Chapter

Human 1
Resource
Management:
Gaining a
Competitive
Advantage

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• Learning Objectives
LO1-1 Discuss the roles and activities of a company’s human resource
management function.
LO1-2 Discuss the implications of the economy, the makeup of the
labor force, and ethics for company sustainability.
LO1-3 Discuss how human resource management affects a company’s
balanced scorecard.
LO1-4 Discuss what companies should do to compete in the global
marketplace.
LO1-5 Identify how social networking, artificial intelligence, and
robotics is influencing human resource management.
LO1-6 Discuss human resource management practices that support
high-performance work systems.
LO1-7 Provide a brief description of human resource management
practices.

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• Introduction

Human Resource Management

• plays a role in a company’s survival, effectiveness, and
competitiveness
• refers to the policies, practices, and systems that influence
employees’ behavior, attitudes, and performance

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• Figure 1.1 Human Resource
Management Practices

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appendix
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• What Responsibilities and Roles Do HR
Departments Perform? 1 of 2
HRM is a means to contribute to
• profitability
• quality
• other business goals

LO 1-1

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• What Responsibilities and Roles Do HR
Departments Perform? 2 of 2
High-Impact HR functions
• more integrated with the business
• more skilled at attracting and retaining employees
• can adapt quickly
• identify and promote talent from within
• identify what motivates employees
• continuously building talent and skills

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• Table 1.1
Responsibilities of HR Departments
Analysis and design of work
Recruitment and selection
Training and development
Performance management
Compensation and benefits
Employee relations/Labor relations
Personnel policies
Employee data and information systems
Legal compliance
Support for business strategy

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• Figure 1.2 HR as a Business with Three
Product Lines 1 of 3
1. Administrative Services and Transactions
Compensation, hiring, staffing
• Emphasis: Resource efficiency and service quality

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• Figure 1.2 HR as a Business with Three
Product Lines 2 of 3
2. Business Partner Services
Developing effective HR systems and helping
implement business plans, talent management.
• Emphasis: Knowing the business and exercising
influence – problem solving, designing effective
systems to ensure needed competencies

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• Figure 1.2 HR as a Business with Three
Product Lines 3 of 3
3. Strategic Partner
Contributing to the business strategy based on
considerations of human capital, business capabilities,
readiness, and developing HR practices as strategic
differentiators
• Emphasis: Knowledge of HR and of the business,
competition, the market, and business strategies

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• Strategic Role of the HRM Function 1 of 12

HRM Role
Time spent on administrative tasks is decreasing, roles
as a strategic business partner, change agent and
employee advocate are increasing.
Shared service model
• Includes centers of expertise or excellence, service centers,
and business partners
• Central place for administrative and transactional tasks

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• Strategic Role of the HRM Function 2 of 12

Technology
Reducing HRM role in administrative tasks, maintaining
records, and providing self-service to employees
• Shift to self-service gives employees access to many
HR issues
• HR managers have more time to work on employee
issues

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• Strategic Role of the HRM Function 3 of 12
Outsourcing
Most commonly outsourced activities
• Benefits administration (e.g., flexible spending accounts,
health plan eligibility status)
• Relocation
• Payroll
Most common reason for outsourcing
• Cost savings
• Increased ability to recruit and manage talent
• Improved HR service quality
• Protection of the company from potential lawsuits by
standardizing processes such as selection and recruitment

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• Strategic Role of the HRM Function 4 of 12

Strategic Role
• Lead efforts focused on talent management and
performance management
• Take the lead in helping companies attract, develop,
and retain talent in order to create global workforces
• Use and analyze data to make a business case for
ideas and problem solutions

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• Table 1.2 Questions to Ask: Is HRM
Playing a Strategic Role in the Business?
1. What is HR doing to provide value-added services to internal
clients?
2. Do the actions of HR support and align with business priorities?

3. How are you measuring the effectiveness of HR?

4. How can we reinvest in employees?

5. What HRM strategy will we use to get business from point A to B?

6. From an HR perspective, what should we be doing to improve our

marketplace position?
7. What’s the best change we can make to prepare for the future?

