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Chapter 1:
The Role of Human Resources

Human Resource Management Day to Day What Is Human Resources?

You have just been hired to work in the human resource LEARNING OBJECTIVES
department of a small company. You heard about the job
1. Explain the role of HRM in organizations.
through a conference you attended, put on by the Society for
2. Define and discuss some of the major HRM activities.
Human Resource Management (SHRM). Previously, the
owner of the company, Jennifer, had been doing everything
Every organization, large or small, uses a variety of capital to
related to human resource management (HRM). You can tell
make the business work. Capital includes cash, valuables, or
she is a bit critical about paying a good salary for something
goods used to generate income for a business. For example,
she was able to juggle all on her own. On your first day, you
a retail store uses registers and inventory, while a consulting
meet the ten employees and spend several hours with the
firm may have proprietary software or buildings. No matter
company owner, hoping to get a handle on which human
the industry, all companies have one thing in common: they
resource processes are already set up.
must have people to make their capital work for them. This
will be our focus throughout the text: generation of revenue
Shortly after the meeting begins, you see she has a completely
through the use of people’s skills and abilities.
different perspective of what HRM is, and you realize it will
be your job to educate her on the value of a human resource
What Is HRM?
manager. You look at it as a personal challenge—both to
Human resource management (HRM) is the process of
educate her and also to show her the value of this role in the
employing people, training them, compensating them,
organization.
developing policies relating to them, and developing
strategies to retain them. As a field, HRM has undergone
First, you tell her that HRM is a strategic process having to
many changes over the last twenty years, giving it an even
do with the staffing, compensation, retention, training, and
more important role in today’s organizations. In the past,
employment law and policies side of the business. In other
HRM meant processing payroll, sending birthday gifts to
words, your job as human resources (HR) manager will be
employees, arranging company outings, and making sure
not only to write policy and procedures and to hire people
forms were filled out correctly—in other words, more of an
(the administrative role) but also to use strategic plans to
administrative role rather than a strategic role crucial to the
ensure the right people are hired and trained for the right job
success of the organization. Jack Welch, former CEO of
at the right time. For example, you ask her if she knows what
General Electric and management guru, sums up the new role
the revenue will be in six months, and Jennifer answers, “Of
of HRM: “Get out of the parties and birthdays and
course. We expect it to increase by 20 percent.” You ask,
enrollment forms.… Remember, HR is important in good
“Have you thought about how many people you will need
times, HR is defined in hard times.” [1]
due to this increase?” Jennifer looks a bit sheepish and says,
“No, I guess I haven’t gotten that far.” Then you ask her
It’s necessary to point out here, at the very beginning of this
about the training programs the company offers, the software
text, that every manager has some role relating to human
used to allow employees to access pay information online,
resource management. Just because we do not have the title
and the compensation policies. She responds, “It looks like
of HR manager doesn’t mean we won’t perform all or at least
we have some work to do. I didn’t know that human
some of the HRM tasks. For example, most managers deal
resources involved all of that.” You smile at her and start
with compensation, motivation, and retention of
discussing some of the specifics of the business, so you can
employees—making these aspects not only part of HRM but
get started right away writing the strategic human resource
also part of management. As a result, this book is equally
management plan.
important to someone who wants to be an HR manager and
to someone who will manage a business.

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Human Resource Recall  Ethics policy

Have you ever had to work with a human resource  Internet usage policy
department at your job? What was the interaction like? What
was the department’s role in that specific organization? Compensation and Benefits Administration
HRM professionals need to determine that compensation is
fair, meets industry standards, and is high enough to entice
The Role of HRM
people to work for the organization. Compensation includes
Keep in mind that many functions of HRM are also tasks
anything the employee receives for his or her work. In
other department managers perform, which is what makes
addition, HRM professionals need to make sure the pay is
this information important, despite the career path taken.
comparable to what other people performing similar jobs are
Most experts agree on seven main roles that HRM plays in
being paid. This involves setting up pay systems that take into
organizations. These are described in the following sections.
consideration the number of years with the organization,
years of experience, education, and similar aspects. Examples
Staffing
of employee compensation include the following:
You need people to perform tasks and get work done in the
 Health Benefits
organization. Even with the most sophisticated machines,
humans are still needed. Because of this, one of the major  Pay
tasks in HRM is staffing. Staffing involves the entire hiring  401(k) (retirement plans)
process from posting a job to negotiating a salary package.  Stock purchase plans
Within the staffing function, there are four main steps:  Vacation time
1. Development of a staffing plan. This plan allows HRM to see  Sick leave
how many people they should hire based on revenue  Bonuses
expectations.  Tuition reimbursement
2. Development of policies to encourage multiculturalism at work.
Multiculturalism in the workplace is becoming more and Retention
more important, as we have many more people from a Human resource people must be aware of all the laws that
variety of backgrounds in the workforce. affect the workplace. HRM Retention involves keeping and
3. Recruitment. This involves finding people to fill the open motivating employees to stay with the organization.
positions. Compensation is a major factor in employee retention, but
4. Selection. In this stage, people will be interviewed and there are other factors as well. Ninety percent of employees
selected, and a proper compensation package will be leave a company for the following reasons:
negotiated. This step is followed by training, retention, 1. The job they are performing
and motivation. 2. Challenges with their manager
3. Poor fit with organizational culture
Development of Workplace Policies 4. Poor workplace environment
Every organization has policies to ensure fairness and
continuity within the organization. One of the jobs of HRM Despite this, 90 percent of managers think employees leave
is to develop the verbiage surrounding these policies. In the as a result of pay. [2] As a result, managers often try to change
development of policies, HRM, management, and executives their compensation packages to keep people from leaving,
are involved in the process. For example, the HRM when compensation isn’t the reason they are leaving at all.
professional will likely recognize the need for a policy or a
change of policy, seek opinions on the policy, write the policy, Training and Development
and then communicate that policy to employees. It is key to Once we have spent the time to hire new employees, we want
note here that HR departments do not and cannot work alone. to make sure they not only are trained to do the job but also
Everything they do needs to involve all other departments in continue to grow and develop new skills in their job. This
the organization. Some examples of workplace policies might results in higher productivity for the organization. Training is
be the following: also a key component in employee motivation. Employees
 Discipline process policy who feel they are developing their skills tend to be happier in
 Vacation time policy their jobs, which results in increased employee retention.
 Dress code Examples of training programs might include the following:

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 Job skills training, such as how to run a particular those things the company has no direct control over;
computer program however, they may be things that could positively or
 Training on communication negatively impact human resources. External factors might
 Team-building activities include the following:
1. Globalization and offshoring
 Policy and legal training, such as sexual harassment
2. Changes to employment law
training and ethics training
3. Health-care costs
4. Employee expectations
Dealing with Laws Affecting Employment
5. Diversity of the workforce
Human resource people must be aware of all the laws that 6. Changing demographics of the workforce
affect the workplace. An HRM professional might work with 7. A more highly educated workforce
some of these laws: 8. Layoffs and downsizing
 Discrimination laws 9. Technology used, such as HR databases
10. Increased use of social networking to distribute
 Health-care requirements
information to employees
 Compensation requirements such as the minimum wage
 Worker safety laws For example, the recent trend
 Labor laws in flexible work schedules (allowing employees to set their
own schedules) and telecommuting (allowing employees to
The legal environment of HRM is always changing, so HRM work from home or a remote location for a specified period
must always be aware of changes taking place and then of time, such as one day per week) are external factors that
communicate those changes to the entire management have affected HR. HRM has to be aware of these outside
organization. Rather than presenting a chapter focused on issues, so they can develop policies that meet not only the
HRM laws, we will address these laws in each relevant needs of the company but also the needs of the individuals.
chapter. Another example is the Patient Protection and Affordable
Care Act, signed into law in 2010. Compliance with this bill
Worker Protection has huge implications for HR. For example, a company with
more than fifty employees must provide health-care coverage
Safety is a major consideration in all organizations.
or pay a penalty. Currently, it is estimated that 60 percent of
Oftentimes new laws are created with the goal of setting
employers offer health-care insurance to their
federal or state standards to ensure worker safety. Unions and
employees. [3] Because health-care insurance will be
union contracts can also impact the requirements for worker
mandatory, cost concerns as well as using health benefits as a
safety in a workplace. It is up to the human resource manager
recruitment strategy are big external challenges. Any manager
to be aware of worker protection requirements and ensure
operating without considering outside forces will likely
the workplace is meeting both federal and union standards.
alienate employees, resulting in unmotivated, unhappy
Worker protection issues might include the following:
workers. Not understanding the external factors can also
 Chemical hazards mean breaking the law, which has a concerning set of
 Heating and ventilation requirements implications as well.
 Use of “no fragrance” zones
 Protection of private employee information One way managers can be aware of the outside forces is to
attend conferences and read various articles on the web. For
Communication example, the website of the Society for Human Resource
Besides these major roles, good communication skills and Management, SHRM Online, [4] not only has job postings in
excellent management skills are key to successful human the field but discusses many contemporary human resource
resource management as well as general management. issues that may help the manager make better decisions when
it comes to people management.
Awareness of External Factors

In addition to managing internal factors, the HR manager

needs to consider the outside forces at play that may affect
the organization. Outside forces, or external factors, are

