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Meeting Present and Emerging Strategic Human Resource

Challenges

CHAPTER OVERVIEW

This first chapter provides a broad overview of the strategic human resource challenges organizations face, and provides a framework to understand the role of human resource strategies, activities, and programs to achieve sustained competitive advantage. To support this broad perspective, some of the most important external and internal challenges vis-‘a-vis HR strategies are discussed in three categories: environmental challenges, organizational challenges, and individual challenges. The chapter explains the planning and implementation of strategic HR policies, as well as the role of line managers and the HR department in the effective use of human resources. Also explored here is how managers, in partnership with Human Resource professionals, adopt and implement HR strategies through specific strategies and programs. HR professionals are often responsible for designing these programs in order to meet business goals and employee needs. While the line managers provide the necessary input during the program design phase, they are primarily responsible for carrying out or implementing such programs. This chapter provides a strong overview of how firms can use HR strategies and initiatives to deal with external and internal challenges which are then explored in detail in later chapters.

ANNOTATED OUTLINE

I. Human Resource Management: The Challenges (PPT 1.1 and 1.2)Human resource challenges that face today’s managers may be categorized according to their primary focus: the environment, the organization; or the individual. Firms that deal with these challenges effectively are likely to outperform those that do not.

A. Environmental Challenges (PPT 1.3)

Environmental challenges refer to forces external to the firm that are largely beyond management’s control but influence organizational performance. They include: rapid change, the Internet revolution, workforce diversity, globalization, legislation, evolving work and family roles, and skill shortages and the rise of the service sector.

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B. Organizational Challenges (PPT 1.4 and 1.5)

Organizational challenges refer to concerns that are internal to the firm. However, they are often a byproduct of environmental forces because no firm operates in a vacuum. These issues include: competitive position (cost, quality, and distinctive capability), decentralization, downsizing, organizational restructuring, self-managed work teams, small businesses, technology, outsourcing, and organizational culture.

Organizational culture is a particularly important element. Culture is the basic assumptions and beliefs shared by members of the organization that express themselves through the rules, norms, dominant values, philosophy, and climate. Firms that regularly make adjustments to these elements to match environmental changes are likely to outperform those whose culture is rigid and unresponsive to external factors.

C. Individual Challenges (PPT 1.6)

Human resource issues at the individual level address concerns that are most pertinent to decisions involving specific employees. These issues almost always reflect what is happening in the larger organization. How individuals are treated also is likely to have an effect on organizational issues. For instance, if many key employees leave a firm to join its competitor, it will affect the competitive posture of the firm. The individual issues include matching people and organization, ethics and social responsibility, productivity, empowerment, brain drain, and job insecurity.

II. Planning & Implementing Strategic HR Policies (PPT 1.7 – 1.9)

To be successful, firms must closely align their HR strategies and programs (tactics) with environmental opportunities, business strategies, and the organization’s unique characteristics and distinctive competence. A firm with a poorly defined HR strategy or a business strategy that does not explicitly incorporate human resources is likely to lose ground to its competitors. Similarly, a firm may have a well-articulated HR strategy yet fail if its HR tactics/policies do not help to implement its HR strategy effectively.

A. The Benefits of Strategic HR Planning

Formulating HR strategies and establishing programs to implement them is strategic human resource planning. Successful HR strategic planning provides many benefits for the company,

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including (1) encouraging proactive rather than reactive behavior, (2) explicit communication of company goals, (3) stimulation of critical thinking and ongoing examination of assumptions, (4) identification of gaps between current situation and future vision, (5) encouragement of line managers’ participation, (6) identification of HR constraints and opportunities, and (7) creation of common bonds

B. The Challenges of Strategic HR Planning

In developing HR strategy, organizations face several important challenges including (1) maintaining a competitive advantage, (2) reinforcing overall business strategy, (3) avoiding excessive concentration on day-to-day problems, (4) developing HR strategies suited to unique organizational features, (5) coping with the environment, (6) securing management commitment, (7) translating the strategic plan into action, (8) combining intended and emergent strategies, and (9) accommodating change.

