Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall2-1 Human Resource Management Chapter Two Organizational Demands, Environmental Influences.
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Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-1
Human Resource Management
Chapter Two Organizational Demands,
Environmental Influences and Strategic HR
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-2
HR Challenges
Organizational demands—strategy, culture, employee concerns
Environmental influences—labor force trends, globalization, technology, ethics and social responsibility
Regulatory issues—legislation protecting rights of individuals and the company with regard to employment processes
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Meeting Organizational Demands
Factors inherent within a company that influence how employees are managed
These include: Strategy Company characteristics Organizational culture Employee concerns
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Strategy
A plan for achieving a competitive advantage Impacts types of jobs employees perform Affects attitudes and behaviors employees
display
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Types of Strategic Planning Business-level/competitive strategy
Identifies how to build and strengthen the business’s long-term competitive position in the marketplace.
Cost leadership: the enterprise aims to become the low-cost leader in an industry. i.e Dell
Differentiation: a firm seeks to be unique in its industry along dimensions that are widely valued by buyers.i.e Volvo and safety, Mercedes reliability and quality
Focus: a firm seeks to carve out a market niche, and compete by providing a product or service customers can get in no other way.i.e Ferrari
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Strategic Human Resource Management
Strategic Human Resource Management The linking of HRM with strategic goals and
objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility.
Formulating and executing HR systems — HR policies and activities—that produce the employee competencies and behaviors the company needs to achieve its strategic aims.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-7
HR’S Strategic Roles HR professionals should be part of the firm’s
strategic planning executive team. Identify the human issues that are vital to business
strategy.
Help establish and execute strategy.
Provide alternative insights.
Are centrally involved in creating responsive and market-driven organizations.
Conceptualize and execute organizational change.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-8
Cost Leadership / Differentiation Strategies
Offering the lowest costs for products and services
Focus on efficiencies and cost reductions
Minimize overhead and costs
Economies of scale are realized
Only one cost leader in an industry
Providing something unique for which customers are willing to pay
Unique product may include features, location, innovation, reputation, status, customer service or quality
Offering something competing firms do not provide and customers value
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Linking Corporate and HR Strategies
Cost Leadership High concern for quantity
Short term focus
To be comfortable with stability
Risk averse
Internal promotion
Differentiation Creative & cooperative
Long term focus
Tolerance for ambiguity
Risk taker
Find people from outside
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-10
Strategy and Managing Employees
Low cost strategy Jobs are narrow in focus
and emphasize standardized and repetitive actions
Individuals are hired with basic skills
Behaviors are fairly well understood
Employees pay based on jobs they perform
Differentiation strategy Jobs geared toward
creativity or customer service
Employees hired with specific skills and new perspectives
Jobs require cooperation, creativity and knowledge sharing
Pay based on individual potential or team accomplishments
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HR’s Strategy Execution Role
The HR department’s strategies, policies, and activities must make sense in terms of the company’s corporate and competitive strategies, and they must support those strategies.
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-12
Linking Corporate and HR Strategies
Strategic Planning
HR Function
Strategic Planning
Strategic Planning
HR Function HR Function
AdministrativeLinkage
Strategic Planning
--------------HR Function
One-Way Linkage Two-Way Linkage Integrative Linkage
Integrative LinkageStrategic planners consider all the people related business issues before making a strategic choice.
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The Prerequisites for Effective Strategy ExecutionLinking the following strategies: Business Strategy Workforce Strategy HR Strategy
Workforce strategy exists conceptually between business strategy and HR strategy Developed by identifying the business strategy
and the people and culture necessary to effectively execute that strategy
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The Prerequisites for Effective Strategy Execution: Workforce Strategy
Strategic culture Strategic capabilities (information, technology and people that create a
firm’s competitive advantage), Strategic positions (“A” positions) Strategic players (“A” players) Workforce philosophy. Serves as a system of governance for decision
making with respect to the workforce by both line managers and HR. Examples: Place A players in A positions Exit C work and C players Develop B players with A potential Differential investments Line manager’s workforce accountability Workforce allocation Cost structure (compensation) .......
