Chapter 1_ HRM

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 3/52 Companies with good human resource practices have more satisfied workers. Companies with happy employees are more profitable. Companies lose money when they try to be good social and environmental citizens. Having a successful career in the future workplace will require young employees to work effectively with older people. Human resource specialists can provide critical information and support that helps make life better for employees. LEARNING OBJECTIVES After reading this chapter you should be able to: Explain how human resource management, from the organizational life-cycle and stakeholder perspectives, can facilitate organizational success. List the core functions of human resource management. Explain what human resource professionals do to help create successful organizations. Identify important labor trends that are affecting organizations and their human resource practices. Explain how effective human resource management requires a combination of strategic and functional perspectives. How Can Human Resource Management Make an Organization Effective? Human resource management focuses on people in organizations. Of course, people are a major component of any organization, so it follows that organizations with more productive employees tend to be more suc- cessful. Employee productivity increases when organizations hire and motivate employees effectively. In addition, good human resource prac-

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 6/52 LEARNING OBJECTIVE 1 How Is Organizational Success Determined? As you begin studying human resource management, it is important to think about what you want to gain from your efforts. How can under- standing human resource management better prepare you for success in your upcoming career? The most basic answer is that human resource skills will help you hire, manage, and motivate employees more effec- tively. Clearly, human resource skills are useful not only to human re- source professionals but also to everyone who has responsibility for lead- ing and managing others. Furthermore, even if you don't plan to work ei- ther as a human resource specialist or as a manager, learning the con- cepts of human resource management will help you to understand why the places where you work do much of what they do. The goal of human resource management is, of course, to make organiza- tions more effective. Thus, a starting point for learning about the field of human resource management is to explore the concept of organizational success. We know that some organizations are more successful than oth- ers. Can differences in human resource management explain why? Most observers agree that Trader Joe's is a successful organization. This is supported by top rankings from publications such as Consumer Reports . But what exactly does it mean to say an organization is successful? Does it mean the organization makes a lot of money? Does it mean the organiza- tion makes the world a better place? Perhaps success is meeting the de- mands of different stakeholders, such as Trader Joe's recent agreement with a farmworker organization concerning employee fair treatment as part of tomato-growing practices. Maybe success simply means the orga- nization has been around for a long time. Because organizational success has many faces, each of these perspectives is partly true. Different view- points capture different meanings of success. Here, we briefly examine the meaning of organizational success from two perspectives—the life-cy- cle model and the stakeholder perspective—and consider how human re- source management plays a role in making organizations effective from each viewpoint. SUCCESS IN LIFE-CYCLE STAGES Think about success for you as an individual. Being successful now doesn't guarantee you will be successful in 10 years. Having just enough money to buy pizza and books may equal success when you are 20, for example, but probably isn't enough when you are 40. Similarly, the life- cycle approach to organizational success suggests that measures of effec- tiveness change as an organization grows. Twenty-five years ago, Trader Joe's was successful simply because it didn't close when 7-Eleven entered the market. Success today depends on expansion into a national chain. 8

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 9/52 how effective human resource practices in call centers increase the likeli- hood of retaining workers, which in turn increases profitability. How Do We Know? D OES E FFECTIVE H UMAN R ESOURCE M ANAGEMENT I NCREASE O RGANIZATIONAL S UCCESS ? Have you phoned a company's call center in the past to ask a question or complain about a product or service? Perhaps a call center representative has phoned you to try to sell you something. Many companies have call centers, and some centers employ thousands of people. As you can proba- bly imagine, working in a call center is not always fun, and employees frequently quit shortly after being hired. An important question therefore is whether good human resource prac- tices can improve work in call centers. Rosemary Batt conducted a study to learn about the effect of human resource practices on organizational performance in call centers. She asked call center managers about the skill level of employees, the amount of freedom employees had to choose how to do their work, and human resource incentives. She also measured employee quit rates and sales growth. The study found higher sales growth in call centers with better human re- source practices. Higher-performing centers had ongoing training, more employees working full-time rather than part-time, and more elaborate performance management systems. Better centers allowed employees to exercise greater control in determining things like work pace, scheduling, and technology design. Much of the effect of the human resource prac- tices on performance came through employee retention. Fewer employ- ees left call centers that had better practices, which in turn helped these centers to experience increased sales growth. The Bottom Line. Organizations are more successful when they have good human resource practices. Success comes from having a stable work- force, which develops when fewer people leave the organization. People are less likely to leave when they have freedom to make choices about how to do their work. They also stay longer when they have full-time jobs that pay them well. Professor Batt thus concluded that good human re- source practices lead to lower quit rates, which in turn increase growth in customer sales. Source: Rosemary Batt, “Managing Customer Services: Human Resource Practices, Quit Rates, and Sales Growth,” Academy of Management Journal 45, no. 3 (2002): 587–597. Formalization Stage

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 12/52 sign that employees' needs are being met. Simply put, people are less likely to look for new work opportunities when they are satisfied with their current jobs. As you can imagine, most companies prefer em- ployee turnover to be low. Employee turnover The process in which employees leave the organization and are re- placed by other employees. Customers Customers are another important group of stakeholders. An organization obviously will have trouble achieving its goals if customers don't buy its goods or services, so the influence of customers on the organization is im- mense. The goods and services available to customers can also affect their lives both positively and negatively. Research evidence strongly supports the notion that good human re- source management improves customer satisfaction, largely through cus- tomers' interactions with employees. Employees tend to treat customers the same way they believe managers treat them. If employees feel the or- ganization values them and treats them with respect, they reproduce these good attitudes and behaviors in their interactions with customers. If they believe management doesn't care about them, they are less likely to be positive and helpful to customers. For example, one study of hairstyl- ists found that those who were most satisfied with their jobs were helpful to clients and coworkers and in turn had more satisfied customers. Human resource practices that demonstrate care and concern for em- ployees thus translate into increased customer satisfaction. Hiring and keeping skilled employees can also improve customer satisfaction. Just think of an experience you have had shopping for something like a new computer. Getting information from a knowledgeable employee is much more satisfying than trying to get information from someone who knows less than you do. How Do We Know? W HY A RE S OME O RGANIZATIONS M ORE E FFECTIVE THAN O THERS ? Human resource specialists often claim that differences in employee skill and ability represent a primary source of competitive advantage for firms. In short, having skilled and knowledgeable employees is seen as a valuable resource that firms can draw on to outperform competitors. Of course, there are many other things, such as firm strategy and economic conditions, that affect organizational performance. An important re- search question is thus whether organizations with better employees— 21 22 23

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 15/52 LEARNING OBJECTIVE 2 panies rated by Fortune as “The 100 Best Companies to Work for in America” are more profitable than their competitors. CONCEPT CHECK 1. 1. What are the four stages of the organizational life cycle, and what is the main goal of each stage? 2. 2. How does human resource management contribute to success at each stage? 3. 3. What four primary groups make up an organization's key stakeholders? What Does Human Resource Management Provide to an Organization? Anyone who has applied for a job with a moderately large organization has probably interacted with a human resource department. But human resource functions go far beyond processing employment applications. From an overall strategic perspective, effective human resource manage- ment builds human capital that in turn increases organizational perfor- mance. In this section, we thus look at a number of activities that human resource professionals carry out in their role of managing the organization's employees. CORE HUMAN RESOURCE FUNCTIONS Core human resource functions can be summarized as people manage- ment activities. As shown in Table 1.2, these activities represent the pri- mary purpose for having a human resource department. The Society for Human Resource Management (SHRM) and its affiliated Certification Institute have identified six broad functional areas of human resource management. These functions are business management and strategy, workforce planning and employment, human resource development, compensation and benefits, employee and labor relations, and risk management. 28 29

