ESSAY: Discuss why it is important to think strategically when administering human resources?

Discuss why it is important to think strategically when administering human resources? What do you see as the challenges? What would be the intended benefits?

Martochhio, J. J. (2017). Human Resources Management (15th ed.). Retrieved from (reference for the reading I am sending you)

Reading Material for this response needed.

Like many students, you’ve probably had a job (or two) at some time or another while working on your degree. Your work experiences are likely to have been influenced by the knowledge and skills of a human resource (HR) manager and your manager. Both HR professionals and managers work together to recruit and hire the right individuals as well as evaluating and rewarding job performance. This textbook is about the important work that HR managers accomplish and how they work with managers and employees to promote a mutually beneficial employment experience. Mutually beneficial employment experiences can be described by goal-directed managers who create a positive environment for you to achieve exemplary job performance, which, together with other employees, will help the company meet its strategic objectives.

This chapter will enable you to describe and understand the human resource management function and why it is worthwhile to study it. In the sections that follow, we introduce you to the functions that make up human resource management (HRM) and identify who is responsible for managing it. Next, we discuss HRM as a strategic business partner and the dynamic role of the environment that influences HRM practice, followed by considering the role of HRM in building corporate culture and employer branding. Then, we turn our attention to HRM in small businesses and the influence of country culture on global business. Finally, we explore essential skills for developing your career in HR or any other career path.
Human Resource Management: What It is and Why It is Important
1.1 Define human resource management (HRM) and the importance of studying it.

Human resource management (HRM) is the use of individuals to achieve organizational objectives. Basically, all managers get things done through the efforts of others. Consequently, managers at every level must concern themselves with HRM. Individuals dealing with human resource matters face a multitude of challenges, ranging from a constantly changing workforce to ever-present government regulations, a technological revolution, and the economy of the United States and the world. Furthermore, global competition has forced both large and small organizations to be more conscious of costs and productivity. Because of the critical nature of human resource issues, these matters must receive major attention from upper management.

human resource management (HRM)
Utilization of individuals to achieve organizational objectives.

Why Study HRM?
Many of you plan to seek a career in HRM; others do not. Even if you don’t, HRM is everyone’s business. Why should you care about studying HRM if you plan to work in accounting, finance, marketing, operations, or starting your own business? Here are two things to consider. First, understanding HRM will give you a solid foundation for understanding your rights and responsibilities as an employee. For instance, you will be more informed about whether the employer is evaluating your performance relative to other employees’ performance or on an absolute standard. Knowing about the Fair Labor Standards Act primes an understanding about whether you qualify for overtime pay. The list goes on and on. Just read the book!

Second, at some point in the future, you will probably have the opportunity to supervise employees or lead a department. When you do, you will need to have the most qualified employees on your team; and, you will want to ensure that they are achieving exemplary performance by providing regular feedback and rewarding excellence. Also, when employees are not performing to standard, you will be responsible for identifying strategies for improvement, perhaps by recommending participation in a training program or two, or deciding to terminate employment. You will seek guidance from HR professionals and they will work with you to use appropriate methods to recruit, select, evaluate, and reward employees. In the end, success in your career will not only depend on your expertise, but also on having good employees.

Human Resource Management Functions
People who manage HRM develop and work through an integrated HRM system. As Figure 1-1 shows, six functional areas are associated with effective HRM: staffing, human resource development, performance management, compensation, safety and health, and employee and labor relations. These functions are discussed next.

Human Resource Management functions include staffing, human resource development, compensation, safety and health, employee and labor relations, and performance management.
FIGURE 1-1 Human Resource Management Functions
Staffing
Staffing is the process through which an organization ensures that it always has the proper number of employees with the appropriate skills in the right jobs, at the right time, to achieve organizational objectives. Staffing involves job analysis, human resource planning, recruitment, and selection, all of which are discussed in this text.1

staffing
Process through which an organization ensures that it always has the proper number of employees with the appropriate skills in the right jobs, at the right time, to achieve organizational objectives.

Job analysis is the systematic process of determining the skills, duties, and knowledge required for performing jobs in an organization. It impacts virtually every aspect of HRM, including planning, recruitment, and selection. Human resource planning is the systematic process of matching the internal and external supply of people with job openings anticipated in the organization over a specified period. The data provided set the stage for recruitment or other HR actions. Recruitment is the process of attracting individuals on a timely basis, in sufficient numbers, and with appropriate qualifications to apply for jobs with an organization. Selection is the process of choosing the individual best suited for a position and the organization from a group of applicants. Successful accomplishment of the staffing function is vital if the organization is to effectively accomplish its mission. These topics are collectively often referred to as staffing.

Performance Management
Performance management (PM) is a goal-oriented process that is directed toward ensuring that organizational processes are in place to maximize the productivity of employees, teams, and ultimately, the organization. Performance appraisal is a formal system of review and evaluation of individual or team task performance. It affords employees the opportunity to capitalize on their strengths and overcome identified deficiencies, thereby helping them to become more satisfied and productive employees.

performance management (PM)
Goal-oriented process directed toward ensuring that organizational processes are in place to maximize the productivity of employees, teams, and ultimately, the organization.

Human Resource Development
Human resource development (HRD) is a major HRM function consisting not only of training and development but also of career planning and development activities, organization development, and performance management and appraisal. Training is designed to provide learners with the knowledge and skills needed for their present jobs. Development involves learning that goes beyond today’s job and has a more long-term focus.

human resource development (HRD)
Major HRM functions consisting not only of training and development but also of individual career planning and development activities, organization development, and performance management and appraisal.

Organization development (OD) is planned and systematic attempts to change the organization (corporate culture), typically to a more behavioral environment. OD applies to an entire system, such as a company or a plant. Numerous OD methods are discussed that serve to improve a firm’s performance.

Career planning is an ongoing process whereby an individual sets career goals and identifies the means to achieve them. According to the U.S. Bureau of Labor Statistics, today’s employees will work for approximately 7 to 10 companies during their careers based on the assumption that most people will work 30 to 40 years.2 A survey conducted by LinkedIn revealed that on average, individuals under the age of 32 change jobs four times.3 Employee loyalty loses its meaning in this environment.

Career development is a formal approach used by the organization to ensure that people with the proper qualifications and experiences are available when needed. Individual careers and organizational needs are not separate and distinct. Organizations should assist employees in career planning so the needs of both can be satisfied.

Compensation
The question of what constitutes a fair day’s pay has plagued management, unions, and workers for a long time. A well-thought-out compensation system provides employees with adequate and equitable rewards for their contributions to meeting organizational goals. As used in this book, the term compensation includes the total of all rewards provided to employees in return for their services. The rewards may be one or a combination of the following:

Direct Financial Compensation (Monetary Compensation): Pay that a person receives in the form of wages, salaries, commissions, and bonuses.

direct financial compensation (monetary compensation)
Pay that a person receives in the form of wages, salary, commissions, and bonuses.

