Man 3301.0001 spring, 2011 kleiman hrm5e-ppt_chapter_01

Chapter 1
Human Resource Management
and Competitive Advantage

© 2010 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.

Chapter Outline
•

1-1 Human Resource Management

•

1-2 Who Is Responsible for Developing and
Implementing HRM Practices?

•

1-3 Gaining a Competitive Advantage

•

1-4 Competitive Advantage and HRM


1-1 Human Resource Management
•

Human resource management: Consists of
practices that help the organization deal
effectively with its people during the various
phases of the employment cycle.

•

Three phases of the employment cycle:




Pre-selection – Planning practices.
Selection – Recruiting applicants and selecting the
most qualified.
Post-selection – Practices designed to maximize the
performance and satisfaction levels of employees.


1-1a HRM Preselection Practices
•

Human resource planning: Anticipate and meet
changing needs relating to the
acquisition, deployment, and utilization of
employees; accomplished through strategic
planning and demand and supply forecasting.

•

Job analysis: A systematic procedure for
gathering, analyzing, and documenting
information about particular jobs.


Figure 4-1 Job Analysis


1-1b HRM Selection Practices
•

Recruitment: Locate and attract job applicants
for particular positions quickly, cost
efficiently, and legally.

•

Selection: Assessing and choosing job
candidates through a technically sound and legal
procedure.


1-1c HRM Postselection Practices
•

Training and development: Planned learning
experiences that teach workers how to perform
their current or future jobs effectively.

•

Performance appraisal: Measures the adequacy
of employees’ job performances and
communicates these evaluations to them.


1-1c HRM Postselection Practices (cont.)
•

Compensation: Entails pay and benefits, and aims
to establish and maintain a competent and loyal
workforce at an affordable cost.

•

Productivity improvement programs: Tie job
behavior to rewards, and aim to motivate
employees to engage in appropriate job behaviors.


1-1d HRM Practices Influenced by
External Factors
•

Legal and environmental issues:



Federal, state, and local laws are designed to
guarantee employees’ rights to fair and safe treatment.
Social, economic, and technological events also
strongly influence HRM practices.

•

Workplace justice laws: Addresses the issue of
employee rights.

•

Union influences: Regulate many HRM practices
such as discipline, promotion, grievance
procedures, and overtime allocations.


1-1d HRM Practices Influenced by
External Factors (cont.)
•

Safety and health concerns: Institution of accident
prevention programs, wellness programs, and
employee assistance programs to ensure the
health and mental well-being of employees.

•

International influences: Development of globally
oriented managers who understand foreign
languages and cultures, as well as the dynamics of
foreign marketplaces.


1-2 Who Is Responsible for Developing
and Implementing HRM Practices?
•

Human resource professionals




•

Establish HRM procedures and methods.
Monitor and evaluate HR practices.
Advise and assist managers on HRM-related
matters.

Line managers




Direct employees’ day-to-day tasks.
Implement HRM practices.
Provide HR professionals with needed inputs for
developing effective practices.


1-3 Gaining a Competitive Advantage &
1-3a Competitive Advantage Defined
•

Firms gain competitive advantage by effectively
managing their human resources.

•

Competitive advantage is a status achieved by a
company when gaining a superior marketplace
position relative to its competition.

•

This is accomplished through cost leadership and
product differentiation.


1-3b Cost Leadership
•

Cost leadership strategy: A firm provides the
same services or products as its competitors, but
produces them at a lower cost.

•

A firm can reduce its per unit cost by increasing the
value of Number of units produced/total cost of
production.

•

Per unit cost can be reduced by:




Using new technology.
Devising more efficient work methods .
Cutting overhead costs.


1-3c Product Differentiation
•

Occurs when a firm produces a product or service
that is preferred by buyers.

•

A firm can accomplish this aim by:






•

Creating a better quality product or service.
Providing innovative products or services.
Choosing a superior location.
Promoting and packaging its product to create a
perception of higher quality.

Creates a competitive advantage if the firm’s
customers are willing to pay enough to cover
extra production costs.


1.1 On the Road to Competitive Advantage
Gaining Competitive Advantage at Trader Joe’s
•

No one signed up for this extra credit opportunity


1-4 Competitive Advantage and HRM
•

Studies have indicated:



A strong link between HRM effectiveness and
productivity.
The impact of a broad range of HRM practices on
shareholder return; 15–30 percent of the total value
of a company could be attributed to the quality of
its HRM practices.


1-4a Evidence Linking HRM Practices to
Competitive Advantage
•

Presentations by Alex Chalashtori – four points

•

Jeffrey Pfeffer identified 16 HRM practices:











Employment security
Selectivity in recruiting
High wages
Incentive pay
Employee ownership
Information sharing
Participation and empowerment
Teams and job redesign


1-4a Evidence Linking HRM Practices to
Competitive Advantage (cont.)
•

Jeffrey Pfeffer identified 16 HRM practices (cont.):









Training and skill development
Cross-utilization and cross-training
Symbolic egalitarianism
Wage compression
Promotion from within
Long-term perspective
Measurement of practices
Overarching philosophy


1-4b A Model Linking HRM Practices to
•

Direct path: The way an HRM practice is carried out
can, by itself, have an immediate impact on
competitive advantage.




Cost leadership can be achieved through the use
of effective HRM practices.
Firms doing the best job of containing HRM-related
costs stand to gain a financial advantage over their
competitors.


Figure 1-4 A Model Linking HRM
Practices to Competitive Advantage


•

Indirect path: An HRM practice can impact
competitive advantage by causing certain
outcomes, which, in turn, create competitive
advantage.





HRM practices  Employee-centered outcomes
Employee-centered outcomes  Organizationcentered outcomes
Organization-centered outcomes  Competitive
advantage


•

HRM Practices  Employee-centered outcomes





Competence – Extent of knowledge, skills, and
abilities possessed for the job.
Motivation – Willingness to exert necessary effort to
perform the job well.
Work related attitudes – where it all comes
together.


•

HRM Practices  Employee-centered outcomes


Work-related attitudes – Extent of
-

-

Job satisfaction – Favorableness of employee attitudes
toward their jobs.
Organizational commitment – Psychological
attachment to, identification with, and involvement in the
organization.
Organizational citizenship – Willingness to engage in
behaviors that help the organization achieve its goals.


•

Employee-centered outcomes  Organizationalcentered outcomes






Output – Quantity, quality, and innovativeness of the
product or service offered by a firm.
Employee retention – Amount of employee turnover.
Legal compliance – Conformance to various
employment laws.
Company reputation/Image – Favorable view of the
organization by potential applicants and customers.


•

Achievement of employee-centered outcomes leads
to favorable organization-centered outcomes.






Positive job attitude, motivation, and high
productivity.
Reduction of HRM-related lawsuits.
Enhances the reputation of the company.
Helps the customers view the company positively.


•

Organization-centered outcomes  Competitive
advantage




Cost leadership – Achieved through using
technology, minimizing turnover rates, and avoiding
lawsuits resulting from noncompliance.
Product differentiation – Achieved through:
-

Individuals performing their jobs well.
Treating employees in a manner that helps retain longterm employees.


1-4c HRM Practices and Sustained
•

Management of human resources is less
susceptible to imitation.

•

The competitive advantage achieved through HRM
practices is likely to be more sustainable.




Competitors rarely have access to a firm’s HRM
practices; the practices are not very visible to
outsiders.
Even when these practices are visible, their impact
may not be as favorable when used by competitors.


Man 3301.0001 spring, 2011 kleiman hrm5e-ppt_chapter_01

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Man 3301.0001 spring, 2011 kleiman hrm5e-ppt_chapter_01