Chapter 01 The Challenge of Human Resources Management

Copyright © 2004 South-Western. All rights reserved.
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Copyright © 2004 South-
Western. All rights reserved. 1–2
Objectives
After studying this chapter, you should be able to:
1. Identify how firms gain sustainable competitive
advantage through people.
2. Explain how globalization is influencing human
resources management.
3. Describe the impact of information technology on
managing people.
4. Identify the importance of change management.
5. State HR’s role in developing intellectual capital.
6. Differentiate how TQM and reengineering influence
HR systems.

Objectives (cont’d)
After studying this chapter, you should be able to:
7. Discuss the impact of cost pressures on HR policies.
8. Discuss the primary demographic and employee
concerns pertaining to HRM.
9. Provide examples of the roles and competencies of
today’s HR managers.

Competitive Advantage through People
• Core Competencies
Integrated knowledge sets within an organization that
distinguish it from its competitors and deliver value to
customers.
• Sustained competitive advantage through
people is achieved if these human resources:
Have value.
Are rare and unavailable to competitors.
Are difficult to imitate.
Are organized for synergy.

Overall Framework for
Human Resource Management
Presentation Slide 1–1
COMPETITIVECOMPETITIVE
CHALLENGESCHALLENGES
• GlobalizationGlobalization
• TechnologyTechnology
• Managing changeManaging change
• Human capitalHuman capital
• ResponsivenessResponsiveness
• Cost containmentCost containment
COMPETITIVECOMPETITIVE
CHALLENGESCHALLENGES
• GlobalizationGlobalization
• TechnologyTechnology
• Managing changeManaging change
• Human capitalHuman capital
• ResponsivenessResponsiveness
• Cost containmentCost containment
HUMANHUMAN
RESOURCESRESOURCES
• PlanningPlanning
• RecruitmentRecruitment
• StaffingStaffing
• Job designJob design
•Training/developmentTraining/development
• AppraisalAppraisal
• CommunicationsCommunications
• CompensationCompensation
• BenefitsBenefits
• Labor relationsLabor relations
HUMANHUMAN
RESOURCESRESOURCES
• PlanningPlanning
• Job designJob design
•Training/developmentTraining/development
• AppraisalAppraisal
• CommunicationsCommunications
• CompensationCompensation
• BenefitsBenefits
• Labor relationsLabor relations
EMPLOYEEEMPLOYEE
CONCERNSCONCERNS
• Background diversityBackground diversity
• Age distributionAge distribution
• Gender issuesGender issues
• Educational levelsEducational levels
• Employee rightsEmployee rights
• Privacy issuesPrivacy issues
• Work attitudesWork attitudes
• Family concernsFamily concerns
EMPLOYEEEMPLOYEE
CONCERNSCONCERNS
• Background diversityBackground diversity
• Age distributionAge distribution
• Gender issuesGender issues
• Educational levelsEducational levels
• Employee rightsEmployee rights
• Privacy issuesPrivacy issues
• Work attitudesWork attitudes
• Family concernsFamily concerns
Figure 1.1

Competitive Challenges and Human
Resources Management
• The most pressing competitive issues facing
firms:
Going global
Embracing technology
Managing change
Developing human capital
Responding to the market
Containing costs

Going Global
• Globalization
The trend toward opening up foreign markets to
international trade and investment.
• Impact of Globalization
Partnerships with foreign firms
“Anything, anywhere, anytime” markets
Lower trade and tariff barriers
 NAFTA, EU, APEC trade agreements
 WTO and GATT

Going Global (cont’d)
• Impact on HRM
Different geographies, cultures, laws,
and business practices
Issues:
 Identifying capable expatriate managers.
 Developing foreign culture and work
practice training programs.
 Adjusting compensation plans for
overseas work.

Embracing New Technology
• Knowledge Workers
Workers whose responsibilities extend beyond the
physical execution of work to include planning,
decision making, and problem solving.
• The Spread of E-commerce
• The Rise of Virtual Workers

Influence of Technology in HRM
• Human Resources Information System (HRIS)
Computerized system that provides current and
accurate data for purposes of control and decision
making.
Benefits:
 Store and retrieve of large quantities of data.
 Combine and reconfigure data to create new information.
 Institutionalization of organizational knowledge.
 Easier communications.
 Lower administrative costs, increase productivity and
response times.

