Strategic Implications of a Dynamic HRM Environment

Fundamentals of Human
Resource Management
All corporate strengths are dependent on people.
Adi Godrej
DeCenzo and Robbins
Chapter 1
Strategic Implications of a Dynamic HRM Environment
Fundamentals of Human Resource

Organizations are About
People
“Take away my people, but
leave my factories, and soon
grass will grow on the factory
floors. Take away my
factories, but leave my people,
and soon we will have a new
and better factory.”
Andrew Carnegie (1835-1919)
Source: Library of Congress

Introduction to HRM
• Two questions:
– Does it matter?
– Why does it matter?
• What is HRM?
– Organization’s methods and procedures for managing
people to enhance skills and motivation
– Activities to enhance the organization’s ability to
attract, select, retain and motivate people

• Human resource management (HRM)
– The policies and practices involved in carrying out the
“people” or human resource aspects of a management
position, including recruiting, screening, training,
rewarding, and appraising.

Human RReessoouurrccee MMaannaaggeemmeenntt
aatt WWoorrkk
• WWhhaatt IIss HHuummaann RReessoouurrccee MMaannaaggeemmeenntt ((HHRRMM))??
– TThhee pprroocceessss ooff aaccqquuiirriinngg,, ttrraaiinniinngg,, aapppprraaiissiinngg,, aanndd
ccoommppeennssaattiinngg eemmppllooyyeeeess,, aanndd ooff aatttteennddiinngg ttoo tthheeiirr llaabboorr
rreellaattiioonnss,, hheeaalltthh aanndd ssaaffeettyy,, aanndd ffaaiirrnneessss ccoonncceerrnnss..
• OOrrggaanniizzaattiioonn
– PPeeooppllee wwiitthh ffoorrmmaallllyy aassssiiggnneedd rroolleess wwhhoo wwoorrkk ttooggeetthheerr
ttoo aacchhiieevvee tthhee oorrggaanniizzaattiioonn’’ss ggooaallss..
• MMaannaaggeerr
– TThhee ppeerrssoonn rreessppoonnssiibbllee ffoorr aaccccoommpplliisshhiinngg tthhee
oorrggaanniizzaattiioonn’’ss ggooaallss,, aanndd wwhhoo ddooeess ssoo bbyy mmaannaaggiinngg tthhee
eeffffoorrttss ooff tthhee oorrggaanniizzaattiioonn’’ss ppeeooppllee..

The Death of HR ?
• Traditional “personnel” function
– Recordkeeping
– Perceived as a dumping ground
• The death of HR?
• HR’s rebirth

Personnel Aspects Of A
Manager’s Job
• Conducting job analyses (determining the nature of each employee’s
job)
• Planning labor needs and recruiting job candidates
• Selecting job candidates
• Orienting and training new employees
• Managing wages and salaries (compensating employees)
• Providing incentives and benefits
• Appraising performance
• Communicating (interviewing, counseling, disciplining)
• Training and developing managers
• Building employee commitment
© 2005 Prentice Hall Inc. All rights reserved. 1–9

1–10
Basic HR Concepts
• Getting results
– The bottom line of managing
• HR creates value by engaging
in activities that produce
the employee behaviors
the company needs to
achieve its strategic
goals.

Line and Staff Aspects of HRM
• Line manager
– A manager who is authorized to direct the work
of subordinates and is responsible for
accomplishing the organization’s tasks.
• Staff manager
– A manager who assists and advises line
managers.

Personnel Mistakes
• Hire the wrong person for the job
• Experience high turnover
• Have your people not doing their best
• Waste time with useless interviews
• Have your company in court because of discriminatory actions
• Have your company receive penalties for unsafe practices
• Have some employees think their salaries are unfair and inequitable
relative to others in the organization
• Allow a lack of training to undermine your department’s effectiveness
• Commit any unfair labor practices

Functions of the HR Manager
• A line function
– The HR manager directs the activities of the people in
his or her own department and in related service areas
(like the plant cafeteria).
• A coordinative function
– HR managers also coordinate personnel activities, a
duty often referred to as functional control.
• Staff (assist and advise) functions
– Assisting and advising line managers is the heart of the
HR manager’s job.

