The New Human Resource Manager: Focus on Improving Performance

They Focus on Improving Performance
Employers expect their human resource managers to help lead their companies' performance -improvement efforts. Human resource managers recognize this. Surveys of HR professionals list competition for market share, price competition/price control, governmental regulations, need for sales growth, and need to increase productivity as top challenges HR managers face.

Today's human resource manager is in a powerful position to improve the firm's performance and profitability, and uses three main levers to do so. The first is the HR department lever. He or she ensures that the human resource management function is delivering its services efficiently. For example, this might include outsourcing certain HR activities such as benefits management to more cost-effective outside vendors, controlling HR function headcount, and using technology such as portals and automated online employee prescreening to deliver its services more cost-effectively.

The second is the employee costs lever. For example, the human resource manager takes a prominent role in advising top management about the company's staffing levels, and in setting and controlling the firm's compensation, incentives, and benefits policies.

The third is the strategic results lever. Here the HR manager puts in place the policies and practices that produce the employee competencies and skills the company needs to achieve its strategic goals. For example, Yahoo's new employment policies helped to improve its innovation and competitiveness, and the bank's new software helped its customer service reps improve their performance, thanks to new human resource training and compensation practices.

The New Human Resource Manager

"Personnel" managers used to focus mostly on administrative activities. They took over hiring and firing from supervisors, ran the payroll department, and administered benefits plans. As expertise in testing emerged, the personnel department played a bigger role in employee selection and training.47 New union laws in the 1930s added "Helping the employer deal with unions" to the list of duties. With new equal employment laws in the 1960s, employers relied on HR for avoiding discrimination claims.

Today, employers face new challenges, such as squeezing more profits from operations. They expect their human resource managers to have what it takes to address these new challenges. Let's look how today's HR managers deal with these challenges.

They Focus More on Strategic, Big-Picture Issues
First, human resource managers are more involved in helping their companies address longer- term, strategic "big-picture" issues. Chapter 3 (Human Resource Management Strategy and Analysis) explains how they do this. In brief, we will see there that strategic human resource management means formulating and executing human resource policies and practices that pro¬duce the employee competencies and behaviors the company needs to achieve its strategic aims. The basic idea behind strategic human resource management is this: In formulating human re¬source management policies and practices, the manager's aim should be to produce the employee skills and behaviors that the company needs to achieve its strategic aims. So, for example, when Yahoo's new CEO recently wanted to improve her company's innovation and productivity, she turned to her new HR manager (a former investment banker). Yahoo then instituted many new HR policies. It eliminated telecommuting to bring workers back to the office, where they could continuously interact, and adopted new benefits (such as 16 weeks' paid maternity leave) to lure new engineers and to make Yahoo a more attractive place in which to work.

The model follows this three-step sequence: 

1. Set the firm's strategic aims 
2. Pinpoint the employee behaviors and skills we need to achieve these strategic aims
3. Decide what HR policies and practices will enable us to produce these necessary employee behaviors and skills.

Carter Cleaning Company

Continuing Case

Carter Cleaning Company

Introduction

A main theme of this book is that human resource management ac­tivities like recruiting, selecting, training, and rewarding employees is not just the job of a central HR group but rather a job in which every manager must engage. Perhaps nowhere is this more apparent than in the typical small service business. Here the owner/manager usually has no HR staff to rely on. However, the success of his or her enterprise (not to mention his or her family's peace of mind) often depends largely on the effectiveness through which workers are recruited, hired, trained, evaluated, and rewarded. Therefore, to help illustrate and emphasize the front-line manager's HR role, throughout this book we will use a continuing case based on an actual small business in the southeastern United States. Each chapter's segment of the case will illustrate how the case's main player—owner/manager Jennifer Carter—confronts and solves personnel problems each day at work by applying the con­cepts and techniques of that particular chapter. Here is background information that you will need to answer questions that arise in sub­sequent chapters. (We also present a second, unrelated "application case" case incident in each chapter.)

Carter Cleaning Centers

Jennifer Carter graduated from State University in June 2005, and, after considering several job offers, decided to do what she always planned to do—go into business with her father, Jack Carter.

Jack Carter opened his first laundromat in 1995 and his second in 1998. The main attraction of these coin laundry businesses for him was that they were capital- rather than labor-intensive. Thus, once the investment in machinery was made, the stores could be run with just one unskilled attendant and none of the labor problems one normally expects from being in the retail service business.