Indirect Financial Compensation (Employee Benefits): All financial rewards that are not included in direct compensation, such as paid vacations, sick leave, holidays, and medical insurance.

indirect financial compensation (employee benefits)
All financial rewards that are not included in direct financial compensation.

Non-financial Compensation: Satisfaction that a person receives from the job itself or from the psychological or physical environment in which the person works.4

non-financial compensation
Satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works.

Employee and Labor Relations
Businesses are required by law to recognize a union and bargain with it in good faith if the firm’s employees want the union to represent them. In the past, this relationship was an accepted way of life for many employers, but most firms today would rather have a union-free environment. As a starting point, union wages and benefits are on average 54 percent higher than nonunion wages and benefits.5 When a labor union represents a firm’s employees, the human resource activity is often referred to as labor relations, which handles the job of collective bargaining (i.e., negotiating employment terms such as work hours). Internal employee relations comprise the HRM activities associated with the movement of employees within the organization such as promotions, demotion, termination, and resignation.

Safety and Health
Safety involves protecting employees from injuries caused by work-related accidents. Health refers to the employees’ freedom from physical or emotional illness. These aspects of the job are important because employees who work in a safe environment and enjoy good health are more likely to be productive and yield long-term benefits to the organization. For instance, one survey showed that the injury rate in highly productive organizations was 18 times lower than in average performing companies and 60 percent lower than in less productive organizations.6 Today, because of federal and state legislation that reflect societal concerns, most organizations have become attentive to their employees’ safety and health needs.

safety
Protection of employees from injuries caused by work-related accidents.

health
Employees’ freedom from physical or emotional illness.

Human Resource Data Analytics
Although human resource data analytics is not a traditional HRM function, it pervades all functional areas. Analyzing employment data (e.g., employee productivity) and business outcomes (e.g., profits) has empowered HR professionals to quantify its influence. In 2016, 51 percent of companies correlated business outcomes with HR programs, which is up from 38 percent just one year earlier.7 Data analytics go a long way toward establishing the HRM function as a strategic business partner.

The scope of data analytics is growing rapidly. No longer do HR professionals limit analyses to internal data. Nowadays, they leverage technology, which has given unfettered access to external data. (We discuss the available technology as part of the dynamic HRM environment later in this chapter.) Internally, research on job safety may identify the causes of certain work-related accidents. The reasons for problems such as excessive absenteeism or excessive grievances may not be clear. However, when such problems occur, HR analytics can help HR professionals find the causes and offer possible solutions. Externally, data gathered through social media outlets, demographic information, hiring patterns, and turnover can help HR professionals develop strategies for attracting top talent.8

HR professionals should not rely exclusively on data analytics for making decisions. Because data, no matter how comprehensive or well analyzed, needs to be tempered by good judgment. For instance, a recent government report states: “Companies should remember that while big data is very good at detecting correlations, it does not explain which correlations are meaningful.”9 For example, researchers have generally established a correlation between pay and turnover (lower pay rates are associated with higher turnover rates). However, it certainly is not the case that every person with low pay will leave the company. Some may stay because they have supportive managers or commute times are short. When making decisions, it is important to remember that correlation does not equate with cause and effect.

Interrelationships of Human Resource Management Functions
All HRM functional areas are highly interrelated. Management must recognize that decisions in one area will affect other areas. For instance, a firm that emphasizes recruiting top-quality candidates but neglects to provide satisfactory compensation is wasting time, effort, and money. If a firm’s compensation system pays below-market wages, the firm will always be hiring and training new employees only to see the best leave for a competitor’s higher wages. For instance, Walmart raised the starting pay rate for store associates to $9 per hour. Walmart executives reasoned that raising pay is a good business decision because it should promote better customer service, higher sales, and lower expenses.10 The interrelationships among the HRM functional areas will become more obvious as these topics are addressed throughout the book.
Who Performs Human Resource Management Activities?
1.2 Describe who performs HRM activities

The person or units who perform the HRM tasks have changed dramatically in recent years, and today there is no typical HR department. Many of these changes are being made so that HR professionals can accomplish a more strategic role. Still, most organizations continue to perform most HR functions within the firm. However, as companies reexamine internal operations, questions are raised, such as: Can some HR tasks be performed more efficiently by line managers or outside vendors? Can some HR tasks be centralized or eliminated altogether? Can technology improve the productivity of HR professionals? One apparent fact is that all functions within today’s organizations are being scrutinized for cost cutting, including HR. All units must operate under a lean budget in this competitive global environment, and HR is no exception.

Evidence provided by The Hackett Group shows that the HR functions have been impacted more than other functions with regard to reductions in staff and operating budgets.11 In fact, the most efficient companies typically spend nearly 30 percent less per employee on HR and operate with 25 percent fewer HR employees.12 Mobile HR has been a major factor in this trend as we discuss later in the chapter. Also, many HR departments continue to get smaller because others outside the HR department now perform certain functions. For instance, HR outsourcing, shared service centers, professional employer organizations, and line managers now assist in the accomplishment of many traditional HR activities.

Human Resource Management Professional
Historically, the HR manager was responsible for each of the six HR functions. A human resource management professional is an individual who normally acts in an advisory or staff capacity, working with other managers to help them address human resource matters. Often, HR departments are created, with the central figure being the HR manager or executive. The HRM professional is primarily responsible for coordinating the management of HR to help the organization achieve its goals. We say more about the work of HR professionals later in the chapter before looking at HRM as a strategic business partner. In the meantime, Figure 1-2 displays a summary of a typical human resource professional’s job along with their usual duties. The typical tasks performed by these professionals.

human resource management professional
Individual who normally acts in an advisory or staff capacity, working with other professionals to help them deal with human resource matters.

A professional Human resources job description.
FIGURE 1-2 Human Resource Professional Job Description
Source: National Center for O*NET Development. 11-3121.00. O*NET OnLine. Retrieved January 2, 2017, from http://www.onetonline.org/link/summary/11-3121.00

Figure 1-2 Full Alternative Text
Line Managers
All managers get things done through the efforts of others. Consequently, managers at every level naturally concern themselves with HRM, for example, making decisions about which job candidates are likely to meet the needs of company, conducting employee performance evaluations, and determining pay raise amounts. Individuals directly involved in accomplishing the primary purpose of the organization are line managers. As the traditional work of HR managers evolves, line managers have assumed some tasks typically done by HR professionals.13 Automation has assisted greatly in this process. Managers are being assisted by manager self-service, the use of software, and the corporate network to automate paper-based human resource processes that require a manager’s approval, recordkeeping or input, and processes that support the manager’s job. Everything from recruitment, selection, and performance appraisal to employee development has been automated to assist line managers in performing traditional HR tasks.

line managers
Individuals directly involved in accomplishing the primary purpose of the organization.

There is a shared responsibility between line managers and HR professionals. Frequently, the line manager looks to HR for guidance in topics such as selection, training, promotion, and taking disciplinary action. The relationship between HR professionals and line managers is illustrated by the following account:

Bill Brown, the production supervisor for Ajax Manufacturing, has just learned that one of his machine operators has resigned. He immediately calls Sandra Williams, the HR manager, and says, “Sandra, I just had a Class A machine operator quit down here. Can you find some qualified people for me to interview?” “Sure Bill,” Sandra replies. “I’ll send two or three down to you within the week, and you can select the one that best fits your needs.”

