How Can Human Resource Management Make an Organization Effective?

Human resource management focuses on people in organizations. Of course, people are a major component of any organization, so it follows that organizations with more productive employees tend to be more successful. Employee productivity increases when organizations hire and motivate employees effectively. In addition, good human resource practices create more satisfied employees, who in turn work harder to satisfy customers.¹

Human resource management

The field of study and practice that focuses on people in organizations.

One prosperous organization that traces much of its success to effective management of people is Trader Joe's. The chain now includes over 365 stores in more than 30 different states, but it began in the 1960s as three convenience stores seeking to survive the introduction of 7-Eleven. Seeing the difficulty of competing head-to-head with 7-Eleven, the founder—Joe Coulombe—decided to change Trader Joe's to a specialty store selling unique products. Trader Joe's has since become well known for providing foods and beverages that cannot be found in other stores. Products, which usually carry the store's own label, include gourmet and specialty foods such as soy ice-cream cookies, black rice, and stuffed salmon.²

Keeping prices low is one key to success for Trader Joe's. However, customers describe their shopping experience as something more than a simple hunt for bargains. Trader Joe's works hard to attract educated customers who develop a loyal relationship with the company. Many of these customers say they have fun shopping at Trader Joe's. They look forward to searching store aisles and finding interesting products. They also enjoy their interactions with helpful store employees dressed in casual Hawaiian shirts. The real key to success for Trader Joe's, then, seems to be finding and keeping great employees.³

What does Trader Joe's do to develop and maintain a productive workforce? Flexible job design certainly plays a role. Employees have a great deal of autonomy in determining how the store can best serve customers. Every employee is encouraged to sample products and make recommendations. Employees are free to tell customers when they don't like something. Workers at Trader Joe's are not limited to performing certain tasks but help out wherever they are needed. Managers, for example, often sweep floors and stock shelves.⁴

Of course, not everyone would fit equally well into the job environment at Trader Joe's. Employee selection focuses on hiring people with personalities that fit the productive and creative culture. Trader Joe's looks for employees who are upbeat, outgoing, and motivated by challenge. Employees also need a good sense of humor and a strong customer orientation.

Convincing people to take jobs with Trader Joe's does not seem to be difficult. The store has a reputation as a desirable place to work, and a large number of people apply whenever job openings are advertised.⁵ One reason people like to work at Trader Joe's is the company's compensation practices. Employees are paid substantially more than they could make doing similar jobs in other companies. Full-time crew members begin at salaries around $50,000. They receive health insurance and participate in an excellent retirement savings program, including a plan that contributes over 15 percent of gross income to a tax-deferred retirement account. Excellent pay not only helps get people interested in working at Trader Joe's but also helps ensure that employees will stay with the company. Managers are almost always promoted from within the company, and few employees leave to work elsewhere.⁶

Both employees and customers see Trader Joe's as a successful company. It is a profitable company, with annual sales exceeding $8 billion. More important, Trader Joe's generates twice as many dollars in sales per square foot of store space as competitors such as Whole Foods. This profitability has helped the company expand the number of stores without taking on debt. Profits grew tenfold over a 10-year period.⁷

The success of Trader Joe's clearly illustrates how a company can thrive in difficult and changing times. Rather than giving up to a formidable competitor, Joe Coulombe identified an unmet need and created an organization to fill that need. Human resource practices at Trader Joe's help attract and motivate employees who provide great customer service. Doing things differently from the competition, and doing them better, has created a culture where people like to go to work. Happy employees make shoppers happy.

 LEARNING OBJECTIVE 1 

How Is Organizational Success Determined?

As you begin studying human resource management, it is important to think about what you want to gain from your efforts. How can understanding human resource management better prepare you for success in your upcoming career? The most basic answer is that human resource skills will help you hire, manage, and motivate employees more effectively. Clearly, human resource skills are useful not only to human resource professionals but also to everyone who has responsibility for leading and managing others. Furthermore, even if you don't plan to work either as a human resource specialist or as a manager, learning the concepts of human resource management will help you to understand why the places where you work do much of what they do.

The goal of human resource management is, of course, to make organizations more effective. Thus, a starting point for learning about the field of human resource management is to explore the concept of organizational success. We know that some organizations are more successful than others. Can differences in human resource management explain why?

Most observers agree that Trader Joe's is a successful organization. This is supported by top rankings from publications such as Consumer Reports. But what exactly does it mean to say an organization is successful? Does it mean the organization makes a lot of money? Does it mean the organization makes the world a better place? Perhaps success is meeting the demands of different stakeholders, such as Trader Joe's recent agreement with a farmworker organization concerning employee fair treatment as part of tomato-growing practices.⁸ Maybe success simply means the organization has been around for a long time. Because organizational success has many faces, each of these perspectives is partly true. Different viewpoints capture different meanings of success. Here, we briefly examine the meaning of organizational success from two perspectives—the life-cycle model and the stakeholder perspective—and consider how human resource management plays a role in making organizations effective from each viewpoint.

SUCCESS IN LIFE-CYCLE STAGES

Think about success for you as an individual. Being successful now doesn't guarantee you will be successful in 10 years. Having just enough money to buy pizza and books may equal success when you are 20, for example, but probably isn't enough when you are 40. Similarly, the life-cycle approach to organizational success suggests that measures of effectiveness change as an organization grows. Twenty-five years ago, Trader Joe's was successful simply because it didn't close when 7-Eleven entered the market. Success today depends on expansion into a national chain.

Organizational life cycle

Stages through which an organization moves after its founding.

At the heart of this model of success is the organizational life cycle, a series of stages through which an organization moves during its lifetime. Stages of growth begin when the organization is founded and end when it ceases to exist. Since goals and objectives change as the organization moves from stage to stage, the nature and meaning of success also change. Here, we examine four common stages in the organizational life cycle: the entrepreneurial stage, the communal stage, the formalization stage, and the elaboration stage.⁹ As you will see, human resource management plays an important role in every stage. Table 1.1 summarizes key differences across the stages.

Entrepreneurial Stage

An organization enters the entrepreneurial stage when it is first created. This stage is a lot like infancy for human beings. The main goal is survival and growth. Organizations in the entrepreneurial stage need to develop an identity and obtain resources. Success during this stage is often measured simply in terms of staying alive. Organizations that survive are successful. The early history of the Internet company Yahoo! is a good example. Yahoo! wasn't profitable in the beginning, but it showed innovation and growth when many competitors were going out of business.

Entrepreneurial stage

First stage in the organizational life cycle; focuses on survival.

Effective human resource management is very important for the survival and growth of newly formed organizations. Organizations must find and hire a sufficient number of high-quality employees. They must also develop basic plans for measuring performance and paying people.

A typical organization employs one human resource specialist for every 100 employees.¹⁰ This means that organizations in the entrepreneurial stage of development are typically too small to have a full-time, dedicated human resource staff. As a result, it is likely that owners and managers of firms with relatively few employees perform many human resource duties themselves or hire outside consultants to do this work.

Given the importance of human resources for entrepreneurial organizations, it is not surprising that firms with better-developed plans and methods of obtaining and paying employees are more likely to survive. For instance, one study found that new organizations lacking clear human resource and pay plans have just a 34 percent chance of surviving the first five years. Firms with good human resource plans, in contrast, have a 92 percent chance of survival.¹¹ Organizations with better plans for hiring and motivating workers are thus more likely to survive—and survival is a key indicator of success during the entrepreneurial stage.

Communal Stage

Organizations that survive the entrepreneurial stage enter the communal stage, which is marked by expansion, innovation, and cooperation. This stage is much like the teenage years for human beings. The main objective is to gain a unique identity and overcome internal conflict. Learning who you are and improving your skills are the essence of life during these years. Similarly, organizations in the communal stage focus on developing and improving processes for effectively producing goods and services. Members of the organization begin to feel a sense of commitment. Survival is still important, but organizational success is measured increasingly by the extent to which employees feel a sense of cohesion or belonging. It is important for employees to build strong feelings of attachment to coworkers and to the mission of the organization. Such attachment is an important part of success at Trader Joe's, where employees feel connected. The company's managers listen to employees, which encourages employees to communicate effectively with customers.¹²

Communal stage

Second stage in the organizational life cycle; focuses on expansion and innovation.

