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Chapter 1 Human Resource Management: Gaining a Competitive Advantage

Human Resource Management Gaining A Competitive Advantage THIRTEENTH EDITION Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

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Learning Objectives 1

1-1 Discuss the roles and activities of a company’s human resource management function.

1-2 Discuss the implications of the economy, the makeup of the labor force, and ethics for company sustainability.

1-3 Discuss how human resource management affects a company’s balanced scorecard.

1-4 Discuss what companies should do to compete in the global marketplace.

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Learning Objectives 2

1-5 Identify how social networking, artificial intelligence, and robotics are influencing human resource management.

1-6 Describe how automation using artificial intelligence and robotics has the potential to change jobs.

1-7 Discuss human resource management practices that support high-performance work systems.

1-8 Provide a brief description of human resource management practices.

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Introduction

Human Resource Management (HRM):

• Plays a role in company’s survival, effectiveness, and competitiveness.

• Refers to the policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

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Figure 1.1 Human Resource Management Practices

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What Responsibilities and Roles Do HR Departments Perform? 1

High-Impact HR Functions:

• More integrated with the business.

• Skilled at attracting and retaining employees.

• Can adapt quickly.

• Identify and promote talent from within.

• Identify what motivates employees.

• Continuously building talent and skills.

LO 1-1

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What Responsibilities and Roles Do HR Departments Perform? 2

HR Department Responsibilities.

• Outplacement.

• Labor law compliance.

• Record keeping.

• Testing.

• Unemployment compensation.

• Some aspects of benefits administration.

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Table 1.1 Responsibilities of HR Departments 1

FUNCTION RESPONSIBILITIES Analysis and design of work.

Job analysis, work analysis, job descriptions.

Recruitment and selection.

Recruiting, posting job descriptions, interviewing, testing, coordinating use of temporary employees.

Training and development.

Orientation, skills training, development programs, career development.

Performance management.

Performance measures, preparation and administration of performance appraisals, feedback and coaching, discipline.

Compensation and benefits.

Wage and salary administration, incentive pay, insurance, vacation, retirement plans, profit sharing, health and wellness, stock plans.

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Table 1.1 Responsibilities of HR Departments 2

FUNCTION RESPONSIBILITIES Employee relations/labor relations.

Attitude surveys, employee handbooks, labor law compliance, relocation and outplacement services.

Personnel policies. Policy creation, policy communications. Employee data and information systems.

Record keeping, HR information systems, workforce analytics, social media, intranet and Internet access.

Legal compliance. Policies to ensure lawful behavior; safety inspections, accessibility accommodations, privacy policies, ethics.

Support for business strategy.

Human resource planning and forecasting, talent management, change management, organization development.

SOURCES: Bureau of Labor Statistics. 2019. U.S. Department of Labor, Occupational Outlook Handbook, Human Resources Specialists; SHRM-BNA Survey No. 66. 2001. “Policy and Practice Forum: Human Resource Activities, Budgets, and Staffs, 2000–2001.” Bulletin to Management, Bureau of National Affairs Policy and Practice Series. Washington: Bureau of National Affairs.

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Figure 1.2 HR as a Business with Three Product Lines

SOURCE: Adapted from Figure 1, “HR Product Lines” in E. E. Lawler, “From Human Resource Management to Organizational Effectiveness,” Human Resource Management 44 (2005), pp. 165–69.

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Strategic Role of the HRM Function 1

HRM Role:

• Time spent on administrative tasks is decreasing.

• Roles as a strategic business partner, change agent, and employee advocate are increasing.

• Shared service model:

• Central place for administrative and transactional tasks.

• Includes centers of expertise or excellence, service centers, and business partners.

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Strategic Role of the HRM Function 2

Role of Technology:

• Reducing HRM role in administrative tasks, maintaining records, and providing self-service to employees.

• Shift to self-service gives employees access to many HR functions.

• HR managers have more time to work with managers on employee issues.

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Strategic Role of the HRM Function 3

Outsourcing: • Most commonly outsourced activities:

• Benefits administration.

• Relocation.

• Payroll.

• Most common reasons for outsourcing:

• Cost savings.

• Increased ability to recruit and manage talent.

• Improved HR service quality.

• Protection of the company from potential lawsuits by standardizing processes such as selection and recruitment.

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Strategic Role of the HRM Function 4

Strategic Role:

• Lead efforts focused on talent management and performance management.

• Use and analyze data to make a business case for ideas and problem solutions.

• Use people management skills across the business.

• Structure and responsibilities changing to ensure strategic role.

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Table 1.2 Questions to Ask: Is HRM Playing a Strategic Role in the Business? Questions to ask: 1. What is HRM doing to provide value-added services to internal clients?

2. Do the actions of HRM support and align with business priorities?

3. How are you measuring the effectiveness of HRM?

4. How can we reinvest in employees?

5. What HRM strategy will we use to get business from point A to B? 6. From an HRM perspective, what should we be doing to improve our

marketplace position?