The attractiveness of operating with virtually no skilled labor not­withstanding, Jack had decided by 1999 to expand the services in each of his stores to include the dry cleaning and pressing of clothes. He embarked, in other words, on a strategy of "related diversification" by adding new services that were related to and consistent with his existing coin laundry activities. He added these for several reasons. He wanted to better utilize the unused space in the rather large stores he currently had under lease. Furthermore, he was, as he put it, "tired of sending out the dry cleaning and pressing work that came in from our coin laundry clients to a dry cleaner 5 miles away, who then took most of what should have been our profits." To reflect the new, expanded line of services, he renamed each of his two stores Carter Cleaning Centers and was sufficiently satisfied with their performance to open four more of the same type of stores over the next 5 years. Each store had its own on-site manager and, on average, about seven employees and annual revenues of about $500,000. It was this six-store chain that Jennifer joined after graduating.

Her understanding with her father was that she would serve as a troubleshooter/consultant to the elder Carter with the aim of both learn­ing the business and bringing to it modern management concepts and techniques for solving the business's problems and facilitating its growth.

Questions

1-23. Make a list of five specific HR problems you think Carter Cleaning will have to grapple with.

1-24. What would you do first if you were Jennifer?

Application Case: Jack Nelson's Problem

As a new member of the board of directors for a local bank, Jack Nelson was being introduced to all the employees in the home office. When he was introduced to Ruth Johnson, he was curious about her work and asked her what the machine she was using did. Johnson replied that she really did not know what the machine was called or what it did. She explained that she had only been working there for 2 months. However, she did know precisely how to operate the machine. According to her supervisor, she was an excellent employee.

At one of the branch offices, the supervisor in charge spoke to Nelson confidentially, telling him that "something was wrong," but she didn't know what. For one thing, she explained, employee turn­over was too high, and no sooner had one employee been put on the job than another one resigned. With customers to see and loans to be made, she continued, she had little time to work with the new employ­ees as they came and went.

All branch supervisors hired their own employees without com­munication with the home office or other branches. When an opening developed, the supervisor tried to find a suitable employee to replace the worker who had quit.

After touring the 22 branches and finding similar problems in many of them, Nelson wondered what the home office should do or what ac­tion he should take. The banking firm generally was regarded as being a well-run institution that had grown from 27 to 191 employees during the past 8 years. The more he thought about the matter, the more puz­zled Nelson became. He couldn't quite put his finger on the problem, and he didn't know whether to report his findings to the president.

Questions

1-20. What do you think is causing some of the problems in the bank's home office and branches?

1-21. Do you think setting up an HR unit in the main office would help?

1-22. What specific functions should an HR unit carry out? What HR functions would then be carried out by supervisors and other line managers? What role should the Internet play in the new HR organization?

Source: GEORGE, SUPERVISION IN ACTION: ART MANAGING OTHERS, 4th, (c) 1985. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

WHAT IS HUMAN RESOURCE MANAGEMENT AND WHY IS IT IMPORTANT?

What Is Human Resource Management?
An organization consists of people with formally assigned roles who work together to achieve the organization's goals. A manager is the person responsible for accomplishing the organization's goals, who does so by managing the efforts of the organization's people.

Most experts agree that managing involves five functions: planning, organizing, staffing, leading, and controlling. In total, these functions represent the management process. Some of the specific activities involved in each function include:

• Planning. Establishing goals and standards; developing rules and procedures; developing plans and forecasting.
• Organizing. Giving each subordinate a specific task; establishing departments; delegating authority to subordinates; establishing channels of authority and communication; coordinating subordinates' work.
• Staffing. Determining what type of people you should hire; recruiting prospective employees; selecting employees; training and developing employees; setting performance standards; evaluating performance; counseling employees; compensating employees.
• Leading. Getting others to get the job done; maintaining morale; motivating subordinates.
• Controlling. Setting standards such as sales quotas, quality standards, or production levels; checking to see how actual performance compares with these standards; taking corrective action, as needed.

We are going to focus on one of these functions—the staffing, personnel management, or human resource management (HRM) function. Human resource management is the process of acquiring, training, appraising, and compensating employees, and of attending to their labor relations, health and safety, and fairness concerns. The topics in HRM  should therefore provide the concepts and techniques to perform the "people" or personnel aspects of your management job. These include:

• Conducting job analyses (determining the nature of each employee's job)
• Planning labor needs and recruiting job candidates
• Selecting job candidates
• Orienting and training new employees
• Managing wages and salaries (compensating employees)
• Providing incentives and benefits
• Appraising performance
• Communicating (interviewing, counseling, disciplining)
• Training and developing managers
• Building employee commitment

And what a manager should know about:

• Equal opportunity and affirmative action
• Employee health and safety
• Handling grievances and labor relations

The Small Business Challenge

A. Why Small Business is Important – More than half the people working in the United Sates—about 68 million out of 118 million—work for small firms.  Small businesses as a group account for most of the 600,000 or so new businesses created every year, as well as for most  business growth.