C. Strategic HR Choices

Human resource strategies, which are implemented through HR activities and programs, may affect the performance of the business. The options that a firm has available in designing its HR system are its strategic HR choices. Figure 1-5 shows a sampling, rather than an exhaustive list, of strategic HR choices. Firms may fall near the left, right, or middle of such a continuum.

III. Selecting HR Strategies to Increase Firm Performance (PPT 1.10)

No HR Strategy is “good” or “bad” in and of itself. The success of HR strategies depends on the situation or context in which they are used. In other words, an HR strategy’s effect on firm performance is always dependent on how well it fits with some of the factors. Fit refers to the consistency or compatibility between HR strategies and other important aspects of the organization

A. Fit with Organizational Strategies (PPT 1.11-17)

Organizational strategies may be examined at two levels: corporate and business. Corporate strategy refers to the mix of businesses a corporation decides to hold and the flow of resources among those businesses. This involves decisions pertaining to acquisition, divestment, diversification, and growth. At one end of the spectrum is the

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evolutionary business strategy; at the other end is the steady-state strategy.

Business unit strategies refer to those established by firms or autonomous units of the corporation. Well-known business strategies were formulated by Porter (overall cost leadership strategy, differentiation business strategy, and focus strategy) and Miles and Snow (defender strategy and prospector strategy).

B. Fit with the Environment

HR strategies should help the organization better exploit environmental opportunities or cope with the unique environmental forces that affect it. The environment can be examined on four dimensions, including (1) degree of uncertainty, (2) volatility, (3) magnitude, and (4) complexity.

C. Fit with Organizational Characteristics

To be effective, HR strategies must be tailored to the organization’s personality. The features of an organization’s personality are its (1) production process for converting inputs into output, (2) market posture, (3) overall managerial philosophy, (4) organizational structure, and (5) organizational culture.

D. Fit with Organizational Capabilities

An organization’s capabilities are its distinct competencies. HR strategies make a greater contribution to a firm’s performance (1) when they help to exploit the firm’s specific advantages or strengths while avoiding its weaknesses, and (2) when they assist in better using its own unique blend of human resource skills and assets.

E. Choosing Consistent and Appropriate HR Tactics to Implement HR Strategies

Even the best-laid strategic HR plans may fail when specific HR programs are poorly chosen or implemented. A firm’s HR strategies must be mutually consistent. That is, HR strategies are more likely to be effective if they reinforce one another rather than work at cross-purposes.

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IV. The HR Department and Managers: An Important Partnership

(PPT 1.18-22)

All managers must effectively deal with human resource issues because these issues are at the core of being a good manager. Moreover, mutual partnerships must be formed among line managers and HR professionals in order to effectively and efficiently meet the employees’ and employers’ goals and needs. It is not uncommon for the two groups to view each other negatively, which often hinders the establishment of an effective partnership between the two groups. Five competencies for Human Resource professionals are required for a Human Resources department to becoming a full strategic partner: (1) leadership, (2) knowledge of the business, (3) HR strategic thinking, (4) process skills, (5) and HR technologies.

Specific steps a company can take to foster an effective partnership between managers and the HR department include: (1) analyze the people side of productivity, (2) view HR professionals as internal consultants, (3) instill a shared sense of common fate, (4) require some managerial experience, (5) actively involve top corporate and divisional managers, (6) require senior HR executives to participate.

A. Specialization in Human Resource Management

During the past 30 years, the size of the typical HR department has increased significantly. This increase may reflect the growth and complexity of government regulations as well as a greater awareness that HR issues are important to achieving business goals and objectives. In addition, in recent years, the compensation of HR professionals has increased significantly, reflecting greater value being placed on the role, and heightened awareness that a well-managed HR function may help the firm to achieve a sustainable competitive advantage.

