Chapter 1
Creating Value Through Human Resources
Chapter 1 Learning Objectives
1. Explain how human resource management, from the organizational life-cycle and stakeholder
perspectives, can facilitate organizational success.
2. List the core functions of HRM.
3. Explain what human resource professionals do to help create successful organizations.
4. Identify important labor trends that are affecting organizations and their human resource
practices.
5. Explain how effective human resource management requires a comnination of strategic and
functional perspectives.
Chapter 1 Outline
1.1 Explain how human resource management, from the organizational life-cycle and stakeholder
perspectives, can facilitate organizational success.
How Can Human Resource Management Make an Organization Effective?
The field of study and practice that focuses on people in organizations.
HR skills help organizations more effectively hire, manage, and motivate employees so
that the organization itself becomes more effective.
A starting point for learning about the field of HRM is to explore the concept of
organizational success.
How Is Organizational Success Determined?
Organizational Life-Cycle: measures of effectiveness change as an organization moves
through a series of four distinct stages during its lifetime.
Entrepreneurial Stage: effective HRM is very important for development of an
organization’s identity and for the survival and growth of newly formed
organizations.
Communal Stage: marked by expansion, innovation, cooperation, and in
developing and improving organizational processes.
Formalization Stage: focus on improving efficiency and finding new and
innovative ways to accomplish the organization’s goals and objectives.
Elaboration Stage: when organizations need to redefine objectives and identify new
opportunities.
Success from Stakeholder Perspectives: success is measured by the extent that
organizations meet stakeholders’ needs (e.g., employees, customers, owners, society).
Stakeholders: Individuals or groups of people who can affect or who are affected by
an organization
Employees: HR practices protect the interests of employees by more effectively
meeting their needs.
° Employee Turnover: the process in which employees leave the organization and
are replaced by other employees.
Customers: Research strongly supports the notion that good HRM improves
customer satisfaction, largely through customers’ interactions with employees.
, Owners: Effective human resource practices are linked to organizational profits,
which are important to owners of organizations. Employees who have better skills,
are well paid, and feel their jobs are secure have higher individual performance,
which translates into desirable organizational improvements like growth in sales.
Society: Organizations that are better community citizens are generally more
profitable than organizations that ignore environmental and social concerns.
The Chain of Success
Meeting the needs of one group can often help meet the needs of others; each group
is referred to as stakeholders.
Properly managing people is therefore a critical part of the chain of excellence for
successful organizations.
Obtaining and keeping excellent employees gives an organization an advantage in
meeting customer needs, which translates into profitability and thereby provides
organizations with resources to further improve HR practices.
CONCEPT CHECK
1. What are the four stages of the organizational life cycle and what is the main goal of
each stage? Entrepreneurial Stage’s main goals are survival and growth; Communal
Stage’s main objective is to gain a unique identity and overcome internal conflict;
Formalization Stage’s key goal is to make goods and services as efficiently as
possible; and Elaboration Stage’s main goals are adaptation and renewal.
2. How does human resource management contribute to success at each stage? Entrepreneurial
Stage: Need to hire and maintain employees; emphasis on creatingplans for measuring
performance and deciding pay; Communal Stage: Need to develop clear communication
channels; emphasis on building strong loyalty among employees; Formalization Stage: Need
to create formalized practices for hiring, training, and compensating; emphasis on continual
improvement of employee skills and motivation; and Elaboration Stage: Need to alter
practices to meet changing demands; emphasis on new ways of organizing work tasks.
3. What four primary groups make up an organization’s key stakeholders? Employees,
customers, owners, and society.
1.2 List the Core HR Functions
Core HR Functions: The HR Certification Institute have identified five broad functional
areas of HRM (people management activities).
Business management works with other parts of the organization to establish and
provide quality goods and services
Talent planning and acquisition designs jobs and places people in them.
Learning and development ensures that employees learn the knowledge, skills, and
abilities required for current and future performance.
Total rewards concerned with managing employee pay and benefits.
Employee and labor relations build and maintain effective working conditions and
relationships.
Spreading Knowledge About HR Practices
, Many of the core HR functions require cooperation between the HR department and other
parts of the organization.
