The Challenges of Human Resource Management

1
The Challenges of Human Resource Management

• There is an old joke that goes.. The
  organization of the future will be so
  technologically advanced that it will be run by
  just one person and a dog. The person will be
  there to feed the dog, and the dog will be there
  to make sure that the person doesnt touch
  anything.
• In the past, observers feared that machines might
  one day eliminate the need for people at work. In
  reality, just the opposite has been occurring.
• Competitive advantage belongs to companies that
  know how to attract, select, deploy, and develop
  talent.
• Competitive Advantage Through People
• While people have always been central to
  organization, today they have taken on an even
  more central role in building a firms
  competitive advantage.
• In knowledge-based industries such as software
  and information services, success increasingly
  depends on people-embodied know-how. This
  includes the knowledge, skills, and abilities
  imbedded in an organizations members.

2
The Challenges of Human Resource Management

• Competitive Advantage Through People
• A firms success is based on establishing a set
  of core competencies integrated knowledge sets
  within an organization that distinguish it from
  its competitor and deliver value to customers.
  Examples
• McDonalds management efficiency
• Federal Express package routing, delivery, and
  employee relations
• Canon Corporation precision mechanics, fine
  optics, and microelectronics
• Organizations can achieve competitive advantage
  through people if they meet the following
  criteria
• The Resources must be of value Value is
  increased when employees find ways to decrease
  costs, provide something unique to customers, or
  some combination of the two. Empowerment
  programs, total quality initiative, and
  continuous improvement efforts.
• The Resource must be rare people are a source of
  competitive advantage when their skills,
  knowledge, and abilities are not equally
  available to competitors. Microsoft and other
  firms hire and train the brightest employees in
  order to gain advantage over competitors.

3
The Challenges of Human Resource Management

• Competitive Advantage Through People
• The Resources must be difficult to imitate when
  employee capabilities and contributions cannot be
  copied by others. (teamwork)
• The Resources must be organized when employees
  talents can be combined and deployed to work on
  new assignments at a moments notice.
• Nearly 80 of executives said the importance of
  HRM in their firms has grown
• substantially over the past ten years, and
  two-thirds said that HR expenditures are
• now viewed as a strategic investment rather than
  simply a cost to be minimized.
• Competitive Challenges and Human Resources
  Management
• Going Global
• Embracing technology
• Managing Change
• Developing human capital
• Responding to the market
• Containing Costs

4
The Challenges of Human Resource Management

• Competitive Challenges and Human Resources
  Management
• Challenge 1 Going Global
• In order to grow and prosper, many companies are
  seeking business opportunities in global markets.
• Exporting accounts for more than 956 billion a
  year. US trade deficit is now nearly 400B
• Impact on Globalization
• Globalization trend toward opening up foreign
  markets to international trade and investment
• Approximately 70 to 85 of the US economy today
  is affected by international competition.
• Nearly 97 of all US exporters are small and
  medium-sized companies.
• Efforts to lower international barriers
• NAFTA facilitate commerce between Mexico,
  Canada, and the U.S.
• FTAA Will encompass the entire Western
  Hemisphere and extend from the tip of Alaska to
  the bottom of Argentina.

5
The Challenges of Human Resource Management

• Efforts to lower international barriers
• EU European Union focuses on the integration of
  European markets
• APEC Asia Pacific Economic Cooperation has
  helped establish freer trade among Pacific Rim
  Countries.
• Effect on Globalization on HRM
• Finding competent individuals that understand,
  geographies, cultures, laws, and business
  practice.
• Challenge 2 Embracing New Technology
• The introduction of advanced technology tends to
  reduce the number of jobs that require little
  skill and to increase the number of jobs that
  require considerable skills.
• This move is from touch labor to knowledge
  workers, where employees responsibilities expand
  to include a richer array of activities such as
  planning, decision making, and problem solving.

6
The Challenges of Human Resource Management

• Challenge 2 Embracing New Technology
• Today, fully one-third of all courses are devoted
  to computer skills training (compared with 25 in
  1996)
• Influence of Technology in HRM
• Today, many firms are using technology to manage
  their HRM called Human Resources Information
  System (HRIS)
• HRIS computerized system that provides current
  and accurate data for purposes of control and
  decision making.
• Three major components
• The operational impact automating routine
  activities, alleviating the administrative
  burden, reducing costs, and improving
  productivity internal to the HR function itself.
  (payroll processing, maintaining employee
  records, administering benefits programs)
• The Relational impact it enhances service by
  providing line managers and employees with remote
  access to HR databases, supporting their HR
  related decisions, and increasing their ability
  to connect with other parts of the corporation.
  (scanning resumes, tracking application
  information)

7
The Challenges of Human Resource Management

• Three major components
• The transformational impact expanding the scope
  and function of the HR depart. (training,
  on-line performance evaluation, employees
  self-learning)
• Challenge 3 Managing Change
• Due to technology, the globalization of
  competition and markets, and workforce
• demographics, CHANGE in today's business world is
  inevitable.
• Types of Change
• Programs that focused on total quality,
  continuous improvement, downsizing,
• reengineering, outsourcing, and the like are all
  examples of the means
• organizations are using to modify the way they
  operate in order to be more
• successful. Two types of change
• Reactive-change that occurs after external forces
  have already affected performance
• Proactive-change initiated to take advantage of
  targeted opportunities.