A QUESTION OF ETHICS: Guide to discussion

Page 4: How much responsibility does an organization have to shield its employees from the effects of rapid change in the environment? What risks does this type of “shock absorber” approach to management entail?

How much responsibility an organization carries to shield its employees from change depends on one’s view of the world. The answers here will closely mirror the answers in the end-of-chapter discussion questions #4 and #5. Please refer to those discussions as well. There should be little doubt that an organization has SOME responsibility to shield its employees from some of the effects of changes. The question is how far

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that responsibility extends. Certainly minor downturns and cyclical changes should not put people out on the street looking for work; management has a responsibility to plan and manage better than that. Also, managers have some level of responsibility to keep their employees up-to-date on skills and information, not only to make them of better service to the company, but also to make them more marketable should layoffs occur. However, at some point the individual has responsibility for his or her own destiny and at some point the company must be concerned with its own ability to survive. Where that line lies is a matter of differing opinion and debate and is subject to one’s own values and view of the world. A lively discussion on this topic can help students to see that some issues are not easily definable and solvable.

Page 9: What is the ethical responsibility of an employer to employees who lack basic literacy and numeracy skills? Should companies be required by law to provide training opportunities for such employees, as some have proposed?

This question also bears much similarity to end-of-chapter discussion questions #4 and #5. It may be easily agreeable among students that companies may have an ethical responsibility to provide basic literacy training to those employees. However, the issue becomes more clouded if the company is in a very competitive, low-skills industry and is barely breaking even. Adding such training programs could be the difference between the company making it and folding. However, it can also be noted that there is much free and volunteer training available in this area that companies could seek out and coordinate. The question of legislation delves into one’s views regarding the role of government. See the end-of-chapter question #5 for more discussion.

Page 28: Experts in career development note that in today’s increasingly chaotic business and economic environment, individual employees need to prepare themselves for job and career changes. Does an employer have an ethical duty to help employees prepare for the change that is almost certain to come?

This question is similar to the “Question of Ethics” on page 4. Certainly companies bear some responsibility to help prepare employees for change. The difficulty comes in determining what form that preparation should take and how extensive the company’s efforts should be.

ANSWERS TO END-OF-CHAPTER DISCUSSION QUESTIONS

1. According to an analysis of the most recent 2000-2002 recession conducted by a team of academics, U.S. businesses are adopting a dual approach to deal with economic fluctuations: boost output by lifting

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productivity (through better technology, careful selection of employees, more training opportunities and the like), and hire temporary workers to adjust to swings in demand. Thus, “companies can quickly lay off temps when demand slows. But these same businesses can give real raises to the remaining workers commensurate with faster productivity” (Cooper, Madigan & Miller, 2002:33): Do you think these policies may lead to perceived inequities? From a human resource perspective, do you support these policies? Explain.

These policies will most likely lead to perceived inequities among the temporary workforce sector. It may promote a “second class citizen” mentality among temporary workers, which could in turn, create a variety of employee relations issues among temporary employees and full time workers. The strategy is effective, however, in terms of providing job security to full time employees, by protecting employees from layoff and providing better chances for wage increases, even during volatility in economic conditions.

2. Which of the environmental, organizational and individual challenges identified in this chapter appear to be most important for human resource management in the twenty-first century, in your opinion? Which are least important? Use your own experiences in your answer.

Answers will vary. Some examples of the most important and least important challenges are listed here with objective information. The students will use their own experiences to support their choices.

Most ImportantSkill ShortagesThere are approximately 40 million illiterate or barely literate adults in the U.S. work force. This means that the U.S. work force is running out of qualified people. The cost of this incompetence in U.S. industry is higher than any of us realizes. It is manifested in missed opportunities, in bad decisions, in reduced quality of work, and in the inability to compete. This skill shortage is likely to remain a major challenge for U.S. firms for years to come.

