Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-1 Human Resource Management 11 th Edition Chapter 1 STRATEGIC HUMAN RESOURCE MANAGEMENT:

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-1

Human Resource Management

11th Edition

Chapter 1

STRATEGIC HUMAN RESOURCE

MANAGEMENT:

AN OVERVIEW


Employer Branding

• Firm’s corporate image or culture • Embodies values and standards that guide

people’s behavior • People know what company stands for,

people it hires, fit between jobs and people, and results it recognizes and rewards

• Important in getting highest quality applicants to join firm


Employer’s Culture Is Known for Such Things As

• It’s fun to work at this company

• We have a passionate and intelligent culture

• There is a strong team feeling here

• It’s a great place to work

• Hopefully it will NOT be: We hate it here


External Evidence of a Great Brand

• Fortune magazine - 100 Best Companies to Work For • Working Mother list of 100 best companies• Fortune magazine list of 100 fastest-growing companies

in the United States• Money magazine list of 100 best places to live• Business Ethics magazine list of 100 Best Corporate

Citizens• BusinessWeek list of 100 best small companies• Computerworld list of Best Places to Work• Black Enterprise list of Best Companies for Diversity


Human Resource Management

• Utilization of individuals to achieve organizational objectives

• All managers at every level must concern themselves with human resource management

• Five functions


1

Human Resource

Management

Human Resource

Development

Com

pens

atio

n

Staffing

Em

ployee and

Labor Relations

Safety and Health

Human Resource Management Functions


Staffing

• Job Analysis

• Human Resource Planning

• Recruitment

• Selection


Staffing (Cont.)

• Staffing - Process through which organization ensures it always has proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectives

• Job analysis - Systematic process of determining skills, duties, and knowledge required for performing jobs in organization


Staffing (Cont.)

• Human resource planning - Systematic process of matching internal and external supply of people with job openings anticipated in the organization over specified period of time

• Recruitment - Process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications, to apply for jobs with an organization


Staffing (Cont.)

• Selection - Process of choosing from a group of applicants the individual best suited for a particular position and the organization


Measuring Quality of Hire in Today’s Environment

• How do you measure quality of hire and set standards for new-hire performance?

• Quality of hire is stressed these days • Developers of automatic tracking systems are

actively involved in trying to come up with the answer to the question of “quality of hires”

• In a few years, some standards will emerge on how you measure and represent your talent management


Human Resource Development• Training

• Development• Career Planning

• Career Development• Organizational Development• Performance Management

• Performance Appraisal


Human Resource Development (Cont.)

• Training - Designed to provide learners with knowledge and skills needed for their present jobs

• Development - Involves learning that goes beyond today's job; more long-term focus

• Career planning - Ongoing process whereby individual sets career goals and identifies means to achieve them



• Career development - Formal approach used by organization to ensure that people with proper qualifications and experiences are available when needed

• Organization development - Planned and systematic attempts to change the organization, typically to a more behavioral environment



• Performance management - Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and ultimately, the organization

• Performance appraisal - Formal system of review and evaluation of individual or team task performance


Compensation

Compensation - All rewards that individuals receive as a result of their employment


Compensation

• Direct Financial Compensation - Pay that person receives in form of wages, salaries, bonuses, and commissions

• Indirect Financial Compensation (Benefits) - All financial rewards not included in direct compensation such as paid vacations, sick leave, holidays, and medical insurance

• Nonfinancial Compensation - Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works


Safety and Health

Employees who work in safe environment and enjoy good health are more likely to be productive and yield long-term benefits to organization.


Safety and Health

• Safety - Involves protecting employees from injuries caused by work-related accidents

• Health - Refers to employees' freedom from illness and their general physical and mental well being


Employee and Labor Relations

In 2007:

• Number of workers belonging to a union rose by 311,000 to 15.7 million

• Union membership rate for public sector workers was 35.9 percent

• Union membership rate for private workforce was 7.5 percent


Employee and Labor Relations (Cont.)

• Business is required by law to recognize union and bargain with it in good faith if firm’s employees want union to represent them

• Human resource activity is often referred to as industrial relations

• Most firms today would rather have union-free environment


Human Resource Research

• Human resource research is not separate function.

• It pervades all HR functional areas.


