Competitive Advantage of HRM

8/4/2019 Competitive Advantage of HRM

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Human Resource Management &

Competitive Advantage


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HR & Competitive Advantage

Non-human resourcessuch as land,capital and equipment

Managing human resources is essential in

order for a business to thrive and survive. People determine the organizations goals

and of course people run the organization

to ensure goals are met/exceeded People are the competitive advantage to

an organizations success


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HRM

In HR we deal with issues such as pre-selection,selection, and post-selection

Pre-selection we planorganizations decide

what types of jobs are going to exist and whatare the qualifications.

During the selection phase, the organizationselects the employees:

Recruiting applicantsAssessing their qualifications

Selecting those most qualified


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HRM

Post-selection phase the organization

develop sound HR practices for effectively

managing their key talent

The firm provides them with training and

development opportunities to have the

necessary skills to perform at satisfactory

levels. (Mission, Vision, StrategicBusiness Objectives)


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HRM

Chapter 3 we talk about HR Planning. Here

managers anticipate and meet changing needs

relating to acquisition, deployment, and

utilization of its employees The strategic planning process takes shape here

Demand and supply forecasting we determine

the number and types of employees we need

(i.e. electrical engineers recruitment process)


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HRM

Chapter 4 we discuss job analysis a process for

gathering, analyzing and documenting

information about specific jobs

Steps:--Determining job qualifications for recruitment

purposes

--Choosing the most appropriate selectiontechniques

--Developing training programs


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HRM

Steps:

--Developing performance appraisal rating

forms

--Helping to determine pay rates

--Setting performance standards for

productivity improvement programs (i.e.assessment testing for administrative

positions)


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HRM

Selection Practices we mean policiesand procedures used by organizations tostaff positions

Chapter 5 Recruitment to locate andattract applicants for specific positions(local, regionally, or nationally)/ internally

Our goal is to identify a suitable pool ofapplicants quickly, cost efficiently, andlegally


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HRM

Selection involves assessing andchoosing job candidates. Again thisprocess needs to be sound and legal

HRM Post-Selection Practicesthesepractices maintain or improve a companysworkers job performance levels:

Training & Development (Chapter 7)planned learning experiences that teachworkers to perform their current or future jobseffectively


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HRM

Training focuses on ones current job and

development focuses on possibly

preparing employees for future jobs.

What is the organizational goal? The

improvement of organizational

performance to meet/exceed goals and

objectives


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HRM

HRM Post-Selection Practices:

--Performance Appraisal (Chapter 8)

--where we measure an employees jobperformance and communicate on anon-going basis (how of performance,what of performance and development

plan)--Decisions on promotions, demotions,discharges, and pay raises


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HRM

Compensation (Chapter 9)

--entails pay and benefits. Pay refers to

the wage or salary an employee earns

--Benefits are a form of compensation in

addition to pay, such as health insurance

or employee discounts

--Goal is to maintain a competent and

loyal workforce at an affordable cost


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HRM

Productivity Improvement Programs(Chapter 10)

--Tie behavior to rewards. We can have

financial rewards (e.g., bonuses, payraises) or non-financial (i.e., improved jobsatisfaction)

--Goal of such programs is to motivateemployees to engage in appropriatebehaviors


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HRM

HRM is also influenced by external factors

--Legal & Environmental Issues (Chapter 2)

--federal, state and local laws (rights to fair

and safe treatment)

--selection process must be conducted by

the book (what are the needed job

qualifications and choose selectionmethods that accurately measure those

qualifications


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HRM

Social, economic, and technological events that influenceHRM:

--cultural diversity of workforce

--work and family issues

--part-time temporary workers--emphasis on quality and teamwork

--mergers and acquisitions

--downsizing and layoffs

--rapid advances in technology

--continuous quality improvement

--high rate of illiteracy in the workforce


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HRM

How do these events influence HRM?

--families-through maternity leave, child

care, flextime, and job sharing

--older workers through skill upgrading and

training handle new techniques

--educating employees on basic readingand writing, and math skills keep up with

rapidly advancing technologies (Motorola)


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HRM

Workplace Justice Laws (Chapter 11)

Addresses the issue of employee rightstreat

workers in a non-discriminatory manner

--workplace rules, disciplinary and

discharge procedures

Union Influences (Chapter 12)

Adherence to written contracts (i.e., discipline,

promotions, grievance procedures, and

overtime allocations


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HRM

Safety & Health Concerns (Chapter 13)

Legal, social, and political pressures on

organizations to ensure the health and safety

of their employees

Wellness and Employee Assistance Programs

(EAP)


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HRM

International Influences (Chapter 14)

Globalization has required companies to enter

foreign markets in order to compete as part of

the globally interconnected set of businessmarkets

Managers need to be more globally oriented

(i.e., understanding foreign cultures andlanguages and the dynamics of foreign

marketplaces)


