MOI UNIVERSITY EMBA PROGRAMMEMBA 820: HUMAN RESOURCE MANAGEMENT

2.0 MEETING HUMAN RESOURCE REQUIREMENTS

This topic discusses the process of meeting the human resource needs of an organization in terms of quantity and quality. It will focus on three main stages of the process: Human resource planning Job analysis Recruitment and selection

2.1 HUMAN RESOURCE PLANNING (HRP)

Objectives: Explain the meaning of human resource planning Discuss the importance of human resource planning Discuss the factors that influence human resource planning Examine the effects of labour turnover on organizational performance

2.1.1 Meaning of Human Resource Planning:

HRP is the process by which a firm predicts the quantity and quality of employees required in the future. It is a strategy for the acquisition, utilization, improvement and retention of HR and an integral part of the broader process of corporate planning. It is achieved by comparing the organization’s current employees with the likely future needs.HRP ensures that the organization has the right kind and number of people at the right places at the right time doing work for which they are economically most useful.

HRP is the key link between a firm’s strategic plan and its HRM function as shown in figure 1 below.

Organizations can make choices on the extent to which to use HRP. These can be categorized as:

Proactive or reactive – anticipate needs and plan in advance or react as they ariseNarrow or broad focus – planning in only a few key HR areas or all areas of HR Informal or formal - choosing to have an unwritten plan (in the heads of managers) or a written formal plan with documentation, dataLoosely or closely tied to business plan – degree of integration to strategic planInflexible or flexible- degree to deal with contingenciesThese are depicted in figure 2 below.

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Overall strategic plan

Strategic human resource planning

Human resource management function

2.1.2 Importance of making a Human Resource Plan

Human resource plans enable organizations to make correct estimates of HR requirements by forecasting the future needs. These are discussed below.

Demand forecasting – This involves the assessment and prediction of the future labour needs of the organization. The HR manager does this by collecting information/data from key members of departments or sections. These would include:

Expected number of personnel within each occupation, their quality, education and skills

Expected turnover of employees through age retirement, resignations, dismissals and death

Formal qualifications for entrance into certain occupations Plans for managerial succession

Supply forecasting – This involves assessing the HR retention capability of the organization. To estimate the organization’s HR retention capability, many factors have to be considered. For example, in western countries, labour turnover is high and organizations have to introduce many incentives to retain labour. Developing countries on the other hand, experience high rates of unemployment hence, low rates of labour turnover due to few alternative employment opportunities. Retaining employees to reduce labour turnover is important and the factors that cause it have to be assessed and ways of overcoming them found.

Recruitment potential forecasting – This refers to the process of assessing the organization’s ability to attract different types of personnel. To estimate recruitment potential, the HR manager would have to consider the following:

Local labour market situation e.g. current and future competition for personnel from other employers e.g. TV stations in Kenya or radio stations.

Local unemployment levels Availability of special skills locally

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Reactive

Formal

Closely tied to strategic plan

Broad

Proactive

Inflexible Flexible

Loosely tied to strategic plan

Informal

Narrow

Output from the educational system and training institutions. Pattern of immigration and emigration (e.g. doctors in Kenya) Attractiveness of area as a place to live (e.g. lake Magadi) Attractiveness of the company to work in in terms of prestige, image, security

etc Local housing, shopping etc Impact of government employment regulations Recruitment practices – e.g. sourcing, realistic job information, follow up of

applications, interview methods etc.

Organizations also benefit from human resource planning in the following ways: Ability to cope with change – changes in competitive forces, markets, technology and

law tends to generate changes in individual employees’ skills and knowledge. Leads to strategic planning – evaluation of organization, environment, strength and

weaknesses of firm Ability to manage HR according to organization’s needs – anticipates HR needs thus

avoids surpluses and shortages of employees. Helps in recruitment and selection - predicting labour market changes,

unemployment levels and population changes Maintaining production levels – foresees and reduces effects of absenteeism, labour

turnover, illness etc by estimating these hazards thus maintaining production levels. Formulation of an effective employee development programme - forecasting

succession, career prospects and skill levels

2.1.3 Factors influencing HRP

Economic factors at national level – unemployment; monetary and fiscal policies and level of economic activity

Level of absenteeism Labour turnover rate Philosophy of top management Advancements in technology Government Laws/policies on training and education, labour etc. Labour Market factors - characteristics of labour force; supply and demand of skills Nature and composition of existing workforce Corporate strategy of the firm - the firm’s long-range business plans

How do the factors listed above affect human resource plans?

