HRM Exam Notes - All topics from modules extracted from the eBook. 72 Pages covering everything. PDF

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HRM Definition HRM involves the productive use of people in achieving the strategic objectives and the satisfaction of individual employee The policies, practices and systems that influence behaviour, attitudes and The process of acquiring, training, appraising, and compensating employees, and of at...

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HRM Definition 

HRM involves the productive use of people in achieving the organisation’s strategic objectives and the

satisfaction of individual employee needs” 

The policies, practices and systems that influence employees’ behaviour, attitudes and performance”



The process of acquiring, training, appraising, and compensating employees, and of attending to their labour relations, health and safety, and fairness concerns

The focus of human resource management (HRM) is on managing people within the employer–employee relationship. Specifically, it involves the productive use of people in achieving the organisation’s strategic business objectives and the satisfaction of individual employee needs. It adds value by designing and implementing HR policies and practices that motivate employees to translate their know-how into productive behaviour. Because HRM seeks to strategically integrate the interests of an organisation and its employees, it is much more than a set of activities relating to the coordination of an organisation’s human resources. HRM is a major contributor to the success of an enterprise because it is in a key position ‘to affect customers, business results and ultimately shareholder value’.3 Says Gratton: ‘The new sources of sustainable competitive advantage available to organizations have people at the centre — their creativity and talent, their inspirations and hopes, their dreams and excitement. The companies that flourish in this decade will do so because they are able to provide meaning and purpose, a context and frame that encourages individual potential to flourish and grow.’4 HRM is either part of the problem or part of the solution in gaining the productive contribution of people. Leading companies such as CSL, Cochlear, Google, General Electric, Johnson & Johnson and Microsoft recognise that human capital is their most important resource and take action to maximise it by: focusing on selecting, developing and rewarding top talent; encouraging open communication, teamwork and collaboration; and refusing to tolerate poor performance or compromise their long-term objectives for short-term gains (see figure 1.1). As the global business environment becomes more competitive, human resources are becoming even more critical to organisation success.5

HRM is management, but management is more than HRM. HRM deals directly with people. Management includes, e.g.: •

marketing

•

management information systems

•

production

•

research and development

•

accounting and finance

HRM Goals The main goals of HRM is to Attract, Maintain and Develop. - S(11 modules)

HRM Activities HRM involves the acquisition, development, reward and motivation, maintenance and departure of an organisation’s human resources. Certain key HRM activities must be undertaken to satisfy these aims: each activity is interrelated and together they represent the core of HRM. *** KNOW ALL DEFINITIONS *** 1. Strategic HRM – aligning the people with the strategic goals and objectives of the organisation? 2. Human resource planning – plan well in advance to ensure we have the right workforce at the right time is the process by which an organisation attempts to ensure that it has the right number of qualified people in the right jobs at the right time. It does this by comparing the present supply of people with its projected demand for human resources. This comparison produces decisions to add, reduce or reallocate employees internally. HR planning is used to achieve: 

more effective and efficient use of human resources



more satisfied and better developed employees

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more effective equal opportunity planning.

3. HRM and legislation – look at the alignment with the legislative legal framework 4. Job analysis, job design defines a job in terms of specific tasks and responsibilities and identifies the KSAOs and qualifications needed to perform it successfully. The products of job analysis are job descriptions (describe the job) and job specifications (describe the type of person needed for the job). Job analysis answers basic questions such as: Which tasks should be grouped together and considered a job? How should a job be designed so that employee performance is enhanced? Job analysis is significant because it represents a basic starting point for HR planning and other HR activities such as recruitment, selection, and training and development. Job analysis, for example, facilitates the development of valid selection systems, helps protect from legal challenge and enhances employee perceptions of fairness.131 5. Recruitment & Selection Recruitment is the process of seeking and attracting a pool of applicants from which qualified candidates for job vacancies within an organisation can be selected. A job vacancy may be filled from within or outside the organisation. Some of the different methods used to recruit employees include job posting, newspaper advertising, social networking sites and executive search. Selection involves choosing from the available candidates the individual predicted to be most likely to perform successfully in a job. Steps in the selection process include computer screening, reviewing applications, psychological testing, employment interviewing, reference checking and completing a medical examination. Based on the information gathered, a selection decision is made.

