CHAPTER 15: HUMAN RESOURCE MANAGEMENT

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CHAPTER 3: THE WORLD MARKETPLACE

BUILDING A TOP-QUALITY WORKFORCE

CHAPTER 15: Human Resource Management

HUMAN RESOURCE MANAGEMENT: BRINGING BUSINESS TO LIFE

Human Resource Management – maximizing the effectiveness of the workforce.

Recruiting world-class talent

Promoting career development

Boosting organizational effectiveness

HUMAN RESOURCE MANAGEMENT CHALLENGES: MAJOR HURDLES

Older Workers Younger Workers Women Workers Work-Life Balance Wage Gap Outsourcing Lawsuits

BEST-PAID EXECUTIVES OF PUBLIC COMPANIES DURING THE PAST DECADE

Company NameTotal compensation

( in millions)

Oracle Lawrence J. Ellison $1,835.70

Interactive Corp/Expedia.Com Barry Diller $1,142.90

Occidental Petroleum Ray R. Irani $857.10

Apple Steve Jobs $748.80

Capital One Financial Richard D. Fairbank $568.50

Countrywide Financial News Angelo R. Mozilo $528.60

Nabors Industries Eugene M. Isenberg $518.00

Yahoo Terry S. Semel $489.60

Cendant Henry R. Silverman $481.20

Unitedhealth Group William W. McGuire $469.30

Lehman Brothers Holdings Richard S. Fuld, Jr. $456.70

Dell Michael S. Dell $453.80

NVR Dwight C. Schar $451.50

United Technologies George David $447.80

Qualcomm Irwin Mark Jacobs $436.80

Fidelity National Financial William P. Foley, II $430.40

Cisco Systems John T. Chambers $393.20

Forest Laboratories Howard Solomon $385.50

Citigroup Sanford I. Weill $360.90

Starbucks Howard D. Schultz $358.40

Colgate-Palmolive Reuben Mark $357.60

XTO Energy Bob R. Simpson $350.60

Target Robert J. Ulrich $342.30

Freeport-Mcmoran Cop&Gold James R. Moffett $332.00

Chesapeake Energy Aubrey K. McClendon $331.60

Wall Street Journal July 27, 2010

BEST-PAID EXECUTIVES OF PUBLIC COMPANIES DURING THE PAST DECADE

HUMAN RESOURCE PLANNING: DRAWING THE MAP

ANALYZING HUMAN ASSETS

Job Analysis What skills does the workforce already

have? What skills do they need?

Job Specifications A master’s degree in business

A minimum of three years business teaching experience

Excellent interpersonal and communication skills

Job Description Teach 5 business classes

Consult with students for 5 hours

Participate in college governance

RECRUITMENT: FINDING THE RIGHT PEOPLE

Internal Recruiting – transferring or promoting employees within the company. Boosts Morale Proven Track Record Lower Recruiting Costs

External Recruiting – looking for employees outside the firm. Recruiting Resources:

• Employment Websites

• Newspaper Ads

• Trade Associations

• Employment Centers

• Colleges/Universities

SELECTION: MAKING THE RIGHT CHOICE

STRUCTURED INTERVIEW

Develop a list of questions prior to interview Focus questions on behaviors and experiences

Describe a time when you…

What would you do if…

If you realized that a co-worker…

JOB OFFERS & CONTINGENT WORKERS

It is important for managers to set a probationary period with new hires Typically 3 to 6 months Employees will become permanent if

everything works out Companies with fluctuating employment

needs may opt to hire contingent workers Temporary Full-Time Independent Contractors On-call Workers

TRAINING AND DEVELOPMENT: HONING THE COMPETITIVE EDGE

Increase innovation Increase technology

adoption Increase productivity Increase motivation Decrease liability

ORIENTATION

Effective orientations are the first step in the development process

Introduce employees to the company culture

Strong orientation programs reduce employee turnover

ON-THE-JOB TRAINING

On-the-Job Training – popular and low cost -

employees simply begin working under the

guidance of experienced employees.

Apprenticeships – training programs where beginners

serve as an assistant prior to working.

