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Chapter

Gaining a Competitive
Advantage
Discuss

the roles and activities of a companys human

resource management function
Discuss the implications of the economy, the makeup of
the labor force, and ethics for company sustainability
Discuss how human resource management affects a
companys balanced scorecard
Discuss what companies should do to compete in the
global marketplace

Chapter

Gaining a Competitive
Advantage
Identify

the characteristics of the workforce and how

they influence human resource management
Discuss human resource management practices that
support high-performance work systems
Provide a brief description of human resource
management practices
.

Introduction

Competitiveness

refers to a companys ability to maintain

and gain market share in its industry
It

is related to company effectiveness

Human

resource management refers to the policies,

practices, and systems that influence employees behavior,
attitudes, and performance
Many

companies refer to HRM as involving people

practices"

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Responsibilities of HR Departments
Employment

and recruiting
Training and development
Compensation
Benefits
Employee Services
Employee and community relations
Personnel records
Health and safety
Strategic planning
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What Roles Do
HR Departments Perform?

Strategic Partner

Administrative
Expert

Human
Resources

Employee
Advocate

Change Agent

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How is the HRM Function

Changing?

The

amount of time that the HRM function devotes to

administrative tasks is decreasing and its roles as a strategic
business partner, change agent, and employee advocate are
increasing
In shifting the focus from current operations to strategies
for the future and preparing non-HR managers to develop
and implement HR practices, HR managers face two
important challenges:
Self-service

refers to giving employees online access to

information about HR issues
Outsourcing refers to the practice of having another company
provide services
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2006 The McGraw-Hill Companies, Inc. All rights rese

The HRM Profession

HR

salaries vary depending on education and experience as

well as the type of industry
HR

specialists
HR generalists
College degrees are held by the vast majority of HRM
professionals
Professional certification is less common than membership in
professional associations
The

primary professional organization for HRM is the

Society for Human Resource Management (SHRM)

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Competitive Challenges
Influencing HRM
competitive
challenges that
companies now face will
increase the importance
of HRM practices:

Three

The Challenge of
Sustainability
The Global
Challenge

The Technology
Challenge

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The Sustainability Challenge

10

Sustainability refers to the ability of a company to survive and succeed

in a dynamic competitive environment

Stakeholders

refers to shareholders, the community, customers,

and all other parties that have an interest in seeing that the
company succeeds
Sustainability includes the ability to:
deal

with economic and social changes,

engage in responsible and ethical business practices,
provide high quality products and services, and
put in place methods to determine if the company is meeting
stakeholders needs
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The Sustainability Challenge

The

11

changing structure of the economy

Impact

of September 11, 2001

The competition for labor
Skill

demands for jobs are changing

Knowledge is becoming more valuable
Intellectual

capital refers to the creativity, productivity, and service

provided by employees
Knowledge workers are employees who contribute to the company
not through manual labor but through a specialized body of
knowledge
Empowerment means giving employees responsibility and
authority to make decisions regarding all aspects of product
development or customer service

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The Sustainability Challenge

12

A learning

organization embraces a culture of lifelong

learning, enabling all employees to continually acquire and
share knowledge
The psychological contract describes what an employee
expects to contribute and what the company will provide to
the employee for these contributions
Alternative work arrangements include independent
contractors, on-call workers, temporary workers, and
contract company workers

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The Balanced Scorecard

13

The

balanced scorecard gives managers the opportunity to

look at the company from the perspective of internal and
external customers, employees and shareholders.
The balanced scorecard should be used to:
Link

human resource management activities to the companys

business strategy.
Evaluate the extent to which the human resource function is
helping the companys meet its strategic objectives.
Measures

of human resource practices primarily relate to

productivity, people, and processes.

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The Balanced Scorecard

14

Customer

How do customers see us?

Time, quality, performance,

service, cost.

Internal

What must we excel at?

Processes that influence customer

satisfaction, availability of
information on service and/or
manufacturing processes.

Innovation
and Learning

Can we continue to improve

and create value?

Improve operating efficiency,

launch new products, continuous
improvement, empowering of
workforce, employee satisfaction.

Financial

How do we look to
shareholders?