7. What’s the best change we can make to prepare for the future?

8. Do we react to business problems or anticipate them in advance?

SOURCES: Based on S. Milligan, "HR 2025: Reach New Heights By Becoming A Trusted Advisor", H R Magazine, November/December 2018, pp. 30-38; D. Ulrich, D. Kryscynski, M. Ulrich, and W. Brockbank, Victory Through Organization (New York: McGraw-Hill Education, 2017); P. Wright, Human Resource Strategy: Adapting to the Age of Globalization (Alexandria, V A: Society for Human Resource Management Foundation, 2008).

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Strategic Role of the HRM Function 5

Demonstrating the Strategic Value of HRM: HR Analytics and Evidenced-Based HR.

• HR can engage in evidence-based HR.

• Requires use of HR or workforce analytics.

• Big data:

• Information merged from HR databases, corporate financial statements, employee surveys, and other data sources.

• Results in evidence-based HR decisions.

• Show that HR practices influence the organization’s bottom line, including profits and costs.

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Strategic Role of the HRM Function 6

The HRM Profession: Positions and Jobs.

• Primary activities involve performing the HR generalist role.

• Fewer HR professionals involved in HR functions at the executive level, training and development, HR consulting, and administrative activities.

• Overall employment in HR-related positions expected to grow by 7 percent between 2019 and 2029.

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Table 1.3 Median Salaries for HRM Positions

POSITION SALARY Chief human resource officer (CHRO) $251,000 Global HR manager 133,000 Management development manager 129,300 Health and safety manager 112,328 Employee benefits manager 104,760 HR manager 105,554 Mid-level labor relations specialist 87,700 Campus recruiter 71,161 Entry-level HRIS specialist 59,300 HR generalist 58,495 Entry-level compensation analyst 61,764 Entry-level employee training specialist 53,100

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Strategic Role of the HRM Function 7

Education and Experience.

Four-year college or graduate HR degree.

• Senior HR role:

• Developing and supporting the company culture.

• Employee recruitment, retention, and engagement.

• Succession planning.

• Designing company’s overall HR strategy.

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Strategic Role of the HRM Function 8

Education and Experience. • Junior HR role:

• Handle transactions related to paperwork, benefits, and payroll administration.

• Answer employee questions. • Data management.

• Professional certification.

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Strategic Role of the HRM Function 9

Competencies and Behaviors.

• Most HRM professionals are generalists.

• Lack business acumen.

• Need nine competencies developed by SHRM.

• Primary professional organization for HRM with more than 300,000 members.

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Strategic Role of the HRM Function 10

Nine Competencies:

1. HR Technical Expertise and Practice. • Apply principles of HRM to contribute to success of the business.

2. Business Acumen.

• Understand business functions and metrics within the organization and industry.

3. Critical Evaluation.

• Interpret information to determine return on investment and organizational impact in making recommendations and business decisions.

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Strategic Role of the HRM Function 11

Nine Competencies.

4. Ethical Practice.

• Integrate core values, integrity, and accountability throughout all organizational and business practices.

5. Global and Cultural Effectiveness. • Manage HR both within and across boundaries.

6. Communications. • Effectively exchange and create free flow of information with and

among various stakeholders at all levels of the organization to produce meaningful outcomes.

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Strategic Role of the HRM Function 12

Nine Competencies.

7. Organizational Leadership and Navigation. • Direct initiatives and processes within the organization and gain

buy-in from stakeholders.

8. Consultation. • Provide guidance to stakeholders such as employees and leaders

seeking expert advice on a variety of circumstances and situations.

9. Relationship Management.

• Manage interactions with and between others with specific goal of providing service and organizational success.

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Competitive Challenges Influencing Human Resource Management 1

Competing Through Environment, Social, and Governance (ESG) Practices. • Sustainability:

• Company’s ability to meet its needs without sacrificing the ability of future generations to meet their needs.

• Company must meet stakeholders’ needs.

• ESG practices must be part of company’s business model to gain competitive advantage and reduce legal risks.

LO 1-2

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Figure 1.4 Competitive Challenges Influencing U.S. Companies

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Competitive Challenges Influencing Human Resource Management 2

Deal with the Workforce and Employment Implications of the Economy:

• Skill demands for jobs have changed.

• Remaining competitive in global economy requires demanding work hours and changes in traditional employment patterns.

• Companies give more attention to HR practices that influence their ability to attract and retain employees.

• The U.S. economy in 2020 shrank for the first time since 2008.

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Table 1.4 Highlights of Employment Projections to 2029 HIGHLIGHTS

• An increase of 6 million jobs is expected between 2019 and 2029. This results from employment growing from 162.8 million to 168.8 million by 2029.

