Human resource management gaining a competitive advantage 2014 chapter 16

Introduction
• Human resource management
practices can help companies
gain a competitive advantage.
• Virtually every HR function in
top companies is going
through a transformation
process to create a function
that can play this new
strategic role while fulfilling its
other roles.

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Categories of HRM Activities

Transformational
Knowledge management
Cultural Change
Strategic redirection and
renewal
Management development
Traditional
Recruitment and selection
Training
Performance management
Compensation
Employee relations
Transactional
Benefits administration

Record keeping
Employee services
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Categories of HRM Activities
• Transactional activities are the day-to-day
transactions a company makes.
– Low in their strategic value.

• Traditional activities are the nuts and bolts of
HR such as performance management, training,
recruiting, selection, compensation, and
employee relations.
– Moderate strategic value.

• Transformational activities create long-term
capability and adaptability for the firm. Activities
include knowledge management, management
development, cultural change, and strategic
redirection and renewal.
– Comprise the greatest strategic value for the firm
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Strategic Management of the HRM Function
• For the HR function to become truly strategic in
its orientation, it must view itself as being a
separate business entity.
• A customer orientation is one of the most

important changes in the HR function’s attempts
to become strategic.
• The products of the HR department must be
identified.
• The technologies through which HR meets
customer needs vary depending on the need
being satisfied.

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Customer-Oriented Perspective

Customers
Line managers
Strategic planners
Employees

HRM function

Technology
Staffing
Performance management
Rewards
Training and development

Customers’ Needs
Committed employees
Competent employees
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Basic Process for HR Strategy

Scan the
external
environment

Identify
strategic
business
issues

Identify
people
issues

Develop
HR
strategy

Communicate
the HR
strategy

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Involving Line Executives
• Involving those in charge of running the

business can increase the quality of
information from which the HR strategy is
created.
• Involvement can occur in a few ways:
– Line executives could simply provide input.
– Line executives could be members of a team
that develops HR strategy.
– Once strategy is developed, line managers
could receive communications with the HR
strategy information.
– Line managers could formally approve a
strategy.
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Characterizing HR Strategies
HR-Focused
People issues/
outcomes

HR strategy

People-Linked
People issues/
outcomes

HR strategy

Business-Linked
Business issues/

outcomes

People issues/
outcomes

HR strategy

People issues/
outcomes

HR strategy

Business-Driven
Business issues/
outcomes

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Measuring HRM Effectiveness
• Marketing the function –
evaluation is a sign that the
HR function cares about the
organization as a whole and
is trying to support
operations, production,
marketing, and other
functions in the company.
• Providing accountability –
evaluation helps determine

whether the HRM function is
meeting its objectives and
effectively using its budget.
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Approaches to Evaluating HRM
Effectiveness
Audit Approach Analytic Approach
• Focuses on reviewing
the various outcomes
of the HR functional
areas.
• Both key indicators and
customer satisfaction
measures are typically
collected.
• Employee assessment.
• Surveys of top-line
executives.

• Focuses on either:

– (1) determining
whether the
introduction of a
program or practice
has the intended effect
or
– (2) estimating the

financial costs and
benefits resulting from
an HR practice.

• More demanding than
the audit approach
because it requires the
detailed use of statistics
and finance
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Restructuring to Improve HRM Effectiveness
• The HRM function effectively is divided
into three divisions:
– The Centers for Expertise - Consist of
functional specialists in the traditional areas
of HR. These individuals ideally act as
consultants in the development of state-ofthe-art systems and processes for use in the
organization.
– The Field Generalists - Consist of the HRM
generalists who are assigned to a business
unit within the firm.
– The Service Center - Consists of individuals
who ensure that the transactional activities
are delivered throughout the organization. 16-11


Outsourcing
• Outsourcing - Contracting with an

outside vendor to provide a
product or service to the firm.
• Usually this is done for one of two
reasons:
– The outsourcing partner can
provide the service more cheaply
– The partner can provide it more
effectively.
• Firms primarily outsource
transactional activities and
services of HR such as payroll,
pension, and benefits
administration.

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Reengineering
• Reengineering is a complete review of
critical work processes and redesign to
make them more efficient and able to
deliver higher quality.
• The reengineering process has four steps:

Identify the
process to be
reengineered

Understand
the process

Redesign
the process

Implement
the process

Feedback
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Improving HRM Effectiveness
through New Technologies
• New technologies - Applications of knowledge,
procedures, and equipment that have not
previously been used.
– Transaction Processing—Computations and
calculations used to review and document HRM
decisions and practices. These include documenting
employee relocation, payroll expenses, and training
course enrollments.
– Decision Support Systems—These are systems
designed to help managers solve problems. They
usually include a "what if" feature.
– Expert systems are computer systems incorporating
the decision rules of people deemed to have
expertise in a certain area.
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Network and Client Server Architecture
• A Network is a combination of
desktop computers, computer
terminals, and mainframes or
minicomputers that share
access to databases and a
means to transmit information
throughout the system.
• Client-server architecture is a
common form of network that
provides the means of
consolidating data and
applications into a single
system.
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Relational Database, Imaging, and
Groupware
• Relational database – Information is
stored in separate files that look like
tables and can be linked by common
elements such as name.
• Imaging – The process for scanning
documents, storing them electronically,
and retrieving them.
• Groupware (or electronic meeting
software) – A software application that
enables multiple users to track, share,
and organize information and to work on

the same document simultaneously.
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Software Applications for HRM
• Improving HRM Effectiveness through New
Technologies–E-HRM - The speed requirements of
e-business force HRM managers to explore how to
leverage technology for the delivery of traditional
and transformational HRM activities.
• Recruitment and Selection - Technology has
enabled firms to monitor hiring processes to
minimize the potential for discriminatory hiring
decisions.
• Compensation and Rewards - Leveraging
technology may allow firms to better achive their
compensation goals with considerably less effort.
• Training and Development - Technology allows firms
to deliver training and development for at least some
skills or knowledge faster, more efficiently, and
possibly more effectively.
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The Future for HR Professionals
• The future for careers in HR
seems brighter than ever.
• Firms need to seek balance
between attracting, motivating,
and retaining the very best talent

and keeping costs as low as
possible.
• Finding such a balance requires
HR leaders who have a deep
knowledge of the business
combined with knowledge of HR
issues, tools, processes, and
technology.

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