THE CHALLENGE OF HUMAN
RESOURCES MANAGEMENT
The purpose of this chapter is to acquaint students with the importance of human resources
management (HRM) and how it contributes to the achievement of an organization’s overall
objectives. In this chapter we discuss how people can be a source of competitive advantage, the
CHAPTER LEARNING OUTCOMES
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Explain how human resources managers can help their firms gain a
sustainable competitive advantage through the strategic utilization
Of people.
LEARNING OUTCOME 1
LEARNING OUTCOME 5
LECTURE OUTLINE
I. WHY STUDY HUMAN RESOURCES MANAGEMENT?
Figure 1.1 will be useful as you discuss this question. The answer to this question is much
A. Human Capital and HRM
The idea that organizations “compete through people” highlights the fact that
II. COMPETITIVE CHALLENGES AND HUMAN RESOURCES MANAGEMENT
Highlights in HRM 1-3 and Figures 1.2 will be useful in your discussion of these
A. Challenge 1: Responding Strategically to Changes in the Marketplace
Given the pace of commerce, organizations can rarely stand still for long. In today’s
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highly competitive environments in which competition is global and innovation is
continuous, being able to adapt has become the key to capturing Opportunities and
Overcome Obstacles as well as the very survival of organizations.
• Programs focused on total quality management, Six Sigma efforts downsizing,
• To meet customers’ expectations, managers must focus on quality, innovation,
variety, and responsiveness. Total quality management (TQM) is a set of
• Six Sigma initiatives work best when organizations make other changes in their
HRM philosophies and programs. The connection of HR to Six Sigma begins
with the formation of teams and extends to training, performance management,
communications, culture, and even rewards.
• Spend some time discussing with students both the opportunities afforded by
international business and the difficulties in managing a global workforce.
Mention the challenges of different geographies, cultures, laws, and business
practices such as offshoring. HRM issues such as staffing, training,
compensation, and labor relations lie at the heart of these concerns. Mention to
students that an entire chapter (Chapter 15) will be devoted to international
issues in HRM.
Chapter 1: The Challenge of Human Resources Management 3
B. Human Resources Managers and Business Strategy
Ten or 20 years ago, human resources personnel were often relegated to conducting
C. Challenge 2: Competing, Recruiting, and Staffing Globally
• Today companies of all sizes are seeking business opportunities in global markets,
or are engaging in globalization in some way. In fact, according to the U.S. Small
Business Administration, nearly 97 percent of all U.S. exporters are small
• Spend some time discussing with students both the opportunities afforded by
international business and the difficulties in managing a global workforce.
• Also, make clear to students that globalization is not just for large companies.
Even small companies such as SpringHill “go global.” In fact, nearly 97 percent
of all U.S. exporters are small and medium-sized companies.
them locate the best opportunities worldwide, be they domestic or abroad.
1. How Globalization Affects HRM
For all of the opportunities afforded by international business, when managers
talk about “going global,” they have to balance a complicated set of issues related
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D. Challenge 3: Setting and Achieving Corporate Social Responsibility and
Sustainability Goals
Corporate Social Responsibility is simply good citizenship. Ask how many have
heard about corporate social responsibility in some other class? If so, what did they
learn about the concept? If not, based on either intuition or what they read in the text,
Sustainability involves the ability to do business without causing damage to the
environment and resources. As you did in discussing corporate social responsibility,
E. Challenge 4: Advancing HRM with Technology
• Ask students to discuss the positive and negative aspects of computers. With
• Discuss with students their experience with jobs that have moved from “touch
labor” to “knowledge workers.” Ask them what kinds of skills these new jobs
• Information technology has also influenced the HR function directly. Human
resource information systems (HRIS) allow organizations to store and quickly
use judgment and decision models to institutionalize organizational knowledge.
Ultimately, IT can provide a data and communications platform that helps HR link
and leverage the firm’s human capital to achieve competitive advantage. The three
ways that IT influences HRM are as follows: (1) operationally—by automating
routine activities, alleviating administrative burdens, reducing costs, and
improving internal HR productivity; (2) relationally—by providing line
Chapter 1: The Challenge of Human Resources Management 5
1. From Touch Labor to Knowledge Workers
Advanced technology tends to reduce the number of jobs that require little skill
2. Influence of Technology on HRM
Perhaps the most central use of technology in HRM is an organization’s human
F. Challenge 5: Containing Costs While Retaining Top Talent and Maximizing
Productivity
1. Managing Benefits
Managing benefits, including sharply higher employee-healthcare costs, are one
of the largest expenditures of any organization, particularly in service and
2. Downsizing
Downsizing is the planned elimination of jobs. Since 2000, 3 million U.S.
3 Furloughing
Furloughing is alternative to downsizing. It involves taking time off with no or
reduced pay.
4. Outsourcing
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5. Offshoring
Offshoring is the practice of moving jobs overseas. Because companies estimate
that they can save 40 to 60 percent on labor costs, the practice is likely here to
6. Employee Leasing
In some cases, the outside vendors may actually hire the displaced employees.
This is known as employee leasing. The value of employee leasing is that it
7. Productivity Enhancements
In addition to cost-cutting efforts, organizations must find ways to increase
G. Challenge 6: Responding to the Demographic and Diversity Challenges of the
Workforce
1. Ethnic and Racial Diversity in the Workforce
America’s employees continue to become more diverse. The U.S. Census Bureau
estimates that in 2014, minorities will make up an even larger share of the U.S.