Examples:The firms long-range planA firm’s future plans to expand its business venture into new areas or develop new products would require actions in the present HRP to ensure an adequate supply of the required personnel five years or so years down the road. For example, if Kenya Airways vision is to expand its destinations to other parts of the world, then it’s HRP must reflect the need for more staff to manage the new routes.

Demographics/ population change

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Fluctuations in population change affect labour supply available in various age categories. For example, in Kenya, 1970’s and 1980’s had high growth rate of 4%. People in the 20 –40 age group have difficulty entering the job market now – for the organization there is an over-supply of new entrants but a higher demand for the 45 and above age group.

The personnel manager faces competition for jobs for new entrants and labour shortage for middle aged and older people in high level jobs. The forecast would be an oversupply of new entrants for the next two decades and a decline thereafter as population growth reduces to 2 - 2.5%. The reverse applies to developed industrialized that have a low supply of new entrants and high supply of labour in the senior levels.

The economy

Fluctuation from depressions to booms and back in the national economy and internationally poses a problem for the HRP manager. Predicted future boom means high sales and increased production hence more categories of personnel needed. Future declines mean layoffs and freezing of employment. Drought may affect agricultural-related firms.

Technological trends

Technology can create new jobs and render others obsolete. For example, computer technology resulted in the decrease of bookkeepers and an increase in the number of computer programmers. Technology is being used to replace labour e.g. ATMs mean fewer tellers in banks.

2.1.4 Labour turnover and HRP

Labour turnover is the movement of people into and out of the firm. Labour turnover rate is the rate of displacement of the personnel employed in an

organization due to resignation, retirement or retrenchment (referred to as separation). This movement is an indicator of the stability of the workforce. When experienced

workers go out and new workers come in who need training, work suffers and cost of labour goes up.

Past turnover rates are useful in predicting the future. If this rate is high, it is a sign of instability and affects the firm’s efficiency and profitability.

Causes of labour turnover Causes can be avoidable or unavoidable. The avoidable factors include: unfriendly working atmosphere; lack of proper facilities and amenities; low wages; poor management and redundancy due to lack of planning or foresight. Unavoidable factors include: personal betterment; illness or accident; death or retirement; dismissal due to insubordination and relocation.

Measurement of labour turnover rate:There are two methods for measuring labour turnover:

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1. Separation rate method which expresses the number of separations during a given period (usually one year) as a percentage of the number employed during same period. Thus:

Number of separations in a period x 100

Average number of workers in the period

OR Number of workers who left in period

X 100Average number of workers in the period

2. Replacement method – expressed in terms of number of new employees as a percentage of average number of workers in a given period.

Number of replacements in a period X 100Average number of workers in period

3. Fluctuation rate method – expressed in terms of number who left plus number of replacements as a percentage of average number of employees in period.

Number of separations + Number of replacements X 100

Average number of workers in the period

Turnover rate is significant in HRP as it helps management in preparing HR inventory for the future

Costs of labour turnover(a) Hiring costs in terms of time, advertising costs, interviewing, selection etc(b) Training costs(c) The pay of a learner is in excess of what is produced(d) Accident rates of new employees are often higher(e) Loss of production in the interval between separation of old employee and

new employee(f) Scrap and waste rise due to inexperience of new employee(g) Increase in overtime costs during interval

Activity: Using examples, can you explain how these factors may affect the performance of an organization?

2.2 JOB ANALYSIS Objectives:

Explain the meaning of job analysis Discuss the importance of conducting a job analysis in organizations Describe the process of job analysis Outline the challenges encountered in the process of job analysis Discuss the significance of job descriptions and job specifications

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2.2.1 Meaning of job analysis Job analysis refers to the detailed and critical analysis of a specific job or position. It involves a detailed examination of its various elements and it provides the groundwork for determining the value of a job.