Major Uses For
HR Information
Systems
Source: HR and Technology Survey, Deloitte &
Touche and Lawson Software, 1998.
HRM 1

Impact of IT on HRM
TransformationalTransformational
ImpactImpact
TransformationalTransformational
ImpactImpact
OperationalOperational
ImpactImpact
OperationalOperational
ImpactImpact
RelationalRelational
ImpactImpact
RelationalRelational
ImpactImpact
HRMHRMHRMHRM

A Guide To Internet Sites
• American Management Association
(http://www.amanet.org/start.htm)
AMA membership, programs, training, etc.
• Society for Human Resource Management
(http://www.shrm.org)
Current events, information, connections, articles.
• HR Professional’s Gateway to the Internet
(http://www.hrisolutions.com/index2.html)
Links to HR-related web pages.
• Training and Development Homepage
(http://www.tcm.com/trdev/)
Job mart, training links, T&D electronic mailing list links.
HRM 2

A Guide To Internet Sites (cont’d)
• FedWorld
(http://www.fedworld.gov)
A gateway to many government web sites.
• U.S. Department of Labor
(http://www.dol.gov)
Job bank, labor statistics, press releases, grants, contract
information.
• Occupational Safety and Health Resources
(http://osh.net)
OSHA-related sites, government pages, resources, etc.
• AFL-CIO
(http://www.aflcio.org/home.htm)
Union news, issue papers, press releases, links to labor sites.
HRM 2

HRM IT Investment Factors
• Initial costs and annual
maintenance costs
• Fit of software packages
to the employee base
• Ability to upgrade
Increased efficiency and
time savings
• Compatibility with current
systems
• User-friendliness
• Availability of technical
support
• Needs for customizing
• Time required to
implement
• Training time required for
HR and payroll

Managing Change
• Types of Change
Reactive change
 Change that occurs after external forces have already
affected performance
Proactive change
 Change initiated to take advantage of targeted
opportunities
• Formal change management programs help to
keep employees focused on the success of the
business.

Managing Change
• Why Change Efforts Fail:
1. Not establishing a sense of urgency.
2. Not creating a powerful coalition to guide the effort.
3. Lacking leaders who have a vision.
4. Lacking leaders who communicate the vision.
5. Not removing obstacles to the new vision.
6. Not systematically planning for and creating short-
term “wins.”
7. Declaring victory too soon.
8. Not anchoring changes in the corporate culture.

Developing Human Capital
• Human Capital
The knowledge, skills, and capabilities of individuals
that have economic value to an organization.
Valuable because capital:
 Is based on company-specific skills.
 Is gained through long-term experience.
 Can be expanded through development.

Responding to the Market
• Total Quality Management (TQM)
A set of principles and practices whose core ideas
include understanding customer needs, doing things
right the first time, and striving for continuous
improvement.
• Six Sigma
A process used to translate customer needs into a set
of optimal tasks that are performed in concert with
one another.

Responding to the Market
• Reengineering
Fundamental rethinking and radical redesign of
business processes to achieve dramatic
improvements in cost, quality, service, and speed.
 Requires that managers create an environment for
change.
 Depends on effective leadership and communication
processes.
 Requires that administrative systems be reviewed and
modified.

Containing Costs
• Downsizing
The planned elimination of jobs (“head count”).
• Outsourcing
Contracting outside the organization to have work
done that formerly was done by internal employees.
• Employee Leasing
The process of dismissing employees who are then
hired by a leasing company (which handles all HR-
related activities) and contracting with that company
to lease back the employees.

Downsizing and Upsizing
Percent of companies reporting that they:
*All annual readings are for 12 months ending at
midyear. Categories are not mutually exclusive.
Source: Gene Koretz, “Hire Math: Fire 3, Add 5,”
Business Week Online (March 13, 2000). Figure 1.2

Containing Costs (cont’d)
• Hidden Costs of Layoff
Severance and rehiring costs
Accrued vacation and sick day payouts
Pension and benefit payoffs
Potential lawsuits from aggrieved workers
Loss of institutional memory and trust in management
Lack of staffers when the economy rebounds
Survivors who are risk-averse, paranoid, and political

Containing Costs (cont’d)
• Benefits of a No-Layoff Policy
A fiercely loyal,more productive workforce
Higher customer satisfaction
Readiness to snap back with the economy
A recruiting edge
Workers who aren’t afraid to innovate, knowing their
jobs are safe.

Productivity Enhancements
Figure 1.3Presentation Slide 1–2
MOTIVATIONMOTIVATION
• Job enrichmentJob enrichment
• PromotionsPromotions
• CoachingCoaching
• FeedbackFeedback
• RewardsRewards
MOTIVATIONMOTIVATION
• Job enrichmentJob enrichment
• PromotionsPromotions
• CoachingCoaching
• FeedbackFeedback
• RewardsRewards
ENVIRONMENTENVIRONMENT
• EmpowermentEmpowerment
•TeamsTeams
• Leader supportLeader support
• CultureCulture
ENVIRONMENTENVIRONMENT
• EmpowermentEmpowerment
•TeamsTeams
• Leader supportLeader support
• CultureCulture
ABILITYABILITY
• SelectionSelection
•TrainingTraining
• DevelopmentDevelopment
ABILITYABILITY
• SelectionSelection
•TrainingTraining
• DevelopmentDevelopment
Perf =Perf = ff (A,M,E)(A,M,E)Perf =Perf = ff (A,M,E)(A,M,E)

