Transcript Introduction to Human Resource Management Fall 2005

Introduction to Human
Resource Management
Fall
2005
Management 412 / Intro to HRM / Page 1
Reading List
Caudron, S. (January 2003). HR is dead - Long live HR. Workforce, pp. 26-30.
Challenger, J. A. (July 2003). Solving the looming labor crisis. USA Today Magazine, pp. 28-30.
Cole, C. L., Gale, S. F., Greengard, S., Kiger, P. J., Lachnit, C., Raphael, T., Shuit, D. P., &
Wiscombe, J. (June 2003). 25 trends that will change the way you do business. Workforce,
pp. 43-56.
Pfeffer, J. (Winter 1998). Seven practices of successful organizations. California Management
Review, 96-124.
Raphael, T. (2003, March). At Google, the proof is in the people. Workforce, pp. 50-51.
Sheley, E. (June, 1996). Share your worth. HRMagazine, pp. 86-96.
Stewart, T. A. (April 13, 1998). A new way to think about employees. Fortune, pp. 169-170.
Stewart, T. A. , & Woods, W. (January 15, 1996). Taking on the last bureaucracy. Fortune,
pp.105-106.
Stewart, T. A. (October 2, 1995). Trying to grasp the intangible. Fortune, pp. 157-161.
Ulrich, D. (January/February 1998). A new mandate for human resources. Harvard Business
Review, pp. 124-134.
Zimmerman, E. (February 2001). What are employees worth? Workforce, pp. 32-36.
Fall
2005
Management 412 / Intro to HRM / Page 2
Introduction to HRM
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Two questions:
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What is HRM?
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Does it matter?
Why does it matter?
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
Management 412 / Intro to HRM / Page 3
The Death of HR ?
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Traditional “personnel” function
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Recordkeeping
Perceived as a dumping ground
The death of HR?
HR’s rebirth
Sources: Caudron (2003); Schuler (1990); Schuler
& Walker (1990); Stewart (1996); Sunoo & Laabs
(1999); Ulrich (2000); Wells (2003)
Management 412 / Intro to HRM / Page 4
Outsourcing HR
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Would it just make more sense to
outsource HR functions?
Many organizations are doing just this
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Recordkeeping and administrative,
perhaps
Basic functions…..
Sources: Caudron (2003); Stewart & Woods
(1996); Zimmerman (April 2001)
Management 412 / Intro to HRM / Page 5
Approaches to Revitalizing HR
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Accounting for human resources
Managing people for competitive
advantage
Management 412 / Intro to HRM / Page 6
Accounting for Human Resources
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Cascio’s costing approach:
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Tracking costs and contributions to firm net
profitability
Human capital approach
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Cost accounting for employee outcomes
Calculate cost of interventions and outcomes on individual
basis
Employees are intangible assets, but can still be valued
Based on assumed contribution of employees to corporate
earnings
Sources: Cascio (1982); Sheley (1996) Solomon
(2000); Stewart (1995); Zimmerman (February 2001)
Management 412 / Intro to HRM / Page 7
Costing HR: Example
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The costs of turnover per individual:
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Calculated
per person,
then
totaled
Costs of reducing turnover
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Exit interviews
Unemployment tax
Recruitment advertising
Staff time to interview applicants
Reference checking, medical exams
Training new employees
Additional training
Realistic job previews
Net savings
Management 412 / Intro to HRM / Page 8
Source: Cascio (1982)
Human Capital: The Steps
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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)
Management 412 / Intro to HRM / Page 9
Human Resources and
Competitive Advantage
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The basic idea: establishing and maintaining
competitive advantage through people.