Work Force DiversityDemographic trends present a significant challenge and opportunity in the management of human resources. These demographic trends include the age composition of the work force (during 1983-1993, employees over age 45 increased by 20%), the racial composition (by 2000, approximately one third of the work force will consist of blacks, Hispanics, Asians, and other minorities), and the gender composition (in 1993, almost 70% of employed men had employed wives; this compares to 54% in 1980 and 45% in 1975). These data affect other issues such as

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work and family roles, cultural sensitivity, the glass ceiling, generation gaps, appraisal feedback that vary based on race, and the extent of government regulation of business. Nevertheless, firms that can formulate and implement HR strategies that capitalize on employee diversity are more likely to survive and prosper.

Least ImportantGeneration GapWhile older individuals may resent reporting to a brash upstart whose career is racing ahead faster than their own, these feelings are not widespread. Also, many of those upstarts are children of older workers, who want them to be successful.

NepotismNepotism among small business owners is quite widespread. However, this practice tends to decrease significantly with firm size, competitive arena (neighborhood, city, state, region, national, or international), the demand for expertise, and the demand for customer satisfaction.

3. In a recent national survey of HR executives in more than 400 companies, most respondents reported that the priorities of top management at their firms are to counter competition, cut costs, and improve performance. Yet only 12% of these HR executives said that their department had a major responsibility for improving productivity, quality, and customer service in their companies. What do you think are some of the reasons for this gap between top management’s priorities and the responsibility of the HR department? What are some of the consequences of this gap? Outline several ways in which HR departments can align themselves with their company’s strategic goals. How do you think an HR department can gain top management’s support for its programs and goals?

Some of the reasons for this gap between top management’s priorities and the responsibility of the HR department are due to the HR manager’s lack of line experience, the inability of top managers to effectively use HR expertise, and the lack of a historical partnership between the two. The consequences can be devastating for the company because HR professionals can play a critical role in enhancing organizational capability.

The key way for HR departments to align themselves with their companies’ strategic goals is to follow the eight guidelines listed in the Manager’s Notebook (Enhancing Strategic Ties between the HR Department and Managers). These include viewing firm performance as a key variable in the design and implementation of all HR programs,

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adopting a long-term orientation, developing a general business orientation, and securing top management commitment.

4. According to a 2002 survey by USA Today/CNN/Gallup poll, only 10% of respondents think American corporations can be trusted to look out for the interests of their employees (Armour, 2002a). In a recent cover story, USA Today notes that “dozens of the largest companies – from Polaroid to IBM to Cisco Systems – have canceled severance, halted health benefits, withdrawn job offers, changed pension plans or issued misleading audit reports. The result? A troubling erosion in the trust that workers place in our nation’s business institution” (Armour, 2002a). What impact is lack of employee trust likely to have on a company? What HR policies can a company put in place to increase the level of trust?

Lack of employee trust typically results in a decrease of employee loyalty, which in turn affects employee retention, morale, individual and team performance. All these factors directly or indirectly impact the bottom line performance of the organization. Human Resource strategies to address these issues may include a communication strategy which articulates the organizations cultural beliefs and assumptions with regard to their people, and provides a greater sense of employees’ connection to the organization; development of specific goals and program to support employee retention; employee attitude surveys which will provide organizational data regarding employee motivation and morale; performance management systems which reward employees for high levels of performance; and communications vehicles which provide direct lines of communication to upper management in order to build trust, with mechanisms for employees to ask questions, and give and receive feedback about important organizational issues.

5. In recent years, much of the outsourcing of HR services has gone to consulting firms that also do auditing work. According to a 2002 study by three well known college professors who examined 3,000 proxy statements, the more consulting a company bought from its auditor the more likely its earnings met or beat Wall Street expectation. Thus, “if you want impressive earnings, hire your auditor as a consultant too” (study reported in Haddad, 2002: 12). Do you think this is mere coincidence? What may account for this observed empirical relationship?