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 18/52 Compensation practices include finding and analyzing information to de- termine how much to pay each employee. Identifying and pursuing meth- ods of using pay to increase employee motivation is an important contri- bution of human resource management. Most human resource depart- ments also take primary responsibility for payroll activities such as pre- paring and distributing paychecks. Administering benefits, especially health insurance, can be quite complicated and usually requires a num- ber of technical contributions from human resource professionals. Compliance with numerous laws and regulations concerning compensa- tion also calls for specialized knowledge, which usually comes from the human resource department. As described in the Technology in HR fea- ture, Web-based information can help human resource departments com- municate critical compensation and benefit policies. Technology in HR U SING W EB -B ASED I NFORMATION TO M ANAGE P EOPLE An important question is whether technology can help human resource departments better serve the needs of managers and employees. The an- swer is a clear yes. Evidence shows that the various functions of human resource management benefit substantially from adopting appropriate technologies. Some forms of technology are common. For instance, approximately 89 percent of organizations now use some type of self-service interface to help managers and employees solve human resource problems. An orga- nization may use a Web-based Internet site to provide information about employee benefits, compensation agreements, organizational policies, and the like. Encouraging members of the organization to go to these sites for information reduces the need for face-to-face conversations and thereby reduces administrative costs. Other forms of technology are not yet as wide spread. Recent trends, how- ever, suggest that cutting-edge firms are using technology to better link human resource practices to organizational strategy. In particular, tech- nologies are being developed to improve methods of measuring produc- tivity. In addition, information about individual employees is being incor- porated into extensive databases that help organizations take advantage of the wide array of skills that employees have to offer. Being able to lo- cate information about the skills of individual employees makes work- force planning easier and more effective. Many technologically advanced organizations are also creating Web-based learning tools to help with hu- man resource development.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 21/52 LEARNING OBJECTIVE 3 Of course, human resource specialists must have knowledge before they can share it. Unfortunately, even professionals working within human re- source departments often have misconceptions about good practices. This is shown by a survey that asked human resource leaders a number of questions about specific employment, staffing, and compensation prac- tices. On average, these professionals knew the correct answer only about 60 percent of the time. Those with higher scores had been promoted more often, had received certification as human resource professionals, and read academic studies more frequently. Simply reading trade journals and popular magazines may not be enough to learn cutting-edge prac- tices. Many of the most important research findings do not make their way into publications written for practicing managers. Overall, re- searchers in the field of human resource management need to do a better job of communicating their findings, and practitioners need to better test and implement best practices. Another aspect of spreading human resource knowledge is building rela- tionships of trust. Human resource departments need to provide man- agers with solutions to problems. Managers are more likely to believe and act on information from the human resource department when they see that it helps them. Human resource professionals earn managers' trust by listening to and understanding their problems and then providing solu- tions that work. This requires people working in the human resource department to be capable of doing a wide array of things that help man- agers do their jobs better. CONCEPT CHECK 1. 1. What are the six core human resource functions? 2. 2. Why is it important for human resource professionals to educate oth- ers in their organizations about human resource functions? What Do Human Resource Specialists Do? We have looked at some ways human resource management helps orga- nizations and have explored some of the functions that human resource departments carry out. We can gain additional insight into the field by looking at the people who work in human resources. An example of someone who works in human resource management is Jen Martens, who works at University of Nevada–Las Vegas (UNLV). UNLV is a state- supported, nonprofit organization with nearly 28,000 students and 3,000 employees. Just like any other large organization, UNLV must recruit and hire many employees every year. Jen Martens assists in this process through her work as manager of employment. Her work includes manag- 31 32 33 34

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 22/52 ing employee recruitment programs, teaching managers how to hire ef- fective employees, and assuring compliance with government regula- tions. Jen also leads other human resource specialists who do things like write job postings and develop interview questions. Human resource professionals like Jen Martens, who is a certified Professional in Human Resources (PHR), work by themselves and with managers to “plan, direct, and coordinate human resource activities of an organization to maximize the strategic use of human resources and main- tain functions such as employee compensation, recruitment, personnel policies, and regulatory compliance.” A more specific list of tasks is pro- vided in Table 1.3. The list in Table 1.3 is helpful, but it does not cover important ways hu- man resource departments provide strategic contributions. Frameworks for capturing this more strategic contribution emphasize roles and com- petencies. Let's look more closely at these two areas. HUMAN RESOURCE ROLES Human resource roles involve people and processes. Part of the human resource professional's role is spending time interacting with employees individually. For instance, employees usually contact an organization's human resource department with questions about retirement benefits, health concerns, and harassment policies. Another part of the human re- source role focuses on developing organizational processes aimed at hir- ing and motivating talented workers. Human resource specialists contrib- ute in these roles through activities such as placing recruiting advertise- ments, helping develop compensation plans, and creating performance measures. We can also look at human resource roles by contrasting long-term and short-term contributions. Short-term activities generally involve day-to- day projects and focus on conducting surveys, maintaining databases, and counseling employees. Long-term activities are more strategic in na- ture and include developing organizational strategies, managing change processes, and planning ways to create new skills. 35

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 23/52 Source: The National O*Net Consortium at http://online.onetcenter.org/ . Combining the people and process dimension with the long-term and short-term dimension results in the grid shown in Figure 1.2 . The figure identifies four critical roles for human resource professionals: functional expert, employee advocate, strategic partner, and human capital developer. Understanding these four roles provides insight into the ac- tual activities of human resource specialists. Figure 1.2 Human Resource Roles. Source: Figure based on information from Dave Ulrich, Human Resource Champions: (Boston: Harvard Business Press, 1997); and Dave Ulrich and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005). Functional Expert The role of functional expert is the most basic human resource role. Most of the activities listed in Table 1.3 fit this role, and many of the chapters in this book examine aspects of this role in more detail. The functional ex- pert role focuses on providing technical expertise related to hiring and motivating employees. In this role, an effective human resource specialist helps build systems and practices to ensure that an organization is using state-of-the-art methods to manage people. This might include creating a 36

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 24/52 testing program to screen potential employees or developing a compensa- tion plan that pays employees more when they produce exceptional re- sults. Human resource specialists also serve as consultants who teach managers ways to improve their interactions with employees. For exam- ple, the human resource department might offer managers training in such things as giving appropriate feedback and asking better interview questions. Functional expert role A human resource role concerned with providing technical exper- tise related to functions such as hiring, training, and compensating employees. One such functional expert is Dana Winkowitsch, who works for Johnson County in Iowa. Dana works as a human resources coordinator and spends a lot of her time answering questions and responding to requests from department heads and elected officials. She conducts orientation sessions to provide safety training, explain benefit programs, and help new employees complete paperwork. She leads the county safety commit- tee and coordinates efforts to investigate accidents and maintain logs of work-related illnesses. Her duties include verifying payroll forms for ac- curacy and using the information database to create new employee posi- tions. Because Johnson County only has a handful of human resource em- ployees, Dana works mostly as a human resource generalist. An organization can gain an advantage over its competitors when its hu- man resource staff members are true functional experts. Experts help make sure that the best employees are hired and then trained to maintain high levels of skill and ability. Experts also increase employees' motiva- tion by helping to ensure that each employee's contribution to the organi- zation is accurately measured and rewarded. Performance in the func- tional expert role therefore represents a primary way human resource specialists such as Dana Winkowitsch can contribute something to the or- ganization that other managers and employees cannot contribute. Employee Advocate Human resource professionals in the employee advocate role listen to employees and provide them with the resources they need to be effective. They look out for the interests of employees and often serve as advocates to make sure management treats employees fairly. Sometimes, too, they help employees who are experiencing personal problems. For instance, human resource professionals may help employees obtain medical care, attend funeral services for family members of employees, and help em- ployees' spouses find work. Showing genuine interest in employees communicates how much an organization cares about its employees. As a 37