Organizations with effective human resource management practices in the communal stage continue to hire good employees and provide training. They also communicate well with employees. Employees, aware of these activities, develop a feeling that the organization is committed to taking care of them. Such feelings increase job satisfaction and feelings of empowerment, so that organizations with better human resource practices have happier employees who are more committed to making the organization successful and helping others.¹³ Employees are also less likely to leave organizations with good human resource practices. The accompanying “How Do We Know?” feature describes a study that demonstrates how effective human resource practices in call centers increase the likelihood of retaining workers, which in turn increases profitability.

Formalization Stage

The formalization stage occurs as organizations become stable and develop clear practices and procedures for doing work. In humans, the formalization stage often begins just after graduation from college, when people tend to settle into stable jobs. Organizations in the formalization stage focus on improving efficiency and finding better ways to accomplish tasks. They develop clear goals for guiding their efforts. Making goods and services as efficiently as possible becomes a key goal. Making a good profit is also important.

Formalization stage

Third stage in the organizational life cycle; focuses on establishing clear practices and procedures for carrying out work.

Effective management of people is beneficial for increasing efficiency and goal accomplishment in this stage. Organizations with formalized human resource practices that develop employee skills and motivate workers generate more sales per employee.¹⁴ IBM represents a company in this stage. IBM has been in existence 100 years and currently employs over 430,000 people. Keeping in touch with so many employees is difficult. However, IBM has a database that contains a profile for every employee. The profile lists each employee's skills. Maintaining such a database takes a great deal of effort, but cost savings from improved matching of employees and jobs has saved IBM $1.4 billion. Effective formalization of human resource practices has thus improved the efficiency and profitability of IBM.¹⁵

Elaboration Stage

The elaboration stage occurs when organizations need to adapt and renew. This stage is similar to middle age for human beings. Success often depends on redefining objectives and identifying new opportunities. People in this stage sometimes go through midlife crises, perhaps changing occupations and developing new hobbies. Organizations in the elaboration stage, like middle-aged people, have existed for some time, but shifting trends and preferences require them to change. For example, years ago Hallmark became successful as a producer of greeting cards, but changes in technology have forced the company to innovate and adapt to produce electronic greetings and family-based media.

Elaboration stage

Final stage in the organizational life cycle; focuses on reinvention and adaptation to change.

Good human resource management is critical for successful adaptation. In fact, one survey found change management to be the most important skill that human resource professionals can contribute to an organization.¹⁶ An example of an organization in this stage is Crouse Hospital in Syracuse, New York. At one point the company had a net loss of $15 million. About half of the hospital's employees were quitting each year. Hospital leaders took note and began to involve employees in an effort to change the culture of the organization. Numerous employee groups met and made suggestions. Employee efforts to turn around hospital performance took time but were successful. Financial problems were reversed to a net profit, and the employee quit rate dropped to 18 percent. Overall job satisfaction has increased to 96 percent.¹⁷ Improved human resource management thus helped move Crouse Hospital from the elaboration stage back to the formalization stage.

SUCCESS FROM STAKEHOLDER PERSPECTIVES

A second approach for assessing organizational effectiveness is the stakeholder perspective. According to this view, organizations are successful to the extent that they meet the needs of their stakeholders. Stakeholders are defined as individuals or groups of people who can affect or who are affected by an organization.¹⁸ This definition is quite broad, since almost every living person could in some way potentially affect or be affected by an organization. Fortunately, research suggests that employees, customers, and owners (shareholders) are the primary stakeholders. Their participation is crucial for the survival of the organization.¹⁹ Society as a collective group is also seen by many as an important stakeholder.

Stakeholders

Individuals or groups who are affected by or who affect an organization.

Employees

Employees make up an important group of stakeholders. Because employees complete tasks to make goods and services, they obviously influence the organization's ability to achieve its objectives. Their lives are also obviously influenced by the organization. Meeting the needs of employees is a critical component of organizational success.

Many human resource practices protect the interests of employees. For instance, the human resource department often plays a major role in ensuring that the organization complies with employment and safety laws. A number of these laws are designed to make sure the organization treats employees fairly. Helping design work tasks to make them more enjoyable is another way human resource management makes life better for employees. Human resource professionals help individuals plan and advance their careers, which keeps employees happy and reduces the chance that they will leave for jobs in other organizations. Thus, good human resource practices reduce employee turnover, which happens when employees quit and take jobs elsewhere.²⁰ Low turnover is a strong sign that employees' needs are being met. Simply put, people are less likely to look for new work opportunities when they are satisfied with their current jobs.²¹ As you can imagine, most companies prefer employee turnover to be low.

Employee turnover

The process in which employees leave the organization and are replaced by other employees.

Customers

Customers are another important group of stakeholders. An organization obviously will have trouble achieving its goals if customers don't buy its goods or services, so the influence of customers on the organization is immense. The goods and services available to customers can also affect their lives both positively and negatively.

Research evidence strongly supports the notion that good human resource management improves customer satisfaction, largely through customers' interactions with employees. Employees tend to treat customers the same way they believe managers treat them. If employees feel the organization values them and treats them with respect, they reproduce these good attitudes and behaviors in their interactions with customers. If they believe management doesn't care about them, they are less likely to be positive and helpful to customers.²² For example, one study of hairstylists found that those who were most satisfied with their jobs were helpful to clients and coworkers and in turn had more satisfied customers.²³ Human resource practices that demonstrate care and concern for employees thus translate into increased customer satisfaction. Hiring and keeping skilled employees can also improve customer satisfaction. Just think of an experience you have had shopping for something like a new computer. Getting information from a knowledgeable employee is much more satisfying than trying to get information from someone who knows less than you do.

Owners

A third group of important stakeholders is made up of owners, including stockholders. Owners influence organizations by determining who leads and makes decisions. In most cases their chief concern is the organization's profits, and the extent to which the organization returns profits and provides them with money influences them in many ways.

A great deal of research has linked human resource practices to organizational profits. As discussed in the “How Do We Know?” feature, this research illustrates how good human resource management makes a difference. Organizations are more profitable when they ensure high levels of employee skill by properly designing jobs, carefully selecting employees, and providing useful training. Effective practices also motivate employees by carefully measuring performance, making fair promotion decisions, and linking pay to performance.²⁴ In short, 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.²⁵

Society

Society represents the broader community in which the organization operates. Although further removed from the organization than the stakeholder groups discussed so far, society still serves as an important stakeholder. On the one hand, organizations affect society through their environmental practices, as well as their support of community charities and other such activities. On the other hand, various political and social forces can strongly influence organizations. For example, think about how changes in attitudes toward conservation and large automobiles affect the U.S. automobile industry.

Figure 1.1 The Chain of Success.

Interestingly, organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. Although there are exceptions, expending effort to do things such as protect the environment and improve local communities usually leads to improved financial performance for organizations.²⁶ In addition, effective human resource management within the organization results in other benefits to society. It provides employees with open channels of communication, which can reduce instances of unethical corporate behavior. Skilled and motivated employees also produce goods and services that help make the world a better place. Taking care of people at work can thus translate into important benefits for society as a whole.

THE CHAIN OF SUCCESS

Successful firms must meet the needs of each group of stakeholders, and these needs vary from group to group.²⁷ Fortunately, meeting the needs of one group can often help meet the needs of others. First, effective human resource management acquires high-quality employees, motivates them to maximize performance, and helps meet their psychological and social needs. This leads to long-term relationships with skilled and happy employees. Effective employees provide good customer service, which results in repeat business. Better customer service leads to improved financial performance that ensures profitability and success. Increased profitability allows organizations to spend money on improving human resource practices, which loops back and continues the chain of success. Properly managing people is therefore a critical part of the chain of success, which is shown in Figure 1.1 and summarizes the relationship among employee, owner, and customer interests. 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 human resource practices. This cycle of success was supported by a study that concluded that companies rated by Fortune as “The 100 Best Companies to Work for in America” are more profitable than their competitors.²⁸

 LEARNING OBJECTIVE 2 

What Does Human Resource Management Provide to an Organization?

