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Introduction to HumanIntroduction to HumanResource ManagementResource Management

M.M. KhasroKhasro MIAH Ph.D.MIAH Ph.D.

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Historical Background of HRMHistorical Background of HRM

Human resource management has changed inHuman resource management has changed in

name various times throughout history.name various times throughout history.

The name change was mainly due to the changeThe name change was mainly due to the changein social and economic activities throughoutin social and economic activities throughouthistory.history.

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Industrial WelfareIndustrial Welfare

Industrial welfare was the first form of humanIndustrial welfare was the first form of human

resource management (HRM).resource management (HRM).

In 1833 the factories act stated that there shouldIn 1833 the factories act stated that there shouldbe male factory inspectors.be male factory inspectors.

In 1878 legislation was passed to regulate theIn 1878 legislation was passed to regulate the

hours of work for children and women byhours of work for children and women byhaving a 60 hour week.having a 60 hour week.

trade unions started to be formed.trade unions started to be formed.

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The welfare workers association was formedThe welfare workers association was formed

later changed to Chartered Institute oflater changed to Chartered Institute of

Personnel and Development.Personnel and Development. Recruitment and Selection started whenRecruitment and Selection started when MaryMary

Wood was asked to start engaging girls duringWood was asked to start engaging girls during

thethe 11st world war.st world war.

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In theIn the 11st world war personnel developmentst world war personnel development

increased due to government initiatives toincreased due to government initiatives to

encourage the best use of people.encourage the best use of people. InIn 19161916 it became compulsory to have a welfareit became compulsory to have a welfare

worker in explosive factories and wasworker in explosive factories and was

encouraged in weapons factories.encouraged in weapons factories.

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A lot of work was done in this field by the armyA lot of work was done in this field by the army

forces.forces.

The armed forces focused on how to testThe armed forces focused on how to testabilities and IQ along with other research inabilities and IQ along with other research inhuman factors at work.human factors at work.

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InIn 18681868 thethe 11st trade union conference was heldst trade union conference was held

started of collective bargaining.started of collective bargaining.

InIn 19131913 the number of industrial welfarethe number of industrial welfareworkers had grown so a conference organizedworkers had grown so a conference organizedbyby SeebohmSeebohm RowntreeRowntree was held.was held.

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Contemporary HRMContemporary HRM

Driven by environmental factorsDriven by environmental factors

Responses to environmental challengesResponses to environmental challenges

Strategic choice re: union avoidanceStrategic choice re: union avoidance

Direct, individualised employment relationshipDirect, individualised employment relationship

Foster mutuality and develop human assetsFoster mutuality and develop human assets

Examples of star firms and Japanese practicesExamples of star firms and Japanese practices

HRM becomes more integrated and proHRM becomes more integrated and pro--active and aactive and astrategic focus is developedstrategic focus is developed

Competitive advantage and positive bottomCompetitive advantage and positive bottom--linelineimpactimpact

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PersonnelPersonnel Management: TheManagement: The

Technical/Maintenance Side of HRMTechnical/Maintenance Side of HRM

Division of laborDivision of labor

Central hiring officesCentral hiring offices

Rules for disciplining and dismissing workersRules for disciplining and dismissing workers

More systematic approaches to trainingMore systematic approaches to training

Performance evaluationPerformance evaluation

Job analysis to aid in employee selection and rationalizeJob analysis to aid in employee selection and rationalize

wageswages

Employee representation plansEmployee representation plans

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FromFrom PersonnelPersonnel

Management to HRMManagement to HRM

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Key DevelopmentsKey Developments

New TechnologyNew Technology new technology allowednew technology allowedoutsourcing of many activities and handling manyoutsourcing of many activities and handling manyadministrative aspects of HR electronically; firms focusadministrative aspects of HR electronically; firms focus

more on core competenciesmore on core competencies OutsourcingOutsourcing of HRM responsibilities (e.g.,of HRM responsibilities (e.g.,

compensation, hiring, training)compensation, hiring, training)

GlobalizationGlobalization HR experts have to deal withHR experts have to deal with

expatriatesexpatriates preparing them for work abroad and forpreparing them for work abroad and forsuccessful return to their home countrysuccessful return to their home country