8. Do we react to business problems or anticipate them in advance?

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• Strategic Role of the HRM Function 5 of 12
Demonstrating the Strategic Value of HRM: HR
Analytics and Evidenced-Based HR
• HR can engage in evidence-based HR
• Requires the use of HR or Workforce Analytics
• Big data
• Information merged from HR databases, corporate financial
statements, employee surveys, and other data sources
• Result in evidence-based HR decisions
• Show that HR practices influence the organization’s bottom
line, including profits and costs

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• Strategic Role of the HRM Function 6 of 12
The HRM Profession: Positions and Jobs
• Primary activities involve performing the HR
generalist role
• Fewer HR professionals are involved in the HR
function at the executive level of the company,
training and development, HR consulting, and
administrative activities

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• Table 1.3 Median Salaries for HRM Positions
POSITION SALARY
Top HR executive $240,206
Global HR manager 121,095
Management development manager  117,114
Health and safety manager 101,872
Employee benefits manager 95,244
HR manager 95,267
Mid-level labor relations specialist 83,974
Campus recruiter 64,725
Entry-level HRIS specialist 54,233
HR generalist  51,180
Entry-level compensation analyst 56,267
Entry-level employee training specialist 48,286

©McGraw-Hill Education. SOURCE: Based on data from Salary Wizard,

• Strategic Role of the HRM Function 7 of 12
Education and Experience
Four-year college or graduate HR degree
Senior HR role
• Developing and supporting the company culture,
• Employee recruitment, retention and engagement
• Succession planning
• Designing the company’s overall HR strategy

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• Strategic Role of the HRM Function 8 of 12
Education and Experience continued
• Junior HR role
• Handle transactions related to paperwork, benefits and
payroll administration
• Answering employee questions
• Data management
• Professional certification

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• Strategic Role of the HRM Function 9 of 12
Competencies and Behaviors
Most HRM professionals are generalists
Lack business acumen
Need nine competencies developed by SHRM

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• Strategic Role of the HRM Function 10 of 12
Nine Competencies
1. HR Technical Expertise and Practice
Apply the principles of HRM to contribute to the success of the
business

2. Business Acumen
Understand business functions and metrics within the
organization and industry

3. Critical Evaluation
Interpret information to determine return on investment and
organizational impact in making recommendations and
business decisions

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• Strategic Role of the HRM Function 11 of 12
Nine Competencies continued
4. Ethical Practice
Integrate core values, integrity, and accountability throughout all
organizational and business practices

5. Global and Cultural Effectiveness

Manage HR both within and across boundaries

6. Communications
Effectively exchange and create a free flow of information with
and among various stakeholders at all levels of the organization
to produce meaningful outcomes

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• Strategic Role of the HRM Function 12 of 12
Nine Competencies continued
7. Organizational Leadership and Navigation
Direct initiatives and processes within the organization and gain
buy-in from stakeholders

8. Consultation
Provide guidance to stakeholders such as employees and
leaders seeking expert advice on a variety of circumstances
and situations

9. Relationship Management
Manage interactions with and between others with the specific
goal of providing service and organizational success

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• Figure 1.4 
Competitive
Challenges
Influencing
U.S.
Companies

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appendix

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• Competitive Challenges Influencing
Human Resource Management 1 of 25
Competing Through Sustainability
Sustainability relates to social responsibility
Also refers to the company’s ability to meet its needs
without sacrificing the ability of future generations to
meet their needs
• Company must meet the needs of stakeholders

LO 1-2

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• Competitive Challenges Influencing
Human Resource Management 2 of 25
Sustainability includes the ability to
Deal with economic and social changes
Practice environmental responsibility
Engage in responsible and ethical business practices
Provide high-quality products and services
Put in place methods to determine if the company is
meeting stakeholders’ needs

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• Competitive Challenges Influencing
Human Resource Management 3 of 25
Deal with the Workforce and Employment
Implications of the Economy
• Skill demands for jobs have changed
• Remaining competitive in a global economy requires
demanding work hours and changes in traditional
employment patterns
• The economy is not growing although unemployment
rate is below 5%
• Wage growth has been uneven
• Labor productivity fell in 2009

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• Competitive Challenges Influencing
Human Resource Management 4 of 25
HR practices that enhance labor productivity
Improving the design of work and the use of technology
Upskilling employees through training
Managing performance and compensation to incentivize
and motivate workers to work smarter and harder
Raising pay and focus on learning