• The labor force is expected to increase by 8.0 million (from 163.5 million in 2019 to 171.5 million in 2029).

• Today, 93% of U.S. jobs are nonagricultural wage and salary jobs: 13% are in goods- producing industries (mining, construction, manufacturing); 80% are in service-providing industries; and 1.4% in agriculture, forestry, fishing, and hunting. The distribution of jobs across industries is projected to be similar in 2029.

• 46.5 million job openings are expected, with more than three-fourths resulting from the need to replace workers who retire or leave an occupation.

• Most new jobs added between 2019 and 2029 will be in service-providing occupations.

• Of the 30 fastest-growing occupations, almost half are related to health care and related occupations (such as home health-care aid, personal care aids, physicians assistants, and nurse practitioners). Other occupations are energy-related or in computer and information technology.

SOURCES: Bureau of Labor Statistics, U.S. Department of Labor, “Table 2.1, Employment by Major Industry Sector," https://www.bls.gov/emp/tables/employment-by-major-industry- sector.htm, accessed March 18, 2021; Bureau of Labor Statistics, U.S. Department of Labor, “Employment Projections: 2019-2029,” September 20, 2020, www.bls.gov/emp, accessed

March 18, 2021.

https://www.bls.gov/emp/tables/employment-by-major-industry-sector.htm

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Competitive Challenges Influencing Human Resource Management 3

Understand and Enhance the Value Placed on Intangible Assets and Human Capital.

• Three types of assets:

1. Financial assets (cash and securities).

2. Physical assets (property, plant, equipment).

3. Intangible assets (human capital, customer capital, social capital, intellectual capital).

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Table 1.6 Examples of Intangible Assets

Human capital. • Tacit knowledge. • Education. • Work-related know-how. • Work-related competence.

Customer capital. • Customer relationships. • Brands. • Customer loyalty. • Distribution channels.

Social capital. • Corporate culture. • Management philosophy. • Management practices. • Informal networking systems. • Coaching/mentoring

relationships.

Intellectual capital. • Patents. • Copyrights. • Trade secrets. • Intellectual property.

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Competitive Challenges Influencing Human Resource Management 4

Understand and Enhance the Value Placed on Intangible Assets and Human Capital.

• Knowledge workers.

• Contribute specialized knowledge.

• Training Options:

• Upskilling or reskilling current employees.

• Hire and train employees who lack the complete skill set.

• Partner with local, federal and state sponsored and funded organizations.

• Train hard-to-employ individuals.

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Competitive Challenges Influencing Human Resource Management 5

Emphasize Empowerment and Continuous Learning:

• Give employees responsibility and authority.

• Hold them accountable.

• Employees share in the rewards and losses.

• Learning organization.

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Competitive Challenges Influencing Human Resource Management 6

Adapt to Change:

• Inevitable.

• Employees expected to take more responsibility for own careers.

• Challenge is how to build a committed, productive workforce.

• Employees manage change through agility.

• Changes in the employment relationship.

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Competitive Challenges Influencing Human Resource Management 7

Maximize Employee Engagement:

• Passionate about their work.

• Committed to the company and its mission.

• Work hard to contribute.

• Measured with attitude or opinion surveys.

• Focus on employee experience.

• Employee value proposition (EVP).

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Table 1.7 Common Themes of Employee Engagement

COMMON THEMES 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 manager.

7. Effort above and beyond the minimum.

8. Understand link between one’s job and company’s mission.

9. Prospects for future growth with the company.

10. Intention to stay with the company.

SOURCES: Based on R. Vance, Employee Engagement and Commitment (Alexandria, V A: Society for Human Resource Management, 2006); T. Lytle, “The Engagement Challenge,” H R Magazine, October 2016, pp. 52–58.

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Competitive Challenges Influencing Human Resource Management 8

Manage Talent:

• Acquiring and assessing employees.

• Learning and development.

• Performance management.

• Compensation.

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Competitive Challenges Influencing Human Resource Management 9

Consider Nontraditional Employment and the Gig Economy:

• Between 20 and 35% of total U.S. workforce.

• Workers set own schedule and do not work for a company.

• Offers flexibility.

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Competitive Challenges Influencing Human Resource Management 10

Provide Flexibility to Help Employees Meet Work and Life Demands.

• 46% of employees work more than 45 hours per week.

• Both the company and employees can benefit.

• Desire to continue working remotely post-pandemic.

• Companies’ policies on remote work vary.

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Competitive Challenges Influencing Human Resource Management 11

Meet the Needs of Stakeholders, Shareholders, Customers, Employees, and Community.

• Demonstrate performance to stakeholders: the balanced scorecard.

• Being customer-focused.

• Improving quality.

• Emphasizing teamwork.

• Reducing new product and service development times.

• Managing for the long term.

