Chapter 2 textbook

How can growth/diversification, mergers, and strategic alliances create HR issues?

Growth depends on:

• Increased employee productivity

• More employees

• Employees developing/acquiring new skills

Diversification: Can create a make-or-buy decision

• Make: Develop capabilities internally

• Buy: Obtain capabilities externally

Mergers: Can fail because of:

• Cultural differences

• Conflicts between managers/workforces

Strategic alliances/joint ventures: Firms cooperate rather than fully merge/acquire; HR can assess cultural compatibility, select executives, develop teamwork, performance measures, and shared incentives.

What is the difference between a low-cost and differentiation strategy?

Low-cost

• Efficiency

• Productivity

• Minimize waste

• Economies of scale

• Cost control

• More job-based pay, less merit pay

Differentiation

• Unique/distinctive offering

• Quality, innovation, speed, or superior service

• Skilled employees

• Training, empowerment, flexibility, creativity

MC traps:

• Low cost does NOT necessarily mean low wages

• Excessive outsourcing can weaken employee skills/core capabilities

• Differentiation better supports entrepreneurial orientation because both emphasize innovation/new ideas.

What extra details should you know about layoffs, attrition, hiring freezes, and termination?

• Layoffs: Fastest workforce reduction

• Attrition: Slowest; workforce decreases naturally and gradually

• Hiring freeze: Stop planned hiring OR don't replace workers who leave; often combined with attrition

• Termination: Employer permanently separates employee; may be used when surplus is considered permanent

Layoffs can be based on seniority or ability/performance.

Seniority advantage: Objective/predictable job security.

Seniority disadvantages: May retain less competent/high-salary employees and ignores differences in talent/effort.

What should you know about benchmarking beyond its basic definition?

• Benchmark organization does NOT have to be a competitor

• Can identify:

  • Performance gaps

  • Causes of gaps

  • Best practices

• Benchmarking alone does not create competitive advantage

• Firm still needs its own combination of strategy + human capital + capabilities.

What is the difference between human capital metrics and HR metrics?

• Human capital metrics: Measure aspects of the workforce/people

• HR metrics: Measure performance of the HR function itself

• HR dashboard: Software that tracks and visually displays HR statistics for managers

Memory:
Human capital = people
HR metrics = HR department

What is the difference between coordination flexibility and resource flexibility?

Coordination flexibility
= Ability to rapidly reallocate resources as needs change.

Examples:

• Move employees between jobs

• Retrain employees

• Change incentives

• Use contingent workers

Resource flexibility
= Having employees capable of performing many different tasks in different ways.

Develop through:

• Cross-training

• Job rotation

• Team-based work

Memory:

• Coordination = MOVE resources

• Resource = VERSATILE people