In this instance, both Bill and Sandra are concerned with accomplishing organizational goals, but from different perspectives. As an HR manager, Sandra identifies applicants who meet the criteria specified by Bill. Yet, Bill will make the final decision about hiring because he is responsible for the machine operators’ performance. His primary responsibility is production; hers is human resources. As an HR manager, Sandra must constantly deal with the many problems related to HR that Bill and the other managers face. Her job is to help them meet the human HR needs of the entire organization.

FYI
The HR outsourcing industry in 2020 is expected to generate $53.9 billion in revenue, up from $42.6 billion in 2015.14

The industry’s expected future annual global growth is nearly 13 percent.15

Human Resources Outsourcing
HR outsourcing (HRO) is the process of hiring external HR professionals to do the HR work that was previously done internally. In the early days of HRO, cost savings was the primary driver in determining which activities to outsource. Today, outsourcing agreements are focusing more on quality of service and saving time, which is often more important than saving money.16 In addition, HRO enables HR to serve as strategic business partners. Paul Belliveau, global advisor at Avance Human Capital Management Advisors, said “Fundamentally, this is about the transformation of HR. Wherever there’s transformation, you have to take away things HR shouldn’t be doing anymore so they can be more strategic.”17 As will be stressed throughout the text, strategic HR has become a major driver for HR professionals.18

HR outsourcing (HRO)
Process of hiring external HR professionals to do the HR work that was previously done internally.

Discrete services outsourcing involves one element of a business process or a single set of high-volume repetitive functions to be outsourced.19 Benefits have often been the HR task most likely to be outsourced. Dan Thomas, president of Trivalent Benefits Consulting Inc., said, “Benefits administration has become so complex that it really takes someone who works with it every single day to keep track of all of the different laws and changes that are going on.”20 For example, a survey conducted by The Prudential Financial and CFO research revealed that the complexity of employee benefits regulation has prompted companies to outsource or consider outsourcing parts of their benefits function: 46 percent (Affordable Care Act), 40 percent (Americans with Disabilities Act), and 38 percent (Family and Medical Leave Act).21

Business process outsourcing (BPO) is the transfer of the majority of HR services to a third party. Typically, larger companies are involved with BPO, both as a provider and a user. A major HR outsourcer is Accenture that has more than $32 billion in revenue.22 For instance, Levi Strauss & Company signed a multiyear BPO agreement in which Accenture took over recruitment and hiring for all of Levi Strauss’ 55,000 retail outlets in more than 110 countries.23 Florida created a Web-based HR information system and outsourced administration of most HR functions for approximately 240,000 state employees and retirees. Outsourced services included recruiting, payroll, and HR administration services and benefits administration.24

Human Resources Shared Service Centers
shared service center (SSC)
A center that takes routine, transaction-based activities dispersed throughout the organization and consolidates them in one place.

A shared service center (SSC), also known as a center of expertise, takes routine, transaction-based activities dispersed throughout the organization and consolidates them in one place. For example, a company with 20 strategic business units might consolidate routine HR tasks and perform them in one location. Shared service centers provide an alternative to HRO and can often provide the same cost savings and customer service. Fewer HR professionals are needed when shared service centers are used, resulting in significant cost savings. The most common HR functions that use SSCs are benefits and pension administration, payroll, relocation assistance and recruitment support, global training and development, succession planning, and talent retention.

Professional Employer Organizations
A professional employer organization (PEO) is a company that leases employees to other businesses. When a decision is made to use a PEO, the company releases its employees, who are then hired by the PEO. The PEO then manages the administrative needs associated with employees. It is the PEO that pays the employees’ salaries; it also pays workers’ compensation premiums, payroll-related taxes, and employee benefits. The PEO is responsible to the Internal Revenue Service (IRS) if, for example, the payroll taxes go unpaid. The company reimburses the PEO, which typically charges a fee of from 2 to 7 percent of the customer’s gross wages, with percentages based on the number of leased employees. Because the PEO is the employees’ legal employer it has the right to hire, fire, discipline, and reassign an employee. However, the client company maintains enough control so it can run the day-to-day operations of its business. Although PEOs have been available since the early 1980s, they have recently become a multi-billion dollar industry. The industry size is valued between $136 billion and $156 billion.25 In fact, there is an estimated two to three million U.S. workers employed under a PEO-type arrangement, and that number is certain to grow.26 PEOs permit business owners to focus on their core business, whereas the PEO handles HR activities.27 Companies using a PEO typically have a high level of benefits and greater HR expertise than they could possibly have had on their own.

professional employer organization (PEO)
A company that leases employees to other businesses.

More about HR Professionals
Various designations are used within the HR profession; among these are HR executives, generalists, and specialists. An executive is a top-level manager who reports directly to the corporation’s chief executive officer (CEO) or to the head of a major division. A generalist, who may be an executive, performs tasks in a variety of HR-related areas. The generalist is involved in several, or all, of the six HRM functions. A specialist may be an HR executive, manager, or nonmanager who is typically concerned with only one of the six functional areas of HRM. Figure 1-3 helps clarify these distinctions.

executive
A top-level manager who reports directly to a corporation’s chief executive officer or to the head of a major division.

generalist
A person who may be an executive and performs tasks in a variety of HR-related areas.

specialist
An individual who may be a human resource executive, a human resource manager, or a nonmanager, and who is typically concerned with only one of the six functional areas of human resource management.

The hierarchy of human resources executives, generalists, and specialists.
FIGURE 1-3 Human Resource Executives, Generalists, and Specialists
Figure 1-3 Full Alternative Text
The vice president of industrial relations, shown in Figure 1-3, specializes primarily in union-related matters. This person is both an executive and a specialist. An HR vice president is both an executive and a generalist, having responsibility for a wide variety of functions. The compensation manager is a specialist, as is the benefits analyst. Whereas a position level in the organization identifies an executive, the breadth of such positions distinguishes generalists and specialists.

HR BLOOPERS
Staffing Stone Consulting

Business at Stone Consulting is growing faster than Shelly Stone expected. She just signed a contract on another big project that she believes secures her future in the consulting business.

However, she has been so busy selling the firm’s services that she has put little thought into how she is going to staff the projects she has recently sold. She opened the firm more than a year ago and quickly hired five consultants and an office manager to help her get the business off the ground.

Unfortunately, one of the consultants has already left the firm after making a huge mistake that caused Shelly to lose a client. Some of the other consultants have raised some concerns with Shelly as well. They’ve asked about pay increases and also her promise to eventually provide them with health insurance. However, she hasn’t had time to even think about these issues because she has focused her attention on finding new clients. As she looks over her project list she realizes she needs to start thinking about staffing fast. Her current team is already committed to other projects and the new projects she has secured need to get started right away. The office manager interrupts her thoughts to tell her a potential client is on the line. Excited about yet another opportunity, Shelly jumps on the call, quickly forgetting her staffing concerns.