LO 1-3

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Table 1.8 The Balanced Scorecard

PERSPECTIVE QUESTIONS ANSWERED

EXAMPLES OF CRITICAL BUSINESS INDICATORS CRITICAL HR INDICATORS

Customer How do customers see us?

Time, quality, performance, service, cost

Employee satisfaction with HR department services; Employee perceptions of the company as an employer

Internal What must we excel at?

Processes that influence customer satisfaction, availability of information on service, and/or manufacturing processes

Training costs per employee, turnover rates, time to fill open positions

Innovation and learning

Can we continue to improve and create value?

Improve operating efficiency, launch new products, continuous improvement, empowering of workforce, employee satisfaction

Employee/skills competency levels, engagement survey results, change management capability

Financial How do we look to shareholders?

Profitability, growth, shareholder value

Compensation and benefits per employee, turnover costs, profit per employee, revenue per employee

SOURCES: Based on K. Thompson and N. Mathys, “The Aligned Balanced Scorecard,” Organizational Dynamics 37 (2008), pp. 378–93; B. Becker, M. Huselid, and D. Ulrich, The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press, 2001).

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Competitive Challenges Influencing Human Resource Management 12

Demonstrate Social Responsibility.

• Helps boost company’s image with customers.

• Helps gain access to new markets.

• Helps attract and retain talented employees.

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Competitive Challenges Influencing Human Resource Management 13

Emphasize Customer Service and Quality.

• Total quality management (TQM) five core values:

1. Methods and processes are designed to meet internal and external customers’ needs.

2. Every employee receives training in quality.

3. Managers measure progress with feedback based on data.

4. Promote cooperation with vendors, suppliers and customers.

5. Quality is designed into a product or service so that errors are prevented rather than being detected and corrected.

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Competitive Challenges Influencing Human Resource Management 14

Malcolm Baldrige National Quality Award.

• Competition that promotes quality.

ISO (International Organization for Standardization) 9000 Standards.

• International standards of quality.

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Competitive Challenges Influencing Human Resource Management 15

Six Sigma:

• Process of measuring, analyzing, improving, and controlling processes.

Lean Thinking and Process Improvement.

• Do more with less effort, equipment space, and time.

• Improve quality of employees’ work experiences.

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Competitive Challenges Influencing Human Resource Management 16

Recognize and Capitalize on the Demographics and Diversity of the Workforce.

• Internal labor force.

• External labor market.

• Average age of workforce will increase.

• Increased workforce diversity.

• Immigration will affect size and diversity.

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Competitive Challenges Influencing Human Resource Management 17

Aging of the Workforce:

• Labor force participation of those 55 years and older expected to grow.

• HRM issues such as career plateauing, retirement planning, and retraining older workers.

The Multigenerational Workforce:

• Five generations.

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Figure 1.5 Comparison of the Age Distribution of the 2019 and 2029 Labor Forces

SOURCE: U.S. Bureau of Labor Statistics, “Employment Projections, Civilian Labor Force, by Age, Sex, Race, and Ethnicity,” https://www.bls.gov/emp/tables/civilian-labor-force- summary.htm, accessed February 13, 2021.

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https://www.bls.gov/emp/tables/civilian-labor-force-summary.htm

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Table 1.10 Generations in the Workforce

YEAR BORN GENERATION AGES

1925 to 45 Traditionalists Silent Generation >76

1946 to 64 Baby Boomers 57 to 75 1965 to 80 Generation X 41 to 56

1981 to 95 Millennials Generation Y Echo Boomers

26 to 40

1996 Generation Z <25

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Competitive Challenges Influencing Human Resource Management 18

A Workforce of Mixed Gender, Race, and Nationality.

• Diversity of workforce increasing.

• Immigration is contributing.

• Percentage of highly skilled immigrants now exceeds percentage of low-skilled immigrants.

• Legal versus illegal immigration.

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Figure 1.6 The U.S. Workforce, 2029

SOURCE: K. Dubina, J. Kim, E. Rolen, & M. Rieley, “Projections Overview and Highlights, 2019-2029,” Monthly Labor Review, U.S. Bureau of Labor Statistics, September 2020, https://doi.org/10.21916/mlr. 2020.21.

https://doi.org/10.21916/mlr

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Competitive Challenges Influencing Human Resource Management 19

Legal Issues:

• Employment laws and regulations.

• Eliminating discrimination and harassment.

• Health care coverage.

• Immigration.

• Data security practices and protecting intellectual property.

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Competitive Challenges Influencing Human Resource Management 20

Ethical Issues:

• Ethics are the fundamental principles of right and wrong.

• Sarbanes-Oxley Act of 2002:

• Sets strict rules for corporate behavior and sets heavy fines and prison terms for noncompliance.

• Imposes criminal penalties for corporate governing and accounting lapses including retaliation against whistle-blowers reporting violations of Security and Exchange Commission rules.