2.2.2. Importance of job analysis

Job analysis forms the cornerstone of all HR functions. Information obtained from this process can be used for:

The recruitment and selection of the most suitable candidates for a job The determination of the training needed by employees Determination of work performance standards The redesign of jobs The maintenance of good industrial relations as employees will know what is

expected of them (creates standardization in work) The determination of the value of a job and subsequently the remuneration level Career development provides employees with information on training and career

development Provides the means by which individual performance can be evaluated

2.2.3 The process of job analysis

This involves data collection by use of methods such as: Questionnaires Interviews Observations Written narratives Self description Checklists and inventories Diaries

Activity: Explain the appropriateness of each data collection method for a given situation

The choice of method depends on; Effectiveness of the method – some methods are effective than others in obtaining the

required information. The most appropriate should be selected. Degree of expertise – different methods require different levels of expertise conduct

the job analysis The resources – human and finances and amount of time available Extent of employee involvement – more involvement means acceptance, ownership

and trust in results, but can lead to inflation of importance of jobs. Solution is to triangulate the job incumbents to enable double checking of accuracy of responses.

Level of detail – depends on purpose of the results e.g. pay needs less detail while training needs more detail

When to conduct – when jobs have changed due to methods, technology or enlarged or enriched or when turnover is high – may indicate job is too difficult.

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Traditional or future oriented analysis – traditional focuses on current performance while future oriented focuses on future performance. Latter is useful in rapidly changing jobs due to technology

The information to look for in the process of job analysis includes: Overall purpose of the job i.e. why the job exists and what the jobholder is expected

to contribute. Job content: i.e. nature and scope of the job in terms of tasks and operations Performance criteria: measures or indicators, which enable evaluation to be carried

out. Competences: the skills knowledge and personal qualities required to perform the job. Developmental factors: career prospects training etc Environmental factors: e.g. health and safety and working conditions

2.2.4 Problems in job analysis

Job Analysis is affected by many factors. When technology changes or products become obsolete, jobs have to be redesigned. It

is therefore a continuous process. Negative employees’ perception of the job analysis process which may be negative

hence reluctant to give information due to fear of layoff Normal resistance to change

2.2.5 Job descriptions and job specifications

The essence of job analysis is the application of systematic methods to the collection of information about jobs. It distinguishes people issues (job specification) and job issues (job description), which are the end products of the job analysis process. These are the end products of job analysis.

A job description is a statement containing items such as: Job title; tools to use; place of job; supervision/reporting line; job summary and working conditions. A job specification also known as person specification is a statement spelling out the human capacities needed for the task. This includes: experience; education; judgment; initiative; physical skills and emotional characterization.

Difference between job description and job specificationJOB DESCRIPTIONProvides basic information on the overall purpose of the job and on the jobholder’s basic accountabilities.

JOB SPECIFICATIONA statement of the human qualifications necessary to do the job.

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Defines the place of the job in the organization and clarifies to jobholders and others the contribution the job makes to achieving organizational objectives

Provides job information to job applicants

Provides a basis for the contract of employment

Job title i.e. name of the job e.g. Economic analyst, Project manager, Executive secretary, Lecturer, Telephone operator, Senior registrar etc.

Shows the reporting line i.e. person whom job holder is reporting to e.g. personnel manager or chief accountant and who reports to the job holder

Overall responsibilities - the broad picture of the job and distinguishing it from other jobs

Limits of main duties and responsibilitiesDetailed statement of work to be performed Tools, equipment and materials usedWorking conditionsHazards Relation of job to other jobs

Describes the amount of various qualification factors that the job holder must possess in order to accomplish the assigned task adequately.The contents include:

Educational qualifications, Experience, TrainingSpecial skillsSpecial aptitudeInitiativeResponsibilityAnalysis and judgment abilityMental and visual demandAdaptabilityEmotional characteristicsPhysical attributes/staminaVerbal or written expression /communicationDemographic characteristics e.g. gender, age, race, marital status, nationality/citizenship etc.

Activity:

Explain the characteristics of a good job description Look at a newspaper job advertisement and identify its components. How do

they relate to what you have learnt about job descriptions and job specifications?

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If you were given the responsibility of carrying out a job analysis in your organization, what methods would you use and why

2.3 RECRUITMENT AND SELECTION

After determining the type and number of employees needed through HRP and determining/identifying the various elements of a job through a job analysis, the next problem of the HRM is to procure the employees.

