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8/4/2019 Competitive Advantage of HRM
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Human Resource Management &
Competitive Advantage
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HR & Competitive Advantage
Non-human resourcessuch as land,capital and equipment
Managing human resources is essential in
order for a business to thrive and survive. People determine the organizations goals
and of course people run the organization
to ensure goals are met/exceeded People are the competitive advantage to
an organizations success
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HRM
In HR we deal with issues such as pre-selection,selection, and post-selection
Pre-selection we planorganizations decide
what types of jobs are going to exist and whatare the qualifications.
During the selection phase, the organizationselects the employees:
Recruiting applicantsAssessing their qualifications
Selecting those most qualified
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HRM
Post-selection phase the organization
develop sound HR practices for effectively
managing their key talent
The firm provides them with training and
development opportunities to have the
necessary skills to perform at satisfactory
levels. (Mission, Vision, StrategicBusiness Objectives)
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HRM
Chapter 3 we talk about HR Planning. Here
managers anticipate and meet changing needs
relating to acquisition, deployment, and
utilization of its employees The strategic planning process takes shape here
Demand and supply forecasting we determine
the number and types of employees we need
(i.e. electrical engineers recruitment process)
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HRM
Chapter 4 we discuss job analysis a process for
gathering, analyzing and documenting
information about specific jobs
Steps:--Determining job qualifications for recruitment
purposes
--Choosing the most appropriate selectiontechniques
--Developing training programs
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HRM
Steps:
--Developing performance appraisal rating
forms
--Helping to determine pay rates
--Setting performance standards for
productivity improvement programs (i.e.assessment testing for administrative
positions)
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HRM
Selection Practices we mean policiesand procedures used by organizations tostaff positions
Chapter 5 Recruitment to locate andattract applicants for specific positions(local, regionally, or nationally)/ internally
Our goal is to identify a suitable pool ofapplicants quickly, cost efficiently, andlegally
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HRM
Selection involves assessing andchoosing job candidates. Again thisprocess needs to be sound and legal
HRM Post-Selection Practicesthesepractices maintain or improve a companysworkers job performance levels:
Training & Development (Chapter 7)planned learning experiences that teachworkers to perform their current or future jobseffectively
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HRM
Training focuses on ones current job and
development focuses on possibly
preparing employees for future jobs.
What is the organizational goal? The
improvement of organizational
performance to meet/exceed goals and
objectives
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HRM
HRM Post-Selection Practices:
--Performance Appraisal (Chapter 8)
--where we measure an employees jobperformance and communicate on anon-going basis (how of performance,what of performance and development
plan)--Decisions on promotions, demotions,discharges, and pay raises
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HRM
Compensation (Chapter 9)
--entails pay and benefits. Pay refers to
the wage or salary an employee earns
--Benefits are a form of compensation in
addition to pay, such as health insurance
or employee discounts
--Goal is to maintain a competent and
loyal workforce at an affordable cost
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HRM
Productivity Improvement Programs(Chapter 10)
--Tie behavior to rewards. We can have
financial rewards (e.g., bonuses, payraises) or non-financial (i.e., improved jobsatisfaction)
--Goal of such programs is to motivateemployees to engage in appropriatebehaviors
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HRM
HRM is also influenced by external factors
--Legal & Environmental Issues (Chapter 2)
--federal, state and local laws (rights to fair
and safe treatment)
--selection process must be conducted by
the book (what are the needed job
qualifications and choose selectionmethods that accurately measure those
qualifications
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HRM
Social, economic, and technological events that influenceHRM:
--cultural diversity of workforce
--work and family issues
--part-time temporary workers--emphasis on quality and teamwork
--mergers and acquisitions
--downsizing and layoffs
--rapid advances in technology
--continuous quality improvement
--high rate of illiteracy in the workforce
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HRM
How do these events influence HRM?
