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Summary - Human Resource Management (6012B0425Y)
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Competitiveness: company’s ability to maintain and gain market share in its industryHRM is defined as set of policies, practices, and systems that influence employees’ behaviors,
attitudes and performances. A set of planned actions that are supposed to maximize companies’
performance by helping employees in achieve goals relevant to the company
Key HRM Practices
1. HRM practices
1. Job analysis and design
2. Recruitment and selection
3. Training and development
4. Performance management
5. Pay structure, incentives and benefits
6. Labor employee relations
Job analysis and design:
Companies produce products and services, for which tasks are required. These tasks grouped
together form jobs.
Job analysis: the process of getting detailed information about jobs
Job design: the process of defining the way work will be performed and the tasks that will be
required in a given job
Can vary from narrow range of tasks (simple) to broad range of complex tasks requiring multiple skills
Employee recruitment and selection:
Recruitment: the process of seeking applicants for potential employment
Selection: the process by which an organization attempts to identify applicants with the necessary
knowledge, skills, abilities, and other characteristics that will help it achieve its goals.
The strategy a company is pursuing will have a direct impact on the types of employees that it seeks
to recruit and select.
Employee training and development:
Training: a planned effort to facilitate the learning of job-related knowledge, skills, and behavior by
employees
Development: the acquisition of knowledge, skills, and behaviors that improve an employee’s ability
to meet changes in job requirement and in client and customer demands Through recruitment,
selection, training, and development, companies can obtain a pool of human resources capable of
implementing a given strategy
Performance management: The means through which managers ensure that employees’ activities
and outputs are congruent with the organization’s goals. It entails specifying those activities and
outcomes that will result in the firm’s successfully implementing the strategy.
Pay structure, incentives, and benefits:
• A high level of pay and/or benefits relative to that of competitors can ensure that the
company attracts and retains high-quality employees
• By tying pay to performance, the company can elicit specific activities and levels of
performance from employees
Labor and employee relations:
Companies can choose to treat employees as an asset that requires investment of resources or as an
expense to be minimized. The general approach to relations with employees can strongly affect their
potential for gaining competitive advantage.
,Shared service model: a way to organize the HR function that includes centers of expertise, service
centers, and business partners.
• Centers of expertise: include HR specialists who provide their services company wide
• Service centers: central place for administrative and transactional tasks (enrolling in training
programs, changing benefits) that employees and managers can access online
• Business partners: HR staff members who work with business-unit managers on strategic
issues (creating new compensation plans, development programs)
Outsourcing: the practice of having another company provide services (vendor, third party or
consultant). Major reasons for outsource HR practices are:
• 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
Evidence-based HR: demonstrating that human resource practices have a positive influence on the
company’s bottom line or key stakeholders (employees, customers, community, shareholders). It
requires the use of HR or workforce analytics
HR or workforce analytics: the practice of using data from HR databases and other data sources to
make evidence-based human resource decisions
Big data: information merged from a variety of sources, including HR databases, corporate financial
statements, and employee surveys, to make evidence-based HR decisions and show that HR practices
can influence the organization’s bottom line, including profits and costs.
Evidence-based management is about making decisions through conscientious, explicit and judicious
use of the best available evidence from multiple sources to increase the likelihood of a favorable
outcome. Gather data from 4 sources:
1. Scientific literature (empirical studies)
2. organization (internal data)
3. practitioners (professional expertise)
4. stakeholder (values and concerns)
Companies that invest in people analytics proactively make use of data available in the company and
embrace the evidence driven approach
The balanced scorecard: a means of performance measurement that gives managers a chance to
look at their company from the perspectives of internal and external customers, employees, and
shareholders. It brings together most of the features that a company needs to focus on to be
competitive. It should be used to:
1. Link human resource management activities to the company’s business strategy
2. Evaluate the extent to which the HRM function is helping the company meet its strategic
objectives
Offshoring: exporting jobs from developed to less developed countries:
• Lower labor costs
• Availability of a skilled workforce with a strong work ethic
,Reshoring: moving jobs from overseas to the US:
• Higher product shipping costs
• Fear of supply chain disruptions due to natural disasters and political instability
• Quality concerns
• Customer preference for US-made products
• Rising labor costs
• Local standards for safety, health, and working conditions can result in negative publicity and
turning off potential customers
Strategic management: is a process, an approach to addressing the competitive challenges an
organization faces. It is a process for analyzing a company’s competitive situation, developing the
company’s strategic goals, and devising a plan of action and allocation of resources that will increase
the likelihood of achieving those goals
Generic strategies: describe the consistent way the company attempts to position itself relative to
competitors
• Cost, differentiation or focus
• Defender, analyzer, prospector, or reactor
Business organizations engage in generic strategies, but they also make choices about
developing strategies for achieving the company’s goals in light of its current environment.
