CHAPTER 1: HUMAN RESOURCE MANAGEMENT: GAINING A COMPETITIVE ADVANTAGE

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CHAPTER 1: HUMAN RESOURCE MANAGEMENT: GAINING A COMPETITIVE ADVANTAGE

Competitiveness = a company’s ability to maintain and gain market share in its industry.The value of a product or service is determined by its quality and how closely the product fits customer needs.Competitiveness is related to company effectiveness, which is determined by whether the company satisfies the needs of stakeholders.

Stakeholders:

Stockholders  want a return on their investment Customers  want a high-quality product or service Employees  desire interesting work and reasonable compensation for their services Community  wants the company to contribute to activities and projects and minimize pollution (=vervuiling) of the environment Companies that do not meet stakeholders’ needs are unlikely to have a competitive advantage over other firms in their industry.Human Resource Management (HRM) = policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

HRM practices include:

Analyzing and designing work Determining resource needs  HR planning Attracting potential employees  recruiting Choosing employees  selection Teaching employees how to perform their jobs an preparing them for the future  training and development Rewarding employees  compensation Evaluating their performance  performance management Creating a positive work environment  employee relations

The HR department is solely responsible for:

Outplacement Labor law compliance Record keeping Testing Unemployment compensation Benefits administration One way to think about the roles and responsibilities of HR departments is to consider HR as a

business within the company with three product lines:

Administrative services and transactions Business partner services Strategic partner Although great emphasis is placed on the strategic role of HR, effective execution of the operational executor competency (necessary administrative services filling open jobs, paying employees, benefits enrollment, keeping employee records, and completing legally required paperwork) is still important.Technological advances have made available e-HRM and human resource information systems, which 2 / 4

l OM oA RcPSD |26 683 34 make administration of services more efficient and effective and free up time for HR to focus on strategic issues.The amount of time that the HRM function devotes to administrative tasks is decreasing, and its roles as strategic business partner, change agent, and employee advocate are increasing.

Two important challenges:

Shifting their focus from current operations to strategies for the future Preparing non-HR managers to develop and implement HR practices The role of HRM in administration is decreasing as technology is used for many administrative purposes, such as managing employee records and allowing employees to get information about and enroll in training, benefits, and other programs.Self-service = giving employees online access to HR information.Outsourcing = the practice of having another company provide services.Traditionally, the HRM department was primarily an administrative expert and employee advocate (=verdediger). Other roles such as practice development and strategic business partnering have increased.Human resources is being transformed from a specialized, stand-alone function to a broad corporate competency in which human resources and line managers build partnerships to gain competitive advantage and achieve overall business goals.

The HR function is organized around three principles. The Hr function wants to:

1.be as innovative as the product side of the business; 2.minimize the infrastructure needed to keep the business running by emphasizing that managers and employees should work together rather than sending employees to HR; 3.anticipate business needs and be prepared with a plan to meet those needs.As part of its strategic role, one of the key contributions that HR can make is to engage in evidence- based HR.Evidence-based HR = demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders (employees, customers, community, shareholders).This helps show that the money invested in HR programs is justified and that HR is contributing to the company’s goals and objectives.What is HR doing to ensure that the right people with the right skills are doing the right things in the jobs that are important for the execution of the business strategy?Three competitive challenges that will increase the importance of HRM practices: The challenge of sustainability Sustainability has been viewed as one aspect of corporate social responsibility related to the impact of the business on the environment.Sustainability = the inability of a company to survive in a dynamic competitive environment. Based on an approach to organizational decision making that considers company’s ability to make a profit without sacrificing the resources of its employees, the community, or the environment. 3 / 4

l OM oA RcPSD |26 683 34 Stakeholders = the various interest groups who have relationships with, and consequently, whose interests are tied to the organization (e.g., employees, suppliers, customers, shareholders, community).Sustainability includes the ability to deal with economic and social changes, practice environmental responsibility, engage in responsible and ethical business practices, provide high-quality products and services, and put in place methods to determine if the company is meeting stakeholders’ needs.The poor economy means more companies are downsizing their workforces, delaying plans for new operations and growth, and revisiting human resource budgets to cut unnecessary programs and costs.The affects of the recession are also worsened by rising health care costs and the economic implications of increasing retiree (=rechthebbende op een pensioen) benefit costs.Customer focus needs to be included in all HRM practices. New technology combined with economic uncertainty will mean that administrative and transactional HR activities will be delivered via technology, creating less need for Hr professionals to provide these activities.The competition for labor is affected by the growth and decline of industries, jobs, and occupations.Competition for labor is also influenced by the number and skills of persons available for full-time work.The future US labor market will be both a knowledge economy and a service economy.Companies are involved in training current employees as well as establishing partnerships with schools to help improve the skills of the current and future US.Another way to look at occupational growth is to consider the pay related to the occupation. That is, occupations are fastest growing provide high pay.Employers have a preference for hiring individuals with skills associated with higher levels of education. This also translates into higher earnings for employees.Today more and more companies are interested in using intangible assets and human capital as a

way to gain an advantage over competitors. Three types of assets:

financial assets  cash and securities physical assets  property, plant, equipment Intangible assets = a type of company asset including human capital, customer capital, social capital, and intellectual capital.They are equally or even more valuable than financial and physical assets but they are difficult to duplicate or imitate. They have been shown to be responsible for a company’s competitive advantage. They are related to a company’s bottom line.One way companies try to increase intangible assets is through attracting, developing, and retaining knowledge workers.Knowledge workers = employees who own the intellectual means of producing a product or service.Knowledge workers contribute specialized knowledge that their managers may not have. Managers depend on them to share information. Knowledge workers are in demand because companies need their skills and jobs requiring them are growing.

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