Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall2-1 Human Resource Management Chapter Two Organizational Demands, Environmental Influences

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2-1

Human Resource Management

Chapter Two Organizational Demands,

Environmental Influences and Strategic HR


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


Meeting Organizational Demands

Factors inherent within a company that influence how employees are managed

These include: Strategy Company characteristics Organizational culture Employee concerns


Strategy

A plan for achieving a competitive advantage Impacts types of jobs employees perform Affects attitudes and behaviors employees

display


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


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.


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.


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


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


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


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.


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.


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


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) .......


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


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


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


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


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


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


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


Understanding Procedure Justice


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


Environmental Influences


Aging Workforce

Baby boomers are approaching retirement Some companies are recruiting older

workers who bring experience and skills to workplace


Demographic Diversity

Number of women expected to grow

Companies must manage diversity to leverage the benefits and eliminate bias and discrimination


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


Globalization Blurs country boundaries in business

activities Enables international joint ventures and

partnerships


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


Pressure Points for Unethical Behavior


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


Regulatory Issues

Employee Health&Safety regulations Turkish Labour Law


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


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

Documents

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall2-1 Human Resource Management Chapter Two Organizational Demands, Environmental Influences