Strategic Implications of a Dynamic HRM Environment

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

Chapter 1Strategic Implications of a Dynamic HRM Environment

Fundamentals of Human Resource ManagementAll corporate strengths are dependent on people.Adi Godrej

DeCenzo and Robbins


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 Resource Management Human Resource Management at Workat Work

• What Is Human Resource Management (HRM)?What Is Human Resource Management (HRM)?– The process of acquiring, training, appraising, and The process of acquiring, training, appraising, and

compensating employees, and of attending to their labor compensating employees, and of attending to their labor relations, health and safety, and fairness concerns.relations, health and safety, and fairness concerns.

• OrganizationOrganization– People with formally assigned roles who work together People with formally assigned roles who work together

to achieve the organization’s goals.to achieve the organization’s goals.

• ManagerManager– The person responsible for accomplishing the The person responsible for accomplishing the

organization’s goals, and who does so by managing the organization’s goals, and who does so by managing the efforts of the organization’s people.efforts of the organization’s people.




The Death of HR ?

• Traditional “personnel” function– Recordkeeping– Perceived as a dumping ground

• The death of HR?

• HR’s rebirth


© 2005 Prentice Hall Inc. All rights reserved. 1–9

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


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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.



• 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.



• 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.



• 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



• 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.


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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.


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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 FactorHR 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.

Recruiting & HR

Strategic Implications of a Dynamic HRM Environment