Human Resource Management 10th Edition Chapter 1 STRATEGIC HUMAN RESOURCE MANAGEMENT: AN OVERVIEW © 2008 by Prentice Hall 1-1 HR Branding • Firm’s corporate image or culture • Embodies values and standards that guide peoples’ behavior • People know what company stands for, people it hires, fit between jobs and people, and results it recognizes and rewards • Important in getting highest quality applicants to join firm © 2008 by Prentice Hall 1-2 Human Resource Management • Utilization of individuals to achieve organizational objectives • All managers at every level must concern themselves with human resource management • Five functions © 2008 by Prentice Hall 1-3 Human Resource Management Functions Human Resource 1 Management Safety and Health © 2008 by Prentice Hall 1-4 Staffing • Job Analysis • Human Resource Planning • Recruitment • Selection © 2008 by Prentice Hall 1-5 Staffing (Cont.) • Staffing - Process through which organization ensures it always has proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectives • Job analysis - Systematic process of determining skills, duties, and knowledge required for performing jobs in organization © 2008 by Prentice Hall 1-6 Staffing (Cont.) • Human resource planning - Systematic process of matching the internal and external supply of people with job openings anticipated in the organization over a specified period of time . • Recruitment - Process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications, to apply for jobs with an organization © 2008 by Prentice Hall 1-7 Staffing (Cont.) • Selection - Process of choosing from a group of applicants the individual best suited for a particular position and the organization © 2008 by Prentice Hall 1-8 Human Resource Development • Training • Development • Career Planning • Career Development • Organizational Development • Performance Management • Performance Appraisal © 2008 by Prentice Hall 1-9 Human Resource Development (Cont.) • Training - Designed to provide learners with knowledge and skills needed for their present jobs • Development - Involves learning that goes beyond today's job; it has more long-term focus • Career planning - Ongoing process whereby individual sets career goals and identifies means to achieve them © 2008 by Prentice Hall 1-10 Human Resource Development (Cont.) • Career development - Formal approach used by organization to ensure that people with proper qualifications and experiences are available when needed • Organization development - Planned process of improving organization by developing its structures, systems, and processes to improve effectiveness and achieving desired goals © 2008 by Prentice Hall 1-11 Human Resource Development (Cont.) • Performance management - Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and ultimately, the organization • Performance appraisal - Formal system of review and evaluation of individual or team task performance © 2008 by Prentice Hall 1-12 Compensation Compensation - All rewards that individuals receive as a result of their employment © 2008 by Prentice Hall 1-13 Compensation • Direct Financial Compensation - Pay that person receives in form of wages, salaries, bonuses, and commissions. • Indirect Financial Compensation (Benefits) - All financial rewards not included in direct compensation such as paid vacations, sick leave, holidays, and medical insurance. • Nonfinancial Compensation - Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works. © 2008 by Prentice Hall 1-14 Safety and Health Employees who work in safe environment and enjoy good health are more likely to be productive and yield long-term benefits to organization. © 2008 by Prentice Hall 1-15 Safety and Health • Safety - Involves protecting employees from injuries caused by work-related accidents • Health - Refers to employees' freedom from illness and their general physical and mental well being © 2008 by Prentice Hall 1-16 Employee and Labor Relations • Private-sector union membership has fallen from 39 percent in 1958 to 7.8 percent in 2005. • Business is required by law to recognize a union and bargain with it in good faith if the firm’s employees want the union to represent them • Human resource activity is often referred to as industrial relations • Most firms today would rather have a union-free environment © 2008 by Prentice Hall 1-17 Human Resource Research • Human resource research is not separate function. • It pervades all HR functional areas. © 2008 by Prentice Hall 1-18 Interrelationships of HRM Functions • All HRM functions are interrelated • Each function affects other areas © 2008 by Prentice Hall 1-19 Dynamic Human Resource Management Environment © 2008 by Prentice Hall 1-20 Environment of Human Resource Management Marketing Society Operations Unanticipated Events Legal Considerations EXTERNAL ENVIRONMENT INTERNAL ENVIRONMENT Customers Safety and Health © 2008 by Prentice Hall Competition Other Functional Areas Labor Market Shareholders Economy Human Resource 1 Management Finance Technology Unions 1-21 Labor Market • Potential employees