It is probably not a coincidence, but more of a deliberate management strategy on the part of both the consulting firms and the organizations that they work with. The executives making the decisions about the accounting firms they select to perform auditing work are often the same executives who make decisions about outsourcing services for

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the organization, including Human Resource functions. In the past ten to fifteen years, many of the large accounting firms have expanded their offerings to include human resource consulting services. The obvious benefit of these comprehensive services is that they enable both the consulting firms and their clients to manage business initiatives from a whole system perspective. Companies will therefore outsource other functions to their accounting firms in whom they have confidence, as they are already familiar with their business, and understand the organization’s overall business strategy.

6. A study by Professors Judiesch and Lyness of the City University of New York’s Baruch College found that adjusting for factors such as age, gender, education and job factors, employees who take leave under the Family and Medical Leave Act (FMLA) of 1993 were heavily penalized. (The FMLA permits employees to take unpaid leave of up to 12 weeks for family or medical reasons). Employees who took leave were less likely to be promoted than non-leave takers, received lower job performance ratings fort the year in which they took time off and received smaller salary increases than their peers with similar low raig. What may account for these findings? Based on your opinion, what does this say in terms of attempts to induce changes in HR practices via government intervention? Explain.

It is clear that most employers do not look kindly on employees using FMLA leaves. The interpretation that employers have of that action may vary widely, but it might include the belief that the employee is taking advantage of the system, that they are unreliable, that they are less loyal to the company, or a variety of other negative views. It seems that government intervention to change HR practices can result in resentment and subtle methods of retaliation by employers.

7. 3M’s competitive business strategy is based on innovation. 3M requires that at least 25% of its annual sales come from products introduced over the previous 5 years, a goal it often exceeds. Specific HR programs adopted to implement this strategy include the creation of a special fund that allows employees to start new projects or follow up on ideas. 3M’s “release time” program, in which workers are given time off during the day to pursue their own interests, is given credit for the creation of new products that management would not have thought of by itself. In addition, 3M’s appraisal process encourages risk taking. A senior manager at 3M says, “If you are threatened with dismissal after working on a project that fails, you will never try again.” What other types of HR policies might 3M institute to spur product innovation?

3M is a leader in the area of encouraging product innovation. As such, it may be difficult for students to come up with additional ideas for ways

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to spur employees in this area. However, there are many areas to consider. Some of these are ones that 3M already has, but are not mentioned in this question. Encourage the students to be creative in answering this question (after all, the essence of innovation is creativity), but then encourage them to examine the drawbacks of each suggestion. Some possible answers might include: decentralization, self-managed work teams, organizational restructuring into small business units, awards, use of modeling technology, flexible work-time (some employees may be more creative late at night), etc.

8. Many believe that top managers care little about human resources compared to such areas as marketing, finance, production, and engineering. What might account for this perception, and what would you do to change it?

Students may refer to The Role of the HR Department in HR Strategy Formulation and Implementation section in responding to this question. Such a section explains the evolution of the HR department in four stages. Additionally, it is important to note that top management has not done a good job of clearly communicating their priorities in ways that are convincing. While many make statements about the importance of their human resources, they are not seen by much of the public as having actions that are consistent with those statements. In order to be convincing, top management must actually make human resources a top priority with their time and resources and make their commitments visible. Making those commitments visible is the most difficult thing to accomplish well. Most of our society is fairly cynical in this area and will tend to believe that top management is just saying the words. However, consistent action over time will help overcome these doubts.

Emerging Trends Case 1.1At Risk From Smoking: Your Job

Critical Thinking Questions

1. Many people believe that policies such as the ones described in the case represent an unacceptable degree of employer’s intrusion into the personal lives of employees. Do you agree? Explain.

Students should be able to take a stance agreeing or disagreeing with this statement. The measure of how well they answer this question is in how well they form their argument and defend their position. Those agreeing should provide a rationale as to why this type of policy would be an unacceptable and unreasonable degree of employer’s intrusion into employees’ personal lives. Those disagreeing should show why this policy is reasonable and does not tread on employees rights to privacy.

