Chapter 1
HUMAN RESOURCE MANAGEMENT
AND COMPETITIVE ADVANTAGE
LEARNING OBJECTIVES
After reading this chapter, students should be able to:
Understand the nature of a firm’s human resource management practices.
Understand the roles played by line managers and human resource professionals in the
human resource management process.
Understand what competitive advantage is and how companies can achieve it.
Understand how a firm’s human resource management practices can help it gain a
competitive advantage.
Understand why competitive advantage gained from human resource management
practices is likely to be sustained over time.
CHAPTER OUTLINE AND LECTURE
,1-1 Human Resource Management
An organization’s success depends on how it manages its resources, including human
resources. Human resource management helps organizations deal effectively with the
phases of employment cycle: preselection, selection, and postselection.
The preselection phase involves planning for types of future job openings and the
qualifications necessary to perform these jobs. The selection phase includes recruiting
applicants, assessing their qualifications, and selecting the most qualified. During the
postselection phase, the HRM personnel attempts to maximize the performance and
satisfaction levels of employees by providing them with the necessary knowledge, skills,
and working conditions to achieve organizational goals.
Ask two students to comment on the employment cycle of a previous job. What would each
student retain and change?
1-1a HRM Preselection Practices
Preselection practices begin with a strategic plan and demand-supply forecasting. Human
resource planning helps managers anticipate and meet changing needs relating to the
acquisition, deployment, and utilization of employees. Next, managers use job analysis as a
systematic procedure for gathering, analyzing, and documenting information about
particular jobs.
1-1b HRM Selection Practices
Organizations recruit candidates internally and externally. Recruitment seeks to identify a
suitable pool of applicants quickly, cost efficiently, and legally. Selection follows
recruitment, whereby managers assess the candidate pool and choose job candidates
through a process that is technically sound and legal.
Arrange students in teams of 3 or 4 people. Ask them to generate a list of all the possible
,sources for locating job candidates. Have them rank the list from best to least and report to the
class. Allow time for discussion and exchange of ideas.
1-1c HRM Postselection Practices
Companies implement postselection practices to maintain or improve their workers’ job
performance levels. Employees participate in training to learn how to effectively perform
their current jobs. Development prepares employees to effectively perform possible future
jobs.
Through performance appraisal, organizations measure employees’ job performances and
communicate evaluations to them. They are also used to motivate and correct behaviors,
and make related HRM decisions such as promotions, demotions, discharges, and pay raises.
Select 2 students who have held full-time jobs and ask them to comment on the appraisal
interviews and system where they work. Ask if they were motivated to perform better as a
result.
All employees must be compensated through pay in the form of wages or salaries. Benefits
are additional types of compensation in the form of insurance or employee discounts. The
aim of compensation is to establish and maintain a competent and loyal workforce at an
affordable cost.
Productivity improvement programs tie job behavior to rewards, which may be financial or
nonfinancial. The purpose is to motivate employees to engage in appropriate job behaviors.
1-1d HRM Practices Influenced by External Factors
Organizations do not exist in vacuums and are influenced by events outside the work
environment. Managers must constantly consider how the legal and environmental issues at
the federal, state, and local levels impact HRM practices. Organizations must prevent
discrimination in their practices as well as consider how social, economic, and technological
events influence HRM practices. Managers must carefully determine needed job
, qualifications and choose selection methods that accurately measure those qualifications.
Organizations must practice workplace justice laws by treating all employees in a fair,
nondiscriminatory manner. They must also negotiate at times with unions that attempt to
represent the interests of some or all of the company’s employees.
Legal, social, and political pressures on health and safety matters directly impact HRM
practices. Accident prevention, wellness, and employee assistance programs are ways to
ensure the health and mental well-being of employees. Organizations are more aware of the
need to hire managers who can deal with the dynamics of foreign markets, and can
understand the language and cultures in those markets.
Ask students to respond to this question. What are the current dominant legal, social, and
political pressures facing HRM?
1-2 Who Is Responsible for Developing and Implementing HRM
Practices?
Whether a firm has a separate HRM department or not, the responsibility for HRM practices
lie with both HR professionals and line managers. The misconception that HR professionals
have sole responsibility in this area can lead to serious problems. It is the interplay between
managers and HR professionals that leads to effective HRM practices.
The nature of the HR professional’s roles varies from company to company, depending
primarily on the size of the organization. Our discussions assume a large company with a
sizable HR department. In smaller firms, line managers can assume these same practices in
an expanded role.