If your professor has assigned this, go to www.pearson.com/mylab/management to complete the HR Bloopers exercise and test your application of these concepts when faced with real-world decisions.

A profession is a vocation characterized by the existence of a common body of knowledge and a procedure for certifying members. Performance standards are established by members of the profession rather than by outsiders; that is, the profession is self-regulated. Most professions also have effective representative organizations that permit members to exchange ideas of mutual concern. These characteristics apply to the field of HR, and several well-known organizations serve the profession. Among the more prominent is the Society for Human Resource Management (www.shrm.org), the Human Resource Certification Institute (www.hrci.org), the Association for Talent Development (ATD, http://www.td.org), and WorldatWork (www.worldatwork.org). The HR profession is based on a variety of competencies. Figure 1-4 lists five competencies and brief descriptions. We will see throughout this book that effective HR professionals demonstrate these competencies. For example, we will look at the advocate competency, particularly, in Chapter 2 as it applies to ethics, corporate social responsibility, and sustainability. The HR expert competency includes all of the knowledge we have already studied and to come in the remainder of this book, for example, staffing, training, and employee relations.

The competency model for H R professionals as represented by the pieces of a puzzle.
FIGURE 1-4 Model of Human Resources Competencies
Source: U.S. Office of Personnel Management. Online: http://archive.opm.gov/studies/transapp.pdf. Accessed January 2, 2017.

Figure 1-4 Full Alternative Text
profession
Vocation characterized by the existence of a common body of knowledge and a procedure for certifying members.

HR Web Wisdom
Human Resource Certification Institute (HRCI)

www.hrci.org

A Professional Certification Program in HR Management is for individuals seeking to expand their formal HR training.

Opportunities for employment in the HRM profession are growing. According to the U.S. Bureau of Labor Statistics:

Employment of human resources managers is projected to grow 9 percent from 2014 to 2024, faster than the average for all occupations.

Employment growth largely depends on the performance and growth of individual companies. However, as new companies form and organizations expand their operations, they will need more human resources managers to oversee and administer their programs.

Managers will also be needed to ensure that firms adhere to changing, complex employment laws regarding occupational safety and health, equal employment opportunity, healthcare, wages, and retirement plans. For example, adoption of the Affordable Care Act may spur the need to hire more managers to help implement this program.

Although job opportunities are expected to vary based on the staffing needs of individual companies, very strong competition can be expected for most positions.

Job opportunities should be best in the management of companies and enterprises industry as organizations continue to use outside firms to assist with some of their human resources functions.

Candidates with certification or a master’s degree—particularly those with a concentration in human resources management—should have the best job prospects. Those with a solid background in human resources programs, policies, and employment law should also have better job opportunities.28

The median annual compensation for HR managers was $106,910, which is nearly three times the median annual earnings for all jobs. Human resource specialist median salaries ranged between $59,020 for training and development specialists to $116,240 for compensation and benefits managers. Figure 1-5 lists the median annual salaries for various jobs in the HRM profession. The salary levels vary on a number factors, including relevant work experience, educational credentials, and industry. For example, median annual salaries for HR managers were substantially higher in the management of companies and enterprises industry ($118,320) than in the health care and social assistance industry ($89,090).

FIGURE 1-5 HR Professional Annual Salaries
Source: U.S. Bureau of Labor Statistics, “Human Resources Managers,” Occupational Outlook Handbook, 2016–17 Edition,” Accessed January 2, 2017, at : www.bls.gov/ooh/management/human-resources-managers.htm.

A table lists 6 H R professions, their job duties, and the 2 thousand 16 median pay for each.
1.2-1 Full Alternative Text
A table lists 6 H R professions, their job duties, and the 2 thousand 16 median pay for each.
Human Resources as a Strategic Business Partner in a Dynamic Environment
1.3 Explain how the HRM function serves as a strategic business partner and the elements of the dynamic HRM environment.

In the environment presently confronting HR, many HR professions are increasingly taking on the role of being a strategic partner with upper management.30 As a strategic business partner, HR professionals are able to focus on matters that are truly important to the company as a whole.31 For example, increasing sales and building customer loyalty to the brand are important goals of soft drink companies such as Coca Cola and PepsiCo. Increasing sales require hiring highly dedicated and motivated sales and distribution employees. As a strategic business partner, HR helps to identify and develop the employees necessary for excellent performance, builds recruitment systems, training programs for product distribution and interactions with customers, constructs performance management, and structures compensation programs that will greatly incentivize these employees to excel. The rapidly evolving world of HR will increasingly require HR professionals to thoroughly understand all aspects of what the companies they work for do. Essentially, they must know more than just HR work.32 In moving from a transactional to a strategic model, HR professionals work toward solving strategic problems in the organization. No longer is an administrative and compliance role appropriate as their primary jobs. For instance, preparing the company’s affirmative action plan or administering the payroll system are compliance and administrative tasks. HR executives today need to think like the CEO to become a strategic partner in achieving organizational plans and results.33 In doing so, they understand the production side of the business and help to determine the strategic capabilities of the company’s workforce, both today and in the future. HR professionals need to be agile in their thinking as they adapt to the ebbs and flows of business. Therefore, HR executives are ensuring that human resources support the firm’s mission.

HR professionals have changed the way they work. Working as a strategic business partner requires a much deeper and broader understanding of business issues.34 What strategically should HR be doing exactly? Possible strategic tasks for HR include making workforce strategies fundamental to company strategies and goals; increasing HR’s role in strategic planning, mergers, and acquisitions; developing awareness or an understanding of the business; and, helping line managers achieve their goals as in the previous example of soft drink companies.

HR professionals can give the CEO and chief financial officer (CFO) a powerful understanding of the role that employees play in the organization and the way it combines with business processes to expand or shrink shareholder value. HR professionals are integrating the goals of HR with the goals of the organization and focusing on expanding its strategic and high-level corporate participation with an emphasis on adding value. In doing so, HR is demonstrating that it can produce a return on investment for its programs. It analyzes HR activities to determine whether they are maintaining acceptable profit margins. For example, HR professionals strive to develop cost-effective training strategies that boost sales revenue that far exceeds the cost of training. The CEO needs help in matters that HR professionals are qualified to handle. HR professionals are the enablers; they are the ones who should know about change and develop strategies to make it work.

Capital and Human Capital
A useful way to better understand how HR serves as a strategic business partner is to think about the use of capital for value creation. Capital refers to the factors that enable companies to generate income, higher company stock prices, economic value, strong positive brand identity, and reputation. There is a variety of capital that companies use to create value, including financial capital (cash) and capital equipment (state-of-the-art robotics used in manufacturing).

Employees represent a specific type of capital called human capital. Human capital, as defined by economists, refers to sets of collective skills, knowledge, and ability that employees can apply to create value for their employers. Companies purchase the use of human capital by paying employees an hourly wage, salary, or bonuses and providing benefits such as paid vacation and health insurance. Also, companies help develop human capital to their advantage by offering training programs aimed at further boosting employee productivity.

human capital
As defined by economists, human capital refers to sets of collective skills, knowledge, and ability that employees can apply to create economic value for their employers.