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Key DevelopmentsKey Developments Stiff competitionStiff competition longlong--term organizationterm organization--orientedoriented

HR decisions give way to shortHR decisions give way to short--term marketterm marketorientationorientation

Risk of low firm performance is transferred toRisk of low firm performance is transferred to

employees whose job and compensation stabilityemployees whose job and compensation stabilitygrows more and more fragilegrows more and more fragile

Strategic HRStrategic HR companies are more focused oncompanies are more focused ongenerating shareholder value, and they look to HRgenerating shareholder value, and they look to HR

experts to take more longexperts to take more long--term, profit orientedterm, profit orientedperspective; HR is a source ofperspective; HR is a source ofcompetitive advantagecompetitive advantageand value added (not only cost cutting) initiativesand value added (not only cost cutting) initiatives

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19701970ss 19801980s: Quality of Work Lifes: Quality of Work Life

Growing dissatisfaction among workers with unchallenging jobsGrowing dissatisfaction among workers with unchallenging jobsand heavyand heavy--handed management prompted managers to rethinkhanded management prompted managers to rethinkthe way work was organized and managedthe way work was organized and managed

Several recessions, oil crises, deregulation, and mounting foreignSeveral recessions, oil crises, deregulation, and mounting foreigncompetition brought considerable pressures to bear oncompetition brought considerable pressures to bear on

managers. Management learned thatmanagers. Management learned that quality,quality, not only cost, was anot only cost, was akey to market success.key to market success.

The value of people increased, (hence the shift from the termThe value of people increased, (hence the shift from the term

personnel management to HRM) and opened the door to apersonnel management to HRM) and opened the door to anew conceptualization of how work is organized and the role ofnew conceptualization of how work is organized and the role ofHR specialistsHR specialists

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QWL ExperimentsQWL Experiments

Reorganization of tasks and technologyReorganization of tasks and technology

SelfSelf--directed work teamsdirected work teams

Joint problemJoint problem--solving groupssolving groups

Improved communication between management andImproved communication between management andlaborlabor

Quality circlesQuality circles

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QWLQWL

-- Employee ParticipationEmployee Participation

-- Career DevelopmentCareer Development

-- CommunicationCommunication

-- WellnessWellness

-- Job Security,Job Security,

Safe EnvironmentSafe Environment

-- CompensationCompensation

-- PridePride

- Quality Improvement Team

- Training, Internal Promotion

- Free Flow, Open,

Group Medical, Recreation

- Counseling

- Full time, Retirement Safety,

Emergency

- Competitive wages / benefits

- Identity, Civic & Environmentalconcern

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19801980ss 19901990s: Quality Improvements: Quality Improvement

JuneJune 19801980 JapanJapan Can Why Cant We?Can Why Cant We?

Trying to stay competitive, many companies looked atTrying to stay competitive, many companies looked atJapan and took up TQM and reengineering.Japan and took up TQM and reengineering.

HR departments became more focused on servingHR departments became more focused on servinginternal customers, training workers in QI techniques,internal customers, training workers in QI techniques,and facilitating organizational change and organizationaland facilitating organizational change and organizationallearning initiativeslearning initiatives

Greater emphasis on union avoidance in the USGreater emphasis on union avoidance in the US((greenfieldgreenfield sites) called for more work reformsites) called for more work reform

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ANew Model of Work System:ANew Model of Work System:

Different NamesDifferent Names Similar MeaningSimilar Meaning

High InvolvementHigh Involvement

High CommitmentHigh Commitment

High PerformanceHigh Performance

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Two Work SystemsTwo Work Systems

In the past two decades, we have witnessedIn the past two decades, we have witnessedtwo work systems which exist side by sidetwo work systems which exist side by side

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Two Work SystemsTwo Work SystemsHRM Practices Command & Control High Performance

