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Human Resource Management

and the Environment

McGraw-Hill/IrwinHuman Resource Management, 10/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Objectives

Define the term human resource management.Describe the strategic importance of human resource

management (HRM) activities.Explain what career opportunities are available in the

HRM field.Discuss the role that specialists and operating managers

play in performing HRM activities.List the main objectives pursued by HRM units.

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Introduction

Human resource management (HRM) is the effective management of people at workThe goal: make workers more satisfied and

productiveWhen an organization is concerned about people, its

total philosophy, culture, and orientation reflect itEvery manager must be concerned with people,

whether or not there is a human resources department

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Introduction

HRM consists of numerous activities:Equal employment opportunity (EEO) complianceJob analysisHuman resource planningRecruitment, selection, motivation, and orientationPerformance evaluation and compensationTraining and developmentLabor relationsSafety, health, and wellness

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Introduction

The HRM unit is oriented toward:ActionPeopleGlobal enterpriseThe future

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A Brief History of HRM

HRM can be traced to England, where craftspeople organized guildsThey used unity to improve working conditions

The Industrial Revolution in the 18th century laid the basis for a new, complex industrial societyChanging work conditions, social patterns, and labor

created a gap between workers and ownersDuring the world wars era, scientific management,

welfare work, and industrial psychology merged

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A Brief History of HRM

Frederick W. Taylor, the father of scientific management, summarized scientific management as:ScienceHarmonyCooperationMaximum output

Industrial psychology, initiated in 1913, focused on:The workerIndividual differencesThe maximum well being of the worker

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A Brief History of HRM

Personnel departments were created to deal with:Drastic changes in technologyOrganizational growthThe rise of unionsGovernment intervention

concerning working peopleAround the 1920s, more organizations

noticed and acted on employee-management conflict

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A Brief History of HRM

The Hawthorne studies (1924 to 1933):Were to determine the effects of

illumination on workers and their outputRather, it pointed out the importance of

social interaction on output and satisfaction

Until the 1960s, the personnel function was concerned only with blue-collar employeesFile clerk, house-keeper, social worker, firefighter,

and union trouble defuser

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Strategic Importance of HRM

Today, HRM plays a major role in:Clarifying the firm’s human resource problemsDeveloping solutions for them

It is oriented toward:ActionThe individualWorldwide interdependenceThe future

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Strategic Importance of HRM

Strategic HRM differs significantly from traditional HRMIn traditional arrangements, responsibility for

managing human resources lies with different specialists in each department or division

In a strategic approach, people management rests with an individual who is in direct contact with workers or line managers

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Strategic Importance of HRM

Investment in human assets

Cost centersAccountability

Developing peopleFollowing the rulesMajor emphasis

Open, participative, empowerment

Bureaucratic, top-down, centralization

Culture

Flexible, based on human resources

Rules, policies, position power

Control

Short, intermediate, long term

Short-term resultsTime focus

Lead, inspire, understandRespond to needsRole of HRM area

Improved understanding and use of human assets

Better performanceObjective

Line managersSpecialistsResponsibility for human resources

Strategic HRMTraditional HRMItem

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Strategic Importance of HRM

For years, the HRM function was not linked to corporate profitOrganizations focused only on current performanceHR managers did not have a strategic perspectiveExecutives categorized HRM in a traditional mannerIt was difficult to develop metrics for HRM activities

Recognition of the importance of people made HRM a major player in developing strategic plansHRM strategies must reflect the organization’s

strategy regarding people, profit, and effectiveness

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Strategic Importance of HRM

Key concepts that must be applied:Analyze and solve problems from a profit-oriented

point of viewAssess and interpret costs and benefits of HRM

issuesPlanning models must include realistic, challenging,

specific, and meaningful goals Prepare reports on HRM solutions to problems

encountered by the firm

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Strategic Importance of HRM

Key concepts that must be applied (continued):Train the human resources staff Emphasize the strategic importance of HRM Show managers that they contribute to the

goals/mission of the firm

The actions, language, and performance of the HRM function must be:MeasuredPrecisely communicatedEvaluated

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Strategic Importance of HRM

The era of HRM accountability resulted from:Concerns about productivity Organizational downsizing and redesign An increasingly diverse workforce The need to effectively use all organizational

resources to compete in an increasingly complex and competitive world

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Strategic Importance of HRM

For the HRM function to be successful, managers in other functions must be knowledgeable and involved Managers play a major role in setting the direction,

tone, and effectiveness of the relationship between:The employeesThe firmThe work performed

