CHAPTER 1: HUMAN RESOURCE MANAGEMENT:

GAINING A COMPETITIVE ADVANTAGE

Human Resource Management (HRM): policies, practices,

and systems that influence employees’ behavior, attitudes,
and performance
Competitiveness: Company’s ability to maintain and gain
market share in its industry; relating to company
effectiveness, determining by whether the company satisfies
the needs of stakeholders
Value of product/service: its quality and how closely fitting
with customer
Practice of HRM:

● Analysis and design of work: job description, job

specification
● HR planning: prepare the labor force for the future(to
reduce risk)
● Recruiting: refer how we identify potential employees
● Selection: choosing the employee
 ● Training:
● Compensation: the benefits that employees receive in
exchange for their performance, it could be monetary or
non-monetary(vacation,....)
● Performance management: how employees achieve the
goals ? ensure that there are a set of activities that meet
the goals.
● Employee relations: creating and maintaining the
positive relations in the working environment.
LO 1-1 Discuss the roles and activities of a company’s
human resource management function.
- What responsibilities and roles do HR Departments
perform?

+ High-impact HR functions(not only taking care of employee,

but also integrate more with the business and strategies), cụ thể
là dưới đây:
● More integrated with business
● Skilled helping managers in attracting, building, engaging, and retaining
● Adapt quickly to business needs and workforce changes
 ● Identify, promote talent from within the company
● Continuously trying to identify what motivates employees to help them
grow and develop
● Ensure continuously building the talent and skills of HR professionals
necessary => Help the company meet new competitive challenges:
❖ Greater savings resulting from reduced turnover and increased levels of
employee engagement. => Greater per-cost-per-employee of high-impact
HR functions
+ HR department solely responsible for
● Outplacement
● Labor law
● Compliance
● Record keeping
● Testing
● Unemployment compensation
● Some aspects of benefits administration
+ HR department is most likely to collaborate with other company
functions on
● Employment interviewing
● Performance management and discipline
● Efforts
=> Improve quality and productivity
+ Large companies are more likely than small ones to employ
HR specialists, with benefits specialists being the most
prevalent.
+ Many different roles and responsibilities can be performed by
the HR department, depending on
● Size of the company
● Characteristics of the workforce
● Industry
● Value system of company management.
+ HR department may take full responsibility for human resource
activities in some whereas in others share the roles and
responsibilities with managers of other departments such as
finance, operations, or information technology
+ One way: consider HR departments as business with 3 product
lines

● Administrative Services and Transactions: traditional product that HR

historically provide
● Business Partner Services and Strategic Partner: things that top
manager want to deliver
- Strategic Role of HRM Function