Anyone who has applied for a job with a moderately large organization has probably interacted with a human resource department. But human resource functions go far beyond processing employment applications. From an overall strategic perspective, effective human resource management builds human capital that in turn increases organizational performance. In this section, we thus look at a number of activities that human resource professionals carry out in their role of managing the organization's employees.

CORE HUMAN RESOURCE FUNCTIONS

Core human resource functions can be summarized as people management activities. As shown in Table 1.2, these activities represent the primary purpose for having a human resource department. The Society for Human Resource Management (SHRM) and its affiliated Certification Institute have identified six broad functional areas of human resource management. These functions are business management and strategy, workforce planning and employment, human resource development, compensation and benefits, employee and labor relations, and risk management.²⁹

Source: Information from Society for Human Resource Management (SHRM) and affiliated Certification Institute. See the PHR and SPHR Body of Knowledge at http://www.hrci.org/uploadedfiles/Content/Resource_Library/Certification_Handbooks_and_Other_Publications/PHR-SPHR%20BOK.pdf/

Business management and strategy

The human resource function concerned with strategic planning, change processes, and evaluating organizational effectiveness.

Business management and strategy focuses on planning how the organization will produce and market goods and services. Strategic tactics guide efforts to do things better than competitors. For instance, an electronics manufacturer might decide to open a new plant that can produce parts less expensively. A hotel might initiate a marketing campaign to attract higher-paying customers. A healthcare provider may decide to structure work around teams of doctors, nurses, and clerical workers. Input from several different sources, including human resource specialists, guides these strategic plans. For the company opening a new plant, human resource data can help determine whether employees have the skills needed to carry out the new processes. For the hotel, human resource data can identify training needs that could result from focusing on a different type of customer. For the healthcare provider, data could help determine new skills that team members might need to learn. Effective strategic practice also requires ongoing measurement to assess the value that human resource management provides to the organization. Making and carrying out strategy is thus an important function that the human resource department shares with other departments throughout the organization. Human resource management also plays an important role in carrying out strategies of global companies. Employee expectations for compensation and benefits vary greatly from country to country. Human resource departments provide valuable assistance that guides organizations as they adapt their policies and practices to fit with local cultures and laws.³⁰

Workforce planning and employment

The human resource function concerned with designing jobs and successfully placing people in those jobs.

Another important human resource function is getting people into jobs. Workforce planning and employment consists of designing jobs and then placing people in them. This function generates information about tasks that need to be done and about the knowledge and skills people must have in order to do those tasks. People with the necessary talents are then recruited and hired from outside the organization or are promoted from within. Once on board, new employees are oriented to company policies and procedures. In some organizations, the human resource department carries out the entire process of planning and hiring. These human resource specialists do everything from placing employment advertisements to conducting interviews to making final selection decisions. In other organizations, the human resource department acts more like a consulting agency. Line managers do the actual recruiting and hiring, while human resource specialists provide assistance. Regardless of who does what, the human resource department is almost always a major player in recruiting and hiring activities.

Human resource development

The human resource function concerned with helping employees learn knowledge and skills.

The human resource development function ensures that employees learn the knowledge, skills, and abilities required for current and future performance. Surveys and assessments provide information about areas where training might be needed. Individual employees receive performance appraisals and develop individualized plans for improvement. The human resource department also uses assessment information to design formal training and development programs. For example, a survey about computer skills may highlight the need for classes to teach people how to use specific software. In many cases, human resource specialists carry out training in such areas as communication skills and organizational policies. The human resource department also coordinates programs designed to accomplish goals such as increasing employee diversity and helping employees balance work and family concerns.

Compensation and benefits

The human resource function concerned with managing employee pay and benefits.

Human resource departments typically carry out the function of compensation and benefits by managing salary and insurance plans. Compensation practices include finding and analyzing information to determine how much to pay each employee. Identifying and pursuing methods of using pay to increase employee motivation is an important contribution of human resource management. Most human resource departments also take primary responsibility for payroll activities such as preparing and distributing paychecks. Administering benefits, especially health insurance, can be quite complicated and usually requires a number of technical contributions from human resource professionals. Compliance with numerous laws and regulations concerning compensation also calls for specialized knowledge, which usually comes from the human resource department. As described in the Technology in HR feature, Web-based information can help human resource departments communicate critical compensation and benefit policies.

Good relationships between managers and employees improve organizational effectiveness. Building and maintaining effective working conditions and relationships are tasks associated with the employee and labor relations function. In organizations whose employees are represented by labor unions, much of this function is directed toward working with the unions. The human resource department plays a major role in negotiating terms of union contracts, which define not only pay levels but also work rules and procedures. Human resource specialists also coordinate procedures for filing and resolving employee grievances. When labor unions are not present, the human resource department works directly with managers and employees to ensure fair treatment of workers. The department may oversee disciplinary actions and provide communication channels so that employees can safely register complaints about such things as sexual harassment. Carrying out the employee and labor relations function thus provides critical support for both the organization and individual employees.

Employee and labor relations

The human resource function concerned with building and maintaining good relationships with employees and labor unions.

The function of risk management promotes the physical and mental wellbeing of people in the workplace. Because important laws govern workplace health and safety, carrying out this function requires specialized knowledge of government regulations. Human resource departments often take the lead in developing plans for reducing accidents. They make policies to protect employee rights of privacy. They also establish procedures to make sure that employees wear proper safety equipment. In many instances, the human resource department plans and coordinates the organization's response to natural disasters, such as hurricanes and earthquakes. Reducing workplace violence is also part of the risk-management function.

Risk management

The human resource function concerned with providing a safe and secure working environment, as well as protecting the organization from liability.

SPREADING KNOWLEDGE ABOUT HUMAN RESOURCE PRACTICES

Many of the core human resource functions just discussed require cooperation between the human resource department and other parts of the organization. Human resource inputs about workforce planning, for example, 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 important, 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.

Another potentially important contribution of human resources is to teach organizational leaders effective practices for attracting and keeping talented workers. In this sense, human resource specialists function like internal consultants and teachers. They help managers learn and improve methods for hiring employees, assessing training needs, and making pay decisions. This function goes beyond simply informing managers about what human resource specialists can do. The emphasis is on helping the managers themselves develop better human resource skills. Human resource departments thus have an important responsibility for training managers throughout the organization.

An important part of spreading knowledge involves overcoming common misconceptions about human resources. Many organizational leaders believe that good human resource management is “common sense.” They think, in other words, that hiring and motivating workers requires no special knowledge. But people who hold this view are mistaken. Managers generally are unfamiliar with many practices that provide clear direction for improving job performance. For instance, many managers resist using employment tests to select employees, even though evidence strongly shows that such tests can help them to make better hiring decisions.

Of course, human resource specialists must have knowledge before they can share it. Unfortunately, even professionals working within human resource departments often have misconceptions about good practices. This is shown by a survey that asked human resource leaders a number of questions about specific employment, staffing, and compensation practices. On average, these professionals knew the correct answer only about 60 percent of the time. Those with higher scores had been promoted more often, had received certification as human resource professionals, and read academic studies more frequently.³¹ Simply reading trade journals and popular magazines may not be enough to learn cutting-edge practices. Many of the most important research findings do not make their way into publications written for practicing managers.³² Overall, researchers in the field of human resource management need to do a better job of communicating their findings, and practitioners need to better test and implement best practices.

Another aspect of spreading human resource knowledge is building relationships of trust. Human resource departments need to provide managers with solutions to problems. Managers are more likely to believe and act on information from the human resource department when they see that it helps them. Human resource professionals earn managers' trust by listening to and understanding their problems and then providing solutions that work.³³ This requires people working in the human resource department to be capable of doing a wide array of things that help managers do their jobs better.

 LEARNING OBJECTIVE 3 

What Do Human Resource Specialists Do?

We have looked at some ways human resource management helps organizations and have explored some of the functions that human resource departments carry out. We can gain additional insight into the field by looking at the people who work in human resources. An example of someone who works in human resource management is Jen Martens, who works at University of Nevada–Las Vegas (UNLV). UNLV is a state-supported, nonprofit organization with nearly 28,000 students and 3,000 employees.³⁴ Just like any other large organization, UNLV must recruit and hire many employees every year. Jen Martens assists in this process through her work as manager of employment. Her work includes managing employee recruitment programs, teaching managers how to hire effective employees, and assuring compliance with government regulations. Jen also leads other human resource specialists who do things like write job postings and develop interview questions.

