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Human Resource Management Unit 1

Sikkim Manipal University Page No. 1

Unit 1 Human Resource Management

An Introduction

Structure:

1.1 Introduction

Objectives

1.2 Distinction between Personnel Management & Human Resources

Management

1.3 Human Resources and its importance

1.4 Evolution of the Human Resource Management

1.5 Human Relations Theory

1.6 Objectives of Human Relation1.7 Summary

1.8 Caselet

1.9 Terminal Questions

1.10 Answers

1.1 Introduction

As you look around you, you will see that todays organizations is

characterised by constant changes. These changes relate to global

economic factors as well as shifts in kind of people that are currently

employed in organizations. You will agree that the life style of employees

has significantly changed as compared to what you saw 8-10 years ago.

The economic changes sweeping through all countries are significantly

impacting work culture, working procedures, and workplace norms. For

example you will find ....

that people are changing jobs more often

people work longer and even carry work home

the hiring process in firms are more elaborate and take longer than it

used to, to hire a employee

firms today take more care of their employees, lot more facilities and

benefits given to employees

This Unit focuses on introducing you to the most critical success factor for

an organization its human resource.

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Todays corporation constantly moulds itself to meet the business

challenges despite economic, political and social patterns in which it exists.The efforts made by organizations to sustain business metrics like revenue,

profits and growth, market share is possible only through the people in the

organization who work towards making this happen within the enterprise.

One of the most useful definition of Human Resources Management (HRM)

is provided by Fisher, Schoendfelt and Shaw in their book Human

Resources Management, HRM involves all management decisions and

practices that directly affect or influence the people or Human resources

who work for the organization. And yet another simple definition is provided

by Bernardin and Russell in their book Human Resources Management

An Experiential Approach, as How people are managed is humanresources management.

And to add to the external challenges there are internal challenges, the

workforce is constantly changing their ideas, attitudes and values. Per Dale

Yoder observation, employment relationships in corporate revel the

following trends:

1) Increased complexity of organization and employment communication

and a distinction between owners, managers and employees.

2) Decreased number of employers and self-employed and enlarged size

of workforce.

3) Enhanced need for training in view of increased requirements of

specialised skills.

4) Public interventions and legal complication in employer-employee

relationships.

5) Enhanced training and development of managers and

professionalization of management education.

6) Possibility of employment explosion in view of the ever-increasing size

of workforce.

7) Rising formal level of education of rank-and-file employees who are

becoming increasingly critical of management malpractices and errors

8) Rank-and-file employees rapidly growing demands in different

employment situations.

9) Increased applications of behavioural science by enterprising

managers.

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10) Recognition of close relationship between profits and earnings and

ability to manage human resources.These trends help an organization to re-engineer itself to ensure that the

business metrics are met and the organization remains profitable. Although

the changes may provide solution to some problems, they may create

several new ones. For example the workforce that constitutes the IT industry

is highly educated and ranks high on intellect which proves a boon to the

rapid progress that technology has brought about in improving the quality of

life for people around the world. This workforce however needs to be

managed carefully to deliver the desired results, for example a poor quality

software code can jeopardise the reputation of the entire organization with

its clients and hamper future contracts and projects. Awareness of thesechallenges enables the managers as well as the HR teams within the

organization to anticipate them and build necessary policies and procedures

to meet them. The ability to find the solutions to these problems can play a

critical role in the organizations ability to cope with the challenges and be

profitable. Herein the HR department plays the role of a consultant advisor

while the manager owns the responsibility to decide the best course of

action and be responsible for execution. Specifically, the managers

responsibility is to lead, guide and direct the efforts of his team to reach the

desired goals. Therefore it is a critical competency for every manager in

todays organization to be effective human resources professional as welland be responsible and accountable for his people responsibilities as much

as for the business results.

Objectives:

After studying this unit, you will be able to:

Distinguish between Personnel Management and Human Resource

Management

Explain Human resources as a function

Debate the importance and evolution of HRM

Discuss the Concept of Human Relations and its objectives

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1.2 Distinction between Personnel Management & Human

Resources ManagementThe history of Human Resources Management traces its roots to the

erstwhile Personnel Management that was prevalent in the companies of a

few decades ago. Though the two terms 'Personnel Management' and

'Human Resources Management' are interchangeably used by most of the

authors, there are key differentiators that make Personnel Management

(PM) different from Human Resources Management (HRM). HRM is clearly

based on the foundation of behavioural science knowledge relating to the

handling of employees to motivate organizational goals. The focus is more

proactive approach and pays attention to employee satisfaction and delight.