+ Amount of time that HRM function devotes to administrative

tasks: decreasing
+ Its roles as a strategic business partner, change agent, and
employee advocate: increasing
 + HR managers faces 2 challenges:
● shifting their focus from current operations to strategies for the
future
● Preparing non-HR managers to develop and implement HR
practices
=> To ensure, many use Shared service model: Way to organize HR
function including:
● Centers of expertise/excellence: HR specialists in staffing or training
● Service centers: central place for administrative and transactional tasks
(Ex: enrolling in training programs or changing benefits that employee
and managers can access online
● Business partners: HR staff members who work with business unit
managers on strategic issues (Ex: Creating new compensation plans,...)
+ HRM in administration is decreasing as technology is used
for many administrative purposes, such as
● Managing employee records
● Allowing employees to get information about and enroll in training,
● Benefits
● Other programs
+ Availability of the Internet => decreasing HRM role in
maintaining records and providing self-service: giving
employees online access to, or apps that provide, information
about HR issues, such as:
★ Training,
★ Benefits,
★ Compensation, and contracts;
★ Enrolling online in programs and services;
★ Completing online attitude surveys
● Managers on important employee issues and less time on day-to-day
transactional tasks.
● As managers became more comfortable with the system => given control
over transactions such as: Shift to self-service => HR focuses more time
on consulting with
❖ approving bonuses
❖ reviewing résumés
❖ evaluating job candidates.
 + Many companies are also contracting with HR service providers
to conduct important but administrative HR functions(Ex:
payroll) to provide expertise in strategically important practice
areas => Outsourcing: the practice of having another company
(a vendor, third party, or consultant)
● Most commonly outsourced activities:
❖ Benefit administration
❖ Relocation
❖ Payroll
● Major reasons choosing outsourcing:
❖ cost savings,
❖ increased ability to recruit and manage talent,
❖ improved HR service quality
❖ protection of the company from potential lawsuits by standardizing processes
+ Traditionally, the HRM department (also known as “personnel”
or “employee relations”): administrative expert and employee
advocate.
● Take care of employee problems
● Make sure employees were paid correctly, administered labor
contracts
● Avoid legal problems.
● Ensure that employee related issues NO interfere with the
manufacturing or sales of products/services
=> Reactive, meaning: HR issues were a concern only if they directly affected the
business. Still remains the case yet to recognize the competitive value of HRM,
or among HR professionals who lack the competencies and skills or
understanding needed to anticipate problems and contribute to the business
strategy.
+ Discussion group of company HR directors and academic
thought leaders => increasingly HR professionals =>expected to
lead efforts focused on talent management and performance
management
+ HR professionals should take the lead in helping companies
attract, develop, and retain talent => create the global
workforces that companies need to be successful.
 + HR professionals have to be able to use and analyze data to
make a business case for ideas and problem solutions.
+ Structure and responsibilities of HR departments likely to
continue to change in the future to ensure that they remain strategic.

+ Some companies wanting managers to have more

accountability for employees, believe that traditional HR
departments are unnecessary as they inhibit innovation by
creating unnecessary and inefficient policies and procedures =>
important payroll, benefits, and other HR processes
+ Advantage of having HR professionals/department:
● Managers lack the specialized knowledge of understanding
employment laws and how to identify potential employees,
determine skills and salaries for positions, and develop current
employees => create systems to avoid legal liability, counsel
employees, and coach managers on how to identify, retain, and
develop talent.
+ HRM may be the most important lever for companies to gain a
competitive advantage over both domestic and foreign
competitors.
- Demonstrating the strategic Value of HRM: HR
analytics and evidence-based HR
+ Evidence-based HR: Demonstration that HR has a
positive influence on the company’s bottom line/ key
stakeholders
 ● Requires use of HR/workforce analytics: practice of using
quantitative methods and scientific methods to analyze big
data: information merged from HR databases, corporate
financial statements, employee surveys, and other data
sources to make evidence-based HR decisions and show that
HR practices influence the organization’s bottom line
- The HRM Profession: Positions and jobs

- Education and experience

+ HR profession will likely continue to be in transition in the near
future
- Competence and behaviors
+ Top-level HR professionals are generalists having expertise in
benefits, compensation, and labor relations, focus on important
issues but lack of business acumen(khả năng hiểu lẹ), expertise
in real-world
+ Congruent with the belief of companies’ top HR leaders that
developing the skills of professionals working in human
resources is an urgent need
+ HR need to have 9 competencies:
+ Demonstrating these competencies can help HR professionals
show managers that they are:
● capable of helping the HR function create value
● contribute to the business strategy
● shape the company culture.
● Help the HR department effectively and efficiently provide the three HR
products discussed earlier and shown in Figure 1.2.
- Competitive Challenges influencing HRM
 + Competing through Sustainability
● Sustainability: company’s ability to meet its needs without
sacrificing the ability of future generations to meet their needs, include:

❖ Organization pursuing: Economical, social and environmental benefits (Triple bottom

lines)
❖ Company success is based on how well the company meets the needs of its
stakeholders.

LO 1-2: Discuss the implications of the economy, the makeup of

the labor force, and ethics for company sustainability

Deal with the workforce and employment implications of

the economy
 - The economy has important implications for HRM. (Structure of
the economy, aging of the workforce, and growth in
professional and service occupations)
* Growth in professional and service occupations: skill
demands for jobs have changed, with knowledge
becoming more valuable.
- Problems: creation of new jobs, aging employees leaving the
workforce, slow population growth, and a lack of employees
who have the skills needed to perform the high-demand jobs
-> Need to give more attention to HR practices to attract and retain
employees.

