t e n t h e d i t i o n
Gary Dessler
Part 1 Introduction
Chapter 1
The Strategic Role of
Human Resource Management
After studying this chapter,
you should be able to:
Explain what human resource management (HR) is and how it relates to the management process.
Give at least eight examples of how managers can use HR concepts and techniques.
Illustrate the HR management responsibilities of line and staff (HR) managers.
Provide a good example that illustrates HR’s role in formulating and executing company strategy.
Write a short essay that addresses the topic: why metrics and measurement are crucial to today’s HR managers.
Outline the plan of this book.
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The Manager’s Human Resource
Management Jobs
Management process
The five basic functions of planning, organizing, staffing, leading, and controlling.
Human resource management (HRM)
The policies and practices involved in carrying out the “people” or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising.
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Personnel Aspects Of A Manager’s Job
Conducting job analyses (determining the nature of each employee’s job)
Planning labor needs and recruiting job candidates
Selecting job candidates
Orienting and training new employees
Managing wages and salaries (compensating employees)
Providing incentives and benefits
Appraising performance
Communicating (interviewing, counseling, disciplining)
Training and developing managers
Building employee commitment
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Personnel Mistakes
Hire the wrong person for the job
Experience high turnover
Have your people not doing their best
Waste time with useless interviews
Have your company in court because of discriminatory actions
Have your company cited by OSHA for unsafe practices
Have some employees think their salaries are unfair and inequitable relative to others in the organization
Allow a lack of training to undermine your department’s effectiveness
Commit any unfair labor practices
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Basic HR Concepts
Getting results
The bottom line of managing
HR creates value by engaging
in activities that produce
the employee behaviors
the company needs to
achieve its strategic
goals.
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Line and Staff Aspects of HRM
Line manager
A manager who is authorized to direct the work of subordinates and is responsible for accomplishing the organization’s tasks.
Staff manager
A manager who assists and advises line managers.
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Line Managers’ HRM Responsibilities
Placing the right person on the right job
Starting new employees in the organization (orientation)
Training employees for jobs new to them
Improving the job performance of each person
Gaining creative cooperation and developing smooth working relationships
Interpreting the firm’s policies and procedures
Controlling labor costs
Developing the abilities of each person
Creating and maintaining department morale
Protecting employees’ health and physical condition
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Functions of the HR Manager
A line function
The HR manager directs the activities of the people in his or her own department and in related service areas (like the plant cafeteria).
A coordinative function
HR managers also coordinate personnel activities, a duty often referred to as functional control.
Staff (assist and advise) functions
Assisting and advising line managers is the heart of the HR manager’s job.
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HR and Authority
Authority
The right to make decisions, direct others’ work, and give orders.
Implied authority
The authority exerted by an HR manager by virtue of others’ knowledge that he or she has access to top management.
Line authority
The authority exerted by an HR manager by directing the activities of the people in his or her own department and in service areas.
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Employee Advocacy
HR must take responsibility for:
Clearly defining how management should be treating employees.
Making sure employees have the mechanisms required to contest unfair practices.
Represent the interests of employees within the framework of its primary obligation to senior management.
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Examples of HR Job Duties
Recruiters
Search for qualified job applicants.
Equal employment opportunity (EEO) coordinators
Investigate and resolve EEO grievances, examine organizational practices for potential violations, and compile and submit EEO reports.
Job analysts
Collect and examine information about jobs to prepare job descriptions.
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Examples of HR Job Duties (cont’d)
Compensation managers
Develop compensation plans and handle the employee benefits program.
Training specialists
Plan, organize, and direct training activities.
Labor relations specialists
Advise management on all aspects of union–management relations.
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HR Department Organizational Chart (Large Company)
Figure 1–1
Source: Adapted from BNA Bulletin to Management, June 29, 2000.
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Cooperative Line and Staff HR Management
The line manager’s responsibility is to specify the qualifications employees need to fill specific positions.
HR staff then develops sources of qualified applicants and conduct initial screening interviews
HR administers the appropriate tests and refers the best applicants to the supervisor (line manager), who interviews and selects the ones he or she wants.
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HR Organizational Chart (Small Company)
Figure 1–2
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Employment and Recruiting—Who Handles It? (percentage of all employers)
Figure 1–3
Source: HR Department Benchmarks and Analysis,” BNA/Society for Human Resource Management, 2002.
Note: length of bars represents prevalence of activity among all surveyed employers.
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The Changing Environment Of
HR Management
HR’s changing role:
“ Personnel departments”
Took over hiring and firing from supervisors, payroll, and benefit plans administration.
In the 1930s added “protecting the firm in its interaction with unions” responsibilities (labor relations).
Assumed organizational responsibilities for equal employment and affirmative action.
