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1. 2-1

2. 2-2 2
A Strategic Management
Approach to HRM
McGraw-Hill/Irwin
Human Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3. 2-3 Introduction
Taking a strategic HRM approach means:
Making human resources management a top priority
Integrating HRM with the company’s strategy,
mission, and goals
HRM can make significant contributions if included
in the strategic planning process from the outset
The strategic management process helps determine:
What must be done to achieve priority objectives
How they will be achieved

4. 2-4 Introduction
Many strategic plans use:
A three to five year timeline
Annual monitoring and
modification
Good HR strategy results in a fit between organiza-tional
strategy and HRM policies and programs
Recruitment, selection, outsourcing, telecommuting,
performance evaluation, compensation

5. 2-5 A Model to Organize HRM
ARDM means:
Acquiring
Rewarding
Developing
Maintaining and protecting
The goals of the ARDM model are:
Socially responsible and ethical practices

6. 2-6 A Model to Organize HRM
The eventual success of any HRM activity is:
The organization's employees are the best qualified
They perform jobs that suit their needs, skills, and
abilities
Matching people and activities in order to
accomplish goals is easier with a diagnostic approach

7. 2-7 Taking a Diagnostic Approach to HRM
The ARDM model has four specific steps:
Diagnosis
Prescription
Implementation
Evaluation
Managers typically diagnose a work situation by
observing and identifying key factors
A prescription is then made to translate the diagnosis
into action
Most human resource problems are too complex to
have a single correct prescription

8. 2-8 Taking a Diagnostic Approach to HRM
Implementing a solution is the next step, followed by
evaluation
Evaluation tells managers whether improvement in
the ARDM process is needed
If an organization teaches its members to focus on
ARDM plus the environment, it is likely to achieve:
Socially responsible, ethical behaviors
Competitive, high-quality products and services
The ARDM model calls for thorough, timely, and
systematic review of each situation

9. 2-9 External Environmental Influences
HRM processes are influenced by both the internal
and external environments
External influences include:
Government laws and regulations
Union procedures and requirements
Economic conditions
The labor force
HR planning must operate within:
Guidelines
Limits of available resources
Competencies

10. 2-10 External Environmental Influences
HRM is one important function among others:
Finance
Accounting
Research and development
Marketing
Production
The interaction of these internal programs sets the
tone for the entire organizational system

11. 2-11 Government Law and Regulations
Government regulations affect:
Hiring
Promotion
Managing diversity
Downsizing
Discipline
Major areas of legislation and regulation include
EEO and human rights legislation
These directly affect recruiting, selection, evaluation,
and promotion

12. 2-12 Government Law and Regulations
EEO and human rights legislation indirectly affects:
Employment planning
Orientation
Career planning
Training
Employee development

13. 2-13 Government Law and Regulations
Other areas of legislation and regulation include:
Employment of illegal aliens
Discrimination based on sex, age, and disability
Compensation regulation
Benefits regulation
Workers' compensation and safety laws
Labor relations laws and regulations
Privacy laws

14. 2-14 Government Law and Regulations
Government regulation has increased substantially
In 1940, the U.S. Dept. of Labor administered
18 regulatory programs
In 2004, it administered more than 135
And that is just one government agency

15. 2-15 Government Law and Regulations
Government regulation impacts a manager’s job:
Regulation encourages simplistic thinking on
complicated issues
Designing and administering regulations is
complex, leading to slow decision making
Regulation leads to complicated legal maneuvering
Many regulations are out of date and serve little
social purpose
There is regulatory overlap and contradiction among
regulatory agencies

16. 2-16 The Union
A union directly affects most aspects of HRM,
including:
Working conditions
Wages and salaries
Fringe benefits
Employees’ rights
Grievance processes
Work hours
There are cooperative unions and combative unions

17. 2-17 The Union
Unions were once concentrated in a few sectors of
the economy
Today, the fastest-growing sectors are the public
sector and the third sector
It is no longer useful to think of unionized employees
as blue-collar factory workers
Engineers, nurses, teachers, secretaries, salespersons,
college professors, professional football players, and
even physicians belong to unions

18. 2-18 Economic Conditions
Two economic factors affect HRM programs:
Productivity
The work sector of the organization
Productivity is:
An important part of a nation's economic condition
Representative of an organization’s overall efficiency
The output of goods and services per unit of input
(resources) used in a production process

19. 2-19 Economic Conditions
Before productivity can be managed and improved,
it must be measured
Isolate the outputs
Determine the costs that went into producing the
output
Compare the current year's figures with those of the
previous year
Productivity measures are crude and subject to
short-term error, but over time can show a trend