Business goals and objectives and the strategies that will enable this tohappen are the foundation for HRM. The basic philosophy is driven by the

Theory Y approach where the belief is that people like to work and do not

prefer to be supervised and made to perform. The employee becomes a

champion for the organization and its product/service.

PM is that management style that deals with the control and reactive

problem solving approach to resolve employee issues in a organizations.

The philosophy for the PM approach relied on the Theory X approach that

believed that people do not naturally like to work and need to be coerced to

work and often need to be driven to work. Is more the stick approach rather

than carrot approach. Rigid rules of dos and donts exist and these provide

the framework for employees behaviour at the workplace. Employee

welfare and formal grievance systems play a significant role here and

thereby managing industrial relations with high amount of trade union

activity are highlighted.

Very few organizations today practice this style to people management, as

the benefits and the long term gains from a HRM approach, impact business

results far more. HRM emphasizes on training, as an important area of

people management, which covers the following aspects:

1. Increasing productivity2. Improving quality

3. Improving organisational climate

4. Ensuring personnel growth etc.

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Self Assessment Questions

1. Personnel Management is proactive while Human ResourcesManagement is reactive (True / False)

2. Trade unions influence the HRM policies of a company (True / False)

3. PM practices support business results better than HRM practices (True /

False)

4. Career planning and employee growth is a initiative of the HRM

philosophy (True / False)

5. A grievance management system is a common HRM function. (True /

False)

1.3 Human Resources and its Importance

For any country its human resources can be defined as the sum total of the

knowledge, skills, creative abilities, talents and aptitudes. Similarly, from the

viewpoint of an organization, it represents the sum total of inherent abilities,

acquired knowledge and skills, talent and aptitudes of its employees. The

human resources have also been designated as human factors. According

to Julius, the human factor refers to a whole consisting of inter-related,

interdependent and inter-acting physiological, psychological, sociological

and ethical components.

In order to have healthy human resources there is the need to pay attentionto and provide for physiological components, such as food, rest and

environmental conditions to satisfy the physiological needs of people at the

workplace. Also important is focus on protection against harmful and

destructive conditions and attempts to avoid drop in income/benefits or even

employment status (e.g. a demotion from a higher level or role to a lower

level or role) so as to have physiological security.

On the psychological aspects, there is the element of emotions and

impulses. These aspects are far more subjective and to add to the challenge

are uniquely different for each individual. While something can inspire

someone the same things can depress and act as a de-motivator for others.People in the organizational context have numerous psychological needs

such as autonomy, achievement, power, acquisitiveness etc. It is natural for

employees to look for the satisfaction of these needs within the organization.

As a social being, each individual looks to satisfy his/her personal needs

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and aspirations as also the sense of affiliation, status, recognition, prestige

etc.Another factor that influences individuals at work are ethical in nature and it

addresses the right and wrong-ness of whatever the individual experiences.

Conflicts in what the individual perceives as right or wrong vs. what the

organization encourages as right or wrong impacts the behaviour of the

individual and his/her satisfaction /well-being within the organization. It is not

uncommon of people leaving a company because they did not like the

policies that they needed to comply with, e.g. corruption in dealing with

certain authorities etc.

There is no doubt that human resources have been critical in organizations

since the very beginning and continue to be critical and significant in todays

organizations. The paradox lies in the fact that even today the majority of

challenges in organizations pertain to the human and social rather than

physical, technical or economic factors. It is a truism that productivity is

associated markedly with the nature of human resources and their total

environment consisting of inter-related, inter-dependent and interacting

economic and non-economic (i.e., political, religious, cultural, sociological

and psychological factors. Thus, the significance of human resources can

be examined from at least two standpoints-economic and non-economic.

While the economic factors are easily identifiable and controllable the non-

economic factors require keen observation and listening skills and will need

to be redressed differently and sensitively.


6. According to_____________, the human factor refers to a whole

consisting of inter-related, interdependent and inter-acting

physiological, psychological, sociological and ethical components.

7. The ______________ elements in managing employees are more

challenging as compared to the physiological ones.

8. Psychologically, it is characterised by ____________ and_____________.

9. Majority of the problems in organizational setting are _________ and

_______ rather than physical, technical or economic.

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10. Conflicts in perception w.r.t. __________ also impact employee

behaviour at work.