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Company Characteristics: Size
Small businesses: Represent over 99% of all employers Have line managers perform the HR
functions Are challenged to provide competitive
wages, benefits and training Enable each employee to directly impact
company’s success
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Young companies:-focus on growth and survival-face pressure to hire people to help the
company grow Mature companies:
-focus on customer retention and future opportunities-have more resources and established
policies and procedures-are more bureaucratic
Stages of Development
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Organizational Culture
Assumptions, values and beliefs of a company that affect how employees behave
• Bureaucratic cultures value rules, formalization, hierarchy
• Entrepreneurial cultures value creativity, knowledge exchange, innovation
• Other cultures value competition, teamwork, cooperation, fun
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What Shapes Culture?
Values and beliefs of a company’s founders Important decisions made in company’s history HR practices that signal values and behavior Management practices and actions Mergers and acquisitions
Strong cultures provide clear, consistent signals
Weak cultures are ambiguous and lack a clear message
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Employee Concerns
Psychological Contract—Perceived obligations employees believe they owe their company and the company owes them Includes pay, benefits and training in exchange
for commitment and performance Governs how employees evaluate company
decisions and how they act on the job
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Work/Life Balance
Demands of work and personal lives Mothers having young children Caring for older family members or dealing
with traffic Flexible work schedules, telecommuting,
family-friendly benefits help attract and retain employees
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JusticeEmployees expect to be treated fairly:
Distributive justice:• Fairness in what individuals receive for their efforts• Compensation for time and effort put into jobs
Procedural justice:• Determination that the process used to make decisions,
rewards, and resolution of disputes is viewed as fair Interactional Justice:
• How employees feel they are treated by managers and supervisors
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Understanding Procedure Justice
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Interactional Justice
How employees feel they are treated by managers and supervisors
When employees perceive company is not meeting its obligations, they respond by:
Speaking up Silence Neglect Leaving Destructive behaviors
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Aging Workforce
Baby boomers are approaching retirement Some companies are recruiting older
workers who bring experience and skills to workplace
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Demographic Diversity
Number of women expected to grow
Companies must manage diversity to leverage the benefits and eliminate bias and discrimination
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Technology Increased reliance on the Internet Some computer proficiency may be required
in all jobs Broadens recruitment efforts beyond local
market Enables virtual workforce—telecommuting,
videoconferencing, e-mail Can also negatively affect the emotional
connection employees feel to co-workers and the company
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Globalization Blurs country boundaries in business
activities Enables international joint ventures and
partnerships
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Ethics and Social Responsibility
Companies and their management being held accountable for ethical behavior
Corporate policies and procedures spell out ethical behavior
Involves how companies behave toward their stakeholders
Can help foster positive reputation and consumer support
Social Responsibility takes ethics to a new level
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Pressure Points for Unethical Behavior
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How to Encourage Ethical Behavior
Appoint an “ethics officer” Monitor aspects of company’s value system Provide ethics training Perform background checks on incoming
employees Devote time at meetings to talk about ethics Have a written code of conduct
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Regulatory Issues
Employee Health&Safety regulations Turkish Labour Law
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Role of HR in the OrganizationsIn an changing world HR is put in the spotlight:
Change of demographics (labor force, aging, gender and ethnic diversity, global heterogeneity is changing the make-up of the workforce)
Advancing technology is changing the organizations and what is expected of HR
Globalization increases competition for talent Competitiveness of the market forces firms to respond quickly
HR professionals need to go beyond accepting or reponding to change and appreciate and master change
Winning the hearts as well as the minds of the employees is a big challenge
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-34
Industrial Relations
Organization
structure / processes
Culture Climate
Values
Principles
Succession Planning
Organizational Structure
Workforce Planning
Work Flow/Job Analysis
Training and Development
Career Planning and Development
Compensation
Recruiting and Selection
Appraising Performance
Employee Satisfaction
Building Employee Commitment
Attract and retain
-productive
-motivated
-high performance people
to have a performance driven culture
BUSINESS STRATEGY
INTELLECTUAL CAPITAL
STRATEGYPeople
Knowledge
Skills
Competencies
Social Responsibility/ Ethics
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