C202 Managing Human Capital

competitive advantage

when it does something differently from its competition that allows it to outperform them and succeed in its industry.

personnel

*It is believed that the first HRM department was created as a department called “__” in 1901 by The National Cash Register Company following a bitter labor strike.

*The new department’s role was primarily legal compliance, focusing on record-keeping, payroll, workplace safety, and employee grievances.

1980s

Beginning in the 19__’s, HRM departments also began managing change, mergers and acquisitions, employee motivation, and organizational culture.

human resource management

__is the organizational function responsible for attracting, hiring, developing, rewarding, and retaining talent.

__is responsible for people-related issues as well as employment-related legal compliance.

Effective __is critical to all organizations because it both manages risk and creates the system that acquires, motivates, manages, and retains the talent that determines the organization’s success. 

Essentially, HRM influences organizational performance through its influence on three key areas:

1. Influencing what employees should do.

• planning

• laws & regulations

2. Influencing what employees can do.

• staffing

• training

3. Influencing what employees will do.

• compensation

• performance management

human resource management

__ creates the system that acquires, motivates, develops, and retains talent and is a key source of competitive advantage.

The core of __ is designing systems that maximize the efficiency and effectiveness of an organization’s use of its talent in accomplishing organizational goals.

main functions with human resource management

• staffing

• performance management

• health and safety

• employee-management relations

• training and development

• rewards and benefits

staffing

__is the process of planning, acquiring, deploying, and retaining employees that enables the organization to meet its talent needs and execute its business strategy.

business strategy

One role of HRM is to staff the most qualified and appropriate employees to support the company in meeting its__.

training and development

__is an important HRM function focused on developing employee capabilities through both formal and informal activities.

The __ function is also responsible for career planning, organizational development, and often legal compliance as well.

What must be aligned with training goals?

performance management and rewards

What are two of the most important management problems businesses face today?

recruitment and training

performance management

__involves aligning individual employees’ goals and behaviors with organizational goals and strategies, appraising and evaluating past and current behaviors and performance, and providing suggestions for improvement.

compensation and benefits

__perceived as both adequate and equitable that reward employees for their contributions to organizational goal attainment are important to employee motivation, performance, and retention.

total rewards

__refers to the sum of all of the rewards employees receive in exchange for their time, efforts, and performance.

total rewards are comprised of:

• direct financial compensation

• indirect financial compensation

• nonfinancial compensation

direct financial compensation

Compensation received in the form of salary, wages, commissions, stock options, or bonuses

indirect financial compensation

(benefits): Any and all financial rewards not considered direct financial compensation, including health insurance, wellness benefits, paid vacations, and free meals

nonfinancial compensation

Rewards and incentives given to employees that are not financial in nature, including intrinsic rewards received from the job itself or from the physical or psychological work environment (e.g., feeling successful or appreciated)

total rewards

The sum of all the rewards an employee receives in exchange for their time, efforts, and performance is referred to as __.

paid vacations

What’s an example of indirect financial compensation

health and safety

Workplace _ and _ includes topics ranging from wellness, fire and food safety, ergonomics, injury management, disaster preparedness, industrial hygiene, and even bullying and workplace violence.

safety

Workplace __ involves protecting employees from work-related toxins, accidents, and injuries.

health

Workplace __ refers to employees’ physical and mental health.

in what they reinforce

Each of the functional areas of human resource management must be consistent__.

employee-management relations

• reflect societal beliefs about the relationship between employees and the capital owners of the organization.

• ultimately determine the employment rights of both employers and employees.

strategic risk

Human resource management initiatives can affect business strategy. These may include the overall talent strategy, company culture, ethics, investments in people, and the implementation of change initiatives.

operational risk

These risks can influence an organization’s ability to execute the business strategy. Human resource management affects the speed and the effectiveness of talent acquisition as well as the development of employees’ skills and the identification and retention of top performers. These and other human resource management activities can directly influence the organization’s success or failure.

financial risk

Human resource management performance affects the organization’s workforce costs and productivity directly through compensation, benefits, turnover, overtime, and time-to-hire and indirectly through errors, accidents, delays, and lost production.

compliance risk

Every employment-related decision can have legal ramifications, particularly in the areas of diversity, health and safety, union relations, whistleblowers, and harassment. SEC regulations mandate the board of directors’ responsibility for oversight of risk management policies. Boards must make known any material risks with the potential to affect company earnings. Because the acquisition, retention, and performance of talent have the potential to affect company earnings, it is essential that organizations identify and manage these risks through effective human resource management.

