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Unformatted text preview: ENT HUTVANRH$OUIROIIS hIANAGE:tV1 MI\I\AGINtrGEIVIPLOYEES FoR (]C)MPETNTIVE ,{DVANT\CI,E, #k, ,f'* 4 with associated andbenefits costs thepotential 1. Discuss (s) employees. managing employees to manage whatit means 2. Explain strategically. 7) theimryggr 5.Exprain tHlgtryitig]||qT9,?----the influence demafids howorganizational 6. Discuss (74,) of employees. management (tl/ HRactivities. thethreeprimary andexplain 3. ldentify influences the envirofiment howtheexternal 7. Describe (76J ofemployees. management practices witheach associated themanagement 4. Discuss primary HRactivity. /8) of 8. Understand theimportance practices. (79l HR establishing Environmental lnfluences Organizational Demands Regulatory lssues 4 cHAPTERI for CompetitiveAclvantage ManagingEmployees Each .gearFortune magazinepublishes its list "America's Most Admired Companies'" directors, and managersto rate other companiesin their in<lusFortuneinvitesexecul.ives, try and then to choosethe l0 they most admire acrossall industries.Panelistsuse eight equally weighted criteria in their rankings: . . . . . . . . QuLalityof management QuLalityof productsand services Imol ation Long-term investmentvalue Finan.cialsoundness Pe,rplemanagerrent Socialresponsibrlity Useof corporateassetsl Theseeiglrt criteria reflectvarious aspectsof companyoperationsthat ultimately relateto company success.Ilrcluding people management-defined as a comPany'sability to the role and keeptalentedemployees-in this list of criteria acknowledges altract,clevelop, has the right play in the successof an organization. When a.company that ernp.loyees employeesin placeand properly developsand motivatesthem, thr: likelihood of sustaining dramatically. a competitive advantageincrezrses | ]{G EMPLOYEES MAfI\,!AG This bool<is abourtrnanagingemployees,the peoplewho make organizationssuccessful. The talent that employeesbring with them when they star:tworlk or acquireafter getting hired playsa key role in determiningwhat the companydoesand how well it doesit. Think Its Web site indicatesthat the companyis a about the companylluman GenomeSciences. "biophLarmaceutical companywith a pipelineof novel compoundsin clinicaldeveloprnent, including drugs to treat such diseasesas hepatitisC, lupus, anthrax disease,cancer, rheumatoid arthritis and HIV/AIDS. Additional products are in clinical developmentby with whi,:hwe arecollaborating.Our missionis to apply greatscienceand greal. compaLnies medic:ineto bring innovativedrugs to patientswith unmet medicalneeds."2Now, consider this cornpanyrnust haveto evenbegin to irchieveits goals.Without the type r:f employe,es In addition to havingthe the companysimply could not be successful. the right employees, right talent,the companymust make surethat it motivatesits employeesto work asheLrdas possibleto contributeto the company'ssuccess. of how to attract, Our goal for thLisbook is to provide you with an understaLnding and skills that knowledge you with ther to equip and employees retain motivate, and develop, can leverage how organizations We also consider activities. pe:rform these manager$need to environthe external and opportunities challenges the the talentsoftheir ernployeesin facing goals their to achieve to do now need ment presents.We fitcus on both what organizations an<l to maintain future to do in ttre need will throul;h employeesand what organizations employees. manage their use to practices they enhancea competitire advantagethrough the Whert'sin a Name? employees tlthoworkfora company. Theindividuals hurnanresourcespractices, oftenHR prirctioes haspul thata company Thepractices place employees. tomanage Beforr:r,r,ediscussLLowto maximize the potential of your employees'we want to take a moment to clarify a few terms that you will seethroughout the text. triffrerentorganizationsuse different terms to refer to the members of their workforce. refersto its employeesas SouthwestAirlines and CIGNA use the term people,Yahoo.com associates. Other companir:suse are employees Wal-Mart Disney has its cast,and Yahoos, used by companier;may Vr4rile the terms the terms human res7urcesand human capital. for a company. who rvork individuals r,i,/e the use the terrn employeesto refer to vary, prtrctices, often shortenedto T'hrpughoutthis book, we usethe term humanresources of the responsibilities HR practices.When we refer to HR practices,we are not talking albout r,ve are rather, the hgman resourcgsdepartment of a company unlesswe specificallysayso; talking about the pr:acticesthat a company has put in placeto manageemployees.W: have chosenthis term becauseit is the one most companiesuseto representtheseactivities.Also, M a n a . g i n L gE m p l o y e e s most schoolsrefer to the courseyou are taking asHuman ResourceMainagement,and most of the tools that you will haveat your disposalasa managerto attract, d,:velop,motivate, and conceptsand principles. rr:tain employeesare relatedto Human Resourcesrrranagemt3nt