Strategic Human Resource Management

Introduction to Human Resource Concepts

What is HRM

Human Resource Management is the organizational function responsible for attracting, hiring, developing, rewarding, and retaining talent.

The Role of Human Resource Management in Google's Success!

Google's founders Sergey Brin and Larry Page believes they attract talented employees due to the company's ability to empower them to change the world. Google states their company will not be able to grow effectively if excellent personnel isn't attracted, and the retention or motivation of their current personnel.
Best Practice HR Tips from Liane Hornsey, Google VP Operations | MeetTheBoss

Competitive Advantage

Competitive advantage is what distinguishes you from the competition in the minds of your customers. Doing something differently from the competition that leads to outperformance and success.

Competitive advantage comes from many factors, such as:
Innovative products/services
Cost effective products/service
Awesome customer service

Competitive Advantage Achievement through Innovation and Knowledge - Urbancová Hana

In today’s highly competitive environment the goal of each organization is to defeat competition and win new customers. Individuals who are holders of knowledge represent a tool for the generation of innovations. Thanks to their personal creativity, their knowledge, skills and abilities it is possible to generate new innovative ideas that will help organizations to achieve a competitive advantage. The aim of the article is to present the findings of a survey targeted at innovations and to identify knowledge as an important element in the process of innovations. Primary data were obtained through a questionnaire survey carried out in organizations in the Czech Republic and evaluated using the tools of descriptive statistics and also the methods of comparison, induction, deduction and synthesis were applied. One of the conclusions of the article is that organizations find it important to innovate and support an innovative culture. Knowledge too is very significant in the innovation process since it represents not only important input, but also output of the transformation process.

Journal of Competitiveness
Vol. 5, Issue 1, pp. 82-96, March 2013
ISSN 1804-171X (Print), ISSN 1804-1728 (On-line), DOI: 10.7441/joc.2013.01.06


This chapter will provide an overview of how HRM influences performance and the execution of business strategy as well as a competitive advantage.

HRM creates the system that acquires, motivate, manage and retains talent that determines the organizations success.

An average of 42% of an organization's budget pays for employee cost - it's pertinent to manage investments that company's create in their people.

How HRM Influences Organizational Performance

What Employees should do:
Key Factors - organizational strategy, competitive environment and legal requirements.
After the strategy has been established -
1. Identify the resources
2. Identify the skill sets
3. Identify the quality/quantity of talent needed to execute the strategy

What Employees can do:
1. Discover, attract and hire correct talent
2. Recruiting and staffing develops motivation
3. Training and Development inspires employees

What Employees will do
: HRM influences performance in an organization
1. Setting clear and concise goals
2. Employee feedback (based upon their performance)
3. Provide a reward system - performance management/compensation influences employees effort, motivation and persistence.
Rewards can include: Compensation, Praise, Recognition, Time Off

Human Resource Management Functions


•Performance Management

•Training and Development

•Rewards and Benefits

•Employee Management Relations

•Health and Safety


•Process of planning, attaining, implementing, and retaining employees which empowers the organization to meet its talent requirements and to execute their business strategy.

•Effective staffing supports the organizations mission and objectives as well as its business strategy.

The video below will exemplify how Caribou Coffee has been successful, due to their proper planning, effective staffing and executing their business strategies.

Caribou Coffee Company, Inc

Training and Development

•Focuses on employee capabilities throughout both formal and informal activities.

•Responsible for career planning, organizational development, and legal compliance.

•Training is expensive – could be waste if the organization fails to hire people who are able to be successful in the organizations development programs.

•Training is essential to preparing employees to be and stay effective in their jobs and to become organizational leaders.

•Organization’s success depends on the future generation of leaders.

Performance Management

•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.

Rewards and Benefits

Total Rewards: Sum of all rewards that employees receive in exchange for their time, efforts and performance.

Direct Financial Compensation: This is the employees salary, wages, commission, stock options or bonuses.

Indirect Financial Compensation: This is the employees health insurance, wellness benefits, paid vacations and free meals.

Non Financial Compensation: This is the employees rewards and incentives including intrinsic rewards received from the job or the physical/psychological work environment. (If an employee feels successful or appreciated).

The following video will provide details of Costco's success and how they can afford to pay their employees above minimum wages with good benefits.

Health and Safety

Workplace health and safety includes wellness, fire and food safety, ergonomics, injury management, disaster preparedness, industrial hygiene, bullying and workplace violence.