1. strategic

2. operational

3. financial

4. compliance

4 primary types of risk:

Human resource management policies and practices add value to organizations and influence organizational performance by either improving efficiency or contributing to revenue growth.

How Does HRM Influence Organizational Performance?

financial risk

Which type of risk management is associated with the reduction of costs in hiring employess?

compliance risk

Which type of risk management involves consideration of legal issues in terms of diversity, health and safety, union relations, whistleblowers, and harassment?

strategic risk

Which type of risk management encompasses the HRM initiatives to strengthen ethical awareness and company culture?

operational risk

Which type of risk management involves the speed and effectiveness of talent acquisition, development of employee skills, and retention of top performers?

business strategy

• defines how the firm will compete in its marketplace.

• should reflect what the organization’s customers want, what the firm wants, and what the firm can cost-effectively deliver

talent philosophy

An organization’s __is a system of beliefs about how its employees should be treated including;

• the value placed on diversity

• ethics

• whether the firm would like employees to stay for a limited time or for their entire careers

• whether employees are viewed as assets to be managed or as investors choosing where to allocate their time and effort

human resource strategy

A firm’s __links the entire human resource function with the firm’s business strategy.

global mindset

• is a set of individual attributes that enable you to influence individuals, groups, and organizations from diverse socio/cultural/institutional systems.

• is learned, so experiences can influence it in a positive or negative manner

culture issues

Mergers and acquisitions often fails because of___.

human resource

Managing organizational change is the responsibility of which type of manager?

communication

__between HR and employees is extremely important.

employee handbooks

__ document the organization’s HRM policies and procedures, and they are very important in helping employees learn about the company’s HRM policies.

shared service center

• centralizes the routine, transaction-based HRM activities, including payroll, benefits administration, and employee exit surveys

• can prevent redundancies and save money, as well as improve the consistency and the efficiency with which these tasks are done

outsourcing

is the hiring of an external vendor to do work rather than doing it internally.

professional employer organization (PEO)

• is a company that leases workers to companies that need them for a fee, ranging from 2 to 7 percent of the worker’s gross wages.

• is technically the employer of these workers, and it manages their administrative needs, including training, discipline, payroll, and benefits.

organizational culture

• is made up of the norms, values, and assumptions of organizational members.

• a company’s culture is reinforced by things such as logos, ceremonies, dress codes, and even office decorations and furniture placement.

culture

__is often defined more casually as “the way we see and do things around here” and is critical in aligning employees’ goals with those of the organization.

culture

What can be reinforced or undermined by its fit with the organization’s business strategy?

Entrepreneurial

• Emphasizes creativity, innovation, and risk taking. Electronic Arts and IDEO are examples of companies with __cultures.

bureaucratic

• Emphasizes formal structures and the correct implementation of organizational procedures, norms, and rules.

• This type of culture is commonly associated with consistency and high ethical standards. Pharmacies and drug manufacturers such as GlaxoSmithKline and Merck often adopt __cultures.

consensual

• Emphasizes loyalty and tradition, and encourages employees to stay with the organization for a long time. Promotion is generally from within. Law firms and the military are good examples of this type of culture.

competitive

• Emphasizes competitive advantage and market superiority. Brokerage and currency trading firms are consistent with this type of culture, which often produce a large amount of stress.

Four broad types of organizational culture are:

1. Entrepreneurial

2. bureaucratic

3. consensual

4. competitive

performance culture

A__ __focuses on hiring, retaining, developing, motivating, and making work assignments based on performance data and results.

entrepreneurial

Which type of culture emphasizes creativity, innovation, and risk taking?

bureaucratic

What type of culture is commonly associated with rules and formal structures?

consensual

Which type of culture emphasizes loyalty and tradition, and encourages employees to stay with the organization for a long time?

competitive

What type of culture emphasizes competitive advantage and market superiority?

it increases the chances that employees will perceive the organization similarly and identify the same culture.

Why is a strong HR system important?

high-performance work systems

• sometimes known as high-involvement or high-commitment organizations, enable high performance through employees.

• __organizations should be structured so that individuals at the lowest level in the organization not only perform work but also are responsible for improving work methods and procedures, solving problems on the job, and coordinating their work with that of others.