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 25/52 result, loyalty and motivation increase, and employees feel a stronger obligation to work hard. Employee advocate role A human resource role concerned with looking out for the interests of employees and ensuring that they are treated fairly. Another important part of being an employee advocate is making sure the interests of employees are recognized when decisions are made. In the event of layoffs, human resource leaders can help ensure that these actions are carried out in ways that minimize the hurt for individuals. In their advocacy role, human resource leaders are often seen as the organization's conscience. By ensuring that employees are properly in- formed about organizational policies and procedures, they can play an important role in preventing members of the organization from engaging in unethical conduct. They do this by pointing out implications of deci- sions and asking leaders throughout the organization to think about the effect of decisions on individual employees. They also help develop and enforce policies that protect employees from being taken advantage of by more powerful supervisors. True leadership also requires human re- source professionals to display high ethics in their own actions. Strategic Partner In the increasingly important strategic partner role , human resource specialists work with other organizational leaders to put company strat- egy into action. True partners go beyond providing support to other lead- ers and expertise in human resource practices. An example of a strategic partner is Tracy Hulsebus, who works as the human resource manager for contingent staffing at the international media company Pearson. Tracy is the business partner for operations as well as other groups. She is responsible for developing strategy and goals to meet business partner objectives, identifying internal and external risks, and providing appro- priate solutions. She manages a team of nine professionals who handle hiring, on-boarding, and employee relations for the contingent workforce at Pearson. To be strategic partners, human resource professionals like Tracy need to know about other business activities, such as finance, ac- counting, and marketing. They must also know a great deal about the organization's products and services. Finally, they must know how these activities, products, and services fit with the company's strategic objec- tives. With this knowledge, human resource partners can provide impor- tant input to help guide organizational decisions and actions. An example of a company where this human resource role is carried out effectively is Edwards Lifesciences, which is described in the accompanying “Building Strength Through HR” feature. Top-level managers at Edwards Lifesciences work closely with human resource professionals to make

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 26/52 sure that employees are organized in a way that helps the company achieve its strategic objectives. Strategic partner role A human resource role concerned with providing inputs that help an organization put its competitive strategy into action. One particularly important aspect of the strategic partner role involves managing change. With organizations changing continually, the people within them must continually adapt to shifting conditions. The ability to apply concepts related to psychological reactions, power and influence, motivation, and group dynamics can help human resource professionals take a leadership role in facilitating change. Building Strength Through HR E DWARDS L IFESCIENCES Edwards Lifesciences is a maker of cardiovascular medical devices. The company that now employs nearly 8,000 people was spun off from the larger Baxter International in 2000. Since 2000 the stock price has risen from $14 to $92 per share. During the down economy, Edwards Lifesciences experienced stock returns approximately five times the aver- age return, and the company is ranked #8 by Forbes for innovation. Leaders in the organization credit much of this success to effective hu- man resource management. Success through human resource management begins with the CEO, Michael Mussallem. He spends about 20 percent of his time working on hiring and developing employees. He is described as a person who cares about relationships and treats others with respect. Even though he is a busy CEO, he will often pick up the telephone and talk to people who are being recruited for key positions. He also meets each year with leaders to conduct talent reviews that assess how well the company is doing in terms of utilizing key personnel to meet strategic objectives. Employee re- cruitment and job planning are included on every agenda for top-man- agement meetings. As part of the focus on maximizing human resource effectiveness, Edwards Lifesciences has identified approximately 75 key positions within the company. The key positions are not all at the top of the organi- zation but represent numerous areas where work is critical to meeting strategic objectives. Training is used to ensure that one or two current employees are ready to take over a key job if someone gets promoted or quits. This helps ensure that about 70 percent of job openings are filled within the company.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 27/52 Edwards Lifesciences competes with other companies by providing cus- tomers with top-quality products. Creativity and excellence are required from employees. The company thus relies on the acquisition, develop- ment, and retention of topnotch employees to fill key positions. These ef- forts have paid off as the company has seen great success even in times of economic difficulty. Source: Information from Gian Ruiz, “Edwards Lifesciences: The Cardiovascular Device Maker Pinpoints and Tracks Mission-Critical Jobs to Stay ahead of Business Needs and Build a Deep Bench of Important Talent,” Workforce Management , March 26, 2007, p. 24; Tony Bingham and Pat Galagan, “Finding the Right Talent for Critical Jobs,” T + D 61 No. 2 (2007): 30–36; http://www.forbes.com/companies/edwards- lifesciences/ . Human Capital Developer Organizations are only successful when they learn faster than their com- petitors. The human capital developer role focuses on helping employ- ees improve their skills. Sometimes facilitating learning requires human resource specialists to work as trainers who teach formal classes. Other times, the developer role requires sitting down with individuals and help- ing them make individualized plans for the future. In both cases, the ob- jective is to make sure that employees continue to learn and improve. Human capital developer role A human resource role concerned with facilitating learning and skill development. Like the strategic partner role, the human capital developer role is be- coming increasingly important in today's organizations. Rapid changes in technology necessitate frequent changes in work processes, which re- quire new inputs from employees. Employees who do not learn new skills become less capable of helping the organization meet the needs of cus- tomers. The human capital developer role thus adds value to the organi- zation by helping employees build and maintain cutting-edge skills.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 28/52 FIGURE 1.3 Human Resource Competencies. Source: Content adapted from Dave Ulrich, Jon Younger, Wayne Brockbank, and Mike Ulrich, HR From the Outside In: Six Competencies For the Future of Human Resources (New York: McGraw-Hill, 2012). HUMAN RESOURCE COMPETENCIES Another way of understanding what human resource professionals do is to examine the competencies they need. Competencies represent charac- teristics and capabilities that human resource professionals need to suc- ceed in their work assignments. To fill their various roles, human re- source specialists need competencies in many areas. One recent model suggests that human resource professionals need six basic competencies. These competencies are shown in Figure 1.3 and include strategic posi- tioner, credible activist, capability builder, change champion, HR innova- tor and integrator, and technology proponent. Competencies Characteristics and capabilities that human resource professionals need to succeed in their work assignments. Strategic Positioner In today's global business environment human resource specialists must increasingly demonstrate the strategic positioner competency, which means they must know the language of business and be able to converse with other organizational leaders. Specific areas of expertise include fi- nance and strategy. Knowledge about stakeholders such as customers and investors is also required. Truly effective human resource specialists go even further to anticipate and plan for future trends in technology, poli- tics, and workforce demographics. This requires a clear vision of the fu- ture, as well as an understanding of what the organization must do in or- der to perform at a high level. This competency is particularly important for the strategic partner role, which requires human resource specialists to be key contributors in determining what makes the organization supe- rior to competitors. 38

