C202 Managing Human Capital Study Guide

MANAGING HUMAN CAPITAL


C202 Managing Human Capital Study Guide
Chapter 1: Strategic Human Resource Management Learning
Objectives:

 A company has a competitive advantage when it does something
differently from its competition that allows it to outperform them
and succeed in its industry. Competitive advantages can come
from factors, including better technology, more innovative
products or services, better locations, lower costs, or outstanding
customer service. These advantages just don’t happen by
themselves. It is always the organization’s employees who create,
implement, or sustain a competitive advantage.
1. Describe the primary Human Resource Management (HRM)
functions.
Human resource management or HRM is the organizational
function responsible for attracting, hiring, developing, rewarding,
and retaining talent. In order to do this effectively, HR must have a
strategy. Effectively managing employees is critical to
organizational success, and doing so is HR’s responsibility.
Broadly speaking, HRM is responsible for two areas:
 people-related issues
 employment-related legal compliance
Since employee costs generally average close to half of an
organization’s operating budget, it is essential to properly manage
the investments a company makes in its people. No organization
will maximize its effectiveness without strategically leveraging the
right talent, while also maintaining legal compliance.
Influencing what employees should do. Influencing what
employees can do. Influencing what employees will do. In more
detail for;




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, What employees should do:
Factors including organizational strategy, competitive
environment, and legal requirements all influence what an
organization’s employees should do. After establishing a business
strategy, managers identify the resources, skills, and quantity
and quality of talent that will be needed to execute it.
What employees can do:
Influencing what employees can do is another way HRM
influences organizational outcomes. By finding, attracting, and
hiring the right talent, recruiting and staffing acquire the
motivation and the abilities from which the company can draw.
The HRM function of training and development influences the
capabilities of an organization’s employees by developing
employees’ skills to meet changing business needs.
What employees will do:
Influencing what employees will do is the third way HRM
influences organizational performance. By setting clear goals
aligned with the business strategy, giving employees feedback on
their performance toward those goals, and rewarding them for
good performance, performance management and compensation
influence employee motivation, effort, and persistence.

When what employees should do, can do, and will do are aligned
in support of each other and are part of an organization’s goals,
work processes are most effective. Positive work environments
help to generate engaged, committed employees who give the
organization a competitive advantage through their increased
effort and performance

2. Explain why HRM is important to organizational performance.
In order to influence organizational performance, HRM essentially
leverages and empowers employees to create highly effective work


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, processes. So, which HRM activities add value and influence an
organization’s performance, and ultimately provide a source of
competitive advantage for the organization:
 Development of efficient systems and processes –
Doing what we do without waste of time, money,
talent, or other resources
 Revenue growth – Increasing the amount of money
received by the company; many times, HR practices
save money, or prevent the waste of money, but
some HR practices actually generate (or at least
grow) revenue; Review this article under this video
for examples of how HR can promote revenue
growth.
 Risk management - What puts us in danger /
jeopardy / peril / hazard / threat? HR looks for
ways to minimize and manage risk in these four
areas to allow the organization to move forward
with caution.
 Strategy
 Operations
 Finances
 Compliance
HRM strategies have the biggest influence on organizational
performance when they are aligned, not only with the business
strategy, but with each other.

3. Explain how HRM strategy supports business strategy.
A company’s business strategy is a plan for how it will compete in
its marketplace. Part of being a strong competitor is effectively
leveraging talent, or human capital. An effective HR management
system does just that, consistent with the organization's talent




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, philosophy, it wields its talent as a very strong competitive
advantage.
Concepts: What is?
● Human resource management: HRM creates the system that
acquires, motivates, develops, and retains talent and
is a key source of competitive advantage. The core of
HRM is designing systems that maximize the efficiency
and effectiveness of an organization’s use of its talent
in accomplishing organizational goals. The main functions
within HRM are staffing, performance management, training and
development, rewards and benefits, health and safety, and employee-
management relations. As you know, HR is responsible for the 2 broad
areas of people-related issues and employment-related legal
compliance. Those responsibilities are carried out through these 6
functional areas, this is what HR does. these are the avenues through
which HRM influence occurs. Within each of these functional areas, HR
designs systems to fully leverage talent in achieving organizational
goals. So, with these functional areas in mind, HR should consider
questions like…
 How do we position (staff) our employees to contribute to
the achievement company goals?
 What kind of training needs to take place to ensure
employees have the knowledge, skills, abilities, and other
talents (KSAOs) to succeed in their role, and in turn, help
achieve company goals?
 How can we structure a rewards and benefits plan that
will fairly compensate our employees while also helping
to achieve our company goals?




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