1.4 Evolution of the Human Resource Management

The historical background to the management techniques of human

resources are in vogue since ancient times. Its only in the past 100 odd

years that the techniques and study of human behaviour at work has

become formal and structured with certain basic practices established as

core and a host of other practices left to each organization to design and

implement as per their individual business driven practices. As per Fisher,

Schonfeldt and Shaw, in their book titled Human Resources Management,

they have characterised the history of HRM as having evolved through fourbroad phases, the Craft system, the scientific system, the human relations

approach and the prevalent organizational science-human resources

approach.

The Craft system refers to early trends noticed in Egypt and Babylon,

where skills based training was provided to people to ensure a steady flow

of craftsmen required to build huge monuments. By the 13 th century,

subsequently the trend was noticed in Europe and later craft guilds evolved

to ensure not only the skill acquisition but regulate the conditions of

employment, level of skill and improved production techniques. Most

relevant in the domestic industry where generations of skilled workers

trained and became experts in a particular skill.

The Scientific Management approach was a key part of the industrial

revolution typical of the nineteenth and early twentieth century. It was

instilled in the principles of mass production and organization of work -

simple work skills and supervisory/managerial skills. This rapidly emerged

as the assembly line approach to managing workflow, which later Fredrick

Taylor (1856-1915) pioneered based on the philosophy that employees

wanted to be used efficiently and money being the primary motivator. Over a

period of time this was proved wrong as employee dissent grew and unionissues surfaced. It was during this phase that employee welfare as a key HR

practice emerged which redressed employee issues like recreational

facilities, medical program and employee grievance systems.

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The Human Relations approach was an outcome of the famous studies

undertaken by US social scientist Elton Mayo and Fritz Roethlisberger at theWestern Electrics Hawthorne plant in Chicago.

The Hawthorne Studies: As described in virtually every book written about

management, the human relations or behavioral school of management

began in 1927 with a group of studies conducted at the Hawthorne plant of

Western Electric, an AT&T subsidiary. Curiously, these studies were

prompted by an experiment carried out by the company's engineers

between 1924 and 1932. Following the scientific management tradition,

these engineers were applying research methods to answer job-related

problems.

Two groups were studied to determine the effects of different levels of

illumination on worker performance. One group received increased

illumination, while the other did not. A preliminary finding was that, when

illumination was increased, the level of performance also increased.

Surprisingly to the engineers, productivity also increased when the level of

illumination was decreased almost to moonlight levels. One interpretation

made of these results was that the employees involved in the experiment

enjoyed being the centre of attention; they reacted positively because

management cared about them. The reason for the increase in the

production was not the physical but the psychological impact of the

employees attitude towards the job and towards the company. Such a

phenomenon taking place in any research setting is now called the

Hawthorne effect.

As a result of these preliminary investigations, a team of researchers

headed by Elton Mayo and F.J. Roethlisberger from Harvard conducted a

lengthy series of experiments extending over a six year period. The

conclusions they reached served as the bedrock of later developments in

the human relations approach to management. Among their key findings

were the following:

Economic incentives are less potent than generally believed ininfluencing employees to achieve high levels of output.

Leadership practices and work-group pressures profoundly influence

employee satisfaction and performance.

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Any factor influencing employee behaviour is embedded in a social

system. For instance, to understand the impact of pay on performance,you also have to understand the climate that exists in the work group

and the leadership style of the superior.

Leadership Style and Practices: As a consequence of the Hawthorne

Studies, worker attitudes, morale, and group influences became a concern

of researchers. A notable development of the nature occurred shortly after

World War II at the University of Michigan. A group of social scientists

formed an organization, later to be called the Institute for Social Research,

to study those principles of leadership that were associated with highest

productivity.

Based upon work with clerical and production employees, an important

conclusion was that supervisors of high-producing units behaved differently

from those of low-producing units. Among the differences in style noted

were that supervisors of productive groups in comparison to their lower

producing counterparts were:

More emotionally supportive of subordinates.

More likely to pay a differentiated role - plan, regulate, and coordinate

the activities of subordinates, but not become directly involved in work

tasks.

More likely to exercise general rather than close or light supervision.

The origin and progress of the human relations movement (particularly

in U.S.A.) has been due to certain social and cultural forces working

there, such as Recognition of the dignity of the individual and his

personality. The individual has a lot of freedom of choice and the idea of

decision-making by oneself is deep-rooted in the national tradition.