8
The Challenges of Human Resource Management

• Managing Change Through HR
• 84 of executives polled said that they have at
  least one change initiative going
• on in their organizations.
• Unfortunately, successful change or change
  management rarely occurs naturally or easily.
  Here is why
• Not establishing a sense or urgency
• Not creating a powerful coalition to guide the
  effort
• Lacking leaders who have a vision
• Lacking leaders who communicate the vision
• Not removing obstacles to the new vision
• Not systematically planning for and creating
  short-term wins
• Declaring victory too soon
• Not anchoring changes in the corporate culture
• Responsibilities change, job assignments change,
  work processes change. And this is a continuous
  change- a part of the job rather than temporary.

9
The Challenges of Human Resource Management

• Challenge 4 Developing Human Capital
• The idea that organizations compete through
  people highlights the fact that
• success increasingly depends on an organizations
  ability to manage Human
• capital.
• Human capital the economic value of knowledge,
  skills, and capabilities.
• Human Capital and HRM
• Human capital is intangible and elusive and
  cannot be managed the way organizations manage
  jobs, products, and technologies.
• One of the reasons for this is that employees,
  not the organization, own their human capital.
• If valued employees leave a company, they take
  their human capital with them, and any investment
  the company has made in training and developing
  those people is lost.
• To build human capital in organizations, managers
  must continue to develop superior knowledge,
  skills, and experience within the workforce.

10
The Challenges of Human Resource Management

• Human Capital and HRM
• Staffing programs focus on identifying,
  recruiting, and hiring the best and the brightest
  talent available.
• Training programs complement these staffing
  practices to provide skill enhancement,
  particularly in areas that cannot be transferred
  to another company if an employee should leave.
  (What is transferable skills?)
• Challenge 5 Responding to the Market
• Meeting customers expectations is essential for
  any organization.
• Focusing on internal management issues, managers
  must also meet customer requirements of quality,
  innovation, variety, and responsiveness.
• These standards separate the successful and
  unsuccessful companies
• Who well does a company understand its customers
  needs?
• How fast can it develop and get a new product to
  market?
• How effectively has it responded to special
  concerns?
• Faster, better, cheaper..

11
The Challenges of Human Resource Management

• Challenge 5 Responding to the Market
• Organizations use several approaches to address
  this very crucial issues
• Total Quality Management (TQ M)
• Six Sigma
• Reengineering
• TQM, Six Sigma, Reengineering, and HRM
• TQM is a set of principles and practices whose
  core ideas include understanding customer needs,
  doing things right the first time, and striving
  for continuous improvement.
• Six Sigma a statistical method of translating a
  customers needs into separate tasks and defining
  the best way to perform each task in concert with
  the others.
• Reengineering has been described as the
  fundamental rethinking and radical redesign of
  business processes to achieve dramatic
  improvements in cost, quality, service and speed.
  (ISO 9000)

12
The Challenges of Human Resource Management

• Challenge 6 Containing Costs
• Investments in reengineering, TQM, human capital,
  technology, globalization,
• and the like are all very important for
  organizational competitiveness.
• Yet, at the same time, there are increasing
  pressures on companies to lower costs and improve
  productivity to maximize efficiency.
• Labor costs are one of the largest expenditures
  of any organization
• Organizations have tried a number of approaches
  to lower costs
• Downsizing, outsourcing and employee leasing, and
  productivity enhancement.
• 1) Downsizing the planned elimination of jobs.
• Other ways of downsizing besides direct layoffs
• Early retirements
• Sweetened voluntary separation program
• Sabbaticals
• Severance packages

13
The Challenges of Human Resource Management

• Challenge 6 Containing Costs
• 2) Outsourcing contracting outside the
  organization to have work done that
• formerly was done by internal employees.
• Some of the most common outsourcing are
• Services of accounting firms
• Advertising firms
• Law firms
• Maintenance such as, security, catering, and
  payroll
• Employee Leasing Process of dismissing
  employees who are then hired by a leasing company
  (which handles all HR related activities) and
  contracting with that company to lease back the
  employees.
• Impact on HR 93 of all HR depts. reported
  outsourcing some of their work
• Increasing morale especially if you know your
  work is only temporarily
• Increasing productivity level
• Managing contracting companies
• Legal issues with temporary workers