B. How Small Business Human Resource Management is Different – Managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur.

1. Size – The general guideline is that it’s not until a company reaches the 100-employee milestone that it can afford a human resource specialist.  However, even five- to six-employee organizations must recruit, select, train, compensate, and retain qualified staff.

2. Priorities – It is not just size but the realities of the entrepreneur’s situation that drive them to focus their time on non-HR issues.

3. Informality – Human resources management activities tend to be more informal in smaller firms.  Entrepreneurs must be able to react quickly to changes in competitive conditions.

4. The Entrepreneur – Entrepreneurs are people who create businesses under risky conditions, and starting new businesses from scratch is always risky.  Entrepreneurs therefore need to be highly dedicated and visionary.

5. Implications – The differences listed above result in potential implications. 1) Small business owners run the risk that their relatively rudimentary human resource practices will put them at a competitive disadvantage. 2) There is a lack of specialized HR expertise as compared with larger firms that have a full range of HR functions. 3) The smaller firm is probably not adequately addressing potential workplace litigation.  Most small business owners are well aware of the threat of employment-related litigation.  4) The small business owner may not be fully complying with compensation regulations and laws.  5) Duplication and paperwork leads to inefficiencies and data entry errors.  For small businesses, employee data often appears on multiple human resource management forms.

C. Why HRM is Important to Small Business – Entrepreneurs need all the advantages they can get, and for them, effective human resource management is a competitive necessity.  Small firms with effective HR practices perform  better than those with less effective practices.

The New Human Resource Managers

III.        The New Human Resource Managers – The trends discussed above mean changes in HRM.

A.    Human Resource Management Yesterday and Today - Today, we’ve seen that companies are competing in a very challenging new environment.  Globalization, competition, technology, workforce trends, and economic upheaval confront employers with new challenges.  In that context, employers expect and demand that their human resource managers exhibit the competencies required to help the company address these new challenges proactively. Management expects HR to provide measurable, benchmark-based evidence for its current efficiency and effectiveness, and for the expected efficiency and effectiveness of new or proposed HR programs.  Management expects solid, quantified evidence that HR is contributing in a meaningful and positive way to achieving the firm’s strategic aims.

B.    They Focus More on Strategic, Big Picture Issues – HR Managers are more concerned with creating and administering HR policies that assist the organization in achieving its strategic objectives.

C.    They Use New Ways to Provide Transactional Services – HR Managers are having to be creative in how they offer services. Technology has drastically changed the way HR can deliver services such as benefits and recruiting information.

D.    They Take an Integrated, “Talent Management” Approach to Managing HR – Employers do not want to lose great talent to competitors, so managing employees involves creating an integrated process of identifying, recruiting, hiring, and developing high-potential employees.

E.    They Manage Ethics – Many ethical issues in organizations today are human resource issues. HR Managers must understand the ethical implications of their decisions.

F.    They Manage Employee Engagement - HR Managers need the skills to foster and manage employee engagement. People who are emotionally and mentally invested in the company are more successful.

G.    They Measure HR Performance and Results – Many companies are expecting HR, like other departments, to take action based on measurable results. For example, measuring the effectiveness of recruiting sources and then improving recruitment based on these results.

H.    They Use Evidence-Based Human Resource Management – This involves the use of data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support human resource management proposals, decisions, practices, and conclusions.

I.      They Add Value - From top management’s point of view, it’s not sufficient that HR management just oversee activities such as recruiting and benefits. HR must add value, particularly by boosting profitability and performance in measurable ways.

J.     They Have New Competencies - Adding value, strategizing, and using technology all require that human resource managers have new competencies. HR Managers still need proficiencies in functional areas such as selection, training, and compensation, but they also require broader business competencies.

K.    HR Certification – Earning certification through the Society of Human Resource Management is increasingly important as human resource management becomes more professionalized.   Certifications of PHR (Professional in HR), GPHR (Global Professional in HR), and SPHR (Senior Professional in HR) are earned by those who successfully complete all the requirements of the certification program.

The Trends Shaping HR Management

II.         The Trends Shaping HR Management - Human Resource responsibilities have become broader and more strategic over time in response to a number of trends. The role of HR has evolved from primarily being responsible for hiring, firing, payroll, and benefits administration to a more strategic role in employee selection, training, and promotion, and an advisory role to the organization in areas of labor relations and legal compliance.

A.    Globalization and Competition Trends – Globalization refers to the tendency of firms to extend their sales, ownership, and/or manufacturing to new markets abroad. Globalization of the world economy and other trends has triggered changes in how companies organize, manage, and use their HR departments. The rate of globalization continues to be high, and has several strategic implications for firms.  More globalization means more competition, and more competition means more pressure to lower costs, make employees more productive, and do things better and less expensively.