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KEY TAKEAWAYS One of the major factors of a successful manager or human

resource (HR) manager is an array of skills to deal with a
 Capital includes all resources a company uses to generate variety of situations. It simply isn’t enough to have knowledge
revenue. Human resources or the people working in the of HR, such as knowing which forms need to be filled out. It
organization are the most important resource. takes multiple skills to create and manage people, as well as a
 Human resource management is the process of employing cutting-edge human resource department.
people, training them, compensating them, developing The first skill needed is organization. The need for this skill
policies relating to the workplace, and developing makes sense, given that you are managing people’s pay,
strategies to retain employees. benefits, and careers. Having organized files on your
 There are seven main responsibilities of HRM managers: computer and good time-management skills are crucial for
staffing, setting policies, compensation and success in any job, but especially if you take on a role in
benefits, retention, training, employment laws, and worker human resources.
protection. In this book, each of these major areas will be
included in a chapter or two. Like most jobs, being able to multitask—that is, work on
 In addition to being concerned with the seven internal more than one task at a time—is important in managing
aspects, HRM managers must keep up to date with human resources. A typical person managing human
changes in the external environment that may impact their resources may have to deal with an employee issue one
employees. The trends toward flexible minute, then switch and deal with recruiting. Unlike many
schedules and telecommuting are examples of external management positions, which only focus on one task or one
aspects. part of the business, human resources focuses on all areas of
 To effectively understand how the external forces might the business, where multitasking is a must.
affect human resources, it is important for the HR
manager to read the HR literature, attend conferences, As trite as it may sound, people skills are necessary in any type
and utilize other ways to stay up to date with new laws, of management and perhaps might be the most important
trends, and policies. skills for achieving success at any job. Being able to manage
a variety of personalities, deal with conflict, and coach others
EXERCISES are all in the realm of people management. The ability to
communicate goes along with people skills. The ability to
1. State arguments for and against the following statement:
communicate good news (hiring a new employee), bad news
there are other things more valuable in an organization
(layoffs), and everything in between, such as changes to
besides the people who work there.
policy, makes for an excellent manager and human resource
2. Of the seven tasks an HR manager does, which do you
management (HRM) professional.
think is the most challenging? Why?

[1] Kristen B. Frasch, David Shadovitz, and Jared Shelly, “There’s No

Keys to a successful career in HRM or management include
Whining in HR,” Human Resource Executive Online, June 30, 2009, accessed understanding specific job areas, such as managing the
September 24, 2010, employee database, understanding employment laws, and
[Link] knowing how to write and develop a strategic plan that aligns
[2] Leigh Rivenbark, “The 7 Hidden Reasons Why Employees Leave,” HR
Magazine, May 2005, accessed October 10, 2010,
with the business. All these skills will be discussed in this
[Link] book.
[3] Peter Cappelli, “HR Implications of Healthcare Reform,” Human
Resource Executive Online, March 29, 2010, accessed August 18, A strategic mind-set as an HR professional is a key skill as
2011, [Link]
[4] Society for Human Resource Management, accessed August 18, 2011,
well. A person with a strategic mind-set can plan far in
[Link] advance and look at trends that could affect the environment
in which the business is operating. Too often, managers focus
1.2 Skills Needed for HRM on their own area and not enough on the business as a whole.
LEARNING OBJECTIVES The strategic HR professional is able to not only work within
his or her area but also understand how HR fits into the
1. Explain the professional and personal skills needed to be bigger picture of the business.
successful in HRM.
2. Be able to define human resource management and the
certifications that can be achieved in this profession.

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Ethics and a sense of fairness are also necessary in human an HR department. In this test, the greater focus is on
resources. Ethics is a concept that examines the moral rights the strategic aspect of HRM.
and wrongs of a certain situation. Consider the fact that many 3. Global Professional in Human Resources (GPHR). This exam
HR managers negotiate salary and union contracts and is for HR professionals who perform many of their tasks
manage conflict. In addition, HR managers have the task of on a global level and whose companies often work
ensuring compliance with ethics standards within the across borders. This exam is three hours long, with 165
organization. Many HR managers are required to work with multiple-choice questions. A person with two years of
highly confidential information, such as salary information, professional experience can take the certification test.
so a sense of ethics when managing this information is However, because the test has the international aspect,
essential. someone who designs HR-related programs and
processes to achieve business goals would be best suited
HUMAN RESOURCE RECALL to earn this certification.

Think of your current skills. Are there personal or

The benefits of achieving certifications are great. In addition
professional skills you would like to work on?
to demonstrating the abilities of the HR professional,
certification allows the professional to be more marketable in
Finally, while we can list a few skills that are important,
a very competitive field.
understanding the particular business, knowing the business
strategy, and being able to think critically about how HR can
Most companies need a human resource department or a
align itself with the strategy are ways to ensure HR
manager with HR skills. The industries and job titles are so
departments are critical parts of the business. HR is a
varied that it is possible only to list general job titles in human
specialized area, much like accounting or finance. However,
resources:
many individuals are placed in HR roles without having the
1. Recruiter
specific knowledge to do the job. Oftentimes people with
2. Compensation analyst
excellent skills are promoted to management and then
3. Human resources assistant
expected (if the company is small) to perform recruiting,
4. Employee relations manager
hiring, and compensation tasks. This is the reason we will
5. Benefits manager
refer to management and HR management interchangeably
6. Work-life coordinator
throughout the chapters. In addition, these skills are
7. Training and development manager
important for HRM professionals and managers alike.
8. Human resources manager
9. Vice president for human resources
Having said that, for those of you wanting a career in HRM,
10. This is not an exhaustive list, but it can be a
there are three exams you can take to show your mastery of
starting point for research on this career path.
HRM material:
1. Professional in Human Resources (PHR). To take this exam,
KEY TAKEAWAYS
an HR professional must have at least two years’
experience. The exam is four hours long and consists of  There are a number of skills crucial to human resource
225 multiple-choice questions in a variety of areas. management. First, being able to organize
Twelve percent of the test focuses on strategic and multitask is necessary. In this job, files must be
management, 26 percent on workforce planning, 17 managed, and an HR manager is constantly working in
percent on human resource development, 16 percent on different areas of the business.
rewards, 22 percent on employee and labor relations, and  Communication skills are necessary in HRM as well. The
7 percent on risk management. The application process ability to present good and bad news, work with a variety
for taking the exam is given on the Human Resource of personalities, and coach employees is important in
Certification Institute website at [Link] HRM.
2. Senior Professional in Human Resources (SPHR). This exam  Specific job skills, such as computer skills, knowledge of
is designed for HR professionals who focus on designing employment law, writing and developing strategic plans,
and planning, rather than actual implementation. It is and general critical-thinking skills are important in any
recommended that the person taking this exam has six type of management, but especially in human resource
to eight years of experience and oversees and manages management.

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 A sense of fairness and strong ethics will make for the Consider the expenses that involve the people part of any
best HR manager. Because HR works with a variety of business:
departments to manage conflict and negotiate union 1. Health-care benefits
contracts and salary, the HR professional 2. Training costs
needs ethics skills and the ability to maintain 3. Hiring process costs
confidentiality. 4. And many more…
 Since one of the major responsibilities of an HR
department is to align the HR strategic plan with the These costs cut into the bottom line of any business. The
business strategic plan, critical and creative thinking, as trick is to figure out how much, how many, or how often
well as writing, are skills that will benefit the HR manager benefits should be offered, without sacrificing employee
as well. motivation. A company can cut costs by not offering benefits
 Many people find themselves in the role of HR manager, or 401(k) plans, but if its goal is to hire the best people, a
so we will use the term HR manager throughout this hiring package without these items will most certainly not get
book. However, many other types of managers also the best people. Containment of costs, therefore, is a
perform the tasks of recruiting, selecting, and balancing act. An HR manager must offer as much as he or
compensating, making this book and the skills listed in she can to attract and retain employees, but not offer too
this section applicable to all majors. much, as this can put pressure on the company’s bottom line.
We will discuss ways to alleviate this concern throughout this
 Certification exams can be taken to make you more
book.
marketable in the field of HRM. These certifications are
offered by the HR Certification Institute (HRCI).
For example, there are three ways to cut costs associated with
EXERCISE
health care:
1. What are your perceptions of what an HR manager does 1. Shift more of the cost of health care to employees
on a day-to-day basis? Research this job title and describe 2. Reduce the benefits offered to cut costs
your findings. Is this the type of job you expected? 3. Change or better negotiate the plan to reduce health-care
costs
1.3 Today’s HRM Challenges
LEARNING OBJECTIVE Health care costs companies approximately $4,003 per year
for a single employee and $9,764 for families. This equals
1. Identify and explain some of the challenges associated
roughly 83 percent and 73 percent of total health-care costs
with HRM.
for single employees and employees with
families, respectively. One possible strategy for
[1]
All departments within an organization must prove their
containment for health-care plans is to implement a cafeteria
value and contributions to the overall business strategy, and
plan. Cafeteria plans started becoming popular in the 1980s
the same is true with HRM. As companies are becoming
and have become standard in many organizations. [2] This
more concerned with cutting costs, HRM departments must
type of plan gives all employees a minimum level of benefits
show the value they add to the organization through
and a set amount to spend on flexible benefits, such as
alignment with business objectives. Being able to add value
additional health care or vacation time. It creates more
starts with understanding some of the challenges of
flexible benefits, allowing the employee, based on his or her
businesses and finding ways to reduce a negative impact on
family situation, to choose which benefits are right for them.
the business. This section will discuss some of the HRM
For example, a mother of two may choose to spend her
challenges, and the rest of this text will dive into greater detail
flexible benefits on health care for her children, while a single,
about how to manage these challenges.
childless female may opt for more vacation days. In other
words, these plans offer flexibility, while saving money, too.
Containing Costs
If you were to ask most business owners what their biggest
Another way to contain costs is by offering training. While
challenges are, they will likely tell you that cost management
this may seem counterintuitive, as training does cost money
is a major factor to the success or failure of their business. In
up front, it can actually save money in the long run. Consider
most businesses today, the people part of the business is the
how expensive a sexual harassment lawsuit or wrongful
most likely place for cuts when the economy isn’t doing well.
termination lawsuit might be. For example, a Sonic Drive-In

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was investigated by the Equal Opportunity Employment use of technology, many companies have virtual workforces
Commission (EEOC) on behalf of seventy women who that perform tasks from nearly all corners of the world. When
worked there, and it was found that a manager at one of the employees are not located just down the hall, management of
stores subjected the victims to inappropriate touching and these human resources creates some unique challenges. For
comments. This lawsuit cost the organization $2 example, technology creates an even greater need to have
million. [3] Some simple training up front (costing less than multicultural or diversity understanding. Since many people
the lawsuit) likely would have prevented this from happening. will work with individuals from across the globe, cultural
Training employees and management on how to work within sensitivity and understanding is the only way to ensure the
the law, thereby reducing legal exposure, is a great way for use of technology results in increased productivity rather than
HR to cut costs for the organization as a whole. decreased productivity due to miscommunications.

