Managing Human Resources through Strategic Partnerships
Chapter 1
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Chapter Outline
THE STRATEGIC IMPORTANCE OF MANAGING HUMAN RESOURCES
Satisfying Multiple Stakeholders
Owners and Investors
Customers
Society
Other Organizations
Organizational Members (The Employees)
Creating Win-Win Situations
GAINING AND SUSTAINING A COMPETITIVE ADVANTAGE
Employees Who Are a Source of Added Value
Employees Who Are Rare
A Culture That Can’t Be Copied
A FRAMEWORK FOR MANAGING HUMAN RESOURCES THROUGH STATEGIC PARTNERSHIPS
The Importance of the External and Organizational Environments
Human Resource Management Activities
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1–3
Chapter Outline (cont’d)
THE HR TRIAD
Line Managers Have Always Been Responsible
HR Professionals Provide Special Expertise
Employees Share Responsibility
LOOKING AHEAD: FOUR SPECIAL CHALLENGES
THE HR TRIAD: Roles and Responsibilities for Managing
Human Resources
Managing Teams
Managing Diversity
Managing Globalization
Managing Change
SUMMARY
Projects to Extend Your Learning
CASE STUDY: Managing Human Resources at Barden Bearings
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The Strategic Importance of
Managing Human Resources
“The industrial revolution was about economies of scale.
The internet revolution
will be about economies
of skill and how you
empower people.”

John Chambers
CEO
Cisco Systems
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Satisfying Multiple Stakeholders
“Chief executives should heed
the interests of various stakeholders including shareholders, customers,
suppliers, and the employees.”

Sidney Harman
CEO, Harman International
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Stakeholders and Examples of Their Objectives
EX 1.1
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Satisfying Multiple Stakeholders
Organizations must satisfy multiple stakeholders
Effective HRM contributes to stakeholder satisfaction
Stakeholders
Individuals or groups that have interests, rights or ownership in an organization and its activities
Primary stakeholders
Those whose concerns the organization must address in order to ensure its own survival.
Success is defined by how effectively these groups are served.
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Owners and Investors
“It truly is a new economy and the rules aren’t written. We have to learn as we go and lend based on intellectual and intangible assets.”
Susan M. Smith
CEO, Royal Bank Growth Company
“It is no accident that the best places
to work are also the places that
make the most money.”
Gordon Bethune
Former CEO, Continental
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Owners and Investors (cont’d)
Old economy:
Investors focused on measuring tangible assets in order to determine a firm’s value.
New economy:
Investors recognize that intangible assets can be just as valuable as tangible assets.
Reputation as an employer-of-choice, depth of employee talent and loyalty, and the firm’s ability to innovate and change.
Studies have shown that effective HR practices can positively affect the bottom line.
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The Relationship between Quality of HRM Activities and Market Value
EX 1.2
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Stakeholder Groups
Customers
Employees can have a direct impact on customer satisfaction.
Understanding the customer’s perspective
Organizational Members (The Employees)
Employees themselves
are a stakeholder group
that cares about:
Pay and benefits
Quality of work life
Employability
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Stakeholder Groups (cont’d)
Society
Legal compliance: legitimacy and community support
Community relations: public opinion and expectations
Social Responsiveness in HRM
Type of employees the company chooses to hire
Criteria used to evaluate their performance
The scheduling and coordinating of activities within work units
Compensation practices in paying employees for time spent in the community (voluntary labor).
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Stakeholder Groups (cont’d)
Other Organizations
Suppliers
Physical and human resources
Unions
Adversarial to collaborative,
problem-solving relationship
with management
Alliance Partners
Achieve common goals
Influence government actions
Collaborate on research
Establish joint ventures
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Stakeholders and HRM
Win-Win situations
HRM can create synergies from the diverse concerns of various stakeholders.
Properly managing human resources
can provide solutions to how best
to satisfy the objectives of multiple
stakeholders, even when the
objectives seem to conflict.
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Gaining and Sustaining
a Competitive Advantage
Sustainable Competitive Advantage
When a company’s advantage is difficult for competitors to understand and copy.
How firms can use HRM to gain sustainable competitive advantage:
Maximize the value added by all employees— especially by “core” employees
Acquire employees who are rare (high quality)
Develop a strong culture that can’t be copied.
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A Framework for Managing Human Resources through Strategic Partnerships
EX 1.3
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The External Environment
Globalization of business
Labor market conditions and trends
Economic and political trends
Technology
Cultural differences
Local, national and
multinational conditions
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The Organizational Environment
Organizational characteristics that shape HRM practices:
Leadership approach of top management
Company culture
Technology
Business
strategy
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Human Resource Management Activities
Human Resource Management (HRM) Activities
The formal HRM policies developed by the company as well as the actual ways these policies are implemented in the daily practices of supervisors and managers.
Formal Policies
Statements of expectations
and aspirations
Are modified and
influenced by daily
practices.
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Human Resource Policies and Practices
HR planning for alignment and change
Job analysis and competency modeling
Recruiting and retaining qualified employees
Selecting employees to fit the job and the organization
Training and developing a competitive workforce
Developing an approach to total compensation
Measuring performance and providing feedback
Using performance-based pay to enhance motivation
Providing benefits and services
Promoting workplace safety and health
Unionization and collective bargaining
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The Human Resources Triad
Line managers have always been responsible.
Employees
share responsibility.
HR has specialized and technical knowledge.
“Human Resources are too important to be left to the HR department.”
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Key Roles for the HR Department and the HR Leader
EX 1.4
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Key Roles for the HR Department and the HR Leader
EX 1.4 cont’d
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Key HR Competencies
Major types of competencies that HR professionals need in order to be effective:
Strategic understanding and contribution (43%)
Personal credibility (23%)
HR delivery (18%)
Business acumen (11%)
HR technology (5%)
Note: percentages indicate weighted impact on business performance
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Ethical Behavior
HR profession’s code of ethics
HR professionals must regard the obligation to implement public objectives and protect the public interest as more important than blind loyalty to an employer’s preferences.
Expectations
Understand problems and maintain professionalism
Maintain high standards of honesty and integrity
Respect the dignity of all employees
Assure that the organization respects the public and its employees
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Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals
EX 1.5
PROFESSIONAL RESPONSIBILITY
Core Principle: As HR professionals, we are responsible for adding value to the organizations we serve and contributing to the ethical success of those organizations. We accept professional responsibility for our individual decisions and actions. We are also advocates for the profession by engaging in activities that enhance its credibility and value.
Guidelines
Adhere to the highest standards of ethical and professional behavior.
Measure the effectiveness of HR in contributing to or achieving organizational goals.
Comply with the law.
Work consistent with the values of the profession.
Strive to achieve the highest levels of service, performance and social responsibility.
Advocate for the appropriate use and appreciation of human beings as employees.
Advocate openly and within the established forums for debate in order to influence decision-making and results.
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Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals
EX 1.5 cont’d
PROFESSIONAL DEVELOPMENT
Core Principle: As professionals we must strive to meet the highest standards of competence and commit to strengthen our competencies on a continuous basis.
Guidelines
Pursue formal academic opportunities.
Commit to continuous learning, skills development and application of new knowledge related to both human resource management and the organizations we serve.
Contribute to the body of knowledge, the evolution of the profession and the growth of individuals through teaching, research and dissemination of knowledge.
Pursue certification such as CCP, CEBS, PHR, SPHR, etc. where available, or comparable measures of competencies and knowledge.
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Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals
EX 1.5 cont’d
ETHICAL LEADERSHIP
Core Principle: HR professionals are expected to exhibit individual leadership as a role model for maintaining the highest standards of ethical conduct.
Guidelines
Be ethical; act ethically in every professional interaction.
Question pending individual and group actions when necessary to ensure that decisions are ethical and are implemented in an ethical manner.
Seek expert guidance if ever in doubt about the ethical propriety of a situation.
Through teaching and mentoring, champion the development of others as ethical leaders in the profession and in organizations.
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Excerpts from the SHRM Code of Ethical and Professional Standards for Human Resource Professionals
EX 1.5 cont’d
FAIRNESS AND JUSTICE
Core Principle: As HR professionals, we are ethically responsible for promoting and fostering fairness and justice for all employees and their organizations.
Guidelines
Respect the uniqueness and intrinsic worth of every individual.
Treat people with dignity, respect and compassion to foster a trusting work environment free of harassment, intimidation, and unlawful discrimination.
Ensure that everyone has the opportunity to develop their skills and new competencies.
Assure an environment of inclusiveness and a commitment to diversity in the organizations we serve.
Develop, administer and advocate policies and procedures that foster fair, consistent and equitable treatment for all.
Regardless of personal interests, support decisions made by our organizations that are both ethical and legal.
Act in a responsible manner and practice sound management in the country(ies) in which the organizations we serve operate.
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Four Special HRM Challenges
Managing Teams
Managing Diversity
Managing Globalization
Managing Change
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Managing Teams
Teams help satisfy customers by achieving:
Improved on-time results delivery
Improved customer relations
Innovation in products and services
Improved product quality
Cost reductions and
improved efficiency

