chapter02-a strategic management approach to hrm

8/2/2019 Chapter02-A Strategic Management Approach to HRM

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A Strategic ManagementApproach 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 companys 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 objectivesHow they will be achieved


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Introduction

Many strategic plans use:A three to five year timeline

Annual monitoring and

modificationGood HR strategy results in a fit between organiza-

tional 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, andabilities

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 diagnosisinto 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,

andpromotion


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EEO and human rights legislation indirectly affects:

Employment planning

Orientation

Career planning

Training

Employee development


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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 regulation has increased substantially

In 1940, the U.S. Dept. of Labor administered18 regulatory programs

In 2004, it administered more than 135

And that is just one government agency

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Government regulation impacts a managers 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 purposeThere 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 employeesas blue-collar factory workers

Engineers, nurses, teachers, secretaries, salespersons,

college professors, professional football players, andeven 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 organizations 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 toshort-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 theprivate

sector

30 percent work in thepublic sector;

10 percent work in the third sector

Private- and third-sector HRM are structuredsimilarly

HRM in the public sector is structurally different

A manager moving from the private or third sectorto 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 themacroeconomic level, competitivenessis:

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 realincomes 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 theorganizational 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

Acompetitive advantage means having a superior

marketplace position relative to competitors

A sustainable competitive advantage means dealing

effectively with employees, customers, suppliers, andcompetitors

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

advantageA 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 takethe 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 employeesmake them more costly to employ

As we age, we lose some of our faculties

This 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 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 administratorsPersonal 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 leaders 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

goalsIn 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 unpleasantnessPhysical 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 employees 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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L d St l d E i


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Leaders 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 groupsProviding direction, encouragement, and authority to

evoke desired behaviors

Reinforcing desirable behavior

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St t i HRM A K t S


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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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St t i HRM A K t S


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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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St t i HRM A K t S


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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, andpeople

An organization must match its:Strategic plan

Employees' characteristics

HRM activities

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St t i HRM A K t S


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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 theorganization

HRM programs must be:

ComprehensiveAdapted to the organization's culture

Responsive to employee needs

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St t i Ch ll F i HRM


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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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St t i Ch ll F i HRM


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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


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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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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


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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 globaleconomy

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Restructuring and Downsizing


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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 thedownsized firm

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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


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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


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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 risksImprove efficiency

Allow the company to focus on its core business

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People & the HRM Diagnostic Framework


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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 arent built in

People differ in their:Abilities

Attitudes and preferences

StylesIntellectual capacities

Ways of doing the job

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Abilities of Employees


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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 leadershipare more subject to change

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Employee Attitudes and Preferences


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An attitudeis:

A characteristic, long-lasting way of thinking, feeling,and behaving toward an object, idea, person, or group

A preferencemeans:

Evaluating an object, idea, or person in a positive ornegative way

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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 workis related to the amount directed to family, interpersonal

relations, and recreation

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Motivation of Employees


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Motivationis 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 towardwork and away from recreation or other areas of life

The motivation to work changes as other life activities

change

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Managers who can determine the work motivations

of employees will make better HRM decisions

Work-oriented, hard working employees are usuallymotivated by incentive compensation systems

Those consciously motivated to do a better job benefit

from performance evaluation techniques

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Personality of Employees


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Personalityis how a person thinks and behaves

It includes the person's:

Traits

Values

Motives

Genetic blue print

Attitudes

Emotional reactivity

AbilitiesSelf-image

Intelligence

Visible behavior patterns

Because each employee

has a unique personality,it is unlikely that a singleset of HRM activities orleadership approacheswill be equally successful

for all employees

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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

AbilitiesAttitudes

Motives

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Desirable End Results


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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


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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 systemsHR 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

chapter02-a strategic management approach to hrm

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