*Note
- HR practices are used to enhance labor productivity by
improving the design of work and the use of technology,
upskilling employees, and managing performance and
compensation.
- Valuable high-performing employees are looking to change jobs
for higher wages or better career opportunities-> Companies
need to attract and retain talented employees by increasing
wages, paying for benefits, and providing training.
- HR programs and the HR function are under pressure to relate to
their company’s business strategy and show a return on
investment.
- Customer focus needs to be included in all HRM practices.
 - New technology means that administrative and transactional HR
activities will be delivered via technology, creating less need for
HR professionals to provide these activities.
- The aging workforce + reduced immigration -> employers focus
more on retraining employees or encouraging older, skilled
workers to delay retirement or work part time.

Labor Force and Employment Characteristics (Textbook

91-95)

Understand and enhance the Value Placed on Intangible

Assets and Human Capital

Intangible Assets
Human capital Customer capital Social capital Intellectual
capital
Tacit knowledge Customer Corporate culture Patents
Education relationships Management Copyrights
Work-related know- Brands philosophy Etc.
how Customer loyalty Management practices
Work-related Distribution Information
competence channels networking systems
Coaching/ Mentoring
relationships

- HRM practices (training, selection, performance management,

and compensation) influence Human and social capital through
influencing customer service, work-related know-how and
competence, and work relationships.
- Intangible assets responsible for a company’s competitive
advantage.
- Intangible assets related to a company’s financial performance,
productivity, innovation.
- Companies increase intangible assets through attracting,
developing, and retaining knowledge workers.
*Knowledge workers: employees contribute to the
company not through manual labor, but through what
they know about customers or a specialized body of
knowledge.
Emphasize Empowerment and Continuous Learning
- Empowering: giving employees responsibility and authority to
make decisions regarding all aspects of product development or
customer service.
- Learning organization: embraces a culture of lifelong learning,
enabling all employees to continually acquire and share
knowledge.
Adapt to Change
- Change refers to the adoption of a new idea or behavior by a
company.
 - Technological advances, changes in the workforce or
government regulations, globalization, and new competitors are
factors that require companies to change.
Maximize Employee Engagement.
- Employee engagement refers to the degree to which employees
are fully involved in their work and the strength of their
commitment to their job and the company
- An engaged employee is passionate about his or her work, is
committed to the company and its mission, and works hard to
contribute.

Manage Talent.
- Talent management refers to the systematic planned strategic
effort to use bundles of HRM practices ( Acquiring and
assessing employees, Learning and development, Performance
management, Compensation)—to attract, retain, develop, and
motivate highly skilled employees and managers.
Consider Nontraditional Employment and the Gig
Economy
Companies are moving away the traditional employment model based
on full-time workers to increasingly rely on nontraditional
employment
- Nontraditional employment includes the use of independent
contractors, freelancers, on-call workers, temporary workers,
and contract company workers.
 - Gig economy: a labour market characterised by the prevalence
of short-term contracts or freelance work, as opposed to
permanent jobs.
-> Companies that rely primarily on nontraditional employment to
meet service and product demands are competing in the gig economy.

Provide Flexibility to Help Employees Meet Work and

Life Demands. (Textbook 103-104)

Meet the Needs of Stakeholders: Shareholders, Customers,

Employees, and Community
Stakeholders include:
- Stockholders (who want a return on their investment)
- Customers (who want a high-quality product or service)
- Employees (who desire interesting work and reasonable
compensation for their services).
- The community (which wants the company to contribute to
activities and projects and minimize pollution of the
environment)
Demonstrate Performance to Stakeholders: The Balanced
Scorecard.
- The balanced scorecard gives managers an indication of the
performance of a company based on the degree to which
stakeholder needs are satisfied; it depicts the company from the
perspective of internal and external customers, employees, and
shareholders
- It is important because it brings together most of the features
that a company needs to focus on to be competitive, including
being customer focused, improving quality, emphasizing
teamwork, etc.
- The balanced scorecard differs from traditional measures of
company performance by emphasizing that the critical indicators
 chosen are based on the company’s business strategy and
competitive demands.
- Companies need to customize their balanced scorecards based
on different market situations, products, and competitive
environments.