Internal career

opportunities

Hiring mainly from outside

the firm

Very little use of internal

career ladders

Hiring mainly from within

the firm

Extensive use of well defined

career ladders

Training No formal training provided Extensive formal trainingprovided

Result-oriented

appraisals

Performance measured by

quantifiable output

Performance measured by

behavior-oriented measures

Incentives Mainly extrinsic Extrinsic and intrinsic

Employmentsecurity

Little High

Benefits to downsized

employees

Formal dismissal policies

Participation in

decision making

Little High

Job descriptions Jobs are clearly/tightly

defined

Jobs are broadly defined

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After studying this chapter, you should be able to:After studying this chapter, you should be able to:After studying this chapter, you should be able to:After studying this chapter, you should be able to:

1.1. Explain what human resource management isExplain what human resource management isand how it relates to the management process.and how it relates to the management process.

2.2. Give at least eight examples of how allGive at least eight examples of how all

managers can use human resourcemanagers can use human resourcemanagement concepts and techniques.management concepts and techniques.

3.3. Illustrate the human resources responsibilitiesIllustrate the human resources responsibilities

of line and staff (HR) managers.of line and staff (HR) managers.

4.4. Provide a good example that illustrates HRsProvide a good example that illustrates HRsrole in formulating and executing companyrole in formulating and executing company

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Human Resource Management atHuman Resource Management at

WorkWork

Human Resource Management is theHuman Resource Management is the

organizational function that deals with issuesorganizational function that deals with issuesrelated to people such as hiring, training,related to people such as hiring, training,

promotion, performance management,promotion, performance management,compensation, organization development,compensation, organization development,

safety, wellness, benefits, employee motivation,safety, wellness, benefits, employee motivation,

communication, administration.communication, administration.

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Therefore,Therefore, human resource management can be defined ashuman resource management can be defined asa specific combination of HR practices, work structures,a specific combination of HR practices, work structures,and processes that maximizes employee knowledge, skill,and processes that maximizes employee knowledge, skill,commitment, and flexibility.commitment, and flexibility.

It composed of many interrelated parts that complementIt composed of many interrelated parts that complementone another to reach the goals of an organization, large orone another to reach the goals of an organization, large orsmall.small.

Set of activities directed at attracting, developing, andSet of activities directed at attracting, developing, and

maintaining an effective workforce capable of achievingmaintaining an effective workforce capable of achievingthe firms objective.the firms objective.

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Beyond this approach,Beyond this approach, HRM has been described in two oppositeHRM has been described in two oppositedimensions: Hard and Soft dimensionsdimensions: Hard and Soft dimensions

TheThe HardHardaspects related to the businessaspects related to the business--focused and calculativefocused and calculativeaspects of managing aspects of managing headcountsheadcounts as a rational way like any otheras a rational way like any otherfactor of production. The hard dimension finds its impetus andfactor of production. The hard dimension finds its impetus andlegitimating in a marketlegitimating in a market--responsive mode of action. It also reflects theresponsive mode of action. It also reflects thebusiness strategy focus often found in HRM accounts.business strategy focus often found in HRM accounts.

TheThe SoftSoft face of HRM traces its roots to the humanface of HRM traces its roots to the human--relations schoolrelations schooland emphasizes communication, training and development,and emphasizes communication, training and development,motivation, culture, value, and involvement. It presages and echoesmotivation, culture, value, and involvement. It presages and echoesthethe resourceresource--based model of the firm and suggest that competitivebased model of the firm and suggest that competitive

advantage can be gained by avoiding shortadvantage can be gained by avoiding short--term costterm cost--cutting in favorcutting in favorof longof long--term flow of building and sustaining capability andterm flow of building and sustaining capability andcommitment.commitment.