located within geographic area from which employees are recruited • Always changing © 2008 by Prentice Hall 1-22 Legal Considerations • Federal, state and local legislation • Court decisions • Presidential executive orders © 2008 by Prentice Hall 1-23 Society • No longer content to accept, without question, the actions of business • Ethics - Discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation • Social responsibility - Implied, enforced or felt obligation of managers to serve or protect interests of groups other than themselves © 2008 by Prentice Hall 1-24 Unions • Group of employees who have joined together for purpose of dealing collectively with their employer • Become a third party when dealing with the company © 2008 by Prentice Hall 1-25 Shareholders • Owners of corporation • Because they have invested money in firm, they may at times challenge programs considered by management to be beneficial to organization © 2008 by Prentice Hall 1-26 Competition • Firms may face intense competition in both their product or service and labor markets • Must maintain a supply of competent employees • Bidding war often results © 2008 by Prentice Hall 1-27 Customers • People who actually use firm’s goods and services • Management has task of ensuring its employment practices do not antagonize members of market it serves • Workforce should be capable of providing top-quality goods and services © 2008 by Prentice Hall 1-28 Technology • The world has never before seen technological changes occur as rapidly as they are today. • Created new roles for HR professionals • Additional pressures on them to keep abreast of technology © 2008 by Prentice Hall 1-29 Economy • In general, when economy is booming, it is often more difficult to recruit qualified workers. • When a downturn is experienced, more applicants are typically available. © 2008 by Prentice Hall 1-30 Unanticipated Events • Occurrences in the external environment that could not be foreseen • Every disaster, whether manmade or by nature, requires a tremendous amount of adjustment with regard to human resource management © 2008 by Prentice Hall 1-31 Cyberwork • Possibility of never-ending workday • BlackBerrys, cell phones, text messaging, and e-mail create endless possibilities for communication • Some workers believe their employer wants them available 24/7 © 2008 by Prentice Hall 1-32 HR’s Changing Role: Questions That Are Being Asked • Can some HR tasks be performed more efficiently by line managers or outside vendors? • Can some HR tasks be centralized or eliminated altogether? • Can technology perform tasks that were previously done by HR personnel? • Many HR departments continue to get smaller © 2008 by Prentice Hall 1-33 HR’s Changing Role: Who Performs Human Resource Management Tasks? • Human Resource Managers • HR Outsourcing • HR Shared Service Centers • Professional Employer Organization (Employee Leasing) • Line Managers © 2008 by Prentice Hall 1-34 Human Resource Manager • Acts in advisory or staff capacity • Works with other managers to help them deal with human resource matters • Today HR departments continue to get smaller because others are accomplishing certain functions © 2008 by Prentice Hall 1-35 HR Outsourcing • Transfers responsibility to an external provider • Market for HR outsourcing is growing dramatically © 2008 by Prentice Hall 1-36 Ways HR Outsourcing is Done • Discrete services • Multi-process services • Total HR outsourcing © 2008 by Prentice Hall 1-37 Discrete Services • One element of business process or single set of high-volume repetitive functions is outsourced to a thirdparty • Large majority of companies outsource transactional HR activities, such as 401(k) administration © 2008 by Prentice Hall 1-38 Multi-process Services • Complete outsourcing of one or more human resource processes • Example: Procter & Gamble outsourced entire training operations © 2008 by Prentice Hall 1-39 Total HR Outsourcing • Transfer majority of HR services to third party • Example: Whirlpool Corporation signed 10-year deal to outsource HR business processes for 68,000 employees to Convergys Corporation © 2008 by Prentice Hall 1-40 HR Shared Service Centers (SSCS) Takes routine, transaction-based activities that are dispersed and consolidates them in one location © 2008 by Prentice Hall 1-41 Professional Employer Organization (Employee Leasing) Company that leases employees to other businesses. © 2008 by Prentice Hall 1-42 Professional Employer Organization (Cont.) • Company releases its employees who are then hired by PEO • PEO pays the employees • PEO is the employees’ legal employer and has the rights to hire, fire, discipline, and reassign an employee • Charges a fee of from 1 to 4 percent of the customer’s gross wages © 2008 by Prentice Hall 1-43 Line Managers Performing HR Tasks • Involved with human resources by nature of their jobs • Line managers are now performing some duties typically done by HR © 2008 by Prentice Hall 1-44 HR as a Strategic Partner • HR executives must understand complex organizational design • Sharp deviation from what has traditionally been an administrative type role for HR © 2008 by Prentice Hall 1-45 Strategic Activities CEOs Want from HR • Make workforce strategies integral to company strategies and goals • Leverage HR’s role in major change initiatives • Earn the right to a seat at the corporate table • Understand finance and profits • Help line managers achieve their goals © 2008 by Prentice Hall 1-46 Human Capital Metrics Measures of HR performance © 2008 by Prentice Hall 1-47 Examples of HR Metrics • • • • • • Time to fill open positions HR headcount ratios Administrative cost per employee Turnover cost Training return on investment Cost per employee for HR administration ranges from $1,200 - $1,600 © 2008 by Prentice Hall 1-48 HR Scorecard • Report card of effectiveness of specific person • Metrics that will best suit each company depends on variety of factors © 2008 by Prentice Hall 1-49 Human Resource Designations © 2008 by Prentice Hall 1-50 Human Resource Executives, Generalists, and Specialists Vice President, Human Resources Manager, Compensation Benefits Analyst Vice President, Industrial Relations Manager, Training and Development Manager, Staffing Executive: Generalist: Specialist: © 2008 by Prentice Hall 1-51 Characteristics of an HR Executive • Performs one or more HR functions • A top-level manager • Reports directly to CEO or head of major division © 2008 by Prentice Hall 1-52 Characteristics of an HR Generalist • Often an executive • Performs tasks in various HR related areas • Involved in several, or all, of the five HRM functions © 2008 by Prentice Hall 1-53 Characteristics of an HR Specialist • May be an HR executive, manager, or non-manager • Typically concerned with only one of the five functional areas © 2008 by Prentice Hall 1-54 Evolution Of Human Resource Management © 2008 by Prentice Hall 1-55 Traditional Human Resource Function in Large Firm • Separate sections were often created • Placed under an HR Manager • Each HR function may have a supervisor & staff • HR Manager works closely with top management in formulating policy © 2008 by Prentice Hall 1-56 Traditional Human Resource Functions in a Large Firm President and CEO Vice President, Marketing Manager, Training and Development Vice President, Operations Manager, Compensation Vice President, Finance Manager, Staffing © 2008 by Prentice Hall Vice President, Human Resources Manager, Safety and Health Manager, Labor Relations 1-57 The Evolving HR Organization HR Outsourcing HR Shared Service Centers Professional Employer Organization Line Manager Evolve to make HR more strategic © 2008 by Prentice Hall 1-58 A Possible Evolving HR Organization Example President and CEO Vice President, Operations Vice President, Strategic Human Resources Training & Development (Outsourced) Vice President, Finance Vice President, Marketing Staffing (Line Managers, Use of Applicant Tracking © 2008 by Prentice Hall Systems) Compensation (Shared Service Centers) Director of Safety and Health 1-59 A Global Perspective: British and American Culture Are Different • United Kingdom might seem to require less adjustment for Americans than countries such as China • Assumption can set up Americans for difficulty, disappointment and underachievement • Sports metaphors may confuse Britons • Example: “step up to the plate,” “cover all the bases,” “I’ll touch base with you,” “ballpark figure,” “off the wall” and “out in left field.” © 2008 by Prentice Hall 1-60 Organization of Human Resource Management 10th Edition PART I. INTRODUCTION • Chapter 1: Strategic Human Resource Management: An Overview PART II. HR ETHICAL, LEGAL, AND SOCIAL CONSIDERATIONS • Chapter 2: Business Ethics and Corporate Social Responsibility • Chapter 3: Workforce Diversity, Equal Employment Opportunity, and Affirmative Action © 2008 by Prentice Hall 1-61 Organization of Human Resource Management 10th Edition (Cont.) PART III. STAFFING • Chapter 4: Job Analysis, Strategic Planning, and Human Resource Planning • Chapter 5: Recruitment • Chapter 6: Selection © 2008 by Prentice Hall 1-62 Organization of Human Resource Management 10th Edition (Cont.) PART IV. HUMAN RESOURCE DEVELOPMENT • Chapter 7: Training and Development • Appendix Chapter 7: Career Planning and Development • Chapter 8: Performance Management and Appraisal © 2008 by Prentice Hall 1-63 Organization of Human Resource Management 10th Edition (Cont.) PART V. COMPENSATION AND BENEFITS • Chapter 9: Compensation • Chapter 10: Benefits, Nonfinancial Rewards, and Other Compensation I ssues PART VI. SAFETY AND HEALTH • Chapter 11: A Safe and Healthy Work Environment © 2008 by Prentice Hall 1-64 Organization of Human Resource Management 10th Edition (Cont.) PART VII. EMPLOYEE AND LABOR RELATIONS • Chapter 12: Labor Union and Collective Bargaining • Appendix Chapter 12: History of Unions in the United States • Chapter 13: Internal Employee Relations PART VIII. OPERATING IN A GLOBAL ENVIRONMENT • Chapter 14: Global Human Resource Management © 2008 by Prentice Hall 1-65 © 2008 by Prentice Hall 1-66