HRM Lecture Notes PDF

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HRM Lecture NotesLecture 1: Introduction to Human Resource ManagementWhat is HRM?Human resource management (HRM) — the process of acquiring, training, appraising, and compensating employees, and of attending to their labour relations, health and safety, and fairness concerns.However, this term is no...

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HRM Lecture Notes Lecture 1: Introduction to Human Resource Management What is HRM? Human resource management (HRM) — the process of acquiring, training, appraising, and compensating employees, and of attending to their labour relations, health and safety, and fairness concerns. ! However, this term is not easy to define because it is commonly used in two different ways. On one hand, it is used generically to describe the body of management activities in business. Used in this way, HRM is really no more than a modern version of what was long labelled ‘personnel management’. ! On the other hand, the term is equally widely used to denote a particular approach to the management of people which is clearly distinct from ‘personnel management’ — it suggests a distinctive philosophy towards carrying out people-oriented organisational activities: one which is held to serve the modern business more effectively than traditional ‘personnel management’. ! HRM as a discipline HRM draws on the main social science disciplines: ! • Economics ! • Psychology ! • Sociology! HRM job titles • Director for people (British Airways) ! • Director of people (Standard Chartered) ! • Personnel director (John Lewis Partnership) ! • Director of human capital (North American Space Agency) !

• Vice-president, human resources (BP plc) ! • Group human resources director (Barclays)$

Personnel management vs. human resource management ! Personnel management Short term ! Reactive ! Ad hoc ! Marginal

Human resource management Long-term ! Proactive ! Strategic ! Integrated

Time planning perspective

• • • •

Psychological contract

Compliance

Commitment

Control systems

External controls (being told what to do)

Self-controls (no one to tell them what to do)

• • • •

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Employee relations perspective

• Pluralist! • Collective ! • Low trust

• Unitarist! • Individual ! • High trust

Preferred structures/systems

• Bureaucratic/mechanistic ! • Centralised ! • Formal defined roles

• Organic ' Devolved ! • Flexible roles

Roles

Specialist/professional

Largely integrated into line management

Evaluation criteria

Cost minimisation

Maximum utilisation (human asset accounting)

Key objectives of HRM Staffing objectives ! HR managers are first concerned with ensuring that the business is appropriately staffed. This involves designing organisation structures, identifying what types of contracts employees will work, before recruiting, selecting and developing the people required to fill the roles: the right people, with the right skills to provide their services when needed. Additionally, employers need to make sure that they develop attractive employment packages that will make possible employees more inclined to work there as opposed to a competitors’ business. This is crucial in today’s society as there is growing competition.! Performance objectives! Once the required workforce is in place, HR managers seek to ensure that people are well motivated and committed so as to maximise their performance in their different roles. Training and development has a role to play, as do reward systems to maximise effort and focus attention on performance targets. The achievement of performance objectives also requires HR specialists to assist in disciplining employees effectively and equitably where individual conduct and/or performance standards are unsatisfactory. ! Change-management objectives ! Frequently, change does not come along in readily defined episodes precipitated by some external factor. Instead it is endemic, generated as much by a continual need to innovate as from definable environmental pressures. Change can come in different forms, such as structural — requiring reorganisation of activities and roles — and cultural — requiring an alteration of attitudes, philosophies or long-present organisational norms. ! Key activities to assist with this include the recruitment and/or development of people with the necessary leadership skills to drive the change process, the employment of change agents to encourage acceptance of change and the construction of reward systems which underpin the change process. However, if change is instructed without employee involvement, this can be a great cause of conflict. ! Administration objectives ! These are carried out to facilitate an organisation’s smooth running. Hence, there is a need to maintain accurate data on individual employees, their performance, attendance, 2  of 130 

training records, terms and conditions of employment and personal details. However, this is also done as there is a legal aspect to much administrative activity. For example, it is vital for businesses to adhere to the National Minimum Wage or Statutory Maternity Pay, or potential legislative risks could arise. ! Reputational objectives ! Lastly, such objectives allow companies to maintain a good reputation. This is extremely important as it can ensure that it can employ the best people. Businesses are increasingly seeking to differentiate and position themselves in their labour markets vis-a-vis competitors by managing their reputations as employers, by engaging in employer branding exercises and by seeking to be recognised as ‘employers of choice’. ! Additionally, to maintain a good reputation and not develop an image as a poor employer, employers must ensure that they: ! • Avoid damaging, negative media coverage! • Avoid disruptive strikes! • Retain a positive relationship with regulatory authorities, customers and suppliers!

Why is HRM important? HRM enables managers to avoid personnel mistakes, some of which include:! • Hiring the wrong person for the job ! • Experiencing high employee turnover ! • Employees not performing to their best capacity ! • Wasting time with useless interviews ! • Having your company cited under federal occupational safety laws! • Being taken to court because of discriminatory actions ! • Having a lack of training undermines performance in teams/departments ! • Unfair labour practices ! To improve performance in organisations through people: the Chartered Institute of Personnel and Development (CIPD) believes that management holds the key to increased productivity. How? By appropriate application of a range of people practices. !