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 29/52 Strategic positioner Knowledge and skills associated with accurately placing an organi- zation in its business context through understanding finance, strat- egy, stakeholders, and competitive context. Credible Activist Credible activists must be proactive and constantly seek opportunities to influence others. They meet their obligations and follow through on com- mitments. The interpersonal relationships these leaders develop make others more willing to follow them. One key for effective influence is tak- ing an interest in others and the greater good rather than pursuing selfish interests. Effective written and oral communication are also part of this competency. Credible activist Knowledge and skills for influencing others through acting with in- tegrity, sharing information, and building trust. Capability Builder The capability builder competency focuses on knowing an organization's strengths and weaknesses. Human resource professionals must understand what an organization can do better than its competitors, and then steer activity to maximize unique capabilities. They help focus energy on the things that really matter. Part of this comes from being fa- miliar with the core values of the organization. Mastery of this compe- tency helps connect employees to the mission and goals of the organiza- tion. As described in the Building Strength Through HR feature, these ef- forts to develop capable employees help companies succeed. Capability builder Knowledge and skills related to understanding what the organiza- tion is capable of doing successfully. Change Champion Effective organizations are constantly adapting and adjusting. The change champion competency encompasses skills and abilities needed to facilitate learning and growth. A first step in proactive change leadership is helping develop a sense of dissatisfaction with the status quo. Employees and leaders need to feel urgency to improve. This requires hu- man resource professionals to guide the use of resources such as time, money, and information. Effort must also be put forth to ensure that new patterns of behavior continue once change has occurred. Change man- agement thus requires true leadership.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 30/52 Change champion Knowledge and skills necessary to initiate and carry out change. Building Strength Through HR M C D ONALD'S McDonald's has 34,000 restaurants located in 119 different countries. Chances are pretty good that you know someone who either works or has worked at McDonald's, as one in eight people have worked for the restau- rant at some point in time. Today over 1.7 million people work for McDonald's. These employees have helped make McDonald's one of the most successful companies of all time. Annual revenue is over $27 billion each year, and net income exceeds $5 billion. McDonald's has increased shareholder dividends for 25 consecutive years. A key to success at McDonald's is employee recruiting. Finding enough employees to fill jobs is a constant task. McDonald's focuses specifically on hiring students. Relationships with school principals, coaches, and counselors help steer students toward jobs at McDonald's. Flexible work schedules help balance work with social interests. McDonald's also fo- cuses on hiring people with physical and mental disabilities. These and other recruiting practices allow McDonald's to maintain a steady flow of job applicants who are willing to work in entry-level positions, which helps minimize overall labor costs. Once employees are hired, McDonald's helps them feel a connection to the company and coworkers. One method of building connections is StationM, which is a private networking site similar to Facebook and MySpace. Hourly employees can use the site to post comments, share pho- tos, and participate in contests. This technology creates bonds and helps young employees feel a connection that builds loyalty. McDonald's also emphasizes skill development. The company actually runs a Hamburger University, where many managers receive extensive training. Although many companies cut training during tough economic

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 31/52 times, McDonald's does not. Effective training helps explain why most managers began their careers as cashiers and cooks. Once they become managers, fewer quit than at competitors. Overall, McDonald's successfully manages a very large number of em- ployees. Its business results clearly show that more effective human re- source management equates with improved performance. Restaurants with the highest levels of employee satisfaction and commitment have the highest customer satisfaction. They are also the most profitable. Sources: Diana Thomas, “McDonald's Continues to Invest in Talent,” T + D 63, No. 11 (2009): 15; Amy Garber, “McD Takes HR Strides to Cement Worker Loyalty,” Nation's Restaurant News , March 7, 2005; Anonymous, “Human Resources: A Challenge Best Addressed One Unit at a Time,” Nation's Restaurant News (2005): 100–101; stationM.com. HR Innovator and Integrator HR innovator and integrator competencies are closely aligned with the functional expert role. Human resource professionals display this compe- tency when they use research-based principles to help them establish ef- fective processes for hiring and motivating employees. Human resource specialists must know how to properly divide work duties, create report- ing relationships, and design motivating jobs. They also need to know about staffing procedures that help attract, select, and promote the right people. Of course, they must carry out these activities in ways that help the organization take advantage of its unique capabilities and effectively pursue its strategy. Each of the human resource practices benefits from being in alignment with other practices to develop a synergistic method of managing and leading employees. HR innovator and integrator Knowledge and skills that ensure HR practices such as work design, staffing, and compensation are aligned in ways that facilitate orga- nizational success. Technology Proponent Modern organizations require the management of massive amounts of in- formation, which is aided by the technology proponent competency. Effective human resource specialists not only use technology themselves but also facilitate use by others. Understanding computing resources and software packages ensures that human resource specialists organize and retrieve information about employees. They also use technology to con- nect people to one another, which often comes through effective use of social media. Technology proponent

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 32/52 LEARNING OBJECTIVE 4 Knowledge and skills used to help organizations effectively adopt technology to manage information and connect individuals. CONCEPT CHECK 1. 1. What are the four critical human resource roles, and what are some key features of each? 2. 2. What is a competency, and what six competencies do human resource professionals need to develop? How Will Current Trends Affect Human Resource Management? We've already seen that the ability to manage change is a key aspect of human resource management. The labor market is one important area in which changes can influence the organization's human resource prac- tices. Of course, nobody can predict the future with perfect accuracy, but a review of trends in the labor market suggests some areas of expected change. In response, organizations and their human resource practices may need to change as well. One good source of information about labor market trends is the Bureau of Labor Statistics (BLS), an agency within the U.S. Department of Labor. BLS surveys and analyses predict particu- larly important trends related to changes in population, the labor force, employment opportunities, and education and training. One such trend is an increasing move toward globalization and multinational corporations. POPULATION TRENDS How much will the U.S. population grow in the coming years? Will the proportion of young people in the population get bigger or smaller? What about the balance of minority groups? Each of these questions focuses on U.S. population trends , which are general movements over time in the number and characteristics of people living in the United States. Organizations are interested in population trends for two main reasons: to help them determine how the demand for their goods and services might change and to provide insight into the number and type of workers that are likely to be available in the future. Population trends Demographic trends related to the characteristics of people in a certain population. 39

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 33/52 The U.S. population grew 11.9 percent over the past ten years, and cur- rent projections indicate that the country's total population will grow by about 10.6 percent during the next decade. The rate of growth is thus ex- pected to be somewhat lower than in the past. We might conclude, then, that the demand for goods and services will increase, more jobs will be created, and a growing number of workers will enter the workforce dur- ing this period. Like the rate of population growth, however, the rates of growth in these areas will be somewhat lower than in the past. The balance between young and old people in the U.S. population is also changing. By 2018 the number of people between the ages of 16 and 24 will stay about the same, the number between 25 and 34 years old will grow. Those between 45 and 54 will shrink, and the number older than 55 will increase by almost 30 percent. Demand for goods and services de- sired by older people should thus increase considerably. The workforce will also become older, with more people near the ends of their careers. As a result, attracting and motivating older workers will become a more important task for human resource departments. LABOR FORCE TRENDS Of course, not everybody in the population works. Labor force trends fo- cus not on the population as a whole but on the number and characteris- tics of people who will be working or looking for work. Racial proportions will also continue to change. The percentage of non-Hispanic white em- ployees is expected to decrease from approximately 70 to 65 percent of the workforce, whereas the percentage of Hispanic workers will increase from about 15 to 19 percent of the workforce. Another important trend concerns women in the workforce. The number of female employees is expected to continue growing slightly faster (7 percent growth) than the number of male employees (6 percent growth). Labor force trends Trends concerning the number and types of people who are work- ing or looking for work.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 34/52 Figure 1.4 Labor Force by Age. Source: http://bls.gov/ooh/About/Projections-Overview.htm#educationandtraining . Attracting and keeping minority and female employees will become in- creasingly important. We might thus expect to see more programs that of- fer convenience to working mothers, such as flexible working hours and on-site daycare. Organizations will also need to find better ways to meet the needs of minority workers. One such approach is to create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues. These groups can also provide impor- tant feedback and suggestions to help leaders understand the unique per- spectives of minority workers. As shown in Figure 1.4 , the population trend for age will also result in a greater proportion of older workers by 2020. Integrating diverse workers will thus be increasingly critical. EMPLOYMENT TRENDS Nobody wants to work in a company or an industry without a future. Therefore, an important question that arises is, Where will the jobs be in the years to come? Employment opportunity trends identify the type of work opportunities that will likely be available in the future. One ongoing trend that is expected to continue is the shift from goods-producing to service-providing employment. Most new jobs will be in areas that pro- duce services. Figure 1.5 provides an overview of industies where jobs are expected to be created over the next decade. The fastest-growing in- dustries will be health services, professional services, and education. The need for healthcare services will continue to increase as the population ages, and the demand for childcare will grow as more women enter the workforce. Employment opportunity trends Trends concerning the types of jobs that will be available in the future. 40

