Chapter 02
Transcript of Chapter 02
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A Strategic Management Approach to HRM
McGraw-Hill/IrwinHuman 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 outsetThe strategic management process helps determine:
What must be done to achieve priority objectivesHow they will be achieved
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Introduction
Many strategic plans use:A three to five year timelineAnnual monitoring and
modification
Good HR strategy results in a fit between organiza-tional strategy and HRM policies and programsRecruitment, selection, outsourcing, telecommuting,
performance evaluation, compensation
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A Model to Organize HRM
ARDM means:AcquiringRewardingDevelopingMaintaining 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 qualifiedThey 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:DiagnosisPrescriptionImplementationEvaluation
Managers typically diagnose a work situation by observing and identifying key factors A prescription is then made to translate the diagnosis
into actionMost 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 environmentsExternal influences include:
Government laws and regulations Union procedures and requirements Economic conditionsThe labor force
HR planning must operate within:GuidelinesLimits of available resourcesCompetencies
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External Environmental Influences
HRM is one important function among others: FinanceAccountingResearch and developmentMarketingProduction
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: HiringPromotionManaging diversityDownsizingDiscipline
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 planningOrientationCareer planningTrainingEmployee 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 conditionsWages and salariesFringe benefitsEmployees’ rightsGrievance processesWork hours
There are cooperative unions and combative unions
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The Union
Unions were once concentrated in a few sectors of the economyToday, the fastest-growing sectors are the public
sector and the third sectorIt 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: ProductivityThe 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 sectorPrivate- and third-sector HRM are structured
similarlyHRM in the public sector is structurally different
A manager moving from the private or third sector to the public sector finds a more complicated jobPoliticians, 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 securitySelective recruitingHigh wagesIncentive payEmployee ownershipInformation sharingParticipation and empowermentTeams and job redesign
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Competitiveness
Activities that can enhance and sustain competitive advantage (continued):Training as skill developmentCross-utilization and cross-trainingSymbolic egalitarianismWage compressionPromotion from withinLong-term perspectiveMeasurement of practicesOverarching 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 militaryEmployed 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 opportunitiesHowever, 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 jobsHistorically, the most recent immigrant groups take
the lowest-level jobsMinorities were living in the U.S. long before the
immigrants arrived
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Older Employees
The percent of older employees is growingOne 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 facultiesThis is an ongoing processThe 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 rateWhen 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 activitiesRural versus urbanInternational versus local
EducationBehaviorLegal-political factorsEconomicsInter-cultural training
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Internal Environmental Influences
HRM programs are influenced by:StrategyGoalsOrganizational cultureNature of the taskWork groupsThe 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 runIs 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 departmentsMost 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 jobDegree 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 groupA 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 activitiesIf 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 RewardsAppraisalDevelopment
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Strategic HRM: A Key to Success
Strategic HRM planning leads to:GrowthProfitsSurvival
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 changesEach organization should adopt a strategy that best
fits its goals, environment, resources, and people An organization must match its:
Strategic planEmployees' characteristicsHRM 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 overHRM must be involved in all aspects of an
organization's operation It must make everyday contributions to the
organization
HRM programs must be:ComprehensiveAdapted to the organization's cultureResponsive 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
workforceWomen 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 careElder careDiversity understanding and training
Understanding diversity is an obvious needMost firms are not yet "diversity-friendly”The negative financial impact can be significantThere 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 skillsStrategic HR planning models must carefully weigh
deficiencies and shortages in skills
The skills gap impacts more than HRMWhole 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 yearsDownsizing 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 stress-
related 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:TemporariesPart-timersContract or leased workersOthers 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 workThis 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:
AbilitiesAttitudes and preferences StylesIntellectual capacitiesWays of doing the job
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Abilities of Employees
Abilities or skills are classified as: MechanicalMotor coordinationMentalCreative
Abilities that are the result of genetic factors can rarely be changed through trainingAbilities 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 wayIt is an inner state that energizes, channels, and
sustains human behavior to achieve goalsWork 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:
TraitsValuesMotivesGenetic blue printAttitudesEmotional reactivityAbilitiesSelf-imageIntelligenceVisible 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
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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: PersonalityAbilitiesAttitudesMotives
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Desirable End Results
HRM must make decisions and solve problems in a socially responsible and ethically sound wayIt must help the firm satisfy its customers and
employeesIt 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