2. Age Distribution of the Workforce
Chapter 1: The Challenge of Human Resources Management 7
The U.S. labor force is aging, as are the work forces of more developed countries
3. Gender Distribution of the Workforce
Women now constitute over half of the U.S. workforce. Approximately 71
percent of mothers with school-age children are employed in some capacity.
H. Challenge 7: Adapting to Educational and Cultural Shifts Affecting the
Workforce
• In recent decades, the educational level of the U.S. workforce has risen
dramatically. But it’s not just workers with four-year degrees that are in great
1. Cultural and Societal Changes Affecting the Workforce
The attitudes, beliefs, values, and customs of people are derived from the culture
2. Employee Rights
Federal laws grant employees the right to equal employment opportunity, union
3. Privacy Concerns of Employees
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Since passage of the federal Privacy Act of 1974, employers have been giving
increased attention to employee rights to privacy. The act applies to records
• Explain to students that not all employee communications in the workplace (e–
have a different opinion.
• Point out that the information employees post on the Web—either on social
4. Changing Attitudes toward Work
Employees today are less likely to define their personal success only in terms of
climbing the corporate ladder to them?
5. Balancing Work and Family
Work and family issues are connected in social, economic, and psychological
III. PARTNERSHIP OF LINE MANAGERS AND HR DEPARTMENTS
Emphasize to students that managing people is every manager’s business, and successful
organizations are those that combine the expertise of HR specialists with the experience of
Chapter 1: The Challenge of Human Resources Management 9
A. Responsibilities of the Human Resources Manager
The major activities of HR managers include the following:
Advice and Counsel—The HR manager often serves as an in-house consultant to
B. Competencies of the Human Resources Manager
Business Mastery—This requires an understanding of the economics of the
business, its financial capabilities, and its competitors and customers. HR
ANSWERS TO END–OF-CHAPTER DISCUSSION QUESTIONS
1. Contrary to what many managers might say, people are not always an organization’s
most important asset. In fact, many times managers adversely affect the impact employees
2. Some of the most basic concerns about opening up an office in another country include legal,
cultural, and administrative differences. Students should be made aware of the options an
3. The answers to this question will vary depending on the person and his or her values and
background. Some students are more focused on day-to-day personal needs and others on
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4. Again, there is not necessarily a specific correct answer. Any answer is at least partially
speculative. Regardless of how students respond, it seems reasonable that as long as an
5. This is an interesting opinion question. Perhaps you can divide the class into discussion
groups who will report back to the class with their perspective. Most likely your class will
6. Probably most students will focus on the pros and say that the U.S. benefits from its diverse
population. Some students will take that position because that is what they believe and others
7. The answer to this question is fairly obvious. HR needs to know these things in order to form
8. It is probably impossible to answer this question definitively. It is meant to stimulate
conversation about the complementary roles within HRM—how they fit together and
ANSWERS TO USING THE INTERNET ACTIVITIES
Internet Exercise #1, page 6
Question:
Visit the SHRM website and search for HR disciplines. List and briefly describe current HR
disciplines. Which of these are you most interested in learning about? Why?
Chapter 1: The Challenge of Human Resources Management 11
Answer:
Student answers will vary on which HR disciplines they are most interested in. Current HR
Internet Exercise #2, page 27
Department of Labor
Question:
Visit the U.S. Department of Labor website and research training programs. What is the DOL
currently doing to educate U.S. workers and prepare them for the workforce?
Answer:
The Department of Labor’s Employment & Training Administration (ETA) funds job training
12 Part 1: Human Resources Management in Perspective
Chapter 1: The Challenge of Human Resources Management 13
VIDEO CASE DISCUSSION GUIDE
Encourage students to consider what went wrong when The Fruit Guys attempted to expand.
Few details are given in the video, but the CEO clearly learned that he needed to have a more
formal arrangement with any new people and that he needed to retain control of his own
operations.
Guide students to think in terms of how different laws and taxes governing employment will
of fresh fruit.
This might be a good time to encourage students to think about how start-up companies often
operate with a fairly loose HR and leadership structure that needs to become more
14 Part 1: Human Resources Management in Perspective
NOTES FOR END–OF-CHAPTER CASE STUDIES
Case Study 1: New HR Strategy Makes Lloyd’s A “Best Company”
1. The case does not specify the skills that Black thinks that the workforce in general needs to
work successfully in the area of HR but based on the focus of her efforts and on what she has
indicated regarding the ideal characteristics of future HR professionals, there are several
2. Outcomes include not only a more positive internal organizational environment in which
3. Some of the challenges of establishing HR policies for a global company include culture
(along with religion), communication, laws, and economic systems. A policy that is viewed
4. Situations that might require an HR manager to say “no” could involve almost any HR
policy or objective which might pay off for the firm but not for a given person, department
Case Study 2: Shell’s Top Recruiter Takes His Cues From Marketing
1. Recruitment by its very nature involves marketing. Firms who have an abundance of highly
qualified applicants trying to sell themselves in pursuit of a limited number of jobs do not
need to recruit. However, marketing not only seeks to sell something to a customer but to do
Chapter 1: The Challenge of Human Resources Management 15
2. Answers will vary depending on the student. To become an employer of choice a firm needs
to understand the needs and values of the type of employees the firm seeks to attract. What is
their age, educational level, values, etc? It might be difficult for an oil company to attract
3. Opinions will also vary on this question. Depending on the size of your class, perhaps you