6. Performance appraisal is concerned with determining how well employees are doing their jobs, communicating that information to the employees and establishing a plan for performance improvement. The information generated by the appraisal process is also used for linking rewards to performance, identifying training and development needs, and making placement decisions. Research shows that performance appraisal (when perceived as accurate and fair) is a practical tool for employee motivation and development. Other research indicates that performance appraisal can have a significant effect on job satisfaction, commitment, turnover intentions, trust, organisational citizenship and behaviour. 7. Training and development focus on the acquisition of the KSAOs required for employees to learn how to perform their jobs, improve their performance, prepare themselves for more senior positions and achieve their career goals. These activities substantially enhance employee (and organisational) knowledge, skills competitiveness and capacity to adapt and change. They are also a powerful communicator that the organisation is interested in the wellbeing of its employees. 8. Career planning and development Career planning and development activities benefit both employees — by identifying employee career goals, possible future job opportunities and personal improvement requirements — and the organisation — by ensuring that qualified employees are available when needed. 9. Remuneration refers to the cash rewards, such as the base pay, bonuses, incentive payments and allowances, which employees receive for working in an organisation. Controversy exists over the precise motivational impact of cash rewards, but there is no doubt that they are an important mainspring in motivating employees and reinforcing employee behaviours demanded by the organisation’s business strategies. Research indicates a positive relationship between pay systems and organisational performance. Benefits are sometimes referred to as indirect or non-cash remuneration. They include superannuation, life insurance, disability insurance, medical and hospital insurance, long-term sickness and accident disability insurance, annual leave, sick leave, maternity leave and tuition refund programs. By improving the quality of work life, benefits reinforce the attractiveness of an organisation as a place to work and emphasise that it cares about its employees. 10. HRM effectiveness

HRM & Strategy What is strategy?

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Strategy is a course of action the company can pursue to achieve its strategic aims

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Strategy is creating fit among a company’s activities

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Strategy is the formulation of organizational missions, goals, and objectives, as well as action plans for achievement that explicitly recognize the competition and the impact of outside environmental forces

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Strategic fit amongst many activities is fundamental not only to competitive advantage but also to the sustainability of that advantage

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At the core, it is the debate between best fit and best practice

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Used for gaining a competitive advantage o

Innovation: Offer something new; different from competitors

o

Quality Enhancement: Products and services

o

Cost Reduction: Attempt to be the lowest cost provider

“Strategy defines the direction in which an organisation intends to move and establishes the framework for action through which it intends to get there”. It involves a consistent approach over time and reflects the organisation’s approach to achieving its objectives. The purpose of strategy is to maintain a position of advantage by capitalising on an organisation’s strengths and minimising its weaknesses. To do this, an organisation must identify and analyse the threats and opportunities present in its external and internal environments — for example, external influences such as the change from a pro-union to a pro-business government (or vice versa), the elimination of tariffs, an increase in the rate of unemployment, an increase in interest rates and a decline in union membership all have significance for an organisation. Thus, organisations need to develop strategies to deal with these external influences if they are to avoid a reactive, short-term approach to management. Similarly, internal influences such as the quality of an organisation’s human resources, its degree of management expertise and its structure and culture can each be a source of strength or weakness. Strengths in HRM, for example, will enable an organisation to better attract, retain and motivate quality employees. Consequently, HRM strategies need to be developed as an integral part of an organisation’s overall strategy.

Strategic Management

‘the process whereby managers establish an organisation’s long-term direction, set specific performance objectives, develop strategies to achieve these objectives in the light of all the relevant internal and external circumstances and undertake to execute the chosen action plans.’ Competitive Advantage: the special edge that permits an organisation to manage environmental influences better than its competitors do The aims of strategic management are to help the organisation to achieve a competitive advantage and to ensure long-term success for the organisation. Strategic management does this by giving managers consistent guidelines for action and by allowing the anticipation of problems and opportunities. BHP Billiton, for example, defines itself as an international company headquartered in Australia and benchmarks itself against its global competitors. Just a few years ago, Wesfarmers was an agricultural company; today, its primary business is retailing. Telstra (telecommunications), Coles and Woolworths (retail) have both considered strategic moves into banking and financial services.242 Companies are having to ask themselves: What is our core business? Westpac, for example, no longer sees itself as a bank but as a technology-based service business whose future competition is likely to come from hi-tech companies such as Apple and Google.243 Are we in the right business? Can we pick the changes affecting our business? Car manufacturers, such as BMW, are now engaged in a battle with Apple and Google to maintain ownership of the ‘brains’ that will power cars of the future.244 Apple, for example, has set a 2019 target date to produce an electric car.245 Who are our customers? What KSAOs must be in place? What management systems are needed? Who are our competitors? US web retail giant Amazon, for example, plans to sell groceries online in the UK making use of the latest robotics technology, which poses a major competitive challenge to traditional supermarkets.246 What are their buying criteria? US car buyers, for example, now care less about the size and price and more about whether or not their mobile devices synchronise with their vehicle.247 How best do we satisfy our customer’s needs?

Strategic HRM Objectives and Activities Strategic HRM: The formulation and execution of human resource policies and practices that produce the employee competencies and behaviours the company needs to achieve its strategic aims.

Strategic HRM objectives and activities must: • be measurable; • E.g., Turnover, recruitment/ selection ratio, employee attitudes, absenteeism, bottom line • include deadline dates for accomplishment; • identify and involve key stakeholders and HR customers to ensure the necessary collaboration • Employees, customers, suppliers, management, unions • nominate the individuals or parties responsible for implementation. • HRM? Line managers?