OTHER TRAINING OPTIONS

Off-the-Job Training – training that takes place away from the job setting.

Companies employ a variety of training strategies:• Vestibule Training• Classroom• Job Simulations

Management Development – programs to assist current and potential executives develop leadership skills.

Computer-Based Training – standardized presentations

using video, audio and broadband technology.

EVALUATION: ASSESSING EMPLOYEE PERFORMANCE

Performance Appraisals Formal feedback Compare actual to expected results May impact compensations, incentives,

promotions, transfers and terminations

HR should create an evaluation tool that ties into the company’s objectives

Evaluation should be a feedback PROCESS Managers should be trained Employees should be informed of the process

COMPENSATION: SHOW ME THE MONEY

Compensation – the combination of pay and benefits.

Wages – pay in exchange for the number of

hours or days that an employee

works.

Salary – the pay that employees receive over a fixed period.

Benefits – noncash

compensation like health care and

vacation.

Compensation is based on:

Competition Contribution Ability to Pay Cost of Living Legislation

PERFORMANCE PAY OPTIONS

Commission

Bonuses

Profit Sharing

Stock Options

Pay for KnowledgeIBM Distinguished EngineerClient Technical AdvisorMember, IBM Academy of Technology

BENEFITS: FROM BIRTHDAY CAKES TO DEATH BENEFITS

• Paid Vacation & Holidays

• Paid Sick Days• Health Insurance• Retirement Programs• Product Discounts• Tuition Reimbursement

• Social Security• Medicare Contributions• Unemployment

Payments• Workers’ Compensation• Federal Family and

Medical Leave

Legally Mandated Benefits Optional Benefits

CAFETERIA-STYLE BENEFITS

Providing employees a set dollar amount per person that they spend on company benefits.

Allows employees to tailor their benefits to their individual needs.

EMPLOYEE HEALTH AND WELLNESS PROGRAMS

““

According to the World Health Organization, every dollar spent on wellness programs

saves three dollars in medical costs. Workplace fitness programs reduce short-

term leave by up to 32% and increase productivity by up to 52%.

(Source: Share the bottom-line benefits by Sid Kirchheimer, Time magazine, February 14, 2004)

FLEXIBLE SCHEDULING

SEPARATION: BREAKING UP IS HARD TO DO

Employees will leave for a variety of reasons Fired Laid Off Transfers Career Changes Personal Reasons

Employers should proceed carefully to avoid wrongful termination lawsuits

Business without Borders

Chapter 3: THE WORLD MARKETPLACE

With technology and telecommunications

booming, and trade barriers falling, the economic

boundaries between nations have begun to blur.

AN UNPRECEDENTED OPPORTUNITY

WORLDWIDE ECONOMIC GROWTH

Nation Population Per Capita GDP (U.S.

Dollars)

GDP Growth Rates

China 1,333,671,015 $8,400 +9.4%

India 1,189,172,906 $3,700 +7.8%

European Union

492,387,344 $34,000 +1.6%

United States 313,232,044 $48,100 +1.5%

Indonesia 245,613,043 $4,700 +6.4%

Brazil 203,429,773 $11,600 +2.8%

Recent forecast of the world ranking of the biggest economies in the year 2050

BRIC countries- Brazil, Russia, India and China

The four original BRIC countries comprise more than 2.8 billion people or 40 percent of the world’s population, cover more than a quarter of the world’s land area over three continents, and account for more than 25 percent of global GDP.