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• Competitive Challenges Influencing
Human Resource Management 5 of 25
Labor Force and Employment Characteristics
• Population is the most important factor in determining
the size and composition of the labor force
• Growth is slowing
• Labor force is aging
• Diversity is increasing
• Service sector is growing
• Education is important to meet job requirements
• Shortage of qualified candidates

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• Competitive Challenges Influencing
Human Resource Management 6 of 25
Understand and Enhance the Value Placed on
Intangible Assets and Human Capital
Three types of assets
• Financial assets (cash and securities)
• Physical assets (property, plant, equipment)
• Intangible assets

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• Table 1.6 Examples of Intangible Assets 1 of 2

Human capital Customer capital

• Tacit knowledge • Customer relationships
• Education • Brands
• Work-related know-how • Customer loyalty
• Work-related competence • Distribution channels

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• Table 1.6 Examples of Intangible Assets 2 of 2

Social capital Intellectual capital

• Corporate culture • Patents
• Management • Copyrights
philosophy • Trade secrets
• Management • Intellectual property
practices
• Informal networking
systems
• Coaching/mentoring
relationships

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• Competitive Challenges Influencing
Human Resource Management 7 of 25
Understand and Enhance the Value Placed on
Intangible Assets and Human Capital continued
Knowledge workers
• Contribute specialized knowledge
• Share knowledge and collaborate on solutions
• In demand because companies need their skills and jobs
requiring them are growing

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• Competitive Challenges Influencing
Human Resource Management 8 of 25
Emphasize Empowerment and Continuous
Learning
Give employees responsibility and authority
Hold them accountable
Employees share in the rewards and losses
Learning organization

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• Competitive Challenges Influencing
Human Resource Management 9 of 25
Adapt to Change
• Inevitable
• Employees expected to take more responsibility for
their own careers
• Challenge is how to build a committed, productive
workforce

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• Competitive Challenges Influencing
Human Resource Management 10 of 25
Maximize Employee Engagement
Passionate about his or her work
Committed to the company and its mission
Works hard to contribute
Measured with attitude or opinion surveys

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• Table 1.7 Common Themes of Employee Engagement

1. Pride in employer
2. Satisfaction with employer
3. Satisfaction with the job
4. Opportunity to perform challenging work
5. Recognition and positive feedback
6. Personal support from manager
7. Effort above and beyond the minimum
8. Understand link between one’s job and company’s mission
9. Prospects for future growth with the company
10. Intention to stay with the company

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• Competitive Challenges Influencing
Human Resource Management 11 of 25
Manage Talent
• Acquiring and assessing employees
• Learning and development
• Performance management
• Compensation

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• Competitive Challenges Influencing
Human Resource Management 12 of 25
Consider Nontraditional Employment and the
Gig Economy
• Between 20-35% of the total U.S. workforce
• Workers set their own schedule and do not work for a
company
• Offers flexibility

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• Competitive Challenges Influencing
Human Resource Management 13 of 25
Provide Flexibility to Help Employees Meet Work
and Life Demands
• 46% of employees work more than 45 hours per week
• Only half of employees in the U.S. believe they have
the flexibility they need to successfully manage their
work and personal or family lives
• Solution: flexible work schedules, work-at-home
arrangements, protecting employees’ free time, and
more productively using employees’ work time

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• Competitive Challenges Influencing
Human Resource Management 14 of 25
Meet the Needs of Stakeholders, Shareholders,
Customers, Employees, and Community
Demonstrate performance to stakeholders: the
balanced scorecard
• Being customer-focused
• Improving quality
• Emphasizing teamwork
• Reducing new product and service development times
• Managing for the long term

LO 1-3
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• Table 1.8 The Balanced Scorecard
PERSPECTIVE QUESTIONS EXAMPLES OF CRITICAL CRITICAL HR INDICATORS
ANSWERED BUSINESS INDICATORS
Customer How do Time, quality, performance, Employee satisfaction with
customers see service, cost HR department services;
us? Employee perceptions of
the company as an
employer
Internal What must we Processes that influence Training costs per
excel at? customer satisfaction, employee, turnover rates,
availability of information on time to fill open positions
service, and/or manufacturing
processes
Innovation Can we continue Improve operating efficiency, Employee/skills competency
and learning to improve and launch new products, levels, engagement survey
create value? continuous improvement, results, change
empowering of workforce, management capability
employee satisfaction
Financial How do we look Profitability, growth, Compensation and benefits
to shareholders? shareholder value per employee, turnover
costs, profit per employee,
revenue per employee

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• Competitive Challenges Influencing Human
Resource Management 15 of 25
Demonstrate Social Responsibility
• Helps boost a company’s image with customers, gain
access to new markets, and help attract and retain
talented employees.
• Companies try to meet shareholder and general
public demands that they be more socially, ethically
and environmentally responsible.
• Helping to protect the planet can also save money.
• Sustainability is an important part of many companies’
business strategy.