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Figure 1.7 Principles of Ethical Companies

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Competitive Challenges Influencing Human Resource Management 21

Ethical Issues.

• HR managers must satisfy these standards for their practices to be considered ethical: 1. HRM practices must result in greatest good for largest number of

people.

2. Employment practices must respect basic human rights of privacy, due process, consent, and free speech.

3. Managers must treat employees and customers equitably and fairly.

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Competitive Challenges Influencing Human Resource Management 22

Competing through Globalization.

• U.S. businesses must:

• Develop global markets.

• Use their practices to improve global competitiveness.

• Better prepare employees for global assignments.

LO 1-4

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Competitive Challenges Influencing Human Resource Management 23

Competing through Globalization.

• Entering International Markets.

• Exporting products overseas.

• Building manufacturing facilities or service centers in other countries.

• Entering into alliances with other companies.

• Engaging in e-commerce.

• Offshoring and reshoring.

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Competitive Challenges Influencing Human Resource Management 24

Competing through Technology.

• Social networking:

• Facilitates communication, decentralized decision making, and collaboration.

• Artificial intelligence and robotics:

• Provide skills that are difficult to find.

• Perform some job tasks previously completed by employees.

• May eliminate some jobs.

LO 1-5 & 1-6

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Competitive Challenges Influencing Human Resource Management 25

Competing through Technology.

• High-performance work systems.

• Maximize the fit between employees and technology.

• Employees, managers, vendors, customers, and suppliers work together.

• Virtual teams:

• Formed within one company or via partnerships with suppliers or competitors.

LO 1-7

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Competitive Challenges Influencing Human Resource Management 26

Competing through Technology.

• Use HRIS, mobile devices, cloud computing, and HR dashboards:

• HRIS stores large quantities of employee data.

• Mobile devices increasingly used to provide employees with anytime, anywhere access to HR applications.

• Cloud computing allows companies to lease software and hardware.

• HR dashboard provides access to important HR metrics for workforce analytics.

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Meeting Competitive Challenges through HRM Practices Three Challenges:

1. Globalization.

2. Sustainability.

3. Technology.

LO 1-8

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Figure 1.8 Examples of How HRM Practices Can Help Companies Meet Competitive Challenges

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Figure 1.9 Major Dimensions of HRM Practices Contributing to Company Competitiveness

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Chapter 2 Strategic Human Resource Management

Human Resource Management Gaining A Competitive Advantage THIRTEENTH EDITION Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

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Learning Objectives

2-1 Describe the differences between strategy formulation and strategy implementation.

2-2 List the components of the strategic management process.

2-3 Discuss the role of the HRM function in strategy formulation.

2-4 Describe the linkages between HRM and strategy formulation.

2-5 Discuss the more popular typologies of generic strategies and the various HRM practices associated with each.

2-6 Describe the different HRM issues and practices associated with various directional strategies.

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Introduction

Strategic Management:

• Having the goal to deploy and allocate resources for competitive advantage.

• Integrally involving the HRM function.

• Using a business model to create value for customers.

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What Is a Business Model?

Business Model:

• Story of how firm will create value for customers and how it will do so profitably.

• Accounting concepts:

• Fixed costs.

• Variable costs.

• Margins.

• Gross margin.

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What Is Strategic Management? 1

Strategic Human Resource Management (SHRM):

• A process.

• Approach to addressing competitive challenges organizations face.

• Managing the “pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.”

• Developing strategies for achieving company’s goals in light of its current environment.

LO 2-1

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What Is Strategic Management? 2

Components of the Strategic Management Process:

• Strategy formulation:

• Strategic planning groups decide on strategy.

• Strategy implementation:

• Organization follows through on strategy.

LO 2-2

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Figure 2.2 A Model of the Strategic Management Process

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What Is Strategic Management? 3

Linkage Between HRM and the Strategic Management Process:

• Strategic choice answers these questions:

• Where to compete?

• How to compete?

• With what will we compete?

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What Is Strategic Management? 4

Role of HRM in Strategy Formulation:

• Answers the question “With what will we compete?”

• Four levels of integration between HRM and strategic management function:

1. Administrative linkage.

2. One-way linkage.

3. Two-way linkage.

4. Integrative linkage.

LO 2-3 & 2-4

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Figure 2.4 Linkages of Strategic Planning and HRM

SOURCE: Adapted from K. Golden and V. Ramanujam, “Between a Dream and a Nightmare: On the Integration of the Human Resource Function and the Strategic Business Planning Process,” Human Resource Management 24 (1985), pp. 429–51.

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Strategy Formulation

Five Major Components:

• Mission.

• Goals.

• External analysis.

• Internal analysis.

• External analysis and internal analysis combined constitute SWOT analysis.

• Strategic choice.

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Figure 2.5 Strategy Formulation

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Table 2.2 S WOT Analysis for Google, Inc.