Objectives: Distinguish between recruitment and selection Discuss the relationship between organizational strategy and recruitment and selection

options State and discuss the various sources of recruitment State and discuss the methods used to select prospective employees.

2.3.1 Defining recruitment and selection

The overall aim of recruitment and selection is to obtain at a minimum cost the number and quality of employees required to satisfy the human resource needs of the organization.

Recruitment: Refers to the first part of the process of filling a vacancy. It is the process of searching for prospective employees and stimulating them to apply for a job in an organization. It includes an examination of the vacancy by getting information on the job – job description and job specifications, then considering the various sources of employees or suitable candidates, making contact with them and attracting applications from them.

Selection: Refers to the process of choosing the individuals who possess the necessary skills, abilities and personality to successfully fill the vacancies. It involves sifting through applications, assessing candidates, making a choice and offering employment.

2.3.2. Strategic Choices in recruitment and selection

Organizations can choose a buy or make strategy when recruiting. Make strategy – means hiring less skilled workforce and investing more in training and developmentBuy strategy – is hiring skilled or professional labour who possess necessary skills to begin working immediately. However the amount of money required to attract such labour may outweigh the benefits

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ORGANIZATIONAL STRATEGY AND RECRUITMENT AND SELECTION

An organization faced with environmental change can adopt one or several strategic postures with the environment. Miles and Snow’s (1978) typologies of defenders, prospectors, analyzers and reactors explain business strategic choices of organizations. The four types of organizations are based on observed patterns of response to market conditions.

Defenders strongly defend their position in the market against any forces whether competitors, government or trade unions. They depend on a narrow line of products that caters for a niche market and tend to rely on established and stable technology. They would rather improve efficiency of existing operations than search for new opportunities when faced with change.

In terms of human resource management response, Anthony and colleagues (1996) explain that defenders prefer aggressively trained specialists in the industry in order to produce and market a narrow line of products. Top managers tend to be highly expert in their limited area of operation. When confronted with change, defender organizations are more likely to focus on internal efficiency-enhancing strategies which may mean adopting cost-cutting measures such as downsizing, reducing product lines, developing high quality workforce through specific training, introducing performance related pay, avoiding trade unions and collective bargaining and adopting numerical flexibility in its employment patterns. From HRM theory, the hard HRM aspects are likely to be stronger than the soft aspects as defenders appear to operate along Taylorist lines where efficiency, tight controls, avoidance of collective bargaining and performance pay are practiced. Defenders prefer stability and are more likely to ‘make’ their own employees by recruiting new job entrants and offering specific training that fits with the organizational strategy and culture. During selection they would look for people with high capacity to learn.

Prospectors on the other hand are described as organizations that are always looking for new market opportunities and aggressively seeking to develop new products and new markets. They have a strong concern for product and market innovation. When confronted with environmental change, they are more likely to experiment with potential responses to emerging trends. Prospectors usually take the lead, forcing competitors to respond, hence acting as creators of change and uncertainty. Because of constant shuffling of products and markets and the need to monitor a wide range of environmental conditions, trends and events, thus spreading their efforts and resources, prospectors tend to be inefficient. In addition, prospector organizations are characterized by loose controls, devolution of power and authority, decentralized systems, less bureaucracy and easy communication.

In terms of human resource management, prospectors look for aggressive, entrepreneurial people who are willing to take risks to develop new products. They maximize functional flexibility by training people on a wide range of skills so that they can be moved easily to new projects. While innovative and highly qualified individuals are valued and rewarded, investment in general skills that are easily transferable to other projects or even other organizations are offered. Expertise and technologies tend to be embedded in people rather than systems and routine mechanical operations. As such, workforce diversity is encouraged to tap a wide range of skills and talents. The human resource management role therefore, is one of facilitating rather than controlling organizational operations. From the foregoing, prospector organizations can be said to practice soft HRM as emphasis is on people oriented outcomes rather than production and efficiency. Prospectors prefer ready made employees hence a ‘buy’ recruitment strategy. In selection they are more likely to use sophisticated techniques and elaborate screening to ensure only the most qualified candidates

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in their fields are selected. They prefer people who can take risks and have high tolerance for change and ambiguity.