Workplace health also includes protecting employees from work related toxins, accidents, and injuries.

More than 81% of businesses in the US with 50 or more employees have a form of health promotions, such as; fitness exercise, stop-smoking campaigns or stress management courses.
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Employee Management Relations

The relationship between organizations owners and employees. It's the rights of all employees and employers.

Tools utilized in managing employee/management relations:
Employee surveys
Labor participation programs

Collective bargain agreements cover the terms and conditions of employment relations.


How HRM Influences Organizational Performance

1. Strategic Risk - HRM initiatives can affect business strategy through talent strategy, the culture of the organization, ethics, employee investment and the implementation of the organizations initiatives.

2. Operations Risk - HRM affects the speed/effectiveness of talent acquisition, professional development of employees skill sets and the ability to identify and retain top performers.

3. Financial Risk- HRM performance affects the organizations workforce cost, productivity directly through benefits, compensation, overtime, turnover and hiring time - indirectly through errors, accidents, lost production and delays.

4. Compliance Risk - All employment related decision making can have legal ramifications such as; diversity, union relations, health and safety, whistleblowers and harassment.

SEC regulations mandate the board of directors in organizations be responsible for managing risk policies. The boards must acknowledge any material risk with the potential to affect organizations earnings.

HRM also influences the interest rate an organization pays to borrow funds.

The Role of HRM in Executing Business Strategy

Business Strategy - determines how the organization will compete in the marketplace.

Developing a business strategy involves making choices regarding which product/services to offer and which strategy to pursue to gain competitive advantage.

All decisions depend on the organizations competitive capabilities, strengths and weaknesses.

Talent Philosophy

A system of beliefs regarding how employees should be treated:

Diversity Value
Timeline on employees stay at the organization
How employees are viewed - assets or investors deciding where to allocate their time and effort.

Human Resource Strategy

Is a linkage between the entire HRM function and the organizations business strategy.

Global Issues

Effective HRM flexibility matching HRM practices to business strategies with the internal/external labor market and the respect that all peoples expectations and values differ globally.


Gaining a competitive advantage through HRm


Steve Phelps, NASCAR
Senior Vice President and CMO

Who is responsible for HRM

THE HRM Professional - align the talent philosophy and HRM strategy with the business strategy, organizations values, develop supervisors skill sets to manage effectively, and be a resource for supervisors with questions and needs.

The Manager - Managers receive the tools needed to execute the firms HRM strategy and assist in developing structed interview guidelines or performance management forms.

The Employee - Must have their own career development plan and consistently develop their skill sets to meet their career goals.

Employee Handbooks

Document the organizations HRM policies and procedures and assist employees learn about the organizations HRM policies.

Shared Service Center

Centralizes routine HRM activites such as; payroll, benefits administration, and employee exit surveys.

The shared service center can provide alternatives to outsourcing task and can free up HR professionals time to focus on strategies.

Outside Vendors

Outsourcing - the hiring of an external vendor to complete the work rather than doing it internally such as; payroll process, attendance records and benefits management.


Professional Employer Organizations

An organization that leases employees to companies that require them.

These employees are leased from a fee ranging 2-7% of the employees gross wages.

Why is HRM Important to Your Career

Knowing how to design and maximize productive and mutually rewarding work relationships with employees is important to every managers success.

Fictitious Organization

Your group must create a fictitious organization that will be developed throughout the quarter. Make sure to pick an organization that will have significant industry information. You don't want to pick an organization that will be too difficult to develop because of a lack of industry information. If you have experience in an industry, you may want to choose an organization within your area of experience. Here are some sample organizations.

Medium to Large sized restaurants
Medium to Large sized grocery stores
Automobile Dealerships
Beauty Salons
Day Spas
Proprietary Schools
Alternative Schools
Sporting Goods Stores
Office Supply Stores
Non Profit Organizations
Mega Churches
Medium to Large Insurance Agencies
Travel Agencies
Computer stores
Medium to Large clothing retailers
Interior Designers

These are just examples. You are free to create any organization as long as it meets the following criteria:
Must have at least 50 employees
Must be legal and appropriate for class discussion
Must have diversity of jobs within the organization (we will focus on three key positions)
Must be the type of organization which lends itself to having researchable industry norms.

Your immediate assignment is to choose an organization with the following information:
Organization Name
Description of what the organization does
Description of organizational customers
Location of organization
Size of organization

In-Class Assignment

Complete discussion questions at the top of page 28.

Questions 1-6