LO 1-3: How HRM affects a company's balanced score

● The balanced score should be used to:
(1) link hrm activities to the company's business strategy.
(2) evaluate the extent to which the hrm function is helping
the company meets its objectives
● Help employees see the company's goals and strategies, how
goals and strategies are measured, how they influence the
critical indicators.
● Measures of hrm practices primarily relate to productivity,
people and process.
○ Process: measures focus on assessing employees's
satisfaction with people system (performance development
sys, compensation and benefits sys) within the company
● Managers need to consider the questions and be able to identify
critical indicators or metrics related to human resources.
● Demonstrate Social Responsibility:
○ Social responsibility can help boost a company's image
with customers
■ Gain access to new markets.
■ Help attract and retain talented employees.
○ Helping to protect the planet can also save money.
■ Reduce the amount of waste sent to landfills by
selling by-products to other companies.
● Emphasize customer service and quality
○ Customer excellence requires attention to product and
service features as well as to interactions with customers.
○ Customer-driven excellence includes understanding what
customers want and anticipating future needs.
○ Customer-driven excellence includes reducing defects,
errors, meeting specifications, and reducing complaints.
■ How the company recovers from errors is also
important for retaining and attracting customers.
○ Total quality management (TQM) is a company wide
effort to continuously improve the ways people, machines,
and systems accomplish work.
■ Methods and processes are designed to meet the
needs of internal and external customers.
■ Every employee in the company receives training
quality.
■ Quality is designed into a product or service so that
errors are prevented from occurring rather than being
detected and corrected.
■ The company promotes cooperation with vendors,
suppliers, and customers to improve quality and hold
down costs.
■ Managers measure progress with feedback based on
data.
● Malcolm Baldrige National Quality Award
 ○ One way that companies can improve the quality of their
products or services is through competing for the MBNQA
or gaining certification in the ISO 9000:2015 standards.
○ The Baldrige award is the highest level of national
recognition for quality that a US company can receive.

● ISO (International Organization for Standardization) 9000

Standards
○ A network of national standards institutes including 160
countries.
○ Develops standards related to management as well as a
wide variety of other areas: education, music, ships,
protection of children.
○ The quality management standards of the ISO 9000 are
based on 8 quality principles:
 ■ Customer focus, leadership, employee engagement,
process approach, system approach to management,
continuous improvement, using facts to make
decisions, establishing mutually beneficial
relationships with suppliers.
● Six sigma
○ The six sigma process refers to a process of: measuring,
analyzing, improving, and then controlling processes once
they have been brought within the narrow six sigma
quality tolerances or standards.
○ Focus on serving customers, to deliver what customers
really want when they want it.
○ Six Sigma involves highly trained employees known as
Champions, Master Black Belts, Black Belts, and Green
Belts who lead and teach teams that are focusing on an
ever-growing number of quality projects.
● Lean thinking and process improvement
○ Lean thinking: way to do more with less effort, time,
equipment, space but still provide customers what they
need and want.
■ Includes training workers in new skills or how to
apply old skills in new ways → can quickly take
over new responsibilities or use new skills to help
fill customers orders.
○ Lean thinking and process improvement supported by
training provided significant value.
● Recognize and capitalize on the demographics and diversity of
the workforce
○ A company's performance on the balanced score is
influenced by the characteristics of its labor force.
■ The labor force of current employees is the internal
labor force.
 ■ The external labor market includes persons
actively seeking employment → the skill and
motivation of a company's internal labor force are
influenced by the external labor market.
■ Predicted changes in the demographics and diversity
of the workforce:
1. Average age will increase.
2. Workforce will become more diverse (gender,
race, generations).
3. Immigration will continue to affect the size and
diversity of the workforce.
● Aging of the workforce
○ The % of workers aged 55 and older will grow from 22%
to 25% by 2024.
■ Older individuals are leading healthier and longer
lives than in the past.
■ Many employees keep working to keep their
employer-based insurance (health insurance).
■ Pension plans based on an individual's contributions
rather than years of service.
○ A trend is for qualified older workers to ask to work part-
time or only a few months at a time as a means to
transition to retirement.
○ Aging workforce → increase hrm issues: career
plateauing, retirement planning, retaining older workers,
avoiding skill obsolescence.
○ Companies will struggle with how to control the rising
cost of benefits and healthcare.
○ Companies will have to ensure that older workers are not
discriminated against >< companies will want to
encourage retirement.
● Workforce of mixed gender, race, nationality
○ US workforce 2024