Human resource professionals like Jen Martens, who is a certified Professional in Human Resources (PHR), work by themselves and with managers to “plan, direct, and coordinate human resource activities of an organization to maximize the strategic use of human resources and maintain functions such as employee compensation, recruitment, personnel policies, and regulatory compliance.”³⁵ A more specific list of tasks is provided in Table 1.3.

The list in Table 1.3 is helpful, but it does not cover important ways human resource departments provide strategic contributions. Frameworks for capturing this more strategic contribution emphasize roles and competencies. Let's look more closely at these two areas.

HUMAN RESOURCE ROLES

Human resource roles involve people and processes. Part of the human resource professional's role is spending time interacting with employees individually. For instance, employees usually contact an organization's human resource department with questions about retirement benefits, health concerns, and harassment policies. Another part of the human resource role focuses on developing organizational processes aimed at hiring and motivating talented workers. Human resource specialists contribute in these roles through activities such as placing recruiting advertisements, helping develop compensation plans, and creating performance measures.

We can also look at human resource roles by contrasting long-term and short-term contributions. Short-term activities generally involve day-to-day projects and focus on conducting surveys, maintaining databases, and counseling employees. Long-term activities are more strategic in nature and include developing organizational strategies, managing change processes, and planning ways to create new skills.

Source: The National O*Net Consortium at http://online.onetcenter.org/.

Combining the people and process dimension with the long-term and short-term dimension results in the grid shown in Figure 1.2. The figure identifies four critical roles for human resource professionals: functional expert, employee advocate, strategic partner, and human capital developer.³⁶ Understanding these four roles provides insight into the actual activities of human resource specialists.

Figure 1.2 Human Resource Roles.
Source: Figure based on information from Dave Ulrich, Human Resource Champions: (Boston: Harvard Business Press, 1997); and Dave Ulrich and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005).

Functional Expert

The role of functional expert is the most basic human resource role. Most of the activities listed in Table 1.3 fit this role, and many of the chapters in this book examine aspects of this role in more detail. The functional expert role focuses on providing technical expertise related to hiring and motivating employees. In this role, an effective human resource specialist helps build systems and practices to ensure that an organization is using state-of-the-art methods to manage people. This might include creating a testing program to screen potential employees or developing a compensation plan that pays employees more when they produce exceptional results. Human resource specialists also serve as consultants who teach managers ways to improve their interactions with employees. For example, the human resource department might offer managers training in such things as giving appropriate feedback and asking better interview questions.

Functional expert role

A human resource role concerned with providing technical expertise related to functions such as hiring, training, and compensating employees.

One such functional expert is Dana Winkowitsch, who works for Johnson County in Iowa. Dana works as a human resources coordinator and spends a lot of her time answering questions and responding to requests from department heads and elected officials. She conducts orientation sessions to provide safety training, explain benefit programs, and help new employees complete paperwork. She leads the county safety committee and coordinates efforts to investigate accidents and maintain logs of work-related illnesses. Her duties include verifying payroll forms for accuracy and using the information database to create new employee positions. Because Johnson County only has a handful of human resource employees, Dana works mostly as a human resource generalist.

An organization can gain an advantage over its competitors when its human resource staff members are true functional experts. Experts help make sure that the best employees are hired and then trained to maintain high levels of skill and ability. Experts also increase employees' motivation by helping to ensure that each employee's contribution to the organization is accurately measured and rewarded. Performance in the functional expert role therefore represents a primary way human resource specialists such as Dana Winkowitsch can contribute something to the organization that other managers and employees cannot contribute.

Employee Advocate

Human resource professionals in the employee advocate role listen to employees and provide them with the resources they need to be effective. They look out for the interests of employees and often serve as advocates to make sure management treats employees fairly. Sometimes, too, they help employees who are experiencing personal problems. For instance, human resource professionals may help employees obtain medical care, attend funeral services for family members of employees, and help employees' spouses find work.³⁷ Showing genuine interest in employees communicates how much an organization cares about its employees. As a result, loyalty and motivation increase, and employees feel a stronger obligation to work hard.

Employee advocate role

A human resource role concerned with looking out for the interests of employees and ensuring that they are treated fairly.

Another important part of being an employee advocate is making sure the interests of employees are recognized when decisions are made. In the event of layoffs, human resource leaders can help ensure that these actions are carried out in ways that minimize the hurt for individuals. In their advocacy role, human resource leaders are often seen as the organization's conscience. By ensuring that employees are properly informed about organizational policies and procedures, they can play an important role in preventing members of the organization from engaging in unethical conduct. They do this by pointing out implications of decisions and asking leaders throughout the organization to think about the effect of decisions on individual employees. They also help develop and enforce policies that protect employees from being taken advantage of by more powerful supervisors. True leadership also requires human resource professionals to display high ethics in their own actions.

Strategic Partner

In the increasingly important strategic partner role, human resource specialists work with other organizational leaders to put company strategy into action. True partners go beyond providing support to other leaders and expertise in human resource practices. An example of a strategic partner is Tracy Hulsebus, who works as the human resource manager for contingent staffing at the international media company Pearson. Tracy is the business partner for operations as well as other groups. She is responsible for developing strategy and goals to meet business partner objectives, identifying internal and external risks, and providing appropriate solutions. She manages a team of nine professionals who handle hiring, on-boarding, and employee relations for the contingent workforce at Pearson. To be strategic partners, human resource professionals like Tracy need to know about other business activities, such as finance, accounting, and marketing. They must also know a great deal about the organization's products and services. Finally, they must know how these activities, products, and services fit with the company's strategic objectives. With this knowledge, human resource partners can provide important input to help guide organizational decisions and actions. An example of a company where this human resource role is carried out effectively is Edwards Lifesciences, which is described in the accompanying “Building Strength Through HR” feature. Top-level managers at Edwards Lifesciences work closely with human resource professionals to make sure that employees are organized in a way that helps the company achieve its strategic objectives.

Strategic partner role

A human resource role concerned with providing inputs that help an organization put its competitive strategy into action.

One particularly important aspect of the strategic partner role involves managing change. With organizations changing continually, the people within them must continually adapt to shifting conditions. The ability to apply concepts related to psychological reactions, power and influence, motivation, and group dynamics can help human resource professionals take a leadership role in facilitating change.

Human Capital Developer

Organizations are only successful when they learn faster than their competitors. The human capital developer role focuses on helping employees improve their skills. Sometimes facilitating learning requires human resource specialists to work as trainers who teach formal classes. Other times, the developer role requires sitting down with individuals and helping them make individualized plans for the future. In both cases, the objective is to make sure that employees continue to learn and improve.

Human capital developer role

A human resource role concerned with facilitating learning and skill development.

Like the strategic partner role, the human capital developer role is becoming increasingly important in today's organizations. Rapid changes in technology necessitate frequent changes in work processes, which require new inputs from employees. Employees who do not learn new skills become less capable of helping the organization meet the needs of customers. The human capital developer role thus adds value to the organization by helping employees build and maintain cutting-edge skills.

FIGURE 1.3 Human Resource Competencies.
Source: Content adapted from Dave Ulrich, Jon Younger, Wayne Brockbank, and Mike Ulrich, HR From the Outside In: Six Competencies For the Future of Human Resources (New York: McGraw-Hill, 2012).

HUMAN RESOURCE COMPETENCIES

Another way of understanding what human resource professionals do is to examine the competencies they need. Competencies represent characteristics and capabilities that human resource professionals need to succeed in their work assignments. To fill their various roles, human resource specialists need competencies in many areas. One recent model suggests that human resource professionals need six basic competencies. These competencies are shown in Figure 1.3 and include strategic positioner, credible activist, capability builder, change champion, HR innovator and integrator, and technology proponent.³⁸

Competencies

Characteristics and capabilities that human resource professionals need to succeed in their work assignments.

Strategic Positioner

In today's global business environment human resource specialists must increasingly demonstrate the strategic positioner competency, which means they must know the language of business and be able to converse with other organizational leaders. Specific areas of expertise include finance and strategy. Knowledge about stakeholders such as customers and investors is also required. Truly effective human resource specialists go even further to anticipate and plan for future trends in technology, politics, and workforce demographics. This requires a clear vision of the future, as well as an understanding of what the organization must do in order to perform at a high level. This competency is particularly important for the strategic partner role, which requires human resource specialists to be key contributors in determining what makes the organization superior to competitors.