who are responsible refer individuals manager to to line manager or We useth,Eterm perform tasksthat are group, to a of employees firr supervisinp;and directing the efforts of directly related,to the creation and delivery of a cr:mpany'sproduLctsor services.For m,any years,line managershad the responsibilityfor mor;1,if not a.ll,aspectsof managingemploylawswerepasse<l, many companiesbeganto assignmuch ees.As rlore ernployment-related of the responsibilityfor employeemanagementto the human resounlesdepartment(also c,alledsirnplythe HR department)-a support fun,srlisnwithLincornpaniesthat servesa'rital and implementingcompanypoliciesfor managingemployees.Over time, role in designi:ng ,oftasks,including rer;ord the role of HR departmentsexpandedto include a wide veLriety training, perforkeepingand payroll, compensationand benefits,:recruitment,select:ion, areincreasinglyrecand regulatoryissues.Now however,companies; rnancen:ranag{tment, not solell'the ognizingthat rnanagingemployeesis a key organir:ation-wideresiponsibility, responsibilityof the HR department-and line managersare being held accountabk for they attract, develop, and motivate the employeesth,eyoversee.3After all, how effectiLvel.r only if they are ableto get the highestlevel of quality effort fiom managersilre ,;uccessful their employees. Of r:ourse,many companiesstill maintain Hll departments,and the employeeswithin But, increasingly,mana.gers servean important role in companysuccess. IJR departmer:rts prilcticesthat maxilnize H.R to design an,C implement HR department with the work must that peoplematter and managers Smart undlerstarrd of their employees. contributions the As we look at some your goals. to achieve company's people, you cannot begin without that emplc,yees why managing you will begin 1-o understand potential costs and benefits, of the job just job the HR the of depaLrtment. of er.erymanager,not is the 'fhe line managerr0r manager for whoareresponsible Theindtvicuals the effortsof a supervising anddirecting gr0up0f employees to perform tasksthat related t0thecreation anddelivaredirecltly products ery0fa r:ornpany's orservices. humanrresource$ department or HFIde;rarrtment that A support functlon withincompanies a vitaln:lein designing andimpleserves pollcies for managing menting crlmpany employeu's Oostsand Benefitsof ManagingHIR ,A,company'scompetitiveadvantageis its abilitl' to creat€:more eco'nomicvalue than its lfhis is done by providing greatervallueto a customerrelativeto the costsof competitorrs. making a prorJuctor providing a service.4Histor:ically,cornpaniesfc,cusedon achievinga competiiti\/eadvantageby holding protectedassets,having extensivefinancial resources, of scale.sOompaniesoften concompeti.ngbasedon price, or benefitingltrom ec,onomies not as a competitiveadvantag;e, but simply as a cost to minimize. r\fter sideredemplc,yees all, maintaininga workforceis one of the largestfixed costsfor m,ostorganizations.In aLddiof the time and effort ne,eded tion to cornpensationcosts,employersincur costsas a resr-Llt mentoring, coaching,and disfor activitiessuch as recruiting,hiring, training, '3'raluatin€i, ciplining employees. and how the'/ are Increasingly,however,companiesare recogrLizingthat employ,ees managedmar/ prove to be as important to competitive successas other organizational attribules, When employeesare mismanaged,they may not be able or willing to r,vork skills for their jobs toward organizationalgoals.If employeesdo not have thLenec,3ssary and are not provided the training to succeed,the'[ ma] not know how to work effectively or efficiently.,resulting in lower performance and greater costs to the company. How employeesaremanagedalsoinfluencestheir attitudesand behal'iors,6Employeeswho feel undervah.redor underappreciatedwill not expend as much effort in performing their jobs.7Unhappy or unmotivatedemployeesmay be lesslik,elyto be responsiveto customer needs,,whichcan cost the company customers.'lMismanagingenrployeesrnay lead to ari well as sabotage,l0whictL can higher levelsof employeeturnover and absenteeism,e who is not properly haveboth direct and indirect costsfor the organiilation.An employere job trained to do a hazardous may make mistakesthat lead to injurl. fs1 the worker and a lawsuit for the company. In r:ontrast,effectivelymanaging employeescan lead t,oimprover:lfirm performarrce.ll Studieshave shown this link in industries as divelse as banking, apparel,and manufacturhavethe skills they need,they are able to contribute to meeting ing.12!\4ren ,employees And when employeesfeel valued by their company,thLeyarelikely to display company goa.