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2. While many companies claim that zero-tolerance, no-smoking policies are enforced for the well-being of employees, some critics argue that the real reason behind these policies is to save on insurance costs. This “false pretense” makes both smokers and non-smokers more cynical of the firm’s real intentions when it comes to explanations concerning incentive programs, introduction of new technology, lay-offs, restructuring, and the like. If you were asked to justify adoption of a zero tolerance non-smoking policy, how would you do it?

Students should identify the strategy they would take in order to adopt and implement this policy. They should describe the business reasons why a zero tolerance smoking policy is being implemented and describe the elements of their communication plan, one of the goals being to address the cynicism of employees about the firm’s real intentions. Their strategy should include an identification of the obstacles they would expect to encounter and how they would go about dealing with those issues. Students should be able to speak to employee vs. employer rights in the context of this example.

3. An alternative to the policy described in this Manager’s Notebook, is to require smokers to pay a higher insurance premium, in a sense asking them to pay for the cost of their habit. Do you think this is a better policy? Explain.

Once again, students may take either stance. Those who would support this alternative would likely make a case that this approach still provides individual freedom and rights, albeit at a higher cost. Those disagreeing should show why this policy still imposes on individual privacy and freedom at an unreasonable level.

Emerging Trends Case 1.2Greater Security or Looking for Dirty Laundry

Critical Thinking Questions

1. Some people believe that security measures, such as those outlined in this “You Manage It,” violate the privacy rights of prospective and current employees, and that they create a climate where big brother is watching over you. Do you agree? Explain.

While few students will probably disagree that some level of security measures are necessary, one of the responsibilities of management from a human resource perspective is to ensure that prospective and current employees rights are not violated, and that due process is apparent whenever suspected problems are identified. One of the issues in question is how, when questionable data is uncovered, that

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data is interpreted. The increase in scrutiny of prospective and current employees reveals information of all types, so how the information is used has become a major issue from human resource standpoint. The ways in which employers respond when they discover a discrepancy varies depending on company policies, the worker’s perceived value and the organizational culture. How security related information is used becomes a matter of interpretation, except perhaps in the most grievous cases

2. One potential problem with security screening systems is that people with minor peccadilloes, (for instance being late on two credit payments) nay be penalized unfairly, perhaps even without their knowledge. What kinds of policies should a firm put in place to decide what is a serious or a trivial security concern? Explain.

Developing a security screening policy, with a set of criteria by which security concerns can be evaluated would be one method of dealing with this issue. Such a policy would outline criteria to determine whether a security concern falls into the “trivial” category versus a “serious” concern or threat, and would provide guidelines for what to do once the level of threat has been determined. For example, the policy might define a serious security concern as one which poses a physical threat to an individual or to the organization, or which compromises the integrity of the business. The policy should also provide guidelines on the appropriate action to take when presented with a security concern (for example, concerns which would results in the refusal to hire, and concerns that would be reason for termination).

3. One troubling aspect of security screening systems is the potential for false alarm, particularly when private security firms are paid to identify and investigate current or prospective employees and customers who may be security risks. And there is always a possibility that consciously or unconsciously, racial or ethnic profiling may enter into consideration. What can a company do to avoid the problem of mistakes being made and potential discrimination as a result of security screening? Explain

Employers need to be concerned with the accuracy of what is discovered in the screening process, as identify theft has become a major issue in the credit checking process. In fact, as a result of these types of issues, recent legislature in California is now requiring employers to provide notice to applicants and employees of the results of third party investigative consumer reports. Additionally, outdated or incorrect information is another concern as database information can often be missing or out of date. Reference checking, criminal checks,

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and credit checks are all common tools used in security screening. Arrest and conviction information in the screening process, in particular, may inadvertently result in the disproportionate screening of minorities and other protected groups. Employers need to be particularly cautious in this area. Because an arrest record is, by definition, not evidence of criminal guilt, such information should generally not be used as definitive grounds for rejection. However, evidence of a criminal conviction may, depending upon the nature of the conviction and the related circumstances, be information that an employer arguably must consider given the employer’s primary business (e.g., security) or other federal or state law requirements (e.g., child care or nursing home care providers). Therefore, in the absence of a controlling federal or state law, employers should generally consider the following before making any negative employment decision based on an applicant’s or employee’s criminal record: the length of time since a conviction; the nature of the crime; the relationship between the job to be performed and the crime committed; the number of convictions; rehabilitation efforts; and the subsequent employment history.