KEY REASONS FOR INTERNATIONAL TRADE

Access to Factors of Production

Reduced Economic Risk

Innovation

Lithium mine production (2011) and reserves in tonnes

Country Production Reserves

 Brazil 160 64,000

 Zimbabwe 470 23,000

 Canada 480 180,000

 Portugal 820 10,000

 Argentina 3,200 850,000

 People's Republic of China 5,200 3,500,000

 Australia 9,260 970,000

 Chile 12,600 7,500,000

World total 34,000 13,000,000

GLOBAL TRADE: TAKING MEASURE

Balance of Trade Trade Deficit Trade Surplus

Balance of Payments Balance of Payments Deficit Balance of Payments Surplus

Exchange Rates Countertrade

United States Balance of Trade

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2011-

46341.0                     

2010-

34840.0-

39912.0-

39699.0-

40762.0-

42187.0-

50130.0-

42898.0-

46759.0-

44455.0-

38278.0-

38316.0-

40264.0

2009-

36067.0-

26362.0-

28009.0-

28445.0-

24855.0-

27139.0-

33086.0-

31072.0-

35164.0-

32302.0-

35273.0-

37132.0

2008-

59923.0-

62655.0-

58898.0-

62973.0-

61175.0-

61295.0-

66401.0-

61449.0-

59770.0-

59442.0-

43804.0-41016.0

The balance of trade is the difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap.

U.S. Balance of Payments (International Transactions)

Current Account Balance:1st quarter 2009: -$101.5 billion 4th quarter 2008: -$154.9 billion 3rd quarter 2008: -$174.1 billion 2nd quarter 2008: -$180.9 billion 1st quarter 2008: -$175.6 billion

EXCHANGE RATES: WHO BENEFITS?

STRONG DOLLAR VS EURO:(Example: $1.00 = 1.20 euros)

• U.S. travelers to Europe Dollar buys more in Europe• American firms with European operations Operating cost are lower• European exporters European products costs less in

U.S.

WEAK DOLLAR VS. EURO:(Example: $1.00 = .60 euros)

• European travelers to U.S. Euro buys more in America• European firms with American operations Operating costs are lower• American exporters American products cost less in

Europe

American Dollar Exchange RateCountry

Currency

ISO 03/06/09 03/05/09 Change

AUSTRALIA Dollar AUD 1.561302 1.560571 +0.0468%

BELGIUM Franc BEF 31.83601 32.10681 -0.8434%

CANADA Dollar CAD 1.286062 1.287082 -0.0792%

DENMARK Krone DKK 5.887687 5.937769 -0.8434%

EUROPEAN UNION Euro EUR 0.789194 0.795907 -0.8434%

FINLAND Markka FIM 4.692334 4.732248 -0.8434%

FRANCE Franc FRF 5.176773 5.220808 -0.8435%

GERMANY Mark DEM 1.543529 1.556659 -0.8435%

HONG KONG Dollar HKD 7.755508 7.758287 -0.0358%

ISRAEL Sheqel ILS 4.241282 4.234666 +0.1562%

ITALY Lira ITL 1528.093 1541.091 -0.8434%

JAPAN Yen JPY 97.89695 98.37888 -0.4899%

KOREA (SOUTH) Won KRW 1549.853 1568.522 -1.1902%

MEXICO Peso MXN 15.26503 15.31762 -0.3433%

NETHERLANDS Guilder NLG 1.739155 1.753948 -0.8434%

NEW ZEALAND Dollar NZD 1.985100 1.994357 -0.4642%

NORWAY Krone NOK 7.064156 7.098946 -0.4901%

RUSSIA Ruble RUB 35.73181 35.86129 -0.3611%

SAUDI ARABIA Riyal SAR 3.755190 3.755172 +0.0005%

SINGAPORE Dollar SGD 1.545703 1.554073 -0.5386%

SOUTH AFRICA Rand ZAR 10.42447 10.65067 -2.1238%

SPAIN Peseta ESP 131.3108 132.4278 -0.8435%

SWEDEN Krona SEK 9.201466 9.291274 -0.9666%

SWITZERLAND Franc CHF 1.152777 1.172858 -1.7121%

TAIWAN Dollar TWD 34.67172 34.94653 -0.7864%

UNITED KINGDOM Pound GBP 0.708837 0.708185 +0.0921%

in USD

GLOBAL MARKET DEVELOPMENT OPTIONS

Lower Risk Higher

Risk

Less Control More

Control

STRATEGIES FOR FINDING GLOBAL SUPPLIERS

Foreign Outsourcing/Contract Manufacturing

• Contracting with foreign suppliers to produce products, usually at a fraction of the domestic cost.

Importing • Buying products that have been produced or grown in foreign nations.

