The Challenge of

Human Resources
Management

Managing Human Resources

Bohlander • Snell 14th edition

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All rights reserved. The University of West Alabama
 Objectives
After studying this chapter, you should be able to:

1. Identify how firms gain sustainable competitive

advantage through people.
2. Explain how globalization is influencing human
resources management.
3. Describe the impact of information technology on
managing people.
4. Identify the importance of change management.
5. State HR’s role in developing intellectual capital.
6. Differentiate how TQM and reengineering influence
HR systems.
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 Objectives (cont’d)
After studying this chapter, you should be able to:

7. Discuss the impact of cost pressures on HR

policies.
8. Discuss the primary demographic and employee
concerns pertaining to HRM.
9. Provide examples of the roles and competencies of
today’s HR managers.

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 Why Study Human Resources Management
• Human Resources Management (HRM)
 The process of managing human resources (human
capital and intellectual assets) to achieve an
organization’s objectives.
• “Why Study HRM?”
 Staffing the organization, designing jobs and teams,
developing skillful employees, identifying approaches
for improving their performance, and rewarding
employee successes—all typically labeled HRM
issues—are as relevant to line managers as they are
to managers in the HR department.

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 Competitive Advantage through People
• Core Competencies
 Integrated knowledge sets within an organization that
distinguish it from its competitors and deliver value to
customers.
• Sustained competitive advantage through
people is achieved if these human resources:
 Have value.
 Are rare and unavailable to competitors.
 Are difficult to imitate.
 Are organized for synergy.

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 Figure 1–1 Overall Framework for Human Resource Management

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 Competitive Challenges and Human
Resources Management
• The most pressing competitive issues facing
firms:
1. Going global
2. Embracing new technology
3. Managing change
4. Managing talent, or human capital
5. Responding to the market
6. Containing costs

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 Challenge 1: Going Global
• Globalization
 The trend toward opening up foreign markets to
international trade and investment
• Impact of globalization
 “Anything, anywhere, anytime” markets
 Partnerships with foreign firms
 Lower trade and tariff barriers
 NAFTA, EU, APEC trade agreements
 WTO and GATT

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 Challenge 1: Going Global (cont’d)
• Corporate Social Responsibility
 The responsibility of the firm to act in the best
interests of the people and communities affected by
its activities
• Impact on HRM
 Different geographies, cultures, laws, and business
practices
 Issues:
 Identifying capable managers and workers
 Developing foreign culture and work practice training
programs.
 Adjusting compensation plans for overseas work

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 Challenge 2: Embracing New Technology
• Knowledge Workers
 Workers whose responsibilities extend beyond the
physical execution of work to include planning,
decision making, and problem solving.
• Knowledge-Based Training
 Online instruction
 “Just-in-time” learning via the Internet
on company intranets

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 Influence of Technology in HRM
• Human Resources Information System (HRIS)
 A computerized system that provides current and
accurate data for the purposes of control and decision
making.
 Benefits:
 Store and retrieve of large quantities of data.
 Combine and reconfigure data to create new information.
 Institutionalization of organizational knowledge.
 Easier communications.
 Lower administrative costs, increased productivity and
response times.

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 Highlights in HRM 2

Most Common HR Information Systems Applications

Payroll 76.7%
Benefits administration 57.1
Benefits enrollment 41.4
Recruiting—applicant tracking 39.1
Personnel administration 39.1
Training and development 31.6
Employee self-service 24.8
Manager self-service 18.0
Other 3.8

Source: “How HR Managers Use Technology Applications to Control HR Department

Costs,” Human Resource Department Management Report, no. 4–5 (May 2004).

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 HRM IT Investment Factors
• Fit of the application to • Time required to
the firm’s employee base. implement and train staff
• Ability to upgrade members to use HRIS
Increased efficiency and • Initial and annual
time savings maintenance costs
• Compatibility with current • Training time required for
systems HR and payroll
• Availability of technical
support

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 Challenge 3: Managing Change
• Types of Change
 Reactive change
 Change that occurs after external forces have already
affected performance
 Proactive change
 Change initiated to take advantage of targeted
opportunities
• Managing Change through HR
 Formal change management programs help to keep
employees focused on the success of the business.

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 Challenge 3: Managing Change (cont’d)
• Why Change Efforts Fail:
1. Not establishing a sense of urgency.
2. Not creating a powerful coalition to guide the effort.
3. Lacking leaders who have a vision.
4. Lacking leaders who communicate the vision.
5. Not removing obstacles to the new vision.
6. Not systematically planning for and creating short-
term “wins.”
7. Declaring victory too soon.
8. Not anchoring changes in the corporate culture.