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 35/52 Organizations in growing industries often find it difficult to attract and retain enough high-quality workers. Good human resource management is particularly beneficial in these organizations because it helps them win the war for talent. Effective recruiting, hiring, and compensation are therefore expected to be particularly critical for high-growth occupations such as nurses, computer programmers, and teachers. The outlook is bright for occupations such as health aide and medical secretary, but it is rather bleak for production workers who make and assemble goods such as clothing. Figure 1.5 Trends In Service Industry Jobs between 2010 and 2020. Source: http://bls.gov/ooh/About/Projections-Overview.htm#educationandtraining . TRENDS IN EDUCATION AND TRAINING Education and training trends tell us something about what competen- cies people will need to perform jobs in the future and how organizations can better focus their recruitment efforts. Growth is expected for a num- ber of jobs that require advanced education. Indeed, the growth of jobs requiring doctoral or professional degrees is expected to be above 20 per- cent, whereas the growth of jobs requiring a high school diploma or less are expected to be below 15 percent. Yet, even with higher growth in jobs that require more education, approximately 60 percent of new jobs will still require only a high school diploma or less. Education and training trends Trends concerning the knowledge and skills workers will need in the future.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 36/52 LEARNING OBJECTIVE 5 Training sometimes comes on the job rather than from formal education, and some jobs in high-growth areas will require this sort of training. Healthcare aides, who perform tasks in areas such as physical therapy, home care, and social services, represent such jobs. Organizations that need employees with these skills must develop on-the-job training pro- grams that will ensure that new employees learn the necessary knowl- edge and skills. GLOBALIZATION TRENDS Globalization trends influence human resource management at many companies. Globalization refers to a process in which companies move beyond their national borders to do business in other countries. For global companies, the entire world represents not only their marketplace but also their place of production. International trade is growing at nearly 10 percent per year, a sure indicator of globalization as an impor- tant force. Numerous large corporations have operations in countries scattered across the globe; even many small companies are purchasing goods and seeking sales from people living in more than one country. Globalization trends Trends concerning the process by which companies move from do- ing business within one country to doing business in many countries. The globalization trend appears to be beneficial for organizations, as companies on average are more profitable when greater portions of their sales, assets, and employees are foreign. Nevertheless, having opera- tions in more than one country does increase the complexity of human resource activities. Fairly compensating employees who work in foreign countries, for example, requires a great deal of expertise. Legal issues across various countries can also make it impossible to adopt standard- ized practices. Developing an international perspective for managing peo- ple is thus crucial as organizations continue to develop in multiple loca- tions throughout the world. CONCEPT CHECK 1. 1. How are current population trends and labor force trends likely to af- fect organizations and their human resource practices in the future? 2. 2. What do employment opportunity trends tell us? 3. 3. How does globalization complicate human resource management? 41 42

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 37/52 How Do Strategic and Functional Perspectives Combine to Direct Human Resource Practices? This chapter provides a broad introduction to human resource manage- ment, a field that focuses on people in organizations. Through good hu- man resource practices, organizations can become more successful in a number of ways. The human resource management field has changed somewhat in recent years. Historically, it has emphasized functional skills, which represent day-to-day activities such as developing specific hiring methods, conducting pay surveys, and providing training. Today, however, it also requires strategic skills, which represent broader aspects of business and include activities such as planning and change manage- ment. Successful organizations require leaders and human resource pro- fessionals to pay attention to both strategic objectives and taking care of people. Accordingly, this textbook integrates the functional and strategic perspec- tives. The overall outline of the book is shown in Figure 1.6 . Specifically, chapters are built around a strategic framework that illustrates how hu- man resource decisions and practices fit with organizational strategy. Most chapters also discuss a key functional area. As shown in the figure, an organization's competitive business strategy, along with legal and safety issues, influences the organization's choice of a human resource strategy. In turn, the human resource strategy chosen shapes the specific activities the organization uses to secure and motivate employees. Activities aimed at securing employees include work design, recruiting, selection, and retention; these are discussed in Chapters 4 through 7 . Activities that relate to motivating workers, which include per- formance management, career development, training, compensation, and labor relations, are discussed in Chapters 8 through 13 . All these activi- ties must be coordinated with each other as well as with the overall hu- man resource strategy. The importance of coordination is discussed in Chapter 14 . 43

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 38/52 Figure 1.6 Framework and Chapter Outline Illustrating How Human Resource Management Practice Links to Strategy. Human resource management is an exciting field that provides critical benefits to organizations. Studying human resource management can help you develop knowledge and skills that will make you more effective throughout your career. Even if you don't become a human resource spe- cialist, knowing why human resource specialists do what they do will en- able you to work more cooperatively with them. Furthermore, knowing about methods for hiring and motivating others can provide you with im- portant leadership skills. As you grow into leadership positions, you will be better equipped to meet the needs of others. Gaining knowledge about human resources will also make you a better strategic planner, enabling you to see how the needs of people and programs can be integrated to promote high performance. Taking a course in human resource manage- ment and reading this text can thus be important in determining your fu- ture success. CONCEPT CHECK 1. 1. How do the functional perspective and the strategic perspective com- bine to create success?

