Introduction to Human Resource Management

1. Introduction to Human Resource Management

2. Reading List Caudron, S. (January 2003). HR is dead - Long live HR. Workforce, pp. 26-30. Challenger, J. A. (July 2003). Solving the looming labor crisis. USA Today Magazine, pp. 28-30. Cole, C. L., Gale, S. F., Greengard, S., Kiger, P. J., Lachnit, C., Raphael, T., Shuit, D. P., & Wiscombe, J. (June 2003). 25 trends that will change the way you do business. Workforce, pp. 43-56. Pfeffer, J. (Winter 1998). Seven practices of successful organizations. California Management Review, 96-124. Raphael, T. (2003, March). At Google, the proof is in the people. Workforce, pp. 50-51. Sheley, E. (June, 1996). Share your worth. HRMagazine, pp. 86-96. Stewart, T. A. (April 13, 1998). A new way to think about employees. Fortune, pp. 169-170. Stewart, T. A. , & Woods, W. (January 15, 1996). Taking on the last bureaucracy. Fortune, pp.105-106. Stewart, T. A. (October 2, 1995). Trying to grasp the intangible. Fortune, pp. 157-161. Ulrich, D. (January/February 1998). A new mandate for human resources. Harvard Business Review, pp. 124-134. Zimmerman, E. (February 2001). What are employees worth? Workforce, pp. 32-36.

3. Introduction to HRM • Two questions: • Does it matter? • Why does it matter? • What is HRM? • Organization’s methods and procedures for managing people to enhance skills and motivation • Activities to enhance the organization’s ability to attract, select, retain and motivate people

4. The Death of HR ? • Traditional “personnel” function • Recordkeeping • Perceived as a dumping ground • The death of HR? • HR’s rebirth Sources: Caudron (2003); Schuler (1990); Schuler & Walker (1990); Stewart (1996); Sunoo & Laabs (1999); Ulrich (2000); Wells (2003)

5. Outsourcing HR • Would it just make more sense to outsource HR functions? • Many organizations are doing just this • Recordkeeping and administrative, perhaps • Basic functions….. Sources: Caudron (2003); Stewart & Woods (1996); Zimmerman (April 2001)

6. Approaches to Revitalizing HR • Accounting for human resources • Managing people for competitive advantage

7. Accounting for Human Resources • Cascio’s costing approach: • Cost accounting for employee outcomes • Calculate cost of interventions and outcomes on individual basis • Tracking costs and contributions to firm net profitability • Human capital approach • Employees are intangible assets, but can still be valued • Based on assumed contribution of employees to corporate earnings Sources: Cascio (1982); Sheley (1996) Solomon (2000); Stewart (1995); Zimmerman (February 2001)

8. Costing HR: Example • The costs of turnover per individual: • Exit interviews • Unemployment tax • Recruitment advertising • Staff time to interview applicants • Reference checking, medical exams • Training new employees • Costs of reducing turnover • Additional training • Realistic job previews • Net savings Calculated per person, then totaled Source: Cascio (1982)

9. Human Capital: The Steps • Determine three years’ total pretax earnings • Determine average assets over same three years • Calculate firm’s return on assets (ROA) • Determine industry average ROA • Calculate “excess returns” • Subtract taxes • Calculate net present value of excess return • Result: “intangible value” of firm’s human capital Sources: Stewart (October 1995); Zimmerman (February 2001)

10. Human Resources and Competitive Advantage • The basic idea: establishing and maintaining competitive advantage through people. • Competitive advantage: • Valuable, rare, inimitable, nonsubstitutable • Achieved not through strategy, but strategy implementation Source: Pfeffer (1994, 1998)

11. Traditional Sources of Competitive Advantage…and Where They’ve Gone • Product and process technology • Technological innovations make innovation easier and faster • Development and manufacturing technology freely available • Protected and regulated markets • Move to global economy • Deregulation • Access to financial resources • Global capital market • Venture capital • Economies of scale • Fragmented markets • Less important with advances in technology • So, what’s left…people Source: Pfeffer (1994, 1998)

12. Competitive Advantage Through People • Viewing the work force as an asset, not an expense • The result: • Harder work, from increased involvement and commitment • Smarter work, through enhanced skills and competence • Lower overhead, by pushing responsibility downward • High performance work systems Source: Pfeffer (1994, 1998)

13. High-Performance Work Systems: The Seven Practices Critical to remember that all of these are part of a system • Employment security • Selective hiring • Self managed teams and decentralized decision making • High compensation, based on organizational performance • Extensive training • Reduced status distinctions • Extensive information sharing (both financial and performance) Source: Pfeffer (1994, 1998)

14. The Research Evidence • Garment manufacturing • Steel minimills • Initial public offerings

15. Garment Manufacturing • Bundle system = traditional assembly line (the employee receives a bundle of garments, does one thing, then passes the bundle on to the next worker) • Modular system = small cross-trained and self-managed work teams, team pay Source: Pfeffer (1998)

16. The Minimills * 1 = very little to 6 = very much Source: Pfeffer (1998)

17. The Case of the IPOs Source: Pfeffer (1998)

18. Performance Problems Low profits High costs Poor customer service Low stock price Organizational Response Reduce training Layoffs Salary freeze Contingent staffing Why Not?The Downward Performance Spiral Individual Behaviors Decreased motivation More accidents Higher turnover Reduced effort Source: Pfeffer (1998)

19. Aligning Strategy and HR • Determine the firm’s strategy • Determine the competencies needed to carry out the strategy • Examine current management practices • Determine congruence • Do the current practices work to enhance needed competencies? • Are the current practices internally consistent? Source: Pfeffer (1998)

20. 7 External Influences on HRM • Economic conditions • Legal requirements and constraints • Demographics • Technology

21. General Economic Conditions • Global economy • Lower wage levels vs. quality and productivity • Ethical issues and political considerations • Domestic factors • Move from manufacturing economy to service / information economy • Mergers  duplication of functions  layoffs • Supply and demand of labor, which, in turn, influences price. • Supply and demand of company’s product, which determines available resources Sources: Challenger (2003); Cole, etal. (2003)

22. Changes in the U.S. Economy, 1939 to Present Source: U.S. Department of Labor, Bureau of Labor Statistics

23. Fastest Growing Occupations, 2002-2012 (by percentage growth) Source: Department of Labor, Bureau of Labor Statistics

24. Fastest Growing Occupations, 2002-2012 (by number of jobs) Source: Department of Labor, Bureau of Labor Statistics

25. Legal Requirements and Constraints • Government now an intermediary in the relationship between employers and employees • Legal requirements and constraints are usually a reflection of social attitudes and opinions

26. Demographics • Supply of labor (number of people, skills, etc.) • New skills needed, but are they present in workforce? • Basic skills availability? • Different needs of different groups in the population • Increasing number of women in paid workforce • Dual-earner families • Family friendly benefits • Aging population Sources: Challenger (2003); Cole, etal. (2003)

27. Participation in the Paid Labor Force by Gender: 1948 to 2004 Source: Department of Labor, Bureau of Labor Statistics

28. Technology • New jobs; old jobs vanish • Need for new skills • Need for continuous skills development • Managing the HR function • Data management • Employee communications

29. Employee and Labor Relations Legal Compliance Training and Development Staffing HR Functions: What We’ll Be Looking At Planning Reward Systems