Book Summary

Managing Human Resources

Chapter 1 Core Objective

1. Explain how a firm’s human resources influence its performance.

2. Describe how firms can use HR initiatives to cope with workplace changes
and trends such as a more diverse workforce, the global economy,
downsizing, and new legislation.
3. Distinguish between the role of the HR department and the role of the
firm’s managers in utilizing human resources effectively
4. Formulate and implement HR strategies that can help the firm achieve a
sustained competitive advantage.
5. Identify HR strategies that fit corporate and business unit strategies.
6. Indicate “HR best practices” associated with high-performing firms.
The Challenges

 Manager: A person who is in charge of others and is responsible for the timely
and correct execution of actions that promote his or her unit’s success.
 Line employee: An employee involved directly in producing the company’s
good(s) or delivering the service(s).
 Staff employee: An employee who supports line employees
 Environmental challenges: Forces external to a firm that affect the firm’s
performance but are beyond the control of management
Cont.
Environmental Challenges

 Many organizations face a volatile environment in which change is nearly

constant. For this reason IBM’s CEO, Sam Palmisano, tells his managers that
he doesn’t believe in forecasts longer than one week. If they are to survive
and prosper, firms need to adapt to change quickly and effectively. Human
resources are almost always at the heart of an effective response system.
Organizational Challenges

 Organizational challenges are concerns or problems internal to a firm. Effective

managers spot organizational issues and deal with them before they become major
problems. One of the themes of this text is proactivity: the need for firms to take
action before problems get out of hand. This can be done only by managers who are well
informed about important HR issues and organizational challenges.
 Controlling costs: A compensation system that uses innovative reward strategies to
control labor costs can help the organization grow
 Improving quality: Many companies have implemented total quality management
(TQM) initiatives, designed to improve the quality of all the processes that lead to a
final product or service
 Creating distinctive capabilities: The third way to gain a competitive advantage is to
use people with distinctive capabilities to create unsurpassed competence in a particular
area (for example, 3M’s competence in adhesives, Carlson Corporation’s leading
presence in the travel business, and Xerox’s dominance of the photocopier market).
Individual Challenges

 Human resource issues at the individual level address the decisions most pertinent to specific
employees. These individual challenges almost always reflect what is happening in the
larger organization
 Productivity: is a measure of how much value individual employees add to the goods or
services that the organization produces. The greater the output per individual, the higher the
organization’s productivity.
 Employee ability: competence in performing a job, can be improved through a hiring and
placement process that selects the best individuals for the job
 Motivation: refers to a person’s desire to do the best possible job or to exert the maximum
effort to perform assigned tasks
 Quality of work life: is related to job satisfaction, which, in turn, is a strong predictor of
absenteeism and turnover
 Empowerment: Providing workers with the skills and authority to make decisions that would
traditionally be made by managers.
Planning and Implementing Strategic HR
Policies
 To be successful, firms must closely align their HR strategies and programs
(tactics) with environmental opportunities, business strategies, and the
organization’s unique characteristics and distinctive competence.
 Strategic human resource (HR) planning: The process of formulating HR
strategies and establishing programs or tactics to implement them.
The Benefits of Strategic HR Planning

 Encouragement of proactive rather than reactive behavior: Being proactive

means looking ahead and developing a vision of where the company wants to
be and how it can use human resources to get there
 Encouragement of proactive rather than reactive behavior: Being proactive
means looking ahead and developing a vision of where the company wants to
be and how it can use human resources to get there.
 Explicit communication of company goals: Strategic HR planning can help a firm
develop a focused set of strategic objectives that capitalizes on its special
talents and know-how
 Stimulation of critical thinking and ongoing examination of assumptions:
Managers often depend on their personal views and experiences to solve
problems and make business decisions
 Identification of gaps between current situation and future vision: Strategic HR
planning can help a firm identify the difference between “where we are today”
and “where we want to be.
 Identification of HR constraints and opportunities: When overall business
strategy planning is done in combination with HR strategic planning, firms can
identify the potential problems and opportunities with respect to the people
expected to implement the business strategy.
The Challenges of Strategic HR Planning

 REINFORCING OVERALL BUSINESS STRATEGY: Developing HR strategies that

support the firm’s overall business strategy is a challenge for several reasons.
 AVOIDING EXCESSIVE CONCENTRATION ON DAY-TO-DAY PROBLEMS: Some
managers are so busy putting out fires that they have no time to focus on the
long term.
 DEVELOPING HR STRATEGIES SUITED TO UNIQUE ORGANIZATIONAL FEATURES:
No two firms are exactly alike. Firms differ in history, culture, leadership
style, technology, and so on.
 COPING WITH THE ENVIRONMENT: Just as no two firms are exactly alike; no
two firms operate in an identical environment. Some must deal with rapid
change, as in the computer industry; others operate in a relatively stable
market.
 SECURING MANAGEMENT COMMITMENT: HR strategies that originate in the HR
department will have little chance of succeeding unless managers at all levels
—including top executives— support them completely
 TRANSLATING THE STRATEGIC PLAN INTO ACTION: The acid test of any
strategic plan is whether it makes a difference in practice. If the plan does
not affect practice, employees and managers will regard it as all talk and no
action.
Strategic HR Choice
Fit with the Environment
Fit with Organizational Characteristics

 To be effective, HR strategies must be tailored to the organization’s

personality
 THE PRODUCTION PROCESS FOR CONVERTING INPUTS INTO OUTPUT Firms
with a relatively routine production process (such as large-volume steel mills,
lumber mills, and automobile plants) tend to benefit from HR strategies that
emphasize control, such as explicit job descriptions and job-specific training.
 THE FIRM’S MARKET POSTURE Firms that experience a high rate of sales
growth and engage in product innovation destined for a wide market segment
tend to benefit from HR strategies that support growth and entrepreneurial
activities. These HR strategies include external recruitment (“buying” skills),
decentralized pay decisions, and customized appraisals
Cont.

 THE FIRM’S ORGANIZATIONAL STRUCTURE: Some HR strategies fit very well

with highly formalized organizations that are divided into functional areas
(for example, marketing, finance, production, and so on) and that
concentrate decision making at the top. The HR strategies appropriate for
this type of firm include a control emphasis, centralized pay decisions,
explicit job descriptions, and job-based pay
 THE FIRM’S ORGANIZATIONAL CULTURE: Companies that foster an
entrepreneurial climate benefit from supporting HR strategies such as loose
work planning, informal hiring and socializing of new employees, and variable
pay
Fit with Organizational Capabilities

 firm’s organizational capabilities include its distinctive competencies those

characteristics (such as technical ability, management systems, and
reputation) that give the firm a competitive edge. For instance, Mercedes-
Benz automobiles are widely regarded as superior because of the quality of
their design and engineering. Wal-Mart’s phenomenal success has been due,
at least in part, to its ability to track products from supplier to customer
better than its competitors can.