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Human Resource Management

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Human Resource Management (MGT501)
Lesson 45
In today's lecture, we will be having overview of the entire course we have covered in previous modules and
will consider the reasons of importance of HRM.
A. Human Resource Management
A managerial function tries to match an organization's needs to the skills and abilities of its employees.
Attracting developing, motivating and retaining required talent and people in organization carries out this
function. Workforce of the organization is also being utilized as a source of competitive advantage by
acquiring financial or economic capabilities, product capabilities, technological or process capability,
organizational capability.
B. Strategies for Gaining Competitive Advantage
Competitive advantage refers to a company's ability to maintain market share and profitability. Any
competitive advantage enjoyed by an organization tends to be short-lived because other companies are
likely to imitate it. This is as true for HR advantages as for technological and marketing advantages. For
example, many high-tech firms have "borrowed" reward programs for key scientists and engineers from
other successful high-tech firms. The challenge from an HR perspective is to develop strategies that offer
the firm a sustained competitive advantage. For instance, a company may develop programs that maximize
present employees' potential through carefully developed career ladders while at the same time rewarding
them generously with company stock with strings attached (for example, a provision that they will forfeit
the stock if they quit before a certain date).
Cost leadership A cost leadership strategy is a competitive strategy in which a company
aims to become the low-cost leader in the industry by emphasizing the attainment of
absolute cost advantages from any and all sources. Requires a balance between low costs
and acceptable quality.
b. Differentiation A differentiation strategy is a competitive strategy in which a company
seeks to be unique in its industry in a way that is valued by the customers. HR strategies
that fit a differentiation strategy emphasize innovation, flexibility, and renewal of the work
force by attracting new talent from other firms, opportunities for mavericks, and
reinforcement (rather than discouragement) of creative flair. The specific HR strategies
that are likely to benefit differentiators include the use of broad job classes, loose work
planning, external recruitment at all levels, team-based learning, emphasis on what the
individual can do (rather than on the job title held) as a basis for pay, and reliance on
performance appraisal as a developmental (rather than a control) device.
Focus Strategy: A focus
strategy is a competitive
strategy  in  which  a
company selects a market
segment and serves the
particular  market  niche
better or cheaper than its
competitors.  The  focus
strategy relies on both a
low-cost  position  and
differentiation, with the
objective of serving a
narrow  target  market
better than other firms.
The firm seeks to achieve
Human Resource Management (MGT501)
differentiation either from better meeting the needs of the particular target, or from
lowering costs in serving this target, or both. The HR strategies likely to fit the focus
strategy best would be somewhere in the middle of those described for low-cost producers
and differentiators.
C. The Strategic Management Process
Strategic planning is the process of identifying the business of the firm today and the business of the firm
for the future, and then identifying the course of action it should pursue. Strategic planning includes the
first five strategic management tasks: evaluating the situation, defining the business, developing the mission,
translating the mission into goals, and then crafting a course of action. Strategic management includes the
implementation phase. The strategic management process is the continuous process of identifying and
pursuing the organization's mission by aligning internal capabilities with the external demands of the
Step 1: Define the Business and Its Mission: The strategic management process begins with answering
the question, in what business should we be? Defining a company's business involves identifying several
things: product scope, vertical integration, geographic scope, how they compete. A vision is a general
statement of the organizations desired direction that evokes emotional feelings in its members. A mission
statement outlines the organization's future path and it communicates its purpose. Managers base their
strategic plans on methodical analyses of their internal and external situations.
IV. Step 2: Translate the mission into strategic goals: Top management's vision and mission are
translated into operational strategic goals.
V. Step 3: Formulate a strategy to achieve the strategic goals: A strategy is a course of action that
explains how the organization will move to achieve its strategic goals given its internal strengths
and weaknesses and its external opportunities and threats. Implementation of the strategy means
translating the plan strategy into actions and results, which requires drawing on the planning,
organizing, leading, and controlling functions of management. Top companies craft strategies
whose basic principles are easy to communicate.
VI. Step 4: Structure: Some HR strategies fit very well with highly formalized organizations that are
divided into functional areas (for example, marketing, finance, production, and so on) and that
concentrate decision making at the top. The HR strategies appropriate for this type of firm include
a control emphasis, centralized pay decisions, explicit job descriptions, and job-based pay.
VII. Step 5: People: People in organization mean to have workforce in organization to perform
different functions. Different set of HR strategies, include informal hiring and socializing of new
employees, decentralized pay decisions, broad job classes, and individual-based pay.
Managers must be alert to opportunities and threats that might require modifying or totally redoing their
strategies. Strategic control is the assessing of progress towards strategic goals and taking corrective action
as needed and keeping the strategy up-to-date.