The hiring process and the cost of turnover in an Technology also creates a workforce that expects to be
organization can be very expensive. Turnover refers to the mobile. Because of the ability to work from home or
number of employees who leave a company in a particular anywhere else, many employees may request and even
period of time. By creating a recruiting and selection process demand a flexible schedule to meet their own family and
with cost containment in mind, HR can contribute directly to personal needs. Productivity can be a concern for all
cost-containment strategies company wide. In fact, the cost managers in the area of flextime, and another challenge is the
of hiring an employee or replacing an old one (turnover) can fairness to other workers when one person is offered a
be as high as $9,777 for a position that pays $60,000. [4] By flexible schedule.
hiring smart the first time, HR managers can contain costs
for their organization. Many companies, however, are going a step further and
creating virtual organizations, which don’t have a physical
In a survey reported on by the Sales and Marketing location (cost containment) and allow all employees to work
Management newsletter, [5] 85 percent of managers say that from home or the location of their choice. As you can
ineffective communication is the cause of lost revenue. E- imagine, this creates concerns over productivity and
mail, instant messaging, text messages, and meetings are all communication within the organization.
examples of communication in business. An understanding
of communication styles, personality styles, and channels of The use of smartphones and social networking has impacted
communication can help us be more effective in our human resources, as many companies now disseminate
communications, resulting in cost containment. In HRM, we information to employees via these methods. Of course,
can help ensure our people have the tools to communicate technology changes constantly, so the methods used today
better, and contain costs and save dollars in doing so. will likely be different one year or even six months from now.
The large variety of databases available to perform HR tasks
One cost-containment strategy for US businesses has been is mind boggling. For example, databases are used to track
offshoring. Offshoring refers to the movement of jobs employee data, compensation, and training. There are also
overseas to contain costs. It is estimated that 3.3 million US databases available to track the recruiting and hiring
jobs will be moved overseas by 2015. [6] According to the US processes.
Census Bureau, most of these jobs are Information Of course, the major challenge with technology is its
Technology (IT) jobs as well as manufacturing jobs. This constantly changing nature, which can impact all practices in
issue is unique to HR, as the responsibility for developing HRM.
training for new workers and laying off domestic workers will
often fall under the realm of HRM. HOW WOULD YOU HANDLE THIS?

Too Many Friends

Of course, cost containment isn’t only up to HRM and
You are the HR manager for a small company, consisting of twenty-
managers, but as organizations look at various ways to
three people plus the two owners, Steve and Corey. Every time you go
contain costs, human resources can certainly provide
into Steve’s office, you see he is on Facebook. Because he is Facebook
solutions.
friends with several people in the organization, you have also heard he
Technology
constantly updates his status and uploads pictures during work time.
Technology has greatly impacted human resources and will
Then, at meetings, Steve will ask employees if they saw the pictures he
continue to do so as new technology is developed. Through
recently uploaded from his vacation, weekend, or backpacking trip. One

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employee, Sam, comes to you with a concern about this. “I am just trying working full time, down from 2008 when 106,648,000 were
to do my job, but I feel if I don’t look at his photos, he may not think I working full time. [9] For full-time workers, the average
am a good employee,” she says. How would you handle this? weekly salary was higher the more educated the worker.

Cyber loafing, a term used to describe lost productivity as a FORTUNE 500 FOCUS
result of an employee using a work computer for personal
Multigenerational is here to stay, and Xerox is the leader in
reasons, is another concern created by technology. One study
recruiting of Generation Y talent. This age group has been
performed by Nucleus Research found that the average
moving into the labor market over the last six years, and this
worker uses Facebook for fifteen minutes per day, which
major demographic change, along with the retirement of
results in an average loss of 1.5 percent of productivity.
[7] Some workers, in fact, use Facebook over two hours per baby boomers, has many companies thinking. Fortune 500
companies know they must find out where their new stars are
day during working hours. Restricting or blocking access to
coming from. In recruiting this new talent, Xerox isn’t
the Internet, however, can result in angry employees and
looking to old methods, because they know each generation
impact motivation at work.
is different. For example, Xerox developed the “Express
Yourself” recruiting campaign, which is geared around a core
Technology can create additional stress for workers.
value of this generation, to develop solutions and change. Joe
Increased job demands, constant change, constant e-mailing
Hammill, the director of talent acquisition, says, “Gen Y is
and texting, and the physical aspects of sitting in front of a
very important. Xerox and other companies view this
computer can be not only stressful but also physically
emerging workforce as the future of our
harmful to employees.
organization.” Besides the new recruiting campaign,
[10]

recruiters are working at what they term “core colleges”—

The Economy
that is, those that produce the kind of talent they need. For
Tough economic times in a country usually results in tough
example, they developed recruitment campaigns with specific
times for business, too. High unemployment and layoffs are
institutions such as the Rochester Institute of Technology
clearly HRM and managerial issues. If a human resource
because of its strong engineering and printing science
manager works for a unionized company, union contracts are
programs. On their company website, they have a specific tab
the guiding source when having to downsize owing to a tough
for the recent college graduate, emphasizing core values of
economy.
this generation, including the ability to contribute, support,
and build skills. With its understanding of multicultural
Besides union restrictions, legal restrictions on who is let go
generations, Xerox has created a talent pool for years to
and the process followed to let someone go should be on the
come.
forefront of any manager’s mind when he or she is required
to lay off people because of a poor economy. Dealing with
It is expected that over the next ten years, over 40 percent of
performance issues and measuring performance can be
the workforce will retire, and there will not be enough
considerations when it is necessary to lay off employees.
younger workers to take the jobs once held by the retiring
workforce. [11] In fact, the American Society of Training and
Likewise, in a growth economy, the HR manager may
Development says that in the next twenty years, seventy-six
experience a different kind of stress. Massive hiring to meet
million Americans will retire, and only forty-six million will
demand might occur if the economy is doing well. For
replace them. As you can imagine, this will create a unique
example, McDonald’s restaurants had to fill six hundred
staffing obstacle for human resources and managers alike, as
positions throughout Las Vegas and held hiring day events in
they try to find talented people in a pool that doesn’t have
2010. [8] Imagine the process of hiring this many people in a
enough people to perform necessary jobs. The reason for this
short period of time The same recruiting and selection
increase in retirement is the aging baby
processes used under normal circumstances will be helpful in
boomers. Baby boomers can be defined as those born
mass hiring situations.
between the years 1946 and 1964, according to the Census
Bureau. They are called the baby boomers because there was
The Changing and Diverse Workforce
a large increase of babies born after soldiers came back from
Human resources should be aware that the workforce is
World War II. Baby boomers account for seventy-six million
constantly changing. For example, in the 2010 census, the
people in the United States in 2011, the same year in which
national population was 308,745,538, with 99,531,000 in 2010
the first of the baby boomers have started to retire.

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The impact of the baby boomer generation on our country book, we will discuss compensation and motivational
and on human resource management is huge. First, the strategies for the multigenerational workforce.
retirement of baby boomers results in a loss of a major part
of the working population, and there are not enough people Diversity refers to age, disability, race, sex, national origin,
to fill those jobs that are left vacant. Second, the baby and religion. Each of these components makes up the
boomers’ knowledge is lost upon their retirement. Much of productive workforce, and each employee has different
this knowledge isn’t formalized or written down, but it needs, wants, and goals. This is why it is imperative for the
contributes to the success of business. Third, elderly people HRM professional to understand how to motivate the
are living longer, and this results in higher health-care costs workforce, while ensuring that no laws are broken.
for all currently in the workforce. It is estimated that three
out of five baby boomers do not have enough money saved Ethics
for retirement, [12] meaning that many of them will depend on A discussion of ethics is necessary when considering
Social Security payments to meet basic needs. However, since challenges of human resources. Much of the discussion
the Social Security system is a pay-as-you-go system (i.e., surrounding ethics happened after the early to mid-2000s,
those paying into the system now are paying for current when several companies were found to have engaged in gross
retirees), there may not be enough current workers to cover unethical and illegal conduct, resulting in the loss of billions
the current Social Security needs. In fact, in 1950 there were of dollars from shareholders. Consider the statistics: only 25
16 workers to support each Social Security beneficiary, but percent of employees trusted their CEO to tell the truth, and
today there are only 3.3 workers supporting each 80 percent of people said that employers have a moral
beneficiary. [13] The implications can mean that more will be responsibility to society. [15] Based on these numbers, an
paid by current workers to support retirees. ethical workplace is important not only for shareholder
satisfaction but for employee satisfaction as well. Companies
As a result of the aging workforce, human resources should are seeing the value of implementing ethics codes within the
keep abreast of changes in Social Security legislation and business.
health-care costs. In addition, human resource managers
should review current workers’ skill levels and monitor Many human resource departments have the responsibility of
retirements and skills lost upon those retirements, which is designing codes of ethics and developing policies for ethical
part of strategic planning. Having knowledge about current decision making. Some organizations hire ethics officers to
workers and skills, as well as predicting future workforce specifically focus on this area of the business. Out of four
needs, will be necessary to deal with the challenges of an aging hundred companies surveyed, 48 percent had an ethics
workforce. officer, who reported to either the CEO or the HR
executive. [16] According to Steve Miranda, chief human
HUMAN RESOURCE RECALL resources officer for the Society for Human Resource
Management (SHRM), “[the presence of an ethics officer]
Have you ever worked in a multigenerational organization?
provides a high-level individual with positional authority who
What were some of the challenges in working with people
can ensure that policies, practices, and guidelines are
who may have grown up in a different era?
effectively communicated across the organization.” [17]