The HRM Challenges

• Human resource are most important asset and single largest most controllable cost within the business model. • HRM has a profound impact on the strategic plan implementation by developing and aligning HRM practices that ensure the company has motivated employees with necessary skills • HR professionals must develop business, professional-technical, change management and integration competencies. o show the true value of the HR function to the organisation (e.g., how to increase profitability through employees’ engagement and commitment) o be the employees’ voice o demonstrate professional competence

3 Key Organizational Strategy Levels

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Corporate-level Strategy o o o

1.

Growth Retrenchment Stability

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Business Competitive Strategy

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Business Functional Strategy

Corporate-Level Strategy: This should answer the questions such as: In what industry should we be operating? How many businesses should we be in? It depends on the outcome of SWOT analysis. E.g., Growth An organisation can expand either through internally generated growth (for example, McDonald’s and Woolworths) or through acquisitions, mergers or joint ventures (for example, Westpac’s takeover of St George Bank). Growth may be concentrated on building existing strengths (for example, food for McDonald’s and financial services for NAB) or on moving into new or unrelated areas of business (for example, the move from beer to wine for the brewer Lion Nathan and Pacific Brands from a manufacturer to a retailer). Retrenchment The emphasis of retrenchment is on performance improvement by increasing productivity, cost-cutting, downsizing, re-engineering and selling or shutting down business operations. BlueScope, Qantas and Telstra are examples of companies employing this strategy in an effort to become more competitive. Retrenchment strategies are common in today’s cutthroat environment. Stability This is a neutral strategy that attempts to maintain the status quo by pursuing established business objectives. A stability strategy is often used when an organisation is performing well in a low-risk environment or when an organisation needs to consolidate after a period of rapid growth or restructuring.

2.

Business-Level Strategy: This should answer the questions such as: How should we compete in the chosen industry?

3.

Functional-level Strategy •

The level of the operating divisions and departments.

•

Functional strategies are interrelated.

•

Functional level strategies in R&D, operations, manufacturing, marketing, finance, and human resources involve the development and coordination of resources through which business unit level strategies can be executed effective and efficiently.

HRM strategies must ALIGN with and SUPPORT the three levels organizational strategy (Corporate, Business, and Functional-level)

HR Planning

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HR Planning is used because we need to maintain alignment with the strategic objectives of the organisation

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Without planning, an organisation cannot be efficient

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Best described as employment planning (or workforce planning).

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The process of systematically reviewing human resource requirements to ensure that the required number of employees with the appropriate knowledge, skills and abilities are available when needed.

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Essentially, it is the process of deciding what positions the firm will have to fill, and how to fill them.

Human resource planning and strategic HRM planning are often mixed up. To avoid such confusion, human resource planning is better described as employment planning. This places HR planning at the operational level where it is concerned with detailed forecasts of employee supply (internal and external) and employee demand. Based on the HR forecasts, specific action can be taken to get the right numbers and types of people doing the right work at the right time (that is, planning the flow of people into, through and out of the organisation). In contrast, strategic HRM planning is concerned with defining philosophy, objectives and strategy, and precedes HR planning. HR planning must be an integrated part of the organisation’s overall strategic planning process Organisational Strategy and HR Planning:

Purpose of HR Planning The purpose of HR planning is to ensure that a predetermined number of persons with the appropriate knowledge, skills and abilities are available at a specified time in the future. HR planning, thus, systematically identifies what must be done to guarantee the availability of the human resources required by an organisation to align with an organisation’s strategic objectives. Managers must ask: What mix of knowledge, skills and abilities do we require now? What mix will we require in the future? Do we have the right

number of qualified employees today? How will employee numbers change in the future? How do our labour costs and productivity compare with those of our competitors? Where will we find the people we need?

The Importance of HR Planning HR planning: systematically identifies what must be done to guarantee the availability of the human resources required by an organisation to meet business objectives. • ensures that: 1.

Available talent is correctly allocated • Person-job misfit/Person-org misfit → job dissatisfaction, voluntary turnover

2.

Labour costs are controlled • Bottom-line

3.

The number of staff is appropriate • Too little → burnout of employees • Too much → waste of money

4.

Talented employees are retained. • People are assets

OR. “RIGHT PEOPLE / RIGHT PLACE / RIGHT JOBS / RIGHT TIME”

The focus of human resource planning or employment planning is on labour demand (the number of people needed by the organisation) and labour supply (the number of qualified people available to the organisation). HR planning involves the entry of people into the organisation (acquisition), the development of people skills (development), appraisal (performance measurement) and the exit of people from the organisation (departure). Recently such a strategic and integrated approach to people management has been labelled talent management. As a consequence, HR planning is the responsibility of all managers — it is not just a HR department activity. Effective HR planning is critical to the organisation’s success because it matches the organisation’s strat...