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The development and implementation of specific organizational
strategies must be based on the areas
of strength in an organization. Referred to as core competencies,
those strengths are the foundation for creating a
competitive advantage for an
organization. A core competency is a unique capability that creates high value and differentiates an
organization from its competition.
Figure 1-1 shows some possible areas where human resources may
become part of core competencies.
Certainly, many organizations have identified that having their human resources as core
competencies differentiates them from their
competitors and is a key determinant of competitive advantages.
Human Capital and HR
Human capital is not solely the people in organizations—it is what
those people bring and contribute
to organizational success. Human capital is
the collective value of the
capabilities, knowledge, skills, life experiences, and motivation of an organizational
workforce.
Sometimes human capital is called intellectual capital to
reflect the thinking, knowledge, creativity, and
decision making that people in organizations contribute. For example, firms with high intellectual capital may
have technical and research employees who
create new biomedical devices, formulate products that can be patented, or develop new
software for specialized uses. All these
organizational contributions illustrate the potential value of human capital. A few years ago, a Nobel prize-winning
economist, Gary Becker, expanded the
view of human capital by emphasizing that countries managing human capital better are more likely to have
better economic results.
The importance of human capital in organizations can be seen in
various ways. One is sheer costs. In
some industries, such as the restaurant industry, employee-related expenditures may exceed
60% of total operating costs. With such
significant levels comes an increasing need to measure the value of human capital and how it is changing through
HR metrics, discussed in the
next post.
HR Functions
HR management can be thought of as seven interlinked functions
taking place within organizations,
as depicted in Figure 1-2. Additionally, external forces—legal, economic, technological,
global, environmental, cultural/ geographic,
political, and social—significantly affect how HR functions are designed, managed, and changed. The
functions can be grouped as follows:
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• Strategic HR Management: As part of maintaining
organizational competitiveness, strategic
planning for HR effectiveness can be increased through the use of HR metrics and
HR technology. These topics are covered in the next post.
• Equal Employment Opportunity: Compliance
with equal employment opportunity
(EEO) laws and regulations affects all other HR activities. The nature of EEO is discussed in the next post.
• Staffing: The aim of staffing is to provide a
sufficient supply of qualified individuals
to fill jobs in an organization. Workers, job design, and job analysis lay
the foundation for staffing by identifying what diverse people do in their jobs and how they are
affected by them. Through HR planning, managers anticipate the future supply of and demand for employees
and the nature of workforce
issues, including the retention of employees. These factors are used when recruiting applicants
for job openings. The selection process
is concerned with choosing qualified individuals to fill those jobs. These staffing activities are discussed
in the next post.
• Talent Management and Development: Beginning
with the orientation of new
employees, talent management and development includes different types of training. Also, HR
development and succession planning of employees and managers is necessary to
prepare for future challenges. Career
planning identifies paths and activities for individual employees as they move within the organization.
Assessing how well employees perform their
jobs is the focus of performance management. Activities associated with talent management are examined in the next post.
• Total Rewards: Compensation in
the form of pay, incentives, and benefits rewards people for performing
organizational work. To be competitive, employers
develop and refine their basic compensation
systems and may use variable
pay programs such as incentive rewards. The rapid increase in
the cost of benefits, especially health care benefits, will continue to be a major issue for most employers. Compensation, variable
pay, and benefits activities are
discussed in the next post.
• Risk Management and Worker Protection: Employers
must address various workplace risks to
ensure protection of workers by meeting legal
requirements and being more responsive to concerns for workplace health and safety.
Also, workplace security has grown in importance along with disaster and
recovery planning, and these
activities are examined in the
next post.
• Employee and Labor Relations: The relationship between managers and their employees
must be
handled legally and effectively. Employer and employee rights must
be addressed. It is important to develop, communicate,
and update HR policies and procedures so that managers and employees alike know what is expected. In some organizations, union/management relations must
be addressed as well. Activities associated
with employee rights and labor/management relations
are discussed in the next post.
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