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Human Resource
Management
and the Environment

McGraw-Hill/Irwin
Human Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Objectives
 Define the term human resource management.
 Describe the strategic importance of human resource
management (HRM) activities.
 Explain what career opportunities are available in the
HRM field.
 Discuss the role that specialists and operating managers
play in performing HRM activities.
 List the main objectives pursued by HRM units.
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Introduction

 Human resource management (HRM) is the effective

management of people at work
 The goal: make workers more satisfied and
productive
 When an organization is concerned about people, its
total philosophy, culture, and orientation reflect it
 Every manager must be concerned with people,
whether or not there is a human resources department
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Introduction
 HRM consists of numerous activities:
 Equal employment opportunity (EEO) compliance
 Job analysis
 Human resource planning
 Recruitment, selection, motivation, and orientation
 Performance evaluation and compensation
 Training and development
 Labor relations
 Safety, health, and wellness
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Introduction
 The HRM unit is oriented toward:
 Action
 People
 Global enterprise
 The future
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A Brief History of HRM
 HRM can be traced to England, where craftspeople
organized guilds
 They used unity to improve working conditions
 The Industrial Revolution in the 18th century laid
the basis for a new, complex industrial society
 Changing work conditions, social patterns, and labor
created a gap between workers and owners
 During the world wars era, scientific management,
welfare work, and industrial psychology merged
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A Brief History of HRM
 Frederick W. Taylor, the father of scientific
management, summarized scientific management as:
 Science
 Harmony
 Cooperation
 Maximum output
 Industrial psychology, initiated in 1913, focused on:
 The worker
 Individual differences
 The maximum well being of the worker
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A Brief History of HRM
 Personnel departments were created to deal with:
 Drastic changes in technology
 Organizational growth
 The rise of unions
 Government intervention
concerning working people
 Around the 1920s, more organizations
noticed and acted on employee-management conflict
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A Brief History of HRM
 The Hawthorne studies (1924 to 1933):
 Were to determine the effects of
illumination on workers and their output
 Rather, it pointed out the importance of
social interaction on output and satisfaction
 Until the 1960s, the personnel function was
concerned only with blue-collar employees
 File clerk, house-keeper, social worker, firefighter,
and union trouble defuser
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Strategic Importance of HRM
 Today, HRM plays a major role in:
 Clarifying the firm’s human resource problems
 Developing solutions for them

 It is oriented toward:
 Action
 The individual
 Worldwide interdependence
 The future
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Strategic Importance of HRM
 Strategic HRM differs significantly from traditional
HRM
 In traditional arrangements, responsibility for
managing human resources lies with different
specialists in each department or division
 In a strategic approach, people management rests
with an individual who is in direct contact with
workers or line managers
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Strategic Importance of HRM

Item Traditional HRM Strategic HRM

Responsibility for Specialists Line managers

human resources
Objective Better performance Improved understanding
and use of human assets
Role of HRM area Respond to needs Lead, inspire, understand

Time focus Short-term results Short, intermediate, long

term
Control Rules, policies, position Flexible, based on human
power resources
Culture Bureaucratic, top-down, Open, participative,
centralization empowerment
Major emphasis Following the rules Developing people

Accountability Cost centers Investment in human

assets
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Strategic Importance of HRM
 For years, the HRM function was not linked to
corporate profit
 Organizations focused only on current performance
 HR managers did not have a strategic perspective
 Executives categorized HRM in a traditional manner
 It was difficult to develop metrics for HRM activities

 Recognition of the importance of people made HRM

a major player in developing strategic plans
 HRM strategies must reflect the organization’s
strategy regarding people, profit, and effectiveness
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Strategic Importance of HRM
 Key concepts that must be applied:
 Analyze and solve problems from a profit-oriented
point of view
 Assess and interpret costs and benefits of HRM issues
 Planning models must include realistic, challenging,
specific, and meaningful goals
 Prepare reports on HRM solutions to problems
encountered by the firm
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Strategic Importance of HRM
 Key concepts that must be applied (continued):
 Train the human resources staff
 Emphasize the strategic importance of HRM
 Show managers that they contribute to the
goals/mission of the firm
 Theactions, language, and performance of the
HRM function must be:
 Measured
 Precisely communicated
 Evaluated
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Strategic Importance of HRM
 The era of HRM accountability resulted from:
 Concerns about productivity
 Organizational downsizing and redesign
 An increasingly diverse workforce
 The need to effectively use all organizational
resources to compete in an increasingly complex
and competitive world
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Strategic Importance of HRM
 For the HRM function to be successful, managers in
other functions must be knowledgeable and involved
 Managers play a major role in setting the direction,
tone, and effectiveness of the relationship between:
 The employees
 The firm
 The work performed