A child is brought up to value independence and encouraged to think on

his own and not to be dependent on parents.

Virtual disappearance of owner managers and the growth of

professional managers capable of managing according to professional

code. Strong organizations of labour, at all levels, calling for higher skills in

communication and participative behaviour on the part of the

management.

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Shortage of labour led to skilled labour being treated as nearly

irreplaceable. Hence, much greater care in utilising this scarce andvaluable resource had to be thought of in the form of "Human Relations."

Higher standards of living of American labour. Since their physical and

security needs were generally satisfied, increased participation alone

could satisfy their emerging social and ego needs.

The possible weakening of work ethics, requiring managers to develop

new attitudes towards labour.

The changing work environment-greater specialization and a large

scope of operations which require a greater degree of managerial

effectiveness with and through employees.

A significant increase in the general educational level of employees who,as a result, demanded more from their employers.

Concurrent with the growth of human relations in work organizations, has

been the burgeoning of techniques and programmes to foster human growth

off the job. In the last two decades, millions of people seeking personal

growth (or sometimes simply emotional arousal) have participated in

programmes such as encounter groups, marriage enrichment groups,

seminar training, couples groups, and transactional analysis.

During the early 1970s, the human potential (meaning development of one's

potential) movement began to appear in work settings. Management

awareness training and assertiveness training represent two other

techniques related to the development of human potential. Both are

designed to deal with the problem of job discrimination against women. In

management awareness training, managers are made more sensitive to

their sexist attitudes (such as thinking of all engineers are male) and in

changing their attitudes.

Assertiveness training has been widely used to help women to be more

direct in making known their demands for equal opportunity.

Career development programmes in industry are more prevalent today than

at any time in the past. Although varying widely in content, all these

programmes are designed to help the individual make career decisions that

will move him or her toward self-fulfillment. In the process, it is assumed that

the person will make a better contribution to the organization.

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Finally the Organizational Sciences approach to human resources

management has brought the focus to the scientific process withinorganizations that can impact employee experience, and less on just the

individual. Todays organizations focus on building their processes and

policies and compete to emerge as preferred employers (best employer). It

is not uncommon for competing organizations to woo the employees

through advertising more and better employee-friendly initiatives like work-

from-home jobs, careers for married couples, global work assignments and

internal job postings and world class workplace infrastructures from in-

campus cricket grounds to gymnasiums for employee wellbeing. This is the

HR that we now see around us.

Activity 1:

Maintaining a competent and motivated workforce is a difficult task.

From your general observations, list out four major challenges, a HR

Manager faces in maintaining a competent workforce.


11. Leadership practices and work-group pressures profoundly influence

employee __________________________________.

12. Any factor influencing employee behaviour is embedded in a

__________. For instance, to understand the impact of pay on

performance, you also have to understand the __________that exists

in the work group and the ____________ of the superior.

13. The origin and progress of the human relations movement (particularly

in U.S.A.) has been due to certain________________________

working there, such as Recognition of the dignity of the individual and

his personality.

14. In management awareness training, managers are made more

___________ _____________(such as thinking of all engineers are

male) and in ___________ ___________________.

1.5 Human Relations Concept

To understand the nature of human relations, we begin with a concise and

operational definition that acts as guidance to what people expect at work.

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Human Relations in Management is a process that brings employees into

contact with and causes them to be influenced by their leaders, their jobs,and other aspects of the organizations which they work in. It includes

everything at the workplace that influences the behavior of employees: their

relationships with their mangers, with other employees, the kind of work they

do, and the impact on them of the practices of the organization as a whole.

As discussed earlier this knowledge of the employees expectations are

critical for the achievement of the business results of revenue, profit, growth,

market share. In the best possible way, "human relations refer to the

interaction of people in all walks of life-in schools, homes, business and

government."

Huneryager' and Heckmann define the expression thus: ... Human relationsare a systematic, developing body of knowledge devoted to explaining the

behavior of individuals in the working organization." In the opinion of

McFarland, "Human Relations is the study and practice of utilizing human

resources through knowledge and through an understanding of the

activities, attitudes, sentiments, and inter-relationships of people at work."

When applied to a business or an industry, it refers to every dimension of

interaction that happens between employee and employee, employee and

manager, teams and managers, employee and customer and employee and

vendor (one who provides a support or a service). It is therefore a key

objective of every organization to ensure that all dimensions of the human

relations are redressed appropriately to ensure positive human relations.

