This document discusses the strategic management approach to human resource management (HRM). It outlines several key factors that influence HRM both internally and externally, including organizational strategy and goals, government regulations, the labor market, the economy, and work groups. The document also presents models for organizing HRM activities, such as the ARDM (Acquiring, Rewarding, Developing, Maintaining) model, and emphasizes the importance of taking a diagnostic approach to align HRM with business strategy and objectives.

1. 2-1

2. 2-2 2
A Strategic Management
Approach to HRM
McGraw-Hill/Irwin
Human Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. 2-3 Introduction
Taking a strategic HRM approach means:
Making human resources management a top priority
Integrating HRM with the company’s strategy,
mission, and goals
HRM can make significant contributions if included
in the strategic planning process from the outset
The strategic management process helps determine:
What must be done to achieve priority objectives
How they will be achieved

4. 2-4 Introduction
Many strategic plans use:
A three to five year timeline
Annual monitoring and
modification
Good HR strategy results in a fit between organiza-tional
strategy and HRM policies and programs
Recruitment, selection, outsourcing, telecommuting,
performance evaluation, compensation

5. 2-5 A Model to Organize HRM
ARDM means:
Acquiring
Rewarding
Developing
Maintaining and protecting
The goals of the ARDM model are:
Socially responsible and ethical practices

6. 2-6 A Model to Organize HRM
The eventual success of any HRM activity is:
The organization's employees are the best qualified
They perform jobs that suit their needs, skills, and
abilities
Matching people and activities in order to
accomplish goals is easier with a diagnostic approach

7. 2-7 Taking a Diagnostic Approach to HRM
The ARDM model has four specific steps:
Diagnosis
Prescription
Implementation
Evaluation
Managers typically diagnose a work situation by
observing and identifying key factors
A prescription is then made to translate the diagnosis
into action
Most human resource problems are too complex to
have a single correct prescription

8. 2-8 Taking a Diagnostic Approach to HRM
Implementing a solution is the next step, followed by
evaluation
Evaluation tells managers whether improvement in
the ARDM process is needed
If an organization teaches its members to focus on
ARDM plus the environment, it is likely to achieve:
Socially responsible, ethical behaviors
Competitive, high-quality products and services
The ARDM model calls for thorough, timely, and
systematic review of each situation

9. 2-9 External Environmental Influences
HRM processes are influenced by both the internal
and external environments
External influences include:
Government laws and regulations
Union procedures and requirements
Economic conditions
The labor force
HR planning must operate within:
Guidelines
Limits of available resources
Competencies

10. 2-10 External Environmental Influences
HRM is one important function among others:
Finance
Accounting
Research and development
Marketing
Production
The interaction of these internal programs sets the
tone for the entire organizational system

11. 2-11 Government Law and Regulations
Government regulations affect:
Hiring
Promotion
Managing diversity
Downsizing
Discipline
Major areas of legislation and regulation include
EEO and human rights legislation
These directly affect recruiting, selection, evaluation,
and promotion

12. 2-12 Government Law and Regulations
EEO and human rights legislation indirectly affects:
Employment planning
Orientation
Career planning
Training
Employee development

13. 2-13 Government Law and Regulations
Other areas of legislation and regulation include:
Employment of illegal aliens
Discrimination based on sex, age, and disability
Compensation regulation
Benefits regulation
Workers' compensation and safety laws
Labor relations laws and regulations
Privacy laws

14. 2-14 Government Law and Regulations
Government regulation has increased substantially
In 1940, the U.S. Dept. of Labor administered
18 regulatory programs
In 2004, it administered more than 135
And that is just one government agency

15. 2-15 Government Law and Regulations
Government regulation impacts a manager’s job:
Regulation encourages simplistic thinking on
complicated issues
Designing and administering regulations is
complex, leading to slow decision making
Regulation leads to complicated legal maneuvering
Many regulations are out of date and serve little
social purpose
There is regulatory overlap and contradiction among
regulatory agencies