Employee Advocacy
• HR must take responsibility for:
– Clearly defining how management should be
treating employees.
– Making sure employees have the mechanisms
required to contest unfair practices.
– Represent the interests of employees within the
framework of its primary obligation to senior
management.

Examples of HR Job Duties
• Recruiters
– Search for qualified job applicants.
• Equal employment opportunity (EEO)
coordinators
– Investigate and resolve EEO grievances, examine
organizational practices for potential violations, and
compile and submit EEO reports.
• Job analysts
– Collect and examine information about jobs to prepare
job descriptions.

Examples of HR Job Duties
(cont’d)
• Compensation managers
– Develop compensation plans and handle the
employee benefits program.
• Training specialists
– Plan, organize, and direct training activities.
• Labor relations specialists
– Advise management on all aspects of union–
management relations.

Introduction
• The World of Work - continues to change, but
at an even more rapid pace.
• HR must understand the implications of:
– globalization
– technology changes
– workforce diversity
– changing skill requirements
– continuous improvement initiatives
– the contingent work force
– decentralized work sites
– and employee involvement

Understanding Cultural
Environments
• Today’s business world is truly a global
village. This term refers to the fact that
businesses currently operate around the
world.

Environments
• HRM must ensure that
– employees can operate in the appropriate language
– communications are understood by a multilingual work force
• Ensure that workers can operate in cultures that differ
on variables such as
– status differentiation
– societal uncertainty
– assertiveness
– individualism
• HRM also must help multicultural groups work
together.

Environments
• Cultural Implications for HRM
– Not all HRM theories and practices are
universally applicable.
– HRM must understand varying cultural
values.

The Changing World of
Technology
• Has altered the way people work.
• Has changed the way information is
created, stored, used, and shared.
• The move from agriculture to
industrialization created a new group of
workers – the blue-collar industrial
worker.
• Since WWII, the trend has been a
reduction in manufacturing work and an
increase in service jobs.

Technology
• Knowledge Worker - individuals whose jobs
are designed around the acquisition and
application of information.
• Why the emphasis on technology:
– makes organizations more productive
– helps them create and maintain a
competitive advantage
– provides better, more useful information

Technology
• How Technology Affects HRM Practices
– Recruiting
– Employee Selection
– Training and Development
– Ethics and Employee Rights
– Motivating Knowledge Workers
– Paying Employees Market Value
– Communication
– Decentralized Work Sites
– Skill Levels
– Legal Concerns

Workforce Diversity
• The challenge is to make organizations
more accommodating to diverse groups
of people.

Workforce Diversity
• The Workforce Today
– minorities and women have become the
fastest growing segments
– the numbers of immigrant workers and
older workers are increasing

Workforce Diversity
• How Diversity Affects HRM
– Need to attract and maintain a diversified
work force that is reflective of the diversity
in the general population.
– Need to foster increased sensitivity to
group differences.
– Must deal with the different
• Values
• Needs
• Interests
• Expectations of employees

Workforce Diversity
• What Is a Work/Life Balance?
– A balance between personal life and work
– Causes of the blur between work and life
• The creation of global organizations means the
world never sleeps.
• Communication technologies allow employees
to work at home.
• Organizations are asking employees to put in
longer hours.
• Fewer families have a single breadwinner.

Labor Supply
• Do We Have a Shortage of Skilled
Labor?
– The combination of the small Gen-X
population, the already high participation
rate of women in the workforce, and early
retirements will lead to a significantly
smaller future labor pool from which
employers can hire.

Labor Supply
• Why Do Organizations Lay Off During
Shortages?
– Downsizing is part of a larger goal of
balancing staff to meet changing needs.
– Organizations want more flexibility to better
respond to change.
– This is often referred to as rightsizing,
linking employee needs to organizational
strategy.