When a relationship exists in an organization, it is referred to as 'employee-

human relations'; and when it exists outside it, it is known as 'public human

relations'. Organizations need to pay due attention to not just the way it

treats employees but also the methods and processes in place to recognize

and reward teams of employees depending on what they achieve and

deliver for the organization. This calls for another dimension in managing

human relations that focus on the employee as a social animal. To place it

in perspective, the human relations focus of an organization needs to have

programs in place to take care of:

a) Employee needs

b) Team needs

c) Customer/vendor needs

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The challenges in front of the modern organization are therefore many and

varied, but have to be met in order for survival.


15. ______________________________ is a process that brings

employees into contact with and causes them to be influenced by their

leaders, their jobs, and other aspects of the organizations which they

work.

16. The decline in popularity of the term human relations" stems in part

from the frustrations experienced by managers of the fifties and sixties

who attempted to use a human relations concept which was un-

realistically limited to ___________________________.

17. In the broadest sense, human relations refer to the _______________

of people in all walks of life-in schools, homes, business and

government.

1.6 Objectives of Human Relations

A human Relations Programme thereby attempts at enhancing employee

motivation and workplace morale through an improved three-way

communications and through employee participation in the decision making

processes. Human relations seek to emphasise 'employee' aspects of workrather than technical or economic aspects. For example while it might be in

the best interest of an organization to have a employee skilled and

completely proficient in one job/ set or responsibilities, todays organization

provides opportunities for employees to multi-skill and acquire knowledge of

new yet related jobs/responsibilities. These acts as a motivator for

employees as they benefit by learning new skills / jobs and given an

opportunity can perform and excel in another job. It also seeks to make

employment and working conditions less impersonal. The human relations

approach emphasises policies and techniques designed to improve

employee morale and job satisfaction. For example it is common place inorganizations to provide for / encourage employee empowerment where-in

the team brings about creative measures to reduce cost/ improve customer

satisfaction. Such teams design and implement self-driven initiatives to bring

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about the business result. It is believed that this is accompanied by

increased employee efficiency and reduction in employee dissatisfaction.An understanding of emerging workplace human behaviour can be

summarised as:

i) Assist the manager to develop a better realization of how his own

attitudes and behaviour play a part in everyday affairs of the team and

its morale;

ii) Assist the manager to develop a keener sensitivity towards the team

members and interpersonal dynamics

iii) Partner with the managers in helping him drive the business goals and

take part ownership of work challenges and how best to resolve them

iv) Enable him to anticipate and prevent problems, or at least to resolvemore effectively those that he cannot avoid; and

v) Network with other teams with related dependencies and help resolve

inter-team business impacting challenges

This Scope of Human Relations springs up from the problems which have

many different causes and perspectives. Halloran has stated these as:

Every person brings a unique set of talents, ambitions and work

experience to a job. These personal attributes change over time, often

as a result of the degree of success or failure the person experiences in

the work world. Matching so many unique sets of personal qualities to

a standardized technology can create problems.

The organizational aspects of a company, such as its size, geographic

location, economic health, and degree of automation, define the scope

of work and the activity in each work division. These frequently arbitrary,

structural definitions often cause difficulties in human relations.

Innovations in technology and production methods generally require the

restructuring of job roles and responsibilities. Radical changes in basic

organizational structure can cause severe strains between employees

and management and create intense problems in human relations.

Promotion of individuals to positions of greater responsibility and

authority generally creates a need for changed behaviour patterns

between the new supervisors and their former peers, which in time, can

create human relations problems.

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Inexperienced employees may not be able to perform their roles or tasks

in work groups in a competent manner. The time they take to adjust cannot only create problems with production schedules, but can also create

particular kinds of human relations problems between them and their co-

employees and supervisors.

The variety of causes of human relations problems lead to the conclusion

that no one programme or single approach can create conditions for good

human relations. Therefore, as shared earlier it in common for organizations

and individuals in organization to constantly innovate and resolve

challenges that will benefit both the organization as well as the employee.

