978-0078112768 Chapter 16 Solution Manual Part 1

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Please click here to access the new HRM Failures case associated with this chapter. HRM

Failures features real-life situations in which an HR conflict ended up in court. Each case

includes a discussion questions and possible answers for easy use in the classroom. HRM

Failures are not included in the text so that you can provide your students with additional

real-life content that helps engrain chapter concepts.

Chapter Summary

The chapter discusses the various roles and activities of the HR function first. Then it examines

how to develop a market- or customer- oriented HR function. Next, the chapter describes the

current structure of most HR functions. Finally, the chapter concludes with a discussion of new

technologies that can improve HR effectiveness, including the Internet, expert systems,

groupware, imaging, and various software applications.

Learning Objectives

After studying this chapter, the student should be able to:

1. Describe the roles that HRM plays in firms today and the categories of HRM activities.

2. Discuss how the HRM function can define its mission and market.

3. Explain the approaches to evaluating the effectiveness of HRM practices.

4. Describe the new structures for the HRM function.

5. Describe how outsourcing HRM activities can improve service delivery efficiency and

effectiveness.

6. Relate how process reengineering is used to review and redesign the HRM practices.

7. Discuss the types of new technologies that can improve the efficiency and effectiveness

of HRM.

8. List the competencies the HRM execution needs to become a strategic partner in the

company.

Extended Chapter Outline

Note: Key terms appear in boldface and are listed in the “Chapter Vocabulary” section.

Opening Vignette:

Googling HR

Google has been recognized over 100 times in the last five years as an exceptional employer,

including being name the #1 Best Company to Work for in the United States (and many other

countries), and the Top #1 Diversity employer. Laszlo Bock leads Google’s People Operations

function, which has responsibility for all areas related to the attraction, development, and

retention of “Googlers.” Block joined Google after holding a number of executive leadership

positions at companies like GE Capital and McKinsey and Company. Block came to Google

unencumbered by the traditional administrative HR mindset, and he sought to create an

innovative and impactful People function.

Discussion Question

1. How did Bock’s lack of direct HR experience actually serve as a facilitative aspect of his

success in imagining, creating and leading “People Operations” for Google?

When Bock came to Google, he had served in leadership positions, but he had not held

HR positions. This means that his frame of reference about Human Resources was,

Google employees, or “Googlers.” As evidenced by the many awards that the company

I. Introduction—Human resource management practices can help companies gain a

competitive advantage. Virtually every HR function in top companies is going through a

transformation process to create a function that can play this new strategic role while

successfully fulfilling its other roles.

II. Activities of HRM

A. Categories of HRM Activities

1. Transactional activities are the day-to-day transactions a company makes.

These activities are low in their strategic value.

2. Traditional activities are the nuts and bolts of HR such as performance

management, training, recruiting, selection, compensation, and employee

relations. These activities have moderate strategic value.

3. Transformational activities create long-term capability and adaptability for

the firm. These activities include knowledge management, management

development, cultural change, and strategic redirection and renewal.

These activities comprise the greatest strategic value for the firm (Text

Figure 16.1).

Competing Through Globalization:

When Is a Bribe a Bribe?

This vignette describes the issues organizations are frequently facing when doing business

overseas – deciding which activities (such as giving gifts or other tokens of recognition or

appreciation to people abroad) are legal or illegal according to the Foreign Corrupt Policies Act.

A 130 page document was released by the US Department of Justice and the Securities and

Exchange Commission in order to provide further guidance as to where the line of being

unethical or illegal is. Since 2009, 50 companies have been prosecuted and fined (with upwards

of $2 billion in fines being paid).

Discussion Question

1. How can a global HR function determine how to operate in compliance with its values

and laws across countries that don’t share those values or laws?

Students will have a variety of views on this topic. It is important to remember that

III. Strategic Management of the HRM Function

For the HR function to become truly strategic in its orientation, it must view itself as

being a separate business entity and engage in strategic management in an effort to

effectively serve the various internal customers.

A. A customer orientation is one of the most important changes in the HR function’s

attempts to become strategic. The most obvious example of HR customers is the

line managers who require HR services. Others include strategic planning team

and employees (Figure 16.2 and 16.3).

B. The products of the HR department must be identified. For example, line

managers want to have high-quality employees committed to the organization.

C. The technologies through which HR meets customer needs vary depending on the

need being satisfied. For example, selection systems ensure that applicants

selected for employment have the necessary knowledge, skills, and abilities to

provide value to the organization.

IV. Building an HR Strategy

A. The Basic Process – Figure 16.4 depicts the basic process for HR strategy (Figure

16.5 shows Goodyear’s strategic business priorities). From these issues, the HR

strategy team needs to identify the specific people issues that will be critical to

address in order for the business to succeed. Finally, the HR strategy is

communicated to the relevant parties, both internal and external to the function.