[s. greater levelsof commitment, loyalty, and moral,:.13Armed wil.h the skills they neecland advantage competiitive more ability t0create economic Acomparny"s value thanitscrlmpetitors, cHAPTER 1 Managing Employees for Cornpetitive A<lvantage greater motivation, employeesmay be more productive. Greater productivity may more than offsetthe costsassociated with managingemployees. Girrenwhat we lnow about the outcomes of effectively marraging employees,many companiesincreasing;ly view employeesas more than just a cost trr control. Thesecompanies know that empl,ryeesare a potential sourceof competitiveadvantageand that their talentsmust be nurtured.la In fact,many companiesnow emphas'ize the value of emp,loyeesto the companydirectly on their Web sites.For example,CIGI'IA, a companythat providesernployeebenelits,states: Explore everlthing that makes CIGNA a specialplace to work. We offer a results-driven environment where we pay for performance.We offer competitivebenefits,We ha'vea diversearLdinclusive workforce. We demand integrity and respectin all we do. Add it all up and you get somewheregreatto work-CIGNA. We oilfer more than a job; we offer something essentialto your careerdevelopmerntthe opportunity to grow in a companythat recognizes,resper:ts and valuesindividual Is contributionsand differences. This company recognizesthat when employeesare managedef[ectively,they can be an important sourceof ,:ompetitiveadvantage. Keepin mind that there is no singlebestway to manageemployees.Rather,eachcompany is different and must manageemployeesin a way that is most appropriate,given its uniquersituation.The internal organizationaldemandsand the externalenvironnnent determinethe conter:tfor settingHR practices.The framework we presentnext and r,:ferencethroughout the book showsthe relationshipamong three setsof HR challengesin an organiilation'sinternill and externalenvironment,threeprimary HR activities,and the path to competitive advantage.Understandingthe framework will better equip you wittr the skillsto strategicallyand effectivelymanageemployeeswhile minimizing the costsof mismanaging;them. Qur,av 1 , 1 S o u t l h w e sAt . i r l i n e s SouthwestAirlineshas beenorl Forfune's"America'sN4ost list numerous AdmiredCompanies" timesand servesarsan for the strategicmanagement exemplar of humanresources. particularly There seems to be nothing unique about SouthwestAirlines.lt usesthe sameairplanes(737s)availfollowsthe sameregulations, ableto otherairlines, anduses the sameairports.YetSouthwestcontinuesto thrivevrhile otherairlinesstruggle.Mostpeopleagreethat its succerss is to duelargely its uniquecultureandhowit managesitsworkforce.Maintaining a fun, emplpyee-friendly, hard-working cultureis criticalto the company. Toensun-. that newhiresfit in with its culture,they arehirgdfor havingthe right"attitude."Afterall, most "skills"qan be learnedon the job. Becauseemployeesown 8% of the company'sstock,they alsotry harder.Whilethereis prothing reallyuniqueabout whatSouthwest does,thereis'certainly rrornething unique ranksnumkler abouthowit doesit. lt continually onein terms of thefewestcustomercomplaints, andit hasbeenprofilable years. for 34 consecutive Southwest Airlineshasa strongreputation liormanaging its peoplewell 'fhe Airlines: hottestthinginthe:sky. Sources:Serwer, A. Southwest Airlines. Foftune, MarchB,2004,pp.86-91: andfiouthwest 11, 2007, Airllnes /aclsheef, December Southwest com/about_swa/press/factsheet. html. wvw.southwest. of Employees Framework for the Strategic Man FRAMEWORK FOR THE STRATEGIC MANAGEMENT OF EMPLOYEES Have you ever tried to assemblea jigsaw puzzle?Without the picture on the box? You have all these odd-shaped little piecesof colored cardboard but no clear idea of how to start putting them together. For many managers'knowing how to hire employees,give them performance feedback,and decide on a pay raise feels much like trying to complete that puzzle without the picture. No sooner doesthe managerbegin to feel as if shehas a handle on some of these aspectsof employee management than changesoccur in the business environment. M"yb. new technology or new laws emerge,and the managerbegins to feel like the shapesofthe pieceshave changed. The framework that we introduce in this chapter and use throughout the book (Exhibit 1.1) is like the guiding picture on the puzzle box.It shows the relationship between the organization'scontext, both external and internal, and the HR activities that the organization needsto use to manage employeesto achieveits ultimate goal: competitive advantage.By understanding the relationships among these components and how the HR activities build on each other, managers can equip and position employeesto maximize their contribution to company performance, which in turn < E x ibit 1.1 Environmental lnfluences Organizational Demands Regulatory lssues Str of rk for the Management I cHAPr!rR 1 Managing Employees for Cornpetitive ACvantage primary HR activities management of employees Thestrategic ar0undthreecategories centers 0f HR (1)Workdesign andworkforce activities planning; (2)managing employee compeemployee tencies; and(3)managing attitudesandbehaviors. l'lFlchallenges in thatmanagers mustconsider Challenges thatrelate to ofemployees themanagement (2)environ(1)Organizational demands; issues. influences; and(3)regulatory mental createsco'mpetitivendvantage.The picture of the puzzle does ,exist,and it helps mana g e r sp u t t o g e t h e tr h e p i e c e s . centersaround three Exhitrit 1.1 shov,rs that the strategicmanagementof employ,ees categoriesof HR activities,which occur within the context of three main HR challenges. The primaryHR activitiesare: 1. Wcrk design and workforce planning. Designingjobs andlplanning for the workfonceneededto ilchieveorganizationalgoals 2. Managing employee competencies. Identifying, acquiring, and developing employeetalent and skills 3. Mianagingemployee attitudes and behaviors. Encouragingand motivating employeesto perform in appropriatewaysto contributeto companygoals Managerscarry out thesethree primary HR activitiesin the context of three rnain HR challenges: 1. Organizationaldemands. Internal factors,including strategy,company characteris1i6:s, organizatio:nal culture,and employeeconcerns 2. Environmental influences. External factors,including labor force trends,globeLlization, technology;and ethicsand socialresponsibility fed3. Regulatoryissues. A specialsubgroupof environmentalinfluencesthat includesr eral,state,and local legislationthat protectsthe rights of individualsand the company with regardto the employmentprocess We discurss theseprimary HR activitiesand HR challengesin mo'redetail in the following section.I{egulatoryissuesare so critical to employeemanagementthat we devote a full chapterto discussinllthern (Chapter3). P R I N / | A R \ TH R A C T I V I T I E S Exhibit 1.2highlightsthe threeprimary HR activities.First,companiesmust decidehow to designjobs and (tnsurethat employeesare where they need to be to meet organizational goals.Second,companiesmust ensurethat employeesha'rethe competenciesthey need to Frerformthosejobs. Third, employeesmust be m<ltivatedto usetheir compietenciesproductively. WorklDesign andWorkforcePlanning Work desrign and wcrkforce planning are two critical componentsof managingemployees. Managersmust designjobs in a way that ensuresthat employeesprerformtasksand responsibilitiesthat have the most potential to add value to the company.Managersmust also WiNhtb& 3"f,Z Primary HR Activities P r i r n e r r yH R A c t i v i t i e s engagein workforce planning to make surethat the right people are in the right placein the company,at thr: right time, to meet company goah;. will do on a day-to-daybasis JoB DEstcN |ob designinvolvesdecidingwhat employe,es job designis a function of the tasksthat as well as how jobs are interconnected.In part, employeesare expectedto perform. However,job design also representsthe choicesm,anagersmake regardinghow thosetasksareto be carried out. T'herea.renLanydifferent wa)'sto designjobs. Some employeeswork on an assemblyline, others work in self-managedteams,and still other employeeswork in relativeisolation.Managersmay designr;imilarjobs in dilferThirrk about how the job ent waysin difl.erentcompanies-no one designfits all situaLtions. j,cb of an accountantin a might dilfer from, the firm in an accounting of an accountant job in a professional dilfer mighLt marketing; manager of a how the retail store chain, or In both examjob firm. manager in a manufactu.ring of marketing servicesfirm from the for companysuctasks imtrortance of thr:se the same, but will be the ples,marryof the tasks need to consider jobs questions nlanagers Sorne performed will differ. the are cessand how job designare: for . What tasksshouldyou emphasizewhen designinga job? . How simpleor complexare thesetasks? . How many taskscan your employeesperform:l . How rnuch flexibility do you provide to yourr employeesin terms of how and where they carry'out their tasks? The choir:esmanagersmake about the task.semployeesperform and how they'are llrom a companyperexpectedto perform thosetaskshaveseveralimportant imp,lications. employeesin tlaose jobs objectives, tasks with company designed to align are when spective, If rnanagersdo not r:onjobs are in a position to add value and increasecompanysuccess. may unknowingllyfocus on tasksand sider compangobjectivesin job design,employeres job perspective, most impofiant. From an ,:mplloyee necessarily the activitiesthat are not company.16 with the as intentions remain as well to designinfluencesemployeesatisfaction, PLANNING ThenumberofempJoyeesindifferentpartsofanorganizeLtion wOFKFORCTE is alwayschanlSing.Factorssuch as employeeturnover and company growth challengernanirgersto make'workforceplanning decisionsto maintain the necessilrynumber of employees. Cornpaniesmust alsodecidehow to allocateemployees-thr:oughpromotions,demoChangr:sin tions, and transfers-to areaswhere they can contribute most signLificantly. strategicemphasis,a reorganizationof operations,or the introduction of new productsor servicesalso influences the demand for different jobs in cliffere:ntparts of a company.At of employeetalent, any poirrt in time, some parts of a company ma)rbe facinl4a sh<lrtag;e while othersmay havea surplus. to addressa Somecornpanieshire full-time employeesor promote cu...
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