(Human Resource Management 14e Robert L. Mathis, John Jackson, Sean Valentine)
(Instructor Manual, For Complete File, Download link at the end of this File)
Chapter 1
Human Resource Management in
Organizations
Learning Objectives
After students have read this chapter, they should be able to:
• Define human capital.
• Identify where employees can be used as a core competency.
• Show the seven categories of HR functions.
• Provide an overview of four challenges facing HR today.
• Explain how organizational ethical issues affect HR management.
• Explain the key competencies needed by HR professionals and why certification is
important.
Chapter Overview
This chapter provides an overview of Human Resource Management by describing seven
important considerations:
• HR as Organizational Core Competency
• HR Management as Organizational Contributor
• Organizational Ethics and HR Management
• Current and Future HR Management Challenges
• Managing HR in Organizations
• HR Management Roles
• HR Management Competencies and Careers
Many organizations today are looking at the management of human capital in their
organizations. The importance of measuring the value of human capital and viewing
human resources as a core competency for an organization is explored in the beginning of
this chapter. A conceptual model is presented that shows that HR management is
composed of seven interlinked activities that are significantly impacted by external forces
(legal, economic, technological, global, environmental, cultural/geographic, political, and
social). These seven activities are identified and briefly described:
• Strategic HR management
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, Chapter 1: Human Resource Management in Organizations
• Equal employment opportunity
• Staffing
• Talent management and development
• Rewards
• Risk management and worker protection
• Employee and labor relations
HR can contribute to organizational results in many ways. Some of the areas of
contribution include organizational culture; organizational productivity; social
responsibilities; customer service and quality; and employee engagement. HR
management’s contributions to each of these areas are explored.
Next, organizational ethics and HR is discussed. The relationship between ethics and
organizational culture, the global differences regarding ethics, and HR’s role in
organizational ethics are covered. The HR impact of the Sarbanes-Oxley Act is also
included.
Current and future HR management challenges are then identified and explored. These
include organizational cost pressures and restructuring; economics and job shifts; skill
shortages; globalization of organizations and HR; workforce demographics and diversity;
HR technology; and measuring HR impact through metrics.
Managing HR in organizations is discussed next. All managers engage in HR management
but they are not expected to know the details about HR regulations and HR systems that
one would expect from an HR professional. Smaller organizations (less than 100) typically
do not have an HR department and the owner or another manager usually takes care of HR
issues. It is important that there is cooperation between the operating managers and the HR
staff for HR efforts to succeed. Some of the common negative and positive views of HR
are discussed.
The various roles that HR management may undertake are then described and include the
administrative, the operational and employee advocate, and the strategic roles. The chapter
concludes with identifying HR competencies needed by all HR professionals and senior
HR leaders. Some discussion of HR careers and various types of certification within the
field of HR are also included.
Chapter Outline
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publicly accessible website, in whole or in part.
, Chapter 1: Human Resource Management in Organizations
HR Headline: Human Resources Management Done Well
Dow Corning is a giant company with over 10,000 employees in 40 locations
world-wide. The company needs engaged employees working every day to turn
its strategy into reality. To help that happen, the company’s Human Resources
Department is a member of the company’s Executive Council. The company
believes it cannot reach its’ potential unless investment is made in its people.
Hiring the right people and getting them in the correct jobs, communicating with
them, and developing them for greater opportunities are keys to the company’s
success. However, all the human resources decisions must strike a strong balance
between the needs of employees, economics of the business, and organizational
performance, if the efforts are to be successful in a very competitive world.
To measure the extent to which the Human Resources Department at Dow
Corning is doing its job, elements of HR performance are measured and
“benchmarked” against how well competitors are doing in these areas. For
example, one common metric regarding human capital is turnover (the rate at
which people leave the company). Historically in DC’s United States operations,
turnover has been about 2% annually, well below average. The average tenure is
11 years at Dow Corning. Employees who started with the company out of high
school and are still there 20 or 30 years later are not uncommon.
I. What is Human Resource Management?
Human resource (HR) management is the design of formal systems in an organization to
manage human talent for accomplishing organizational goals. Whether a big company or a
small nonprofit organization, those employees must be paid, which means an appropriate
and legal compensation system is needed. Employees also must be recruited, selected,
trained, and managed. Each of these activities requires thought and understanding about
what will work well and what may not. Research on these issues and the knowledge from
successful approaches form the basis for HR management.
A. Why Organizations Need HR Management
Despite the obvious differences between large and small organizations, the same HR
issues must be managed in every organization. In a sense every manager in an
organization is an HR manager. However, it is unrealistic to expect every manager to
know about the nuances of equal employment regulations, or how to design a
compensation system. For that reason, larger organizations frequently have people who
specialize in these activities that form the HR function or department.
Cooperation between operating managers and the HR department is necessary for HR
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, Chapter 1: Human Resource Management in Organizations
efforts to succeed. In many cases, the HR department designs processes and systems
that the operating managers must help implement. The exact division of labor between
the two varies from organization to organization.
B. Human Capital
Organizations must manage four types of assets:
• Physical assets—Buildings, land, furniture, computers, vehicles, equipment, etc.
• Financial assets—Cash, financial resources, stocks, bonds or debt, etc.
• Intellectual property assets—Specialized research capabilities, patents,
information systems, designs, operating processes, copyrights, etc.
• Human assets—Individuals with their talents, capabilities, experience,
professional expertise, relationships, etc.
All these assets are important to varying degrees in different organizations. But the
human assets are the “glue” that holds all the other assets together and guides their use
to achieve results. Effective use of the firm’s human capital may explain a significant
part of the difference in higher market value between one company and another.
Human capital is the collective value of the capabilities, knowledge, skills, life
experiences, and motivation of an organizational workforce. Sometimes human capital
is called intellectual capital to reflect the thinking, knowledge, creativity, and decision
making that people in organizations contribute. However, unlike intellectual property
which the organization does own (patents for example) it does not own its human
capital.
A fundamental question is whether better human resource management strategies create
higher market values for companies, or whether financially successful companies have
more resources to allocate to human capital initiatives. It can be argued that hiring the
right people, supporting their creative thinking and productivity, and combining it all
with the right technology should build superior business performance and shareholder
value. However, the relationship between these two perspectives is more complex than
that. It appears that the way the HR practices are implemented affects results. Generally
better HR practices should improve firm performance if implemented properly and
having superior human capital can indeed influence company performance.
C. Managing Human Resources in Organizations
Human Resources/human capital that work in organizations may have valuable
contributions they can make to the organization’s mission, only if they have the
opportunity to contribute in a sensible way. Employees must be fit into the right job, be
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© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