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 39/52 A MANAGER'S PERSPECTIVE REVISITED I N T HE M ANAGER'S P ERSPECTIVE THAT OPENED THE CHAPTER , M IGUEL WAS EXCITED ABOUT THE PROSPECTS OF ACCEPTING A JOB OFFER. HE FELT LIKE THE FIRM WAS SUCCESSFUL AND THAT IT WOULD PROVIDE HIM WITH A BRIGHT FUTURE . F OLLOWING ARE THE ANSWERS TO THE “W HAT D O Y OU T HINK ?” QUIZ THAT FOLLOWED THE CASE . W ERE YOU ABLE TO CORRECTLY IDENTIFY THE TRUE STATEMENTS ? C OULD YOU DO BETTER NOW ? 1. Companies with good human resource practices have more satisfied workers. Companies who treat employees well have more satis- fied workers, who in turn provide better customer service . 2. Companies with happy employees are more profitable. High employee satisfaction has been consistently linked to good organiza- tional performance . 3. Companies lose money when they try to be good social and environ- mental citizens. More socially responsible companies actually have higher profits on average . 4. Having a successful career in the future workplace will require young employees to work effectively with older people. Trends suggest that the workforce will get older over the next few years as the percent- age of people aged 55 to 64 increases . 5. Human resource specialists can provide critical information and sup- port that help make life better for employees. The employee ad- vocate role is an important part of the contribution made by human re- source specialists . Miguel is wise to think about a company's human resource practices be- fore deciding whether to accept a job offer. Effective human resource management is a key determinant of employee satisfaction and is an im- portant part of organizational success. Joining a company with effective human resource practices will mean that Miguel is more likely to enjoy his work—and that his new employer is likely to be around for all the years that Miguel wants to work there.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 40/52 The contribution of human resources to success can vary across an organization's life cycle. In the entrepreneurial stage, survival equals suc- cess. Human resource management helps the organization find employ- ees. Success during the communal stage is marked by expansion and in- novation. Building a sense of belonging and satisfying the needs of em- ployees are critical. During the formalization stage, success comes from developing clear and efficient procedures. Human resource management builds structured programs that provide consistent procedures. An orga- nization must change and adapt in the elaboration stage. This change is facilitated by hiring and rewarding people who have new ideas and dif- ferent ways of doing things. The stakeholder perspective focuses on people who affect and are af- fected by an organization. Human resource practices protect the interests of employees, and organizations with good practices experience lower employee turnover. Skilled and motivated employees effectively meet the needs of customers. Organizations with more effective human resource management practices have higher profits. Better human resource man- agement can also benefit society as a whole by protecting the environ- ment and helping disadvantaged people. Human resource departments provide organizations with a number of key functions. In the function of business management and strategy, the human resource department works with other parts of the organization to plan effective methods of delivering goods and services. The function of workforce planning and employment determines who will do what tasks and recruits and selects people into jobs. The function of human re- source development focuses on measuring the contributions of employ- ees and teaching them new knowledge and skills. In the function of com- pensation and benefits, the human resource department plays an impor- tant role in making sure that employees are paid fairly and receive the proper insurance benefits. A fifth function is employee and labor rela- tions, which captures efforts to work with labor unions and to ensure fair treatment of workers. The final human resource function is risk management.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 41/52 Human resource specialists add value to an organization through a num- ber of different roles. In the functional expert role, they build systems and practices that help the organization better manage people. Human resource specialists contribute knowledge and skills that many other or- ganizational members do not have. The employee advocate role provides an opportunity for meeting the needs of individual employees. Specialists filling this role listen to employee concerns and try to help them solve problems. The human resource perspective is integrated into other parts of the organization through the strategic partner role. The role of human capital developer facilitates learning and makes sure that employees in the organization continue to develop new knowledge and skills. Performing the human resource roles requires competency in six differ- ent areas. One area is strategic positioning. Effective human resource spe- cialists understand business issues such as finance, strategy, stakeholders, and competitive context. The second competency relates to becoming a credible activist who can successfully influence others. The third compe- tency focuses on being a capability builder, which occurs when human resource specialists help the organization understand and leverage its unique strengths. The fourth competency emphasizes becoming a change champion. The fifth competency is most closely related to traditional HR skills and emphasizes the proper alignment of staffing and motivation processes. Being a technology proponent encompasses the final compe- tency, which emphasizes the importance of embracing the use of new tools for managing information and connecting people. The U.S. population will increase, though at a lower rate than in the past, and will get older. As the population ages, the demand for products and services purchased by older people, such as healthcare, will grow. Older workers will also make up a greater percentage of the workforce. The proportion of Hispanic workers and women in the workforce will in- crease as well. Human resource departments will thus benefit from find- ing ways to meet the needs of older people, women, and members of mi- nority groups. Job growth is expected in the fields of healthcare and so- cial assistance services. Globalization will require human resource de- partments to create processes that effectively manage people working in various foreign countries.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 42/52 In order to be truly effective, human resource management must com- bine strategic planning with day-to-day functional activities. Specific ar- eas where this combination can take place include improving methods for securing employees and then maximizing their performance. Business management and strategy 14 Capability builder competencies 22 Change champion competencies 23 Communal stage 7 Compensation and benefits 15 Competencies 22 Credible activist competencies 22 Education and training trends 27 Elaboration stage 9 Employee advocate role 19 Employee and labor relations 16 Employee turnover 10 Employment opportunity trends 26 Entrepreneurial stage 7 Formalization stage 9 Functional expert role 19 Globalization trends 27 HR innovator and integrator competencies 24 Human capital developer role 21 Human resource development 14 Human resource management 4 Labor force trends 25

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 43/52 Organizational life cycle 6 Population trends 25 Risk management 16 Stakeholders 9 Strategic partner role 20 Strategic positioner competencies 22 Technology proponent competencies 24 Workforce planning and employment 14 1. Why might a newly formed organization be considered successful even if it is losing money? 2. Think of stores where you shop. Do employees of some stores seem happier than employees of other stores? What human resource prac- tices might explain differences in employee happiness? 3. How can socially responsible organizations have high profits even though they spend money on things like environmental protection? 4. Why do managers and human resource specialists often do poorly on tests about the best ways of hiring and paying employees? 5. What are some specific things that can be done to teach company lead- ers how human resource management can contribute to organiza- tional success? 6. Which human resource role do you think is most important? em- ployee advocate? functional expert? strategic partner? human capital developer? Explain your answer. 7. Why do you think change is so difficult for organizations? What can human resource specialists do to make change easier? 8. What are some challenges you might face if you join an organization with a lot of older workers? 9. What are some things an organization could do to better meet the needs of women and members of minority groups? 10. How do you think the field of human resource management will change in the next 10 years? Keeping employees happy at Zappos.com takes a little weirdness and a willingness to make work fun. You may not expect a woman whose footwear of choice is tennis shoes to work at one of the world's largest on-

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 44/52 line shoe companies, but for senior HR manager Hollie Delaney, PHR, Zappos.com Inc. is a comfy fit. Staff members in six HR functions report to Delaney at this intense, high- energy company where a worker might spring onto a table during a meeting and perform an impromptu break dance, and the computer log- on requires identifying the photo of a randomly selected employee. Conference rooms at corporate headquarters in Henderson, Nevada, are named after casinos in a nod to the famed Strip 6.7 miles away. In fact, the company plans to relocate to downtown Las Vegas sometime in 2012 or 2013. Job applicants at the 24/7 operation are interviewed in a room re- sembling a talk show set, and employees have been asked to submit cre- ative ideas in various scenarios such as coming up with their own designs for Steve Madden creations. During annual Bald & Blue Day, CEO Tony Hsieh and other employees volunteer to shave their heads or dye their hair blue. HR Magazine talked to Delaney about her career and how Zappos deliv- ers happiness to its customers—and its 3,000 employees. Question: Before Zappos, you worked in HR at a casino. What was that like? It was big and impersonal, with thousands of employees and so many rules between unions and nonunions. There was a rule for everything— even that I had to wear pantyhose if I worked in HR. It made it difficult to be yourself. At the time, I thought HR was not for me. Question: Describe your Zappos job interview. During the phone interview, I described myself as “fun but a little weird.” The interviewer said “Wow, that's one of our core values.” I met everyone in HR and interviewed with 10 managers, including Tony. He was sitting in a cubicle alongside other employees; I didn't know he was the CEO at first. I started crying while telling him about my “miracle baby” and thought I'd blown the job interview. Question: During on-boarding, Zappos offers new hires $3,000 to leave if they don't think they and the company are a good fit. Were you tempted? It was $1,000 when I started, but no. Everybody here was so happy. They were so invested in this company. You could see it, and you could feel it. I was floored. I was skeptical, but I knew there had to be something special here for people to behave that way. Question: How can you tell if a candidate is a good fit?