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• Competitive Challenges Influencing Human
Resource Management 16 of 25

Total Quality Management (TQM) 5 Core Values

1. Methods and processes are designed to meet
internal and external customers’ needs.
2. Every employee receives training in quality.
3. Promote cooperation with vendors, suppliers and
customers.
4. Managers measure progress with feedback based on
data.
5. Quality is designed into a product or service so that
errors are prevented rather than being detected and
corrected.

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• Competitive Challenges Influencing Human
Resource Management 17 of 25
Malcolm Baldrige National Quality Award

ISO (International Organization for

Standardization) 9000 Standards

Six Sigma

Lean Thinking & Process Improvement

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• Competitive Challenges Influencing Human
Resource Management 18 of 25

Recognize and capitalize on the demographics

and diversity of the workforce
Internal labor force
External labor market
• Average age of workforce will increase
• Increased workforce diversity
• Immigration will affect size and diversity
• Generational difference with five generations
• Gender and racial composition of the workforce

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• Figure 1.5 Comparison of the Age Distribution
of the 2014 and 2024 Labor Forces

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©McGraw-Hill Education. SOURCE: Bureau of Labor Statistics, “Employment Projections,

• Table 1.11 Generations in the Workforce

YEAR BORN GENERATION AGES

1925–45 Traditionalists >72
Silent Generation
1946–64 Baby Boomers 53-72
1965–80 Generation X 37-52
1981–95 Millennials 22-36
Generation Y
Echo Boomers
1996 Generation Z <21

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• Figure 1.6 The U.S. Workforce, 2024

©McGraw-Hill Education. SOURCE: Bureau of Labor Statistics, “Employment Projections,

• Competitive Challenges Influencing
Human Resource Management 19 of 25

A Workforce of Mixed Gender, Race and

Nationality
• Diversity of workforce increasing
• Immigration is contributing
• The percentage of highly skilled immigrants now exceeds the
percentage of low-skilled immigrants
• Legal vs. illegal immigration
• Managing a diverse workforce

©McGraw-Hill Education.
• Table 1.12 How Managing Cultural Diversity Can
Provide a Competitive Advantage 1 of 2
1. Cost As organizations become more diverse, the cost of a poor
argument job in integrating workers will increase. Those who handle
this well will thus create cost advantages over those who
don’t.
2. Employee Companies develop reputations on favorability as
attraction and prospective employers for women and ethnic minorities.
retention Those with the best reputations for managing diversity will
argument win the competition for talent. As the labor pool shrinks and
changes composition, this edge will become increasingly
important.
3. Marketing The insight and cultural sensitivity that diverse employees
argument bring to the marketing effort should help the company enter
new markets and develop products and services for
diverse populations.

©McGraw-Hill Education.
• Table 1.12 How Managing Cultural Diversity Can
Provide a Competitive Advantage 2 of 2

4. Creativity Diversity of perspectives and less emphasis on

argument conformity to norms of the past improves the level of
creativity.
5. Problem- Heterogeneity in decisions and problem-solving groups
solving potentially produces better decisions through a wider
argument range of perspectives and more thorough critical
analysis of issues.
6. System Greater flexibility to react to changes in customer
flexibility preferences and tastes (i.e., reactions should be faster
argument and cost less).

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• Competitive Challenges Influencing Human
Resource Management 20 of 25
Legal Issues
Employment laws and regulations
Eliminating discrimination and harassment
Health care coverage
Immigration
Data security practices and protecting intellectual
property

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• Figure 1.7 Principles of Ethical Companies

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appendix
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• Competitive Challenges Influencing Human
Resource Management 21 of 25
Ethical Issues
Sarbanes-Oxley Act of 2002
• Sets strict rules for corporate behavior and sets heavy fines
and prison terms for noncompliance
• Imposes criminal penalties for corporate governing and
accounting lapses including retaliation against whistle-
blowers reporting violations of Security and Exchange
Commission rules.