Labor Supply
• How Do Organizations Balance Labor
Supply?
– Organizations are increasingly using
contingent workers to respond to
fluctuating needs for employees.
– Contingent workers include
• Part-time workers
• Temporary workers
• Contract workers

Labor Supply
• Issues Contingent Workers Create for
HRM
– How to attract quality temporaries
– How to motivate employees who are
receiving less pay and benefits
– How to have them available when needed
– How to quickly adapt them to the
organization
– How to deal with potential conflicts
between core and contingent workers

Continuous Improvement
Programs
• Continuous improvement - making
constant efforts to provide better
products and service to customers
– External
– Internal
• Quality management concepts have
existed for over 50 years and include
the pioneering work of W. Edwards
Deming.

Continuous Improvement
Programs
• Key components of continuous
improvement are:
– Focus on the customer
– Concern for continuous improvement
– Improvement in the quality of everything
– Accurate measurement
– Empowerment of employees

Employee Involvement
• Delegation – having the authority to make
decisions in one’s job
• Work teams – workers of various
specializations who work together in an
organization
• HRM must provide training to help empower
employees in their new roles.
• Involvement programs can achieve:
– greater productivity
– increased employee loyalty and commitment

A Look at Ethics
• Three views of ethics:
– Utilitarian View – decisions are made on the basis
of their outcomes or consequences
– Rights View – decisions are made with concern for
respecting and protecting individual liberties and
privileges
– Theory of Justice View – decisions are make by
enforcing rules fairly and impartially
• Code of ethics - a formal document that
states an organization’s primary values and
the ethical rules it expects organizational
members to follow.

1–36
Measuring HR’s Contribution
• Strategy
– The company’s long-term plan for how it will
balance its internal strengths and weaknesses
with its external opportunities and threats to
maintain a competitive advantage.
• HR managers today are more involved in partnering
with their top managers in both designing and
implementing their companies’ strategies.
– Top management wants to see, precisely, how
the HR manager’s plans will make the company
more valuable.

1–37
HR Metrics
• Absence Rate
[(Number of days absent in month) ÷ (Average number of
employees during mo.) × (number of workdays)] × 100
• Cost per Hire
(Advertising + Agency Fees + Employee Referrals +
Travel cost of applicants and staff + Relocation costs +
Recruiter pay and benefits) ÷ Number of Hires
• Health Care Costs per Employee
Total cost of health care ÷ Total Employees
• HR Expense Factor
HR expense ÷ Total operating expense Figure 1–5

HR Metrics (cont’d)
• Human Capital ROI
Revenue − (Operating Expense − [Compensation cost +
Benefit cost]) ÷ (Compensation cost + Benefit cost)
• Human Capital Value Added
Revenue − (Operating Expense − ([Compensation cost +
Benefit Cost]) ÷ Total Number of FTE
• Revenue Factor
Revenue ÷ Total Number of FTE
• Time to fill
Total days elapsed to fill requisitions ÷ Number hired

HR Metrics (cont’d)
• Training Investment Factor
Total training cost ÷ Headcount
• Turnover Costs
Cost to terminate + Cost per hire + Vacancy Cost +
Learning curve loss
• Turnover Rate
[Number of separations during month ÷ Average number
of employees during month] × 100
• Workers’ Compensation Cost per Employee
Total WC cost for Year ÷ Average number of employees

Measuring HR’s Contribution
• The HR Scorecard
– Shows the quantitative standards,
or “metrics” the firm uses to
measure HR activities.
– Measures the employee behaviors
resulting from these activities.
– Measures the strategically relevant
organizational outcomes of those
employee behaviors.

Strategic Implications of a Dynamic HRM Environment

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Strategic Implications of a Dynamic HRM Environment

Similar to Strategic Implications of a Dynamic HRM Environment (20)

More from Haris Bin Zahid

More from Haris Bin Zahid (9)

Strategic Implications of a Dynamic HRM Environment

Editor's Notes