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Summary - Human resource management : gaining a competitive advantage
1 Human resource management; gaining a competitive advantage
What is HRM?
Policies, practices and systems that influence employees behavior, attitudes and performance
Responsibilities of HRM:
- Employment and recruiting (interviewing, recruiting, testing, temporary labor cooridination)
- Training and development (orientation, performance management skill training, productivity enhancement)
- Compensation (wage & salary administration, executive compensation, incentive pay, job evaluation)
- Beneftis (insurance, vacation, leave administration, retirement plans, profit sharing, stock plans)
- Employee services (employee assistance programs, relocation services)
- Employee and community relations (attitude surveys, labor relations, publications, labor law, compliance)
- Personnel records (information systems, records)
- Health and safety (safety and drug inspections, health and wellness)
- Strategic planning (international HR, forecasting, planning, mergers and acquisitions)
What are the six competences for the HR professions?
- Credible activist
- Cultural steward
- Talen manager/organizational designer
- Strategic architect
- Business ally
- Operational executor
Sustainability is the ability to be profitable without sacrifices valuable resources (e.g. the environment, employees well-being)
Stakeholders are all parties that have an interest in the company´s success and viability
The balance scorecard is a way to measure the company performance based on the satisfaction of multiple stakeholders. This scorecard should be communicated to employees, that gives them a frameework and helps them see the goals and strategies of the company, how these are measured and how they influence the critical indicators. It should be used to link HRM practices to the corporations strategy. And to evaluate how the HR practices are serving the corporation strategy.
An example of competing through sustainability is Patagona.
1.1 Challenges to the 21st century HRM
Challenges are at economic, people, technology and globalization level.
- A poor global economy means a greater need for
–More stress on current employees
– Uncertainty in their work environments
Rising cost of corporation’s providing healthcare
–Not as much of a concern in Europe as it is in the US
Employee engagement; The degree to which employees are fully involved in their work and committed to the company. Measured with attitude or opinion surveys.
Components of employee engagement:
1. Pride in Employer
2. Satisfaction with employer
3. Satisfaction with the job
4. Opportunity to perform challenging work
5. Recognition and positive feedback
6. Personal support from managers
7. Effort above and beyond the minimum
8. Understand the link between one’s job and the company mission
9. Prospects for future growth with the company
10.Intention to stay with the company
The psychological contract: An employee’s perception of what the company expects him/her to provide and what the company will provide in return for these efforts.
What employees want in exchange for greater insecurity:
• Flexible work schedules
• Comfortable conditions
• More autonomy
• Training and development opportunities
Work/life balance is the most important factor in employee satisfaction, after that opportunities to grow.
- Increasing diversity of the workforce
- An older workforce
Hiring and retaining older workers
- Flexible work arrangement
Increasing value of intangible assets
- Human capital (education, work related know how & tacit knowledge)
- Customer capital (customer relationships, customer loyalty, brands)
- Social capital (corporate culture, management practices, informal networking systems)
- Intellectual capital (patents, copyrights, trade secrets)
Why are intangible assets relevant to HRM? Because HRM policies have a direct impact on human and social capital.
The most critical skills for the 21st century: critical thinking, information and technology application, teamwork, creativity, diversity, leadership,oral communication, professionalism, ethics, written communication.
Offshoring: exporting jobs from developed to less developed countries
• Reduced labor cost
• Greater availability of a skilled labor force
• People’s willingness to accept lower working standards
• Are the standards of performance as strong as in the home country?
• Lower ability to monitor the conditions that workers are in
• Negative public image
• Political unrest
Competing in emerging markets
Workforce vs. market; these challenges affect both the internal labor force and the external labor force.
2 Strategic HRM
What is strategic HRM?
A pattern of planned HR activities intended to enable an organization to reach its goals
HRM is tied to the organizations strategy which means that the organizations goals and busness model are aligned with how it selects and trains people.
The strategic management process has two distinct yet interdependent phases:
- Strategy formulation
- Strategy implementation
What is strategy formulation?
Deciding on a strategic direction by defining a company’s mission and goals, its opportunities and threats, and its
internal strengths and weaknesses.
What is strategy implementation?
The process of devising structures and allocating resources to realize the strategy a company has chosen.
Evidence based HR: demonstrating that HR practices have a positive influence on the company´s bottom line and key stakeholders (e.g. employees, customers and shareholders)
What is a business model? How an organization plans to make money.
1. Fixed Costs: costs that result regardless of the number of units produced
- Rent for the stores, Maintenance of coffee machines
2. Variable Costs: costs that vary directly with the number of units produced
- Costs of cups, Utilities to run machines, Food & drink costs
3. Contribution Margin: what you charge for a product and how much the product costs to produce. (contributes to your ability to pay for the fixed costs)
- If it costs .50€ to make a latte and you sell it for 4€, 3.50€ is your contribution margin.
4. Gross Margin: Total profit (N units sold x Contribution Margin)
- If you sell 500 lattes, your gross margin is 1.750€
HRM and competitive strategy
- Where to compete?
- How to compete?
- With what will we compete?
What are the four levels of integration between HRM function and the strategic management function?
- Administrative linkage (lowest level of integration)
- One-way linkage (strategic function informs HRM functions)
- Two-way linkage (first strategic gives to HRM, HRM works on it, back to strategic and decision is made, after HRM develops a program to implement the plan)
- Integrative linkage (continuing interaction and HRM manager is part of the senior management team)