Human Resource Management

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Human Resource Management Competitive Advantage
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HR Competitive Advantage

• Non-human resourcessuch as land, capital and
  equipment
• Managing human resources is essential in order
  for a business to thrive and survive.
• People determine the organizations goals and of
  course people run the organization to ensure
  goals are met/exceeded
• People are the competitive advantage to an
  organizations success

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HRM

• In HR we deal with issues such as pre-selection,
  selection, and post-selection
• Pre-selection we planorganizations decide what
  types of jobs are going to exist and what are the
  qualifications.
• During the selection phase, the organization
  selects the employees
• Recruiting applicants
• Assessing their qualifications
• Selecting those most qualified

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HRM

• Post-selection phase the organization develop
  sound HR practices for effectively managing their
  key talent
• The firm provides them with training and
  development opportunities to have the necessary
  skills to perform at satisfactory levels.
  (Mission, Vision, Strategic Business Objectives)

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HRM

• Chapter 3 we talk about HR Planning. Here
  managers anticipate and meet changing needs
  relating to acquisition, deployment, and
  utilization of its employees
• The strategic planning process takes shape here
• Demand and supply forecasting we determine the
  number and types of employees we need (i.e.
  electrical engineers recruitment process)

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HRM

• Chapter 4 we discuss job analysis a process for
  gathering, analyzing and documenting information
  about specific jobs
• Steps
• --Determining job qualifications for recruitment
  purposes
• --Choosing the most appropriate selection
  techniques
• --Developing training programs

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HRM

• Steps
• --Developing performance appraisal rating forms
• --Helping to determine pay rates
• --Setting performance standards for productivity
  improvement programs (i.e. assessment testing for
  administrative positions)

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HRM

• Selection Practices we mean policies and
  procedures used by organizations to staff
  positions
• Chapter 5 Recruitment to locate and attract
  applicants for specific positions (local,
  regionally, or nationally)/ internally
• Our goal is to identify a suitable pool of
  applicants quickly, cost efficiently, and legally

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HRM

• Selection involves assessing and choosing job
  candidates. Again this process needs to be sound
  and legal
• HRM Post-Selection Practicesthese practices
  maintain or improve a companys workers job
  performance levels
• Training Development (Chapter 7)planned
  learning experiences that teach workers to
  perform their current or future jobs effectively

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HRM

• Training focuses on ones current job and
  development focuses on possibly preparing
  employees for future jobs.
• What is the organizational goal? The improvement
  of organizational performance to meet/exceed
  goals and objectives

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HRM

• HRM Post-Selection Practices
• --Performance Appraisal (Chapter 8)
• --where we measure an employees job
  performance and communicate on an on-going basis
  (how of performance, what of performance and
  development plan)
• --Decisions on promotions, demotions,
  discharges, and pay raises

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HRM

• Compensation (Chapter 9)
• --entails pay and benefits. Pay refers to the
  wage or salary an employee earns
• --Benefits are a form of compensation in
  addition to pay, such as health insurance or
  employee discounts
• --Goal is to maintain a competent and loyal
  workforce at an affordable cost

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HRM

• Productivity Improvement Programs (Chapter 10)
• --Tie behavior to rewards. We can have
  financial rewards (e.g., bonuses, pay raises) or
  non-financial (i.e., improved job satisfaction)
• --Goal of such programs is to motivate employees
  to engage in appropriate behaviors

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HRM

• HRM is also influenced by external factors
• --Legal Environmental Issues (Chapter 2)
• --federal, state and local laws (rights to
  fair and safe treatment)
• --selection process must be conducted by the
  book (what are the needed job qualifications
  and choose selection
• methods that accurately measure those
• qualifications

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HRM

• Social, economic, and technological events that
  influence HRM
• --cultural diversity of workforce
• --work and family issues
• --part-time temporary workers
• --emphasis on quality and teamwork
• --mergers and acquisitions
• --downsizing and layoffs
• --rapid advances in technology
• --continuous quality improvement
• --high rate of illiteracy in the workforce

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HRM

• How do these events influence HRM?
• --families-through maternity leave, child care,
  flextime, and job sharing
• --older workers through skill upgrading and
  training handle new techniques
• --educating employees on basic reading and
  writing, and math skills keep up with rapidly
  advancing technologies (Motorola)

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HRM

• Workplace Justice Laws (Chapter 11)
• Addresses the issue of employee rightstreat
  workers in a non-discriminatory manner
• --workplace rules, disciplinary and discharge
  procedures
• Union Influences (Chapter 12)
• Adherence to written contracts (i.e., discipline,
  promotions, grievance procedures, and overtime
  allocations

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HRM

• Safety Health Concerns (Chapter 13)
• Legal, social, and political pressures on
  organizations to ensure the health and safety of
  their employees
• Wellness and Employee Assistance Programs
• (EAP)

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HRM

• International Influences (Chapter 14)
• Globalization has required companies to enter
  foreign markets in order to compete as part of
  the globally interconnected set of business
  markets
• Managers need to be more globally oriented (i.e.,
  understanding foreign cultures and languages and
  the dynamics of foreign marketplaces)