Without managerial participation, there are likely to be major human resource problems

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HRM and Organizational Effectiveness

For a firm to survive and prosper, reasonable goals must be achieved in:PerformanceLegal complianceEmployee satisfactionAbsenteeismTurnoverTraining effectiveness and ROIGrievance ratesAccident rates

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HRM and Organizational Effectiveness

Effectiveness is measured by the balance of such complimentary characteristics as:Reaching goalsEmploying the skills/abilities of employees

efficiently Ensuring the influx and retention of well-trained,

motivated employees Three elements needed for firms to be effective:

Mission and strategyOrganizational structureHRM

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HRM and Organizational Effectiveness

It is important to remember that the people who do the work and create the ideas

allow the organization to survive

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HRM and Organizational Effectiveness

Changes experienced by organizations:Growing global competitionRapidly expanding technologies Increased demand for individual, team, and

organizational competencies Faster cycle times Increasing legal and compliance scrutiny Higher customer expectations

The mechanized, routine-oriented workforce is giving way to a knowledge-based workforce

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HRM and Organizational Effectiveness

Top management has trouble making strategic planning decisions regarding people All other resources are evaluated in terms of money

Implementing high performance management practices results in:Profitability gainsStock price increasesHigher company survival rates

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Objectives of the HRM Function

HRM contributions to organizational effectiveness:Helping the organization reach its goals Employing workforce skills and abilities efficiently Increasing job satisfaction, self-actualization, and

quality of work life

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Objectives of the HRM Function

HRM contributions to organizational effectiveness (continued):Communicating HRM policies to all employeesMaintaining ethical policies and socially responsible

behavior Managing change to the mutual advantage of

individuals, groups, the enterprise, and the public

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Objectives of the HRM Function

Increasing employees’ job satisfaction and self-actualizationEmployees must feel that the job is right for their

abilities and that they are being treated equitably Satisfied employees are not automatically more

productive However, unsatisfied employees tend to be absent and

quit more often and produce lower-quality work Both satisfied and dissatisfied employees can perform

equally in quantitative terms

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Objectives of the HRM Function

Quality of work life (QWL) is a general concept that refers to several aspects of the job, including:Management and supervisory style Freedom and autonomy to make decisions on the job Satisfactory physical surroundings Job safetySatisfactory working hoursMeaningful tasks

The job and work environment should be structured to meet as many workers’ needs as possible

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Objectives of the HRM Function

Communicating HRM policies to all employees:HRM policies, programs, and

procedures must be communicated fully and effectively

They must be represented to outsidersTop-level managers must understand

what HRM can offer

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Objectives of the HRM Function

Maintaining ethical policies and socially responsible behavior:HRM managers must show by example that HRM

activities are fair, truthful, and honorablePeople must not be discriminated againstTheir basic rights must be protected

These principles should apply to all activities in the HRM area

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Objectives of the HRM Function

Trends that strain employer-employee relationships:TelecommutingOutsourcing HRMFamily medical leaveChild careSpouse-relocation assistancePay for skillsBenefit cost-sharingUnion-management negotiation

These changes are due to the emergence of new lifestyles and an aging population

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Objectives of the HRM Function

Managing increased urgency and faster cycle times:Firms are placing a growing emphasis on:

Increasing customer serviceDeveloping new products

and servicesTraining and educating

technicians, managers, and decision makers

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Objectives of the HRM Function

Shorter cycle times mean less time to:Train, educate, and assign managersSolve sexual harassment complaintsRecruit and select talented peopleImprove the firm’s image

Learning provides a framework for decreasing cycle time

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Objectives of the HRM Function

Faster, more urgent management behaviors have been caused by:Foreign and domestic competitionTechnological changesThe emergence of new opportunities

Pressure to increase learning and reduce cycle time, while also reducing cost, is a competitive realityHRM activities must be in sync with the firm’s

environment

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Who Performs HRM Activities

Two groups normally perform HRM activities:HR manager-specialistsOperating managers

The effectiveness of the human resource declines more quickly than all other resourcesAn investment in people effects organizational

effectiveness more than money, materials, or equipment

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Who Performs HRM Activities

A large part of an operating manager’s day is spent:In scheduled and unscheduled meetingsIn telephone conversationsSolving problems that have a direct impact on people

In smaller organizations, the operating manager has such HRM responsibilities as:Scheduling workRecruitment and selectionCompensating people