16. 2-16 The Union
A union directly affects most aspects of HRM,
including:
Working conditions
Wages and salaries
Fringe benefits
Employees’ rights
Grievance processes
Work hours
There are cooperative unions and combative unions

17. 2-17 The Union
Unions were once concentrated in a few sectors of
the economy
Today, the fastest-growing sectors are the public
sector and the third sector
It is no longer useful to think of unionized employees
as blue-collar factory workers
Engineers, nurses, teachers, secretaries, salespersons,
college professors, professional football players, and
even physicians belong to unions

18. 2-18 Economic Conditions
Two economic factors affect HRM programs:
Productivity
The work sector of the organization
Productivity is:
An important part of a nation's economic condition
Representative of an organization’s overall efficiency
The output of goods and services per unit of input
(resources) used in a production process

19. 2-19 Economic Conditions
Before productivity can be managed and improved,
it must be measured
Isolate the outputs
Determine the costs that went into producing the
output
Compare the current year's figures with those of the
previous year
Productivity measures are crude and subject to
short-term error, but over time can show a trend

20. 2-20 Economic Conditions
Suggested solutions for increasing productivity:
Reduce government controls
Develop more favorable income tax incentives
Reindustrialize the business-industrial complex
Reducing legislative controls can adversely affect the
quality of life and society for decades to come
 Toxic waste, radiation, air pollution, and other forms
of destruction must be carefully controlled

21. 2-21 Economic Conditions
Managers can influence productivity through sound
HRM programs
Diagnosis, prescription,
implementation, and evaluation
Recruitment and selection
Motivational and compensation
techniques
Training and development

22. 2-22 The Work Sector of HRM
60 percent of HR specialists work in the private
sector
30 percent work in the public sector;
10 percent work in the third sector
Private- and third-sector HRM are structured
similarly
HRM in the public sector is structurally different
A manager moving from the private or third sector
to the public sector finds a more complicated job
Politicians, the public, special interest groups, and
reporters all exert outside pressure

23. 2-23 Competitiveness
At the macroeconomic level, competitiveness is:
The degree to which a nation can, under free and fair
market conditions, produce goods and services that
meet the test of international markets while
simultaneously maintaining or expanding the real
incomes of its citizens
If you substitute organization for nation, and
employees for citizens, you have the definition of
organizational competitiveness

24. 2-24 Competitiveness
At the organizational level, competitiveness is an
important issue
How effectively do workers produce the product?
How good is the quality of the services or goods?
Can employees handle new technology and produce
the product at lower costs?
Does the firm have the human resources needed to
increase manufacturing to a global level?
Will the push to work harder and faster raise
turnover, absenteeism, and the number of defects?

25. 2-25 Competitiveness
A competitive advantage means having a superior
marketplace position relative to competitors
A sustainable competitive advantage means dealing
effectively with employees, customers, suppliers, and
competitors
The way HRM activities are implemented and
modified can provide competitive advantages

26. 2-26 Competitiveness
Activities that can enhance and sustain competitive
advantage:
Employment security
Selective recruiting
High wages
Incentive pay
Employee ownership
Information sharing
Participation and empowerment
Teams and job redesign

27. 2-27 Competitiveness
Activities that can enhance and sustain competitive
advantage (continued):
Training as skill development
Cross-utilization and cross-training
Symbolic egalitarianism
Wage compression
Promotion from within
Long-term perspective
Measurement of practices
Overarching philosophy

28. 2-28 Competitiveness
Competitors can adopt and/or improve on successful
HRM activities
A firm with fair and equitable treatment of human
resources is less susceptible to losing its competitive
advantage
A few HRM activities can be copied, but imitation of
an entire culture and system of HRM is difficult

29. 2-29 Composition & Diversity of Labor Force
The labor force of the United States comprises all
people age 16 years or older who are:
Not in the military
Employed or actively seeking work
As of 2004, over 146 million Americans were in the
workforce