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Human Resource Management atHuman Resource Management at

WorkWork

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Acquisition

Training

Appraisal

CompensatingLabor Relations

Health and

Safety

Fairness

Human

Resource

Management

(HRM)

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Personnel Aspects of a ManagersPersonnel Aspects of a Managers

JobJobyy Conducting job analysesConducting job analyses

yy Planning labor needs and recruiting job candidatesPlanning labor needs and recruiting job candidates

yy Selecting job candidatesSelecting job candidates

yy Orienting and training new employeesOrienting and training new employees

yy Managing wages and salariesManaging wages and salaries

yy Providing incentives and benefitsProviding incentives and benefits

yy Appraising performanceAppraising performance

yy CommunicatingCommunicating

yy Training and developing managersTraining and developing managers

yy Building employee commitmentBuilding employee commitment

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DIFFERENCES BETWEEN TRADITIONAL AND NEWDIFFERENCES BETWEEN TRADITIONAL AND NEW

HRMHRM

FactorsFactors Traditional HRTraditional HR New HRM Concept

Responsibility of HRResponsibility of HR Staff specialistsStaff specialists Line managers

FocusFocus Employee relationsEmployee relations Partnership with internal and

external customers and

stakeholders

Role of HRRole of HR Transactional, change followerTransactional, change follower

and respondentsand respondents

Transformational, change

leader and initiator

InitiativesInitiatives Slow reactive, fragmentedSlow reactive, fragmented Fast, proactive, integrated

Time HorizonsTime Horizons Short termShort term Short, median and long as

necessary

ControlControl BureaucraticBureaucratic-- rules, policies,rules, policies,

proceduresprocedures

Organic- flexible, whatever is

needed to succeed

Job DesignJob Design Tight division of labor,Tight division of labor,

independence, specializationindependence, specialization

Broad, flexible, cross-training

Key InvestmentKey Investment Capital, ProductsCapital, Products People, knowledge

AccountabilityAccountability Cost centreCost centre Investment centre

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Personnel MistakesPersonnel Mistakes

yy Hire the wrong person for the jobHire the wrong person for the job

yy Experience high turnoverExperience high turnover

yy Have your people not doing their bestHave your people not doing their best

yy Waste time with useless interviewsWaste time with useless interviews

yy Have your company in court because of discriminatory actionsHave your company in court because of discriminatory actions

yy Have some employees think their salaries are unfair andHave some employees think their salaries are unfair andinequitable relative to others in the organizationinequitable relative to others in the organization

yy Allow a lack of training to undermine your departmentsAllow a lack of training to undermine your departmentseffectivenesseffectiveness

yy Commit any unfair labor practicesCommit any unfair labor practices

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Basic HRConceptsBasic HRConcepts

The bottom line of managing:The bottom line of managing:Getting resultsGetting results

HR creates value by engaging inHR creates value by engaging in

activities that produce theactivities that produce theemployee behaviors that theemployee behaviors that the

company needs to achieve itscompany needs to achieve itsstrategic goals.strategic goals.

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LivingLiving

OrganizationOrganization

HR ConceptHR Concept

(Dynamic)(Dynamic)

AdaptabilityAdaptability

& Flexibility& Flexibility

ProductivityProductivity

PerformanceManagementCompetency

- Quality of work-life- Work-life Balance- Healthy Organization

Development(TD/CD/OD)

(SHRM)(SHRM)

(HRD)(HRD)

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Line and StaffAspects of HRMLine and StaffAspects of HRM

Line managerLine manager

A manager who is authorized to direct the work ofA manager who is authorized to direct the work ofsubordinates and is responsible for accomplishingsubordinates and is responsible for accomplishingthe organizations tasks.the organizations tasks.

Staff managerStaff manager

A manager who assists and advises line managers.A manager who assists and advises line managers.

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Line Managers HRM ResponsibilitiesLine Managers HRM Responsibilities

1.1. Placing the right person on the right jobPlacing the right person on the right job

2.2. Starting new employees in the organization (orientation)Starting new employees in the organization (orientation)

3.3. Training employees for jobs that are new to themTraining employees for jobs that are new to them

4.4. Improving the job performance of each personImproving the job performance of each person

5.5. Gaining creative cooperation and developing smooth workingGaining creative cooperation and developing smooth workingrelationshipsrelationships

6.6. Interpreting the firms policies and proceduresInterpreting the firms policies and procedures

7.7. Controlling labor costsControlling labor costs

8.8. Developing the abilities of each personDeveloping the abilities of each person

9.9. Creating and maintaining department moraleCreating and maintaining department morale

10.10. Protecting employees health and physical conditionProtecting employees health and physical condition

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Human Resource Managers DutiesHuman Resource Managers Duties