Strategic positioner

Knowledge and skills associated with accurately placing an organization in its business context through understanding finance, strategy, stakeholders, and competitive context.

Credible Activist

Credible activists must be proactive and constantly seek opportunities to influence others. They meet their obligations and follow through on commitments. The interpersonal relationships these leaders develop make others more willing to follow them. One key for effective influence is taking an interest in others and the greater good rather than pursuing selfish interests. Effective written and oral communication are also part of this competency.

Credible activist

Knowledge and skills for influencing others through acting with integrity, sharing information, and building trust.

Capability Builder

The capability builder competency focuses on knowing an organization's strengths and weaknesses. Human resource professionals must understand what an organization can do better than its competitors, and then steer activity to maximize unique capabilities. They help focus energy on the things that really matter. Part of this comes from being familiar with the core values of the organization. Mastery of this competency helps connect employees to the mission and goals of the organization. As described in the Building Strength Through HR feature, these efforts to develop capable employees help companies succeed.

Capability builder

Knowledge and skills related to understanding what the organization is capable of doing successfully.

Change Champion

Effective organizations are constantly adapting and adjusting. The change champion competency encompasses skills and abilities needed to facilitate learning and growth. A first step in proactive change leadership is helping develop a sense of dissatisfaction with the status quo. Employees and leaders need to feel urgency to improve. This requires human resource professionals to guide the use of resources such as time, money, and information. Effort must also be put forth to ensure that new patterns of behavior continue once change has occurred. Change management thus requires true leadership.

Change champion

Knowledge and skills necessary to initiate and carry out change.

HR Innovator and Integrator

HR innovator and integrator competencies are closely aligned with the functional expert role. Human resource professionals display this competency when they use research-based principles to help them establish effective processes for hiring and motivating employees. Human resource specialists must know how to properly divide work duties, create reporting relationships, and design motivating jobs. They also need to know about staffing procedures that help attract, select, and promote the right people. Of course, they must carry out these activities in ways that help the organization take advantage of its unique capabilities and effectively pursue its strategy. Each of the human resource practices benefits from being in alignment with other practices to develop a synergistic method of managing and leading employees.

HR innovator and integrator

Knowledge and skills that ensure HR practices such as work design, staffing, and compensation are aligned in ways that facilitate organizational success.

Technology Proponent

Modern organizations require the management of massive amounts of information, which is aided by the technology proponent competency. Effective human resource specialists not only use technology themselves but also facilitate use by others. Understanding computing resources and software packages ensures that human resource specialists organize and retrieve information about employees. They also use technology to connect people to one another, which often comes through effective use of social media.

Technology proponent

Knowledge and skills used to help organizations effectively adopt technology to manage information and connect individuals.

 LEARNING OBJECTIVE 4 

How Will Current Trends Affect Human Resource Management?

We've already seen that the ability to manage change is a key aspect of human resource management. The labor market is one important area in which changes can influence the organization's human resource practices. Of course, nobody can predict the future with perfect accuracy, but a review of trends in the labor market suggests some areas of expected change. In response, organizations and their human resource practices may need to change as well. One good source of information about labor market trends is the Bureau of Labor Statistics (BLS), an agency within the U.S. Department of Labor. BLS surveys and analyses predict particularly important trends related to changes in population, the labor force, employment opportunities, and education and training.³⁹ One such trend is an increasing move toward globalization and multinational corporations.

POPULATION TRENDS

How much will the U.S. population grow in the coming years? Will the proportion of young people in the population get bigger or smaller? What about the balance of minority groups? Each of these questions focuses on U.S. population trends, which are general movements over time in the number and characteristics of people living in the United States. Organizations are interested in population trends for two main reasons: to help them determine how the demand for their goods and services might change and to provide insight into the number and type of workers that are likely to be available in the future.

Population trends

Demographic trends related to the characteristics of people in a certain population.

The U.S. population grew 11.9 percent over the past ten years, and current projections indicate that the country's total population will grow by about 10.6 percent during the next decade. The rate of growth is thus expected to be somewhat lower than in the past. We might conclude, then, that the demand for goods and services will increase, more jobs will be created, and a growing number of workers will enter the workforce during this period. Like the rate of population growth, however, the rates of growth in these areas will be somewhat lower than in the past.

The balance between young and old people in the U.S. population is also changing. By 2018 the number of people between the ages of 16 and 24 will stay about the same, the number between 25 and 34 years old will grow. Those between 45 and 54 will shrink, and the number older than 55 will increase by almost 30 percent. Demand for goods and services desired by older people should thus increase considerably. The workforce will also become older, with more people near the ends of their careers. As a result, attracting and motivating older workers will become a more important task for human resource departments.

LABOR FORCE TRENDS

Of course, not everybody in the population works. Labor force trends focus not on the population as a whole but on the number and characteristics of people who will be working or looking for work. Racial proportions will also continue to change. The percentage of non-Hispanic white employees is expected to decrease from approximately 70 to 65 percent of the workforce, whereas the percentage of Hispanic workers will increase from about 15 to 19 percent of the workforce. Another important trend concerns women in the workforce. The number of female employees is expected to continue growing slightly faster (7 percent growth) than the number of male employees (6 percent growth).

Labor force trends

Trends concerning the number and types of people who are working or looking for work.

Figure 1.4 Labor Force by Age.
Source: http://bls.gov/ooh/About/Projections-Overview.htm#educationandtraining.

Attracting and keeping minority and female employees will become increasingly important. We might thus expect to see more programs that offer convenience to working mothers, such as flexible working hours and on-site daycare. Organizations will also need to find better ways to meet the needs of minority workers. One such approach is to create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues. These groups can also provide important feedback and suggestions to help leaders understand the unique perspectives of minority workers. As shown in Figure 1.4, the population trend for age will also result in a greater proportion of older workers by 2020. Integrating diverse workers will thus be increasingly critical.

EMPLOYMENT TRENDS

Nobody wants to work in a company or an industry without a future. Therefore, an important question that arises is, Where will the jobs be in the years to come? Employment opportunity trends identify the type of work opportunities that will likely be available in the future. One ongoing trend that is expected to continue is the shift from goods-producing to service-providing employment. Most new jobs will be in areas that produce services. Figure 1.5 provides an overview of industies where jobs are expected to be created over the next decade. The fastest-growing industries will be health services, professional services, and education. The need for healthcare services will continue to increase as the population ages, and the demand for childcare will grow as more women enter the workforce.⁴⁰

Employment opportunity trends

Trends concerning the types of jobs that will be available in the future.

Organizations in growing industries often find it difficult to attract and retain enough high-quality workers. Good human resource management is particularly beneficial in these organizations because it helps them win the war for talent. Effective recruiting, hiring, and compensation are therefore expected to be particularly critical for high-growth occupations such as nurses, computer programmers, and teachers. The outlook is bright for occupations such as health aide and medical secretary, but it is rather bleak for production workers who make and assemble goods such as clothing.

Figure 1.5 Trends In Service Industry Jobs between 2010 and 2020.
Source: http://bls.gov/ooh/About/Projections-Overview.htm#educationandtraining.

TRENDS IN EDUCATION AND TRAINING

Education and training trends tell us something about what competencies people will need to perform jobs in the future and how organizations can better focus their recruitment efforts. Growth is expected for a number of jobs that require advanced education. Indeed, the growth of jobs requiring doctoral or professional degrees is expected to be above 20 percent, whereas the growth of jobs requiring a high school diploma or less are expected to be below 15 percent. Yet, even with higher growth in jobs that require more education, approximately 60 percent of new jobs will still require only a high school diploma or less.

Education and training trends

Trends concerning the knowledge and skills workers will need in the future.

Training sometimes comes on the job rather than from formal education, and some jobs in high-growth areas will require this sort of training. Healthcare aides, who perform tasks in areas such as physical therapy, home care, and social services, represent such jobs. Organizations that need employees with these skills must develop on-the-job training programs that will ensure that new employees learn the necessary knowledge and skills.