30. 2-30 Women in the Workforce
In 2002, about 47 percent of the full-time U.S.
workforce consisted of women
This is a 235 percent increase since 1947
The number of married male employees has increased
by only 30 percent
Women should have equal job opportunities
However, they still face workplace discrimination
There are signs that more women will have
professional jobs

31. 2-31 Minorities in the Workforce
The situation for racial and ethnic minorities in the
U.S. is similar to that for women
Few Hispanics, African-Americans, or Native
Americans are found in high-status, high-paying jobs
Historically, the most recent immigrant groups take
the lowest-level jobs
Minorities were living in the U.S. long before the
immigrants arrived

32. 2-32 Older Employees
The percent of older employees is growing
One of the toughest employment problems today is
the older employee who loses a job through no
personal fault
Higher insurance premiums for older employees
make them more costly to employ
As we age, we lose some of our faculties
This is an ongoing process
The key is to match employees with jobs

33. 2-33 Older Employees
Contrary to stereotypes:
Employees 45+ have no
more accidents than
younger ones
Until age 55, absenteeism rates are the same or lower
Employees under 35 have the worst accident rate
When total performance is considered, older
employees are just as effective as younger ones

34. 2-34 Employment Projection
The ten fastest-growing occupations:
Computer software, engineers, applicants
Computer support specialists
Computer software, engineers, systems software
Network and computer system administrators
Network systems and data communication analysts
Desktop publishers
Database administrators
Personal and home care aides
Computer systems analysts
Medical assistants

35. 2-35Geographic Location of the Organization
The location of the organization influences hiring
practices and HRM activities
Rural versus urban
International versus local
Education
Behavior
Legal-political factors
Economics
Inter-cultural training

36. 2-36 Internal Environmental Influences
HRM programs are influenced by:
Strategy
Goals
Organizational culture
Nature of the task
Work groups
The leader’s style and experience

37. 2-37 Strategy
A strategy:
Indicates what an organization's key executives hope
to accomplish in the long run
Is concerned with competition and aligning the
resources of the firm
Some companies believe long-term success is linked
to helping employees achieve work-life balance

38. 2-38 Goals
Organizational goals differ within and among
departments
Most departments have similar goals
Differences arise from the importance placed on the
goals
In organizations where profits take precedence,
HRM goals receive little attention
This results in effectiveness problems (absenteeism,
performance decrements, high grievance rates)

39. 2-39 Goals
Diversity refers to any mixture of themes
characterized by differences and similarities
Diversity in organizations is more than demographics
Dealing with workforce diversity means focusing on
the collective picture of differences and similarities

40. 2-40 Goals
Wisconsin Power and Light uses a six-step approach
to diversity training:
Form a diversity steering team
Create a diversity training team
Select a diversity training project manager
Complete a cultural audit
Design a training program
Implement and evaluate the training

41. 2-41 Organization Culture
A firm's organizational culture is shown by:
The way it does business
How it treats customers and employees
The autonomy or freedom that exists in the
departments or offices
The degree of loyalty expressed by employees

42. 2-42 Organization Culture
Organization culture represents the perceptions held
by the employees
There is no one "best" culture for the development of
human resources
Culture can:
Impact behavior, productivity, expectations
Provide a benchmark for standards of performance

43. 2-43 Nature of the Task
HRM is the effective matching of
the nature of the task (job)
with the nature of the employee

44. 2-44 Nature of the Task
Job factors that attract or repel workers:
Degree of knowledge and ability to use information
Degree of empowerment
Degree of physical exertion
Degree of environmental unpleasantness
Physical location of work
Time dimension of work
Human interaction on the job
Degree of variety in the task
Task identity
Task differences and job design

45. 2-45 Work Group
An employee’s experiences are largely influenced by
the work group
A group is two or more people who:
Consider themselves a group
Work interdependently to accomplish a purpose
Communicate and interact with one another on a
continuous basis
In many cases, work next to each other