--families-through maternity leave, child
care, flextime, and job sharing
--older workers through skill upgrading and
training handle new techniques
--educating employees on basic readingand writing, and math skills keep up with
rapidly advancing technologies (Motorola)
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HRM
Workplace Justice Laws (Chapter 11)
Addresses the issue of employee rightstreat
workers in a non-discriminatory manner
--workplace rules, disciplinary and
discharge procedures
Union Influences (Chapter 12)
Adherence to written contracts (i.e., discipline,
promotions, grievance procedures, and
overtime allocations
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HRM
Safety & Health Concerns (Chapter 13)
Legal, social, and political pressures on
organizations to ensure the health and safety
of their employees
Wellness and Employee Assistance Programs
(EAP)
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HRM
International Influences (Chapter 14)
Globalization has required companies to enter
foreign markets in order to compete as part of
the globally interconnected set of businessmarkets
Managers need to be more globally oriented
(i.e., understanding foreign cultures andlanguages and the dynamics of foreign
marketplaces)
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HRM
Who is responsible for Developing &Implementing HRM Practices? Most companies have an HRM department but there is
a shared partnership with the line organization
(Reviews HR Models) Effective managers attempt to solve HR problems
by:
--providing input into the selection decisions
--trying to supervise people in a way that creates ateam feeling
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HRM
Effective managers attempt to solve HR
problems by:
--providing training and coaching
--providing opportunities for employeeadvancement
--providing flexible scheduling for students
and other part time workers
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HRM
HR consults to the line organization
Managers carry out many procedures andmethods devised by HR professionals:
--Interview job applicants
--Provide orientation, coaching, and on-the-job training
--Provide and communicate jobperformance ratings
--Recommend salary increases
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HRM
Managers carry out many procedures andmethods devised by HR professionals:
--Carry out disciplinary procedures
--Investigate accidents--Settle grievance issues
Gaining a competitive advantage:
--Cost leadership strategyfirm provides thesame services or products as its competitors, butproduces them at a lower cost (Classdiscussion)
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HRM
Gaining a competitive advantage: Product differentiationoccurs when a firm produces a
product or service that is preferred by buyers:
--creating a better quality product or service than its
competitors
--providing innovative products or services that are notoffered by its competitors
--choosing a superior locationone more accessible to
customers--promoting and packaging its product to create theperception of higher quality
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HRM As A Competitive Advantage
1994 study examined the HRM practicesand productivity levels of 968 firms across35 industries
Effectiveness of each companys set of HRMpractices was rated based on the presence ofsuch things as: Incentive plans
Employee grievance systems Formal performance appraisal systems
Workers participation in decision making
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HRM: Competitive Advantage
Strong link between HR competitiveness
and productivity
--one standard deviation in HRM ratings
translated to a productivity difference of
5%. Means that a company with a high
HRM effectiveness ratings (e.g., 86th
percentile) out-produced the averagecompany by 5%
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HRM: Competitive Advantage
Another study conducted by Chris Ryan andAssociates evaluated the impact of a broadrange of HRM practices on shareholder return.Found that 15-30% of the total value of acompany could be attributed to the quality ofHRM practices
Where is the greatest impact? Providing employees with effective orientation training
Letting employees know what is expected of them
Discharging employees that are chronically poorperformers
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HRM: Competitive Advantage
Discuss Model on Linking HRM Practicesto Competitive Advantage
Direct Paththe way HRM practice is
carried out can have an immediate impacton competitive advantage
Indirect Pathan HRM practice can
impact competitive advantage by causingcertain outcomes, which, in turn, createcompetitive advantage
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HRM: Competitive Advantage
Firms can achieve cost leadership through
the use of effective HRM practices
HRM costs through recruitment, selection,
training and compensationall big expensesfor a firm
Service industries 70% of their budget is
made up of payroll
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HRM: Competitive Advantage
Indirect Impact of HRM practices:
HRM practices------Employment centered
outcomes
Employment-centered outcomes---
Organization-centered outcomes
Organization-centered outcomes
Competitive advantage
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HRM: Competitive Advantage
Employee-centered outcomes:
Competenceknowledge, skills, and abilities
an employee has that the job requires
Motivationis the employee willing to exertthe necessary effort to perform the job well
Work-related attitudesis the employee
satisfied with their job, committed to theorganization, and act as a good corporate
citizen
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HRM: Competitive Advantage
Employee-centered outcomes---
organization-centered outcomes
Organization centered outcomes consist of
output, employee retention, legal compliance,and company reputation or image.
Output refers to the quantity, quality, and
innovativeness of the product or service offered by
the firm
Retention rates reflect the amount of employee
turnover a firm experiences
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HRM: Competitive Advantage
Organization centered outcomes: Retention rates reflect the amount of employee
turnover a firm experiences
Legal compliance concerns the issue of whether thefirms HRM practices conform to the requirements
imposed by the various employment laws
Company reputation concerns how favorably
outsiderspotential applicants and customersview the organization
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HRM: Competitive Advantage
What drives employee retention?:
Career growth and learning opportunities
Fair pay
Company pride/organizational commitment
Employee empowerment
High involvement HR systemslet employees
use skills as they see fit or provide financialincentives
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HRM: Competitive Advantage
Organization-Centered Outcomes---Competitive Advantage Most common ways to cut HRM costs is to
employ technology to replace some of themore expensive HR professional-deliveredservices (i.e., e-learning vs. in class training)
Low turnover of employees you will have
better customer retention (recruiting,selection, and training costs of a newemployee)
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HRM: Competitive Advantage
Management of HR is less susceptible to
imitation therefore competitive advantage
achieved through HRM practices is likely to be
more sustainable: Competitors rarely have access to a firms HRM
practices
Even when practices are visible, their impact may not
be as favorable by competitors due to interrelatedsystem (i.e., incentive pay system may only work when
used in conjunction with selection practices that favor
hiring risk takers. (Marriott Case Revisited)