1

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Chapter

1 2

Gaining a Competitive
Advantage

Discuss the roles and activities of a company’s human

resource management function
Discuss the implications of the economy, the makeup of
the labor force, and ethics for company sustainability
Discuss how human resource management affects a
company’s balanced scorecard
Discuss what companies should do to compete in the
global marketplace
Chapter

1 3

Gaining a Competitive
Advantage

Identify the characteristics of the workforce and how

they influence human resource management
Discuss human resource management practices that
support high-performance work systems
Provide a brief description of human resource
management practices

.
 Introduction 4

 Competitiveness refers to a company’s ability to maintain

and gain market share in its industry
 It is related to company effectiveness
 Human resource management refers to the policies,
practices, and systems that influence employees’ behavior,
attitudes, and performance
 Many companies refer to HRM as involving “people
practices"

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 5
Responsibilities of HR Departments
 Employment and recruiting
 Training and development

 Compensation

 Benefits

 Employee Services

 Employee and community relations

 Personnel records

 Health and safety

 Strategic planning

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 What Roles Do
6
HR Departments Perform?

Strategic Partner

Administrative Human Employee

Expert Resources Advocate

Change Agent

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 How is the HRM Function
7
Changing?
 The amount of time that the HRM function devotes to
administrative tasks is decreasing and its roles as a strategic
business partner, change agent, and employee advocate are
increasing
 In shifting the focus from current operations to strategies
for the future and preparing non-HR managers to develop
and implement HR practices, HR managers face two
important challenges:
 Self-service refers to giving employees online access to
information about HR issues
 Outsourcing refers to the practice of having another company
provide services
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 The HRM Profession 8

 HR salaries vary depending on education and experience as

well as the type of industry
 HR specialists
 HR generalists
 College degrees are held by the vast majority of HRM
professionals
 Professional certification is less common than membership in
professional associations
 The primary professional organization for HRM is the
Society for Human Resource Management (SHRM)

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 Competitive Challenges
9
Influencing HRM
 Three competitive
challenges that
companies now face will
increase the importance The Challenge of
of HRM practices: Sustainability

The Global
Challenge

The Technology
Challenge

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 The Sustainability Challenge 10

 Sustainability refers to the ability of a company to survive and succeed

in a dynamic competitive environment
 Stakeholders refers to shareholders, the community, customers,
and all other parties that have an interest in seeing that the
company succeeds
 Sustainability includes the ability to:
 deal with economic and social changes,
 engage in responsible and ethical business practices,

 provide high quality products and services, and

 put in place methods to determine if the company is meeting

stakeholders’ needs

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 The Sustainability Challenge 11

 The changing structure of the economy

 Impactof September 11, 2001
 The competition for labor

 Skill
demands for jobs are changing
 Knowledge is becoming more valuable
 Intellectual capital refers to the creativity, productivity, and service
provided by employees
 Knowledge workers are employees who contribute to the company
not through manual labor but through a specialized body of
knowledge
 Empowerment means giving employees responsibility and
authority to make decisions regarding all aspects of product
development or customer service
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 The Sustainability Challenge 12

 A learning organization embraces a culture of lifelong

learning, enabling all employees to continually acquire and
share knowledge
 The psychological contract describes what an employee
expects to contribute and what the company will provide to
the employee for these contributions
 Alternative work arrangements include independent
contractors, on-call workers, temporary workers, and
contract company workers

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 The Balanced Scorecard 13

 The balanced scorecard gives managers the opportunity to

look at the company from the perspective of internal and
external customers, employees and shareholders.
 The balanced scorecard should be used to:
 Link human resource management activities to the company’s
business strategy.
 Evaluate the extent to which the human resource function is
helping the company’s meet it’s strategic objectives.
 Measures of human resource practices primarily relate to
productivity, people, and processes.

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 The Balanced Scorecard 14

Customer How do customers see us? Time, quality, performance,

service, cost.

What must we excel at? Processes that influence customer

Internal
satisfaction, availability of
information on service and/or
manufacturing processes.

Improve operating efficiency,

Innovation Can we continue to improve
launch new products, continuous
and Learning and create value?
improvement, empowering of
workforce, employee satisfaction.
Financial How do we look to Profitability, growth, shareholder
shareholders? value.