GLOBALIZATION TRENDS

Globalization trends influence human resource management at many companies. Globalization refers to a process in which companies move beyond their national borders to do business in other countries. For global companies, the entire world represents not only their marketplace but also their place of production. International trade is growing at nearly 10 percent per year, a sure indicator of globalization as an important force.⁴¹ Numerous large corporations have operations in countries scattered across the globe; even many small companies are purchasing goods and seeking sales from people living in more than one country.

Globalization trends

Trends concerning the process by which companies move from doing business within one country to doing business in many countries.

The globalization trend appears to be beneficial for organizations, as companies on average are more profitable when greater portions of their sales, assets, and employees are foreign.⁴² Nevertheless, having operations in more than one country does increase the complexity of human resource activities. Fairly compensating employees who work in foreign countries, for example, requires a great deal of expertise. Legal issues across various countries can also make it impossible to adopt standardized practices. Developing an international perspective for managing people is thus crucial as organizations continue to develop in multiple locations throughout the world.

 LEARNING OBJECTIVE 5 

How Do Strategic and Functional Perspectives Combine to Direct Human Resource Practices?

This chapter provides a broad introduction to human resource management, a field that focuses on people in organizations. Through good human resource practices, organizations can become more successful in a number of ways. The human resource management field has changed somewhat in recent years. Historically, it has emphasized functional skills, which represent day-to-day activities such as developing specific hiring methods, conducting pay surveys, and providing training. Today, however, it also requires strategic skills, which represent broader aspects of business and include activities such as planning and change management. Successful organizations require leaders and human resource professionals to pay attention to both strategic objectives and taking care of people.⁴³

Accordingly, this textbook integrates the functional and strategic perspectives. The overall outline of the book is shown in Figure 1.6. Specifically, chapters are built around a strategic framework that illustrates how human resource decisions and practices fit with organizational strategy. Most chapters also discuss a key functional area.

As shown in the figure, an organization's competitive business strategy, along with legal and safety issues, influences the organization's choice of a human resource strategy. In turn, the human resource strategy chosen shapes the specific activities the organization uses to secure and motivate employees. Activities aimed at securing employees include work design, recruiting, selection, and retention; these are discussed in Chapters 4 through 7. Activities that relate to motivating workers, which include performance management, career development, training, compensation, and labor relations, are discussed in Chapters 8 through 13. All these activities must be coordinated with each other as well as with the overall human resource strategy. The importance of coordination is discussed in Chapter 14.

Figure 1.6 Framework and Chapter Outline Illustrating How Human Resource Management Practice Links to Strategy.

Human resource management is an exciting field that provides critical benefits to organizations. Studying human resource management can help you develop knowledge and skills that will make you more effective throughout your career. Even if you don't become a human resource specialist, knowing why human resource specialists do what they do will enable you to work more cooperatively with them. Furthermore, knowing about methods for hiring and motivating others can provide you with important leadership skills. As you grow into leadership positions, you will be better equipped to meet the needs of others. Gaining knowledge about human resources will also make you a better strategic planner, enabling you to see how the needs of people and programs can be integrated to promote high performance. Taking a course in human resource management and reading this text can thus be important in determining your future success.

The contribution of human resources to success can vary across an organization's life cycle. In the entrepreneurial stage, survival equals success. Human resource management helps the organization find employees. Success during the communal stage is marked by expansion and innovation. Building a sense of belonging and satisfying the needs of employees are critical. During the formalization stage, success comes from developing clear and efficient procedures. Human resource management builds structured programs that provide consistent procedures. An organization must change and adapt in the elaboration stage. This change is facilitated by hiring and rewarding people who have new ideas and different ways of doing things.

The stakeholder perspective focuses on people who affect and are affected by an organization. Human resource practices protect the interests of employees, and organizations with good practices experience lower employee turnover. Skilled and motivated employees effectively meet the needs of customers. Organizations with more effective human resource management practices have higher profits. Better human resource management can also benefit society as a whole by protecting the environment and helping disadvantaged people.

Human resource departments provide organizations with a number of key functions. In the function of business management and strategy, the human resource department works with other parts of the organization to plan effective methods of delivering goods and services. The function of workforce planning and employment determines who will do what tasks and recruits and selects people into jobs. The function of human resource development focuses on measuring the contributions of employees and teaching them new knowledge and skills. In the function of compensation and benefits, the human resource department plays an important role in making sure that employees are paid fairly and receive the proper insurance benefits. A fifth function is employee and labor relations, which captures efforts to work with labor unions and to ensure fair treatment of workers. The final human resource function is risk management.

Human resource specialists add value to an organization through a number of different roles. In the functional expert role, they build systems and practices that help the organization better manage people. Human resource specialists contribute knowledge and skills that many other organizational members do not have. The employee advocate role provides an opportunity for meeting the needs of individual employees. Specialists filling this role listen to employee concerns and try to help them solve problems. The human resource perspective is integrated into other parts of the organization through the strategic partner role. The role of human capital developer facilitates learning and makes sure that employees in the organization continue to develop new knowledge and skills.

Performing the human resource roles requires competency in six different areas. One area is strategic positioning. Effective human resource specialists understand business issues such as finance, strategy, stakeholders, and competitive context. The second competency relates to becoming a credible activist who can successfully influence others. The third competency focuses on being a capability builder, which occurs when human resource specialists help the organization understand and leverage its unique strengths. The fourth competency emphasizes becoming a change champion. The fifth competency is most closely related to traditional HR skills and emphasizes the proper alignment of staffing and motivation processes. Being a technology proponent encompasses the final competency, which emphasizes the importance of embracing the use of new tools for managing information and connecting people.

The U.S. population will increase, though at a lower rate than in the past, and will get older. As the population ages, the demand for products and services purchased by older people, such as healthcare, will grow. Older workers will also make up a greater percentage of the workforce. The proportion of Hispanic workers and women in the workforce will increase as well. Human resource departments will thus benefit from finding ways to meet the needs of older people, women, and members of minority groups. Job growth is expected in the fields of healthcare and social assistance services. Globalization will require human resource departments to create processes that effectively manage people working in various foreign countries.

In order to be truly effective, human resource management must combine strategic planning with day-to-day functional activities. Specific areas where this combination can take place include improving methods for securing employees and then maximizing their performance.

Business management and strategy 14

Capability builder competencies 22

Change champion competencies 23

Communal stage 7

Compensation and benefits 15

Competencies 22

Credible activist competencies 22

Education and training trends 27

Elaboration stage 9

Employee advocate role 19

Employee and labor relations 16

Employee turnover 10

Employment opportunity trends 26

Entrepreneurial stage 7

Formalization stage 9

Functional expert role 19

Globalization trends 27

HR innovator and integrator competencies 24

Human capital developer role 21

Human resource development 14

Human resource management 4

Labor force trends 25

Organizational life cycle 6

Population trends 25

Risk management 16

Stakeholders 9

Strategic partner role 20

Strategic positioner competencies 22

Technology proponent competencies 24

Workforce planning and employment 14

1. Why might a newly formed organization be considered successful even if it is losing money?
2. Think of stores where you shop. Do employees of some stores seem happier than employees of other stores? What human resource practices might explain differences in employee happiness?
3. How can socially responsible organizations have high profits even though they spend money on things like environmental protection?
4. Why do managers and human resource specialists often do poorly on tests about the best ways of hiring and paying employees?
5. What are some specific things that can be done to teach company leaders how human resource management can contribute to organizational success?
6. Which human resource role do you think is most important? employee advocate? functional expert? strategic partner? human capital developer? Explain your answer.
7. Why do you think change is so difficult for organizations? What can human resource specialists do to make change easier?
8. What are some challenges you might face if you join an organization with a lot of older workers?
9. What are some things an organization could do to better meet the needs of women and members of minority groups?
10. How do you think the field of human resource management will change in the next 10 years?

Keeping employees happy at Zappos.com takes a little weirdness and a willingness to make work fun. You may not expect a woman whose footwear of choice is tennis shoes to work at one of the world's largest online shoe companies, but for senior HR manager Hollie Delaney, PHR, Zappos.com Inc. is a comfy fit.