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Profitability, growth, shareholder

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Customer Service and

Quality Emphasis

15

Total

Quality Management (TQM) is a company-wide

effort to continuously improve the ways peoples, machines,
and systems accomplish work
Core values of TQM include:
designing

methods and processes to meet the needs of internal

and external customers
all employees receive training in quality
promotion of cooperation with vendors, suppliers, and
customers
management gives feedback on progress

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Customer Service and

Quality Emphasis

16

Malcolm

Baldrige National Quality Award

established in 1987 to promote quality
awareness, to recognize quality
achievements, and to publicize successful
quality strategies.
ISO 9000:2000
quality standards adopted worldwide.
Six Sigma process
system of measuring, analyzing, improving,
and controlling processes once they meet
quality standards.
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2006 The McGraw-Hill Companies, Inc. All rights rese

Changing Demographics
Diversity of the Workforce

17

Internal

labor force is the labor force of current

employees.
External labor market includes persons actively seeking
employment.
The U.S. workforce is becoming increasingly diverse.
Women
Minorities
Disabled

workers
Immigrants

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Managing a Diverse Workforce

18

To

successfully manage a diverse workforce, managers

must develop a new set of skills, including:
Communicating

effectively with employees from a wide

variety of cultural backgrounds.
Coaching and developing employees of different ages,
educational backgrounds, ethnicity, physical ability, and race.
Providing performance feedback that is based on objective
outcomes.
Creating a work environment that makes it comfortable for
employees of all backgrounds to be creative and innovative.
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Legal and Ethical Issues

19

Five

main areas of the legal environment have influenced

HRM over the past 25 years
Equal

employment opportunity legislation

Employee safety and health
Employee pay and benefits
Employee privacy
Job security
Women

and minorities still face the glass ceiling

The Sarbanes-Oxley Act of 2002 sets strict rules for
corporate behavior and sets heavy fines for noncompliance,
especially in regards to accounting practices
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Legal and Ethical Issues

20

Human

resource managers must satisfy

three basic standards for their practices
to be considered ethical:
HRM

practices must result in the

greatest good for the largest number of
people
Employment practices must respect basic
human rights of privacy, due process,
consent, and free speech
Managers must treat employees
equitably and fairly
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The Global Challenge

21

Companies

are finding that to survive they must compete in

international markets as well as fend off foreign
corporations attempts to gain ground in the U.S.
Every business must be prepared to deal with the global
economy. This is made easier by technology.
Offshoring refers to the exporting of jobs from developed
countries to less developed countries.
Many companies are entering international markets by
exporting their products overseas, building manufacturing
facilities in other countries, entering into alliances with
foreign companies, and engaging in e-commerce
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The Technology Challenge

22

Technology

has reshaped the way we play,

plan our lives, and where we work
The

overall impact of the Internet

The Internet has created a new business
model e-commerce in which business
transactions and relationships can be
conducted electronically

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The Technology Challenge

23

Advances in technology have:

changed how and where we work,
resulted in high-performance models of work systems,
increased the use of teams to improve customer service and product quality,
changed skill requirements,
increased working partnerships,
led to changes in company structure and reporting relationships,
increased the availability of Human Resource Information Systems
(HRIS), which are used to acquire, store, manipulate, analyze, retrieve, and
distribute HR information,
increased the availability of e-HRM, which is the processing and
transmission of digitalized information used in HRM,
increased the competitiveness of high performance work systems.

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Meeting Competitive Challenges

24
Through HRM Practices
HRM

practices that help companies deal

with the four competitive challenges can
be grouped into four dimensions
The

human resource environment

Acquiring and preparing human resources
Assessment and development of human
resources
Compensating human resources

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2006 The McGraw-Hill Companies, Inc. All rights rese

Meeting Competitive Challenges

25
Through HRM Practices
Managing

internal and external environmental factors allows

employees to make the greatest possible contribution to company
productivity and competitiveness
Customer needs for new products or services influence the
number and type of employees businesses need to be successful
Besides interesting work, pay and benefits are the most important
incentives that companies can offer employees in exchange for
contributing to productivity, quality, and customer service
Human resource management practices of both managers and the
human resource function must be aligned and contribute to the
companys strategic goals

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2006 The McGraw-Hill Companies, Inc. All rights rese