Introduction - Human Resource Management - Lecture Slides, Slides of Human Resource Management

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Introduction to Human Resource

Management

Introduction to HRM

• Two questions:
  • Does it matter?
  • Why does it matter?
• What is HRM?
  • Organization’s methods and procedures for managing people to enhance skills and motivation
  • Activities to enhance the organization’s ability to attract, select, retain and motivate people

Outsourcing HR

• Would it just make more sense to outsource

HR functions?

• Many organizations are doing just this

• Recordkeeping and administrative, perhaps
• Basic functions…..

Sources: Caudron (2003); Stewart & Woods (1996); Zimmerman (April 2001)

Approaches to Revitalizing HR

• Accounting for human resources
• Managing people for competitive advantage

Costing HR: Example

• The costs of turnover per individual:
  • Exit interviews
  • Unemployment tax
  • Recruitment advertising
  • Staff time to interview applicants
  • Reference checking, medical exams
  • Training new employees
• Costs of reducing turnover
  • Additional training
  • Realistic job previews
• Net savings

Calculated per person, then totaled

Source: Cascio (1982)docsity.com

Human Capital: The Steps

• Determine three years’ total pretax earnings
• Determine average assets over same three years
• Calculate firm’s return on assets (ROA)
• Determine industry average ROA
• Calculate “excess returns”
• Subtract taxes
• Calculate net present value of excess return
• Result: “intangible value” of firm’s human capital

Sources: Stewart (October 1995); Zimmerman (February 2001)

Traditional Sources of Competitive Advantage…and Where They’ve Gone

• Product and process technology
  • Technological innovations make innovation easier and faster
  • Development and manufacturing technology freely available
• Protected and regulated markets
  • Move to global economy
  • Deregulation
• Access to financial resources
  • Global capital market
  • Venture capital
• Economies of scale
  • Fragmented markets
  • Less important with advances in technology
• So, what’s left…people

Source: Pfeffer (1994, 1998)

Competitive Advantage Through People

• Viewing the work force as an asset, not an expense
• The result:
  • Harder work, from increased involvement and commitment
  • Smarter work, through enhanced skills and competence
  • Lower overhead, by pushing responsibility downward
• High performance work systems

Source: Pfeffer (1994, 1998)

The Research Evidence

• Garment manufacturing

• Steel minimills

• Initial public offerings

Garment Manufacturing

Performance Measure Bundle Modular Gross margin 26.0% 31.6% Operating profit 7.9% 13.0% Average discount 14.6% 10.2% Sewing throughput (days) 9.5 days 1.8 days

• Bundle system = traditional assembly line (the employee receives a bundle of garments, does one thing, then passes the bundle on to the next worker)
• Modular system = small cross-trained and self- managed work teams, team pay

Source: Pfeffer (1998)

The Case of the IPOs

Probability of 5 Year Survival of IPO

79% 87% 60% 45%

HR Value Rewards

Top 16% of Firms Bottom 16% of Firms

Source: Pfeffer (1998)

Why Not? The Downward Performance Spiral

Individual Behaviors Decreased motivation More accidents Higher turnover Reduced effort

Performance Problems Low profits High costs Poor customer service Low stock price

Organizational Response Reduce training Layoffs Salary freeze Contingent staffing

Source: Pfeffer (1998)

External Influences on HRM

• Economic conditions

• Legal requirements and constraints

• Demographics

• Technology

General Economic Conditions

• Global economy
  • Lower wage levels vs. quality and productivity
  • Ethical issues and political considerations
• Domestic factors
  • Move from manufacturing economy to service / information economy
  • Mergers  duplication of functions  layoffs
• Supply and demand of labor influences price
• Supply and demand of company’s product, which determines available resources

Sources: Challenger (2003); Cole, et al. (2003)