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HRM

• Who is responsible for Developing Implementing
  HRM Practices?
• Most companies have an HRM department but there
  is a shared partnership with the line
  organization (Reviews HR Models)
• Effective managers attempt to solve HR problems
  by
• --providing input into the selection decisions
• --trying to supervise people in a way that
  creates a team feeling

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HRM

• Effective managers attempt to solve HR problems
  by
• --providing training and coaching
• --providing opportunities for employee
  advancement
• --providing flexible scheduling for students and
  other part time workers

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HRM

• HR consults to the line organization
• Managers carry out many procedures and methods
  devised by HR professionals
• --Interview job applicants
• --Provide orientation, coaching, and on-the-job
  training
• --Provide and communicate job performance
  ratings
• --Recommend salary increases

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HRM

• Managers carry out many procedures and methods
  devised by HR professionals
• --Carry out disciplinary procedures
• --Investigate accidents
• --Settle grievance issues
• Gaining a competitive advantage
• --Cost leadership strategyfirm provides the
  same services or products as its competitors, but
  produces them at a lower cost (Class discussion)

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HRM

• Gaining a competitive advantage
• Product differentiationoccurs when a firm
  produces a product or service that is preferred
  by buyers
• --creating a better quality product or service
  than its competitors
• --providing innovative products or services that
  are not offered by its competitors
• --choosing a superior locationone more
  accessible to customers
• --promoting and packaging its product to create
  the perception of higher quality

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HRM As A Competitive Advantage

• 1994 study examined the HRM practices and
  productivity levels of 968 firms across 35
  industries
• Effectiveness of each companys set of HRM
  practices was rated based on the presence of such
  things as
• Incentive plans
• Employee grievance systems
• Formal performance appraisal systems
• Workers participation in decision making

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HRM Competitive Advantage

• Strong link between HR competitiveness and
  productivity
• --one standard deviation in HRM ratings
  translated to a productivity difference of 5.
  Means that a company with a high HRM
  effectiveness ratings (e.g., 86th percentile)
  out-produced the average company by 5

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HRM Competitive Advantage

• Another study conducted by Chris Ryan and
  Associates evaluated the impact of a broad range
  of HRM practices on shareholder return. Found
  that 15-30 of the total value of a company could
  be attributed to the quality of HRM practices
• Where is the greatest impact?
• Providing employees with effective orientation
  training
• Letting employees know what is expected of them
• Discharging employees that are chronically poor
  performers

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HRM Competitive Advantage

• Discuss Model on Linking HRM Practices to
  Competitive Advantage
• Direct Paththe way HRM practice is carried out
  can have an immediate impact on competitive
  advantage
• Indirect Pathan HRM practice can impact
  competitive advantage by causing certain
  outcomes, which, in turn, create competitive
  advantage

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HRM Competitive Advantage

• Firms can achieve cost leadership through the use
  of effective HRM practices
• HRM costs through recruitment, selection,
  training and compensationall big expenses for a
  firm
• Service industries 70 of their budget is made up
  of payroll

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HRM Competitive Advantage

• Indirect Impact of HRM practices
• HRM practices------Employment centered outcomes
• Employment-centered outcomes---Organization-center
  ed outcomes
• Organization-centered outcomesCompetitive
  advantage

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HRM Competitive Advantage

• Employee-centered outcomes
• Competenceknowledge, skills, and abilities an
  employee has that the job requires
• Motivationis the employee willing to exert the
  necessary effort to perform the job well
• Work-related attitudesis the employee satisfied
  with their job, committed to the organization,
  and act as a good corporate citizen

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HRM Competitive Advantage

• Employee-centered outcomes---organization-centered
  outcomes
• Organization centered outcomes consist of output,
  employee retention, legal compliance, and company
  reputation or image.
• Output refers to the quantity, quality, and
  innovativeness of the product or service offered
  by the firm
• Retention rates reflect the amount of employee
  turnover a firm experiences

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HRM Competitive Advantage

• Organization centered outcomes
• Retention rates reflect the amount of employee
  turnover a firm experiences
• Legal compliance concerns the issue of whether
  the firms HRM practices conform to the
  requirements imposed by the various employment
  laws
• Company reputation concerns how favorably
  outsiderspotential applicants and
  customersview the organization

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HRM Competitive Advantage

• What drives employee retention?
• Career growth and learning opportunities
• Fair pay
• Company pride/organizational commitment
• Employee empowerment
• High involvement HR systemslet employees use
  skills as they see fit or provide financial
  incentives

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HRM Competitive Advantage

• Organization-Centered Outcomes---Competitive
  Advantage
• Most common ways to cut HRM costs is to employ
  technology to replace some of the more expensive
  HR professional-delivered services (i.e.,
  e-learning vs. in class training)
• Low turnover of employees you will have better
  customer retention (recruiting, selection, and
  training costs of a new employee)

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HRM Competitive Advantage

• Management of HR is less susceptible to imitation
  therefore competitive advantage achieved through
  HRM practices is likely to be more sustainable
• Competitors rarely have access to a firms HRM
  practices
• Even when practices are visible, their impact may
  not be as favorable by competitors due to
  interrelated system (i.e., incentive pay system
  may only work when used in conjunction with
  selection practices that favor hiring risk
  takers. (Marriott Case Revisited)