This helps understand the key HR objectives which can be best illustrated

by understanding the functions that HR attempts to fulfil in any organization:

i) Human Resource Planning estimating the need for resources in

order achieve the desired business results. HR plans can be both short

term/immediate as well as long term / strategic. The HR team partners

with the line managers to understand the business goals and targets

for the year and then together plan the HR needs in order to meet the

goals.

ii) Acquisition of human resources staffing the organizations with the

right mix of skills and competencies at the right time. It also includes

HR initiatives like promotions and internal job posting to fulfil thisrequirement for human resources. Staffing teams in organizations are

usually a separate group of specialists who work closely with the line

managers to understand the skills and competencies needed for the

job and engage together to select the best talent for the open positions.

iii) Training and employee development focuses on managing training

activities to upgrade skills and knowledge as well as soft skills like team

building and leadership. The training team is again a group of HR

specialists who propose the training program and consult with the line

managers to ensure that the program achieves the desired outcomes.

iv) Building performance management systems focuses on the rightprocesses to set goals for performance as individuals/teams and

related measurement methods. This is a core HR activity and is

supported by the HR generalist.

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v) Reward systems establishing appropriate compensation systems

and reward mechanisms that would reward the desired outcome andresults in accordance with the corporate values. This again forms a part

of the HR generalists tasks. How employees progress in a organization

how they are paid w.r.t. internal and external market factors, what

employee benefits are offered, are some aspect that this function

redresses.

vi) Human Resources Information Systems that would take care of the

operational transactions from the time an employee joins till the time

the employee exits, like personnel files, compensation administration,

payroll, benefits administration and issuing letters and testimonials.

This task is supported by as separate HR operations team who act as aHR helpdesk and provide information to the employees/managers.

Activity 2

Read 2-3 articles and list out few welfare measures e.g. pensions plans

etc, which companies are offering to their employees. Then against

each, mention the reason, why you think the company has provided this

benefit.

Self Assessment Questions18. Human relations seek to emphasise '_________' aspects of work rather

than technical or economic aspects.

19. Every person brings a unique set of talents, ambitions and work

experience to a job. Innovations in technology and production methods

generally require the restructuring of __________________________.

20. ____________________may not be able to perform their roles or tasks

in work groups in a competent manner.

21. ___________________________ help determine the correct processes

for setting goals and measuring achievements.

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1.7 Summary

Management of human resources is the essence of being a manager

who has to get things done through others. And in this activity the

manager is supported by the HR professionals who act as the expert

providing the right guidance within the framework of the organizations

policies and practices.

The human resources have also been designated as human factors that

need to be managed at the workplace in order to ensure that the

business objectives are met.

According to Julius, the human factor refers to a whole consisting of

inter-related, interdependent and inter-acting physiological,psychological, sociological and ethical components.

Majority of the problems in organizational setting are human and social

rather than physical, technical or economic.

The physical resources will not give results unless the human resources

are applied to them.

Management of human resources is being regarded as a specialised

profession such as that of medicine and law.

The Human Resources Department is responsible for many varied

functions including employment, safety, training, wage and salary

administration and research and development.

The Head of the Human Resources Department is associated with top

management and helps it in the formulation of Human Resources

policies for the company.

Human Relations in Management is a process that brings employees

into contact with and causes them to be influenced by their leaders, their

jobs, and other aspects of the organizations which they work. It includes

everything in the work environment that influences the behaviour of

employees:

A human relations programme represents an attempt at improving

employee morale and motivation.

As a consequence of the Hawthorne Studies, worker attitudes, morale,

and group influences became a concern of researchers.

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The terms Personnel Management' and 'Human Resources

Management' are interchangeably used by most of the authors, thoughthere are some differences between them.

HRM is a broad concept which covers many personnel aspects and

includes social, professional and individual enterprise aspects, whereas

Personnel Management focuses only on personnel aspects such as

leadership, justice determination, task specialisation, staffing,

performance appraisal, etc.

HRM is more growth-oriented whereas Personnel Management is

slightly narrow.

1.8 Caselet

Talent management: How to invest in your workforce

By Douglas MacMillan

The war for talent. - The coming brain drain.- Mismanaged succession.

In recent years, judging by steady increases in spending on talent

management, workforce challenges like these have become top of

mind for most companies, large and small. But what is the most

productive way to invest in your workforce, and what are the chances

you will see a tangible return?

A new study conducted jointly by IBM's Institute for Business Value and

Washington-based think tank Human Capital Institute (HCI), and shared

exclusively with BusinessWeek.com, has yielded promising answers to

those questions.