Social Issues and HRM
• Changing Demographics
Shrinking pool of entry-level workers
Productivity
Individual differences
Retirement benefits
Social Security contributions
Skills development
Use of temporary employees
HRM 4

Social Issues and HRM (cont’d)
• Employer/Employee Concerns
Job as an entitlement
Right to work
Whistle-blowing
Employment at will
AIDS
Comparable worth
Concern for privacy
Mandated benefits
HRM 4

Social Issues and HRM (cont’d)
• Attitudes Toward Work and Family
Day care
Flextime
Job sharing
Alternative work schedules
Elder care
Job rotation
Parental leave
Telecommuting
HRM 4

Labor Force and Racial Distribution
Figure 1.4a
Source: “Labor Force,” Occupational Outlook
Quarterly 45. no. 4 (Winter 2001/2002): 36–41.

Labor Force Growth By Race And
Hispanic Origin, Projected 2000–2010
Figure 1.4b

Labor Force Share By Race And
Hispanic Origin, 2000 And Projected 2010
Figure 1.4c

Labor Force Participation Rate By Sex,
1950–2000 And Projected 2000–2010
Figure 1.5a

Labor Force Growth By Sex,
Projected 2000–2010
Figure 1.5b

Labor Force Share By Sex,
1990, 2000, And Projected 2010
Figure 1.5c

Education
Pays
Source: U.S. Department of Labor. Figure 1.6

Model of
Diversity
Management
Strategy
Figure 1.7
Source: Kathleen Iverson, “Managing for Effective Workforce Diversity,” Cornell Hotel
and Restaurant Administration Quarterly 41, no. 2 (April 2000): 31–38.

Why Diversity?
The primary business reasons for
diversity management include…
HRM 5
Source: Association of Executive Search Consultants (member survey). Used with
permission of the Association of Executive Search Consultants, http://www.aesc.org.
Better utilization
of talent
(93%)
Better utilization
of talent
(93%)
IncreasedIncreased
marketplacemarketplace
understandingunderstanding
(80%)(80%)
IncreasedIncreased
marketplacemarketplace
understandingunderstanding
(80%)(80%) EnhancedEnhanced
creativitycreativity
(53%)(53%)
EnhancedEnhanced
creativitycreativity
(53%)(53%)
IncreasedIncreased
quality of teamquality of team
problem solvingproblem solving
(40%)(40%)
IncreasedIncreased
quality of teamquality of team
problem solvingproblem solving
(40%)(40%)
Breadth ofBreadth of
understanding inunderstanding in
leadershipleadership
positionspositions
(60%)(60%)
Breadth ofBreadth of
understanding inunderstanding in
leadershipleadership
positionspositions
(60%)(60%)

Top Issues for Managers
in Balancing Work and Home
Executive recruiters say 75 percent of senior management candidates
and 88 percent of middle managers raised concerns about balancing
work and home. Top issues:
Source: Association of Executive Search
Consultants (member survey). Used with
permission of the Association of Executive
Search Consultants, http://www.aesc.org.
Figure 1.8

Qualities of Human Resources Managers
• Responsibilities
Advice and counsel
Service
Policy formulation and
implementation
Employee advocacy
• Competencies
Business mastery
HR mastery
Change mastery
Personal credibility

Human
Resource
Competency
Model
Source: Arthur Yeung, Wayne Brockbank, and Dave Ulrich, “Lower Cost, Higher Value: Human Resource Function in
Transformation.” Reprinted with permission from Human Resource Planning, Vol. 17, No. 3 (1994). Copyright 1994 by The Human
Resource Planning Society, 317 Madison Avenue, Suite 1509, New York, NY 10017, Phone: (212) 490-6387, Fax: (212) 682-6851. Figure 1.9
BusinessBusiness
MasteryMastery
• Business acumenBusiness acumen
• Customer orientationCustomer orientation
• External RelationsExternal Relations
BusinessBusiness
MasteryMastery
• Business acumenBusiness acumen
• Customer orientationCustomer orientation
• External RelationsExternal Relations
HRHR
MasteryMastery
• Performance appraisalPerformance appraisal
• Rewards systemRewards system
• CommunicationCommunication
• Organization designOrganization design
HRHR
MasteryMastery
• Performance appraisalPerformance appraisal
• CommunicationCommunication
• Organization designOrganization design
ChangeChange
MasteryMastery
• Interpersonal skillsInterpersonal skills
and influenceand influence
• Problem-solving skillsProblem-solving skills
• Innovation and creativityInnovation and creativity
ChangeChange
MasteryMastery
• Interpersonal skillsInterpersonal skills
and influenceand influence
• Problem-solving skillsProblem-solving skills
• Innovation and creativityInnovation and creativity
PersonalPersonal
CredibilityCredibility
• TrustTrust
• PersonalPersonal
relationshipsrelationships
• Lived valuesLived values
• CourageCourage

Chapter 01 The Challenge of Human Resources Management

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