Such cooperative efforts are improved and the value of people management increases
when leaders throughout the organization know what HR specialists bring to the table.
Another potentially important contribution of human resources is to teach organizational
leaders effective practices for attracting and keeping talented workers.
Another aspect of spreading human resource knowledge is building relationships of trust.
CONCEPT CHECK
1. What are the five core HR functions? Business management, talent planning and
acquisition, Learning and development, total rewards, and employee and labor
relations.
2. Why is it important for HR professionals to educate others in their organizations about
HR functions? Many of the core human resource functions require cooperation
between the human resource department and other parts of the organization. HR
inputs about workforce planning must be coordinated with operational plans for
increasing or decreasing production. Efforts to develop new employee skills also must
be coordinated with strategic and marketing plans. Such cooperative efforts are
improved and the value of people management increases when leaders throughout the
organization know what human resource specialists bring to the table. An important
aspect of spreading knowledge is thus to help managers and others throughout the
organization know the special capabilities that human resource specialists provide.
1.3 What do HR Specialists Do?
Administer compensation, benefits and performance management systems, and safety and
recreation programs.
Identify staff vacancies and recruit, interview, and select applicants.
Allocate human resources, ensuring appropriate matches between personnel.
Provide current and prospective employees with information about policies, job duties,
working conditions, wages, opportunities for promotion, and employee benefits.
Perform difficult staffing duties, including dealing with understaffing, refereeing disputes,
firing employees, and administering disciplinary procedures.
Advise managers on organizational policy matters such as equal employment opportunity and
sexual harassment and recommend needed changes.
Analyze and modify compensation and benefits policies to establish competitive programs
and ensure compliance with legal requirements.
Plan and conduct new employee orientation to foster positive attitude toward organizational
objectives.
Serve as a link between management and employees by handling questions, interpreting and
administering contracts, and helping resolve work-related problems.
HR ROLES
Short-term activities generally involve day-to-day projects and focus on conducting
surveys, maintaining databases, counseling employees.
Functional Expert: focuses on providing technical expertise related to hiring and
motivating employees. They do this by helping the organization build systems and
Creating Value Through Human Resources
Chapter 1 Learning Objectives
1. Explain how human resource management, from the organizational life-cycle and stakeholder
perspectives, can facilitate organizational success.
2. List the core functions of HRM.
3. Explain what human resource professionals do to help create successful organizations.
4. Identify important labor trends that are affecting organizations and their human resource
practices.
5. Explain how effective human resource management requires a comnination of strategic and
functional perspectives.
Chapter 1 Outline
1.1 Explain how human resource management, from the organizational life-cycle and stakeholder
perspectives, can facilitate organizational success.
How Can Human Resource Management Make an Organization Effective?
The field of study and practice that focuses on people in organizations.
HR skills help organizations more effectively hire, manage, and motivate employees so
that the organization itself becomes more effective.
A starting point for learning about the field of HRM is to explore the concept of
organizational success.
How Is Organizational Success Determined?
Organizational Life-Cycle: measures of effectiveness change as an organization moves
through a series of four distinct stages during its lifetime.
Entrepreneurial Stage: effective HRM is very important for development of an
organization’s identity and for the survival and growth of newly formed
organizations.
Communal Stage: marked by expansion, innovation, cooperation, and in
developing and improving organizational processes.
Formalization Stage: focus on improving efficiency and finding new and
innovative ways to accomplish the organization’s goals and objectives.
Elaboration Stage: when organizations need to redefine objectives and identify new
opportunities.
Success from Stakeholder Perspectives: success is measured by the extent that
organizations meet stakeholders’ needs (e.g., employees, customers, owners, society).
Stakeholders: Individuals or groups of people who can affect or who are affected by
an organization
Employees: HR practices protect the interests of employees by more effectively
meeting their needs.
° Employee Turnover: the process in which employees leave the organization and
are replaced by other employees.
Customers: Research strongly supports the notion that good HRM improves
customer satisfaction, largely through customers’ interactions with employees.
, Owners: Effective human resource practices are linked to organizational profits,
which are important to owners of organizations. Employees who have better skills,
are well paid, and feel their jobs are secure have higher individual performance,
which translates into desirable organizational improvements like growth in sales.