The meaning of value creation differs according to a company’s mission. It is useful to think about the differences between for-profit and not-for-profit organizations. For example, Microsoft and Frito Lay are for-profit companies that strive to generate annual earnings for company shareholders. These companies promote profit generation by selling quality software and quality snack products, respectively. The American Red Cross is an illustration of a not-for-profit organization that relies on charitable monetary contributions and grant money to create societal value. The people who contribute money and other resources do not seek monetary gain. Instead, they value supporting humanitarian causes such as disaster relief. The American Red Cross provides disaster relief after the occurrence of devastating events, including the wildfires in California, earthquakes in Oklahoma, and tornadoes in Florida.

Every organization relies on capital to create value, but the combination of capital used to create value differs from company to company. For example, Frito Lay uses state-of-the-art manufacturing equipment, and the American Red Cross does not. However, every organization shares in common the employment of individuals and the necessity of managing employees to successfully create value. Indeed, HRM is the business function of managing employees to facilitate an organization’s efforts to create value.

Dynamic Human Resource Management Environment
Many interrelated factors affect HRM practice within and outside the organization. As illustrated in Figure 1-6, environmental factors include legal considerations, labor market, society, political parties, unions, shareholders, competition, customers, technology, the economy, and unanticipated events. Each factor, either separately or in combination with others, can create constraints or opportunities for HRM.

The environments of human resources management diagram takes the base model of human resources management functions, and adds internal and external factors.
FIGURE 1-6 Environment of Human Resource Management
Figure 1-6 Full Alternative Text
Legal Considerations
A significant external force affecting HRM relates to federal, state, and local legislation and the many court decisions interpreting this legislation. For example, the Age Discrimination in Employment Act is an example of a federal law that protects older workers from illegal discrimination. In addition, presidential executive orders have had a major impact on HRM. Executive Order 13145 protects all qualified individuals in federal employment based on protected genetic information, or information about a request for or the receipt of genetic services. These legal considerations affect virtually the entire spectrum of human resource policies. Laws, court decisions, and executive orders affecting other HRM activities will be described in the appropriate chapters.

Labor Market
Potential employees located within the geographic area from which employees are normally recruited comprise the labor market. The capabilities of a firm’s employees determine, to a large extent, how well the organization can perform its mission. Because new employees are hired from outside the firm, the labor market is considered an important environmental factor. The labor market is always changing, and these shifts inevitably cause changes in the workforce of an organization. For example, members of the aging baby boom cohort, the largest current generation of employees, are retiring in large numbers; however, younger generations are smaller and less well-prepared to assume leadership roles because they have had much less time in the workforce to develop them.

Society
Society may also exert pressure on HRM. The public is no longer content to accept, without question, the actions of business. To remain acceptable to the public, a firm must accomplish its purpose while complying with societal norms.

Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation. Corporate social responsibility (CSR) is closely related to ethics. CSR is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves.35 We take up these subjects in Chapter 2.

Political Parties
Closely related to society, but not the same, are political parties. The Democratic and Republican parties are the two major political parties in the United States. These parties often have differing opinions on how HRM should be accomplished. For example, Democrats tend to favor more government regulation that protects the rights of virtually all employees to receive at least a minimum wage (the Fair Labor Standards Act) and unpaid family leave (the Family and Medical Leave Act). Republicans, on the other hand, tend to favor less government regulation, believing that businesses should have as much flexibility as possible to operate profitably.

Unions
Wage levels, benefits, and working conditions for millions of employees reflect decisions made jointly by unions and management. A union consists of employees who have joined together for the purpose of negotiating terms of employment such as wages and work hours. The United Auto Workers is an example of a large labor union. Unions are treated as an environmental factor because, essentially, they become a third party when dealing with the company.

union
Consists of employees who have joined together for the purpose of negotiating terms of employment, such as wages and work hours.

shareholders
Owners of a corporation.

Shareholders
The owners of a corporation are called shareholders. Because shareholders, or stockholders, have invested money in the firm, they may at times challenge programs considered by management to be beneficial to the organization. Stockholders are wielding increasing influence, and management may be forced to justify the merits of a program in terms of how it will affect future projects, costs, revenues, profits, and even benefits to society as a whole.36 Considerable pressure has recently been exerted by shareholders and lawmakers to control the salaries of corporate executives as we shall see in the discussion of the Dodd-Frank Act in Chapters 2 and 9.37

Competition
Firms may face intense global competition for both their product or service and labor markets. Unless an organization is in the unusual position of monopolizing the market it serves, other firms will be producing similar products or services. A firm must also maintain a supply of competent employees if it is to succeed, grow, and prosper. But other organizations are also striving for that same objective. A firm’s major task is to ensure that it obtains and retains a sufficient number of employees in various career fields to allow it to compete effectively. A bidding war often results when competitors attempt to fill certain critical positions in their firms. Even in a depressed economy, firms find creative ways to recruit and retain such employees. For example, a company may offer a signing bonus (that is, a one-time monetary payment) to offset lower pay.

Customers
The people who use a firm’s goods and services also are part of its external environment. Because sales are crucial to the firm’s survival, management has the task of ensuring that its employment practices provide excellent customer support service. Customers constantly demand high-quality products and after-purchase service. Therefore, a firm’s workforce should provide top-quality goods and after-sale customer support. These conditions relate directly to the skills, qualifications, and motivations of the organization’s employees.

FYI
In a survey of HR professionals, 36 percent have disqualified a job candidate because of troubling information discovered on a public social media profile.38

HR Technology
The rate of technological change is staggering. The development of technology has created new roles for HR professionals but also places additional pressures on them to keep abreast of the technology. As noted earlier, leveraging technology can help HR professionals to consider both internal and external data to aid in decision making. We will briefly review three applications: human resource information systems, cloud computing, and social media.

With the increased technology sophistication has come the ability to design a more useful human resource information system (HRIS), which is any organized approach for obtaining relevant and timely information on which to base HR decisions. The HRIS brings under one encompassing technology system many human resource activities. Think of an HRIS as an umbrella for merging the various subsystems discussed throughout this text. Today, mainstay HR responsibilities such as planning, recruitment, selection, oversight of legal and regulatory compliance, benefits administration, and the safeguarding of confidential employee information cannot be carried out effectively without an HRIS. Throughout the text, topics will be highlighted that are part of an HRIS. In addition, all of the HRIS applications may be accessed through cloud computing.

human resource information system (HRIS)
Any organized approach for obtaining relevant and timely information on which to base HR decisions.