Interrelationships of HRM Functions

• All HRM functions are interrelated

• Each function affects other areas


Dynamic Human Resource

Management Environment


Environment of Human Resource Management

EXTERNAL ENVIRONMENTINTERNAL ENVIRONMENT

1

Human Resource

Management

Other Functional

Areas

OperationsMarketing

Finance

Lega

l Con

side

ratio

ns E

cono

my

Technology

Society

Shareholders

Unions

Customers Competition Labor Market

Human Resource

Development

Com

pens

atio

n

Staffing

Em

ployee and

Labor Relations

Safety and Health

Unanticipated E

vents


Labor Market

• Potential employees located within geographic area from which employees are recruited

• Always changing


Legal Considerations

• Federal, state and local legislation

• Court decisions

• Presidential executive orders


Society• No longer content to accept, without

question, the actions of business

• Ethics - Discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation

• Corporate social responsibility - Implied, enforced or felt obligation of managers to serve or protect interests of groups other than themselves


Unions

• Group of employees who have joined together for purpose of dealing collectively with their employer

• Becomes a third party when dealing with the company


Shareholders

• Owners of corporation

• Because they have invested money in firm, they may at times challenge programs considered by management to be beneficial to organization


Competition

• Firms may face intense competition in both their product or service and labor markets

• Must maintain a supply of competent employees

• Bidding war often results


Customers

• People who actually use firm’s goods and services

• Management has task of ensuring its employment practices do not antagonize members of market it serves

• Workforce should be capable of providing top-quality goods and services


Technology

• The world has never before seen technological changes occur as rapidly as they are today.

• Created new roles for HR professionals • Additional pressures on them to keep

abreast of technology• In 2008 survey of CEOs worldwide,

83% ranked change as most important issue confronting their organization


Cyberwork

• Possibility of never-ending workday

• BlackBerrys, cell phones, text messaging, and e-mail create endless possibilities for communication

• Some workers believe their employer wants them available 24/7


Economy

• In general, when economy is booming, it is often more difficult to recruit qualified workers.

• When a downturn is experienced, more applicants are typically available.


Unanticipated Events

• Occurrences in external environment that could not be foreseen

• Every disaster, whether manmade or by nature, requires a tremendous amount of adjustment with regard to human resource management


HR’s Changing Role: Questions That Are Being Asked

• Can some HR tasks be performed more efficiently by line managers or outside vendors?

• Can some HR tasks be centralized or eliminated altogether?

• Can technology perform tasks that were previously done by HR personnel?

• Many HR departments continue to get smaller.


HR’s Changing Role:Who Performs Human

Resource Management Tasks?

• Human Resource Managers

• HR Outsourcing

• HR Shared Service Centers

• Professional Employer Organization (Employee Leasing)

• Line Managers


Human Resource Manager

• Historically, the human resource manager was responsible for each of the five HR functions

• Acts in advisory or staff capacity

• Works with other managers to help them deal with human resource matters

• Today HR departments continue to get smaller because others are accomplishing certain functions


HR Outsourcing

• Transfers responsibility to an external provider

• Market for HR outsourcing is growing dramatically


Ways HR Outsourcing is Done

• Discrete services

• Multi-process services

• Total HR outsourcing


Discrete Services

• One element of business process or single set of high-volume repetitive functions is outsourced to a third-party

• Large majority of companies outsource transactional HR activities, such as 401(k) administration


Multi-Process Services

• Complete outsourcing of one or more human resource processes

• Example: Procter & Gamble outsources entire training operations


Total HR Outsourcing

• Transfer majority of HR services to third party

• Example: Whirlpool Corporation signed 10-year deal to outsource HR business processes for 68,000 employees to Convergys Corporation

• Total outsourcing is difficult to accomplish


HR Shared Service Centers (SSCS)

Takes routine, transaction-based activities that are dispersed and consolidates them in one location


Professional Employer Organization (Employee Leasing)

Company that leases employees to other businesses


Professional Employer Organization (Cont.)

• Company releases its employees who are then hired by PEO

• PEO pays the employees

• PEO is employees’ legal employer and has rights to hire, fire, discipline, and reassign an employee

• Charges a fee of from 2-7% of the customer’s gross wages


Advantages of PEO’s

• Often enjoy economies of scale that permit them to offer wider selection of benefits at considerably lower costs

• Workers frequently have greater opportunities for job mobility

• If client organization suffers a downturn, the leasing company offers job security

• PEO can handle compliance requirements of programs such as 401(k) programs


Line Managers Performing HR Tasks

• Involved with human resources by nature of their jobs

• Line managers are now performing some duties typically done by HR


HR as a Strategic Partner

• HR executives must understand complex organizational design

• Sharp deviation from what has traditionally been an administrative-type role for HR


Strategic Activities CEOs Want from HR

• Make workforce strategies integral to company strategies and goals

• Leverage HR’s role in major change initiatives

• Earn the right to a seat at the corporate table

• Understand finance and profits

• Help line managers achieve their goals


Strategic Activities CEOs Want from HR (Cont.)

• HR professionals must integrate goals of HR with goals of the organization

• Must focus on expanding its strategic and high-level corporate participation with an emphasis on adding value

• HR must demonstrate that it can produce a return on investment for its programs


Questions to Be Answered to Determine if HR Is Involved Strategically

• Is HR present at mergers and acquisitions planning meetings, strategy reviews, and restructuring discussions?

• Does HR provide an annual report on its ROI?

• Does HR lead the people strategy?