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Functions of

HR Managers

Line FunctionLine Authority

ImpliedAuthority

Staff FunctionsStaff Authority

Innovator

Employee Advocacy

Coordinative

FunctionFunctional Authority

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Human Resource SpecialtiesHuman Resource Specialties

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Recruiters

EEO

Coordinators

Labor Relations

Specialists

Training

SpecialistsJob Analysts

Compensation

Managers

Human

Resource

Specialties

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FIGUREFIGURE 1111HR Organization Chart for a Large OrganizationHR Organization Chart for a Large Organization

10/17/2010 134MBA Fall 2010 KsMSource: www.hr.wayne.edu/orgcharts.php.Accessed May 6, 2007.

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FIGUREFIGURE 1122 HR Organizational Chart (Small Company)HR Organizational Chart (Small Company)

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FIGUREFIGURE 1133 Employment and RecruitingEmployment and RecruitingWho Handles It?Who Handles It?

(Percentage ofAll Employers)(Percentage ofAll Employers)

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Source: HRMAGAZINE, BNA/Society for Human Resource Management, 2002.

Reproducedwith permission via Copyright Clearance Center.

Note: Length of bars represents prevalence of activity among all surveyed employers.

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The Changing Environment ofThe Changing Environment of

Human Resource ManagementHuman Resource Management

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Globalization Trends

Technological Trends

Trends in the Nature of Work

Workforce Demographic Trends

Changes and Trends

in Human Resource

Management

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FIGUREFIGURE 1144 Employment migration: Projected Loss ofEmployment migration: Projected Loss ofJobsJobs and Wagesand Wages

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Source: Michael Schroeder, States Fight Exodus of Jobs, Wall Street Journal, June 3, 2003,

p.84.Reproducedwith permission of Dow Jones & Co. Inc. via Copyright Clearance Center.

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The Changing Role ofThe Changing Role of

Human Resource ManagementHuman Resource Management

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New

Responsibilities

for HR Managers

Measuring theHRM

Teams Performance

Managing with the

HR Scorecard

Process

Creating High-

Performance Work

Systems

Strategic Human

Resource

Management

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TABLETABLE 1111 Technological Applications for HRTechnological Applications for HR

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Application Service Providers (ASPs) and technology outsourcing

Web portals

PCs and high-speed access

Streaming desktop video

The mobile Web and wireless net access

E-procurement

Internet- and network-monitoring software

Bluetooth

Electronic signatures

Electronic bill presentment and payment

Data warehouses and computerized analytical programs

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HighHigh--Performance Work SystemPerformance Work System

PracticesPractices

yy Employment securityEmployment security

yy Selective hiringSelective hiring

yy Extensive trainingExtensive training

yy SelfSelf--managed teams/decentralized decision makingmanaged teams/decentralized decision makingyy Reduced status distinctionsReduced status distinctions

yy Information sharingInformation sharing

yy Contingent (payContingent (pay--forfor--performance) rewardsperformance) rewards

yy Transformational leadershipTransformational leadership

yy Measurement of management practicesMeasurement of management practices

yy Emphasis on highEmphasis on high--quality workquality work

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Benefits of a HighBenefits of a High--PerformancePerformance

Work System (HPWS)Work System (HPWS) Generate more job applicantsGenerate more job applicants

Screen candidates more effectivelyScreen candidates more effectively

Provide more and better trainingProvide more and better training

Link pay more explicitly to performanceLink pay more explicitly to performance

Provide a safer work environmentProvide a safer work environment

Produce more qualified applicants per positionProduce more qualified applicants per position

Hiring based on validated selection testsHiring based on validated selection tests

Provide more hours of training for new employeesProvide more hours of training for new employees

Conduct more performance appraisalsConduct more performance appraisals

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FIGUREFIGURE 1155 Five Sample HR MetricsFive Sample HR Metrics

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HR Metric* How to Calculate It