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Who Performs HRM Activities

As the organization grows, the operating manager’s HR work may be shifted to HRM specialistsHR specialists are found in organizations with

100 to 150 employeesA HR department is typically created when the

number of employees reaches 200 to 500

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Outsourcing

Outsourcing HRM activities is growing in popularity because of:DownsizingRapid growth or decline of businessGlobalizationIncreased competitionRestructuring

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Outsourcing

Some executives assume that outsourcing can:Reduce costsImprove flexibilityPermit the hiring of specialized expertise

The choice to outsource HRM activities is being made with little empirical support

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Interaction of Operating & HR Managers

With both operating managers and HR specialists making HRM decisions, there can be conflictThey have different orientations and objectives

Conflict is worse if joint decisions must be made on:DisciplinePhysical working conditionsTerminationTransferPromotionEmployment planning

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Interaction of Operating & HR Managers

Operating managers and HR specialists can also differ on:How much authority employees

have over job design Labor relations Organizational planning Rewards, such as bonuses

and promotions

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Interaction of Operating & HR Managers

The roles of HRM and operating managers have been impacted by:Sweeping changes in business GlobalizationTechnologyDemography

People don’t leave companies, they leave managersHRM can help managers

do a better job

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Interaction of Operating & HR Managers

HRM is often seen as a company policemanIt is also seen as inflexible and over-attentive to detail

HRM specialists are encouraged to:Analyze every activity and prove its added value Understand the businessBecome a strategic partner with line managers Seek out operating managers Help managers avoid problems Be flexible and open to the ideas of others

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Necessary HRM Competencies

Record keepingTraining/development

Accounting/financeEmployment law

Benefit designRecruiting/staffing

Compensation designLeadership

ForecastingProblem solving

TechnologyCommunication

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HRM’s Place in Management

The HR department must be a proactive, integral part of management and strategic planning Ascertain specific organizational needs for the

use of its competence Evaluate the use and satisfaction among other

departments Educate management and employees about the

availability and use of HRM services

HRM strategic plans must build on the firm's strengths

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HRM’s Place in Management

To develop a competitive advantage over other firms:Organizations must create value in a way that is rare

and difficult for competitors to imitate

These things must become so important and effective that every unit in the firm knows they are needed for success:

The compensation system Training opportunitiesDiversity management programs

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HRM’s Place in Management

HR executives must educate other departments about the human resource implications of decisionsThis requires being familiar with other aspects of the

organization, including:InvestmentsAdvertisingMarketingProduction controlComputer utilizationResearch and development

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HR Department Operations

Most organizations keep HR units smallAbout 150 people maximum

The number of HR specialists to operating employees (personnel ratio) varies by industry:The national average is 1 specialist to 100 employees

Construction, agriculture, retail, wholesale, and services have fewer specialists than average

Public utilities, durable goods manufacturing, banking, insurance, and government have an above-average ratio

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HRM Strategy

A firm's HRM strategy integrates major objectives, policies, and procedures into a cohesive whole A well-formulated HRM strategy aggregates and

allocates a firm's resources on the basis of: The organization’s internal strengths

and weaknesses Changes in the environment The anticipated actions of competitors

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Clarifying Meaningful HRM Objectives

The objectives of an organization or department are the goals it seeks to achieve Most objectives are stated in very general terms, from

which more specific statements are developed These plans are called policies and procedures or

rules

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Clarifying Meaningful HRM Objectives

More specific

Strategy: The plan that integrates major objectives

Objectives: Goals that are specific and measurable

Policies: Guides to decision making

Procedures/Rules: Specific directions for decision making

More specific

More specific

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HRM Policy

A policy is a general guide that expresses limits within which action should occurPolicies arise from past or potential problemsThey free managers from making certain decisionsThey ensure some consistency in behaviorThey allow managers to concentrate on decisions in

which they have the most experience and knowledge

For some organizations, the next step is to develop procedures and rules

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HRM Procedures

Procedures (rules) are a specific direction to actionIn large organizations, procedures are collected and

put into manuals called standard operating procedures (SOPs)

Organizations must ensure that consistent decision making flows from a well-developed, but not excessive, set of policies and procedures

Procedures should be developed for only the most vital areas

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Organization of an HR Department

In most organizations, the chief HR executive reports to the top managerIn medium- and small-sized organizations, HRM and

another function may be in a single departmentIn nonprofit organizations, HRM is typically a unit in

the business office HR specialists are usually located at the headquarters

of an organization