D. Strategic Management Role:
Strategic management role is used to link the firm's HR policies and practices to the broader,
longer-term needs of the firm and its stakeholders. Main responsibilities include Setting the direction
Crafting corporate- and business-level plans developing and implementing functional plans measuring,
evaluating, revising and refocusing, the fit between HR & business strategy
a. Enabler and Consultant Role: This role is used to enabling line managers to make things happen
main responsibilities include, Training, assisting with problem diagnosis developing solutions with
managers being accessible and attuned to employee needs and concerns
Human Resource Management (MGT501)
Monitoring and Maintaining Role: Continuous monitoring is required to have compliance with
legal regulations and effectiveness of HR activities and this is ensured by the monitoring role by HR
department. Main activities performed in this role include monitoring morale, providing support
during change and uncertain times
d. Innovator Role: Improving productivity and quality of work life it includes: Adapting to an
environment of uncertainty, energy conservation, and international competition, justifying the
benefits and costs of programs
Change and Knowledge Facilitator Role: This role is played in order to facilitate organizational change
and to maintain the organizational flexibility. It includes focusing on the future, guiding the flow of
knowledge, information and learning throughout the organization.
E. High-performance Work System (HPWS)
A specific combination of HR practices, work structures, and processes that maximizes employee
knowledge, skill, commitment, and flexibility is called high performance work systems. This system is
composed of many interrelated parts that complement one another to reach the goals of an organization,
large or small. This system is based upon the principles of
shared information, knowledge development, performance
reward linkage and social equality. High performance
Work Systems
work  system  can  bring  many  advantages  to
organization they mainly include:
Sysem Desgn
Employee Benefits: High performance
Wok low
work systems are beneficent for employee in
HRM prractices
HRM pactices
absence  that  they  are  provided  with
opportunity  of  more  involvement  in
Prrnciples off
Piinciples o
satisfaction specifically through organizational
The Implementtaton
The Implemenatiion
training and developmental policies and can
achievement of goals and mission of the
Organizational Benefits: Organization can improve and increase the productivity; it can
ensure quality, flexibility in system in order to have more satisfied customers.
F. Selecting HR Strategies to Increase Firm Performance
No HR Strategy is "good" or "bad" in and of itself. The success of HR strategies depends on the situation
or context in which they are used. In other words, an HR strategy's effect on firm performance is always
dependent on how well it fits with some of the factors. Fit refers to the consistency or compatibility
between HR strategies and other important aspects of the organization
a. Fit with Organizational Strategies
Organizational strategies may be examined at two levels: corporate and business.
Corporate strategy refers to the mix of businesses a corporation decides to hold and the flow of resources
among those businesses. This involves decisions pertaining to acquisition, divestment, diversification, and
growth. At one end of the spectrum is the evolutionary business strategy; at the other end is the steady-
state strategy. Business unit strategies refer to those established by firms or autonomous units of the
corporation. Well-known business strategies were formulated by Porter (overall cost leadership strategy,
differentiation business strategy, and focus strategy) and Miles and Snow (defender strategy and prospector
b. Fit with the Environment
HR strategies should help the organization better exploit environmental opportunities or cope with the
Human Resource Management (MGT501)
unique environmental forces that affect it.  The environment can be examined on four dimensions,
including (1) degree of uncertainty, (2) volatility, (3) magnitude, and (4) complexity.
c. Fit with Organizational Characteristics
To be effective, HR strategies must be tailored to the organization's personality. The features of an
organization's personality are its (1) production process for converting inputs into output, (2) market
posture, (3) overall managerial philosophy, (4) organizational structure, and (5) organizational culture.
d. Fit with Organizational Capabilities
An organization's capabilities are its distinct competencies. HR strategies make a greater contribution to a
firm's performance (1) when they help to exploit the firm's specific advantages or strengths while avoiding
its weaknesses, and (2) when they assist in better using its own unique blend of human resource skills and
e. Choosing Consistent and Appropriate HR Tactics to Implement HR Strategies
Even the best-laid strategic HR plans may fail when specific HR programs are poorly chosen or
implemented. A firm's HR strategies must be mutually consistent. That is, HR strategies are more likely to
be effective if they reinforce one another rather than work at cross-purposes.