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 45/52 When people tour our company, they're kind of shellshocked. Some can- not get over the fact that people aren't in offices and it's so loud. Or, they want to work 9 to 5 and call it a day. Our environment is not the ideal place to meet those types of expectations. A state of consistent change, the open environment, and team aspect do not work for everyone. We move around a lot; you get to build relationships with people you haven't met before. You can be in senior management in four to seven years. In our call center, employees bid for different shifts every six months. You can wear pajamas or bunny ears to a meeting and be taken seriously—actu- ally, they're more responsive to you. The recruiting team interviews can- didates for culture fit and a willingness to change and to learn. They no- tice how applicants interact at lunch. Do they talk with others or just the person they think makes the hiring decision? Our shuttle drivers tell us what candidates say during the ride back to their hotels. Question: When did you know you had embraced the culture? It took me about a year to change from focusing on the 10 percent of em- ployees who cause problems to the 90 percent who do not. I remember Tony wanted to let all employees give out one $50 monthly bonus to any employee they chose. My traditional HR response was “You're insane.” I thought people would give it to their friends, but some didn't even give it out at all: They were waiting for people to “wow” them the same way they were expected to wow customers. I didn't have any skepticism left by the time we started the Wishez Program in 2010. Employees' wishes have ranged from asking for homemade frosted sugar cookies to wanting to jump off the Stratosphere Hotel. One worker's wish for a car was granted when an employee bought a new car and gave him his old vehicle. Question: I understand you wrestled with staying in HR at Zappos. What happened? I'd been here nearly two years. People did not like HR when I started. It had the stigma of being the Debbie Downer Department, the rules en- forcer. No one wants to be a part of that. HR was in a transitional period. We didn't have a Zappos identity. I felt like an outsider looking in. Headhunters started calling me. I wasn't sure what I wanted to do, where I stood with the company. I realized when I was talking to the life coach on staff that I had a huge opportunity to do something awesome at this awesome company. We started asking different managers what they needed from HR. An HR generalist started sitting in each department for eight months. Now, they include us in termination discussions. We are in- vited to teams' happy hours. We work with them to be part of the good things they do and not just the “You're getting written up” conversations. Zappos' ZCON team, which moved to HR from merchandising in January and handles areas such as reception, shuttle services, travel, and concierge services, is bringing a new face to HR. I'm having fun now. I could never go back to a traditional HR job. Here, our job is to educate

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 46/52 employees. I'm more of a teacher, not a policeman. Our job is to protect the culture. If HR says “no,” it doesn't mean no. You have to know all the rules of HR but be able to throw them out. If it's a rule, is it a good rule? QUESTIONS 1. Does Zappos sound like a place you would want to work? Why? 2. Do you think it makes sense to offer new employees a $3,000 incentive to quit? 3. How do you think the role of HR might change as Zappos matures as a company? 4. How does the role of HR at Zappos differ from typical companies such as the casinos referenced in the article? Source: Originally published as “Delivering HR at Zappos” by Kathy Guchiek c 2011, Society for Human Resource Management, Alexandria, VA. Used with permission. All rights reserved. Curt's Cowboy Corner is a chain of 15 stores that sells cowboy boots and western clothing. Curt opened the first store 10 years ago in a small Rocky Mountain town and quickly gained a following of loyal customers. Based on input from customers and friends, Curt decided to expand his business and began opening new stores in nearby towns. He plans to open 10 more stores in the next few years. Each of Curt's stores has a manager, three full-time sales representatives, and five or six part-time employees. In the early days, Curt worked closely with each store manager to plan day-to-day operations, helping to make all hiring decisions. He and a secretary also spent many days each month working on payroll. Lately, however, Curt has found that he does not have enough time to interview job candidates and handle several other of his customary tasks. He thinks this might be one reason some of the newer employees aren't working out so well. In addition, last month, he was two days late completing the payroll, thereby creating numerous problems for employees. Curt knows that he needs to do a better job of delegating tasks. Another of his concerns focuses on the potential liabili- ties of having a growing workforce. One employee recently told him that she felt uncomfortable about some sexual comments her boss had made to her. Curt spent several hours talking to both the employee and her boss, and although he feels pretty good about how he handled the situa- tion, he acknowledges that he does not have the requisite knowledge or skill to resolve such matters. Curt's brother, who owns a number of automobile dealerships in a distant city, has encouraged Curt to hire a human resource professional. But Curt

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 47/52 has been reluctant to hire staff members who do not spend time selling in stores. His philosophy has always been that staff members who don't make sales are an expense without much return. At the same time Curt knows that he must do something or else things will get worse. If he is able to grow the business as he plans, he will soon have nearly 100 full- time employees. QUESTIONS 1. What are some specific tasks that a human resource specialist could do for Curt? 2. Are there any financial benefits that might come from hiring a human resource specialist? 3. How might labor trends affect Curt's ability to continue expanding his stores? 4. What benefits and problems might result if Curt hires a human re- source specialist to provide support to all stores? Would it be better to simply delegate all human resource activities to each store manager? The Society for Human Resource Management (SHRM) is a professional association devoted to human resource management. Visit the SHRM website at shrm.org and learn about the human resources field. Look for information related to the following questions: 1. How many members are there in SHRM? 2. What types of careers are available in the field of human resource management? 3. What is the SHRM Code of Ethics, and how does it guide the efforts of human resource specialists? 4. What kind of resources does SHRM offer to help people learn new skills? 5. What are chapter/member groups? Who can join? 6. What are some current news issues that relate to human resource management? Access the companion website to test your knowledge by completing a Mega Manufacturing role-playing exercise. In this exercise, you're an HR consultant and will be assisting a small but established company (Mega Manufacturing) who will be going through