B. Involving Line Executives – Because the HR strategy seeks to address business

issues, involving those in charge of running the business can increase the quality

of information from which the HR strategy is created. Involvement can occur in a

few ways:

1. Line executives could simply provide input.

2. Line executives could be members of a team that develops HR strategy.

3. Once strategy is developed, line managers could receive communications

with the HR strategy information.

4. Line managers could formally approve a strategy.

C. Characterizing HR Strategies – Four categories of the HR-business relationship

can be identified (Figure 16.7):

1. HR-focused HR functions

2. People-linked HR functions

3. Business-linked HR functions

4. Business-driven HR functions

V. Measuring HRM Effectiveness – Having good measures of the function’s effectiveness

provides the following benefits:

1. Marketing the function – evaluation is a sign that the HR function cares about

the organization as a whole and is trying to support operations, production,

marketing, and other functions in the company.

2. Providing accountability – evaluation helps determine whether the HRM

function is meeting its objectives and effectively using its budget.

A. Approaches for Evaluating Effectiveness – There are two commonly used approaches for

evaluating the effectiveness of HRM practices.

1. Audit approach – focuses on reviewing the various outcomes of

the HR functional areas. Both key indicators and customer satisfaction

measures are typically collected (see Table 16.1). One important source of

effectiveness data can be the customers.

a. One important internal customer is the employee of the firm.

Employees often have both direct and indirect contact with the HR

function. However, the problem with assessing effectiveness only

from the employees’ perspective is that often they are responding

not from the standpoint of the good of the firm, but rather from

their own individual perspective. Many firms have gone to

surveys of top-line executives as a better means of assessing the

effectiveness of the HR function (Figure 16.9 and 16.10).

2. Analytic Approach – focuses on either (1) determining whether

the introduction of a program or practice has the intended effect or (2)

estimating the financial costs and benefits resulting from an HR practice.

a. Evaluating a training program is one strategy for determining

whether the program works.

b. The second strategy involves determining the dollar value of the

training program, taking into account all the costs associated with

the program (Table 16.2).

c. The analytical approach is more demanding than the audit

approach because it requires the detailed use of statistics and

finance.

VI. Improving HRM Effectiveness

Once a strategic direction has been established and HR’s effectiveness evaluated, leaders

of the HR function can explore how to improve its effectiveness in contributing to the

firm’s competitiveness. Figure 16.11 depicts this process. Table 16.4 depicts an example

of analysis needed to determine the dollar value of a selection test.

A. Restructuring To Improve HRM Effectiveness- Figure 16.12 depicts a generic

structure for the HRM function. depicts the process of improving HRM

effectiveness. The HRM function effectively is divided into three divisions:

1. The Centers for Expertise usually consist of the functional specialists in

the traditional areas of HR such as recruitment, selection, training, and

compensation. These individuals ideally act as consultants in the

development of state-of-the-art systems and processes for use in the

organization.

2. The Field Generalists consist of the HRM generalists who are assigned to

a business unit within the firm.

3. The Service Center consists of individuals who ensure that the

transactional activities are delivered throughout the organization.

B. Outsourcing to Improve HRM Effectiveness – Outsourcing entails contracting

with an outside vendor to provide a product or service to the firm, as opposed to

producing the product using employees within the firm.

1. Usually this is done for one of two reasons: Either the outsourcing partner

can provide the service more cheaply than it would cost to do it internally,

or the partner can provide it more effectively than it can be performed

internally.

2. Firms primarily outsource transactional activities and services of HR such

as pension and benefits administration as well as payroll.

C. Improving HRM Effectiveness Through Process Redesign – Process redesign

enables the HRM function to more effectively deliver HRM services.

Reengineering is a complete review of critical work processes and redesign to

make them more efficient and able to deliver higher quality. The reengineering

process, shown in Figure 16.13 has four steps:

1. Identify the Process – Managers who control the process should be

identified and asked to be part of the reengineering team.

2. Understand the Process – A variety of techniques are available to help with

this step, such as data flow diagrams (Figure 16.14), data-entity

relationship diagrams, senario analyses, surveys or focus groups, and

cost-benefit analyses.

3. Redesign the Process – During this phase, the team develops models, tests

them, chooses a prototype, and determines how to integrate the prototype

into the organization.

4. Implement the Process—The company should try out the new process in a

controlled setting before introducing it widely.

D. Improving HRM Effectiveness Through Using New Technologies – HRM

Information Systems

1. New technologies are current applications of knowledge, procedures, and

equipment that have not previously been used.

2. Transaction Processing—Computations and calculations used to review

and document HRM decisions and practices. These include documenting

employee relocation, payroll expenses, and training course enrollments.

Summarized information can be provided for government reports such as

EEO-1.

3. Decision Support Systems—These are systems designed to help

managers solve problems. They usually include a “what if” feature.

4. Expert systems are computer systems incorporating the decision rules of

people deemed to have expertise in a certain area.