STRENGTHS • Expanding liquidity. • Operational efficiency. • Broad range of services

portfolio.

OPPORTUNITIES • Growing demand for online

video. • Growth in Internet advertising

market. • Inorganic growth.

WEAKNESSES • Issues with Chinese

government. • Dependence on advertising

segment. • Losses at YouTube.

THREATS • Weak economic outlook. • Invalid clicks. • Microsoft–Yahoo! Deal.

Source: GlobalData

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Strategy Implementation 1

“An organization has a variety of structural forms and organizational processes to choose from when implementing a given strategy.” Five variables:

• Organizational structure.

• HRM tasks:

• Task design.

• Selection, training, and development of people.

• Reward systems.

• Types of information and information systems.

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Figure 2.6 Variables to Be Considered in Strategy Implementation

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Strategy Implementation 2

Organizational Culture:

• “…a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business.”

• Helps define relevant stakeholders (employees, customers, suppliers, and competitors) and how to interact with them.

• Both strategy and culture need to be aligned with the value they provide to customers.

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Strategy Implementation 3

Talent:

• Individuals who can have a disproportionate (positive or negative) impact on the firm.

• Key groups of employees who are critical to driving value in the value chain that drives value to the customer.

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Figure 2.7 Supply Chain, Manufacturing, Distribution, and Service

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Strategy Implementation 4

Talent

• Vertical alignment occurs when HR practices and processes address strategic needs of the business.

• Link is primarily through people:

• Job analysis and design.

• Recruitment.

• Selection systems.

• Training and development programs.

• Performance management systems.

• Reward systems.

• Labor relations programs.

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Figure 2.9 Strategy Implementation

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Table 2.3 Menu of HRM Practice Options

HRM Practice Options • Job Analysis and Design. • Recruitment and Selection. • Training and Development. • Performance Management. • Pay Structure, Incentives, and Benefits. • Labor and Employee Relations.

SOURCES: Adapted from R. S. Schuler and S. F. Jackson, “Linking Competitive Strategies with Human Resource Management Practices,” Academy of Management Executive 1 (1987), pp. 207–19; and C. Fisher, L. Schoenfeldt, and B. Shaw, Human Resource Management, 2nd ed. (Boston: Houghton Mifflin, 1992).

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Strategy Implementation 5

HRM Practices:

• Job analysis:

• Process of getting detailed information about jobs.

• Job design:

• Addresses what tasks should be grouped into a particular job.

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Strategy Implementation 6

HRM Practices

• Recruitment:

• Process through which the organization seeks applicants for potential employment.

• Selection:

• Process by which the organization attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics to help it achieve its goals.

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Strategy Implementation 7

HRM Practices

• Training:

• Planned effort to facilitate the learning of job-related knowledge, skills, and behavior.

• Development:

• Acquiring knowledge, skills, and behavior that improve employees’ ability to meet challenges of existing jobs or jobs that do not yet exist.

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Strategy Implementation 8

HRM Practices

• Performance management:

• Ensures employees’ activities and outcomes are congruent with organization’s objectives.

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Strategy Implementation 9

HRM Practices

• Pay structure, incentives, and benefits:

• High pay and/or benefits relative to competitors can help company attract and retain high-quality employees.

• Might have negative impact on overall labor costs.

• Tying pay to performance can elicit specific activities and levels of performance from employees.

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Strategy Implementation 10

HRM Practices

• Labor and employee relations:

• Employees. Assets or expenses?

• How much should employees participate in decision making?

• What rights do employees have?

• What is the company’s responsibility to employees?

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Strategy Implementation 11

Strategic Types:

• Porter’s cost and differentiation strategies:

• Value created by reducing costs.

• Value created by differentiating a product or service so the company can charge a premium price relative to its competitors.

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Strategy Implementation 12

HRM Needs in Strategic Types

• Role behaviors:

• In cost strategies: companies define the skills they require and invest in training employees in these skill areas.

• In differentiation strategies: employees exhibit role behaviors such as cooperating with others, developing new ideas, and taking a balanced approach to process and results.

Strategy Implementation 13

Directional Strategies:

• Concentration.

• Internal growth.

• Mergers and acquisitions.

• Downsizings.

LO 2-6

Strategy Implementation 14

Concentration Strategies:

• Company must maintain current skills that exist in organization.

• Need for skill-based training and fair compensation.

• Appraisals are more behavioral, and behaviors are established through extensive experience.

Strategy Implementation 15

Internal Growth Strategies:

• Companies must constantly hire, transfer, and promote individuals.

• Compensation weighted towards achievement.

• Joint ventures require conflict resolution.

Strategy Implementation 16

Mergers and Acquisitions:

• On the increase.

• HR needs to be involved.

• People issues can cause problems.

• Different organizational cultures—standardization?

• Conflict resolution.

Strategy Implementation 17

Downsizing:

• Trend has increased significantly during March 2020 due to the lockdown of the economy.