G. Expectations for HR Professionals
Today's dynamic environment places some expectations upon the HR professional to meet the changing
environment and contingencies these expectations are enlisted as following:
 Understand problems assigned
 Stay competent and professional through study and research
 Maintain high standards of personal honesty and integrity
 Consider the personal interests, welfare, and dignity of all employees affected by recommendations
and actions
 Ensure organizations maintain high regard for public interest and personal interests and dignity of
H. Current HRM Challenges
a.  Managing Teams
Team building--activities aimed at improving the internal work and relationship processes of teams--
requires attention to both task and interpersonal relationships. In team building, organizations apply the
principles of group dynamics to select complementary members, support more cohesion, manage stages of
group development, and establish constructive norms that foster high performance. Membership in teams is
based on expertise in areas that are necessary for task accomplishment. Trust is the key to team members'
commitment to a common goal, mutual accountability, and collaboration. Trust is built on six
interdependent factors: the integrity of the members; open communication; mutual respect and support;
fairness and equity; competence and hard work; and reward for cooperation. In addition, clear goals are a
requirement for effective teamwork. Members of effective teams play eight different roles, all of which are
necessary for a complete team and for synergy
b. Managing Diversity
A diverse workforce refers to two or more groups, each of whose members are identifiable and
distinguishable based on demographic or other characteristics like gender age group, education etc. Several
barriers in dealing with diversity include stereotyping, prejudice, ethnocentrism, discrimination, tokenism,
and gender-role. Managing diversity means planning and implementing organizational systems and practices
to manage people so that the potential advantages of diversity are maximized while its potential
disadvantages are minimized. Managers are striving for racial, ethnic, and sexual workplace balance as a
matter of economic self-interest. A study found that cultural diversity contributes to improved productivity,
Human Resource Management (MGT501)
return on equity, and market performance.
Managing Globalization
One of the most dramatic challenges facing as they enter the twenty-first century is how to compete against
foreign firms, both domestically and abroad. Many companies are already being compelled to think globally,
something that doesn't come easily to firms long accustomed to doing business in a large and expanding
domestic market with minimal foreign competition.
Weak response to international competition may be resulting in upwards layoffs in every year. Human
resources can play a critical role in a business's ability to compete head-to-head with foreign producers. The
implications of a global economy on human resource management are many. Some firms try to develop a
global company identity to smooth over cultural differences between domestic employees and those in
international operations. Minimizing these differences increases cooperation and can have a strong impact
on the bottom line. Some firms actively engage in international alliances with foreign firms or acquire
companies overseas to take advantage of global markets. Making such alliances work requires a highly
trained and devoted staff. These illustrations show how firms can use HR strategies to gain a worldwide
competitive advantage.
d. Managing Change
Many organizations face a volatile environment in which change is nearly constant. If they are to survive
and prosper, they need to adapt to change quickly and effectively. Human resources are almost always at the
heart of an effective response system. Here are a few examples of how HR policies can help or hinder a
firm grappling with external change:
I. Code of Ethics for HR Professionals:
Ethics related problems are faced by the organizations whenever there is a practice of using favoritism
rather than ability or job performance for managerial decisions regarding employment, promotion, pay and
discipline. These problems can be reduced and eliminated by maintaining the highest standards of
professional and personal conduct, encouraging employers to make fair and equitable treatment of all
employees a primary concern, maintaining loyalty to employers and pursue company objectives in ways
consistent with the public interest, upholding all laws and regulations relating to employer activities, and
maintaining the confidentiality of privileged information. People's expectations that their employers will
behave ethically are increasing, so much that many firms and professional organizations have created codes
of ethics outlining principles and standards of personal conduct for their members. These negative
perceptions have worsened over the years. The widespread perceptions of unethical behavior may be
attributed to the fact that managerial decisions are rarely clear-cut. Except in a few blatant cases (such as
willful misrepresentation), what is ethical or unethical is open to debate. Even the most detailed codes of
ethics are still general enough to allow much room for managerial discretion. In other words, many specific
decisions related to the management of human resources are subject to judgment calls. Workplace
Flexibility: collaborative work in a virtual office
How Can You Gain Support for "Best HR Practices?"
Managers can gain support for best HR practices by linking the use of HR practices to the solution of real
business problems, and to achieving tangible business goals. This achievement of goals requires selection of
well defined and specific, measurable and realistic goals and communicating the expected standard of
performance to workers. Managers should demonstrate how the benefits outweigh the costs of using "best
HR practices." Speak the language of business people, i.e., money, not correlation coefficients! Etc.
K. Future HR Trends:
Workplace Flexibility: collaborative work in a virtual office as well as flexible work hours is
one of future HR trends.
Human Resource Management (MGT501)
Global Business: borderless business requires a global workforce to perform the function at
international business level.
Work & Society: working to live, not living to work
Workforce Development: constant learning in a just-in-time format, learning organization &
high skill utilization
Definition of Jobs: jobs get bigger & broader
Strategic Role of HR: becoming leaders, not just partners
The Value of Predicting: having a vision & a way to achieve it.
Key issues of the organization are to achieve efficiency, effectiveness and competitiveness and this can be
done by using not ignoring the Knowledge and experience are available. Because most of the time Best HR
Practices are not used because of Resistance to change, Ignorance on the part of decision makers and
Political considerations. By overcoming these three factors we can have more effectively managed
organizations by using HR practices.
