A Strategic Management Approach to HRM

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A Strategic Management Approach to HRM
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Objectives

• Describe how an ARDM model can be used to examine
  and solve people problems.
• Explain the difference between external and
  internal environmental forces that affect HRM
  problems.
• Discuss the role that HRM can play in
  accomplishing the organizations strategic plan.
• Identify how HRM activities contribute to a
  firms productivity.

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Introduction

• Taking a strategic HRM approach means
• Making human resources management a top priority
• Integrating HRM with the companys strategy,
  vision 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 objectives
• How they will be achieved

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Introduction

• Many strategic plans use
• A three to five year timeline
• Annual monitoring and modification
• Good 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,
  and abilities
• 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
  diagnosis into 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, and promotion

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Government Law and Regulations

• EEO and human rights legislation indirectly
  affects
• Employment planning
• Orientation
• Career planning
• Training
• Employee development

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Government Law and Regulations

• 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 Law and Regulations

• Government regulation has increased substantially
  
• In 1940, the U.S. Dept. of Labor administered 18
  regulatory programs
• In 2004, it administered more than 135
• And that is just one government agency

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Government Law and Regulations

• 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 purpose
• There 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
  employees as blue-collar factory workers
• Engineers, nurses, teachers, secretaries,
  salespersons, college professors, professional
  football players, and even 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 to
  short-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 the private
  sector
• 30 percent work in the public sector 10 percent
  work in the third sector
• Private- and third-sector HRM are structured
  similarly
• HRM in the public sector is structurally
  different
• A manager moving from the private or third sector
  to 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 the macroeconomic level, competitiveness is
• 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 real incomes 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 the organizational 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

• A competitive advantage means having a superior
  marketplace position relative to competitors
• A sustainable competitive advantage means dealing
  effectively with employees, customers, suppliers,
  and competitors
• 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 advantage
• A 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
  take the 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 employees
  make them more costly to employ
• As we age, we lose some of our faculties
• This is an ongoing process
• The 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 administrators
• Personal 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 goals
• In 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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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 unpleasantness
• Physical location of work
• Time dimension of work
• Human interaction on the job
• Degree of variety in the task
• Task identity (more about this in Chapter 6)?
• 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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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 groups
• Providing direction, encouragement, and authority
  to evoke desired behaviors
• Reinforcing desirable behavior

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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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Strategic HRM A Key to Success

• 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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Strategic HRM A Key to Success

• 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, and
  people
• An organization must match its
• Strategic plan
• Employees' characteristics
• HRM activities

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Strategic HRM A Key to Success

• 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 the
  organization
• HRM programs must be
• Comprehensive
• Adapted to the organization's culture
• Responsive to employee needs

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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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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

• The U.S. workforce is changing in dramatic ways
• There is a slower increase in the number of
  Caucasian workers than other groups
• Since 2006, white males have no longer dominated
  the workforce
• Women are entering the workforce in record
  numbers
• The number of Hispanic (Latino/Latina), Asian,
  and older workers will continue to rise

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Building a Cooperative Workforce

• 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

• 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
  global economy

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Restructuring and Downsizing

• 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 the
  downsized firm

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Restructuring and Downsizing

• 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

• 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

• 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 risks
• Improve efficiency
• Allow the company to focus on its core business

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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
• Styles
• Intellectual capacities
• Ways of doing the job

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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
  leadership are more subject to change

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Employee Attitudes and Preferences

• An attitude is
• A characteristic, long-lasting way of thinking,
  feeling, and behaving toward an object, idea,
  person, or group
• A preference means
• Evaluating an object, idea, or person in a
  positive or negative way

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Employee Attitudes and Preferences

• 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 work is
  related to the amount directed to family,
  interpersonal relations, and recreation

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Motivation of Employees

• Motivation is 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
  toward work and away from recreation or other
  areas of life
• The motivation to work changes as other life
  activities change

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Motivation of Employees

• Managers who can determine the work motivations
  of employees will make better HRM decisions
• Work-oriented, hard working employees are usually
  motivated by incentive compensation systems
• Those consciously motivated to do a better job
  benefit from performance evaluation techniques

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Personality of Employees

• Personality is how a person thinks and behaves
• It includes the person's
• Traits
• Values
• Motives
• Genetic blue print
• Attitudes
• Emotional reactivity
• Abilities
• Self-image
• Intelligence
• Visible behavior patterns

Because each employee has a unique personality,
it is unlikely that a single set of HRM
activities or leadership approaches will be
equally successful for all employees
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Personality of Employees

• 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
• Abilities
• Attitudes
• Motives

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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

• Organizational effectiveness is critically
  influenced by HR management practices
• Improvements in productivity, quality, and
  customer satisfaction typically depend on changes
  in multiple management systems
• HR 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