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• Competitive Challenges Influencing Human
Resource Management 22 of 25
Ethical Issues continued
Human resource managers must satisfy three basic
standards for their practices to be considered ethical
• HRM practices must result in the greatest good for the
largest number of people
• Employment practices must respect basic human rights of
privacy, due process, consent, and free speech
• Managers must treat employees and customers equitably
and fairly

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• Competitive Challenges Influencing
Human Resource Management 23 of 25
Competing Through Globalization
U.S. businesses must
• Develop global markets
• Use their practices to improve global competitiveness
• Better prepare employees for global assignments

LO 1-4

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• Competitive Challenges Influencing
Human Resource Management 24 of 25
Competing Through Globalization continued
• Entering International Markets
• Exporting products overseas
• Building manufacturing facilities or service centers in other
countries
• Entering into alliances with foreign companies
• Engaging in e-commerce

• Offshoring and Reshoring

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• Competitive Challenges Influencing
Human Resource Management 25 of 25
Competing Through Technology
• Consider applications of social networking, artificial
intelligence, and robotics
• Use HRIS, Mobile devices, cloud computing, and
HR dashboards
• Consider high-performance work systems and virtual
teams

LO 1-5, 1-6
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• Figure 1.9 Major Dimensions of HRM Practices
Contributing to Company Competitiveness

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• Meeting Competitive Challenges through
HRM Practices

Three challenges
Global
Sustainability
Technology

LO 1-7

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• Figure 1.8 Examples
of How HRM
Practices Can Help
Companies Meet
Competitive
Challenges

Jump to long description in

appendix
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• Appendix of Image Long
Descriptions

©McGraw-Hill Education.
• Appendix 1 Figure 1.1 Human Resource
Management Practices

A graphic denotes Strategic HRM Practices of analysis and

design of work, HR planning, recruiting, selection, training
and development, compensation, performance
management and employee relations that all impact
company performance.

Return to original slide

©McGraw-Hill Education.
• Appendix 2 Figure 1.4 Competitive Challenges
Influencing U.S. Companies
Competing through sustainability
• Deal with the workforce and employment implications of the economy
• Understand and enhance the value of intangible assets and human capital
• Meet the needs of stakeholders: shareholders, customers, employees, and the
community
• Emphasize customer service and quality
• Recognize and capitalize on the demographics and diversity of the workforce
• Deal with legal and ethical issues
Competing through globalization
• Entering international markets
• Offshoring and reshoring
Competing through technology
• Consider social networking
• Use HRIS, mobile devices, cloud computing, and HR dashboards
• Consider high-performance work systems and virtual teams
All three challenges affect U.S. business competitiveness.

Return to original slide

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• Appendix 3 Figure 1.5 Comparison of the Age Distribution of
the 2014 and 2024 Labor Forces

The first chart is labeled 2014 and shows 64% of the labor
force is 25-54 years old; 22% is 55 years and older; and
14% is 16 to 24 years old.
The second chart is labeled 2024 and shows 64% of the
workforce is still 25 to 54 years old; but 25% is 55 years
and older; and 11% is 16 to 24 years old.

Return to original slide

©McGraw-Hill Education.
• Appendix 4 Figure 1.7 Principles of Ethical
Companies
• Emphasize mutual benefits in customer, vendor, client,
and community relationships
• Employees take responsibility for company actions
• A sense of purpose or vision valued and used by
employees in their work
• Emphasize fairness in treatment of employees,
customers, vendors, and clients

Return to original slide

©McGraw-Hill Education.
• Appendix 5 Figure 1.8 Examples of How HRM Practices Can
Help Companies Meet Competitive Challenges
• HRM strategy is matched to business strategy.
• Knowledge is shared.
• Work is performed by teams.
• Pay systems reward skills and accomplishments.
• Selection system is job-related and legal.
• Flexibility in where and when work is performed.
• Employee engagement is monitored.
• Continuous learning environment is created.
• Discipline system is progressive.
• Customer satisfaction and quality are evaluated in the performance management
system.
• Skills and values of a diverse workforce are valued and used.
• Technology is used to reduce the time for administrative tasks and to improve HR
efficiency and effectiveness.
Return to original slide

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