Competitive advantage:
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Valuable, rare, inimitable, nonsubstitutable
Achieved not through strategy, but strategy
implementation
Source: Pfeffer (1994, 1998)
Management 412 / Intro to HRM / Page 10
Traditional Sources of Competitive
Advantage…and Where They’ve Gone
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Product and process technology
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Protected and regulated markets
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Global capital market
Venture capital
Economies of scale
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Move to global economy
Deregulation
Access to financial resources
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Technological innovations make innovation easier and faster
Development and manufacturing technology freely available
Fragmented markets
Less important with advances in technology
So, what’s left…people
Source: Pfeffer (1994, 1998)
Management 412 / Intro to HRM / Page 11
Competitive Advantage Through
People
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Viewing the work force as an asset, not an
expense
The result:
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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)
Management 412 / Intro to HRM / Page 12
High-Performance Work
Systems: The Seven Practices
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Employment security Critical to remember that all of
these are part of a system
Selective hiring
Self managed teams and decentralized decision
making
High compensation, based on organizational
performance
Extensive training
Reduced status distinctions
Extensive information sharing (both financial and
performance)
Source: Pfeffer (1994, 1998)
Management 412 / Intro to HRM / Page 13
The Research Evidence
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Garment manufacturing
Steel minimills
Initial public offerings
Management 412 / Intro to HRM / Page 14
Garment Manufacturing
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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 selfmanaged work teams, team pay
Performance Measure
Gross margin
Operating profit
Average discount
Sewing throughput (days)
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Source: Pfeffer (1998)
Bundle
26.0%
7.9%
14.6%
9.5 days
Modular
31.6%
13.0%
10.2%
1.8 days
Management 412 / Intro to HRM / Page 15
The Minimills
Management
Practice
Wages
% of employees in
teams
Decentralization *
General training *
Labor hours / ton
Scrap rate
Control
$18.07
%
Commitment Improvement
$21.52
19%
36.6%
52.4%
43%
2.42
1.92
3.04
3.35
26%
74%
- 34%
- 63%
* 1 = very little to 6 = very much
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Source: Pfeffer (1998)
Management 412 / Intro to HRM / Page 16
The Case of the IPOs
Probability of 5 Year Survival of IPO
Top 16% of Firms
Bottom 16% of Firms
87%
79%
60%
45%
HR Value
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Source: Pfeffer (1998)
Rewards
Management 412 / Intro to HRM / Page 17
Why Not?
The Downward Performance Spiral
Performance Problems
Low profits
High costs
Poor customer service
Low stock price
Fall Source: Pfeffer (1998)
2005
Organizational Response
Reduce training
Layoffs
Salary freeze
Contingent staffing
Individual Behaviors
Decreased motivation
More accidents
Higher turnover
Reduced effort
Management 412 / Intro to HRM / Page 18
Aligning Strategy and HR
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Determine the firm’s strategy
Determine the competencies needed to carry
out the strategy
Examine current management practices
Determine congruence
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Do the current practices work to enhance needed
competencies?
Are the current practices internally consistent?
Source: Pfeffer (1998)
Management 412 / Intro to HRM / Page 19
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External Influences on HRM
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Economic conditions
Legal requirements and constraints
Demographics
Technology
Management 412 / Intro to HRM / Page 20
General Economic Conditions
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Global economy
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Domestic factors
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Lower wage levels vs. quality and productivity
Ethical issues and political considerations
Move from manufacturing economy to service / information
economy
Mergers  duplication of functions  layoffs
Supply and demand of labor, which, in turn,
influences price.
Supply and demand of company’s product, which
determines available resources
Sources: Challenger (2003); Cole, et al. (2003)
Management 412 / Intro to HRM / Page 21
Changes in the U.S. Economy,
1939 to Present
100%
80%
60%
40%
20%
0%
1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999
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Natural Resources & Mining
Construction
Manufacturing
Trade, Transportation & Utilities
Information
Professional & Business Services
Leisure & Hospitality
Government
Source: U.S. Department of Labor, Bureau of Labor Statistics
Management 412 / Intro to HRM / Page 22
Fall
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Source: Department of Labor, Bureau of Labor Statistics
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Fastest Growing Occupations, 2002-2012 (by
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Management 412 / Intro to HRM / Page 23
Fall
2005
Source: Department of Labor, Bureau of Labor Statistics
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Management 412 / Intro to HRM / Page 24
Legal Requirements and
Constraints
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Government now an intermediary in the
relationship between employers and
employees
Legal requirements and constraints are
usually a reflection of social attitudes and
opinions
Management 412 / Intro to HRM / Page 25
Demographics
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Supply of labor (number of people, skills, etc.)
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Different needs of different groups in the population
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New skills needed, but are they present in workforce?
Basic skills availability?
Increasing number of women in paid workforce
Dual-earner families
Family friendly benefits
Aging population
Sources: Challenger (2003); Cole, et al. (2003)
Management 412 / Intro to HRM / Page 26
100
90
80
70
60
50
40
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20
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0
19
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19
63
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% Labor Force Participation
Participation in the Paid Labor
Force by Gender: 1948 to 2004
Men
Fall
2005
Source: Department of Labor, Bureau of Labor Statistics
Women
Management 412 / Intro to HRM / Page 27
Technology
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New jobs; old jobs vanish
Need for new skills
Need for continuous skills development
Managing the HR function
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Data management
Employee communications
Management 412 / Intro to HRM / Page 28
HR Functions: What We’ll Be
Looking At
Planning
Employee and
Labor Relations
Training
and
Development
Fall
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Legal
Compliance
Staffing
Reward
Systems Management 412 / Intro to HRM / Page 29