A rapidly developing trend is the increased mobility of tasks performed by HR professionals.39 A major factor contributing to HR mobility is cloud computing, a means of providing software and data via the Internet. Cloud computing and the use of mobile devices are changing the way HR work is performed, and the change is moving at an amazing pace.40 With the cloud there is no more expensive, capital-intensive hardware and infrastructure and no more expensive, time-consuming, staff-intensive upgrades.41 Cloud computing permits businesses to buy and use what they need, when they need it. It allows large organizations to move away from managing their own computer centers and focus on the core competencies of the firm. Cloud users can access the application securely from anywhere in the world.42 HR professionals can be virtually anywhere and access the cloud, all through any standard Web.

HR departments are leveraging the increasing popularity of social media, including LinkedIn, Facebook, YouTube, and Twitter. In a 2015 Society for Human Resource Management survey, HR professionals revealed that social networking is an important tool for recruiting passive and active applicants. Most respondents, 84 percent, say that their organizations currently use social media and 9 percent plan to use it.43 There are two additional applications of social media. First, companies may use social media to promote knowledge sharing as well as training and development. Second, social media is often used to reinforce identification with the organization and promoting the brand.

Economy
The economy of the nation and world is a major environmental factor affecting HRM. As a generalization, when the economy is booming, it is more difficult to recruit qualified workers. On the other hand, when a downturn is experienced, more applicants are typically available. To complicate this situation even further, one segment of the country may be experiencing an economic downturn, another a slow recovery, and another a boom. A major challenge facing HR is working within this dynamic, ever-changing economic environment because it impacts every aspect of HRM.44

Unanticipated Events
Unanticipated events are occurrences in the environment that cannot be foreseen. The Deepwater Horizon oil spill off the Gulf Coast in 2010 caused major modifications in the performance of many HR functions. Every disaster—whether human-made or natural—likely requires a tremendous amount of adjustment with regard to HRM. For example, after Hurricane Katrina, Tulane University reduced their number of employees. On a global perspective, think of the many different ways HR was affected by the tsunami in Japan. Japanese automobile plants in the United States were forced to temporarily shut down because of a lack of parts produced in Japan. Other recent disasters, such as heat waves, earthquakes, tornadoes, floods, and fires have created their own type of difficulty.
The Role of HRM in Building Corporate Culture and Employer Branding
1.4 Discuss the role of HRM in building corporate culture and employer branding.

FYI
A survey of more than 7,000 CEOs and HR leaders revealed that 82 percent consider culture a source of competitive advantage.45

As an internal environment factor affecting HRM, corporate culture refers to the firm’s social and psychological climate. Corporate culture is defined as the system of shared values, beliefs, and habits within an organization that interacts with the formal structure to produce behavioral norms. Employer branding is an extension of product or business branding. Employer branding is the firm’s corporate image or culture created to attract and retain the type of employees the firm is seeking. It is what the company stands for in the public eye.46 Establishing a positive corporate culture and brand is another way HR professionals contribute to a company’s success. We discuss corporate culture and employer branding next.

corporate culture
System of shared values, beliefs, and habits within an organization that interacts with the formal structure to produce behavioral norms.

employer branding
Firm’s corporate image or culture created to attract and retain the type of employees the firm is seeking.

Corporate Culture
Culture gives people a sense of how to behave and what they ought to be doing. Each individual gradually forms such perceptions over a period of time as the person performs assigned activities under the general guidance of a superior and a set of organizational policies. The culture existing within a firm influences the employees’ degree of satisfaction with the job as well as the level and quality of their performance. The assessment of how desirable the organization’s culture is may differ for each employee. One person may perceive the environment as bad, and another may see the same environment as positive. An employee may actually leave an organization in the hope of finding a more compatible culture. Max Caldwell, a managing director at Towers Watson, said, “Maybe the best definition of company culture is what everyone does when no one is looking.”47 Topics related to corporate culture are presented throughout this text. Some corporate culture topics include the following:

Employer branding is the firm’s corporate image or culture created to attract and retain the type of employees the firm is seeking. It is what the company stands for in the public eye.

Diversity management is about pursuing an inclusive corporate culture in which newcomers feel welcome and everyone sees the value of his or her job.

Organizational fit refers to management’s perception of the degree to which the prospective employee will fit in with the firm’s culture or value system. A good Web site should provide a feeling of the kind of corporate culture that exists within the company.

New hire orientation reflects the firm’s corporate culture by showing in effect, “How we do things around here.”

Talent management is a strategic endeavor to optimize the use of employees and enables an organization to drive short- and long-term results by building culture, engagement, capability, and capacity through integrated talent acquisition, development, and deployment processes that are aligned to business goals.

Organization development is a major means of achieving change in the corporate culture.

Anything that the company provides an employee is included in compensation, from pay and benefits to the organization’s culture and environment.

A corporate culture that does not consider the needs of employees as individuals makes the firm ripe for unionization.

Retaining the best employees often rests with the corporate culture that exists within the organization.

Accident rates decline when the corporate culture encourages workers consciously or subconsciously to think about safety.

A country’s culture is the set of values, symbols, beliefs, languages, and norms that guide human behavior within the country. Cultural differences are often the biggest barrier to doing business in the world market. Many of the global topics discussed throughout your text are influenced by the issue of corporate culture or country culture.

country’s culture
Set of values, symbols, beliefs, language, and norms that guide human behavior within the country.

Employer Branding
A colleague shared a memory about his mother, which bears directly on this subject. His mother would always buy a certain brand of canned fruit even though it was more expensive. The brand name itself caused her to buy a product that although higher priced was probably the same or similar quality as less expensive brands. The company had created a positive image that made her want to use the product. As with the canned fruit, companies want a brand that will entice individuals to join and remain with the firm.48 HR professionals play an essential role in creating and promoting a company’s brand. Effective branding communicates why the company is a cut above other workplaces by providing persuasive reasons for job seekers to choose the company over others.49 As such, the focus on employer branding has become increasingly important for organizations. Jeffrey St. Amour, national practice leader for PricewaterhouseCoopers’ HR Services strategic communication group said, “They’re both trying to create the same thing, which is product loyalty or a feeling that this is a high-quality company.”50 Employer branding has become a major recruitment and retention strategy and everyone in the company works to promote the image of the firm.51

Brands imply what employees will get from working there and why working for the company is a career and not just a job. For example, consulting firm PwC emphasizes its commitment to career development as part of its recruitment strategy: “Every career path is different. That’s why we help you design your own.”52 As more Gen-Yers enter the workforce, firms may need to alter their brand to attract and retain these young people who view having fun in an engaging work environment as important as a good salary. A well-paying job that is boring will not keep them for long. Cosmetic company L’Oréal understands this expectation. The company takes time to understand what employees value in their work experiences, and they incorporate much of these values in an employee value proposition. L’Oréal promises prospective employees a “thrilling experience” and an “environment that will inspire you.”53

An employer brand embodies the values and standards that guide people’s behavior. Through employer branding, people get to know what the company stands for, the people it hires, the fit between jobs and people, and the results it recognizes and rewards. Every company has a brand, which could be the company of choice or one of last resort. A robust employment brand attracts people and makes them want to stay. In fact, most workers want to belong to an organization that embraces the ideas and principles they share.54 Employer branding has become a driving force to engage and retain the firm’s most valuable employees.55 As the economy prospers, firms vigorously seek talent, and, employer branding is attracting more attention.

