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A Strategic Management Approach to HRM


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Title: A Strategic Management Approach to HRM

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A Strategic Management Approach to HRM
  • 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
  • Discuss the role that HRM can play in
    accomplishing the organizations strategic plan.
  • Identify how HRM activities contribute to a
    firms productivity.

  • 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

  • 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
  • Recruitment, selection, outsourcing,
    telecommuting, performance evaluation,

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

A Model to Organize HRM
  • The eventual success of any HRM activity is
  • The organization's employees are the best
  • They perform jobs that suit their needs, skills,
    and abilities
  • Matching people and activities in order to
    accomplish goals is easier with a diagnostic

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

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
  • Socially responsible, ethical behaviors
  • Competitive, high-quality products and services
  • The ARDM model calls for thorough, timely, and
    systematic review of each situation

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

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

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

Government Law and Regulations
  • EEO and human rights legislation indirectly
  • Employment planning
  • Orientation
  • Career planning
  • Training
  • Employee development

Government Law and Regulations
  • Other areas of legislation and regulation
  • 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

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

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

The Union
  • A union directly affects most aspects of HRM,
  • Working conditions
  • Wages and salaries
  • Fringe benefits
  • Employees rights
  • Grievance processes
  • Work hours
  • There are cooperative unions and combative unions

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

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
  • Representative of an organizations overall
  • The output of goods and services per unit of
    input (resources) used in a production process

Economic Conditions
  • Before productivity can be managed and improved,
    it must be measured
  • Isolate the outputs
  • Determine the costs that went into producing the
  • 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

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

Economic Conditions
  • Managers can influence productivity through sound
    HRM programs
  • Diagnosis, prescription, implementation, and
  • Recruitment and selection
  • Motivational and compensation techniques
  • Training and development

The Work Sector of HRM
  • 60 percent of HR specialists work in the private
  • 30 percent work in the public sector 10 percent
    work in the third sector
  • Private- and third-sector HRM are structured
  • HRM in the public sector is structurally
  • 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

  • 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

  • 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?

  • 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

  • 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

  • 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

  • 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

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

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

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
  • Historically, the most recent immigrant groups
    take the lowest-level jobs
  • Minorities were living in the U.S. long before
    the immigrants arrived

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

Older Employees
  • Contrary to stereotypes
  • Employees 45 have no more accidents than
    younger ones
  • Until age 55, absenteeism rates are the same or
  • Employees under 35 have the worst accident rate
  • When total performance is considered, older
    employees are just as effective as younger ones

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

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

Internal Environmental Influences
  • HRM programs are influenced by
  • Strategy
  • Goals
  • Organizational culture
  • Nature of the task
  • Work groups
  • The leaders style and experience

  • 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

  • Organizational goals differ within and among
  • 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)

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

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

Nature of the Task
  • HRM is the effective matching of the nature of
    the task (job) with the nature of the employee

Nature of the Task
  • Job factors that attract or repel workers
  • Degree of knowledge and ability to use
  • 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

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

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

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

Work Group
  • Changing the group's norms and behavior
  • 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

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

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

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

Strategic HRM A Key to Success
  • Organizational strategic plans permit HR to
    prepare for internal and external environment
  • Each organization should adopt a strategy that
    best fits its goals, environment, resources, and
  • An organization must match its
  • Strategic plan
  • Employees' characteristics
  • HRM activities

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

Strategic Challenges Facing HRM
  • Global competition has become intense
  • HRM professionals are now being asked to optimize
    the skills, talents, and creativity of every
  • Failure to do so will mean the firm cannot
    compete in a globally interconnected world

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

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
  • The number of Hispanic (Latino/Latina), Asian,
    and older workers will continue to rise

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

Caliber of the Workforce
  • Recruiting and developing skilled labor is
  • 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

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
  • It encourages firms to reduce their costs
  • Profits increase in the short-run, but not
  • It leads to lower compensation/wages within the
    downsized firm

Restructuring and Downsizing
  • Restructuring means changing the reporting and
    authority relationships within a firm
  • Downsizing is a reduction in a company's
  • 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

Contingent Workers
  • Contingent workers include
  • Temporaries
  • Part-timers
  • Contract or leased workers
  • Others who are hired to handle extra tasks or
  • The number of contingent workers has increased
    steadily since the early 1970s

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

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

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

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

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

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

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

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
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
  • Each person is unique and acts/thinks in a
    certain way because of
  • Personality
  • Abilities
  • Attitudes
  • Motives

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
  • It is a demanding job, but an exciting challenge

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
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