Last spring, researchers from IBM and HCI surveyed 1,900 professionals in

over 1,000 public- and private-sector companies, from a range of industries,

geographies and organizational sizes. Respondents scored their companies

in 30 specific competencies, which fell into six key practices of talent

management: strategy development, attracting and retaining, motivating and

developing, deploying and managing, connecting and enabling, and

transforming and sustaining.

Companies with high scores across the board were more likely to have

strong financial performance, based on reported change in operating profits
mailto:[email protected]&Subject=Feedback%20on%20'Talent%20management:%20How%20to%20invest%20in%20your%20workforce'mailto:[email protected]&Subject=Feedback%20on%20'Talent%20management:%20How%20to%20invest%20in%20your%20workforce'mailto:[email protected]&Subject=Feedback%20on%20'Talent%20management:%20How%20to%20invest%20in%20your%20workforce'

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between 2003 and 2006. "It's not the first research to show a correlation

between talent management and financial results," admits Allan Schweyer,executive director of HCI and one of the authors of the report, "but it's one in

a handful, and I think it really adds to that body of evidence that is helping

organizations to build a solid business case for investments in talent

management."

Planning aheadOrganizational size was a main difference-maker between companies that

did well on the survey and those that did poorly. Researchers found that

large companies defined as having 10,000 to 50,000 employees do not

only manage their existing employees more efficiently, but they are better

equipped to plan ahead for the number of people and types of skills they willneed to bring into their organization in the future. "Smaller competitors who

haven't done this work really scramble in a lot of cases when it comes to

filling holes in their workforce," says Schweyer.

Large companies outperformed the total sample by 4 percent in linking

workforce-management strategy to business strategy, and by 7 percent in

having metrics that provide input into strategic workforce planning decisions.

Yet small companies do have the advantage of being nimble and able to

manage their workforce on an intimate, informal level. Organizations with

fewer than 1,000 employees were 4 percent better than the total sample at

collaboration and sharing knowledge, 6 percent better at promoting virtualworking, and 4 percent better at identifying relevant skills.

Surprisingly, medium-size companies between 1,000 and 10,000

employees were less likely to have implemented five out of the six talent

management practices in the study. At that size, says IBM associate partner

Eric Lesser, "you're too small to do it by yourself but perhaps haven't built

the infrastructure or managerial focus" that larger companies have. Lesser

and the other authors of the report termed these companies "organizational

adolescents" that have growing pains because they are unable both to

diagnose issues and keep a long-term perspective.

Major differences between industries also emerged in the report:

Knowledge-intensive businesses tended to focus on development and

collaboration, while service-intensive ones emphasized employee attraction

and retention. All nonprofit industries studied government, education, and

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health care lagged behind the private sector in virtually all areas of talent

management.The best way to invest in talent management depends greatly on the size

and industry of a company. And there is no easy fix for the human resources

woes that are becoming more common in all business.

But for those looking to link talent to profits, there were two competencies

that a majority of the best-performing companies had in common:

understanding and addressing workforce attitudes and engagement levels;

and aligning employee incentives with appropriate business goals.

Source : BusinessWeek; Thursday, August 14, 2008

1.9 Terminal Questions

1. What is Human Resources Management? What is its importance in the

Modern world?

2. Bring out with examples the interaction between Economic and Non-

economic factors in Human Resources Management.

3. Enumerate the growth of Human Resources Management in India and

its impact on India's ethos.

4. Explain the factors responsible for growth of Human Relations.

5. Distinguish between Personnel Management & Human Resources

Management.

1.10 Answers

Answers to Self Assessment Questions

1. False

2. False

3. False

4. True

5. False

6. Jucius,7. psychological,

8. Emotions and impulses,

9. Human and social,

10. Ethics

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11. Satisfaction and performance,

12. Social system, climate, leadership style,13. Social and cultural forces,

14. Sensitive to their attitudes, changing their attitudes

15. Human Relations Management,

16. people-people relationships,

17. Interaction

18. Employee

19. Job roles and responsibilities

20. Inexperienced employees

21. Performance management systems

Answers to Terminal Questions:

1. Refer to 1.3

2. Refer to 1.4

3. Refer to 1.5

4. Refer to 1.5

5. Refer to 1.6

References

1. Human Resources Management by Fisher, Schoenfeldt and Shaw

2. Managing Human Resources Productivity, Quality of Work Life, Profitsby Wayne F. Cascio

3. International Human Resources Management : Text and Cases by K

Aswathappa and Sadhna Dash

4. Human Resources Management by K Aswathappa

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