• Companies that implement __utilize a fundamentally different approach to managing than do more traditional hierarchical and bureaucratic organizations.

seven elements of high performance work systems (HPWS):

1. Employment security

2. Selective hiring of new talent

3. Self-managed teams and decentralization of decision making as the basic principles of organizational design

4. Comparatively high compensation contingent on organizational performance

5. Extensive training

6. Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels

7. Extensive sharing of financial and performance information throughout the organization

ethics

are the standards of moral behavior that define socially accepted behaviors that are right as opposed to wrong

5 different types of ethical standards that help us evaluate the ethics of an action:

1. utilitarian standard

2. rights standard

3. fairness standard

4. common good standard

5. virtue standard

utilitarian standard

The ethical action best balances good over harm by doing the most good or doing the least harm. When Southwest Airlines cuts all employees’ pay rather than laying anyone off, it is following a__ standard.

rights standard

The ethical action is the one that best respects and protects the moral rights of everyone affected by the action, including the right to privacy, to be told the truth, or to be safe. If a supervisor tells an employee to handle a toxic substance without appropriate protective gear, the employee has a right to refuse.

fairness standard

The ethical action treats all people equally, or at least fairly, based on some defensible standard. The __standard is central in the debate over the appropriateness of CEO salaries and bonuses that are hundreds of times larger than the pay of the average employee.

common good standard

The ethical action shows respect and compassion for everyone, especially the most vulnerable. Ensuring that suppliers do not employ child labor or provide unsafe working conditions is an example of applying the __standard.

virtue standard

The ethical action is consistent with certain ideal virtues including civility, compassion, and benevolence. This standard asks, “Is this action consistent with my behaving at my best?” A company that values honesty quickly recalling products that might be defective or dangerous reflects the __standard.

utilitarian standard

What ethical action is associated with balancing the most good and the least harm?

rights standard

Which ethical action is the one that best respects and protects the moral rights of everyone affected by the action?

fairness standard

Which ethical action treats all people equally or at least fairly based on some defensible standard?

three types of systemic errors organizations often make that undermine their ethics efforts:

1. omission errors

2. remission errors

3. commission errors

omission errors

a lack of written rules

remission errors

pressure to make unethical choices

commission errors

a failure to follow sound, established operational and ethical practices

code of conduct

specify expected and prohibited actions in the workplace and give examples of appropriate behavior.

code of ethics

• is a decision-making guide that describes the highest values to which an organization aspires.

• it specifies the company’s ethical rules regarding what employees should and should not do.

Corporate social responsibility

happens when businesses show concern for the common good and value human dignity

culture

For corporate social responsibility to last in a company, it must integrate with the __of the company.

identify key goals

Which of the following is a first step of a change initiative?

trust

One of the most important factors in successfully creating organizational change is the creation of a culture of __.

power distance

is the amount of inequality that exists and that is accepted among people with and without power; higher power distance (e.g., Philippines, Guatemala, and Malaysia) is associated with more hierarchical companies that have large gaps in authority and compensation, while lower power distance (e.g., Austria, Israel, and Denmark) is reflected in flatter organizations in which employees and supervisors are considered and treated more equally.

Individualism

refers to the strength of the ties people have with others in their community. Higher individualism (e.g., United States, Australia, and New Zealand) is reflected in greater valuation of people’s time and need for freedom with an emphasis on individual and extrinsic rewards, whereas lower individualism (e.g., Guatemala, Ecuador, and Bangladesh), is reflected in placing a high value on harmony rather than honesty with an emphasis on intrinsic and collective rewards.

masculinity

refers to the extent to which a culture reflects traditionally masculine or feminine traits. Highly masculine cultures show a societal preference for assertiveness, achievement, and material rewards for success. More feminine cultures prefer modesty, cooperation, and quality of life. Higher masculinity (e.g., Japan, Hungary, and Slovakia) is reflected in a distinction between men’s work and women’s work, while lower masculinity (e.g., Denmark, Sweden, and Norway) is reflected in equal employment opportunity, often supported with legislation.

uncertainty avoidance

reflects the degree of anxiety felt in uncertain or unfamiliar situations. Higher uncertainty avoidance (e.g., Greece, Portugal, and Uruguay) is associated with a need for structure and very formal and rule-driven business conduct, whereas lower uncertainty avoidance (e.g., Singapore, Jamaica, and Hong Kong) is associated with an informal business culture, greater acceptance of risk, and more concern with long-term performance than with daily events.

Long-term orientation

reflects a focus on long-term planning, delivering on social obligations, and avoiding “losing face.” A longer-term orientation (e.g., China and Taiwan) is reflected in a strong work ethic and placing high value on education and training, whereas a shorter-term orientation (e.g., West Africa and Canada) is characterized by higher individualism, creativity, and equality.

evaluating the two cultures for compatibility

What is a key function that HRM plays to help determine whether a planned merger will be successful?

business strategy execution

In which area are the HRM activities the most important to identify and measure through metrics?