Achieving acknowledgment by an external source is a good way for a brand to be recognized. Being listed on Fortune magazine’s 100 Best Companies to Work For is so desirable that some organizations try to change their culture and philosophies to get on the list. Think about how being on the following lists might assist in a company’s recruitment and retention programs:

Black Enterprise list of Best Companies for Diversity

Business Ethics magazine list of 100 Best Corporate Citizens

Computerworld list of Best Places to Work

Forbes magazine list of Best Companies for Work-Life Balance

Fortune magazine list of 100 Fastest-Growing Companies in the United States

Training magazine list of 125 Best Companies for Employee Development

Working Mother list of 100 Best Companies

As the previous discussion indicates, many companies embrace creating and maintaining a positive work culture, and they recognize it is “good” business because they are better able to recruit and retain valued employees. A company named Patagonia also recognizes the benefits of a positive work culture from the perspective of employees. The following Watch It video describes Patagonia’s efforts to maintain a positive work culture that emphasizes a culture of personal responsibility, flexibility, and development.
Human Resource Management in Small Businesses
1.5 Summarize human resource management issues for small businesses.

The Small Business Administration (SBA) defines a small business as one that is independently owned and operated, is organized for profit, and is not dominant in its field. More than 99 percent of the businesses in the United States are classified as small businesses and they are responsible for at least half of private sector employment.56 The discussion throughout this text has historically focused primarily on how HR is practiced with major corporations. However, today, many college graduates obtain jobs in small businesses. In fact, growth of small business is often a primary driver for the economy. Therefore, the practice of HR as it is conducted in small businesses is discussed at various times in your text.

HR Web Wisdom
U.S. Small Business Administration

www.sba.gov/

Small business is the most powerful engine of opportunity and economic growth in the United States. SBA offers a variety of programs and support services to help owners navigate the issues they face with initial applications and resources to help after they open for business. Virtually all HR topics can be addressed from a small business standpoint.

Typically, the same HR functions previously identified must be accomplished by small business, but the manner in which they are accomplished may be altered.57 Small businesses often do not have a formal HR unit or an HRM specialist. Rather, line managers often handle the HR functions. The focus of their activities is generally on hiring and retaining capable employees. Some aspects of HR functions may actually be more significant in smaller firms than in larger ones. For example, a staffing mistake in hiring an incompetent employee who alienates customers may cause the business to fail. In a larger firm, such an error might be much less harmful. As the business grows, the need for a more sophisticated HR function usually is needed.58 This move typically occurs at the 25-employee level when concerns about compliance with labor laws often begin.59 Also, new small businesses are faced with a host of federal and state government regulatory requirements, tax laws, and compensation demands.
Country Culture and Global Business
1.6 Identify ways that country culture influences global business.

A country’s culture is the set of values, symbols, beliefs, languages, and norms that guide human behavior within the country. It is learned behavior that develops as individuals grow from childhood to adulthood. As one goes from one side of this country to the other, a wide range of cultural differences will be experienced. The same can be said in traveling from north to south. Then, think about the cultural differences that exist in going from this country to another. Americans’ use of colloquialisms often creates cultural barriers. Perhaps surprisingly, misunderstanding can occur between two countries that share the same language such as is the case for the United States and the United Kingdom. For instance, Martin Brooks, Production and Export Manager of pet nutrition company Hilton Herbs considers the United States as one of the most challenging. “As an example, we had a product for older horses and dogs called Veteran,” he says.60 Sales were flat until the company replaced the word “veteran” with “senior,” following the way people in the United States refer to older pets. Veteran is a commonplace descriptor in the UK. If a significant cultural divide can exist between two countries that share a common language, how much wider must the contrast be between countries that speak different languages? No doubt quite significant.

Even though the language may be the same, such as is the case with the United States and the United Kingdom, major cultural differences do exist. Dean Foster, a New York-based consultant on intercultural business issues said, “The United Kingdom really is a foreign country—and HR departments that ignore that fact are at their peril. It’s that expectation of similarity that throws everyone off.”61 A businessperson who travels from Switzerland to Italy goes from a country where meetings tend to be highly structured and expected to start on time to one where meetings can be more informal and punctuality is less important.62 Many believe that China has the most different culture for Americans to deal with.63

Throughout this text, cultural differences between countries will be identified as a major factor influencing global business. This borderless world adds dramatically to the difficulty of managing employees. Cultural differences reveal themselves in everything from the workplace environments to differences in the concept of time, space, and social interaction.64 Companies operating in the global environment recognize that national cultures differ and that such differences cannot be ignored.65

Getting work done is less likely when individuals from one culture are tone deaf to cultural norms elsewhere. For example, L’Oréal’s decision making culture encourages open debate, which management maintain generates creativity.66 However, that style probably does not fit well with cultural differences in other countries. The company’s confrontational approach is inconsistent with the cultural values in Southeast Asia, which is a region where they conduct business. An Indonesian employee said, “To an Indonesian person, confrontation in a group setting is extremely negative, because it makes the other person lose face. So it’s something that we try strongly to avoid in any open manner.”67

Getting work done becomes especially more challenging when companies of different country origins merge. For instance, Chrysler Corporation employees have gone through major cultural changes in the last several years.68 The misfortune cost Daimler nearly $36 billion over a decade, which amounted to a loss of almost $10 million per day for 10 years.69 First, they were merged into a German firm, Daimler-Benz, then they were sold back to a U.S. company, and they are now merged into Fiat, an Italian firm. Each ownership change brought new cultural rules with which employees had to deal. Certainly, the Germans and Italians have two distinct cultures.70 InBev, based in Leuven, Belgium, purchased Anheuser-Busch several years ago, making it the leading global brewer and one of the world’s top five consumer products companies (AB InBev). Merging two large corporate cultures after an acquisition is often not easy. In fact, InBev’s purchase of Anheuser-Busch was particularly difficult, even two-and-a-half years after the $52 billion deal closed, the story continues.71 AB InBev reached an agreement, valued at $100 billion, to acquire beer brewer SABMiller. No doubt, the companies will face further challenges as they merge their workforces and operations. For instance, AB InBev’s CEO Carlos Brito once said that he does not “like people at the company to have fun.”72 Brito’s sentiment does not fit with SABMiller’s work culture, which reportedly is more casual.