 Without managerial participation,

there are likely to be major human
resource problems
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HRM and Organizational Effectiveness
 Fora firm to survive and prosper, reasonable goals
must be achieved in:
 Performance
 Legal compliance
 Employee satisfaction
 Absenteeism
 Turnover
 Training effectiveness and ROI
 Grievance rates
 Accident rates
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HRM and Organizational Effectiveness
 Effectiveness is measured by the balance of such
complimentary characteristics as:
 Reaching goals
 Employing the skills/abilities of employees efficiently
 Ensuring the influx and retention of well-trained,
motivated employees
 Three elements needed for firms to be effective:
 Mission and strategy
 Organizational structure
 HRM
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HRM and Organizational Effectiveness

It is important to remember that

the people who do the work and create the ideas
allow the organization to survive
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HRM and Organizational Effectiveness
 Changes experienced by organizations:
 Growing global competition
 Rapidly expanding technologies
 Increased demand for individual, team, and
organizational competencies
 Faster cycle times
 Increasing legal and compliance scrutiny
 Higher customer expectations

 The mechanized, routine-oriented workforce is

giving way to a knowledge-based workforce
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HRM and Organizational Effectiveness
 Top management has trouble making strategic
planning decisions regarding people
 All other resources are evaluated in terms of money

 Implementing high performance management

practices results in:
 Profitability gains
 Stock price increases
 Higher company survival rates
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Objectives of the HRM Function

 HRM contributions to organizational effectiveness:

 Helping the organization reach its goals
 Employing workforce skills and abilities efficiently
 Increasing job satisfaction, self-actualization, and
quality of work life
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Objectives of the HRM Function
 HRM contributions to organizational effectiveness
(continued):
 Communicating HRM policies to all employees
 Maintaining ethical policies and socially responsible
behavior
 Managing change to the mutual advantage of
individuals, groups, the enterprise, and the public
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Objectives of the HRM Function
 Increasing employees’ job satisfaction and self-
actualization
 Employees must feel that the job is right for their
abilities and that they are being treated equitably
 Satisfied employees are not automatically more
productive
 However, unsatisfied employees tend to be absent and
quit more often and produce lower-quality work
 Bothsatisfied and dissatisfied employees can perform
equally in quantitative terms
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Objectives of the HRM Function
 Quality of work life (QWL) is a general concept that
refers to several aspects of the job, including:
 Management and supervisory style
 Freedom and autonomy to make decisions on the job
 Satisfactory physical surroundings
 Job safety
 Satisfactory working hours
 Meaningful tasks
 The job and work environment should be structured
to meet as many workers’ needs as possible
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Objectives of the HRM Function
 Communicating HRM policies to
all employees:
 HRM policies, programs, and
procedures must be communicated
fully and effectively
 They must be represented to outsiders
 Top-level managers must understand
what HRM can offer
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Objectives of the HRM Function
 Maintaining ethical policies and socially responsible
behavior:
 HRM managers must show by example that HRM
activities are fair, truthful, and honorable
 People must not be discriminated against
 Their basic rights must be protected

 These
principles should apply to all activities in the
HRM area
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Objectives of the HRM Function
 Trends that strain employer-employee relationships:
 Telecommuting
 Outsourcing HRM
 Family medical leave
 Child care
 Spouse-relocation assistance
 Pay for skills
 Benefit cost-sharing
 Union-management negotiation

 These changes are due to the emergence of new

lifestyles and an aging population
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Objectives of the HRM Function
 Managing increased urgency and faster cycle
times:
 Firms are placing a growing emphasis on:
 Increasing customer service
 Developing new products
and services
 Training and educating
technicians, managers,
and decision makers
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Objectives of the HRM Function
 Shorter cycle times mean less time to:
 Train, educate, and assign managers
 Solve sexual harassment complaints
 Recruit and select talented people
 Improve the firm’s image

 Learning provides a framework for decreasing

cycle time
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Objectives of the HRM Function
 Faster,more urgent management behaviors have
been caused by:
 Foreign and domestic competition
 Technological changes
 The emergence of new opportunities

 Pressure to increase learning and reduce cycle time,

while also reducing cost, is a competitive reality
 HRM activities must be in sync with the firm’s
environment
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Who Performs HRM Activities
 Two groups normally perform HRM activities:
 HR manager-specialists
 Operating managers

 The effectiveness of the human resource declines

more quickly than all other resources
 An investment in people effects organizational
effectiveness more than money, materials, or
equipment
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Who Performs HRM Activities
A large part of an operating manager’s day is spent:
 In scheduled and unscheduled meetings
 In telephone conversations
 Solving problems that have a direct impact on people

 Insmaller organizations, the operating manager has

such HRM responsibilities as:
 Scheduling work
 Recruitment and selection
 Compensating people
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Who Performs HRM Activities

