Sept 5, 2002

1. Sept 5, 2002 Meeting Human Resource Challenges

2. Learning Objectives for Chapter 1 • Explain how a firm’s human resources influence its performance. • Describe how firms can use HR initiatives to cope with workplace changes, business and societal trends • Identify HR strategies that fit corporate and business unit strategies. • Formulate and implement HR strategies that can help the firm achieve a sustained competitive advantage. • Distinguish between the role of the HR department and the role of the firm’s managers in human resources management.

3. Critical Types of Capital Contributing to Firm Success • Financial capital (money, plants, and equipment) • Human capital (abilities and skills) • Intellectual capital (ideas and knowledge) • Social capital (resources from relationships) • Human Resource management contributes to the development and effective utilization of three of the four types of capital

4. Societal Trends, Work Place Changes, and Human Resource Challenges Societal trends • Rapid Change • Globalization • Rise of Internet • Legislation • Hyper competitiveness • Rise of the service sector Work place changes • Competitive Position: Cost, • Quality, Distinctive Capabilities • Decentralization • Downsizing • Organizational Restructuring • Self-Managed Work Teams • Small Businesses • Organizational Culture • Technology • Outsourcing Human Resource Challenges • Ethical Dilemmas and Social Responsibility • Staffing, Development, and Productivity • Job Design and Empowerment • Brain Drain and Talent Shortage • Safety Net and Job Insecurity

5. Human Resource Challenges in HK and China Hong Kong • Declining growth, a stagnant economy • Primarily service economy • Influx of talents from mainland • Unclear competitive edge in global market • Chinese mainland • Rapidly growth, especially private sector • Competitive skilled & professional labor markets • Evolving business and labor laws • WTO and increasing competitiveness • Business ethics

6. A Hong Kong Company: Computime • 28 years old • 30% annual sales growth in past 3 years • 5% profit margin • Production plant in Shenzhen • Administrative and HQ offices in HK • 7 divisions – 4 functions and 3 business units • About 500 staff employees and 3000 production workers • ISO objective but defective products due to rush

7. Computime (VMV) Vision 目標 透過忠誠及恪守商業道德的營商手法，建立持久的伙伴關係，使我們能晉身為設計、製造及分銷電子工業世界內的全球領導者。 To become a global leader in electronics supply chain services through establishing long-term partnerships based on integrity and ethical business practices. Mission 使命 透過全體員工的合作，組成一支具應變能力、富靈活性及勇於創新的團隊，並以敢於承擔和全身奉獻的精神，務求令我們的產品能超越顧客在品質、成本、物流和服務上的要求。 We act as one responsive, flexible and innovative team with full commitment and dedication to exceed our customers’ expectations in quality, cost, delivery and service. Value 信念 務求以客為本 實現零的缺點 追求不斷創新 確立團隊精神 堅守商業道德 承擔社會責任 Customer First Zero Defect Innovations One Team Business Ethics Social Responsibility

8. Discussion Questions • What are the HR challenges facing Computime? • What information do we need to identify the HRM challenges of Computime? • How can Computime use HRM to stay competitive and sustain its rapid growth?

9. An HRM Framework for analyzing HRM challenges of a company Business Strategies Environment Consistency Fit Fit Improved Firm Performance HR Strategies And choices Consistency Consistency Fit Fit Organizational Characteristics Organizational Capabilities Consistency

10. Influence of Business Strategies on HRM Common Organizational Characteristics Business Strategy HR Strategies • Explicit job descriptions • Detailed work planning • Emphasis on technical • qualifications and skills • Emphasis on job-specific • training • Emphasis on job-based pay • Sustained capital investment • Tight cost control • Low-cost distribution system • Structured organization • and responsibilities Overall cost leadership • Broad job classes • Loose work planning • External recruitment • Individual-based pay • performance appraisal as development tool • Product engineering • Strong capability in basic research • Reputation for quality or technological leadership Differ- entiation • Combination of HR • strategies above. Focus • Combination of business • strategies above.

11. The Importance of Organizational Characteristics on HRM Overall management philosophy Structure Culture

12. Influence of Environment on HRM Environmental Dimension Low High Degree of Uncertainty Volatility • Detailed work planning • Job-specific training • Fixed pay • High dependence on superior • Control emphasis • Efficient production • Job-specific training • Fixed pay • Loose work planning • Generic training • Variable pay • Multiple inputs for appraisals • Flexibility • Innovation • Generic training • Variable pay

13. Influence Environment on HRM (cont.) Environmental Dimension Low High Magnitude of Change Complexity • Explicit job descriptions • Formal hiring and socialization of new employees • “make” skills • Uniform appraisal procedures • Control emphasis • Internal recruitment • Centralized pay decisions • High dependence on superior • Broad job classes • Informal hiring and socialization of new employees • “buy” skills • Customized appraisals • Flexibility • External recruitment • Decentralized pay decisions • Multiple inputs for appraisals

14. Importance of Organizational Capabilities on HRM Leadership – at all levels Technology – process and product Management Systems – information and control Quality – reliability and timeliness Distinctive competences?

15. Human Resource Strategies and Choices • Determining HR needs– HR planning and job analysis (chapter 2) • Importing HR – recruiting and selection (chapter 5) • Preparing HR – socialization and training (chapter 8) • Compensating HR – setting compensation (chapter 10) • Evaluating HR – appraising and managing performance (chapter 7, 14) • Incentivise HR – rewarding performance (chapter 11) • Appreciating HR differences – managing diversity (chapter 4) • Developing HR – career development (chapter 9) • Protecting HR – designing and administering benefits (12) • Positive HR relations – developing employee relations (chapter 13) • HR in global companies – international HRM (chapter 17) • Exporting HR – separation, downsizing and outplacement (chapter 6)

16. Questions to consider • How much responsibility does an organization have to shield its employees from the effects of rapid changes in the environment? • Does an employer have an ethical responsibility to train employees who lack basic literary and numerical skills? Why yes or why no? • In today’s increasing chaotic business and economic environment, does an employer have a responsibility to help employees prepare for these changes that may affect their jobs and careers? • All civil servants in HK will face a pay reduction of 1 to 5% this October. Is this fair to the employees? Why yes or why no? • Some European countries have laws barring organizations form using computer technology that invades employee privacy. Do you believe that similar laws should be developed in Hong Kong? Why yes or no?

17. HRM and the Bottom Line • Research has shown consistently a clear link between progressive HR practices (e.g., High involvement HR systems) and • Sales • Productivity • Retention

18. An Exceptional Company: Southwest Airline • 31 years old • Post 9/11, SWA had no layoff, posted profits and did not reduce flights • What account for the success of SWA? • Can or how can SWA sustain its success? • Can other companies imitate SWA’s approach to HRM? If not, why not? • What can Computime learn from SWA?