Practices performed by the HR department Job analysis

Administration of contracts of employment

HR planning

Employee welfare and counselling

Recruitment and selection

Equal opportunities policy and monitoring

Training and development

Health and safety

Pay and conditions of employment

Outplacement

Grievance and disciplinary procedures

Culture management

Employee relations and communications

Knowledge management

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HRM practices at different stages of the employee life cycle !

Transition

Recruitment*&* selection

Reward*management* &*Performance* management

Succession* Planning

Training*&* Development

HRM and line management Authority — the right to make decisions, direct others’ work, and give orders. ! Line authority — the authority exerted by a HR manager by directing the activities of the people in his or her own department and in services areas (like the plant cafeteria). ! Staff (advisory) authority — staff authority gives the manager the right (authority) to advise other managers or employees in HRM related matters — they have a coordinative function.! Line manager — a manager who is authorised to direct the work of subordinates and is responsible for accomplishing the organisation’s tasks. ! Staff manager — a manager who assists and advises line managers. ! Functional authority — the authority exerted by an HR manager as coordinator of personnel activities. ! Hence, line managers have line authority, and staff managers have staff authority. HR managers can also be line managers if they have people reporting into them. The HR manager carries out three distinct functions: ! 1. A line function • Directs the activities of the people in his or her own department ! • Also in related areas ! • E.g. the plant cafeteria ! 2. A coordinative function • Coordinates personnel activities, aka ‘functional authority/control’! • Ensures line managers are implementing the HR policies and practices ! • E.g. adhering to its sexual harassment policies ! 3. Staff (assist and advise functions) • Advises the CEO so he/she can better understand the personnel aspects of the company's strategic options ! 4  of 130 

• Assists in hiring, training, evaluating, rewarding, counselling, promoting, firing employees ! • Administers benefit programs e.g. health and accident insurance, retirement, vacation, etc! • Helps line managers comply with equal employment and occupational safety laws! • Carries out an innovator role, by providing up-to-date info on current trends and new methods for better use of the employees ! • Plays an employee advocacy role by representing the interests of employees within the framework of its primary obligation to senior management! • Likely to exert implied authority because line managers know the HR manager has top management’s ear in areas like testing and affirmative action ! HR organisational charts!

Nowadays, there are a wide variety of ways that organisations choose to organise their human resources and each department. This is so that they can be more flexible and adapt to what their company specialises in. !

The evolution of personnel management 1. Social justice (late 19th/early 20th century) ! The origins of personnel management lie in the 19th century, deriving from the work of social reformers. Their criticisms of the free enterprise system and the hardship created by the exploitation of workers by factory owners enabled the first personnel managers to be appointed and provided the first frame of reference in which they worked: to ameliorate the lot of the workers. ! In the late 19th and early 20th centuries some of the larger employers with a paternalistic outlook began to appoint welfare officers to manage a series of new initiatives designed to make life less harsh for their employees. Some prominent examples include progressive schemes of unemployment benefit, sick pay and subsidised housing. ! 5  of 130 

2. Humane bureaucracy (early to mid 20th century) ! The second phase marked the beginnings of a move away from a sole focus on welfare towards the meeting of various other organisational objectives. Personnel managers began to gain responsibilities in the areas of staffing, training and organisation design. Influences in this era included F.W. Taylor and Henri Fayol, who started to look at management and administrative processes analytically, working out how organisational structures could be designed and labour deployed so as to maximise efficiency. ! The humane bureaucracy stage was also influenced by the Human Relations School, which sought to ameliorate the potential for industrial conflict and dehumanisation present in too rigid an application of these scientific management approaches. Examples include Elton Mayo, who had prevalent work on this subject, focusing on the social relationships in the workplace as well as employee morale. ! 3. Negotiated consent (mid 20th century) ! Personnel managers next added expertise in bargaining to their repertoire of skills. In the period of full employment following WWII, labour became a scarce resource. This led to a growth in trade union membership, and was referred to as ‘the challenge from below’. Personnel specialists managed the new collective institutions such as joint consultation committees, joint production committees and suggestion schemes set up in order to accommodate the new realities. ! The government helped with this, by encouraging the appointment of personnel officers and set up the first specialist courses for them in the universities. A management advisory service was also set up as the Ministry of labour, which still exists today. ! 4. Organisation (1970s/1980s) ! The late 1960s saw a switch in focus among personnel specialists, away from dealing principally with the rank-and-file employee on behalf of management, towards dealing with management itself and the integration of managerial activity. This phase was characterised by the development of career paths and of opportunities within organisations for personnel growth. ! This too remains a concern of personnel specialists today, with a significant portion of time and resources being devoted to the recruitment, development and retention of an elite core of people with specialist expertise on whom the business depends for its future. Personnel specialists developed techniques for workforce planning, which involves forecasting an organisation’s likely future skills needed and the steps needed to be taken to achieve this. ! 5. HRM (1990s and onwards) ! The term HRM dates from the early 1980s when courses with that name began to be offered as part of MBA programmes at leading American business schools. Even though it is unclear on who coined the term, the notion that employees should be regarded as ‘human resources’ dates from at least 10 years earlier. ! By the late 1980s, the term HRM replaced ‘personnel management’ in many organisations. Additionally, with the decentralisation of bargaining and the rise in many 6  of 130 