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HRM

Who is responsible for Developing &Implementing HRM Practices? Most companies have an HRM department but there is

a shared partnership with the line organization

(Reviews HR Models) Effective managers attempt to solve HR problems

by:

--providing input into the selection decisions

--trying to supervise people in a way that creates ateam feeling


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HRM

Effective managers attempt to solve HR

problems by:

--providing training and coaching

--providing opportunities for employeeadvancement

--providing flexible scheduling for students

and other part time workers


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HRM

HR consults to the line organization

Managers carry out many procedures andmethods devised by HR professionals:

--Interview job applicants

--Provide orientation, coaching, and on-the-job training

--Provide and communicate jobperformance ratings

--Recommend salary increases


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HRM

Managers carry out many procedures andmethods devised by HR professionals:

--Carry out disciplinary procedures

--Investigate accidents--Settle grievance issues

Gaining a competitive advantage:

--Cost leadership strategyfirm provides thesame services or products as its competitors, butproduces them at a lower cost (Classdiscussion)


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HRM

Gaining a competitive advantage: Product differentiationoccurs when a firm produces a

product or service that is preferred by buyers:

--creating a better quality product or service than its

competitors

--providing innovative products or services that are notoffered by its competitors

--choosing a superior locationone more accessible to

customers--promoting and packaging its product to create theperception of higher quality


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HRM As A Competitive Advantage

1994 study examined the HRM practicesand productivity levels of 968 firms across35 industries

Effectiveness of each companys set of HRMpractices was rated based on the presence ofsuch things as: Incentive plans

Employee grievance systems Formal performance appraisal systems

Workers participation in decision making


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HRM: Competitive Advantage

Strong link between HR competitiveness

and productivity

--one standard deviation in HRM ratings

translated to a productivity difference of

5%. Means that a company with a high

HRM effectiveness ratings (e.g., 86th

percentile) out-produced the averagecompany by 5%


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Another study conducted by Chris Ryan andAssociates evaluated the impact of a broadrange of HRM practices on shareholder return.Found that 15-30% of the total value of acompany could be attributed to the quality ofHRM practices

Where is the greatest impact? Providing employees with effective orientation training

Letting employees know what is expected of them

Discharging employees that are chronically poorperformers


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Discuss Model on Linking HRM Practicesto Competitive Advantage

Direct Paththe way HRM practice is

carried out can have an immediate impacton competitive advantage

Indirect Pathan HRM practice can

impact competitive advantage by causingcertain outcomes, which, in turn, createcompetitive advantage


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Firms can achieve cost leadership through

the use of effective HRM practices

HRM costs through recruitment, selection,

training and compensationall big expensesfor a firm

Service industries 70% of their budget is

made up of payroll


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Indirect Impact of HRM practices:

HRM practices------Employment centered

outcomes

Employment-centered outcomes---

Organization-centered outcomes

Organization-centered outcomes

Competitive advantage


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Employee-centered outcomes:

Competenceknowledge, skills, and abilities

an employee has that the job requires

Motivationis the employee willing to exertthe necessary effort to perform the job well

Work-related attitudesis the employee

satisfied with their job, committed to theorganization, and act as a good corporate

citizen


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Employee-centered outcomes---

organization-centered outcomes

Organization centered outcomes consist of

output, employee retention, legal compliance,and company reputation or image.

Output refers to the quantity, quality, and

innovativeness of the product or service offered by

the firm

Retention rates reflect the amount of employee

turnover a firm experiences


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Organization centered outcomes: Retention rates reflect the amount of employee

turnover a firm experiences

Legal compliance concerns the issue of whether thefirms HRM practices conform to the requirements

imposed by the various employment laws

Company reputation concerns how favorably

outsiderspotential applicants and customersview the organization


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What drives employee retention?:

Career growth and learning opportunities

Fair pay

Company pride/organizational commitment

Employee empowerment

High involvement HR systemslet employees

use skills as they see fit or provide financialincentives


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Organization-Centered Outcomes---Competitive Advantage Most common ways to cut HRM costs is to

employ technology to replace some of themore expensive HR professional-deliveredservices (i.e., e-learning vs. in class training)

Low turnover of employees you will have

better customer retention (recruiting,selection, and training costs of a newemployee)


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Management of HR is less susceptible to

imitation therefore competitive advantage

achieved through HRM practices is likely to be

more sustainable: Competitors rarely have access to a firms HRM

practices

Even when practices are visible, their impact may not

be as favorable by competitors due to interrelatedsystem (i.e., incentive pay system may only work when

used in conjunction with selection practices that favor

hiring risk takers. (Marriott Case Revisited)

Competitive Advantage of HRM

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