HR managers are still
learning about what
makes teams work!
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Managing Teams (cont’d)
Working on teams helps satisfy employees by:
Facilitating management development and career growth
Reinforcing or expanding informal networks in the organization
Improving employees’ understanding of the business
Increasing employee ownership,
commitment, and motivation
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Why Organizations Use Work Teams
TO SATISFY EMPLOYEES
Improve on-time delivery of results
Improve customer relations
Facilitate innovation in products and services
Improve quality
Reduce costs and improve efficiency
TO SATISFY CUSTOMERS
Facilitate management development and career growth
Reinforce or expand
Improve employees’ understanding of the business informal networks in the organization
Increase employee ownership, commitment, and motivation
EX 1.6
THE MOST COMMON REASONS FOR HAVING
EMPLOYEES WORK IN TEAMS
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Managing Diversity
Diversity management practices must be sensitive to issues of:
Religion, sexual orientation, marital and family status, age, and various other “unifying life experiences,” as well as gender and ethnicity.
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Managing Globalization
Aspects of Globalization
Exporting
Overseas manufacturing
Transnational firms
Challenge
Developing an approach to
managing human resources
that works at home as well
as abroad.
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Managing Change
Issues in managing change
Shortages of qualified employees
New technologies
Changing laws and regulations
Mergers and structural changes
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TERMS TO REMEMBER
HR profession’s code of ethics
HR triad
Human resource management (HRM) activities
Human resource management (HRM) system
Human resource (HR) professionals
Human resources
Intangible human assets
Society for Human Resource Management (SHRM)
Stakeholders
Sustainable competitive advantage