○ A low unemployment rate means that many employers are

struggling to fill both full-time and seasonal skilled and
unskilled jobs.
○ Managing diversity involves many different activities:
creating an organizational culture that values diversity,
ensuring hrm system bias-free, facilitating higher career
involvement of women, promoting knowledge, accepting
cultural differences, ensuring involvement in education
both within and outside the company, and dealing with
employees’ resistance to diversity.
○ To successfully manage a diverse workforce, managers
must develop a new set of skills:
◼ Communicating effectively with employees from a
variety of cultural backgrounds.
◼ Coaching and developing employees of different
ages, educational backgrounds, ethnicities, physical
abilities, and races.
◼ Providing performance feedback based on objective
outcomes rather than values and stereotypes that
work against women, minorities, and disabled
persons by prejudging these persons’ abilities and
talents.
◼ Creating a work environment that makes it
comfortable for employees of all backgrounds to be
creative and innovative.
◼ Recognizing and responding to generational issues.
○ Cultural diversity can provide a competitive advantage:
● Legal issues
● Ethical issues
○ Organizations have engaged in serious ethical misconduct:
General Motors (failure to fix and notify customers about
faulty ignition switches), the U.S. Department of Veterans
Affairs (concealed patient wait times), the U.S. Secret
Service (security breaches involving partying and
prostitutes), and Takata (installed faulty airbags).
○ Principles of ethical companies:
 ● Compliance: company is not violating legal regulations.
○ But a company can be compliant and still have employees
engaging in unethical practices.

LO 1-4: Discuss what companies should do to compete in the

global marketplace.
1. Increase businesses competitiveness and value by increasing their
global presence.

Many companies are entering international markets by

- exporting their products overseas
- building manufacturing facilities or service centers in other countries
- entering into alliances with foreign companies
- engaging in e-commerce.

a. Offshoring

● Definition: the exporting of jobs from developed countries, such as the

United States, to countries/ where labor and other costs are lower.

● Why do businesses need offshoring?

→ lower labor costs
→ the availability of a skilled workforce with a strong work ethic.

b. Reshoring

● Definition: the return of jobs to the United States, or to be more specific,

it is the practice of moving a business or part of a business that was based
in a different country back to its original country.

● Why do businesses need reshoring?

→ higher product shipping costs
→ fear of supply chain disruptions due to natural disasters
→ political instability
 → quality concerns
→ customer preference for [Link] products
→ rising labor costs
→ ethical issues (some countries’ local standards for safety, health, and
working conditions may be substantially lower than those in the United
States, resulting in negative publicity and turning off potential customers)

2. Find and retain talented employees, especially in emerging markets

Companies often place successful U.S. managers in charge of overseas

operations, but these managers lack the cultural understanding necessary to
attract, motivate, and retain talented employees.

➔ Solutions to this problem include:

a. Cross cultural training: for better understanding of the culture and
norms of the other country.
b. Store operations, leadership, and staff management skills training

LO 1-5: Identify how social networking, artificial intelligence, and

robotics is influencing human resource management.
Social networking: refer to websites such as Facebook, Twitter, and LinkedIn,
wikis or blogs that facilitate interaction between people usually around shared
interests.

