UNIT 1 – September 10 , 2013
Human Resource Management
• The process of managing human resources (human capital and intellectual assets) to
achieve an organization’s objectives.
• Staffing the organization, designing jobs and teams, developing skillful employees,
identifying approaches for improving their performance, and rewarding employee successes
are as relevant to line managers as they are to the HR department.
• Competitive advantage through employees: Employees have to be selected and motivated
to be better.
• Human capital is the knowledge, skills, and capabilities of employees that add economic
value to an organization. Even if some key people leave, it’s important to have others in the
o Ex: CEO of Saatchi & Saatchi gets fired by the board and stock plummets; the CEO
and his team were the human capital.
• Human capital and HRM
o Creation of knowledge
o Utilization of knowledge
o Application of knowledge
• It’s foolish to let talent go after developing them, so companies like Sun Microsystems ask
employees to work on long-term projects or take unpaid vacations in tough times.
• Brain waste: the biggest mistake that companies make is not using the human capital they
have. Many workers are underutilized. For example, failure to recognize foreign experience.
• A way of applying knowledge is to post ideas, wisdom, knowledge, problems on an intranet
to share solutions or best practices so that other units can benefit from this shared
Impact of HR
• The impact of HR functions is dramatically positive; positive gains, more profitable, etc.
o 15% of relative profit derives from HR studies ADMS 2600
o Increased financial success
• Two main ways of affecting businesses
o Cost savings
Most expensive cost is labour, representing approx. 80% of running the
businesses, meaning this needs to be controlled
Managing turnover and absenteeism
Hiring an employee is estimated to be about 1 years’ worth of salary
o More productive employees
Doing things faster, better, or cheaper with the same number of employees
Key HR functions of selection: HR planning, performance appraisal, training,
The HR manager should be able to outline the cost/benefit analysis of a
• Most pressing competitive issues:
o Responding strategically to changes in the marketplace
o Competing, Recruiting and Staffing Globally
o Achieving Corporate Social Responsibility and Sustainability Goals
o Advancing HR with technology
o Containing costs while retaining talent and productivity
o Responding to the demographic and diversity challenges of the workforce.
• HRM systems can help organizations can help provide products faster, better and cheaper
o Six Sigma
A process used to translate customer needs into a set of optimal tasks that
are performed in concert with one another
3.4 defects per 1 million products ADMS 2600
o Reengineering and HRM
Fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in cost, quality, service, and speed
• Types of change
o Reactive change
Change that occurs after external forces have already affected performance.
o Proactive change
Change initiated to take advantage of targeted opportunities.
• Formal change management programs help keep employees focused on the success of the
• Change management can be as simple as teaching a new software program, or as complex
and changing the attitudes of managers and employees
• Some reasons why change efforts fail:
o Not establishing sense of urgency
o Lacking leaders who have a vision
o Not removing obstacles
o Not anchoring changes in corporate culture
• Globalization: the trend towards opening up foreign markets to international trade and
• Impact of globalization
o “Anything, anywhere, anytime” markets
o Partnerships with foreign firms
o Lower trade and tariff barriers
• GAT: General agreement of tariffs and trade; establish rules and guidelines for global
commerce ADMS 2600
Corporate Social Responsibility
• Corporate social responsibility: responsibility of the firm to act in the best interests of the
people and communities affected by its activities
• We are not only concerned about price, b