Table of Contents:
  1. INTRODUCTION TO HRM:Growing Importance of HRM, Road Map of the Course
  2. ESSENTIALS OF MANAGEMENT:Concepts and Essential of Management, Managerís Roles
  3. ORGANIZATION AND COMPONENTS OF ORGANIZATION:Open versus Closed Systems, The Hawthorne Studies
  4. PEOPLE AND THEIR BEHAVIOR:Why to work in organizations?, The Goals of Organizational Behavior
  5. INDIVIDUAL VS. GROUP BEHAVIOR:What Are Roles?, Problem solving Team
  6. PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT:Records and Administration, Competitive Advantage
  7. HRM IN A CHANGING ENVIRONMENT:Productivity, New Trends at Work Place
  8. How organization Cultivate a Diverse Workforce, STEPS TOWARD MANAGEMENT OF DIVERSITY
  9. FUNCTIONS AND ENVIRONMENT OF HRM:Compensation and Benefits, Safety And Health, Interrelationships of HRM Functions
  10. LINE AND STAFF ASPECTS OF HRM:Authority, Line versus Staff Authority, Staff Manager
  11. LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences
  12. HUMAN RESOURCE PLANNING (HRP):Benefits of HR Planning, Forecasting Human Resource Availability
  13. STRATEGIC PLANNING AND HRIS:HRís Strategic Role, Human Resource Information System, Common HRIS Functions
  14. JOB ANALYSIS:Purposes of the job Analysis, Questions Job Analysis Should Answer
  15. JOB ANALYSIS:Methods of Collecting Job Analysis Information, Observation, Source of Data
  16. JOB ANALYSIS (CONTD.):SURPLUS OF EMPLOYEES FORECASTED, Diversity through Recruiting Efforts
  17. SOURCES OF RECRUITMENT:ALTERNATIVES TO RECRUITMENT, Quantity of the Applicants, Quality of the Applicants
  18. SELECTION:Initial Screening, Advantages of Successful Screening
  19. SELECTION TESTS:Characteristics of Properly Designed Selection Tests, Guidelines for Conducting an Interview
  20. SELECTION PROCESSÖ CONTD:Background Investigations, Physical Exam, Selecting Managers
  21. SOCIALIZATION:Compensation and Benefits, Team Membership, Stages in socialization Process, Training and Development Trends
  22. TRAINING AND DEVELOPMENT:Learning, Phases of Training, Why Transfer of Training Fails
  23. MAXIMIZING LEARNING:Following up on Training, Repetition, Feedback, Purposes of T & D
  24. CAREER MANAGEMENT:Individual career planning, Career Planning and Development Methods
  25. PERFORMANCE:Determinants of Job Performance, Why is performance measured?, Performance Management
  28. COMPENSATION SYSTEM:Pay, Job Pricing, Compensation: An Overview, Compensation Surveys
  29. BENEFITS:Total Compensation, Discretionary Benefits (Voluntary), Workplace Flexibility
  30. ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES:Types of Pay-for-Performance Plans, Empower Employees
  31. MOTIVATION:The Motivation Process, Motivational Theories, Challenges of motivating employees
  32. OCCUPATION, HEALTH & SAFETY:Physical Conditions, Accident Investigation, Smoking in The work place
  33. STRESS MANAGEMENT:Symptoms of Stress, Managing Stress,
  34. COMMUNICATION IN ORGANIZATION:Burnout, Social Support at Work & Home, Communication in organization, Meetings
  35. TRADE UNIONS:Collective Bargaining, The HRM Department in a Nonunion Setting, Phases of Labor Relations
  36. CONFLICT AND NEGOTIATION:Transitions in Conflict Thought, Individual Conflict Management Styles
  37. POWER AND POLITICS:Sources of Power, Advantages and Disadvantages of PowerPower and Politics in Context
  38. EMPLOYEE RIGHTS AND DISCIPLINE:Contractual Rights, Management Rights, Disciplining Employees,
  39. DISCIPLINE (CONT...):Factors to Consider when Disciplining, Disciplinary Guidelines, Employee Separations
  40. LEADERSHIP:The Leaderís Behavior, Situational Theories of Leadership, Becoming a Leader
  41. REVISION (LESSON 12-21):Plans, Job Specification, Human resource planning, Selection Process, Corporate Culture
  42. REVISION (LESSON 22-26):Training, Case Study Method, Training, Performance
  43. REVISION (LESSON 27-35):Classification Method, Compensation, Empowerment, Mediation
  44. INTERNATIONAL DIMENSIONS OF HRM:Global Corporation, Type of staff members, Approaches to Global Staffing
  45. CONCLUSION & REVIEW:Strategies for Gaining Competitive Advantage, High-performance Work System