Another challenge, besides lack of workers, is the

For example, the insurance company Allstate recently hired a
multigenerational workforce. Employees between the ages of
chief ethics and compliance officer (CECO) who offers a
seventeen and sixty-eight have different values and different
series of workshops geared toward leaders in the
expectations of their jobs. Any manager who tries to manage
organization, because they believe that maintaining high
these workers from varying generations will likely have some
ethical standards starts at the top of an organization. In
challenges. Even compensation preferences are different
addition, the CECO monitors reports of ethics complaints
among generations. For example, the traditional baby
within the organization and trains employees on the code of
boomer built a career during a time of pensions and strongly
ethics or code of conduct.[18] A code of ethics is an outline
held values of longevity and loyalty to a company. Compare
that explains the expected ethical behavior of employees. For
the benefit needs of this person to someone who is younger
example, General Electric (GE) has a sixty-four-page code of
and expects to save through a 401(k) plan, and it is clear that
conduct that outlines the expected ethics, defines them, and
the needs and expectations are different. [14] Throughout this
provides information on penalties for not adhering to the

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code. The code of conduct is presented below. Of course, Because technology is part of our work life, cyber loafing,
simply having a written code of ethics does little to encourage or employees spending too much time on the Internet,
positive behavior, so many organizations (such as GE) offer creates new challenges for managers. Technology can
stiff penalties for ethics violations. Developing policies, also create challenges such as workplace stress and lack
monitoring behavior, and informing people of ethics are of work-life balance.
necessary to ensure a fair and legal business.  The economy is a major factor in human resource
management. HR managers, no matter what the state of
The following is an outline of GE’s code of conduct: [19] the economy, must plan effectively to make sure they
 Obey the applicable laws and regulations governing our have the right number of workers at the right time. When
business conduct worldwide. we deal with a down economy, the legal and union
 Be honest, fair, and trustworthy in all your GE activities implications of layoffs must be considered, and in an up
and relationships. economy, hiring of workers to meet the internal demand
 Avoid all conflicts of interest between work and is necessary.
personal affairs.  The retirement of baby boomers is creating a gap in the
 Foster an atmosphere in which fair employment workplace, related to not only the number of people
practices extend to every member of the diverse GE available but also the skills people have.
community. Multigenerational companies, or companies with
 Strive to create a safe workplace and to protect the workers of a variety of ages, must find ways to motivate
environment. employees, even though those employees may have
 Through leadership at all levels, sustain a culture where different needs. HR must be aware of this and continually
ethical conduct is recognized, valued, and exemplified by plan for the challenge of a changing workforce. Diversity
all employees. in the workplace is an important challenge in human
resource management.
KEY TAKEAWAYS  Ethics and monitoring of ethical behavior are also
challenges in HRM. Setting ethical standards and
 One of the most important aspects to productive HRM monitoring ethical behavior, including developing a code
is to ensure the department adds value to the rest of the of conduct, is a must for any successful business.
organization, based on the organization’s strategic plan. EXERCISES
 One of the major challenges of HRM is containment of
1. Research the various generations: baby boomers,
costs. This can be done in several ways, for example, in
Generation X, and the Y Generation (millennials).
the way health care and benefits are offered. Many
Compare and contrast five differences between the
companies are developing cafeteria plans that satisfy the
generations. How might these differences impact HRM?
employee and help contain costs.
2. Review news articles on the current state of the economy.
 HRM can also contain costs by developing and managing
Which aspects of these articles do you think can relate to
training programs and ensuring employees are well
HRM?
trained to be productive in the job.
 Hiring is a very expensive part of human resources, and
therefore HRM should take steps to ensure they are [1] “Use Three Strategies to Cut Health Care Costs,” Business Management
hiring the right people for the job the first time. Daily, September 9, 2010, accessed October 10, 2010,
[Link]
Turnover is a term used to describe the departure of an strategies-to-cut-health-care-costs/[Link].
employee. [2] Mary Allen, “Benefits, Buffet Style—Flexible Plans,” Nation’s
 Poor communication results in wasting time and Business, January 1997, accessed October 1,
2010, [Link]
resources. We can communicate better by understanding
[3] “LL Sonic Settles EEOC Lawsuit for $2 Million,” Valencia County
communication channels, personalities, and styles. News Bulletin, June 23, 2011.
 Technology is also a challenge to be met by human [4] James Del Monte, “Cost of Hiring and Turnover,” JDA Professional
resources. For example, employees may request Services, Inc., 2010, accessed October 1,
2010, [Link]
alternative work schedules because they can use [5] “The Cost of Poor Communications,” Sales and Marketing, December
technology at home to get their work done. 22, 2006, accessed October 1,
2010, [Link]

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 Westover — Strategic Human Resource Management — 11

[6] Vivek Agrawal and Diana Farrell, “Who Wins in Offshoring?” in 

Human resource managers need many different types of
“Global Directions,” special issue, McKinsey Quarterly, (2003): 36–41,
[Link]
skills. Being able to organize, multitask, and
[7] “Facebook Use Cuts Productivity at Work,” Economic Times, July 25, communicate effectively, as well as having specific job
2009, accessed October 4, skills, such as how to run a particular computer program,
2010, [Link] and a sense of fairness and ethics, is crucial to a
cuts-productivity-at-work-Study/articleshow/[Link].
[8] “McDonald’s Readies for Massive Hiring Spree,” Fox 5 News, Las
successful career in HRM.
Vegas, May 2010, accessed October 5,  There are many contemporary challenges associated
2010, [Link] (site with HRM. First, it is up to everyone in the organization
discontinued).
to contain costs. HR managers need to look at their
[9] Bureau of Labor Statistics, Current Population Survey Report, accessed
July 7, 2011, [Link] individual departments and demonstrate the necessity
[10] Stephanie Armour, “Generation Y: They’ve Arrived at Work with a and value of their functions to the organization. HR
New Attitude,” USA Today, November 6, 2005. managers can also help contain costs in several ways,
[11] Alvaro Fernandez, “Training the Aging Workforce,” SharpBrains,
such as managing benefits plans and compensation and
August 10, 2007, accessed October 6,
2010, [Link] providing training.
workforce-and-their-brains.  The fast-changing nature of technology is also a
[12] Joe Weisenthal, “3 of 5 Baby Boomers Don’t Have Enough for challenge in HRM. As new technologies are developed,
Retirement,” Business Insider Magazine, August 16,
2010, [Link]
employees may be able to implement innovative ways of
[13] Brenda Wenning, “Baby Boomer Retirement May Be a working such as flextime. HR managers are also
Bust,” Metrowest News Daily, March 21, 2010. responsible for developing policies dealing with cyber
[14] Michelle Capezza, “Employee Benefits in a Multigenerational loafing and other workplace time wasters revolving
Workplace,” EpsteinBeckerGreen, August 12, 2010, accessed October 6,
2010, [Link]
around technology. Employee stress and lack of work-
[15] Strategic Management Partners, “Unethical Statistics Announced At life balance are also greatly influenced by technology.
Business Leaders Event,” news release, [Link]  Awareness of the changes in the economy allows the
[Link]/archives/2005/02/unethical_stati.html, accessed August 31,
human resource manager to adequately plan for
2011.
[16] Mark McGraw, “The HR-Ethics Alliance,” HR Executive Online, June reductions and additions to the workforce.
16, 2011, accessed July 7,  The aging and changing workforce is our final factor.
2011, [Link] As baby boomers retire, there likely will not be enough
[17] Mark McGraw, “The HR-Ethics Alliance,” HR Executive Online, June
16, 2011, accessed July 7,
people to replace them, and many of the skills the baby
2011, [Link] boomers have may be lost. In addition, having to work
brackets in the original. with multiple generations at once can create challenges
[18] Mark McGraw, “The HR-Ethics Alliance,” HR Executive Online, June as different expectations and needs arise
16, 2011, accessed July 7,
2011, [Link]
from multigenerational workforces.
[19] “The Spirit and the Letter,” General Electric Company, accessed CHAPTER CASE
August 10, 2011,
[Link] Changes, Changes
[Link]. Jennifer, the owner and manager of a company with ten
employees, has hired you to take over the HRM function so
1.4 Cases and Problems she can focus on other areas of her business. During your
CHAPTER SUMMARY first two weeks, you find out that the company has been
greatly affected by the up economy and is expected to
 Human resource management is the process of
experience overall revenue growth by 10 percent over the
employing people, training them, compensating them,
next three years, with some quarters seeing growth as high as
developing policies relating to the workplace, and
30 percent. However, five of the ten workers are expected to
developing strategies to retain employees. Three
retire within three years. These workers have been with the
certification exams, which are offered by the Human
organization since the beginning and provide a unique
Resource Certification Institute, can be taken to show
historical perspective of the company. The other five workers
HRM skills and become more marketable.
are of diverse ages.
 Human resource management involves seven main In addition to these changes, Jennifer believes they may be
areas: (1) staffing, (2) workplace policies, (3) benefits and able to save costs by allowing employees to telecommute one
compensation, (4) retention, (5) training, (6) to two days per week. She has some concerns about
employment laws, and (7) employee protection.

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productivity if she allows employees to work from home. 2.

What are some considerations the company and HR
Despite these concerns, Jennifer has even considered closing should be aware of when making changes related to this
down the physical office and making her company a virtual case study?
organization, but she wonders how such a major change will 3. What would the initial steps be to start planning for these
affect the ability to communicate and worker motivation. changes?
Jennifer shares with you her thoughts about the costs of 4. What would your role be in implementing these
health care on the organization. She has considered cutting changes? What would Jennifer’s role be?
benefits entirely and having her employees work for her on a TEAM ACTIVITIES
contract basis, instead of being full-time employees. She isn’t
1. In a group of two to three people, research possible
sure if this would be a good choice.
career paths in HRM and prepare a PowerPoint
Jennifer schedules a meeting with you to discuss some of her
presentation to discuss your findings.
thoughts. To prepare for the meeting, you perform research
2. Interview an HR manager and discuss his or her career
so you can impress your new boss with recommendations on
path, skills, and daily tasks. Present your findings to your
the challenges presented.
class.
1. Point out which changes are occurring in the business
that affect HRM.
NOTES:

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Chapter 2:
Developing and Implementing Strategic HRM Plans

The Value of Planning management (HRM) strategic plan to make sure Techno, Inc.
James stumbled into his position as the human resource has the right number of workers with the right skills, at the
manager. He had been working for Techno, Inc. for three right time in the future.
years, and when the company grew, James moved from a
management position into a human resource management 2.1 Strategic Planning
position. Techno, Inc. is a technology and software LEARNING OBJECTIVES
consulting company for the music industry.
1. Explain the differences been HRM and personnel
management.
James didn’t have a good handle on how to effectively run a
2. Be able to define the steps in HRM strategic planning.
human resources (HR) department, so for much of the time
he tried to figure it out as he went. When Techno started
In the past, human resource management (HRM) was called
seeing rapid growth, he hired thirty people within a one-
the personnel department. In the past, the personnel
month period to meet the demand. Proud of his ability to
department hired people and dealt with the hiring paperwork
accomplish his task of meeting the business’s current needs,
and processes. It is believed the first human resource
James was rather pleased with himself. He had spent
department was created in 1901 by the National Cash
numerous hours mulling over recruitment strategies, putting
Register Company (NCR). The company faced a major strike
together excellent compensation plans, and then eventually
but eventually defeated the union after a lockout. After this
sifting through résumés as a small part of the hiring process.
difficult battle, the company president decided to improve
Now the organization had the right number of people needed
worker relations by organizing a personnel department to
to carry out its projects.
handle grievances, discharges, safety concerns, and other
employee issues. The department also kept track of new
Fast forward five months, however, and it turned out the
legislation surrounding laws impacting the organization.
rapid growth was only temporary. James met with the
Many other companies were coming to the same realization
executives of the business who told him the contracts they
that a department was necessary to create employee
had acquired were finished, and there wasn’t enough new
satisfaction, which resulted in more productivity. In 1913,
work coming in to make payroll next month if they didn’t let
Henry Ford saw employee turnover at 380 percent and tried
some people go. James felt frustrated because he had gone
to ease the turnover by increasing wages from $2.50 to $5.00,
through so much effort to hire people, and now they would
even though $2.50 was fair during this time period. [1] Of
be laid off. Never mind the costs of hiring and training his
course, this approach didn’t work for long, and these large
department had taken on to make this happen. As James sat
companies began to understand they had to do more than
with the executives to determine who should be laid off, he
hire and fire if they were going to meet customer demand.
felt sad for the people who had given up other jobs just five
months before, only to be laid off.
More recently, however, the personnel department has
divided into human resource management and human
After the meeting, James reflected on this situation and
resource development, as these functions have evolved over
realized that if he had spoken with the executives of the
the century. HRM is not only crucial to an organization’s
company sooner, they would have shared information on the
success, but it should be part of the overall company’s
duration of the contracts, and he likely would have hired
strategic plan, because so many businesses today depend on
people differently, perhaps on a contract basis rather than on
people to earn profits. Strategic planning plays an important
a full-time basis. He also considered the fact that the
role in how productive the organization is.
organization could have hired an outsourcing company to
recruit workers for him. As Jason mulled this over, he realized
Most people agree that the following duties normally fall
that he needed a strategic plan to make sure his department
under HRM. Each of these aspects has its own part within
was meeting the needs of the organization. He vowed to work
the overall strategic plan of the organization:
with the company executives to find out more about the
company’s strategic plan and then develop a human resource

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Table 2.1 Examples of Differences between Personnel Management other issues is generally a responsibility that falls on the
and HRM HRM department.
Personnel Management
Focus HRM Focus In smaller organizations, the manager or owner is likely
performing the HRM functions. [2] They hire people, train
Helping to achieve strategic goals
them, and determine how much they should be paid. Larger
Administering of policies through people
companies ultimately perform the same tasks, but because
HRM training programs that are they have more employees, they can afford to employ
Stand-alone programs, integrated with company’s mission specialists, or human resource managers, to handle these
such as training and values areas of the business. As a result, it is highly likely that you,
as a manager or entrepreneur, will be performing HRM tasks,
Personnel department Line managers share joint
responsible for managing responsibility in all areas of people hence the value in understanding the strategic components of
people hiring and management HRM.

Creates a cost within an Contributes to the profit objectives HRM vs. Personnel Management
organization of the organization
Human resource strategy is an elaborate and systematic plan
of action developed by a human resource department. This
1. Staffing. Staffing includes the development of a strategic definition tells us that an HR strategy includes detailed
plan to determine how many people you might need to pathways to implement HRM strategic plans and HR plans.
hire. Based on the strategic plan, HRM then performs Think of the HRM strategic plan as the major objectives the
the hiring process to recruit and select the right people organization wants to achieve, and the HR plan as the
for the right jobs. specific activities carried out to achieve the strategic plan. In
2. Basic workplace policies. Development of policies to help other words, the strategic plan may include long-term goals,
reach the strategic plan’s goals is the job of HRM. After while the HR plan may include short-term objectives that are
the policies have been developed, communication of tied to the overall strategic plan. As mentioned at the
these policies on safety, security, scheduling, vacation beginning of this chapter, human resource departments in the
times, and flextime schedules should be developed by past were called personnel departments. This term implies
the HR department. Of course, the HR managers work that the department provided “support” for the rest of the
closely with supervisors in organizations to develop organization. Companies now understand that the human
these policies. Workplace policies will be addressed side of the business is the most important asset in any
throughout the book. business (especially in this global economy), and therefore
3. Compensation and benefits. In addition to paychecks, 401(k) HR has much more importance than it did twenty years ago.
plans, health benefits, and other perks are usually the While personnel management mostly involved activities
responsibility of an HR manager. surrounding the hiring process and legal compliance, human
4. Retention. Assessment of employees and strategizing on resources involves much more, including strategic planning,
how to retain the best employees is a task that HR which is the focus of this chapter. The Ulrich HR model, a
managers oversee, but other managers in the common way to look at HRM strategic planning, provides an
organization will also provide input. overall view of the role of HRM in the organization. His
5. Training and development. Helping new employees develop model is said to have started the movement that changed the
skills needed for their jobs and helping current view of HR; no longer merely a functional area, HR became
employees grow their skills are also tasks for which the more of a partnership within the organization. While his
HRM department is responsible. Determination of model has changed over the years, the current model looks at
training needs and development and implementation of alignment of HR activities with the overall global business
training programs are important tasks in any strategy to form a strategic partnership. [3] His newly revised
organization. Succession planning includes handling the model looks at five main areas of HR:
departure of managers and making current employees 1. Strategic partner. Partnership with the entire organization
ready to take on managerial roles when a manager does to ensure alignment of the HR function with the needs
leave. of the organization.
6. Regulatory issues and worker safety. Keeping up to date on
new regulations relating to employment, health care, and

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2. Change agent. The skill to anticipate and respond to recruited and interviewed have similar qualities as the
change within the HR function, but as a company as a best people already doing the job. In addition, the HR
whole. manager will likely want to meet with the financial
3. Administrative expert and functional expert. The ability to department and executives who do the budgeting, so
understand and implement policies, procedures, and they can determine human resource needs and recruit
processes that relate to the HR strategic plan. the right number of people at the right times. In addition,
4. Human capital developer. Means to develop talent that is once the HR department determines what is needed,
projected to be needed in the future. communicating a plan can gain positive feedback that
5. Employee advocate. Works for employees currently within ensures the plan is aligned with the business objectives.
the organization. 4. Understand how technology can be used. Organizations
oftentimes do not have the money or the inclination to
According to Ulrich, [4] implementation of this model must research software and find budget-friendly options for
happen with an understanding of the overall company implementation. People are sometimes nervous about
objectives, problems, challenges, and opportunities. For new technology. However, the best organizations are
example, the HR professional must understand the dynamic those that embrace technology and find the right
nature of the HRM environment, such as changes in labor technology uses for their businesses. There are
markets, company culture and values, customers, thousands of HRM software options that can make the
shareholders, and the economy. Once this occurs, HR can HRM processes faster, easier, and more effective. Good
determine how best to meet the needs of the organization strategic plans address this aspect.
within these five main areas.
HR managers know the business and therefore know the
HRM AS A STRATEGIC COMPONENT OF THE needs of the business and can develop a plan to meet those
BUSINESS needs. They also stay on top of current events, so they know
what is happening globally that could affect their strategic
Keeping the Ulrich model in mind, consider these four
plan. If they find out, for example, that an economic
aspects when creating a good HRM strategic plan:
downturn is looming, they will adjust their strategic plan. In
1. Make it applicable. Often people spend an inordinate
other words, the strategic plan needs to be a living document,
amount of time developing plans, but the plans sit in a
one that changes as the business and the world changes.
file somewhere and are never actually used. A good
strategic plan should be the guiding principles for the
HUMAN RESOURCE RECALL
HRM function. It should be reviewed and changed as
aspects of the business change. Involvement of all Have you ever looked at your organization’s strategic plan?
members in the HR department (if it’s a larger What areas does the plan address?
department) and communication among everyone
within the department will make the plan better. The Steps to Strategic Plan Creation
2. Be a strategic partner. Alignment of corporate values in HRM strategic plans must have several elements to be
the HRM strategic plan should be a major objective of successful. There should be a distinction made here: the
the plan. In addition, the HRM strategic plan should be HRM strategic plan is different from the HR plan. Think of
aligned with the mission and objectives of the the HRM strategic plan as the major objectives the
organization as a whole. For example, if the mission of organization wants to achieve, while the HR plan consists of
the organization is to promote social responsibility, then the detailed plans to ensure the strategic plan is achieved.
the HRM strategic plan should address this in the hiring Oftentimes the strategic plan is viewed as just another report
criteria. that must be written. Rather than jumping in and writing it
3. Involve people. An HRM strategic plan cannot be without much thought, it is best to give the plan careful
written alone. The plan should involve everyone in the consideration.
organization. For example, as the plan develops, the HR
manager should meet with various people in
departments and find out what skills the best employees
have. Then the HR manager can make sure the people

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Table 2.2 Lifecycle Stages and HRM Strategy

Life Cycle Training and Labor / Employee
Stage Staffing Compensation Development Relations

Meet or exceed labor market Define future skill

Attract best technical and rates to attract needed requirements and begin Set basic employee-relations
Introduction professional talent. talent. establishing career ladders. philosophy of organization.

Recruit adequate numbers and Mold effective management

mix of qualifying workers. Plan Meet external market but team through management
management succession. Manage consider internal equity development and Maintain labor peace,
rapid internal labor market effects. Establish formal organizational employee motivation, and
Growth movements. compensation structures. development. morale.

Encourage sufficient turnover to

minimize layoffs and provide
new openings. Encourage Control labor costs and
mobility as reorganizations shift Maintain flexibility and maintain labor peace.
Maturity jobs around. Control compensation costs. skills of an aging workforce. Improve productivity.

Improve productivity and

Plan and implement workforce achieve flexibility in work
reductions and reallocations; rules. Negotiate job security
downsizing and outplacement Implement tighter cost Implement retraining and and employment-adjustment
Decline may occur during this stage. control. career consulting services. policies.

Conduct a Strategic Analysis again put the organization in the growth phase. Table 2.2
A strategic analysis looks at three aspects of the individual "Lifecycle Stages and HRM Strategy" explains some of
HRM department: the strategies that may be different depending on the
1. Understanding of the company mission and values. It is organizational life cycle.
impossible to plan for HRM if one does not know the 3. Understanding of the HRM department mission and
values and missions of the organization. As we have values. HRM departments must develop their own
already addressed in this chapter, it is imperative for the departmental mission and values. These guiding
HR manager to align department objectives with principles for the department will change as the
organizational objectives. It is worthwhile to sit down company’s overall mission and values change. Often the
with company executives, management, and supervisors mission statement is a list of what the department does,
to make sure you have a good understanding of the which is less of a strategic approach. Brainstorming
company mission and values. about HR goals, values, and priorities is a good way to
2. Another important aspect is the understanding of the start. The mission statement should express how an
organizational life cycle. You may have learned about the organization’s human resources help that organization
life cycle in marketing or other business classes, and this meet the business goals. A poor mission statement might
applies to HRM, too. An organizational life cycle refers read as follows: “The human resource department at
to the introduction, growth, maturity, and decline of the Techno, Inc. provides resources to hiring managers and
organization, which can vary over time. For example, develops compensation plans and other services to assist
the employees of our company.”
When the organization first begins, it is in the 4. A strategic statement that expresses how human
introduction phase, and a different staffing, resources help the organization might read as follows:
compensation, training, and labor/employee relations “HR’s responsibility is to ensure that our human
strategy may be necessary to align HRM with the resources are more talented and motivated than our
organization’s goals. This might be opposed to an competitors’, giving us a competitive advantage. This
organization that is struggling to stay in business and is will be achieved by monitoring our turnover rates,
in the decline phase. That same organization, however, compensation, and company sales data and comparing
can create a new product, for example, which might that data to our competitors.” [5] When the mission

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statement is written in this way, it is easier to take a Many organizations and departments will use a strategic
strategic approach with the HR planning process. planning tool that identifies strengths, weaknesses,
5. Understanding of the challenges facing the opportunities, and threats (SWOT analysis) to determine
department. HRM managers cannot deal with change some of the issues they are facing. Once this analysis is
quickly if they are not able to predict changes. As a result, performed for the business, HR can align itself with the needs
the HRM manager should know what upcoming of the business by understanding the business strategy. See
challenges may be faced to make plans to deal with those Table 2.3 "Sample HR Department SWOT Analysis for
challenges better when they come along. This makes the Techno, Inc." for an example of how a company’s SWOT
strategic plan and HRM plan much more usable. analysis can be used to develop a SWOT analysis for the HR
department.
Identify Strategic HR Issues
In this step, the HRM professionals will analyze the Once the alignment of the company SWOT is completed,
challenges addressed in the first step. For example, the HR can develop its own SWOT analysis to determine the
department may see that it is not strategically aligned with the gaps between HR’s strategic plan and the company’s strategic
company’s mission and values and opt to make changes to its plan. For example, if the HR manager finds that a
departmental mission and values as a result of this department’s strength is its numerous training programs, this
information. is something the organization should continue doing. If a
weakness is the organization’s lack of consistent
Table 2.3 Sample HR Department SWOT Analysis for Techno, Inc. compensation throughout all job titles, then the opportunity
Hiring talented people to review and revise the compensation policies presents itself.
In other words, the company’s SWOT analysis provides a
Company growth basis to address some of the issues in the organization, but it
Technology implementation for business
can be whittled down to also address issues within the
processes department.

Excellent relationship between HRM and Prioritize Issues and Actions

Strengths management/executives Based on the data gathered in the last step, the HRM manager
No strategic plan for HRM should prioritize the goals and then put action plans together
to deal with these challenges. For example, if an organization
No planning for up/down cycles identifies that they lack a comprehensive training program,
No formal training processes plans should be developed that address this need. An
important aspect of this step is the involvement of the
Lacking of software needed to manage business management and executives in the organization. Once you
processes, including go-to-market staffing have a list of issues you will address, discuss them with the
Weaknesses strategies management and executives, as they may see other issues or
Development of HRM staffing plan to meet other priorities differently than you. Remember, to be
industry growth effective, HRM must work with the organization and assist
the organization in meeting goals. This should be considered
HRM software purchase to manage training,
in every aspect of HRM planning.
staffing, assessment needs for an unpredictable
business cycle
Draw Up an HRM Plan
Continue development of HRM and executive Once the HRM manager has met with executives and
relationship by attendance and participation in management, and priorities have been agreed upon, the plans
key meetings and decision-making processes are ready to be developed. Sometimes companies have great
Develop training programs and outside strategic plans, but when the development of the details
development opportunities to continue occurs, it can be difficult to align the strategic plan with the
Opportunities development of in-house marketing expertise more detailed plans. An HRM manager should always refer
to the overall strategic plan before developing the HRM
Economy
strategic plan and HR plans.
Threats Changing technology

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Even if a company does not have an HR department, HRM 2.2 Writing the HRM Plan
strategic plans and HR plans should still be developed by LEARNING OBJECTIVE
management. By developing and monitoring these plans, the
1. Describe the steps in the development of an HRM plan.
organization can ensure the right processes are implemented
to meet the ever-changing needs of the organization. The
The writing of an HRM strategic plan should be based on the
strategic plan looks at the organization as a whole, the HRM
strategic plans of the organization and of the department.
strategic plan looks at the department as a whole, and the HR
Once the strategic plan is written, the HR professional can
plan addresses specific issues in the human resource
begin work on the HR plan. This is different from the
department.
strategic plan in that it is more detailed and more focused on
the short term.
KEY TAKEAWAYS

 Personnel management and HRM are different ways of HOW WOULD YOU HANDLE THIS?
looking at the job duties of human resources. Twenty
Compensation Is a Touchy Subject
years ago, personnel management focused on
administrative aspects. HRM today involves a strategic
As the HR manager, you have access to sensitive data, such as pay
process, which requires working with other departments,
information. As you are looking at pay for each employee in the
managers, and executives to be effective and meet the
marketing department, you notice that two employees with the same job
needs of the organization.
title and performing the same job are earning different amounts of money.
 In general, HRM focuses on several main areas, which As you dig deeper, you notice the employee who has been with the
include staffing, policy development, compensation and company for the least amount of time is actually getting paid more than
benefits, retention issues, training and development, and the person with longer tenure. A brief look at the performance
regulatory issues and worker protection. evaluations shows they are both star performers. You determine that two
 To be effective, the HR manager needs to utilize different managers hired the employees, and one manager is no longer
technology and involve others. with the organization. How would you handle this?
 As part of strategic planning, HRM should conduct a
strategic analysis, identify HR issues, determine and The six parts of the HRM plan include the following:
prioritize actions, and then draw up the HRM plan. 1. Determine human resource needs. This part is heavily involved
EXERCISES with the strategic plan. What growth or decline is
expected in the organization? How will this impact your
1. What is the difference between HR plans and HRM
workforce? What is the economic situation? What are
strategic plans? How are they the same? How are they
your forecasted sales for next year?
different?
2. Determine recruiting strategy. Once you have a plan in place,
2. Of the areas of focus in HRM, which one do you think is
it’s necessary to write down a strategy addressing how
the most important? Rank them and discuss the reasons
you will recruit the right people at the right time.
for your rankings.
3. Select employees. The selection process consists of the
interviewing and hiring process.
[1] Michael Losey, “HR Comes of Age,” HR Magazine, March 15, 1998, 4. Develop training. Based on the strategic plan, what training
accessed July 11, 2011, needs are arising? Is there new software that everyone
[Link]
must learn? Are there problems in handling conflict?
[2] Jan de Kok and Lorraine M. Uhlaner, “Organization Context and
Human Resource Management in the Small Firm” (Tinbergen Institute Whatever the training topics are, the HR manager should
Discussion Papers 01-038/3, Tinbergen Institute, 2001), accessed August address plans to offer training in the HRM plan.
13, 2011, [Link] 5. Determine compensation. In this aspect of the HRM plan,
[3] David Ulrich and Wayne Brockbank, The HR Value
the manager must determine pay scales and other
Proposition (Boston: Harvard Business Press, 2005), 9–14.
[4] David Ulrich, “Evaluating the Ulrich Model,” Acerta, 2011, accessed compensation such as health care, bonuses, and other
July 11, 2011, [Link] perks.
according-to-dave-ulrich#ppt_2135261. 6. Appraise performance. Sets of standards need to be
[5] Gary Kaufman, “How to Fix HR,” Harvard Business Review,
developed so you know how to rate the performance of
September 2006, accessed July 11, 2011, [Link]
fix-hr/ar/1. your employees and continue with their development.

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Figure 2.3

Determine Human Resource Needs 4. What skills do your employees need to gain to keep up
The first part of an HR plan will consist of determining how with technology?
many people are needed. This step involves looking at 5. Who is retiring soon? Do you have someone to replace
company operations over the last year and asking a lot of them?
questions: 6. What are the sales forecasts? How might this affect your
1. Were enough people hired? hiring?
2. Did you have to scramble to hire people at the last
minute? These are the questions to answer in this first step of the HR
3. What are the skills your current employees possess? plan process. As you can imagine, this cannot be done alone.

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Involvement of other departments, managers, and executives and it can be less expensive to hire someone for only a
should take place to obtain an accurate estimate of staffing specified period of time.
needs for now and in the future.
No matter how it is done, recruitment is the process of
Many HR managers will prepare an inventory of all current obtaining résumés of people interested in the job. In our next
employees, which includes their educational level and step, we review those résumés, interview, and select the best
abilities. This gives the HR manager the big picture on what person for the job.
current employees can do. It can serve as a tool to develop
employees’ skills and abilities, if you know where they are Select
currently in their development. For example, by taking an After you have reviewed résumés for a position, now is the
inventory, you may find out that Richard is going to retire time to work toward selecting the right person for the job.
next year, but no one in his department has been identified Numerous studies have been done, and while they have
or trained to take over his role. Keeping the inventory helps various results, the majority of studies say it costs an average
you know where gaps might exist and allows you to plan for of $45,000 to hire a new manager. [1] While this may seem
these gaps. exaggerated, consider the following items that contribute to
the cost:
HR managers will also look closely at all job components and 1. Time to review résumés
will analyze each job. By doing this analysis, they can get a 2. Time to interview candidates
better picture of what kinds of skills are needed to perform a 3. Interview expenses for candidates
job successfully. Once the HR manager has performed the 4. Possible travel expenses for new hire or recruiter
needs assessment and knows exactly how many people, and 5. Possible relocation expenses for new hire
in what positions and time frame they need to be hired, he or 6. Additional bookkeeping, payroll, 401(k), and so forth
she can get to work on recruiting, which is also called a 7. Additional record keeping for government agencies
staffing plan. 8. Increased unemployment insurance costs
9. Costs related to lack of productivity while new employee
Recruit gets up to speed
Recruitment is an important job of the HR manager.
Knowing how many people to hire, what skills they should Because it is so expensive to hire, it is important to do it right.
possess, and hiring them when the time is right are major First, résumés are reviewed and people who closely match the
challenges in the area of recruiting. Hiring individuals who right skills are selected for interviews. Many organizations
have not only the skills to do the job but also the attitude, perform phone interviews first so they can further narrow the
personality, and fit can be the biggest challenge in recruiting. field. The HR manager is generally responsible for setting up
Depending on the type of job you are hiring for, you might the interviews and determining the interview schedule for a
place traditional advertisements on the web or use social particular candidate. Usually, the more senior the position is,
networking sites as an avenue. Some companies offer the longer the interview process takes, even up to eight
bonuses to employees who refer friends. No matter where weeks. [2] After the interviews are conducted, there may be
you decide to recruit, it is important to keep in mind that the reference checks, background checks, or testing that will need
recruiting process should be fair and equitable and diversity to be performed before an offer is made to the new
should be considered. employee. HR managers are generally responsible for this
aspect. Once the applicant has met all criteria, the HR
Depending on availability and time, some companies may manager will offer the selected person the position. At this
choose to outsource their recruiting processes. For some point, salary, benefits, and vacation time may be negotiated.
types of high-level positions, a head hunter will be used to Compensation is the next step in HR management.
recruit people nationally and internationally. A head hunter is
a person who specializes in matching jobs with people, and Determine Compensation
they usually work only with high-level positions. Another What you decide to pay people is much more difficult than it
option is to use an agency that specializes in hiring people for seems. Pay systems must be developed that motivate
a variety of positions, including temporary and permanent employees and embody fairness to everyone working at the
positions. Some companies decide to hire temporary organization. However, organizations cannot offer every
employees because they anticipate only a short-term need, benefit and perk because budgets always have constraints.

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Even governmental agencies need to be concerned with Perform a Performance Appraisal

compensation as part of their HR plan. For example, in 2011, The last thing an HR manager should plan is the performance
Illinois State University gave salary increases of 3 percent to appraisal. A performance appraisal is a method by which job
all faculty, despite state budget cuts in other areas. They performance is measured. The performance appraisal can be
reasoned that the pay increase was needed because of the called many different things, such as the following:
competitive nature of hiring and retaining faculty and staff. 1. Employee appraisal
The university president said, “Our employees have had a 2. Performance review
very good year and hopefully this is a good shot in the arm 3. 360 review
that will keep our morale high.” [3] 4. Career development review

The process in determining the right pay for the right job can No matter what the name, these appraisals can be very
have many variables, in addition to keeping morale high. beneficial in motivating and rewarding employees. The
First, as we have already discussed, the organization life cycle performance evaluation includes metrics on which the
can determine the pay strategy for the organization. The employee is measured. These metrics should be based on the
supply and demand of those skills in the market, economy, job description, both of which the HR manager develops.
region, or area in which the business is located is a Various types of rating systems can be used, and it’s usually
determining factor in compensation strategy. For example, a up to the HR manager to develop these as well as employee
company operating in Seattle may pay higher for the same job evaluation forms. The HR manager also usually ensures that
than their division in Missoula, Montana, because the cost of every manager in the organization is trained on how to fill out
living is higher in Seattle. The HR manager is always the evaluation forms, but more importantly, how to discuss
researching to ensure the pay is fair and at market value. job performance with the employee. Then the HR manager
Employees can develop their skills while getting paid for it. tracks the due dates of performance appraisals and sends out
Training is the next step in the HR planning process. e-mails to those managers letting them know it is almost time
to write an evaluation.
Develop Training
Once we have planned our staffing, recruited people, selected HUMAN RESOURCE RECALL
employees, and then compensated them, we want to make
Have you ever been given a performance evaluation? What
sure our new employees are successful. One way we can
was the process and the outcome?
ensure success is by training our employees in three main
KEY TAKEAWAYS
areas:
1. Company culture. A company culture is the organization’s  Human resource planning is a process that is part of the
way of doing things. Every company does things a bit strategic plan. It involves addressing specific needs within
differently, and by understanding the corporate culture, the organization, based on the company’s strategic
the employee will be set up for success. Usually this type direction.
of training is performed at an orientation, when an  The first step in HR planning is determining current and
employee is first hired. Topics might include how to future human resource needs. In this step, current
request time off, dress codes, and processes. employees, available employees in the market, and future
2. Skills needed for the job. If you work for a retail store, your needs are all analyzed and developed.
employees need to know how to use the register. If you
 In the second step of the process, once we know how
have sales staff, they need to have product knowledge to
many people we will need to hire, we can begin to
do the job. If your company uses particular software,
determine the best methods for recruiting the people we
training is needed in this area.
need. Sometimes an organization will use head hunters to
3. Human relations skills. These are non-job-specific skills
find the best person for the job.
your employees need not only to do their jobs but also
 After the recruiting process is finished, the HR manager
to make them all-around successful employees. Skills
will begin the selection process. This involves setting up
needed include communication skills and interviewing
interviews and selecting the right person for the job. This
potential employees.
can be an expensive process, so we always want to hire
the right person from the beginning.
 HR managers also need to work through compensation
plans, including salary, bonus, and other benefits, such as

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health care. This aspect is important, since most unique, as most résumé-scanning software programs can only
organizations want to use compensation to attract and search for specific keywords and are not able to assess the job
retain the best employees. fit or tie the criteria directly to the overall strategic plan. The
 The HR manager also develops training programs to project uses IBM India’s spoken web technology, in which
ensure the people hired have the tools to be able to do the prospective employee answers a few questions, creating
their jobs successfully. the equivalent of voice résumé. Then using these voice
EXERCISES résumés, the hiring manager can easily search for those
prospects who meet the needs of the organization and the
1. Of the parts of HR planning, which do you think is most objectives of the strategic plan.
difficult, and why? Which would you enjoy the most, and
why? Some of the challenges noted with this software include the
2. Why is it important to plan your staffing before you start recognition of language and dialect issues. However, the IBM
to hire people? human resources solution is still one of the most
3. What is the significance of training? Why do we need it sophisticated of such tools to be developed. “Services is very
in organizations? people-intensive. Today, there is talk of a war for talent, but
attracting the right kind of people is a challenge, yet
[1] Susan Herman, Hiring Right: A Practical Guide (Thousand Oaks, CA:
unemployment is very high. Our solution applies
Sage, 1993), xv. sophisticated analytics to workforce management,” says
[2] John Crant, “How Long Does an Interview Process Take?” Manish Gupta, director at IBM Research-India. [2]
[Link], December 2, 2009, accessed October 28, 2010,
[Link]
Interview-Process-Take/3500/422.
It is likely that this is only the beginning of the types of
[3] Stephanie Pawlowski, “Illinois State University to Get Salary Bump,” technology that allow HR professionals to tie their HR plans
WJBC Radio, July 11, 2011, accessed July 11, directly to a strategic plan with the touch of a few buttons.
2011, [Link]

Link HRM Strategic Plan to Company Plan

2.3 Tips in HRM Planning Understanding the nature of the business is key to being
LEARNING OBJECTIVE successful in creating a strategic plan for HRM. Because every
1. Explain the aspects needed to create a usable and business is different, the needs of the business may change,
successful HRM plan. depending on the economy, the season, and societal changes
in our country. HR managers need to understand all these
As you have learned from this chapter, human resource aspects of the business to better predict how many people are
strategic planning involves understanding your company’s needed, what types of training are needed, and how to
strategic plan and HR’s role in the organization. The planning compensate people, for example. The strategic plan that the
aspect meets the needs of the strategic plan by knowing how HR manager writes should address these issues. To address
many people should be hired, how many people are needed, these issues, the HR manager should develop the
and what kind of training they need to meet the goals of the departmental goals and HR plans based on the overall goals
organization. This section gives some tips on successful HR of the organization. In other words, HR should not operate
strategic planning. alone but in tandem with the other parts of the organization.
The HRM plan should reflect this.
FORTUNE 500 FOCUS
Monitor the Plan Constantly
Like many Fortune 500 companies throughout the world, Oftentimes a great strategic plan is written, taking lots of
IBM in India finds that picking the best prospects for job time, but isn’t actually put into practice for a variety of
postings isn’t always easy. By using advanced analytics, reasons, such as the following:
however, it aims to connect the strategic plan, staffing needs, 1. The plan wasn’t developed so that it could be useful.
and the hiring process using a simple tool. The project was 2. The plan wasn’t communicated with management and
originally developed to assign people to projects internally at others in the HRM department.
IBM, but IBM found this tool able to not only extract 3. The plan did not meet the budget guidelines of the
essential details like the number of years of experience but organization.
also make qualitative judgments, such as how good the
person actually is for the job. [1] This makes the software

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4. The plan did not match the strategic outcomes of the Be Aware of Legislative Changes
organization. One of the major challenges in HRM is having an awareness
5. There was lack of knowledge on how to actually of what is happening from a legal perspective. Because most
implement it. budgets are based on certain current laws, knowing when the
law changes and how it will affect department budgets and
There is no point in developing a plan that isn’t going to be planning (such as compensation planning) will create a more
used. Developing the plan and then making changes as solid strategic plan. For example, if the minimum wage goes
necessary are important to making it a valuable asset for the up in your state and you have minimum wage workers,
organization. A strategic plan should be a living document, in reworking the budget and communicating this change to your
that it changes as organizational or external factors change. accounting team is imperative in providing value to the
People can get too attached to a specific plan or way of doing organization. We will discuss various legislation throughout
things and then find it hard to change. The plan needs to this book.
change constantly or it won’t be of value.
KEY TAKEAWAYS
Measure It
A good strategic plan and HR plan should discuss the way As has been the theme throughout this chapter, any
“success” will be measured. For example, rather than writing, HRM plan should be directly linked to the strategic plan
“Meet the hiring needs of the organization,” be more specific: of the organization.
“Based on sales forecasts from our sales department, hire ten  A plan should be constantly updated and revised as things
people this quarter with the skills to meet our ten job in the organization change.
openings.” This is a goal that is specific enough to be  A good strategic plan provides tools to determine
measured. These types of quantitative data also make it easier whether you met the goal. Any plan should have
to show the relationship between HR and the organization, measureable goals so the connection to success is
and better yet, to show how HR adds value to the bottom obvious.
line. Likewise, if a company has a strategic objective to be a  Changes in a strategic plan and in goal setting are
safe workplace, you might include a goal to “develop training necessary as the internal and external environments
to meet the needs of the organization.” While this is a great change. An HR manager should always be aware of
goal, how will this be measured? How will you know if you changes in forecasts, for example, so the plan can change,
did what you were supposed to do? It might be difficult to too.
measure this with such a general statement. On the other  Legislative changes may impact strategic plans and
hand, a goal to “develop a safety training workshop and have budgets as well. It’s important to make sure HR managers
all employees complete it by the end of the year” is specific are keeping up on these changes and communicating
and can be measured at the end to determine success. them.
EXERCISES
HUMAN RESOURCE RECALL
1. What are some ways an HR manager can keep up on
What are some of your personal goals? Are these goals legislative changes? Do a web search and list specific
measureable? publications that may help keep the HR manager aware
of changes.
Sometimes Change Is Necessary 2. Why is it important to be able to measure strategic plans?
It can be difficult to base an entire plan on forecasted What might happen if you don’t?
numbers. As a result, an HRM department that is willing to
change quickly to meet the needs of the organization proves
its worthiness. Consider a sales forecast that called for fifteen [1] Sridhar Chari, “IBM Automates Parsing of Resumes,” iStock Analyst,
July 11, 2011, accessed July 11,
new hires, but you find out months later the organization is 2011, [Link]
having a hard time making payroll. Upon digging deeper, you automates-parsing-of-resumes.
find the sales forecasts were over exaggerated, and now you [2] Sridhar Chari, “IBM Automates Parsing of Resumes,” iStock Analyst,
have fifteen people you don’t really need. By monitoring the July 11, 2011, accessed July 11,
2011, [Link]
changes constantly (usually done by asking lots of questions automates-parsing-of-resumes.
to other departments), you can be sure you are able to change
your strategic plan as they come.

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2.4 Cases and Problems 

To make the most from a strategic plan, it’s important
CHAPTER SUMMARY to write the goals in a way that makes them measurable.
CHAPTER CASE
 Human resource management was once called the
personnel department. In the past, hiring people and We Merged…Now What?
working with hiring paperwork was this department’s Earlier this month, your company, a running equipment
job. Today, the HRM department has a much broader designer and manufacturer called Runners Paradise, merged
role, and as a result, HR managers must align their with a smaller clothing design company called ActiveLeak.
strategies with the company’s strategies. Your company initiated the buyout because of the excellent
 Functions that fall under HRM today include staffing, design team at ActiveLeak and their brand recognition,
creation of workplace policies, compensation and specifically for their MP3-integrated running shorts. Runners
benefits, retention, training and development, and Paradise has thirty-five employees and ActiveLeak has ten
working with regulatory issues and worker protection. employees. At ActiveLeak, the owner, who often was too
 Human resource strategy is a set of elaborate and busy doing other tasks, handled the HRM roles. As a result,
systematic plans of action. The company objectives and ActiveLeak has no strategic plan, and you are wondering if
goals should be aligned with the objectives and goals of you should develop a strategic plan, given this change. Here
the individual departments. are the things you have accomplished so far:
 The steps to creating an HRM strategic plan include  Reviewed compensation and adjusted salaries for the
conducting a strategic analysis. This entails having an sake of fairness. Communicated this to all affected
understanding of the values and mission of the employees.
organization, so you can align your departmental strategy  Developed job requirements for current and new jobs.
in the same way.  Had each old and new employee fill out a skills inventory
 The second step is to identify any HR issues that might Excel document, which has been merged into a database.
impact the business.  From this point, you are not sure what to do to fully
 The third step, based on the information from the first integrate the new organization.
and second steps, is to prioritize issues and take action. 1. Why should you develop an HRM strategic plan?
Finally, the HRM professional will draw up the HRM 2. Which components of your HR plan will you have to
plan. change?
 The HRM plan consists of six steps. The first is to 3. What additional information would you need to create
determine the needs of the organization based on sales an action plan for these changes?
forecasts, for example. Then the HR professional will TEAM ACTIVITIES
recruit and select the right person for the job. HRM 1. Work in a group of three to five people. Choose a company
develops training and development to help better the and perform a SWOT analysis on that organization and be
skills of existing employees and new employees, too. The prepared to present it to the class.
HR manager will then determine compensation and 2. Based on the SWOT analysis you performed in the first
appraise performance of employees. Each of these parts question, develop new objectives for the organization.
of the HRM plan is discussed in its own separate chapter
in greater detail. NOTES:
 As things in the organization change, the strategic plan
should also change.

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