Competing Through Technology:

TD Bank Creates Internal Connections

This vignette describes the growing pains being experienced by TD Bank. TD Bank was

founded in Canada, but through a series of expansions and acquisitions now has locations

throughout the U.S. as well as Canada, with the majority of their locations in the U.S.. TD Bank

has utilized software known as “Connections” that was developed by IBM in order to help

facilitate employees acting as one unified North American bank.

Discussion Question

1. In what ways can an HR function leverage internal social media technology to

increase organizational effectiveness?

Student’s responses here will likely be creative. Having tremendous familiarity with

the use and functions of social media, students today can be very creative in their use

VII. Software Applications for HRM:

A. Improving HRM Effectiveness through New Technologies –E-HRM

1. Since the mid 1990’s, HRM functions sought to play a more strategic role

in organizations. The first task was to eliminate transactional tasks in

order to free up time to focus on traditional and transformational activities

(Figure 16.11).

2. The speed requirements of e-business force HRM managers to explore

how to leverage technology for the delivery of traditional and

transformational HRM activities.

B. Recruitment and Selection

1. Traditional recruitment and selection processes have required considerable

face-to-face communications. Technology has transformed these

processes.

2. Technology has enabled firms to monitor hiring processes to minimize the

potential for discriminatory hiring decisions.

C. Compensation and Rewards

1. Compensation systems in organizations probably reflect the most

pervasive of bureaucracy within HRM.

2. Leveraging technology may allow firms to better achive their

compensation goals with considerably less effort.

D. Training and Development

1. A number of firms have begun delivering training via the Web. Some types of

training can be done effectively via the Internet or an intranet, while others

might not.

2. The challenge of speedy delivery of HRM services brings the concept of

Internet-based training to the forefront. Firms compete to attract and

retain both customers and talented employees. How well a firm develops

and treats existing employees largely determines how well it achieves

these outcomes.

3. Technology allows firms to deliver training and development for at least

some skills or knowledge faster, more efficiently, and possibly more

effectively. It can quickly merge training, communication, and immediate

response to strategic contingencies.

Competing Through Sustainability:

Electrolux Leads the Sustainable Way

Swedish-based Electrolux has been names by the Dow Jones Sustainability Index as the durable

household products sector leader for six consecutive years. Efforts such as providing customers

with an “ecosavings” calculator on their website (which allows customers to calculate improved

environmental impacts by replacing older appliances) and setting environmental goals for the

company itself have allowed them to be on that list. These efforts also provide benefits outside

of environmental issues such as building the company brand, customer loyalty, etc.

Discussion Question

1. How can HR functions help to support a firm’s sustainability efforts?

Students may come up with creative ways to respond to this question. One issue that

VIII. The Future for HR Professionals – The future for careers in the HR profession seems

brighter than ever. Firms need to seek the balance between attracting, motivating, and

retaining the very best talent and keeping labor and administrative costs as low as

possible. Finding such a balance requires HR leaders who have a deep knowledge of the

business combined with a deep knowledge of HR issues, tools, processes, and

technology.

IX. The Role of the Chief Human Resource Officer

The CHRO is responsible for several functions including leading the human resource

function and ensuring that HR systems and processes deliver value to the organization.

CHRO’s play seven roles (Figure 16.17 depicts the percentage of time CHRO’s spend in

each role) as identified in a recent survey:

1. Strategic advisor – A role of the CHRO that focuses on the formulation and

implementation of the firm’s strategy.

2. Talent architect – A role of the CHRO that focuses on building and identifying the

human capital critical to the present and future of the firm.

3. Counselor/Confidante/Coach – A role of the CHRO that focuses on counseling or

coaching team members or resolving interpersonal or political conflicts among team

members.

4. Leader of the HR Function – A role of the CHRO that focuses on working with HR

team members regarding the development, design, and delivery of HR services.

5. Liaison to the Board – A role of the CHRO that focuses on preparation for board

meetings, phone calls with board members, and attendance at board meetings.

6. Workforce Sensor – A role of the CHRO that focuses on identifying workforce morale

issues or concerns.

7. Representative of the Firm – A role of the CHRO that focuses on activities with external

stakeholders, such as lobbying, speaking to outside groups, etc.

Integrity in Action:

MF Global’s Illegal Transfer

This vignette depicts the events that took place at investment bank MF Global in October 2011.

A former governor and U.S. Senator, John Corzine, who headed the firm at the time, called a

mid-level employee and explained to her, in vague terms, that it was important to transfer funds

to cover overdrafts. The employee transferred customer funds to cover the investment bank’s

overdrafts, an act that was illegal. Corzine later claimed he did not instruct the employee to do

so and was not informed she had. The question is whether or not he encouraged the act, and if

so, he is in violation of the law as well.

Discussion Question

1. What must HR functions do to ensure that leaders do not encourage employees to engage

in behavior that is not in compliance with the firm’s values or legal requirements?

There are many directions this conversation can take depending on students’ ethical and

moral compass. One way that HR can contribute to protecting employees from these