20. 2-20 Economic Conditions
Suggested solutions for increasing productivity:
Reduce government controls
Develop more favorable income tax incentives
Reindustrialize the business-industrial complex
Reducing legislative controls can adversely affect the
quality of life and society for decades to come
 Toxic waste, radiation, air pollution, and other forms
of destruction must be carefully controlled

21. 2-21 Economic Conditions
Managers can influence productivity through sound
HRM programs
Diagnosis, prescription,
implementation, and evaluation
Recruitment and selection
Motivational and compensation
techniques
Training and development

22. 2-22 The Work Sector of HRM
60 percent of HR specialists work in the private
sector
30 percent work in the public sector;
10 percent work in the third sector
Private- and third-sector HRM are structured
similarly
HRM in the public sector is structurally different
A manager moving from the private or third sector
to the public sector finds a more complicated job
Politicians, the public, special interest groups, and
reporters all exert outside pressure

23. 2-23 Competitiveness
At the macroeconomic level, competitiveness is:
The degree to which a nation can, under free and fair
market conditions, produce goods and services that
meet the test of international markets while
simultaneously maintaining or expanding the real
incomes of its citizens
If you substitute organization for nation, and
employees for citizens, you have the definition of
organizational competitiveness

24. 2-24 Competitiveness
At the organizational level, competitiveness is an
important issue
How effectively do workers produce the product?
How good is the quality of the services or goods?
Can employees handle new technology and produce
the product at lower costs?
Does the firm have the human resources needed to
increase manufacturing to a global level?
Will the push to work harder and faster raise
turnover, absenteeism, and the number of defects?

25. 2-25 Competitiveness
A competitive advantage means having a superior
marketplace position relative to competitors
A sustainable competitive advantage means dealing
effectively with employees, customers, suppliers, and
competitors
The way HRM activities are implemented and
modified can provide competitive advantages

26. 2-26 Competitiveness
Activities that can enhance and sustain competitive
advantage:
Employment security
Selective recruiting
High wages
Incentive pay
Employee ownership
Information sharing
Participation and empowerment
Teams and job redesign

27. 2-27 Competitiveness
Activities that can enhance and sustain competitive
advantage (continued):
Training as skill development
Cross-utilization and cross-training
Symbolic egalitarianism
Wage compression
Promotion from within
Long-term perspective
Measurement of practices
Overarching philosophy

28. 2-28 Competitiveness
Competitors can adopt and/or improve on successful
HRM activities
A firm with fair and equitable treatment of human
resources is less susceptible to losing its competitive
advantage
A few HRM activities can be copied, but imitation of
an entire culture and system of HRM is difficult

29. 2-29 Composition & Diversity of Labor Force
The labor force of the United States comprises all
people age 16 years or older who are:
Not in the military
Employed or actively seeking work
As of 2004, over 146 million Americans were in the
workforce

30. 2-30 Women in the Workforce
In 2002, about 47 percent of the full-time U.S.
workforce consisted of women
This is a 235 percent increase since 1947
The number of married male employees has increased
by only 30 percent
Women should have equal job opportunities
However, they still face workplace discrimination
There are signs that more women will have
professional jobs

31. 2-31 Minorities in the Workforce
The situation for racial and ethnic minorities in the
U.S. is similar to that for women
Few Hispanics, African-Americans, or Native
Americans are found in high-status, high-paying jobs
Historically, the most recent immigrant groups take
the lowest-level jobs
Minorities were living in the U.S. long before the
immigrants arrived

32. 2-32 Older Employees
The percent of older employees is growing
One of the toughest employment problems today is
the older employee who loses a job through no
personal fault
Higher insurance premiums for older employees
make them more costly to employ
As we age, we lose some of our faculties
This is an ongoing process
The key is to match employees with jobs

33. 2-33 Older Employees
Contrary to stereotypes:
Employees 45+ have no
more accidents than
younger ones
Until age 55, absenteeism rates are the same or lower
Employees under 35 have the worst accident rate
When total performance is considered, older
employees are just as effective as younger ones

34. 2-34 Employment Projection
The ten fastest-growing occupations:
Computer software, engineers, applicants
Computer support specialists
Computer software, engineers, systems software
Network and computer system administrators
Network systems and data communication analysts
Desktop publishers
Database administrators
Personal and home care aides
Computer systems analysts
Medical assistants

35. 2-35Geographic Location of the Organization
The location of the organization influences hiring
practices and HRM activities
Rural versus urban
International versus local
Education
Behavior
Legal-political factors
Economics
Inter-cultural training

36. 2-36 Internal Environmental Influences
HRM programs are influenced by:
Strategy
Goals
Organizational culture
Nature of the task
Work groups
The leader’s style and experience

37. 2-37 Strategy
A strategy:
Indicates what an organization's key executives hope
to accomplish in the long run
Is concerned with competition and aligning the
resources of the firm
Some companies believe long-term success is linked
to helping employees achieve work-life balance