Absence rate#

ofdays absent in month 100Average# ofemployees during month # ofworkdays

Cost per hire Advertising + agency fees + employee referrals + travel cost of

applicants and staff + relocation costs + recruiter pay and benefits

Number of hires

HR expense

factor

HRexpense

Total operating expense

Time to fill Total days elapsed to fill job requisitions

Number hired

Turnover rate Number of separations during month 100

Averagenumber ofemployees during month

Sources:Robert Grossman, Measuring Up, HR Magazine, January 2000, pp. 2935; Peter V.Le Blanc, Paul Mulvey, and Jude T.Rich, Improving theReturn onHuman Capital: New Metrics,

Compensation and Benefits Review, January/February 2000, pp. 1320; Thomas E. Murphy and Sourushe Zandvakili, Data and Metrics-Driven Approach to HumanResource Practices: Using

Customers, Employees, and Financial Metrics, Human Resource Management39, no. 1 (Spring 2000), pp. 93105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;]

SHRM/BNA 2000 Cost Per Hire and Staffing Metrics Survey;www.shrm.org. See also, SHRM Research 2006 Strategic HRManagement Survey Report, Society forHumanResource Management..

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Measuring HRs ContributionMeasuring HRs Contribution

The HR ScorecardThe HR Scorecard Shows the quantitative standards,Shows the quantitative standards,

or metrics the firm uses toor metrics the firm uses tomeasure HR activities.measure HR activities.

Measures the employee behaviorsMeasures the employee behaviorsresulting from these activities.resulting from these activities.

Measures the strategically relevantMeasures the strategically relevantorganizational outcomes of thoseorganizational outcomes of thoseemployee behaviors.employee behaviors.

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The Human Resource ManagersThe Human Resource Managers

P

roficienciesP

roficiencies New ProficienciesNew Proficiencies

HR proficienciesHR proficiencies

Business proficienciesBusiness proficiencies

Leadership proficienciesLeadership proficiencies

Learning proficienciesLearning proficiencies

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FIGUREFIGURE 1166 Effects CFOs Believe Human Capital Has on Business OutcomesEffects CFOs Believe Human Capital Has on Business Outcomes

10/17/2010 146MBA Fall 2010 KsM

Source: StevenH. Bates, Business Partners, HR Magazine, September 2003, p. 49.Reproduced

with permission of the Society forHumanResource Management via Copyright Clearance Center.

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HRCertificationHRCertification

HR is becoming more professionalized.HR is becoming more professionalized. Society for Human Resource ManagementSociety for Human Resource Management

(SHRM)(SHRM)

SHRMs Human Resource CertificationSHRMs Human Resource CertificationInstitute (HRCI)Institute (HRCI)

SPHR (senior professional in HR)SPHR (senior professional in HR)certificatecertificate

PHR (professional in HR)PHR (professional in HR)

certificatecertificate

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FIGUREFIGURE 1177

20042004 SHRMSHRM

LearningLearning

SystemSystem

ModuleModuleDescriptionsDescriptions

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The Human Resource ManagersThe Human Resource Managers

Proficiencies (contd)Proficiencies (contd)

Managing within the LawManaging within the Law

Equal employment lawsEqual employment laws

Occupational safety and health lawsOccupational safety and health laws

Labor lawsLabor laws

Managing EthicsManaging Ethics

Ethical lapsesEthical lapses

SarbanesSarbanes--Oxley inOxley in 20032003

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10/17/2010 150MBA Fall 2010 KsM

An integrated approach to people resourcing

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HR strategy: the integration of HR activities to

manage performance

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HRM in the twenty-first century?

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KE Y T E R M SKE Y T E R M SKE Y T E R M SKE Y T E R M S

management processmanagement processhuman resource managementhuman resource management

(HRM)(HRM)

authorityauthority

line managerline manager

staff managerstaff manager

line authorityline authority

staff authoritystaff authority

implied authorityimplied authority

functional controlfunctional control

employee advocacyemployee advocacy

globalizationglobalizationhuman capitalhuman capital

strategystrategy

strategic planstrategic plan

metricsmetrics

HR ScorecardHR Scorecard

outsourcingoutsourcing

ethicsethics

strategic human resource managementstrategic human resource management

highhigh--performance work systemperformance work system

10/17/2010 153MBA Fall 2010 KsM