B.    Indebtedness (“Leverage”) and Deregulation – In many countries, government stipends stripped away rules and regulations.  In the United States and Europe, for example, the rules that prevented commercial banks from expanding into new businesses, such as stock brokering, were relaxed.

            C.   Technological Trends – Virtual online communities, virtual design environments, and Internet-based distribution systems have enabled firms to become more competitive.  HR faces the challenge of quickly applying technology to the task of improving its own operations.

           

            D.   Trends in the Nature of Work – Jobs are changing due to new technological demands. Dramatic increases in productivity have allowed manufacturers to produce more with fewer employees.  Nontraditional workers, such as those who hold multiple jobs, “contingent” or part-time workers, or people working in alternative work arrangements, enable employers to keep costs down.

1.   High-Tech Jobs – More jobs have gone high tech, requiring workers to have more education and skills. Even traditional blue-collar jobs require more math, reading, writing, and computer skills than ever before.

2.   Service Jobs – Most newly created jobs are and will continue to be in the service sector.

3.    Knowledge Work and Human Capital – This refers to the knowledge, education, training, skills, and expertise of a firm’s workers. The HR function must employ more sophisticated and creative means to identify, attract, select, train, and motivate the required workforce.

E.   Workforce Demographic Trends – The labor force is getting older and more multi-ethnic.  The aging labor force presents significant changes in terms of potential labor shortages, and many firms are instituting new policies aimed at encouraging aging employees to stay, or at re-hiring previously retired employees. Growing numbers of workers with eldercare responsibilities and high rates of immigration also present challenges and opportunities for HR managers.

1.     Demographic Trends – The U.S. Workforce is becoming older and more ethincally diverse. Demographic Trends are also making finding and retaining quality employees more challenging.

2.     “Generation Y” – Born between 1977 and 2002, these employees want fair and direct supervisors and aim to work faster and better than other workers.

3.     Retirees – Organizations must deal with the large number of people leaving the workforce. In many cases the number of younger workers entering the workforce is not enough to fill all of the vacated positions.

4.     Nontraditional Workers – These workers may hold multiple jobs and may be contigent or part-time employees. Technology is facilitating these alternate work arrangement.

5.     Workers from Abroad – This is one way that organizations are trying to overcome the large number of retirees, but the option is sometimes met with opposition as unemployment increases.  

F.         Economic Challenges and Trends – All of these trends are occurring in a context of challenge and upheaval.  In Figure 1-5, gross national product (GNP) – a measure of the United States of America’s total output – boomed between 1940 and 2010.

What is Human Resource Management

I.          What is Human Resource Management and Why it is Important – The Management process involves the following functions: planning, organizing, staffing, leading, and controlling.  The “people” or personnel aspects of management jobs involve conducting job analyses; planning labor needs and recruiting job candidates; selecting job candidates; orienting and training new employees; managing wages and salaries; providing incentives and benefits; appraising performance; communicating; training and developing managers; building employee commitment; being knowledgeable about equal opportunity, affirmative action, and employee health and safety; and handling grievances and labor relations.

A.    What Is Human Resource Management? The management process includes several functions: planning, organizing, staffing, leading and controlling. Human resource management is the process of acquiring, training, appraising, and compensating employees, and attending to their labor relations, health and safety, and fairness concerns.

B.    Why Is HR Management Important to All Managers?  Managers don’t want to make personnel mistakes, such as hiring the wrong person, having their company taken to court because of discriminatory actions, or committing unfair labor practices. HRM can improve profits and performance by hiring the right people and motivating them appropriately. It is also possible you may spend some time as an HR Manager, so being familiar with this material is important.

C.    Line and Staff Aspects of HRM – Although most firms have a human resource department with its own manager, all managers tend to get involved in activities like recruiting, interviewing, selecting, and training.

D.    Line Managers’ HR Duties – Most line managers are responsible for line functions, coordinative functions, and some staff functions.

E.    Human Resource Manager’s Duties – Human Resource Managers also have line, coordinative, and staff functions. However, they exert line authority only within the HR department. They have implied authority with line managers due to the fact that they have the ear of top management on many important issues contributing to organizational health.

F.    New Approaches to Organizing HR – Employers are experimenting with offering human resource services in new ways.  For example, some employers organize their HR services around the following four groups:  transactional, corporate, embedded, and centers of expertise.

G.    Cooperative Line and Staff HR Management: An Example – In recruiting and hiring, it’s generally the line manager’s responsibility to specify the qualifications employees need to fill specific positions.  Then the HR staff takes over.  They develop sources of qualified applicants and conduct initial screening interviews.  They administer appropriate tests, then refer the best applicants to the supervisor (line manager), who interviews and selects the ones he/she wants.