Staff members in six HR functions report to Delaney at this intense, high-energy company where a worker might spring onto a table during a meeting and perform an impromptu break dance, and the computer log-on requires identifying the photo of a randomly selected employee. Conference rooms at corporate headquarters in Henderson, Nevada, are named after casinos in a nod to the famed Strip 6.7 miles away. In fact, the company plans to relocate to downtown Las Vegas sometime in 2012 or 2013. Job applicants at the 24/7 operation are interviewed in a room resembling a talk show set, and employees have been asked to submit creative ideas in various scenarios such as coming up with their own designs for Steve Madden creations. During annual Bald & Blue Day, CEO Tony Hsieh and other employees volunteer to shave their heads or dye their hair blue.

HR Magazine talked to Delaney about her career and how Zappos delivers happiness to its customers—and its 3,000 employees.

Question: Before Zappos, you worked in HR at a casino. What was that like?

It was big and impersonal, with thousands of employees and so many rules between unions and nonunions. There was a rule for everything—even that I had to wear pantyhose if I worked in HR. It made it difficult to be yourself. At the time, I thought HR was not for me.

Question: Describe your Zappos job interview.

During the phone interview, I described myself as “fun but a little weird.” The interviewer said “Wow, that's one of our core values.” I met everyone in HR and interviewed with 10 managers, including Tony. He was sitting in a cubicle alongside other employees; I didn't know he was the CEO at first. I started crying while telling him about my “miracle baby” and thought I'd blown the job interview.

Question: During on-boarding, Zappos offers new hires $3,000 to leave if they don't think they and the company are a good fit. Were you tempted?

It was $1,000 when I started, but no. Everybody here was so happy. They were so invested in this company. You could see it, and you could feel it. I was floored. I was skeptical, but I knew there had to be something special here for people to behave that way.

Question: How can you tell if a candidate is a good fit?

When people tour our company, they're kind of shellshocked. Some cannot get over the fact that people aren't in offices and it's so loud. Or, they want to work 9 to 5 and call it a day. Our environment is not the ideal place to meet those types of expectations. A state of consistent change, the open environment, and team aspect do not work for everyone. We move around a lot; you get to build relationships with people you haven't met before. You can be in senior management in four to seven years. In our call center, employees bid for different shifts every six months. You can wear pajamas or bunny ears to a meeting and be taken seriously—actually, they're more responsive to you. The recruiting team interviews candidates for culture fit and a willingness to change and to learn. They notice how applicants interact at lunch. Do they talk with others or just the person they think makes the hiring decision? Our shuttle drivers tell us what candidates say during the ride back to their hotels.

Question: When did you know you had embraced the culture?

It took me about a year to change from focusing on the 10 percent of employees who cause problems to the 90 percent who do not. I remember Tony wanted to let all employees give out one $50 monthly bonus to any employee they chose. My traditional HR response was “You're insane.” I thought people would give it to their friends, but some didn't even give it out at all: They were waiting for people to “wow” them the same way they were expected to wow customers. I didn't have any skepticism left by the time we started the Wishez Program in 2010. Employees' wishes have ranged from asking for homemade frosted sugar cookies to wanting to jump off the Stratosphere Hotel. One worker's wish for a car was granted when an employee bought a new car and gave him his old vehicle.

Question: I understand you wrestled with staying in HR at Zappos. What happened?

I'd been here nearly two years. People did not like HR when I started. It had the stigma of being the Debbie Downer Department, the rules enforcer. No one wants to be a part of that. HR was in a transitional period. We didn't have a Zappos identity. I felt like an outsider looking in. Headhunters started calling me. I wasn't sure what I wanted to do, where I stood with the company. I realized when I was talking to the life coach on staff that I had a huge opportunity to do something awesome at this awesome company. We started asking different managers what they needed from HR. An HR generalist started sitting in each department for eight months. Now, they include us in termination discussions. We are invited to teams' happy hours. We work with them to be part of the good things they do and not just the “You're getting written up” conversations. Zappos' ZCON team, which moved to HR from merchandising in January and handles areas such as reception, shuttle services, travel, and concierge services, is bringing a new face to HR. I'm having fun now. I could never go back to a traditional HR job. Here, our job is to educate employees. I'm more of a teacher, not a policeman. Our job is to protect the culture. If HR says “no,” it doesn't mean no. You have to know all the rules of HR but be able to throw them out. If it's a rule, is it a good rule?

QUESTIONS

1. Does Zappos sound like a place you would want to work? Why?
2. Do you think it makes sense to offer new employees a $3,000 incentive to quit?
3. How do you think the role of HR might change as Zappos matures as a company?
4. How does the role of HR at Zappos differ from typical companies such as the casinos referenced in the article?

Source: Originally published as “Delivering HR at Zappos” by Kathy Guchiek c 2011, Society for Human Resource Management, Alexandria, VA. Used with permission. All rights reserved.

Curt's Cowboy Corner is a chain of 15 stores that sells cowboy boots and western clothing. Curt opened the first store 10 years ago in a small Rocky Mountain town and quickly gained a following of loyal customers. Based on input from customers and friends, Curt decided to expand his business and began opening new stores in nearby towns. He plans to open 10 more stores in the next few years.

Each of Curt's stores has a manager, three full-time sales representatives, and five or six part-time employees. In the early days, Curt worked closely with each store manager to plan day-to-day operations, helping to make all hiring decisions. He and a secretary also spent many days each month working on payroll. Lately, however, Curt has found that he does not have enough time to interview job candidates and handle several other of his customary tasks. He thinks this might be one reason some of the newer employees aren't working out so well. In addition, last month, he was two days late completing the payroll, thereby creating numerous problems for employees. Curt knows that he needs to do a better job of delegating tasks. Another of his concerns focuses on the potential liabilities of having a growing workforce. One employee recently told him that she felt uncomfortable about some sexual comments her boss had made to her. Curt spent several hours talking to both the employee and her boss, and although he feels pretty good about how he handled the situation, he acknowledges that he does not have the requisite knowledge or skill to resolve such matters.

Curt's brother, who owns a number of automobile dealerships in a distant city, has encouraged Curt to hire a human resource professional. But Curt has been reluctant to hire staff members who do not spend time selling in stores. His philosophy has always been that staff members who don't make sales are an expense without much return. At the same time Curt knows that he must do something or else things will get worse. If he is able to grow the business as he plans, he will soon have nearly 100 full-time employees.

QUESTIONS

1. What are some specific tasks that a human resource specialist could do for Curt?
2. Are there any financial benefits that might come from hiring a human resource specialist?
3. How might labor trends affect Curt's ability to continue expanding his stores?
4. What benefits and problems might result if Curt hires a human resource specialist to provide support to all stores? Would it be better to simply delegate all human resource activities to each store manager?

The Society for Human Resource Management (SHRM) is a professional association devoted to human resource management. Visit the SHRM website at shrm.org and learn about the human resources field.

Look for information related to the following questions:

1. How many members are there in SHRM?
2. What types of careers are available in the field of human resource management?
3. What is the SHRM Code of Ethics, and how does it guide the efforts of human resource specialists?
4. What kind of resources does SHRM offer to help people learn new skills?
5. What are chapter/member groups? Who can join?
6. What are some current news issues that relate to human resource management?

Access the companion website to test your knowledge by completing a Mega Manufacturing role-playing exercise.

In this exercise, you're an HR consultant and will be assisting a small but established company (Mega Manufacturing) who will be going through significant expansion due to a new government contract. With the growth, the owner knows that it will be a good idea to add a dedicated HR person to his management team and wants you to help. As he's talking about the beliefs and vision of the company, you consider the organizational life cycle model, core HR functions, and critical HR roles. He then asks for your suggestions, and you realize that this assignment may be a great opportunity to align this new HR department with the strategy of the company.

ENDNOTES

1. Michael Riketta, “The Causal Relation Between Job Attitudes and Performance: A Meta-Analysis of Panel Studies,” Journal of Applied Psychology 93 (2008): 472–481; Ingrid Smithey Fulmer, Barry Gerhart, and Kimberly S. Scott, “Are the 100 Best Better? An Empirical Investigation of the Relationship Between Being a ‘Great Place to Work’ and Firm Performance,” Personnel Psychology 56 (2003): 965–993; Benjamin Schneider and David E. Bowen, “Employee and Customer Perceptions of Service in Banks: Replication and Extension,” Journal of Applied Psychology 70 (1985): 423–433.