industries of non-union firms, managers in the private sector found themselves free and able to develop their own local policies and practices. As time went by, the same approach began being adopted by the public sector too.! 6. The next stage: a ‘new HR’ or HR 2.0 ! Many writers believe that we are now entering a sixth stage of HR, which is different from ever before. Some of these trends include: ! • Employees are becoming more mobile, move around between organisations, also internationally! • Employees might have multiple employers (‘permeable organisations’); work with agencies, franchises, outsourced firms — organisational boundaries become blurred ! • Moving away from expectation that employees will demonstrate commitment to a set of corporate values set by the organisation; there is now a stronger focus on customers! • Employees are encouraged to think about customer needs! • Employees are also viewed as ‘internal customers’, establishing and maintaining high levels of employee loyalty becoming important for retention! • HRM also focuses on reputation building of the organisation (building a brand)! Change of HR focus 1950s-60s

1970s-80s

1990s -

Nature of environment

Stable, predictable

Incremental shifts

Turbulent, complex

Management focus

Structure and systems. Long-range planning. HR: ‘jobs’

Strategy and Process. ! Consistency and fit. ! HR: person-job

Innovation, flexibility, capabilities. ! Entrepreneurship and diversity.! Partnership/networks. ! HR: personorganisation; teams

!

DESIGN

Relevance$to$ other$business$ areas,$strategy$ and$‘internal’$ coherence

How$policies$work$and$how$ they$effect$behaviour

Political,$economic$ and$social$issues

HR CR

A

W

HRD EO

R EI

INTEGRATION

IMPLEMENTATION

HR = resourcing; A=assessment; HRD=development; R=reward; EI=employee involvement; EO=equal ops.; W=welfare; CR=collective representation.

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Best practice vs. best fit The debate between best practice and best fit is an interning one of general significance which has consequences across the field of HRM. At root it is about the ‘best way’ of carrying out HR activities which is universally applicable. The main elements of the ‘best practice bundle’ are those which have long been considered as examples of good practice in the HRM field. These include: ! • • • • •

More advanced selection methods ! A serious commitment to employee involvement ! Substantial investment in training and development ! The use of individualised reward systems ! Harmonised terms and conditions of employment as between different groups of employees !

However, what is appropriate for one business may not be the same for another, which is where the ‘best fit’ theory comes in. Key variables include the size of the establishment, the dominant product market strategy being pursued and the nature of the labour markets in which the organisation competes. !

Trends shaping HRM So companies must be…

Trends • Technological advances ! • Trends in the nature of work ! • Demographic and workforce trends ! • Globalisation and competition ! • Indebtedness (“leverage”) and deregulation ! • Economic challenges and trends 

• More competitive ! • Faster and more responsive ! • More costeffective ! • Human-capital oriented !  • More scientific and how they make decisions

HR managers will therefore need these competencies • They focus more on strategic, bigpicture issues strategic goals ! • The use new ways to provide HR services ! • They take a talent management approach to managing HR ! • They manage employee engagement ! • They manage ethics ! • They measure HR performance and results ! • They use evidence-based HRM! • They add value! • They understand their HR philosophy ! • They have new competencies

Technological advances ! For one thing, technology dramatically changed how human resource managers do their jobs. LinkedIn and Facebook recruiting are examples. Employers can access candidates via Facebook’s job board. This provides a seamless way to recruit and promote job listings from Facebook. Then, after creating a job listing, the employer can advertise its job link using Facebook. Innovations like these have dramatically changed how HR managers do things. ! Additionally, the Hr portal, usually hosted on a company’s intranet, provides employees with single access point or “gateway” to HR information. They streamline the HR 8  of 130 

process, improve HRM performance, and allow HR managers to focus more on strategic issues. ! Globalisation! Globalisation — the tendency of firms to extend their sales, ownership, and/or manufacturing to new markets abroad. ! Globalisation compels employers to be more efficient. More globalisation means more competition, and more competition means more pressure to be “world class” — to lower costs, to make employees more productive, and to do things better and less expensively. The search for greater efficiencies prompts many employers to offshore (export jobs to lower-cost locations abroad). ! 50 or so years ago, globalisation boomed. Imports and exports in the US rose significantly. Changes in economic and political philosophies drove this boom. Governments dropped cross-border taxes or tariffs, formed economic free-trade areas, and took other steps to encourage the free flow of trade among countries. The economic rationale was that by doing so, all countries would gain.! Competition ! Over time there have been strong trends towards greater concentration of market power in the hands of larger organisations, much greater levels of import penetration into UK markets from overseas producers and a reduction in the amount of time in which any one organisation is able to achieve and maintain market dominance in an industry. In some industries, competition has become so intense that they are characterised by economists as being ‘hyper-competitive’ in nature. ! There are many drivers of increased competitive intensity: • National markets are increasingly being subsumed into single international markets with many more players and far less predictability ! • Technological advances both create greater opportunities, but also drive competitive intensity...