The cultural norms of Japan promote loyalty and teamwork. The work culture there is one in which honesty and hard work are prized assets. In Japan, most managers tend to remain with the same company for life. In the United States, senior executives often change companies, but the Japanese believe strongly that leaving a job is to be avoided out of respect for the business team.73 In Japan, if a boss gives detailed instructions to a subordinate, it is like saying the person is incompetent.74 Japan is not the only Asian country that promotes worker respect for their bosses and a team work ethic. For example, norms in Korean culture pressure workers to “pull late nights” because they feel the need to please their superiors. One observer described these workers: “They just sit in their chairs and they just watch their team leaders, and they’re thinking, ‘What time is he going to leave the office?”’75 Then, there is an expectation that the boss and employees will go out for drinks, and it is important that employees participate. In Korea, drinking together helps build workplace camaraderie and trust.76

Cultural misunderstandings are common, but they can be hazards to executives managing global workforces. Samuel Berner, head of HR of the private banking Asia Pacific division in Singapore for Credit Suisse AG said, “Things that are perfectly natural in one culture offend in another.”77 Eric Rozenberg, CMM, CMP, president, Ince&Tive, of Brussels, Belgium, stated, “Even though people are aware that there are cultural differences between various nationalities, they’re still uncomfortable with it and are afraid of making mistakes.”78
Developing Skills for Your Career
1.7 Explore essential skills for developing your career in HR or any other career path.

If you’re not an HRM major, you may be thinking that this section isn’t relevant to you. Let me assure you, it is. Whether or not you plan on a career in HRM, the lessons you learn in this course will help you in business and in your life. Also, it is only through the aggregate of your educational experience that you will have the opportunity to develop many of the skills that employers have identified as critical to success in the workplace. In this course, and, specifically in this text, you’ll have the opportunity to develop and practice seven important skills in the following ways: communication, critical thinking, collaboration, knowledge application and analysis, business ethics and social responsibility, information technology application and computing skills, and data literacy.

Communication
Communication is defined as effective use of oral, written, and nonverbal skills for multiple purposes (e.g., to inform, instruct, motivate, persuade, and share ideas); effective listening; using technology to communicate; and being able to evaluate the effectiveness of communication efforts—all within diverse contexts. The Working Together feature offers opportunities to collaborate through sharing ideas, listening to others’ ideas, and coming up with a cohesive team response to the assignment. If assigned by your instructor, you may make brief oral presentations, creating an additional opportunity for working together. All the while, you will gain insight into your and your group members’ strengths and weaknesses pertaining to communication (and collaboration) skills. Never pass up an opportunity to hone these skills.

Critical Thinking
Critical thinking involves purposeful and goal-directed thinking used to define and solve problems, make decisions or form judgments related to a situation or set of circumstances. The Chapter Review questions and a new feature in this edition, HRM by the Numbers, provide you with an excellent opportunity to think through concepts and their applications. HRM by the Numbers will also give you the chance to analyze quantitative data to facilitate problem solving. Analysis of the Incidents, which depict realistic scenarios that you will likely encounter in the workplace, requires your interpretation and an actionable response. Similarly, you will have the chance to think through and discuss your responses to common Ethics Dilemmas. More about the ethics dilemmas shortly. Critically thinking about situations is just one part of the story. The Personal Inventory Assessment feature, included in most chapters, gives you the opportunity for self-assessment and personal reflection. Understanding yourself and finding your voice will help you approach situations within and outside the employment setting with greater confidence.

Collaboration
Collaborative learning takes place in a situation in which individuals actively work together on a task, constructing meaning and knowledge as a group through dialogue and negotiation resulting in a final product reflective of their joint, interdependent actions. I’ve already made the case for Working Together. Your professor may similarly ask you to analyze Incidents in small groups. Another feature new in this edition, HRM is Everyone’s Business, explains how HR professionals and managers throughout the organization work together to address important workplace issues. This feature highlights the connections between managers and HR professionals, and the reality that work is rarely performed in isolation.

Knowledge Application and Analysis
Knowledge application and analysis is defined as the ability to learn a concept and then appropriately apply that knowledge in another setting to achieve a higher level of understanding. All the activities discussed in this section provide you with multiple opportunities to think through solutions to specific problems and generalize these processes to other situations you will likely encounter in the future. Two additional features further help you develop this skill. Try It directs you to mini simulations and, in Watch It, you will review video clips that require a response to important workplace challenges.

Business Ethics and Social Responsibility
Business ethics are sets of guiding principles that influence the way individuals and organizations behave within the society that they operate. Two additional issues require everyone’s attention. The first, CSR is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. Second, corporate sustainability focuses on the possible future impact of an organization on society, including social welfare, the economy, and the environment. Both issues are like ethics; however, ethics also focuses on individual decision making and behavior as well as the impact of ethical choices on employee welfare. The review questions, particularly in Chapter 2 on ethics, social responsibility, and sustainability, and the Ethics Dilemmas throughout your textbook, will keep these important matters in the forefront as you move ahead in your career.

Information Technology Application and Computing Skills
Information technology application and computing skills are defined as the ability to select and use appropriate technology to accomplish a given task. The individual is also able to apply computing skills to solve problems. HRM by the Numbers gives you the opportunity to develop these skills.

Data Literacy
Data literacy is the ability to access, assess, interpret, manipulate, summarize, and communicate data. Throughout this book, the newly created feature titled FYI provides tidbits of information from survey research and extensive databases (e.g., employment statistics) that illuminate trends, opinions, and the use of specific HR practices. These data should enable you to translate quantitative information for placement into the employment context. Further, you can expand this skill by thinking through when and how to create new policies or modify existing ones.

In summary, you will find opportunities throughout this book to develop several critical skills that provide a foundation of success on any career path that you follow. As you learn about HRM, consider how you can generalize these skills to other workplace situations. Best of luck whether you are preparing for the start of your career or are in the process of changing career paths!

Scope of this Book
Effective HRM is crucial to the success of every organization. To be effective, managers must understand and competently practice HRM. This book was designed to give you the following:

An insight into the role of strategic HRM in today’s organizations and the strategic role of HR functions

An appreciation of the value of employees as human capital

An awareness of the importance of business ethics and corporate social responsibility

An understanding of job analysis, HR planning, recruitment, and selection

An awareness of the importance of HR development, including training and developing, for employees at all levels

An understanding of performance appraisal and its role in performance management

An appreciation of how compensation and employee benefits programs are formulated and administered

An opportunity to understand employee and labor relations

An understanding of safety and health factors as they affect the firm’s profitability

An appreciation of the global impact on HRM This book is organized in six parts, as shown in Figure 1-7; combined, they provide a comprehensive view of HRM. As you read it, hopefully you will be stimulated to increase your knowledge in this rapidly changing and challenging field.

A table discusses the organization of the book.
FIGURE 1-7 Organization of This Book

ANSWER

The human resource department is an important department for any organization. Other than recruiting staff that is vetted and proven to be best qualified for mandates within the work setting, human resource management is also involved with undertaking performance appraisals which are important in evaluating the strengths and weaknesses of employees. In undertaking their mandate, it is important for a person to think strategically while administering human resources.

Importance of thinking Strategically when Administering Human Resources

First and foremost, thinking strategically helps guarantee a greater chance of an organization achieving its goals. Thinking strategically helps come up with proper plans on how to recruit, train and retain employees that are ready to drive an organization’s mandate. Secondly, thinking strategically helps the human resource to come up with performance appraisal indicators that are free of discrimination and reflect the aspirations of an organization (Musilek, 2019). Furthermore, it is the best way to come up with motivational strategies that will help improve the productivity of employees.