Discussion Case 1.3Managers and HR Professionals at Sands Corporation: Friends or Foes?

Critical Thinking Questions

1. What seems to be the main source of conflict between supervisors and the HR department at Sands Corporation? Explain.

The main source of conflict seems to be an imbalance in power which leads to work role conflicts. Top management at Sands believes that a strong HR department with a highly qualified staff can do a better job of handling most personnel matters than supervisors. Also, they believe that a good HR department can help prevent legal problems that naive line managers may inadvertently create. One of Sand's competitors recently lost a $5 million sex discrimination suit, and this added to the top managers’ resolve to have a strong HR component.

2. Do you believe that managers should be given more autonomy to make personnel decisions such as hiring, appraising, and compensating subordinates? If so, what are some potential drawbacks to granting them this authority? Explain.

Yes. Managers should be given more autonomy to make these decisions. The core of good management is manifested in how line managers manage people. The drawbacks, however, to giving them more autonomy are numerous. First, they may make poor decisions that

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would be costly to the company and to employee morale. For example, the employees, according to the managers, are presently complaining about limitations on pay increases for excellent performers. They are not complaining that the pay scale is inherently unfair. Inherently unfair systems tend to violate the law (Civil Rights Act, Title VII, Fair Labor Standards Act, Equal Pay Act). Undue limitation on pay for excellent performers is not an exemplary management practice; however, it is not a violation of EEO laws.

Second, the supervisors say that they are afraid to indicate certain "truthful" statements on the performance appraisals because they fear investigations by the HR department. This indicates that the supervisors may, by telling the "truth" cause the company to be sued. For example, if a supervisor says that she systematically pays male welders more than female welders because they are the primary breadwinners, she is being truthful about her motives. But, her actions violate the law (i.e., Equal Pay Act, prohibiting sex-based wage discrimination).

Third, the supervisors complain that the HR department ranks applicants on test scores and other formal criteria, yet those persons do not fit well in the department and do not get along with them or the coworkers. It appears that if supervisors had their way they would select applicants on more subjective factors. This could cause lots of problems in terms of adherence to Sand's federal contract requirements and the company's ability to gain subsequent contracts with the federal government.

3. How should Sand's top executives deal with the complaints expressed by supervisors? How should the director of the HR department deal with the situation? Explain.

Top executives should listen very carefully to the complaints of supervisors. They must be able to discern the needs of the supervisors, develop training programs to meet their need for more autonomy, and at the same time use leadership skills to persuade them to "buy" into particular human resource programs.

Supervisors and other line managers must learn to view HR professionals as valuable internal consultants who can provide advice and support to improve the management of operations, rather than perceiving them as enforcers of bureaucratic procedures.

In addition, the top executives may need to establish a forum to discuss the strategic implications of HR programs in conjunction with operations. This would help to open communication channels, to exchange ideas, and to forge a closer linkage between HRM and line management. Also, it can help ensure that daily tactical decisions

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become part of a larger picture or plan. The bottom line is that firm performance, not the supervisors' preferences, must be seen as a key variable in the design and implementation of all human resource programs.

The following list shows what the director of the HR department should do:

The HR department director should not be defensive, but attempt to understand the supervisor's dilemma. Furthermore, he should prepare a document which shows the quality of services provided by the HR department to the managers of the company. The HR director also may propose supervisory training that would broaden their view concerning human resources as a key element in organizational effectiveness and performance.