Exporting • Producing products domestically and selling them abroad

STRATEGIES FOR REACHING GLOBAL MARKETS

Licensing Authority given by domestic firm for rights

to produce/market its product and use trademarks/patents.

Franchising Providing the right to produce and market

products under its operating requirements. Direct Investment

Firms acquire businesses or develop new facilities in foreign countries.

Joint Ventures Two or more companies joining forces to

pursue specific opportunities (Partnership or Strategic Alliances

STRATEGIES FOR REACHING GLOBAL MARKETS

45

Foreign acquisition

allows companies to

gain quick access into

new markets

Foreign acquisition

allows companies to

gain quick access into

new markets

In the wake of the Great Recession…

Italian carmaker Fiat acquired struggling

U.S. auto giant, Chrysler to leverage the American market

MULTINATIONAL FIRMS

Shell Oil

Michelin Tires

Jaguar Automobiles

Nokia Cell Phones

Nestle Quick

Netherlands/England

France

India

Finland

Switzerland

Columbia Records Japan/Germany

Do you know where the firm that ultimately owns each brand is headquartered?

BARRIERS TO INTERNATIONAL TRADE

Sociocultural Differences

Economic Differences

Political & Legal Differences

SOCIAL/CULTURAL DIFFERENCES

Nonverbal Communication Forms of Address Attitudes toward

punctuality Religious Celebrations Business Practice/Gifts

Think beyond the obvious differences.

Social/cultural differences can rapidly

undermine business relationships.

ECONOMIC DIFFERENCES

Can you profitably provide your product

or service to meet the needs of the

market?

• Exchange Rates• Population• Per Capita Income• Infrastructure

TransportationCommunicationEnergy Finance

Can you profitably provide your product or

service to meet the needs of the market?

POLITICAL & LEGAL DIFFERENCES

Political regimes differ around the world Legal Differences

Lack of Enforcement Bribery

Political Climate Stability Violence

Piracy and intellectual property is a problem in several foreign nations

PROTECTIONISM

Reasons to Create Trade Restrictions

Reasons to Eliminate Trade Restrictions

Protect domestic industry Reduce prices and increase choices for consumers

Protect domestic jobs in key industries

Increase domestic jobs

Retaliate against countries who have engaged in unfair trade

practices

Build exporting opportunities

Pressure other countries Use world resources more efficiently

Reasons to Create Trade Restrictions

Reasons to Eliminate Trade Restrictions

TRADE RESTRICTIONS Tariffs

Taxes levied against imports Quotas

Limitations on the amount of specific products that may be imported from certain countries

Voluntary Export Restrictions Limitations on the amount of specific

products that one nation will export to another

Embargo Total ban on international trade of a certain

item or a total halt in trade with a specific nation

GLOBAL EMPLOYMENT

““

A new study suggests that 2.3 million service jobs will have moved from the

United States to other countries by 2008, up from 900,000 as of 2003.

REVERSE BRAIN DRAIN

Many talented immigrants are moving home to take advantage of new economic opportunities.

US companies can cut costs by sourcing employees from overseas.

But is America losing potential innovators such as Sergey Brin, founder of Google?

FREE TRADE: THE MOVEMENT GAINS MOMENTUM

There has been a global move toward free trade – the unrestricted movement of good and services across

borders.

GATT AND WORLD TRADE ORGANIZATION (WTO)

General Agreement on Tariffs & Trade (GATT) Established in 1948 Now encompasses 125 nations Slashed tariffs by about 30%

Promote International Trade Settle Trade Disputes

FREE TRADE

The World Bank 185 Member Countries Reduce World Poverty in Developing World Influence Global Economy Provide Financial Assistance

Low interest loans The International Monetary Fund

Support Stable Exchange Rates Facilitate International Payments Adopt Economic Policies Promote Trade Lend money to member nations

TRADING BLOCS/COMMON MARKETS

The North American Free Trade Agreement (NAFTA) The largest trading bloc US, Canada, Mexico

European Union (EU) The largest common market 27 nations; combined GDP

$15Trillion Goal is to bolster Europe’s

trade position

Groups of Countries promoting the free flow of goods and services