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1 A Framework for Human Resource Management, 5th ed.Gary Dessler

2 Managing Human Resources TodayCh 1

3 When you finish studying this chapter, you should be able to:Answer the question, “What is human resource management?” Discuss the components of the changing environment of human resource management. Describe the nature of strategic planning. Give examples of human resource management’s role as a strategic partner.

4 What is Human Resource Management?Human resource (HR) management refers to the practices and policies you need to carry out the personnel aspects of your management job Human resource (HR) management refers to the practices and policies you need to carry out the personnel aspects of your management job, specifically, acquiring, training, appraising, rewarding, and providing a safe, ethical and fair environment for your company’s employees

5 Human Resource ManagementConducting job analyses Planning labor needs and recruiting job candidates Selecting job candidates Orienting and training new employees Managing wages and salaries

6 Human Resource Management (cont.)Providing incentives and benefits Appraising performance Communicating Training and developing Building employee commitment

7 What a Manager Should Know AboutEqual opportunity, ethics, and affirmative action Employee health and safety, and ethical treatment Grievance and labor relations

8 Why Is HR Management Important to All Managers?Personnel mistakes you don’t want to make: Having your employees not performing at peak capacity Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Personnel mistakes you don’t want to make Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices

9 Why Is HR Management Important to All Managers? (cont.)Personnel mistakes you don’t want to make: Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices Personnel mistakes you don’t want to make Hiring the wrong person for the job Experiencing high turnover Finding employees not doing their best Having your company taken to court because of your discriminatory actions Having your company cited under federal occupational safety laws for unsafe practices Allowing a lack of training to undermine your department’s effectiveness Committing any unfair labor practices

10 Line Versus Staff Authoritythe right to make decisions, to direct the work of others, and to give orders

11 Line Versus Staff Authority (cont.)Line managers authorized to give orders Line managers are associated with managing functions (like sales or production) that the company needs to exist Line Versus Staff Authority Line managers are authorized to give orders In charge of accomplishing the organization’s basic goals Staff managers assist and advise line managers in accomplishing these goals HR managers are generally staff managers

12 Line Versus Staff Authority (cont.)Staff managers assist and advise line managers in accomplishing these goals Staff managers generally run departments that are advisory or supportive, like purchasing, human resource management, and quality control

13 Line Managers’ HR ResponsibilitiesPlacing the right person in the right job Starting new employees in the organization Training employees for jobs that are new to them Improving the job performance of each person Gaining creative cooperation and developing smooth working relationships Line Managers’ HR Responsibilities Placing the right person in the right job Starting new employees in the organization Training employees for jobs that are new to them Interpreting the company’s policies and procedures Controlling labor costs Protecting employees’ health and physical conditions

14 Line Managers’ HR Responsibilities (cont.)Interpreting the company’s policies and procedures Controlling labor costs Developing the abilities of each person Creating and maintaining departmental morale Protecting employees’ health and physical conditions

15 Human Resource Department’s Management ResponsibilitiesCompensation and benefits Recruiting Training and development Job analysis Equal employment opportunity Labor relations Human Resource Department’s Management Responsibilities Compensation and benefits Recruiting Training & development Employee relations Occupational safety and health Job analysis

16 Insert figure 1.1

17 HR in Small Business Small firms generally don't have the critical mass required for a full-time human resource manager. Their human resource management tends to be “ad hoc and informal.”

18 HR’s Changing Role The metamorphosis of personnel into human resource management reflects the fact that in today’s business environment, highly trained and committed employees are often a firm’s main real sustainable competitive advantage.

19 HR’s Changing EnvironmentGlobalization refers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroad HR’s Changing Environment Globalization refers to firms’ tendency to extend their sales, ownership, and/or manufacturing to new markets abroad Formulating selection, training, and compensation policies for expatriate employees

20 HR’s Changing EnvironmentTechnological advances Nature of work service jobs outsourcing human capital Technological Advances Challenge of quickly applying technology to the task of improving operations Nature of Work Knowledge-intensive high-tech jobs are replacing traditional factory jobs Two-thirds of workforce employed in producing services

21 Workforce Trends

22 HR’s Changing EnvironmentGrowing emphasis on “knowledge workers” and human capital Human capital refers to the knowledge, education, training, skills, and expertise of a firm’s workers Human capital refers to the knowledge, education, training, skills, and expertise of a firm’s workers Managers need new world-class HR management systems and skills to get employees to work more like committed partners

23 Demographic and Workforce Trends Labor force growth is not expected to keep pace with job growth Labor force is getting older Shift to nontraditional workers Nontraditional workers include those who hold multiple jobs, or who are “contingent” or part-time workers, or people working in alternative work arrangements (such as a mother– daughter team sharing one flight attendant job at JetBlue airlines). Today, almost 10% of American workers—13 million people—fit this nontraditional workforce category. Of these, about 8 million are independent contractors who work on specific projects and move on once the projects are done.