46. 2-46 Work Group
An effective group is one in which:
Members function and act as a team
Members participate fully in group discussion
Group goals are clearly developed
Resources are adequate to accomplish group goals
Members furnish suggestions leading to achievement
of goals

47. 2-47 Work Group
Most most effective work groups:
Are small (7 to 14 members)
Have stable membership
Members:
Have eye contact and work closely together
Have similar backgrounds
Depend on the group to satisfy their needs
Effective groups support management and the
organization's goals, unless it conflicts with their
own

48. 2-48 Work Group
 Changing the group's norms and behavior requires:
The manager's leadership
The manager's power to reward or discipline
The transfer of some group members
Work groups are directly related to the success of
HRM activities
If a group opposes HRM programs, it can ruin them
Consider permitting work-group participation in
designing and implementing HRM

49. 2-49 Leader’s Style and Experience
The experience and leadership style of the operating
manager directly affects HRM activities
Orchestrating the skills, experiences, personalities,
and motives of individuals
Facilitating interaction within work groups
Providing direction, encouragement, and authority to
evoke desired behaviors
Reinforcing desirable behavior

50. 2-50 Strategic HRM: A Key to Success
Three levels of strategy apply to HRM activities:
Strategic (long term)
Managerial (medium term)
Operational (short term)
The HRM activities are:
Employee selection/placement
Rewards
Appraisal
Development

51. 2-51 Strategic HRM: A Key to Success
Strategic HRM planning leads to:
Growth
Profits
Survival
Planning also:
Expands awareness of possibilities
Identifies strengths and weaknesses
Reveals opportunities
Points to the need to evaluate the impact of internal
and external forces

52. 2-52 Strategic HRM: A Key to Success
Organizational strategic plans permit HR to prepare
for internal and external environment changes
Each organization should adopt a strategy that best
fits its goals, environment, resources, and people
An organization must match its:
Strategic plan
Employees' characteristics
HRM activities

53. 2-53 Strategic HRM: A Key to Success
The days of viewing HRM as only a highly
specialized and technical staff are over
HRM must be involved in all aspects of an
organization's operation
It must make everyday contributions to the
organization
HRM programs must be:
Comprehensive
Adapted to the organization's culture
Responsive to employee needs

54. 2-54 Strategic Challenges Facing HRM
Global competition has become intense
HRM professionals are now being asked to optimize
the skills, talents, and creativity of every employee
Failure to do so will mean the firm cannot compete in
a globally interconnected world

55. 2-55 Strategic Challenges Facing HRM
Technology trends:
Growth in knowledge needs
Shift in human competencies
Global market connection
Business streamlining
Rapid response
Quicker innovation
Quality improvement
Industrial revolution

56. 2-56 Building a Cooperative Workforce
The U.S. workforce is changing in dramatic ways:
There is a slower increase in the number of Caucasian
workers than other groups
By 2006, white males will no longer dominate the
workforce
Women are entering the workforce in record numbers
The number of Hispanic, Asian, and older workers
will continue to rise

57. 2-57 Building a Cooperative Workforce
The changing look, age, and needs of the workforce
have resulted in more concern about:
Child care
Elder care
Diversity understanding and training
Understanding diversity is an obvious need
Most firms are not yet "diversity-friendly”
The negative financial impact can be significant
There will be increased demand for fair, ethical, and
prompt handling of diversity issues

58. 2-58 Caliber of the Workforce
Recruiting and developing skilled labor is important
A growing number of jobs require higher levels of
education, language, math, and reasoning skills
Strategic HR planning models must carefully weigh
deficiencies and shortages in skills
The skills gap impacts more than HRM
Whole societies must face the consequences of not
having the workforce needed to compete in a global
economy

