HUman resource managemenr 2e s keiman chapter1

Chapter 1
Human Resource Management
and Competitive Advantage

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


Chapter Outline
•

1-1 Human Resource Management

•

1-2 Who Is Responsible for Developing and
Implementing HRM Practices?

•

1-3 Gaining a Competitive Advantage

•

1-4 Competitive Advantage and HRM

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-1 Human Resource Management
•

Human resource management: Consists of practices
that help the organization deal effectively with its
people during the various phases of the employment
cycle.

•

Three phases of the employment cycle:





Pre-selection – Planning practices.
Selection – Recruiting applicants and selecting the
most qualified.
Post-selection – Practices designed to maximize the
performance and satisfaction levels of employees.

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1-1a HRM Preselection Practices
•

Human resource planning: Anticipate and meet
changing needs relating to the acquisition,
deployment, and utilization of employees;
accomplished through strategic planning and
demand and supply forecasting.

•

Job analysis: A systematic procedure for gathering,
analyzing, and documenting information about
particular jobs.

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Figure 4-1 Job Analysis

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1-1b HRM Selection Practices
•

Recruitment: Locate and attract job applicants for
particular positions quickly, cost efficiently, and
legally.

•

Selection: Assessing and choosing job candidates
through a technically sound and legal procedure.

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1-1c HRM Postselection Practices
•

Training and development: Planned learning
experiences that teach workers how to perform their
current or future jobs effectively.

•

Performance appraisal: Measures the adequacy of
employees’ job performances and communicates
these evaluations to them.

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1-1c HRM Postselection Practices (cont.)
•

Compensation: Entails pay and benefits, and aims to
establish and maintain a competent and loyal
workforce at an affordable cost.

•

Productivity improvement programs: Tie job behavior
to rewards, and aim to motivate employees to
engage in appropriate job behaviors.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.

1-1d HRM Practices Influenced by
External Factors
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Legal and environmental issues:




Federal, state, and local laws are designed to
guarantee employees’ rights to fair and safe treatment.
Social, economic, and technological events also
strongly influence HRM practices.

•

Workplace justice laws: Addresses the issue of
employee rights.

•

Union influences: Regulate many HRM practices
such as discipline, promotion, grievance procedures,
and overtime allocations.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.

1-1d HRM Practices Influenced by
External Factors (cont.)
•

Safety and health concerns: Institution of accident
prevention programs, wellness programs, and
employee assistance programs to ensure the health
and mental well-being of employees.

•

International influences: Development of globally
oriented managers who understand foreign
languages and cultures, as well as the dynamics of
foreign marketplaces.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-2 Who Is Responsible for Developing
and Implementing HRM Practices?
•

Human resource professionals




•

Establish HRM procedures and methods.
Monitor and evaluate HR practices.
Advise and assist managers on HRM-related matters.

Line managers




Direct employees’ day-to-day tasks.
Implement HRM practices.
Provide HR professionals with needed inputs for
developing effective practices.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-3 Gaining a Competitive Advantage &
1-3a Competitive Advantage Defined
•

Firms gain competitive advantage by effectively
managing their human resources.

•

Competitive advantage is a status achieved by a
company when gaining a superior marketplace
position relative to its competition.

•

This is accomplished through cost leadership and
product differentiation.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-3b Cost Leadership
•

Cost leadership strategy: A firm provides the same
services or products as its competitors, but produces
them at a lower cost.

•

A firm can reduce its per unit cost by increasing the
value of Number of units produced/total cost of
production.

•

Per unit cost can be reduced by:




Using new technology.
Devising more efficient work methods .

Cutting overhead costs.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-3c Product Differentiation
•

Occurs when a firm produces a product or service
that is preferred by buyers.

•

A firm can accomplish this aim by:





•

Creating a better quality product or service.
Providing innovative products or services.
Choosing a superior location.
Promoting and packaging its product to create a
perception of higher quality.

Creates a competitive advantage if the firm’s
customers are willing to pay enough to cover extra
production costs.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4 Competitive Advantage and HRM
•

Studies have indicated:




A strong link between HRM effectiveness and
productivity.
The impact of a broad range of HRM practices on
shareholder return; 15–30 percent of the total value of
a company could be attributed to the quality of its HRM
practices.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4a Evidence Linking HRM Practices to
Competitive Advantage
•

Jeffrey Pfeffer identified 16 HRM practices:










Employment security
Selectivity in recruiting
High wages
Incentive pay
Employee ownership
Information sharing
Participation and empowerment
Teams and job redesign

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4a Evidence Linking HRM Practices to
Competitive Advantage (cont.)
•

Jeffrey Pfeffer identified 16 HRM practices (cont.):










Training and skill development
Cross-utilization and cross-training
Symbolic egalitarianism
Wage compression
Promotion from within
Long-term perspective
Measurement of practices
Overarching philosophy

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


Figure 1-4 A Model Linking HRM Practices
to Competitive Advantage

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage
•

Direct path: The way an HRM practice is carried out
can, by itself, have an immediate impact on
competitive advantage.




Cost leadership can be achieved through the use of
effective HRM practices.
Firms doing the best job of containing HRM-related
costs stand to gain a financial advantage over their
competitors.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

Indirect path: An HRM practice can impact
competitive advantage by causing certain outcomes,
which, in turn, create competitive advantage.





HRM practices  Employee-centered outcomes
Employee-centered outcomes  Organizationcentered outcomes
Organization-centered outcomes  Competitive
advantage

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.

1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

HRM Practices  Employee-centered outcomes




Competence – Extent of knowledge, skills, and
abilities possessed for the job.
Motivation – Willingness to exert necessary effort to
perform the job well.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

HRM Practices  Employee-centered outcomes


Work-related attitudes – Extent of
-

-

Job satisfaction – Favorableness of employee attitudes

toward their jobs.
Organizational commitment – Psychological attachment
to, identification with, and involvement in the
organization.
Organizational citizenship – Willingness to engage in
behaviors that help the organization achieve its goals.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

Employee-centered outcomes  Organizationalcentered outcomes







Output – Quantity, quality, and innovativeness of the
product or service offered by a firm.
Employee retention – Amount of employee turnover.
Legal compliance – Conformance to various
employment laws.
Company reputation/Image – Favorable view of the
organization by potential applicants and customers.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

Achievement of employee-centered outcomes leads
to favorable organization-centered outcomes.





Positive job attitude, motivation, and high productivity.
Reduction of HRM-related lawsuits.
Enhances the reputation of the company.
Helps the customers view the company positively.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.


1-4b A Model Linking HRM Practices to
Competitive Advantage (cont.)
•

Organization-centered outcomes  Competitive
advantage




Cost leadership – Achieved through using technology,
minimizing turnover rates, and avoiding lawsuits
resulting from noncompliance.
Product differentiation – Achieved through:
-

Individuals performing their jobs well.
Treating employees in a manner that helps retain longterm employees.

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.