24 Gen Y May be “the most high maintenance workforce in the history of the world” Their capacity for using information technology will also make them the most high-performing

25 The Strategic Role of Human Resource ManagementMain responsibility facing human resource managers is to institute policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic goals

26 The Strategic Role of Human Resource Management (cont.)Strategy the company’s plan for how it will balance its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage

27 HR’s Role in Executing Strategy Study found that mergers and/or acquisitions in which the human resource teams had been involved were more likely to have been successful Study found that mergers and/or acquisitions in which the human resource teams had been involved (for instance in assessing and providing advice regarding employee attitudes, helping plan and lead the integration of the compensation and benefits plans) were more likely to have been successful

28 Strategy and HR – Albertson’sAlbertson’s human resource management team chose a computer system from Unicru of Portland, Oregon that collects and analyzes the information entered by applicants online. It ranks applicants based on the extent to which they exhibit the customer-focused traits that predict success in retail jobs and helps track candidates throughout the screening process. Strategy and HR Example As in many firms today, Albertson’s Markets faced competitive pressures from firms like Wal-Mart and from food stores from abroad. Albertson’s top management therefore relied on the firm’s human resource managers to be partners in helping the firm achieve its strategic goals. Among other things, reducing personnel-related costs and improving Albertson’s performance meant hiring employees who had a customer-focused approach, as well as reducing turnover, improving retention, and eliminating time-consuming manual processes and procedures for store managers. Working with its information technology department, Albertson’s human resource management team chose a computer system from Unicru of Portland, Oregon ( The system collects and analyzes the information entered by applicants online and at kiosks. It ranks applicants based on the extent to which they exhibit the customer-focused traits that predict success in retail jobs, helps track candidates throughout the screening process, and does other things, such as track reasons for departure once applicants are hired. Human resource managers were able to present a compelling business case to illustrate the new system’s return on investment. Working as a partner in Albertson’s strategy design and implementation process, the HR team thus contributed in a significant way to achieving Albertson’s strategic goals.25

29 Two Strategic Human Resource ChallengesFocus on boosting competitiveness, reducing costs, and improving employee performance Be more involved in both formulating and implementing company strategy Most firms’ strategies increasingly stress building organizational competitiveness and performance. HR must be more involved in designing—not just implementing—companies’ strategies.

30 Corporate Strategy

31 Basics of Strategic PlanningCorporate-level strategy identifies the portfolio of businesses that comprise the company and the ways in which these businesses relate to each other For example, a diversification strategy implies that the firm will expand by adding new product lines. A vertical integration strategy means the firm expands by, perhaps, producing its own raw materials, or selling its products direct. Consolidation— reducing the company’s size—and geographic expansion—for instance, taking the business abroad—are some other corporate strategy possibilities.

32 Basics of Strategic PlanningBusiness-level/competitive strategy identifies how to build and strengthen the business’s long-term competitive position in the marketplace

33 HR and Competitive Advantage“any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share” Managers use several competitive strategies to achieve competitive advantage. One, cost leadership, means the enterprise aims to become the low-cost leader in an industry. Wal-Mart is a typical industry cost leader: It maintains its competitive advantage in part through its satellite-based distribution system. In a differentiation competitive strategy, a firm seeks to be unique in its industry along dimensions that are widely valued by buyers

34 Basics of Strategic PlanningFunctional strategies identify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goals Functional strategies Identify the basic courses of action that each of the business’s departments will pursue in order to help the business attain its competitive goals

35 Strategic Human Resource Managementformulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aims Strategic Human Resource Management The linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility

36 Linking Corporate and HR Strategies

37 HR’s Role in Formulating Strategy HR participates by supplying information regarding the company’s internal human strengths and weaknesses

38 High-Performance Work Systeman integrated set of human resource management policies and practices that together produce superior employee performance The basic aim here is to install human resource systems—in recruiting, screening, training, appraisal, and compensation, for instance—so that the company generates more job applicants, screens candidates more effectively, provides more and better training, links pay more explicitly to performance, and provides a safer work environment. In this way the human resource team can make a measurable contribution to the company’s bottom line.

39 Measuring HR PerformanceEmployers expect their human resource management teams to provide measurable evidence of their effectiveness.

40 Sample Metrics - IBM Human resource managers need access to the performance measures (or “metrics”), as well as to comparable, benchmark-able figures from similar firms. For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8%. There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees. IBM’s Randall MacDonald needed $100 million from IBM to reorganize its HR operations, and he emphasized human resource metrics in requesting those funds. He told top management, “I’m going to deliver talent to you that’s skilled and on time and ready to be deployed. I will be able to measure the skills, tell you what skills we have, what [skills] we don’t have [and] then show you how to fill the gaps or enhance our training.”33 Human resource managers such as MacDonald need access to the performance measures (or “metrics”), as well as to comparable, benchmark-able figures from similar firms. For example, median HR expenses as a proportion of companies’ total operating costs average about 0.8%. There tends to be between 0.9 and 1.0 human resource staff persons per 100 employees (the ratio tends to be lower in retailing and distribution firms, and higher in public, state organizations).34 Employers can request customized benchmark comparisons (for training hours, and tests administered, for instance) from services such as the Society for Human Resource Management’s Human Capital Benchmarking Service, and its database of over 1,500 organizations.35

41 The HR Scorecard HR scorecardshows the quantitative standards, or “metrics,” the firm uses to measure HR activities, and to measure the employee behaviors resulting from these activities, and to measure the strategically relevant organizational outcomes of those employee behaviors

42 HR and Technology Self-service Call centers Productivity improvementOutsourcing

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44 HRIS HR portals provide employees with a single gateway to all HR information Streamline the HR process and enable HR managers to focus more on strategic issues

45 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.