• Has it developed performance indicators for the success of that strategy?


Questions to Be Answered to Determine if HR Is Involved Strategically (Cont.)

• Is HR rated by its customers?

• Does the organization conduct strategic versus entitlement employee surveys?

• Are employee and other survey initiatives linked to customer and financial metrics?

• Is there an ROI process to evaluate HR initiatives connected to the business strategy?


Strategic HR Audit

• If HR professionals are to achieve the level of respect they desire, they must be subjected to the audit process

• Auditors should document if HR activities are being accomplished in an optimum manner


Human Capital Metrics

Measures of HR performance


Examples of HR Metrics

• Time to fill open positions

• HR headcount ratios

• Administrative cost per employee

• Turnover cost

• Training return on investment

• Quality of hire


HR Scorecard

• Report card of effectiveness of specific person

• Metrics that will best suit each company depend on variety of factors


Human Resource Designations


Human Resource Executives, Generalists, and Specialists

Vice President, Human

Resources

Vice President, Industrial Relations

Manager, Compensation

Manager, Staffing

Manager, Training and Development

Benefits Analyst

Executive: Generalist: Specialist:


Characteristics of an HR Executive

• Performs one or more HR functions

• A top-level manager

• Reports directly to CEO or head of

major division


Characteristics of an HR Generalist

• Often an executive

• Performs tasks in various HR-related areas

• Involved in several, or all, of the five HRM functions


Characteristics of an HR Specialist

• May be an HR executive,

manager, or non-manager

• Typically concerned with only one

of the five functional areas


Evolution Of Human Resource Management


Traditional Human Resource Function in Large Firm

• Separate sections were often created

• Placed under an HR Manager

• Each HR function may have a supervisor & staff

• HR Manager works closely with top management in formulating policy


Traditional Human Resource Functions in a Large Firm

President and CEO

Vice President, Marketing

Vice President, Operations

Vice President, Finance

Vice President, Human

Resources

Manager, Training and Development

Manager, Compensation

Manager, Staffing

Manager, Safety and

Health

Manager, Labor

Relations


Evolution of Human Resource Management

• First edition text was titled Personnel: The Management of Human Resources, and focus was more on personnel as staff or advisory function

• Title has changed to Human Resource Management with more general management focus


Other Name Changes

• Personnel Administrator changed its name to HR Magazine

• Personnel to HR Focus

• Personnel Journal to Workforce Management

• Today, the people who perform HR tasks are certainly different than they were even a decade ago


The Evolving HR Organization

• HR Outsourcing• HR Shared Service

Centers • Professional Employer

Organization

• Line Manager

• Evolve to make HR more strategic

A Possible Evolving HR Organization Example

President and CEO

Vice President, Operations

Vice President, Strategic Human

Resources

Vice President, Finance

Director of Safety

and Health

Training & Development (Outsourced)

Compensation (Shared Service

Centers)

Staffing (Line Managers, Use of Applicant Tracking

Systems)

Vice President, Marketing

1-70


A Global Perspective: Cultural Differences in Global HR

• Country’s culture is the set of values, symbols, beliefs, languages, and norms that guide human behavior within the country

• Learned behavior develops as individuals grow from childhood to adulthood

• Companies operating in the global environment recognize that national cultures differ and that such differences cannot be ignored


Organization ofHuman Resource Management

11th Edition

PART I. INTRODUCTION• Chapter 1: Strategic Human Resource

Management: An OverviewPART II. HR ETHICAL, LEGAL, AND SOCIAL

CONSIDERATIONS• Chapter 2: Business Ethics and Corporate

Social Responsibility • Chapter 3: Workforce Diversity, Equal

Employment Opportunity, and Affirmative Action



11th Edition (Cont.)

PART III. STAFFING

• Chapter 4: Job Analysis, Strategic Planning, and Human Resource Planning

• Chapter 5: Recruitment

• Chapter 6: Selection




PART IV. HUMAN RESOURCE DEVELOPMENT

• Chapter 7: Training and Development

• Appendix Chapter 7: Career Planning and Development

• Chapter 8: Performance Management and Appraisal




PART V. COMPENSATION AND BENEFITS• Chapter 9: Compensation • Chapter 10: Benefits, Nonfinancial

Compensation, and Other Compensation Issues

PART VI. SAFETY AND HEALTH• Chapter 11: A Safe and Healthy Work

Environment




PART VII. EMPLOYEE AND LABOR RELATIONS• Chapter 12: Labor Union and Collective

Bargaining• Appendix Chapter 12: History of Unions in the

United States• Chapter 13: Internal Employee RelationsPART VIII. OPERATING IN A GLOBAL

ENVIRONMENT• Chapter 14: Global Human Resource

Management

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means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the

United States of America.

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall

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Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 1-1 Human Resource Management 11 th Edition Chapter 1 STRATEGIC HUMAN RESOURCE MANAGEMENT: