Human Resource
Management:
Gaining a
Competitive
Advantage
CBM 0005 – HUMAN RESOURCE
MANAGEMENT
Introduction
Human Resource Management (HRM):
• Plays a role in company’s effectiveness, and competitiveness.
• Effectiveness depends on the satisfaction of stakeholder’s needs.
• Refers to the policies, practices, and systems that influence employees’ behavior,
attitudes, and performance.
• Designing management systems to ensure that human talent is used effectively and
efficiently to accomplish organizational goals.
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Introduction
Human Capital
•The collective value of the capabilities, knowledge, skills, life experiences, and
motivation of an organizational workforce.
•Hiring the right people, supporting their creative thinking and productivity, and levering
it all with the right technology seems to build superior business performance and
shareholder value.
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Organizational Culture
Shared values and beliefs that give members of an organization meaning and provide
them with rules for behaviour
Is constant and enduring
Comprises the organizational social environment within a firm
Affects service and quality, organizational productivity, and financial results
H R Management as a Career Field
H R generalist: A person who has responsibility for performing a variety of H R activities
H R specialist: A person who has in-depth knowledge and expertise in a specific area of
HR
Human Resource Management Practices
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What Responsibilities and Roles Do HR Departments Perform?
High-Impact HR Functions:
• More integrated with the business.
• Skilled at attracting and retaining employees.
• Can adapt quickly.
• Identify and promote talent from within.
• Identify what motivates employees.
• Continuously building talent and skills.
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What Responsibilities and Roles Do HR Departments Perform?
HR Department Responsibilities:
• Outplacement.
• Labor law compliance.
• Recordkeeping.
• Testing.
• Unemployment compensation.
• Some aspects of benefits administration.
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Responsibilities of HR Departments
FUNCTION RESPONSIBILITIES
Analysis and design Job analysis, work analysis, job descriptions.
of work
Recruitment and selection Recruiting, posting job descriptions, interviewing, testing, coordinating use
of temporary employees.
Training and development Orientation, skills training, development programs, career development.
Performance management Performance measures, preparation and administration of performance
appraisals, feedback and coaching, discipline.
Compensation and Wage and salary administration, incentive pay, insurance, vacation,
benefits retirement plans, profit sharing, health and wellness, stock plans.
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Responsibilities of HR Departments 2
FUNCTION RESPONSIBILITIES
Employee relations/labor Attitude surveys, employee handbooks, labor law compliance, relocation
relations and outplacement services.
Personnel policies Policy creation, policy communications.
Employee data and information Recordkeeping, HR information systems, workforce analytics, social
systems media, intranet and Internet access.
Legal compliance Policies to ensure lawful behavior, safety inspections, accessibility
accommodations, privacy policies, ethics.
Support for business strategy Human resource planning and forecasting, talent management, change
management, organization development.
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HR as a Business with Three Product Lines
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Smaller Organizations and HR
Management
As an organization grows,
In a company with an owner
Not every organization is often a clerical employee is
and three employees, the
able to maintain an HR added to handle payroll,
owner usually takes care of
department. benefits, and required HR
HR issues.
recordkeeping.
Other HR jobs are added as
At 80 to 100 employees, an
the company gets larger and
organization typically needs
as HR technology
to designate a person to
increasingly becomes
specialize in HR
available for small- and
management.
medium-sized organizations.
Operational and Employee
Advocate Role for HR
HR has often been viewed as the “employee advocate” in organizations.
Employee advocacy helps ensure fair and equitable treatment for
employees regardless of personal background or circumstances.
The operational role requires HR professionals to cooperate with
operating managers and to identify and implement needed programs
and policies in the organization.
Strategic Role of the HRM Function
HRM role:
• Time spent on administrative tasks is decreasing.
• Roles as a strategic business partner, change agent, and employee advocate are
increasing.
• Shared service model:
◦ Central place for administrative and transactional tasks.
◦ Includes centers of expertise or excellence, service centers, and business partners.
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Strategic Role of the HRM Function
Role of technology:
• Reducing HRM role in administrative tasks, maintaining records, and providing self-
service to employees.
◦ Shift to self-service gives employees access to many HR functions.
◦ HR managers have more time to work with managers on employee issues.
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Strategic Role of the HRM Function
Outsourcing:
◦ Most commonly outsourced activities:
◦ Benefits administration.
◦ Relocation.
◦ Payroll.
◦ Most common reasons for outsourcing:
◦ Cost savings.
◦ Increased ability to recruit and manage talent.
◦ Improved HR service quality.
◦ Protection of the company from potential lawsuits by standardizing processes such as selection and
recruitment.
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Strategic Role of the HRM Function
Strategic role:
• Lead efforts focused on talent management and performance management.
• Use and analyze data to make a business case for ideas and problem solutions.
• Use people management skills across the business.
• Structure and responsibilities changing to ensure strategic role.
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Questions to Ask: Is HRM Playing a Strategic Role in the Business?
Questions to ask:
• What is HRM doing to provide value-added services to internal clients?
• Do the actions of HRM support and align with business priorities?
• How are you measuring the effectiveness of HRM?
• How can we reinvest in employees?
• What HRM strategy will we use to get business from point A to B?
• From an HRM perspective, what should we be doing to improve our marketplace position?
• What’s the best change we can make to prepare for the future?
• Do we react to business problems or anticipate them in advance?
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Strategic Role of the HRM Function
Demonstrating the strategic value of HRM: HR analytics and evidenced-based HR
• HR can engage in evidence-based HR.
• Requires use of HR or workforce analytics.
• Big data:
◦ Information merged from HR databases, corporate financial statements, employee surveys, and
other data sources.
◦ Results in evidence-based HR decisions.
◦ Shows that HR practices influence the organization’s bottom line, including profits and costs.
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Strategic Role of the HRM Function
The HRM profession: Positions and jobs:
• Primary activities involve performing the HR generalist role.
• Fewer HR professionals involved in HR functions at the executive level, training and
development, HR consulting, and administrative activities.
• Overall employment in HR-related positions expected to grow by 7 percent between
2019 and 2029.
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Strategic Role of the HRM Function
Competencies and behaviors:
• HR professionals need 10 competencies developed by Society for Human Resource
Management (SHRM).
• Four clusters of competencies:
◦ Technical
◦ Interpersonal
◦ Business
◦ Leadership
• SHRM is primary professional and world’s largest organization for HRM with more than
320,000 members.
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Strategic Role of the HRM Function
Ten competencies:
• Human resource expertise.
◦ Apply principles of HRM to contribute to success of the business.
• Business acumen.
◦ Understand business functions and metrics within the organization and industry.
• Analytical aptitude.
◦ Interpret information to determine return on investment and organizational impact in making
recommendations and business decisions.
• Ethical practice.
◦ Integrate core values, integrity, and accountability throughout all organizational and business
practices.
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Strategic
Role for HR
Strategic Role of the HRM Function
Ten competencies:
• Global mindset.
◦ Manage HR both within and across boundaries.
• Communications.
◦ Effectively exchange and create free flow of information with and among various
stakeholders at all levels of the organization to produce meaningful outcomes.
• Diversity, equity, and inclusion.
◦ Create a workplace in which everyone is treated fairly and respectfully, has equal
access to opportunities and resources, feels they belong, and can use their unique
backgrounds and characteristics to contribute to organizational success.
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Strategic Role of the HRM Function
Ten competencies:
• Leadership and navigation.
◦ Direct initiatives and processes within the organization and gain buy-in from
stakeholders.
• Consultation.
• Provide guidance to stakeholders such as employees and leaders seeking expert
advice on a variety of circumstances and situations.
• Relationship Management.
• Manage interactions with and between others with specific goal of providing service
and organizational success.
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Competitive Challenges Influencing Human Resource Management
Competing through environment, social, and governance (ESG) practices:
• Sustainability:
◦ Company’s ability to meet its needs without sacrificing the ability of future generations to meet
their needs.
◦ Company must meet stakeholders’ needs.
◦ ESG practices must be part of company’s business model to achieve sustainability, gain
competitive advantage, and reduce legal risks.
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Competitive Challenges Influencing Human Resource Management
Competing through environment, social, and governance (ESG) practices:
• Deal with the workforce and employment implications of the economy:
• Skill demands for jobs have changed.
• Remaining competitive in global economy requires demanding work hours and changes in
traditional employment patterns.
• Companies give more attention to HR practices that influence their ability to attract and retain
employees.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Employment is projected to grow significantly from 2022 to 2032.
• Key growth sectors like health care, social assistance, technology, and transportation.
• Skills requirements:
◦ STEM skills.
◦ Digital literacy.
◦ Knowledge workers.
◦ Upskilling.
◦ Reskilling.
◦ On-job training.
◦ Training partnerships.
◦ Training hard-to-employ individuals.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Three types of assets:
◦ Financial assets (cash and securities).
◦ Physical assets (property, plant, equipment).
◦ Intangible assets (human capital, customer capital, social capital, intellectual capital).
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Examples of Intangible Assets
Human capital Customer capital
• Tacit knowledge • Customer relationships
• Education • Brands
• Work-related know-how • Customer loyalty
• Work-related competence • Distribution channels
Social capital Intellectual capital
• Corporate culture
• Patents
• Management philosophy
• Copyrights
• Management practices
• Trade secrets
• Informal networking systems.
• Intellectual property. 30
Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Emphasize empowerment and continuous learning:
◦ Give employees responsibility and authority.
◦ Hold them accountable.
◦ Employees share in the rewards and losses.
◦ Learning organization.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Adapt to change:
◦ Inevitable.
◦ Employees expected to take more responsibility for own careers.
◦ Challenge is how to build a committed, productive workforce.
◦ Employees manage change through agility.
◦ Changes in the employment relationship.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Maximize employee engagement:
◦ Passionate about their work.
◦ Committed to the company and its mission.
◦ Work hard to contribute.
◦ Measured with attitude or opinion surveys.
◦ Focus on employee experience.
◦ Employee value proposition (EVP).
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Manage talent:
◦ Acquiring and assessing employees
◦ Learning and development
◦ Performance management
◦ Compensation
◦ Consider nontraditional employment and the gig economy:
◦ Workers set own schedule and do not work for a company.
◦ Offers flexibility.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Understand and enhance the value placed on intangible assets and human capital:
◦ Provide flexibility to help employees meet work and life demands:
◦ Both the company and employees can benefit.
◦ Desire to continue working remotely post-pandemic.
◦ Companies’ policies on remote work vary.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Meet the needs of stakeholders: shareholders, customers, employees, and community:
◦ Demonstrate performance to stakeholders: the balanced scorecard.
◦ Being customer-focused.
◦ Improving quality.
◦ Emphasizing teamwork.
◦ Reducing new product and service development times.
◦ Managing for the long term.
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The Balanced Scorecard
QUESTIONS EXAMPLES OF CRITICAL BUSINESS
PERSPECTIVE ANSWERED INDICATORS CRITICAL HR INDICATORS
Customer How do customers see Time, quality, performance, Employee satisfaction with HR
us? service, cost department services; Employee
perceptions of the company as an
employer
Internal What must we excel Processes that influence customer Training costs per employee,
at? satisfaction, availability of turnover rates, time to fill open
information on service, and/or positions
manufacturing processes
Innovation and Can we continue to Improve operating efficiency, Employee/skills competency levels,
learning improve and create launch new products, continuous engagement survey results, change
value? improvement, empowering of management capability
workforce, employee satisfaction
Financial How do we look to Profitability, growth, shareholder Compensation and benefits per
shareholders? value employee, turnover costs, profit per
employee, revenue per employee
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Meet the needs of stakeholders: shareholders, customers, employees, and
community:
◦ Demonstrate social responsibility:
◦ Helps boost company’s image with customers.
◦ Helps gain access to new markets.
◦ Helps attract and retain talented employees.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Emphasize customer service and quality:
◦ Total quality management (TQM) five core values:
1. Methods and processes are designed to meet internal and external customers’ needs.
2. Every employee receives training in quality.
3. Managers measure progress with feedback based on data.
4. Promote cooperation with vendors, suppliers, and customers.
5. Quality is designed into a product or service so that errors are prevented rather than being
detected and corrected.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Emphasize customer service and quality:
◦ Malcolm Baldrige National Quality Award:
◦ Competition that promotes quality.
◦ ISO (International Organization for Standardization) 9000 Standards:
◦ International standards of quality.
◦ Six Sigma:
◦ Process of measuring, analyzing, improving, and controlling processes.
◦ Lean thinking and design thinking:
◦ Do more with less effort, equipment space, and time.
◦ Kaizen.
◦ Plan-Do-Study-Act.
◦ Improve quality of employees’ work experiences.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
◦ Recognize and capitalize on the demographics and diversity of the workforce:
◦ Internal labor force.
◦ External labor market.
◦ Average age of workforce will increase.
◦ Increased workforce diversity.
◦ Immigration will affect size and diversity.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
◦ Recognize and capitalize on the demographics and diversity of the workforce:
◦ Aging of the workforce:
◦ HRM issues such as career plateauing, retirement planning, and retraining older
workers.
◦ The multigenerational workforce:
◦ Five generations.
◦ A workforce of mixed gender, race, and nationality:
◦ Diversity of workforce increasing.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
◦ Recognize and capitalize on the demographics and diversity of the workforce:
◦ The role of immigration:
◦ Immigration is contributing.
◦ Percentage of highly skilled immigrants now exceeds percentage of low-skilled
immigrants.
◦ Legal versus illegal immigration.
◦ Capitalizing on diversity, equity, inclusion, and belonging (DEIB):
◦ Helps gaining competitive advantage.
◦ Harness power of diverse workforce.
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
• Legal issues:
◦ Employment laws and regulations.
◦ Eliminating discrimination and harassment.
◦ Whistle-blowers.
◦ Health care coverage.
◦ Data security practices and protecting intellectual property.
◦ Ethical issues:
◦ Ethics are the fundamental principles of right and wrong.
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Principles of Ethical Companies
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Competitive Challenges Influencing Human Resource Management
Labor force and employment characteristics:
◦ Ethical issues:
◦ HR managers must satisfy these standards for their practices to be considered ethical:
◦ HRM practices must result in greatest good for largest number of people.
◦ Employment practices must respect basic human rights of privacy, due process, consent, and free speech.
◦ Managers must treat employees and customers equitably and fairly.
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Competitive Challenges Influencing Human Resource Management
Competing through globalization:
• Businesses must:
◦ Develop global markets.
◦ Use their practices to improve global competitiveness.
◦ Better prepare employees for global assignments.
• Entering international markets:
◦ Exporting products overseas.
◦ Building manufacturing facilities or service centers in other countries.
◦ Entering into alliances with other companies.
◦ Engaging in e-commerce.
• Offshoring and reshoring.
◦ Nearshoring.
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Competitive Challenges Influencing Human Resource Management
Competing through technology:
• Artificial intelligence and robotics:
◦ Provide skills that are difficult to find.
◦ Perform some job tasks previously completed by employees.
◦ May eliminate some jobs.
• High-performance work systems:
◦ Maximize the fit between employees and technology.
• Virtual teams:
◦ Formed within one company or via partnerships with suppliers or competitors.
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Competitive Challenges Influencing Human Resource Management
Competing through technology:
• Use HRIS, mobile devices, cloud computing, and HR dashboards:
◦ HRIS stores large quantities of employee data.
◦ Mobile devices increasingly used to provide employees with anytime, anywhere access to HR
applications.
◦ Cloud computing allows companies to lease software and hardware.
◦ HR dashboard provides access to important HR metrics for workforce analytics.
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Meeting Competitive Challenges through HRM Practices
Three challenges:
• Globalization
• Sustainability
• Technology
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Closely linked with the strategic role of HR is
the way HR management professionals
influence the organizational ethics practiced by
executives, managers, and employees.
Ethics and Organizations that are seen as operating with
HR integrity are viewed more positively by
individuals in the community and industry, as
Management
well as by consumers and employees.
That positive view often translates into bottom-
line financial results and the ability to attract
and retain human resources.
Organizations that are seen as ethical in the way they operate
have longer-term success.
People in organizations are making ethical decisions on a daily
HR’s Role in basis,
Organizational
HR management plays a key role as the “keeper and voice” of
Ethics organizational ethics.
All managers, including HR managers, must deal with ethical
issues and be sensitive to how they interplay with HR activities.
Examples of How HRM Practices Can Help Companies Meet Competitive Challenges
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Major Dimensions of HRM Practices Contributing to Company
Competitiveness
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