14
The Challenges of Human Resource Management

• Challenge 6 Containing Costs
• 3) Productivity Enhancement Productivity can be
  defined as the output
• gained from a fixed amount of inputs,
  organizations can increase productivity
• either by reducing the imports (the cost
  approach) or by increasing the amount that
• employees produce.
• Two view points
• View Point 1 managers may cut costs only to
  find that productivity falls at even
• at ore rapid rate WHY?????????
• View Point 2 -Mangers may find that increasing
  investment in employees
• (raising labor costs) may lead to even greater
  returns in enhanced productivity. ?
• Fact The US is the worlds most productive
  nation. However, other can catch-up
• How to Increase Productivity?
• Employee productivity is the result of a
  combination of employee abilities, motivation,
  and work environment. Figure 1.3
• When productivity falls off or more positively,
  when productivity improves the changes is
  usually traceable to enhanced skill, motivation,
  or a work environment conducive to high
  performance.

15
The Challenges of Human Resource Management

• Challenge 6 Containing Costs
• How to Increase Productivity?
• Employee productivity is the result of a
  combination of employee abilities, motivation,
  and work environment. Figure 1.3
• When productivity falls off or more positively,
  when productivity improves the changes is
  usually traceable to enhanced skill, motivation,
  or a work environment conducive to high
  performance.
• Demographics and Employee Concerns
• Demographic Changes among the most significant
  challenges to managers are the demographic
  changes occurring the the US.
• The Diversity Challenges figure 1.4
• In the year 2010 minorities will make up an even
  larges share of the US labor
• force than they do today.
• Blacks will increase their share from 10 to 12
  percent
• Hispanics from 7 to 12 percent
• Asian American from 3 to 6 percent
• These groups are expected to account for about 70
  percent of labor force.

16
The Challenges of Human Resource Management

• Demographics and Employee Concerns
• Age Distribution of Employees
• The of older workers is beginning to rise as
  baby boomers approach retirement age and is
  projected to reach 15.2 by 2010.
• Companies are finding that large portions of
  their workforces are nearing retirement.
• Managers are concerned that the expertise of
  these employees is likely to be drained too
  rapidly from companies.
• What are companies dealing with this issue
• Attracting older workers to work for them
• Innovative ways of training Old version You
  cant teach an old dog new tricks New version
  You cant teach an old dog the same way you
  teach a puppy
• Gender Distributions of the Workforce (figure
  1.5)
• Bureau of Labor suggest that women will continue
  to join the US labor force and are expected to
  account for about 48 by 2010.

17
The Challenges of Human Resource Management

• Demographics and Employee Concerns
• Gender Distributions of the Workforce (figure
  1.5)
• HR Issues with the upcoming Gender
• Employers are under constant pressure to ensure
  equality for women with respect of employment,
  advancement opportunities, and compensation.
• Need to accommodate working mothers and father
  through parental leaves, part-time employment,
  flexible work schedules, job sharing,
  telecommuting, and more sensitive to the growing
  need for policies and procedure to eliminate
  sexual harassment in the workplace.
• Rising Levels of Education (figure 1.5)
• The most Secure and fastest-growing sectors of
  employment over the past few decades have been in
  areas requiring higher levels of education.
• However, this brings yet another challenge and
  that is that the there is a widening gap between
  the educated and the noneducated.
• Recent study suggests that less than half of all
  high school seniors are able to handle
  mathematics problems involving fractions,
  decimals, percents, elementary geometry, and
  simple algebra.

18
The Challenges of Human Resource Management

• Demographics and Employee Concerns
• Cultural Changes
• The attitudes, beliefs, values, and customs of
  people in a society are an integral part of their
  culture.
• Employee Rights
• Over the past few decades, federal legislation
  has radically changed the rules for management of
  employees by granting them many specific rights.
  Among these are
• Equal Employment Opportunity (chapter 2)
• Union Representation, if desired (chapter 14)
• Safe and Healthful Work environment (chapter 12)
• Pension plan that is fiscally sound (chapter 11)
• Equal Pay for men and women performing the same
  job (chapter 9)
• Employment at will doctrine (chapter 13)

19
The Challenges of Human Resource Management

• Demographics and Employee Concerns
• Changing Attitudes Towards Work
• Employees today are less likely to define their
  personal success only in terms of financial
  gains.
• This trend has been evolving for some time, but
  observes have noted that it has peaked since the
  terrorist attacks of 9/11.
• Personal fulfillment and self-expression as
  well as a balance between work and family are
  key factors in a complex array of job attitudes.
• Employees are looking for
• Interesting work
• Balancing the challenges and rewards of work with
  those in their personal lives
• Ways of living that are less complicated but more
  meaningful
• HRM has become more complex than it was when
  employees were concerned primarily with economic
  survival.

20
The Challenges of Human Resource Management

• Responsibilities of the Human Resource Manager
• Advise and Counsel
• Service
• Policy formulation and implementation
• Employee advocacy
• Competencies of the Human Resources Manager
  (figure 1.9)
• Business mastery
• HR Mastery
• Change Mastery
• Personal credibility