 Asthe organization grows, the operating manager’s

HR work may be shifted to HRM specialists
 HR specialists are found in organizations with
100 to 150 employees
 A HR department is typically created when the
number of employees reaches 200 to 500
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Outsourcing
 Outsourcing HRM activities is growing in popularity
because of:
 Downsizing
 Rapid growth or decline of business
 Globalization
 Increased competition
 Restructuring
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Outsourcing
 Some executives assume that outsourcing can:
 Reduce costs
 Improve flexibility
 Permit the hiring of specialized expertise

 The
choice to outsource HRM activities is being
made with little empirical support
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Interaction of Operating & HR Managers
 Withboth operating managers and HR specialists
making HRM decisions, there can be conflict
 They have different orientations and objectives

 Conflict is worse if joint decisions must be made on:

 Discipline
 Physical working conditions
 Termination
 Transfer
 Promotion
 Employment planning
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Interaction of Operating & HR Managers
 Operating managers and HR specialists can also
differ on:
 How much authority employees
have over job design
 Labor relations
 Organizational planning
 Rewards, such as bonuses
and promotions
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Interaction of Operating & HR Managers
 The roles of HRM and operating managers have
been impacted by:
 Sweeping changes in business
 Globalization
 Technology
 Demography
 People don’t leave companies,
they leave managers
 HRM can help managers
do a better job
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Interaction of Operating & HR Managers
 HRM is often seen as a company policeman
 It is also seen as inflexible and over-attentive to detail

 HRM specialists are encouraged to:

 Analyze every activity and prove its added value
 Understand the business
 Become a strategic partner with line managers
 Seek out operating managers
 Help managers avoid problems
 Be flexible and open to the ideas of others
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Necessary HRM Competencies

Communication Technology
Problem solving Forecasting
Leadership Compensation design
Recruiting/staffing Benefit design
Employment law Accounting/finance
Training/development Record keeping
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HRM’s Place in Management
 TheHR department must be a proactive, integral
part of management and strategic planning
Ascertain specific organizational needs for the
use of its competence
Evaluate the use and satisfaction among other
departments
Educate management and employees about the
availability and use of HRM services
 HRM strategic plans must build on the firm's
strengths
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HRM’s Place in Management
 To develop a competitive advantage over other
firms:
 Organizations must create value in a way that is rare
and difficult for competitors to imitate
 These things must become so important and effective
that every unit in the firm knows they are needed for
success:
 The compensation system
 Training opportunities
 Diversity management programs
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HRM’s Place in Management
 HR executives must educate other departments
about the human resource implications of decisions
 This requires being familiar with other aspects of the
organization, including:
 Investments
 Advertising
 Marketing
 Production control
 Computer utilization
 Research and development
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HR Department Operations
 Most organizations keep HR units small
 About 150 people maximum

 The number of HR specialists to operating

employees (personnel ratio) varies by industry:
 The national average is 1 specialist to 100 employees
 Construction, agriculture, retail, wholesale, and
services have fewer specialists than average
 Public utilities, durable goods manufacturing, banking,
insurance, and government have an
above-average ratio
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HRM Strategy
A firm's HRM strategy integrates major objectives,
policies, and procedures into a cohesive whole
 A well-formulated HRM strategy aggregates and
allocates a firm's resources on the basis of:
 The organization’s internal strengths
and weaknesses
 Changes in the environment
 The anticipated actions of competitors
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Clarifying Meaningful HRM Objectives
 The objectives of an organization or department are
the goals it seeks to achieve
 Most objectives are stated in very general terms, from
which more specific statements are developed
 These plans are called policies and procedures or
rules
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Clarifying Meaningful HRM Objectives

Strategy: The plan that

integrates major objectives

More specific

Objectives: Goals that are

specific and measurable

More specific

Policies: Guides to decision

making

More specific

Procedures/Rules: Specific
directions for decision making
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HRM Policy
A policy is a general guide that expresses limits
within which action should occur
 Policies arise from past or potential problems
 They free managers from making certain decisions
 They ensure some consistency in behavior
 They allow managers to concentrate on decisions in
which they have the most experience and knowledge
 Forsome organizations, the next step is to develop
procedures and rules
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HRM Procedures
 Procedures (rules) are a specific direction to action
 In large organizations, procedures are collected and
put into manuals called standard operating
procedures (SOPs)
 Organizations must ensure that consistent decision
making flows from a well-developed, but not
excessive, set of policies and procedures
 Procedures should be developed for only the most
vital areas
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Organization of an HR Department
 In most organizations, the chief HR executive
reports to the top manager
 In medium- and small-sized organizations, HRM and
another function may be in a single department
 In nonprofit organizations, HRM is typically a unit in
the business office
 HR specialists are usually located at the headquarters
of an organization
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Plan of the Book
 This book is divided into these sections:
 Part 1: Introduction to HRM and the Environment

 Part II: Acquiring Human Resources

 Part III: Rewarding Human Resources
 Part IV: Developing Human Resources
 Part V: Labor Management Relations
 Part VI: Protecting Human Resources