Human Resource Management

Chapter 1

Management of Human Capital in Organizations

• Human Capital– The collective value of the capabilities, knowledge,

skills, life experiences, and motivation of an organizational workforce.

– Also known as intellectual capital.• Core Competency– A unique capability that creates high value and

differentiates an organization from its competition.– HR competencies: a source of competitive advantage.

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Human Resource Management

• Meaning– The policies and practices involved in carrying out the

“people” or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising.

– The design of formal systems in an organization to ensure effective and efficient use of human talent to accomplish organizational goals.

– The policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

• Meaning– The policies, practices, and systems that influence

employees’ behavior, attitudes, and performance.– HRM is viewed as a means of moving people along to

achieve organisational goals through staffing, performance, change management and administrative objectives.

• HR creates value by engaging in activities that produce the employee behaviors that the company needs to achieve its strategic goals.

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Goals of HRM• Attract, retain, and motivate employees• Direct employee efforts toward goals of

organization• Assist in the development of the strategic

direction of the organization• Provide the organization a source of

competitive advantage• Help ensure legal compliance

HR Activities

• Strategic HR Management• Equal Employment Opportunity• Staffing• HR Development• Compensation and Benefits• Health, Safety, and Security• Employee and Labor Relations

HR Activities

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HRM in Large v. Small Firms

Large• Designated HR professionals and HR department

• Formal HR policies; HR manual; job descriptions

Small• HR duties combined with other administrative functions (e.g.

accounting) or performed by line managers.• Less formal HR policies, less likely to have HR manual, job

descriptions

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HR Functions

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1

Human Resource

Management

Human Resource

Development

Com

pens

ation

Staffing

Employee and Labor

Relations

Safety and Health

Human Resource Management Functions

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i. Staffing• Staffing – Process through which an organization ensures it always

has the proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectives

• Job analysis– Systematic process of determining skills, duties, and

knowledge required for performing jobs in an organization• Human resource planning– Systematic process of matching the internal and external

supply of people with job openings anticipated in the organization over a specified period of time .

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Staffing (Cont.)

• Recruitment– Process of attracting individuals on a timely basis, in

sufficient numbers, and with appropriate qualifications, to apply for jobs with an organization

• Selection– Process of choosing from a group of applicants the

individual best suited for a particular position and the organization

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ii. Human Resource Development

• Training• Development• Career Planning

• Career Development• Organizational Development• Performance Management• Performance Appraisal

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Human Resource Development (Cont.)

• Training– Designed to provide learners with knowledge and skills needed

for their present jobs • Development – Involves learning that goes beyond today's job; it has more

long-term focus• Career planning– Ongoing process whereby individual sets career goals and

identifies means to achieve them• Career development– Formal approach used by organization to ensure that people

with proper qualifications and experiences are available when needed

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• Organization development– Planned process of improving organization by

developing its structures, systems, and processes to improve effectiveness and achieving desired goals

• Performance management– Goal-oriented process directed toward ensuring

organizational processes are in place to maximize productivity of employees, teams, and ultimately, the organization

• Performance appraisal– Formal system of review and evaluation of individual

or team task performance

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iii. Compensation

• Compensation– All rewards that individuals receive as a result of their

employment• Direct Financial Compensation– Pay that person receives in form of wages, salaries, bonuses, and

commissions.• Indirect Financial Compensation (Benefits)– All financial rewards not included in direct compensation such as

paid vacations, sick leave, holidays, and medical insurance.• Nonfinancial Compensation– Satisfaction that person receives from job itself or from

psychological and/or physical environment in which person works.

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iv. Safety and Health

• Employees who work in a safe environment and enjoy good health are more likely to be productive and yield long-term benefits to organization.

• Safety– Involves protecting employees from injuries caused by

work-related accidents

• Health– Refers to employees' freedom from illness and their

general physical and mental well being

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v. Employee and Labor Relations• Business is required by law to recognize a union and

bargain with it in good faith if the firm’s employees want the union to represent them

• Human resource activity is often referred to as industrial relations

• Most firms today would rather have a union-free environment

Copyright © 2005 Thomson Business & Professional Publishing. All rights reserved.

1–19

HR Management Challenges

• Globalization of Business– Outsourcing and increased competition

• Economic and Technological Changes– Occupational shifts from manufacturing and

agriculture to service industries and telecommunications

– Pressures of global competition causing firms to adapt by lowering costs and increasing productivity

• Technological Shifts and the Internet– Growth of information technology

HR Management Challenges

• Workforce Availability and Quality Concerns– Inadequate supply of workers with needed skills for

“knowledge jobs”– Education of workers in basic skills

• Growth in Contingent Workforce– Increases in temporary workers, independent

contractors, leased employees, and part-timers caused by:• Need for flexibility in staffing levels• Increased difficulty in firing regular employees.• Reduced legal liability from contract employees

HR Management Challenges

• Workforce Demographics and Diversity– Increasing Racial/Ethnic Diversity

– More Women in the Workforce• Single-parent households

• Dual-career couples

• Domestic partners

• Working mothers and family/childcare

– Significantly Aging Workforce• Age discrimination

HR Management Challenges

• Organizational Cost Pressures and Restructuring– Mergers and Acquisitions– “Right-sizing”—eliminating of layers of management,

closing facilities, merging with other organizations, and outplacing workers• Intended results are flatter organizations, increases in

productivity, quality, service and lower costs.• Costs are “survivor mentality”, loss of employee loyalty, and

turnover of valuable employees.

– HR managers must work toward ensuring cultural compatibility in mergers.

HR Management Roles

• Administrative Role– Clerical and administrative support operations

(e.g., payroll and benefits work)• Technology is transforming how HR services are

delivered.• Outsourcing HR services to reduce HR staffing costs

• Operational and Employee Advocate Role– “Champion” for employee concerns• Employee crisis management• Responding to employee complaints

Changing Roles of HR Management

Figure 1–5Note: Example percentages are based on various surveys.

Strategic Role for HR

• Strategic Role– “Contributing at the Table” to organizational results – HR becomes a strategic business partner by:

• Focusing on developing HR programs that enhance organizational performance.

• Involving HR in strategic planning at the onset.• Participating in decision making on mergers, acquisitions,

and downsizing.• Redesigning organizations and work processes• Accounting and documenting the financial results of HR

activities.

Operational to Strategic Transformation of HR

Figure 1–6

New Approaches to HR Management

• Collaborative HR– The process of HR professionals from several

different organizations working jointly to address shared business problems.• Firms benefit from the expertise of other firms, without

having the time and expense of developing some of their own HR practices.

HR Technology

• Human Resource Management System (HRMS)– An integrated system providing information used by HR

management in decision making.– Purposes (Benefits) of HRMS

• Administrative and operational efficiency in compiling HR data• Availability of data for effective HR strategic planning

– Uses of HRMS• Automation of payroll and benefit activities• EEO/affirmative action tracking• HR Workflow: increased access to HR information

– Employee self-service reduces HR costs.