• Disadvantages:

• Tends to fall short of meeting companies’ financial and organizational objectives.

• Has negative effects on employee morale and productivity.

• Must “surgically” reduce workforce by cutting less valuable workers.

• Early retirement programs usually result in rehiring.

• Survivor morale issues.

Figure 2.11 Layoffs and Discharges (January 2019 to August 2020)

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, “Layoffs and discharges in small, medium, and large establishments,” Oct. 14, 2020, www.bls.gov/opub/ted/2020/layoffs-and-discharges-in-small-medium-and-large-establishments.htm

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Strategy Implementation 18

Downsizing:

• Advantages:

• Allows company to “get rid of dead wood” and make way for fresh ideas.

• Opportunity to change organization’s culture.

• Demonstrate to top-management the value of company’s human resources to its ultimate success.

Strategy Implementation 19

Strategy Evaluation and Control:

• Must constantly monitor effectiveness of both the strategy and implementation process.

• Helps identify problem areas and either revise existing structures and strategies or devise new ones.

The Role of Human Resources in Providing Strategic Competitive Advantage 1

Emergent Strategies:

• Strategies that evolve from grassroots of the organization.

• What organizations actually do, not what they intend to do.

• Usually identified by those lower in organizational hierarchy.

• Intended strategies are result of rational decision-making process used by top managers to develop strategic plan.

The Role of Human Resources in Providing Strategic Competitive Advantage 2

Enhancing Firm Competitiveness:

• Develop human capital pool that allows the company to adapt to ever-changing environments.

• Becoming a “learning organization.”

• Allows people to continually expand capacity to achieve desired results.

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Chapter 4 The Analysis and Design of Work

Human Resource Management Gaining A Competitive Advantage THIRTEENTH EDITION Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Learning Objectives

4-1 Analyze an organization’s structure and work-flow process, identifying the output, activities, and inputs in the production of a product or service.

4-2 Understand the importance of job analysis in strategic human resource management.

4-3 Choose the right job analysis technique for a variety of human resource activities.

4-4 Identify the tasks performed and the skills required in a given job.

4-5 Understand the different approaches to job design. 4-6 Comprehend the trade-offs among the various

approaches to designing jobs.

Introduction

There is no “one best way” to design jobs and structure organizations. Organizations need to create a fit between environment, competitive strategy, and philosophy and its jobs and organizational design. Failing to design effective organizations and jobs has important implications for competitiveness.

Work-Flow Analysis and Organization Structure 1 Work-Flow Design:

• Important in understanding how to bundle tasks into discrete jobs.

Organization Structure:

• Need to understand how jobs at different levels relate.

LO 4-1

Work-Flow Analysis and Organization Structure 2 Work-Flow Analysis:

• A means to understand all tasks required to produce high-quality products, and the skills necessary to perform those tasks.

Figure 4.1 Developing a Work–Unit Activity Analysis

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Work-Flow Analysis and Organization Structure 3 Work-Flow Analysis

• Analyzing work outputs:

• Can be a product or service.

• Must also specify standards for quantity or quality of outputs:

• Can create challenges for how to efficiently process inputs to generate outputs.

• Must decided whether to produce whole output or just parts.

Work-Flow Analysis and Organization Structure 4 Work-Flow Analysis

• Analyzing work processes:

• Determine how output is generated (operating procedures).

• Team-based job design.

• Efficiency experts can improve work-flow processes.

• Lean production.

Employee Motivation

This job may look tedious or possibly even uninteresting. Considering how to engage employees in seeing the benefits of their work outside of the lab is an important way to motivate them through their day.

Work-Flow Analysis and Organization Structure 5 Work-Flow Analysis

• Analyzing work inputs:

• Raw materials.

• Just-in-time inventory.

• Equipment.

• Technology improves human operators.

• Human skills.

Work-Flow Analysis and Organization Structure 6 Organization Structure

• Dimensions of structure:

• Centralization.

• Departmentalization.

Work-Flow Analysis and Organization Structure 7 Organization Structure

• Structural configurations:

• Functional structure.

• High levels of centralization.

• Very efficient with little redundancy.

• Divisional structure.

• Low levels of centralization.

• More flexible and innovative.

• Not efficient.

Figure 4.2 The Functional Structure

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SOURCE: Adapted from J. A. Wagner and J. R. Hollenbeck, Organizational Behavior: Securing Competitive Advantage, 3rd ed. (New York: Prentice Hall, 1998).

Figure 4.3 Divisional Structure: Product Structure

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SOURCE: Adapted from J. A. Wagner and J. R. Hollenbeck, Organizational Behavior: Securing Competitive Advantage, 3rd ed. (New York: Prentice Hall, 1998).