1-2a HR Professional’s Role
HR professionals typically assume three areas of responsibility: establish HRM procedures
and methods, monitor/evaluate HR practices, and advise/assist managers on HRM-related
HUMAN RESOURCE MANAGEMENT
AND COMPETITIVE ADVANTAGE
LEARNING OBJECTIVES
After reading this chapter, students should be able to:
Understand the nature of a firm’s human resource management practices.
Understand the roles played by line managers and human resource professionals in the
human resource management process.
Understand what competitive advantage is and how companies can achieve it.
Understand how a firm’s human resource management practices can help it gain a
competitive advantage.
Understand why competitive advantage gained from human resource management
practices is likely to be sustained over time.
CHAPTER OUTLINE AND LECTURE
,1-1 Human Resource Management
An organization’s success depends on how it manages its resources, including human
resources. Human resource management helps organizations deal effectively with the
phases of employment cycle: preselection, selection, and postselection.
The preselection phase involves planning for types of future job openings and the
qualifications necessary to perform these jobs. The selection phase includes recruiting
applicants, assessing their qualifications, and selecting the most qualified. During the
postselection phase, the HRM personnel attempts to maximize the performance and
satisfaction levels of employees by providing them with the necessary knowledge, skills,
and working conditions to achieve organizational goals.
Ask two students to comment on the employment cycle of a previous job. What would each
student retain and change?
1-1a HRM Preselection Practices
Preselection practices begin with a strategic plan and demand-supply forecasting. Human
resource planning helps managers anticipate and meet changing needs relating to the
acquisition, deployment, and utilization of employees. Next, managers use job analysis as a
systematic procedure for gathering, analyzing, and documenting information about
particular jobs.
1-1b HRM Selection Practices
Organizations recruit candidates internally and externally. Recruitment seeks to identify a
suitable pool of applicants quickly, cost efficiently, and legally. Selection follows
recruitment, whereby managers assess the candidate pool and choose job candidates
through a process that is technically sound and legal.
Arrange students in teams of 3 or 4 people. Ask them to generate a list of all the possible
,sources for locating job candidates. Have them rank the list from best to least and report to the
class. Allow time for discussion and exchange of ideas.
1-1c HRM Postselection Practices
Companies implement postselection practices to maintain or improve their workers’ job
performance levels. Employees participate in training to learn how to effectively perform
their current jobs. Development prepares employees to effectively perform possible future
jobs.
Through performance appraisal, organizations measure employees’ job performances and
communicate evaluations to them. They are also used to motivate and correct behaviors,
and make related HRM decisions such as promotions, demotions, discharges, and pay raises.
Select 2 students who have held full-time jobs and ask them to comment on the appraisal
interviews and system where they work. Ask if they were motivated to perform better as a
result.
All employees must be compensated through pay in the form of wages or salaries. Benefits
are additional types of compensation in the form of insurance or employee discounts. The
aim of compensation is to establish and maintain a competent and loyal workforce at an
affordable cost.
Productivity improvement programs tie job behavior to rewards, which may be financial or
nonfinancial. The purpose is to motivate employees to engage in appropriate job behaviors.
1-1d HRM Practices Influenced by External Factors
Organizations do not exist in vacuums and are influenced by events outside the work
environment. Managers must constantly consider how the legal and environmental issues at
the federal, state, and local levels impact HRM practices. Organizations must prevent
discrimination in their practices as well as consider how social, economic, and technological
events influence HRM practices. Managers must carefully determine needed job
, qualifications and choose selection methods that accurately measure those qualifications.
Organizations must practice workplace justice laws by treating all employees in a fair,
nondiscriminatory manner. They must also negotiate at times with unions that attempt to
represent the interests of some or all of the company’s employees.
Legal, social, and political pressures on health and safety matters directly impact HRM
practices. Accident prevention, wellness, and employee assistance programs are ways to
ensure the health and mental well-being of employees. Organizations are more aware of the
need to hire managers who can deal with the dynamics of foreign markets, and can
understand the language and cultures in those markets.
Ask students to respond to this question. What are the current dominant legal, social, and
political pressures facing HRM?
1-2 Who Is Responsible for Developing and Implementing HRM
Practices?
Whether a firm has a separate HRM department or not, the responsibility for HRM practices
lie with both HR professionals and line managers. The misconception that HR professionals
have sole responsibility in this area can lead to serious problems. It is the interplay between
managers and HR professionals that leads to effective HRM practices.
The nature of the HR professional’s roles varies from company to company, depending
primarily on the size of the organization. Our discussions assume a large company with a
sizable HR department. In smaller firms, line managers can assume these same practices in
an expanded role.
1-2a HR Professional’s Role
HR professionals typically assume three areas of responsibility: establish HRM procedures
and methods, monitor/evaluate HR practices, and advise/assist managers on HRM-related