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 Customer Service and
15
Quality Emphasis
 Total Quality Management (TQM) is a company-wide
effort to continuously improve the ways peoples, machines,
and systems accomplish work
 Core values of TQM include:
 designing methods and processes to meet the needs of internal
and external customers
 all employees receive training in quality
 promotion of cooperation with vendors, suppliers, and
customers
 management gives feedback on progress

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 Customer Service and
16
Quality Emphasis
 Malcolm Baldrige National Quality Award
 established in 1987 to promote quality
awareness, to recognize quality
achievements, and to publicize successful
quality strategies.
 ISO 9000:2000
 quality standards adopted worldwide.
 Six Sigma process
 system of measuring, analyzing, improving,
and controlling processes once they meet
quality standards.

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 Changing Demographics
17
Diversity of the Workforce
 Internal labor force is the labor force of current
employees.
 External labor market includes persons actively seeking
employment.
 The U.S. workforce is becoming increasingly diverse.
 Women
 Minorities
 Disabledworkers
 Immigrants

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 Managing a Diverse Workforce 18

 Tosuccessfully manage a diverse workforce, managers

must develop a new set of skills, including:
 Communicating effectively with employees from a wide
variety of cultural backgrounds.
 Coaching and developing employees of different ages,
educational backgrounds, ethnicity, physical ability, and race.
 Providing performance feedback that is based on objective
outcomes.
 Creating a work environment that makes it comfortable for
employees of all backgrounds to be creative and innovative.

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 Legal and Ethical Issues 19

 Five
main areas of the legal environment have influenced
HRM over the past 25 years
 Equal employment opportunity legislation
 Employee safety and health
 Employee pay and benefits
 Employee privacy
 Job security

 Women and minorities still face the “glass ceiling”

 The Sarbanes-Oxley Act of 2002 sets strict rules for
corporate behavior and sets heavy fines for noncompliance,
especially in regards to accounting practices
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 Legal and Ethical Issues 20

 Human resource managers must satisfy

three basic standards for their practices
to be considered ethical:
 HRM practices must result in the
greatest good for the largest number of
people
 Employment practices must respect
basic human rights of privacy, due
process, consent, and free speech
 Managers must treat employees
equitably and fairly
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 The Global Challenge 21

 Companies are finding that to survive they must compete in

international markets as well as fend off foreign
corporations’ attempts to gain ground in the U.S.
 Every business must be prepared to deal with the global
economy. This is made easier by technology.
 Offshoring refers to the exporting of jobs from developed
countries to less developed countries.
 Many companies are entering international markets by
exporting their products overseas, building manufacturing
facilities in other countries, entering into alliances with
foreign companies, and engaging in e-commerce

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 The Technology Challenge 22

 Technology has reshaped the way we play,

plan our lives, and where we work
 The overall impact of the Internet
 The Internet has created a new business
model – e-commerce – in which business
transactions and relationships can be
conducted electronically

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 The Technology Challenge 23

 Advances in technology have:

 changed how and where we work,
 resulted in high-performance models of work systems,
 increased the use of teams to improve customer service and product quality,
 changed skill requirements,
 increased working partnerships,
 led to changes in company structure and reporting relationships,
 increased the availability of Human Resource Information Systems
(HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and
distribute HR information,
 increased the availability of e-HRM, which is the processing and
transmission of digitalized information used in HRM,
 increased the competitiveness of high performance work systems.

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 Meeting Competitive Challenges
24
Through HRM Practices
 HRM practices that help companies deal
with the four competitive challenges can be
grouped into four dimensions
 The human resource environment
 Acquiring and preparing human resources
 Assessment and development of human
resources
 Compensating human resources

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 Meeting Competitive Challenges
25
Through HRM Practices
 Managing internal and external environmental factors allows
employees to make the greatest possible contribution to company
productivity and competitiveness
 Customer needs for new products or services influence the
number and type of employees businesses need to be successful
 Besides interesting work, pay and benefits are the most important
incentives that companies can offer employees in exchange for
contributing to productivity, quality, and customer service
 Human resource management practices of both managers and the
human resource function must be aligned and contribute to the
company’s strategic goals

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