Figure 4.4 Divisional Structure: Geographic Structure

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SOURCE: Adapted from J. A. Wagner and J. R. Hollenbeck, Organizational Behavior: Securing Competitive Advantage, 3rd ed. (New York: Prentice Hall, 1998).

Figure 4.5 Divisional Structure: Client Structure

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SOURCE: Adapted from J. A. Wagner and J. R. Hollenbeck, Organizational Behavior: Securing Competitive Advantage, 3rd ed. (New York: Prentice Hall, 1998).

Work-Flow Analysis and Organization Structure 8 Organization Structure

• Variations in an organization’s structure:

• Keep subunits small.

• Divisional structures more flexible and innovative but not very efficient.

• May not make decisions in best interests of the company.

• In functional structures, there can be a disconnect between perceived needs of front-line workers and management.

• Little opportunity for self-cannibalization or rogue units.

• Most appropriate in stable, predictable environments.

• “Middle-of-the-road” approach.

Work-Flow Analysis and Organization Structure 9 Organization Structure

• Structure and the nature of jobs:

• Jobs in functional structures need to be narrow and highly specialized.

• Managers of divisional structures often need to be more experienced or high in cognitive ability relative to managers of functional structures.

Job Analysis 1

The Importance of Job Analysis:

• Work redesign.

• Human resource planning.

• Selection.

• Training and development.

• Performance appraisal.

• Career planning.

• Job evaluation.

LO 4-2

Job Analysis 2

The Importance of Job Analysis to Line Managers:

• Must have detailed information about all jobs in work group to understand work-flow process.

• Need to understand the job requirements to make intelligent hiring decisions.

• Are responsible for ensuring each individual is performing satisfactorily.

• Must ensure work is being done safely.

Job Analysis 3

Job Analysis Information:

• Nature of information.

• Job descriptions.

• Tasks, duties, and responsibilities (TDRs).

• Need effective balance between breadth and specificity.

• Job specifications.

• Knowledge, skills, abilities, and other characteristics (KSAOs).

• Not directly observable.

Job Analysis 4

Job Analysis Information:

• Sources of job analysis information.

• Subject-matter experts.

• Job incumbent.

• Supervisors.

• Social networks.

• Other sources may be customers, external job analysts.

Figure 4.6 Social Network within an Organization

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Job Analysis 5

Job Analysis Methods:

• Position Analysis Questionnaire (PAQ).

• Information input.

• Mental processes.

• Work output.

• Relationships with other persons.

• Job context.

• Other characteristics.

LO 4-3

Table 4.2 Overall Dimensions of the Position Analysis Questionnaire Dimensions of Position Analysis Questionnaire: • Decision/communication/general responsibilities. • Clerical/related activities. • Technical/related activities. • Service/related activities. • Regular day schedule versus other work schedules. • Routine/repetitive work activities. • Environmental awareness. • General physical activities. • Supervising/coordinating other personnel. • Public/customer/related contact activities. • Unpleasant/hazardous/demanding environment. • Nontypical work schedules.

Job Analysis 6

Job Analysis Methods

• The Occupational Information Network (O*NET).

• Uses a common language that generalizes across jobs to describe abilities, work styles, work activities, and work context required for various occupations.

• Criticized for being poorly coordinated and redundant and laced with jargon that is difficult for nonspecialists to understand.

• Accurately describes requirements for jobs.

Job Analysis 7

Dynamic Elements of Job Analysis:

• Jobs change and evolve over time.

• Job analysis process must also detect changes in nature of jobs.

• “Jobs” being replaced by “gigs.”

• Workers act as private contractors.

LO 4-4

Job Design 1

It is the process of defining how work will be performed and tasks required in a given job.

• Job redesign.

• Changing tasks or way work is performed in existing job.

• Four basic approaches:

1. Mechanistic.

2. Motivational.

3. Biological.

4. Perceptual-motor.

LO 4-5 & LO 4-6

Job Design 2

Mechanistic Approach:

• Identify simplest way to structure work to maximize efficiency.

• Scientific management.

• Workers are trained in the “one best way” to do job, then selected on their ability to do the job.

• Monetary incentives.

• Reduces need for high-ability individuals.

Job Design 3

Mechanistic Approach:

• Focuses on psychological and motivational potential of a job.

• Attitudinal variables are most important.

• Job Characteristics Model.

• Skill variety.

• Task identity.

• Autonomy.

• Feedback.

• Task significance.

• Job gentrification.

Job Design 4

Biological Approach:

• Goal is to minimize physical strain by structuring the physical work environment around how the body works.

• Also called ergonomics.

• Applied to redesigning equipment for jobs that are physically demanding.

• Sitting or standing for long periods can be damaging.

• Has positive psychological effects by providing climate that values safety and health.

Job Design 5

Perceptual-Motor Approach:

• Design jobs that don’t exceed people’s mental capabilities and limitations.

• Information overload can detract from performance.

• Absence presence results when interacting with multiple media.

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