Chapter 02

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2 A Strategic Management Approach to HRM

McGraw-Hill/Irwin Human Resource Management, 10/e

© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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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

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Introduction Many

strategic plans use: A three to five year timeline Annual monitoring and modification

Good

HR strategy results in a fit between organizational strategy and HRM policies and programs Recruitment, selection, outsourcing, telecommuting, performance evaluation, compensation

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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

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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

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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

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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

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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

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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

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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

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Government Law and Regulations EEO

and human rights legislation indirectly affects: Employment planning Orientation Career planning Training Employee development

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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?

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Geographic 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

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Internal Environmental Influences HRM

programs are influenced by: Strategy Goals Organizational culture Nature of the task Work groups The leader’s style and experience

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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

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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)

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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

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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

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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

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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

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Nature of the Task

HRM is the effective matching of the nature of the task (job) with the nature of the employee

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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 stressrelated health problems

There

is a growing sense that job security is a thing of the past

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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

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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

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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

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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

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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

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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

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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

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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

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Personality of Employees Personality

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

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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

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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

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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