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A Changing HR Environment
Globalization
Technological Advances
Exporting Jobs
The Nature of Work
Workforce Demographics
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Employment Exodus:
Projected Loss of Jobs and Wages
Figure 1–4
Source: Michael Shroeder, “States Fight Exodus of Jobs,” Wall Street Journal, June 3, 2003, p. 84.
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Measuring HR’s Contribution
Strategy
The company’s long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.
HR managers today are more involved in partnering with their top managers in both designing and implementing their companies’ strategies.
Top management wants to see, precisely, how the HR manager’s plans will make the company more valuable.
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HR Metrics
Absence Rate
[(Number of days absent in month) ÷ (Average number of employees during mo.) × (number of workdays)] × 100
Cost per Hire
(Advertising + Agency Fees + Employee Referrals + Travel cost of applicants and staff + Relocation costs + Recruiter pay and benefits) ÷ Number of Hires
Health Care Costs per Employee
Total cost of health care ÷ Total Employees
HR Expense Factor
HR expense ÷ Total operating expense
Figure 1–5
Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; .
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HR Metrics (cont’d)
Human Capital ROI
Revenue − (Operating Expense − [Compensation cost + Benefit cost]) ÷ (Compensation cost + Benefit cost)
Human Capital Value Added
Revenue − (Operating Expense − ([Compensation cost + Benefit Cost]) ÷ Total Number of FTE
Revenue Factor
Revenue ÷ Total Number of FTE
Time to fill
Total days elapsed to fill requisitions ÷ Number hired
Figure 1–5 (cont’d)
Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; .
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HR Metrics (cont’d)
Training Investment Factor
Total training cost ÷ Headcount
Turnover Costs
Cost to terminate + Cost per hire + Vacancy Cost + Learning curve loss
Turnover Rate
[Number of separations during month ÷ Average number of employees during month] × 100
Workers’ Compensation Cost per Employee
Total WC cost for Year ÷ Average number of employees
Figure 1–5 (cont’d)
Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; .
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Measuring HR’s Contribution
The HR Scorecard
Shows the quantitative standards, or “metrics” the firm uses to measure HR activities.
Measures the employee behaviors resulting from these activities.
Measures the strategically relevant organizational outcomes of those employee behaviors.
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Benefits of a High Performance Work System (HPWS)
Generate more job applicants
Screen candidates more effectively
Provide more and better training
Link pay more explicitly to performance
Provide a safer work environment
Produce more qualified applicants per position
More employees are hired based on validated selection tests
Provide more hours of training for new employees
Higher percentages of employees receiving regular performance appraisals.
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The New HR Manager
New Proficiencies
HR proficiencies
Business proficiencies
Leadership proficiencies
Learning proficiencies
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The New HR Manager (cont’d)
The Need to “Know Your Employment Law”
Equal employment laws
Occupational safety and health laws
Labor laws
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Effects CFOs Believe Human Capital
Has on Business Outcomes
Figure 1–6
Source: Steven H. Bates, “Business Partners,” HR Magazine, September 2003, p. 49
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The New HR Manager
Ethics and HR
Ethical lapses (., Enron, Martha Stewart)
Sarbanes-Oxley Act in 2003
Intended to curb erroneous corporate financial reporting:
Requires CEOs and CFOs to certify their companies’ periodic financial reports.
Prohibits personal loans to executive officers and directors.
Requires CEOs and CFOs to reimburse their firms for bonuses and stock option profits if corporate financial statements subsequently require restating.
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HR Professional Certification
HR is becoming more professionalized.
Society for Human Resource Management (SHRM)
SHRM’s Human Resource Certification Institute (HRCI)
SPHR (senior professional in HR)
PHR (professional in HR)
certificate
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HR and Technology
Benefits of technological applications for HR
Intranet-based employee portals through which employees can self-service HR transactions.
The availability of centralized call centers staffed with HR specialists.
Increased efficiency of HR operations.
The development of data warehouses of HR-related information.
The ability to outsource HR activities to specialist service providers.
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The Plan of This Book: Basic Themes
HR management is the responsibility of every manager—not just those in the HR department.
HR managers must always stand ready to defend their plans and contributions in measurable terms.
An HR department’s performance is measured relative to achieving the company’s strategic aims.
HR managers increasingly rely on IT to help support the company’s strategic aims.
Virtually every HR-related decision managers make has legal implications.
Globalization and diversity are important HR issues today.
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Strategy and the Basic HR Process
Figure 1–8
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KEY TERMS
management process
human resource management (HRM)
authority
line manager
staff manager
line authority
implied authority
functional control
employee advocacy
globalization
nontraditional workers
human capital
strategy
metrics
HR Scorecard
outsourcing
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