Benefit Risk
+ facilitates communication, + Managers fear that social
decentralized decision making, and networking may result in employees
collaboration. wasting time/harassing their co-
+ Useful for connecting to customers worker.
and valuable for busy employees to
share knowledge and ideas with their
peers and managers. Especially young
Millennials or Generation Y workers.
=> However, many companies believe that the benefit of using social
networking for HR practices and allowing employees to use social networks at
work outweighs the risks.
● Potential issues that can be addressed by using social networking:

Artificial intelligence and Robotics: is a technology that stimulates human

thinking. It works through queries that allow it to learn from data over time so
that it can recognize the trends and patterns that influence future searches and
suggestions.
Ex: Apple’s Siri
Human resource information system(HRIS): is a computer system used to
acquire, store, retrieve, and distribute information related to a company’s human
resources.
● HRIS can support strategic decision making, help the company avoid
lawsuits, provide data for evaluating policies and programs, and support
day-to-day HR decisions.
Mobile devices: refers to smartphones and tablet computers. Mobile devices are
increasingly being used to provide employees with anytime and anywhere
access to HR applications and other work-related information.
Cloud computing: computing systems that provide information technology
infrastructure over a network in a self-service, modifiable, and on-demand
model.
 ● Give companies and their employees access to applications and
information from mobile devices rather than relying solely on personal
computers.
● Allow groups to work in new ways, can make employees more
productive by allowing them to share documents and information easier.
HR dashboard: a series of indicators or metrics that manager and employees
have access to on the company intranet or HRIS.
● Are important for determining the value of HR practices and how they
contribute to business goals.

LO 1-6 Discuss human resource management practices that

support high performance work systems.

1. Virtual teams

Definition: teams that are separated by time, geographic distance, culture,

and/or organizational boundaries and that rely almost exclusively on technology
143 (e-mail, Internet, videoconferencing) to interact and complete their projects.

- Virtual teams can be formed within one company whose facilities are
scattered throughout the country or the world.

- A company may also use virtual teams in partnerships with suppliers or

competitors to pull together the necessary talent to complete a project or
speed the delivery of a product to the marketplace.

2. Table 1.14

These practices are designed to give employees skills, incentives, knowledge,

and autonomy.
There may be a best HRM system, but whatever the company does, the
practices must be aligned with each other and be consistent with the system if
they are to positively affect company performance.

LO 1-7: Provide a brief description

of human resource management
practices

Figure 1.8: Examples of How HRM

practices can help companies meet
competitive challenges.

HRM practices that help companies deal

with the competitive challenges can be
grouped into the four dimensions shown in
Figure 1.9(Major dimensions of HRM
practices contributing to company
competitiveness.)
 1. Managing the human resources environment
Creating a positive environment allows employees to make the greatest possible
contribution to the company productivity and competitiveness. Creating a
positive environment for human resources involves the following:
+ Linking HRM practices to the company’s business objectives
+ Ensuring that HRM practices comply with federal,state and local laws.
+ Designing work that motivates and satisfies employees as well as
maximise customer service, quality and productivity.
2. Acquiring and preparing human resources
Customer needs for new products or services influence the number and type of
employees that businesses need to be successful. This area HRM deals with the
following:
+ Identifying HR requirements(planning, recruiting, and selecting)
+ Training employees to have the skills needed to perform their jobs
3. Assessing and development of Human Resources
Managers need to ensure that employees have the necessary skills to perform
current and future jobs. This area HRM addresses the following:
+ Measuring the employee’s performance
+ Preparing employees for future work role and identifying employees’s
works interest, goals, values and other career issues
+ Creating an employment relationship and work environment that benefits
both the company and employee.
4. Compensating HR
Besides interesting work, pay and benefits are the most important incentives
that companies can offer employees in exchange for contributing to
productivity, quality, and customer service. This area HRM includes the
following
+ Creating pay systems
+ Rewarding employee contribution
+ Providing employees with benefits