Society: Organizations that are better community citizens are generally more
profitable than organizations that ignore environmental and social concerns.
The Chain of Success
Meeting the needs of one group can often help meet the needs of others; each group
is referred to as stakeholders.
Properly managing people is therefore a critical part of the chain of excellence for
successful organizations.
Obtaining and keeping excellent employees gives an organization an advantage in
meeting customer needs, which translates into profitability and thereby provides
organizations with resources to further improve HR practices.
CONCEPT CHECK
1. What are the four stages of the organizational life cycle and what is the main goal of
each stage? Entrepreneurial Stage’s main goals are survival and growth; Communal
Stage’s main objective is to gain a unique identity and overcome internal conflict;
Formalization Stage’s key goal is to make goods and services as efficiently as
possible; and Elaboration Stage’s main goals are adaptation and renewal.
2. How does human resource management contribute to success at each stage? Entrepreneurial
Stage: Need to hire and maintain employees; emphasis on creatingplans for measuring
performance and deciding pay; Communal Stage: Need to develop clear communication
channels; emphasis on building strong loyalty among employees; Formalization Stage: Need
to create formalized practices for hiring, training, and compensating; emphasis on continual
improvement of employee skills and motivation; and Elaboration Stage: Need to alter
practices to meet changing demands; emphasis on new ways of organizing work tasks.
3. What four primary groups make up an organization’s key stakeholders? Employees,
customers, owners, and society.
1.2 List the Core HR Functions
Core HR Functions: The HR Certification Institute have identified five broad functional
areas of HRM (people management activities).
Business management works with other parts of the organization to establish and
provide quality goods and services
Talent planning and acquisition designs jobs and places people in them.
Learning and development ensures that employees learn the knowledge, skills, and
abilities required for current and future performance.
Total rewards concerned with managing employee pay and benefits.
Employee and labor relations build and maintain effective working conditions and
relationships.
Spreading Knowledge About HR Practices
, Many of the core HR functions require cooperation between the HR department and other
parts of the organization.
Such cooperative efforts are improved and the value of people management increases
when leaders throughout the organization know what HR specialists bring to the table.
Another potentially important contribution of human resources is to teach organizational
leaders effective practices for attracting and keeping talented workers.
Another aspect of spreading human resource knowledge is building relationships of trust.
CONCEPT CHECK
1. What are the five core HR functions? Business management, talent planning and
acquisition, Learning and development, total rewards, and employee and labor
relations.
2. Why is it important for HR professionals to educate others in their organizations about
HR functions? Many of the core human resource functions require cooperation
between the human resource department and other parts of the organization. HR
inputs about workforce planning must be coordinated with operational plans for
increasing or decreasing production. Efforts to develop new employee skills also must
be coordinated with strategic and marketing plans. Such cooperative efforts are
improved and the value of people management increases when leaders throughout the
organization know what human resource specialists bring to the table. An important
aspect of spreading knowledge is thus to help managers and others throughout the
organization know the special capabilities that human resource specialists provide.
1.3 What do HR Specialists Do?
Administer compensation, benefits and performance management systems, and safety and
recreation programs.
Identify staff vacancies and recruit, interview, and select applicants.
Allocate human resources, ensuring appropriate matches between personnel.
Provide current and prospective employees with information about policies, job duties,
working conditions, wages, opportunities for promotion, and employee benefits.
Perform difficult staffing duties, including dealing with understaffing, refereeing disputes,
firing employees, and administering disciplinary procedures.
Advise managers on organizational policy matters such as equal employment opportunity and
sexual harassment and recommend needed changes.
Analyze and modify compensation and benefits policies to establish competitive programs
and ensure compliance with legal requirements.
Plan and conduct new employee orientation to foster positive attitude toward organizational
objectives.
Serve as a link between management and employees by handling questions, interpreting and
administering contracts, and helping resolve work-related problems.
HR ROLES
Short-term activities generally involve day-to-day projects and focus on conducting
surveys, maintaining databases, counseling employees.
Functional Expert: focuses on providing technical expertise related to hiring and
motivating employees. They do this by helping the organization build systems and