Strategic human resource management (SHRM): pattern of planned human resource deployments
and activities intended to enable an organization to achieve its goals
We look at the whole system, how they support each other creating horizontal alignment –
the degree to which the HRM practices are mutually supporting and reinforcing. When the
practices within the system are aligned with each other, they can create synergies when
combined
The strategic management process has two interdependent phases:
• Strategy formulation: the process of deciding on a strategic direction by defining a
company’s mission and goals, its external opportunities and threats, and its internal
strengths and weaknesses
• Strategy implementation: the process of devising structures and allocating resources to
enact the strategy a company has chosen
There are 4 levels of integration between the HRM function and the strategic management function:
• Administrative linkage:
o Lowest level of integration
o The HRM function’s attention is focused on day-to-day activities
o There is no time or opportunity to take a strategic outlook toward HRM issues.
Strategic business planning exists without any input of HRM.
o The department simply engages in administrative work unrelated to the company’s
core business needs
• One-way linkage:
o The firm’s strategic business planning function develops the strategic plan and then
informs the HRM function of the plan
o Does recognize the importance of HR in implementing the strategic plan
o Often leads to strategic plan that the company cannot successfully implement
, • Two-way linkage:
o Allows for consideration of human resource issues during the strategy formulation
process
o Integration occurs in 3 sequential steps
▪ Strategic planning informs HRM of the various strategies considered
▪ HRM analyzes the human resource implications of the various strategies and
presents results
▪ Strategic decision is made and the strategic plan is passed to HRM, who
develops programs to implement it
• Integrative linkage:
o Dynamic and multifaceted, based on continuing rather than sequential interaction
o HRM function built right into the strategy formulation and implementation processes
Directional strategies
Companies have four directional strategies to meet objectives:
• Concentration strategies: strategy focusing on increasing market share, reducing costs, or
creating and maintaining a market niche for products and services
1. Maintain the current skills that exists in the organization
2. Training programs provide a means of keeping those skills sharp among people and
compensation programs focus on retaining people that have those skills
• Internal growth strategy: a focus on new market and product development, innovation, and
joint ventures. They build upon existing strengths
1. Growth requires that a company constantly hire, transfer, and promote individuals,
and expansion into different market may change the necessary skills
2. Compensation packages are heavily weighted toward incentives for achieving growth
goals
• External growth strategy: an emphasis on acquiring vendors and suppliers or buying
businesses that allow a company to expand into new markets
1. Mergers and acquisitions
2. People issues may be one of the major reasons that mergers do not always live up to
expectations
3. Businesses have different cultures, thus HRM programs may face problems in
integrating and standardizing practices across the company’s businesses
• Divestment/downsizing: the planned elimination of large numbers of personnel, designed to
enhance organizational effectiveness (rightsizing). It creates a number of opportunities and
challenges for HRM:
1. Challenges:
▪ HRM must surgically reduce the workforce by cutting only the workers who
are less valuable in their performance
▪ To boost the morale of employees who remain after the reduction, they may
feel guilt over laid off friends, or may envy their friends who have retired
with attractive severance and pension benefits
▪ HRM therefore must maintain open communication with remaining
employees to build their trust and commitment rather than withholding
information
2. Opportunities:
▪ Allows to ‘get rid of dead wood’ and make way for fresh ideas
▪ Unique opportunity to change an organization's culture
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