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 Challenge 4: Managing Talent, or Human
Capital
• Human Capital
 The knowledge, skills, and capabilities of individuals
that have economic value to an organization.
 Valuable because capital:
 is based on company-specific skills.
 is gained through long-term experience.
 can be expanded through development.

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 Challenge 5: Responding to the Market
• Total Quality Management (TQM)
 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 process used to translate customer needs into a set
of optimal tasks that are performed in concert with
one another.

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 Challenge 5: Responding to the Market
(cont’d)
• Reengineering and HRM
 Fundamental rethinking and radical redesign of
business processes to achieve dramatic
improvements in cost, quality, service, and speed.
 Requires that managers create an environment for
change.
 Depends on effective leadership and communication
processes.
 Requires that administrative systems be reviewed and
modified.

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 Challenge 6: Containing Costs
• Downsizing
 The planned elimination of jobs (“head count”).
 Layoffs
• Outsourcing
 Contracting outside the organization to have work
done that formerly was done by internal employees.
• Offshoring
 The business practice of sending jobs to other
countries.

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 Figure 1–2 Estimated Number and Types of U.S. Jobs Moving Offshore by 2015

Source: Near-Term Growth of Offshoring Accelerating, Forester Research, Inc., May 2004.
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 Challenge 6: Containing Costs (cont’d)
• Employee Leasing
 The 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.

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 Challenge 6: Containing Costs (cont’d)
• Hidden Costs of Layoff
 Severance and rehiring costs
 Accrued vacation and sick day payouts
 Pension and benefit payoffs
 Potential lawsuits from aggrieved workers
 Loss of institutional memory and trust in management
 Lack of staffers when the economy rebounds
 Survivors who are risk-averse, paranoid, and political

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 Challenge 6: Containing Costs (cont’d)
• Benefits of a No-Layoff Policy
 A fiercely loyal,more productive workforce
 Higher customer satisfaction
 Readiness to snap back with the economy
 A recruiting edge
 Workers who aren’t afraid to innovate, knowing their
jobs are safe.

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 Figure 1–3 U.S. Productivity/Output per Worker

Source: Derived from U.S. Department of Commerce data

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 Figure 1–4 Productivity Enhancements

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 Highlights in HRM 4

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 Figure 1–5 Growth of the U.S. Minority Population

Source: U.S. Census Bureau

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 Figure 1–6 Labor Force and Gender Distributions

LABOR FORCE PARTICIPATION

RATE BY SEX, PROJECTED
1950–2012
Continuing a historical trend, the
labor force participation rate for
men will decline as the rate for
women increases.

LABOR FORCE GROWTH BY

SEX, PROJECTED 2002–2012
The number of women in the
labor force is expected to grow at
a higher rate than that for men.
Source: U.S. Department of Labor
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 Figure 1–7 Education Pays

Source: U.S. Department of Labor

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 Figure 1–8 Model of Diversity Management Strategy

Source: Reprinted by permission of Elsevier from “Managing for Effective Workforce Diversity” by Kathleen
Iverson from The Cornell Hotel and Restaurant Administration Quarterly 41, no. 2 (April 2000): 31–38.
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 Highlights in HRM 5

Source: Survey data from Gail Robinson and Kathleen Dechant, “Building a Business Case for Diversity,” Academy of
Management Executive 11, no. 3 (August 1997): 21–31; permission conveyed through the Copyright Clearance Center, Inc.

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 Cultural Changes

Employee Concern for

Rights Privacy

Cultural
Changes

Balancing Work Attitudes

and Family towards Work

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 Qualities of Human Resources Managers
• Responsibilities • Competencies
1. Advice and counsel 1. Business mastery
2. Service 2. HR mastery
3. Policy formulation and 3. Change mastery
implementation 4. Personal credibility
4. Employee advocacy

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 Figure 1–9 Human Resource Competency Model

Source: Arthur Yeung, Wayne Brockbank, and Dave Ulrich, “Lower Cost, Higher Value: Human Resource Function in Transformation.” Reprinted
with permission from Human Resource Planning, Vol. 17, No. 3 (1994). Copyright 1994 by The Human Resource Planning Society, 317 Madison
Avenue, Suite 1509, New York, NY 10017, Phone: (212) 490-6387, Fax: (212) 682-6851.
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 Key Terms
• corporate social • knowledge workers
responsibility • managing diversity
• downsizing • offshoring
• employee leasing • outsourcing
• globalization • proactive change
• human capital • reactive change
• human resources • reengineering
information system
(HRIS) • Six Sigma
• human resources • total quality management
management (HRM) (TQM)

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