The HR director would do well to indicate to what extent the federal contracts require certain items to be processed and, thus, dictate some of the so-called "bureaucratic" paperwork, which affords the company and its employees a regular paycheck.

The HR director should prepare a document that indicates the measurable effect that current HR programs have had on productivity, reductions in litigation, labor cost savings in compensation expenditures, etc.

Finally, the HR department should seek to design training programs that reflect line management's values and input, establish pay structures that are flexible enough to reward excellent performers, provide more supervisory training on performance appraisal feedback, and create a more mutual or shared-power relationship with these managers. Such a relationship would place them more appropriately in a position of business-partner rather than adversary.

Video Shorts Case 1.4The Strategic Role of Human Resource Management

Critical Thinking Questions

1. Do you agree with SPOTLIGHT panelists Jenny Herman of Loews and Martin Buckingham of Hot Jobs that Daryl Hulme did a good job? How is she protecting the interests of the company? How is she protecting the interests of the employee as well as fostering commitment?

Yes. Right now she needs to help Jackson and other employees toabsorb the shock and deal with a temporary lack of direction. She is protecting the company’s competitive advantage by doing everythingshe can to retain Jackson and explaining to Jackson that he and people like him are the reason that Hot Jobs is attractive to Yahoo. Daryl is

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counting on the commitment he has to Hot Jobs and taking this opportunity to reinforce that commitment. She is protecting Jackson by giving him a game plan to help him look after his own interests, while letting him know how important he is as a leader and a talented employee. Some students may feel that she has let Jackson down, andthat her honesty did nothing to gain his trust.

2. Hot Jobs Associate Director of HR, Martin Buckingham is apprehensive that this period of transition will affect the focus of the Hot Jobs staff resulting in lower productivity and the loss of some of the company’s best people. Why is this especially significant at an Internet company like Hot Jobs?

Yahoo intends to integrate not only Hot Jobs’ superior database and brand, but its industry leading talent as well. Human capital, meaning the knowledge, education, training, skills and expertise of a firm’s workers is especially important in a technology business. HR has invested heavily in the ongoing training of its staff and cannot afford to lose them. Superior “knowledge” is what differentiates Hot Jobs form the competition.

3. If you were in Jackson’s place, what would you do? Why?

Student answers will vary, depending upon experience and inclination. Based on his “star” performance at Hot Jobs, he has becomeaccustomed to excellent compensation and the perks that come withbeing a manager. He may not want to leave. Based on his reactions during his conversation with Daryl, he seems to be motivated by money and may choose to accept an outside offer.

4. Host Meg Allen feels that communication during a time of corporate flux is especially important. Using Jackson and Daryl as examples, would you say that Hot Jobs enjoys good communication between its line mangers and HR managers? Explain.

Students may interpret the surveillance tape in various ways. They may feel Jackson and Daryl are being honest with one another. Jackson does not seem to have taken any decisive steps without first seeking her guidance. As a line manager, he has come to HR first, which is evidence that there is excellent communication between the two. Other students my reason that he has obviously not been briefed by HR until now, when he has had to initiate the dialogue, showing that communication between line managers and HR managers is not what it should be.

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Part One

5. According to Martin Buckingham, all HR employee policies “trickle down” from the specific vision of the CEO. How does this affect HR’s role in executing and formulating strategy? How does this differ from Loews Hotels?

This makes perfect sense. All HR functions included in planning, organizing, staffing, leading and controlling such as counseling and training employees should reflect the philosophy of the company. When HR management is called upon to help with strategically pivotal processes like formulating downsizing and restructuring strategies, or environmental scanning all efforts must be cohesive in order to contribute to corporate success. At Loews, HR personnel are well represented on the board that formulates corporate policy, giving them direct input during the planning process. However, it should be noted that the company is run very much in accordance with the personal convictions of the CEO and philanthropist Jonathan M. Tisch.

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