38. 2-38 Goals
Organizational goals differ within and among
departments
Most departments have similar goals
Differences arise from the importance placed on the
goals
In organizations where profits take precedence,
HRM goals receive little attention
This results in effectiveness problems (absenteeism,
performance decrements, high grievance rates)

39. 2-39 Goals
Diversity refers to any mixture of themes
characterized by differences and similarities
Diversity in organizations is more than demographics
Dealing with workforce diversity means focusing on
the collective picture of differences and similarities

40. 2-40 Goals
Wisconsin Power and Light uses a six-step approach
to diversity training:
Form a diversity steering team
Create a diversity training team
Select a diversity training project manager
Complete a cultural audit
Design a training program
Implement and evaluate the training

41. 2-41 Organization Culture
A firm's organizational culture is shown by:
The way it does business
How it treats customers and employees
The autonomy or freedom that exists in the
departments or offices
The degree of loyalty expressed by employees

42. 2-42 Organization Culture
Organization culture represents the perceptions held
by the employees
There is no one "best" culture for the development of
human resources
Culture can:
Impact behavior, productivity, expectations
Provide a benchmark for standards of performance

43. 2-43 Nature of the Task
HRM is the effective matching of
the nature of the task (job)
with the nature of the employee

44. 2-44 Nature of the Task
Job factors that attract or repel workers:
Degree of knowledge and ability to use information
Degree of empowerment
Degree of physical exertion
Degree of environmental unpleasantness
Physical location of work
Time dimension of work
Human interaction on the job
Degree of variety in the task
Task identity
Task differences and job design

45. 2-45 Work Group
An employee’s experiences are largely influenced by
the work group
A group is two or more people who:
Consider themselves a group
Work interdependently to accomplish a purpose
Communicate and interact with one another on a
continuous basis
In many cases, work next to each other

46. 2-46 Work Group
An effective group is one in which:
Members function and act as a team
Members participate fully in group discussion
Group goals are clearly developed
Resources are adequate to accomplish group goals
Members furnish suggestions leading to achievement
of goals

47. 2-47 Work Group
Most most effective work groups:
Are small (7 to 14 members)
Have stable membership
Members:
Have eye contact and work closely together
Have similar backgrounds
Depend on the group to satisfy their needs
Effective groups support management and the
organization's goals, unless it conflicts with their
own

48. 2-48 Work Group
 Changing the group's norms and behavior requires:
The manager's leadership
The manager's power to reward or discipline
The transfer of some group members
Work groups are directly related to the success of
HRM activities
If a group opposes HRM programs, it can ruin them
Consider permitting work-group participation in
designing and implementing HRM

49. 2-49 Leader’s Style and Experience
The experience and leadership style of the operating
manager directly affects HRM activities
Orchestrating the skills, experiences, personalities,
and motives of individuals
Facilitating interaction within work groups
Providing direction, encouragement, and authority to
evoke desired behaviors
Reinforcing desirable behavior

50. 2-50 Strategic HRM: A Key to Success
Three levels of strategy apply to HRM activities:
Strategic (long term)
Managerial (medium term)
Operational (short term)
The HRM activities are:
Employee selection/placement
Rewards
Appraisal
Development

51. 2-51 Strategic HRM: A Key to Success
Strategic HRM planning leads to:
Growth
Profits
Survival
Planning also:
Expands awareness of possibilities
Identifies strengths and weaknesses
Reveals opportunities
Points to the need to evaluate the impact of internal
and external forces

52. 2-52 Strategic HRM: A Key to Success
Organizational strategic plans permit HR to prepare
for internal and external environment changes
Each organization should adopt a strategy that best
fits its goals, environment, resources, and people
An organization must match its:
Strategic plan
Employees' characteristics
HRM activities

53. 2-53 Strategic HRM: A Key to Success
The days of viewing HRM as only a highly
specialized and technical staff are over
HRM must be involved in all aspects of an
organization's operation
It must make everyday contributions to the
organization
HRM programs must be:
Comprehensive
Adapted to the organization's culture
Responsive to employee needs

54. 2-54 Strategic Challenges Facing HRM
Global competition has become intense
HRM professionals are now being asked to optimize
the skills, talents, and creativity of every employee
Failure to do so will mean the firm cannot compete in
a globally interconnected world

55. 2-55 Strategic Challenges Facing HRM
Technology trends:
Growth in knowledge needs
Shift in human competencies
Global market connection
Business streamlining
Rapid response
Quicker innovation
Quality improvement
Industrial revolution

56. 2-56 Building a Cooperative Workforce
The U.S. workforce is changing in dramatic ways:
There is a slower increase in the number of Caucasian
workers than other groups
By 2006, white males will no longer dominate the
workforce
Women are entering the workforce in record numbers
The number of Hispanic, Asian, and older workers
will continue to rise

