Topic 1. The strategic role of Human Resource Management. Chapters 1, 2, and 14.
Chapter 1: Managing employees for competitive advantage
People management: a company’s ability to attract, develop, and keep talented employees.
When a company has the right employees in place and properly develops and motivates them, the
likelihood of sustaining competitive advantage increases dramatically.
Human resource practices:the practices that a company has put in place to manage employees.
Line manager: the individuals who are responsible for supervising and directing the efforts of a
group of employees to perform tasks that are directly related to the creation and delivery of a
company’s product.
Human resource department: a support function within companies that serves a vital role in
designing and implementing company policies for managing employees. Tasks are e.g. record keeping
and payroll, compensation and benefits, recruitment, selection, training, performance management,
and regulatory issues.
Line managers are being held accountable for how effectively they attract, develop, and motivate the
employees they oversee. The managers are becoming more important in the HR practices.
The costs and benefits of managing HR
- Competitive advantage: a company’s ability to create more economic value than its
competitors. This is done by providing greater value to a customer relative to the costs of
making a product or service. The management, skills, and their attitudes and behaviors of
employees can be a competitive advantage.
- Managing employees costs money, but the increased productivity should offset this. There is
no single best way to manage employees.
Primary HR activities
1. Work design and workforce planning: designing jobs and planning for the
workforce needed to achieve organizational goals.
2. Managing employee competencies: identifying, acquiring, and developing
employee talent and skills.
3. Managing employee attitudes and behaviors: encouraging and motivating employees to
perform in appropriate ways to contribute to company goals.
Leading to: Employee contributions and Competitive advantage.
Work design and workforce planning: Managers must design jobs in a way that ensures that
employees perform tasks and responsibilities that have the most potential to add value to the
company. Managers must also engage in workforce planning to make sure that the right people are in
the right place in the company, at the right time, to meet company goals.
,Job design: Involves deciding what employees will do on day to day basis as well as how jobs are
interconnected.
Some questions managers need to consider for job design are:
● What tasks should you emphasize when designing a job?
● How simple or complex are these tasks?
● How many tasks can your employees perform?
● How much flexibility do you provide to your employees in terms of how and where do they
carry out their tasks?
Job design should be consistent with the company’s goals to reach competitive advantage. Job design
influences employee satisfaction, as well as intentions to remain at the company (employee
perspective).
Workforce planning
Factors such as employee turnover and company growth challenge managers to make workforce
planning decisions to maintain the necessary number of employees. Companies must also decide how
to allocate employees through promotions, demotions, and transfers to areas where they can
contribute most significantly.
Contingent labor: relying on temporary employees, independent contractors, and other forms of
alternative labor.
Some of the important decisions in workforce planning:
- How should you address a labor shortage? A labor surplus?
- When should you require current employees to work overtime versus hire additional
full time staff?
- When should you outsource work rather than hire new employees?
- What can you do to minimize the negative effects of downsizing?
Managing employee competencies
Competencies: the knowledge, skills, abilities, and other talents that employees possess.
Recruitment: T
he process of generating a qualified pool of potential employees interested in working
for your company or encouraging individuals within your company to pursue other positions within
the company.
The challenge is to have a clear understanding of the competencies needed to succeed in a job and
designing a strategy for identifying individuals in the labor market who possess those competencies
and who would be a good match for the organization’s culture and goals. A recruitment value
proposition addresses the question: Why would someone want to work for this company?
Some key issues to address in creating a recruitment strategy are:
- For what competencies do you recruit?
- What groups do you target with your recruitment message?
- Do you recruit internally, externally, or both?
- How do you ensure that you offer an employee value proposition that will attract the right
applicants?
, ecruitment focuses on generating a qualified pool of candidates for job opening, selection
Selection: R
focuses on choosing the best person from that pool.
Some of the key issues in making selection decisions are:
- How do you generate the information you need to make an effective, and legal, hiring
decision?
- Which tests are most effective for identifying employees with high potential?
- What questions should you ask candidates during an interview?
- Who makes the ultimate hiring decision?
Training: E nsures that new and current employees know the ins and outs of the organization and have
the skills they need to succeed.
Training is also used to develop individuals for future positions.
Some important decisions in training are:
- How do you know which employees need to be trained?
- How do you design an effective training program?
- Which training methods are most effective to meet your needs?
- How do you know if your training efforts have been successful?
Managing employee attitudes and behaviors
Performance management
The criteria managers use to evaluate their employees need to represent the attitudes and behaviors
managers expect of their employees. When managers clearly communicate performance criteria,
employees are more likely to have a good understanding of the steps they need to take to achieve
successful job performance.
It focuses on evaluating employees, providing them with feedback, and using employee development
activities to improve current and future performance.
The continuous improvement part of this process entails giving clear feedback regarding performance,
praising good performers, and disciplining poor performers.
Effective performance management means helping employees how to continually improve. Some
critical issues in performance management are:
● What is the best way for you to measure employee performance?
● How should you communicate that information to employees?
● In addition to performance evaluation, how can managers give employees developmental feedback
to improve their performance?
● How should you manage poorly performing employees?
Compensation and incentives
- Compensation has a strong influence on attitudes and behaviors.
- Incentive systems show employees how managers expect employees to focus their time and energy.
Even among companies that reward their employees based on performance, the performance criteria
may differ. Also in the size of the incentives, it is an indicator of how a firm values a particular
activity or level of performance. Some of the key questions when designing compensation and
incentive systems are:
● What factors should you consider when determining the salary range for a job?
● What is the best way to determine how much employees should be paid?
, ● How much of that pay should be guaranteed and how much should be based on
incentives?
● What types of incentives should be used to encourage the attitudes and behaviors the firm
wants?
Employee benefits, health and wellness
Some health and wellness programs are required by law.
Also voluntary benefit programs, such as paid time off, health care, and retirement programs. Some
critical issues when considering employee benefits, health and wellness are:
- Which benefit programs are most appropriate for your workforce?
- What are the legal requirements regarding benefit programs?
- How can you ensure the safety of your employees?
HR activities alignment
Alignment: the extent to which the three primary HR activities are designed to achieve the goals of
the organization. It can be broken down in internal:
- Internal alignment: the extent to which specific practices used within each HR activity are
consistent with one another as well as aligned across the primary HR activities.
- External alignment: the extent to which the three primary HR activities that a company uses
help them meet their organizational demands, cope with environmental factors, and comply
with regulatory issues.
Internal alignment:
- Work environment: job design and workforce planning
- Managing employee attitudes and behaviors: performance management,
compensation, incentives and rewards, and benefits, health and wellness.
- Managing employee competencies: recruitment, selection, training and development.
HR challenges
- Internal factors: e.g. company characteristics, strategic objectives, organizational culture, and
employee concerns of the workforce. They differ across organizations.
- Competitive and regulatory forces are also constantly changing.
Challenge 1: Meeting organizational demands: These are factors within a firm that affect decisions
regarding how to manage employees.
- Strategy: The company’s plan for achieving a competitive advantage over its rivals. Rivals
should be unable to duplicate. The strategy that a company chooses influences its primary HR
activities. By shaping how employees work and add value, a company’s strategy also affects
the competencies employees in those jobs must possess, as well as the specific attitudes and
behaviors they need to display.
- Company characteristics:
- Size is related to the type of resources available, level of pay, benefits and training
opportunities, and the degree of autonomy and discretion that managers expect of
employees to display at their jobs.
- Stage of development: e.g. the pressures upon employees in a new business.
- Organizational cultures: The set of underlying values and beliefs that employees of a
company share. It is unwritten, yet understood and taken for granted. Each organization has a