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 48/52 significant expansion due to a new government contract. With the growth, the owner knows that it will be a good idea to add a dedicated HR person to his management team and wants you to help. As he's talking about the beliefs and vision of the company, you consider the organiza- tional life cycle model, core HR functions, and critical HR roles. He then asks for your suggestions, and you realize that this assignment may be a great opportunity to align this new HR department with the strategy of the company. ENDNOTES 1. Michael Riketta, “The Causal Relation Between Job Attitudes and Performance: A Meta-Analysis of Panel Studies,” Journal of Applied Psychology 93 (2008): 472–481; Ingrid Smithey Fulmer, Barry Gerhart, and Kimberly S. Scott, “Are the 100 Best Better? An Empirical Investigation of the Relationship Between Being a ‘Great Place to Work’ and Firm Performance,” Personnel Psychology 56 (2003): 965–993; Benjamin Schneider and David E. Bowen, “Employee and Customer Perceptions of Service in Banks: Replication and Extension,” Journal of Applied Psychology 70 (1985): 423–433. 2. John A. Byrne, “Lessons from Our Customer Champions,” Fast Company 87 (October 2004):16; “Trader Joe's Targets ‘Educated’ Buyer,” Seattle Post- Intelligencer , August 30, 2003; Stan Abraham, “Dan Bane, CEO of Trader Joe's,” Strategy & Leadership 30, no. 6 (2002): 30–32. 3. Irwin Speitzer, “The Grocery Chain That Shouldn't Be,” Fast Company 79 (February 2004): 31. Abraham, “Dan Bane,” 30–32. 4. Jena McGregor, “Leading Listener: Trader Joe's,” Fast Company 87 (October 2004): 82–83; Len Lewis, excerpts from Trader Joe's Adventure , (Chicago: Dearborn Trade Publishing, 2005). Reported in “Fostering a Loyal Work force at Trader Joe's,” Workforce Management Online , June 2005, www.workfocre.com/archive/feature/24/06/51/index.php . 5. http://company.monster.com/trader ; Lewis, Trader Joe's Adventure . 6. Lewis, Trader Joe's Adventure ; Beth Kowitt, “Inside the Secret World of Trader Joe's,” Fortune International 162, no. 4 (2010): 32–39. 7. Larry Armstrong, “Trader Joe's: The Trendy American Cousin,” BusinessWeek , 3880 (April 26, 2004): 62; Kowitt, “Inside the Secret World of Trader Joe's,” 32–39.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 49/52 8. http://www.traderjoes.com/about/customer-updates-responses.asp? i=60 9. Robert E. Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33–51; I. M. Jawahar and Gary L. McLaughlin, “Toward a Descriptive Stakeholder Theory: An Organizational Life Cycle Approach,” Academy of Management Review 26 (2001): 397–414. 10. BNA, Inc. HR Department Benchmarks and Analysis™: (Washington, DC: Bureau of National Affairs, 2004). 11. Theresa M. Welbourne and Alice O. Andrews, “Predicting the Performance of Initial Public Offerings: Should Human Resource Management Be in the Equation?” Academy of Management Journal 39 (1996): 891–919. 12. Speitzer, “The Grocery Chain That Shouldn't Be,” 31. 13. Jake G. Messersmith, Pankaj C. Patel, David P. Lepak, and Julian S. Gould-Williams, “Unlocking the Black Box: Exploring the Link Between High-Performance Work Systems and Performance,” Journal of Applied Psychology 96 (2011): 1105–1118. 14. Mark A. Huselid, “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance,” Academy of Management Journal 38 (1995): 635–672. 15. Jeremy Smerd, “IBM: Optimas Award Winner for Financial Impact,” Workforce Management , October 20, 2008, 22. 16. Dave Ulrich, Wayne Brockbank, Arthur K. Yeung, and Dale G. Lake, “Human Resource Competencies: An Empirical Assessment,” Human Resource Management 34 (1995): 473–495. 17. Patrick J. Keger, “Crouse Hospital: Optimas Award for General Excellence,” Workforce Management , October 20, 2008, 16–17; http://www.crouse.org/careers/ . 18. R. Edward Freeman, Strategic Management: A Stakeholder Perspective (Marshfield, MA: Pittman Publishing, 1984).

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 50/52 19. Max B. E. Clarkson, “A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance,” Academy of Management Review 20 (1995): 92–117. 20. Huselid, “The Impact of Human Resource Management Practices,” 635–672; Rosemary Batt, “Managing Customer Services: Human Resource Practices, Quit Rates, and Sales Growth,” Academy of Management Journal 45, no. 3 (2002): 587–597. 21. Peter W. Hom and Angelo J. Kinicki, “Toward a Greater Understanding of How Dissatisfaction Drives Employee Turnover,” Academy of Management Journal 44 (2001): 975–987; Rodger W. Griffeth, Peter W. Hom, and Stefan Gaertner, “A Meta-Analysis of Antecedents and Correlates of Employee Turnover: Update, Moderator Tests, and Research Implications for the Next Millennium,” Journal of Management 26 (2000): 463–488. Schneider and Bowen, “Employee and Customer Perceptions,” 423–433. 22. Huselid, “The Impact of Human Resource Management Practices,” 635–672. 23. Stephanie C. Payne and Sheila Simsarian Webber, “Effects of Service Provider Attitudes and Employment Status on Citizenship Behaviors and Customers' Attitudes and Loyalty Behavior,” Journal of Applied Psychology 91 (2006): 365–378. 24. Batt, “Managing Customer Services,” 587–597. 25. Mahesh Subramony, Nicole Krause, Jacqueline Norton, and Gary N. Burns, “The Relationship between Human Resource Investments and Organizational Performance: A Firm-Level Examination of Equilibrium Theory,” Journal of Applied Psychology 93 (2008): 778–788. 26. Mark Orlitzky, Frank L. Schmidt, and Sara L Rynes, “Corporate Social and Financial Performance: A MetaAnalysis,” Organization Studies 24 (2003): 403–441; W. Gary Simpson and Theodore Kohers, “The Link Between Corporate Social and Financial Performance: Evidence from the Banking Industry,” Journal of Business Ethics 35 (2002): 97–109; Bernadette M. Ruf, Krishnamurty Muralidhar, Robert M. Brown, Jay J. Janney, and Karen Paul, “An Empirical Investigation Between Change in Corporate Social Performance and Financial Performance: A Stakeholder Theory Perspective,” Journal of Business Ethics 32 (2001): 143–156.

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 51/52 27. Pedro Lorca and Julita Garcia-Biez, “The Relation between Firm Survival and the Achievement of Balance among Its Stakeholders: An Analysis,” International Journal of Management 21 (2004): 93–99. 28. Ingrid Smithey Fulmer, Barry Gerhart, and Kimberly S. Scott, “Are the 100 Best Better? An Empirical Investigation of the Relationship Between Being a ‘Great Place to Work’ and Firm Performance,” Personnel Psychology 56 (2003): 965–993. 29. http://www.hrci.org/uploadedfiles/Content/Resource_Library/Certification_Handbooks_and_Other_Publ SPHR%20BOK.pdf 30. Judy Greenwald, “Multicountry Benefits Require Delicate Touch,” Business Insurance 40, no. 50. (2006): 12–13. 31. Sara L. Rynes, Amy E. Colbert, and Kenneth G. Brown, “HR Professionals' Beliefs about Human Resource Practices: Correspondence between Research and Practice,” Human Resource Management 41 (2002): 149–174. 32. Sara L. Rynes, Tamara L. Giluk, and Kenneth G. Brown, “The Very Separate Worlds of Academic and Practitioner Periodicals in Human Resource Management: Implications for Evidence-Based Management,” Academy of Management Journal 50 (2007): 987–1008. 33. Dave Ulrich and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005). 34. http://www.unlv.edu/main/highlights.html . 35. Occupational Information Network, O*net Online see http://online.onetcenter.org/link/summary/11–3040.00 36. Ulrich and Brockbank, The HR Value Proposition . 37. Susan Quinn, “Putting the Human Back into Human Resources,” Public Management 80, no. 9 (1998): 23–28. 38. Dave Ulrich, Jon Younger, Wayne Brockbank, and Mike Ulrich, HR from the Outside In: Six Competencies for the Future of Human Resources (New York: McGraw Hill, 2012).

3/28/24, 9:29 AM Chapter 1: Creating Value Through Human Resources | Human Resource Management, 3rd Edition https://learning.oreilly.com/library/view/human-resource-management/9781118582800/12_chapter01.html#c1 52/52 39. Statistics taken from U.S. Department of Labor Bureau of Labor Statistics website, http://bls.gov/ooh/About/Projections-Overview.htm . 40. Ibid. 41. A. T. Kearney, Inc. “The Globalization Index,” Foreign Policy 157 (2006): 75–81. 42. Sally Sledge, “Globalization and Performance in the New Millennium: A Look at Firms from Developed and Developing Nations,” Journal of American Academy of Business 10, no. 2 (2007): 51–57. 43. Mathis Schulte, Cheri Ostroff, Svetlana Shmulyian, and Angelo Kinicki, “Organizational Climate Configurations: Relationships to Collective Attitudes, Customer Satisfaction, and Financial Performance,” Journal of Applied Psychology 94 (2009): 618–634.