2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a

1 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Chapter 1

Human Resource Management in Organizations

Learning Objectives

After students have read this chapter, they should be able to:

• Define human capital.• Identify where employees can be used as a core competency.• Show the seven categories of HR functions.• Provide an overview of four challenges facing HR today.• Explain how organizational ethical issues affect HR management.• Explain the key competencies needed by HR professionals and why certification is important.

Chapter Overview

This chapter provides an overview of Human Resource Management by describing seven

important considerations:

• HR as Organizational Core Competency • HR Management as Organizational Contributor • Organizational Ethics and HR Management • Current and Future HR Management Challenges • Managing HR in Organizations • HR Management Roles • HR Management Competencies and Careers

Many organizations today are looking at the management of human capital in their organizations. The importance of measuring the value of human capital and viewing human resources as a core competency for an organization is explored in the beginning of this chapter. A conceptual model is presented that shows that HR management is composed of seven interlinked activities that are significantly impacted by external forces (legal, economic, technological, global, environmental, cultural/geographic, political, and

social). These seven activities are identified and briefly described:

• Strategic HR management (Human Resource Management 14e Robert L. Mathis, John Jackson, Sean Valentine) (Instructor Manual, For Complete File, Download link at the end of this File) 1 / 4

Chapter 1: Human Resource Management in Organizations

2 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.• Equal employment opportunity • Staffing • Talent management and development • Rewards • Risk management and worker protection • Employee and labor relations

HR can contribute to organizational results in many ways. Some of the areas of contribution include organizational culture; organizational productivity; social responsibilities; customer service and quality; and employee engagement. HR management’s contributions to each of these areas are explored.

Next, organizational ethics and HR is discussed. The relationship between ethics and organizational culture, the global differences regarding ethics, and HR’s role in organizational ethics are covered. The HR impact of the Sarbanes-Oxley Act is also included.

Current and future HR management challenges are then identified and explored. These include organizational cost pressures and restructuring; economics and job shifts; skill shortages; globalization of organizations and HR; workforce demographics and diversity; HR technology; and measuring HR impact through metrics.

Managing HR in organizations is discussed next. All managers engage in HR management but they are not expected to know the details about HR regulations and HR systems that one would expect from an HR professional. Smaller organizations (less than 100) typically do not have an HR department and the owner or another manager usually takes care of HR issues. It is important that there is cooperation between the operating managers and the HR staff for HR efforts to succeed. Some of the common negative and positive views of HR are discussed.

The various roles that HR management may undertake are then described and include the administrative, the operational and employee advocate, and the strategic roles. The chapter concludes with identifying HR competencies needed by all HR professionals and senior HR leaders. Some discussion of HR careers and various types of certification within the field of HR are also included.

Chapter Outline

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Chapter 1: Human Resource Management in Organizations

3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• What is Human Resource Management?

Human resource (HR) management is the design of formal systems in an organization to manage human talent for accomplishing organizational goals. Whether a big company or a small nonprofit organization, those employees must be paid, which means an appropriate and legal compensation system is needed. Employees also must be recruited, selected, trained, and managed. Each of these activities requires thought and understanding about what will work well and what may not. Research on these issues and the knowledge from successful approaches form the basis for HR management.

• Why Organizations Need HR Management

Despite the obvious differences between large and small organizations, the same HR issues must be managed in every organization. In a sense every manager in an organization is an HR manager. However, it is unrealistic to expect every manager to know about the nuances of equal employment regulations, or how to design a compensation system. For that reason, larger organizations frequently have people who specialize in these activities that form the HR function or department.

Cooperation between operating managers and the HR department is necessary for HR

HR Headline: Human Resources Management Done Well

Dow Corning is a giant company with over 10,000 employees in 40 locations world-wide. The company needs engaged employees working every day to turn its strategy into reality. To help that happen, the company’s Human Resources Department is a member of the company’s Executive Council. The company believes it cannot reach its’ potential unless investment is made in its people.Hiring the right people and getting them in the correct jobs, communicating with them, and developing them for greater opportunities are keys to the company’s success. However, all the human resources decisions must strike a strong balance between the needs of employees, economics of the business, and organizational performance, if the efforts are to be successful in a very competitive world.

To measure the extent to which the Human Resources Department at Dow Corning is doing its job, elements of HR performance are measured and “benchmarked” against how well competitors are doing in these areas. For example, one common metric regarding human capital is turnover (the rate at which people leave the company). Historically in DC’s United States operations, turnover has been about 2% annually, well below average. The average tenure is 11 years at Dow Corning. Employees who started with the company out of high school and are still there 20 or 30 years later are not uncommon. 3 / 4

Chapter 1: Human Resource Management in Organizations

4 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.efforts to succeed. In many cases, the HR department designs processes and systems that the operating managers must help implement. The exact division of labor between the two varies from organization to organization.

• Human Capital

Organizations must manage four types of assets:

• Physical assets—Buildings, land, furniture, computers, vehicles, equipment, etc.• Financial assets—Cash, financial resources, stocks, bonds or debt, etc.• Intellectual property assets—Specialized research capabilities, patents, information systems, designs, operating processes, copyrights, etc.• Human assets—Individuals with their talents, capabilities, experience, professional expertise, relationships, etc.

All these assets are important to varying degrees in different organizations. But the human assets are the “glue” that holds all the other assets together and guides their use to achieve results. Effective use of the firm’s human capital may explain a significant part of the difference in higher market value between one company and another.

Human capital is the collective value of the capabilities, knowledge, skills, life experiences, and motivation of an organizational workforce. Sometimes human capital is called intellectual capital to reflect the thinking, knowledge, creativity, and decision making that people in organizations contribute. However, unlike intellectual property which the organization does own (patents for example) it does not own its human capital.

A fundamental question is whether better human resource management strategies create higher market values for companies, or whether financially successful companies have more resources to allocate to human capital initiatives. It can be argued that hiring the right people, supporting their creative thinking and productivity, and combining it all with the right technology should build superior business performance and shareholder value. However, the relationship between these two perspectives is more complex than that. It appears that the way the HR practices are implemented affects results. Generally better HR practices should improve firm performance if implemented properly and having superior human capital can indeed influence company performance.

• Managing Human Resources in Organizations

Human Resources/human capital that work in organizations may have valuable contributions they can make to the organization’s mission, only if they have the opportunity to contribute in a sensible way. Employees must be fit into the right job, be

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