonstrate Social Responsibility
• Helps boost a company’s image with customers, gain
access to new markets, and help attract and retain
talented employees.
• Companies try to meet shareholder and general
public demands that they be more socially, ethically
and environmentally responsible.
• Helping to protect the planet can also save money.
• Sustainability is an important part of many companies’
business strategy.

Total Quality Management (TQM) 5 Core Values
1. Methods and processes are designed to meet
internal and external customers’ needs.
2. Every employee receives training in quality.
3. Promote cooperation with vendors, suppliers and
customers.
4. Managers measure progress with feedback based on
data.
5. Quality is designed into a product or service so that
errors are prevented rather than being detected and
corrected.

Malcolm Baldrige National Quality Award
ISO (International Organization for
Standardization) 9000 Standards
Six Sigma
Lean Thinking & Process Improvement

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
• Generational difference with five generations
• Gender and racial composition of the workforce

Figure 1.5 Comparison of the Age Distribution of
the 2014 and 2024 Labor Forces
appendix
SOURCE: Bureau of Labor Statistics, “Employment Projections, 2014–2024,” News Release, www.bls.gov, accessed February 9, 2017.

Table 1.11 Generations in the Workforce
YEAR BORN GENERATION AGES
1925–45 Traditionalists
Silent Generation
>72
1946–64 Baby Boomers 53-72
1965–80 Generation X 37-52
1981–95 Millennials
Generation Y
Echo Boomers
22-36
1996 Generation Z <21

Figure 1.6 The U.S. Workforce, 2024
SOURCE: Bureau of Labor Statistics, “Employment Projections, 2014–2024,” News Release, www.bls.gov, accessed February 9, 2017.

A Workforce of Mixed Gender, Race and
Nationality
• Diversity of workforce increasing
• Immigration is contributing
• The percentage of highly skilled immigrants now exceeds the
percentage of low-skilled immigrants
• Legal vs. illegal immigration
• Managing a diverse workforce

Table 1.12 How Managing Cultural Diversity Can
Provide a Competitive Advantage 1 of 2
1. Cost
argument
As organizations become more diverse, the cost of a poor
job in integrating workers will increase. Those who handle
this well will thus create cost advantages over those who
don’t.
2. Employee
attraction and
retention
argument
Companies develop reputations on favorability as
prospective employers for women and ethnic minorities.
Those with the best reputations for managing diversity will
win the competition for talent. As the labor pool shrinks and
changes composition, this edge will become increasingly
important.
3. Marketing
argument
The insight and cultural sensitivity that diverse employees
bring to the marketing effort should help the company enter
new markets and develop products and services for
diverse populations.

Table 1.12 How Managing Cultural Diversity Can
Provide a Competitive Advantage 2 of 2
4. Creativity
argument
Diversity of perspectives and less emphasis on
conformity to norms of the past improves the level of
creativity.
5. Problem-
solving
argument
Heterogeneity in decisions and problem-solving groups
potentially produces better decisions through a wider
range of perspectives and more thorough critical
analysis of issues.
6. System
flexibility
argument
Greater flexibility to react to changes in customer
preferences and tastes (i.e., reactions should be faster
and cost less).

Legal Issues
Employment laws and regulations
Eliminating discrimination and harassment
Health care coverage
Immigration
Data security practices and protecting intellectual
property

Figure 1.7 Principles of Ethical Companies
appendix

Ethical Issues
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.

Ethical Issues continued
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 and customers equitably
and fairly

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

Competing Through Globalization continued
• Entering International Markets
• Exporting products overseas
• Building manufacturing facilities or service centers in other
countries
• Entering into alliances with foreign companies
• Engaging in e-commerce
• Offshoring and Reshoring

Competing Through Technology
• Consider applications of social networking, artificial
intelligence, and robotics
• Use HRIS, Mobile devices, cloud computing, and
HR dashboards
• Consider high-performance work systems and virtual
teams
LO 1-5, 1-6

Figure 1.9 Major Dimensions of HRM Practices
Contributing to Company Competitiveness

Meeting Competitive Challenges through
HRM Practices
Three challenges
Global
Sustainability
Technology
LO 1-7

Figure 1.8 Examples of
How HRM Practices
Can Help Companies
Meet Competitive
Challenges
appendix

Appendix of Image Long
Descriptions

Appendix 1 Figure 1.1 Human Resource
Management Practices
A graphic denotes Strategic HRM Practices of analysis and
design of work, HR planning, recruiting, selection, training
and development, compensation, performance
management and employee relations that all impact
company performance.
Return to original slide

Appendix 2 Figure 1.4 Competitive Challenges
Influencing U.S. Companies
Competing through sustainability
• Deal with the workforce and employment implications of the economy
• Understand and enhance the value of intangible assets and human capital
• Meet the needs of stakeholders: shareholders, customers, employees, and the
community
• Emphasize customer service and quality
• Recognize and capitalize on the demographics and diversity of the workforce
• Deal with legal and ethical issues
Competing through globalization
• Entering international markets
• Offshoring and reshoring
Competing through technology
• Consider social networking
• Use HRIS, mobile devices, cloud computing, and HR dashboards
• Consider high-performance work systems and virtual teams
All three challenges affect U.S. business competitiveness.

Appendix 3 Figure 1.5 Comparison of the Age Distribution of the
2014 and 2024 Labor Forces
The first chart is labeled 2014 and shows 64% of the labor
force is 25-54 years old; 22% is 55 years and older; and
14% is 16 to 24 years old.
The second chart is labeled 2024 and shows 64% of the
workforce is still 25 to 54 years old; but 25% is 55 years
and older; and 11% is 16 to 24 years old.

Appendix 4 Figure 1.7 Principles of Ethical
Companies
• Emphasize mutual benefits in customer, vendor, client,
and community relationships
• Employees take responsibility for company actions
• A sense of purpose or vision valued and used by
employees in their work
• Emphasize fairness in treatment of employees,
customers, vendors, and clients

Appendix 5 Figure 1.8 Examples of How HRM Practices Can
Help Companies Meet Competitive Challenges
• HRM strategy is matched to business strategy.
• Knowledge is shared.
• Work is performed by teams.
• Pay systems reward skills and accomplishments.
• Selection system is job-related and legal.
• Flexibility in where and when work is performed.
• Employee engagement is monitored.
• Continuous learning environment is created.
• Discipline system is progressive.
• Customer satisfaction and quality are evaluated in the performance management
system.
• Skills and values of a diverse workforce are valued and used.
• Technology is used to reduce the time for administrative tasks and to improve HR
efficiency and effectiveness.

BA 105 Chapter 1 PowerPoint - Week 1

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