59. 2-59 Restructuring and Downsizing
Facts about downsizing:
Half of all downsized firms end up with at least as
many employees again within a few years
Downsizing in manufacturing is not new
It is positively correlated to foreign competition
It encourages firms to reduce their costs
Profits increase in the short-run, but not productivity
It leads to lower compensation/wages within the
downsized firm

60. 2-60 Restructuring and Downsizing
Restructuring means changing the reporting and
authority relationships within a firm
Downsizing is a reduction in a company's workforce
Downsizing has a human face and can result in stress-related
health problems
There is a growing sense that job security is a thing
of the past

61. 2-61 Contingent Workers
Contingent workers include:
Temporaries
Part-timers
Contract or leased workers
Others who are hired to handle extra tasks or
workloads
The number of contingent workers has increased
steadily since the early 1970s

62. 2-62 Contingent Workers
Outsourcing means hiring another firm to do work
This includes HRM activities
The outsource firm provides the employees to
complete the job
Professional employee organizations (PEOs) are
growing in popularity because they can:
Save a firm money
Reduce its risks
Improve efficiency
Allow the company to focus on its core business

63. 2-63
People & the HRM Diagnostic Framework
Employees are the most important concern in the
diagnostic model
Even the best HRM activities can backfire if
adjustments for individual differences aren’t built in
People differ in their:
Abilities
Attitudes and preferences
Styles
Intellectual capacities
Ways of doing the job

64. 2-64 Abilities of Employees
Abilities or skills are classified as:
Mechanical
Motor coordination
Mental
Creative
Abilities that are the result of genetic factors can
rarely be changed through training
Abilities such as interpersonal skills and leadership
are more subject to change

65. 2-65 Employee Attitudes and Preferences
An attitude is:
A characteristic, long-lasting way of thinking,
feeling, and behaving toward an object, idea, person,
or group
A preference means:
Evaluating an object, idea, or person in a positive or
negative way

66. 2-66 Employee Attitudes and Preferences
Work:
Allows for the expression of both aggressive and
pleasure-seeking drives
Offers a way to channel energy
Provides income
Offers a justification for existence
Is a way to achieve self-esteem and self-worth
The amount of energy directed toward work
is related to the amount directed to family, interpersonal
relations, and recreation

67. 2-67 Motivation of Employees
Motivation is a set of attitudes that predisposes a
person to act in a specific, goal-directed way
It is an inner state that energizes, channels, and
sustains human behavior to achieve goals
Work motivation channels a person's behavior toward
work and away from recreation or other areas of life
The motivation to work changes as other life
activities change

68. 2-68 Motivation of Employees
Managers who can determine the work motivations
of employees will make better HRM decisions
Work-oriented, hard working employees are usually
motivated by incentive compensation systems
Those consciously motivated to do a better job
benefit from performance evaluation techniques

69. 2-69 Personality of Employees
Personality is how a person thinks and behaves
It includes the person's:
Traits
Values
Motives
Genetic blue print
Attitudes
Emotional reactivity
Abilities
Self-image
Intelligence
Visible behavior patterns
Because each employee
has a unique personality,
it is unlikely that a single
set of HRM activities or
leadership approaches
will be equally successful
for all employees

70. 2-70 Personality of Employees
Behavioral scientists have found that:
The employee is both rational and intuitive
A person acts in response to internal inclinations,
choices, and environmental influences
Each person is unique and acts/thinks in a certain
way because of:
 Personality
Abilities
Attitudes
Motives

71. 2-71 Desirable End Results
HRM must make decisions and solve problems in a
socially responsible and ethically sound way
It must help the firm satisfy its customers and
employees
It is a demanding job, but an exciting challenge

72. 2-72 Comments to Reflect On
Organizational effectiveness is critically influenced
by HR management practices
Improvements in productivity, quality, and customer
satisfaction typically depend on changes in multiple
management systems
HR management systems drive behavior; they must
align with other management systems
It is hard to improve organizational performance
without paying attention to HR management
The HR department must be a central player in a
company's competitive efforts