57. 2-57 Building a Cooperative Workforce
The changing look, age, and needs of the workforce
have resulted in more concern about:
Child care
Elder care
Diversity understanding and training
Understanding diversity is an obvious need
Most firms are not yet "diversity-friendly”
The negative financial impact can be significant
There will be increased demand for fair, ethical, and
prompt handling of diversity issues

58. 2-58 Caliber of the Workforce
Recruiting and developing skilled labor is important
A growing number of jobs require higher levels of
education, language, math, and reasoning skills
Strategic HR planning models must carefully weigh
deficiencies and shortages in skills
The skills gap impacts more than HRM
Whole societies must face the consequences of not
having the workforce needed to compete in a global
economy

59. 2-59 Restructuring and Downsizing
Facts about downsizing:
Half of all downsized firms end up with at least as
many employees again within a few years
Downsizing in manufacturing is not new
It is positively correlated to foreign competition
It encourages firms to reduce their costs
Profits increase in the short-run, but not productivity
It leads to lower compensation/wages within the
downsized firm

60. 2-60 Restructuring and Downsizing
Restructuring means changing the reporting and
authority relationships within a firm
Downsizing is a reduction in a company's workforce
Downsizing has a human face and can result in stress-related
health problems
There is a growing sense that job security is a thing
of the past

61. 2-61 Contingent Workers
Contingent workers include:
Temporaries
Part-timers
Contract or leased workers
Others who are hired to handle extra tasks or
workloads
The number of contingent workers has increased
steadily since the early 1970s

62. 2-62 Contingent Workers
Outsourcing means hiring another firm to do work
This includes HRM activities
The outsource firm provides the employees to
complete the job
Professional employee organizations (PEOs) are
growing in popularity because they can:
Save a firm money
Reduce its risks
Improve efficiency
Allow the company to focus on its core business

63. 2-63
People & the HRM Diagnostic Framework
Employees are the most important concern in the
diagnostic model
Even the best HRM activities can backfire if
adjustments for individual differences aren’t built in
People differ in their:
Abilities
Attitudes and preferences
Styles
Intellectual capacities
Ways of doing the job

64. 2-64 Abilities of Employees
Abilities or skills are classified as:
Mechanical
Motor coordination
Mental
Creative
Abilities that are the result of genetic factors can
rarely be changed through training
Abilities such as interpersonal skills and leadership
are more subject to change

65. 2-65 Employee Attitudes and Preferences
An attitude is:
A characteristic, long-lasting way of thinking,
feeling, and behaving toward an object, idea, person,
or group
A preference means:
Evaluating an object, idea, or person in a positive or
negative way

66. 2-66 Employee Attitudes and Preferences
Work:
Allows for the expression of both aggressive and
pleasure-seeking drives
Offers a way to channel energy
Provides income
Offers a justification for existence
Is a way to achieve self-esteem and self-worth
The amount of energy directed toward work
is related to the amount directed to family, interpersonal
relations, and recreation

67. 2-67 Motivation of Employees
Motivation is a set of attitudes that predisposes a
person to act in a specific, goal-directed way
It is an inner state that energizes, channels, and
sustains human behavior to achieve goals
Work motivation channels a person's behavior toward
work and away from recreation or other areas of life
The motivation to work changes as other life
activities change

68. 2-68 Motivation of Employees
Managers who can determine the work motivations
of employees will make better HRM decisions
Work-oriented, hard working employees are usually
motivated by incentive compensation systems
Those consciously motivated to do a better job
benefit from performance evaluation techniques

69. 2-69 Personality of Employees
Personality is how a person thinks and behaves
It includes the person's:
Traits
Values
Motives
Genetic blue print
Attitudes
Emotional reactivity
Abilities
Self-image
Intelligence
Visible behavior patterns
Because each employee
has a unique personality,
it is unlikely that a single
set of HRM activities or
leadership approaches
will be equally successful
for all employees

70. 2-70 Personality of Employees
Behavioral scientists have found that:
The employee is both rational and intuitive
A person acts in response to internal inclinations,
choices, and environmental influences
Each person is unique and acts/thinks in a certain
way because of:
 Personality
Abilities
Attitudes
Motives

71. 2-71 Desirable End Results
HRM must make decisions and solve problems in a
socially responsible and ethically sound way
It must help the firm satisfy its customers and
employees
It is a demanding job, but an exciting challenge

72. 2-72 Comments to Reflect On
Organizational effectiveness is critically influenced
by HR management practices
Improvements in productivity, quality, and customer
satisfaction typically depend on changes in multiple
management systems
HR management systems drive behavior; they must
align with other management systems
It is hard to improve organizational performance
without paying attention to HR management
The HR department must be a central player in a
company's competitive efforts