2. John A. Byrne, “Lessons from Our Customer Champions,” Fast Company 87 (October 2004):16; “Trader Joe's Targets ‘Educated’ Buyer,” Seattle Post-Intelligencer, August 30, 2003; Stan Abraham, “Dan Bane, CEO of Trader Joe's,” Strategy & Leadership 30, no. 6 (2002): 30–32.

3. Irwin Speitzer, “The Grocery Chain That Shouldn't Be,” Fast Company 79 (February 2004): 31. Abraham, “Dan Bane,” 30–32.

4. Jena McGregor, “Leading Listener: Trader Joe's,” Fast Company 87 (October 2004): 82–83; Len Lewis, excerpts from Trader Joe's Adventure, (Chicago: Dearborn Trade Publishing, 2005). Reported in “Fostering a Loyal Work force at Trader Joe's,” Workforce Management Online, June 2005, www.workfocre.com/archive/feature/24/06/51/index.php.

5. http://company.monster.com/trader; Lewis, Trader Joe's Adventure.

6. Lewis, Trader Joe's Adventure; Beth Kowitt, “Inside the Secret World of Trader Joe's,” Fortune International 162, no. 4 (2010): 32–39.

7. Larry Armstrong, “Trader Joe's: The Trendy American Cousin,” BusinessWeek, 3880 (April 26, 2004): 62; Kowitt, “Inside the Secret World of Trader Joe's,” 32–39.

8. http://www.traderjoes.com/about/customer-updates-responses.asp?i=60

9. Robert E. Quinn and Kim Cameron, “Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33–51; I. M. Jawahar and Gary L. McLaughlin, “Toward a Descriptive Stakeholder Theory: An Organizational Life Cycle Approach,” Academy of Management Review 26 (2001): 397–414.

10. BNA, Inc. HR Department Benchmarks and Analysis™: (Washington, DC: Bureau of National Affairs, 2004).

11. Theresa M. Welbourne and Alice O. Andrews, “Predicting the Performance of Initial Public Offerings: Should Human Resource Management Be in the Equation?” Academy of Management Journal 39 (1996): 891–919.

12. Speitzer, “The Grocery Chain That Shouldn't Be,” 31.

13. Jake G. Messersmith, Pankaj C. Patel, David P. Lepak, and Julian S. Gould-Williams, “Unlocking the Black Box: Exploring the Link Between High-Performance Work Systems and Performance,” Journal of Applied Psychology 96 (2011): 1105–1118.

14. Mark A. Huselid, “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance,” Academy of Management Journal 38 (1995): 635–672.

15. Jeremy Smerd, “IBM: Optimas Award Winner for Financial Impact,” Workforce Management, October 20, 2008, 22.

16. Dave Ulrich, Wayne Brockbank, Arthur K. Yeung, and Dale G. Lake, “Human Resource Competencies: An Empirical Assessment,” Human Resource Management 34 (1995): 473–495.

17. Patrick J. Keger, “Crouse Hospital: Optimas Award for General Excellence,” Workforce Management, October 20, 2008, 16–17; http://www.crouse.org/careers/.

18. R. Edward Freeman, Strategic Management: A Stakeholder Perspective (Marshfield, MA: Pittman Publishing, 1984).

19. Max B. E. Clarkson, “A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance,” Academy of Management Review 20 (1995): 92–117.

20. Huselid, “The Impact of Human Resource Management Practices,” 635–672; Rosemary Batt, “Managing Customer Services: Human Resource Practices, Quit Rates, and Sales Growth,” Academy of Management Journal 45, no. 3 (2002): 587–597.

21. Peter W. Hom and Angelo J. Kinicki, “Toward a Greater Understanding of How Dissatisfaction Drives Employee Turnover,” Academy of Management Journal 44 (2001): 975–987; Rodger W. Griffeth, Peter W. Hom, and Stefan Gaertner, “A Meta-Analysis of Antecedents and Correlates of Employee Turnover: Update, Moderator Tests, and Research Implications for the Next Millennium,” Journal of Management 26 (2000): 463–488. Schneider and Bowen, “Employee and Customer Perceptions,” 423–433.

22. Huselid, “The Impact of Human Resource Management Practices,” 635–672.

23. Stephanie C. Payne and Sheila Simsarian Webber, “Effects of Service Provider Attitudes and Employment Status on Citizenship Behaviors and Customers' Attitudes and Loyalty Behavior,” Journal of Applied Psychology 91 (2006): 365–378.

24. Batt, “Managing Customer Services,” 587–597.

25. Mahesh Subramony, Nicole Krause, Jacqueline Norton, and Gary N. Burns, “The Relationship between Human Resource Investments and Organizational Performance: A Firm-Level Examination of Equilibrium Theory,” Journal of Applied Psychology 93 (2008): 778–788.

26. Mark Orlitzky, Frank L. Schmidt, and Sara L Rynes, “Corporate Social and Financial Performance: A MetaAnalysis,” Organization Studies 24 (2003): 403–441; W. Gary Simpson and Theodore Kohers, “The Link Between Corporate Social and Financial Performance: Evidence from the Banking Industry,” Journal of Business Ethics 35 (2002): 97–109; Bernadette M. Ruf, Krishnamurty Muralidhar, Robert M. Brown, Jay J. Janney, and Karen Paul, “An Empirical Investigation Between Change in Corporate Social Performance and Financial Performance: A Stakeholder Theory Perspective,” Journal of Business Ethics 32 (2001): 143–156.

27. Pedro Lorca and Julita Garcia-Biez, “The Relation between Firm Survival and the Achievement of Balance among Its Stakeholders: An Analysis,” International Journal of Management 21 (2004): 93–99.

28. Ingrid Smithey Fulmer, Barry Gerhart, and Kimberly S. Scott, “Are the 100 Best Better? An Empirical Investigation of the Relationship Between Being a ‘Great Place to Work’ and Firm Performance,” Personnel Psychology 56 (2003): 965–993.

29. http://www.hrci.org/uploadedfiles/Content/Resource_Library/Certification_Handbooks_and_Other_Publications/PHR-SPHR%20BOK.pdf

30. Judy Greenwald, “Multicountry Benefits Require Delicate Touch,” Business Insurance 40, no. 50. (2006): 12–13.

31. Sara L. Rynes, Amy E. Colbert, and Kenneth G. Brown, “HR Professionals' Beliefs about Human Resource Practices: Correspondence between Research and Practice,” Human Resource Management 41 (2002): 149–174.

32. Sara L. Rynes, Tamara L. Giluk, and Kenneth G. Brown, “The Very Separate Worlds of Academic and Practitioner Periodicals in Human Resource Management: Implications for Evidence-Based Management,” Academy of Management Journal 50 (2007): 987–1008.

33. Dave Ulrich and Wayne Brockbank, The HR Value Proposition (Boston: Harvard Business Press, 2005).

34. http://www.unlv.edu/main/highlights.html.

35. Occupational Information Network, O*net Online see http://online.onetcenter.org/link/summary/11–3040.00

36. Ulrich and Brockbank, The HR Value Proposition.

37. Susan Quinn, “Putting the Human Back into Human Resources,” Public Management 80, no. 9 (1998): 23–28.

38. Dave Ulrich, Jon Younger, Wayne Brockbank, and Mike Ulrich, HR from the Outside In: Six Competencies for the Future of Human Resources (New York: McGraw Hill, 2012).

39. Statistics taken from U.S. Department of Labor Bureau of Labor Statistics website, http://bls.gov/ooh/About/Projections-Overview.htm.

40. Ibid.

41. A. T. Kearney, Inc. “The Globalization Index,” Foreign Policy 157 (2006): 75–81.

42. Sally Sledge, “Globalization and Performance in the New Millennium: A Look at Firms from Developed and Developing Nations,” Journal of American Academy of Business 10, no. 2 (2007): 51–57.

43. Mathis Schulte, Cheri Ostroff, Svetlana Shmulyian, and Angelo Kinicki, “Organizational Climate Configurations: Relationships to Collective Attitudes, Customer Satisfaction, and Financial Performance,” Journal of Applied Psychology 94 (2009): 618–634.