Analyzers are organizations with a split personality. They have one product in a changing market and another in a stable market. In terms of human resources, analyzers value both stability and innovation in employees. For this type of organization, balance is important. When change occurs, they may resort to hiring a numerically and functionally flexible periphery workforce while retaining a specialized core set of employees to provide stability and continuity. Because they possess characteristics of both the defender and prospector organizations, analyzers can be said to practice either soft or hard HRM depending on whether the change is perceived as a threat or an opportunity.

Finally reactors are organizations whose managers may perceive major changes in their environment but have difficulties adapting quickly. Miles and Snow describe such organizations as unstable and ineffective. The causes for such dysfunction may be either the failure of top management to articulate the organization’s strategy or inability to shape the organization’s structure to fit strategy or resistance to change by management. In terms of human resource management, reactors prefer employees who are less resistant to change and would help the organization move along a chosen path. As their decisions are erratic it is rather difficult to predict the response of reactors.

Sources of recruitmentSources can be internal or external.

Internal sources: i.e. ‘promotion from within.’ It is considered the best method for recruiting for top and middle level managers. The methods for internal sourcing include:

Company newsletter Internal e-mail Circulars to all staff Noticeboards Meetings Company conferences

Benefits of internal recruitment Builds employee loyalty Ensures ability and continuity in the organization Creates a state of sincerity and trust among employees Encourages hard work and good performance in the lower ranks as they look forward

to promotion Cheap and quick to obtain employees Reduces costs of induction training Inside employees know the organization and its policies Have proved their ability and loyalty Promotion from within is a positive moral builder One vacancy filled results in upgrading of several employees and hiring a new person

to fill the vacant position at the bottom Better utilization of employees in different jobs A present employee who is promoted is more likely to stay with the organization than

a new employee. Quicker and cheaper than external recruitment

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Disadvantages of recruiting internally Narrow area of selection Leads to stagnation of service and perpetuates conservatism Stifles new ideas Does not compel employees to keep abreast of new development in their fields.

External sources: - External sources are usually used whenever a vacancy falls vacant. Even when an internal candidate is transferred or promoted in the organization, the final result is external sourcing elsewhere in the organization. Sources are many and some are more costly than others. Some of the sources are:

Former employees: those who worked with the organization but left for various reasons with a good record. They know the organization culture and policies and are likely to stay with the organization

Friends and relatives of present employees: Although it may be seen as nepotism, – their recommendation supports the candidates character.

Schools and colleges: provides young and new entrants to the job labour market. But require training.

Advertising: used for high level HR. It gives more information e.g. job description and specifications, salary, benefits etc. Reaches a wide audience.

Employment agencies: collects curriculum vitae’s and pass on to organizations looking for particular skills.

Casual applications – unsolicited: cheap for the organization – usually cover a wide array of skills and have to be sorted.

Labour unions: creates good industrial relations with management and labour unions Professional organizations e.g. IPM, KIM, KASNEB or LSK (recently used for

recruiting judges in Kenya) etc Recruitment consultants: e.g. Hawkins & associates, Manpower services etc

Benefits of external sources Fresh ideas are attracted as employees bring in new experiences from outside Possess varied and broad experiences New employees can help break old habits

Disadvantages of external recruitment Brings in people with no administrative/managerial experience Huge expenditure on long training Reduced incentive to good performance among present employees – they see no

chance of promotion

Choice of method for recruitment depends on: The type of job to be filled Relative difficulty of attracting candidates by the organization Geographical location of the organization Time available to fill the position Past success or failure in using different methods Size of the organization Calibre of present employees Attitude of top management

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Recruitment strategy of the organization

Costs of recruitmentRecruitment is a costly personnel management function. The costs include:

Management time used in job analysis Drafting advertisements and displaying Assembling and sorting applications Preparing an sitting in interviews for selection Postage to unsuccessful candidates

2.3.3 Selection

This is the second stage in the procurement process. It is determining which applicants best fit the job applied for. It involves: sifting through applications; inviting candidates; interviewing; testing; assessing; obtaining references; offering employment and preparing contracts of employment. It is a series of activities for securing basic information about applicants, which is compared with the job specification – the standard qualifications required for the job.

Methods of employee selection

Activity: Using your own experience, state the different types of methods organizations use to select employees from a list of applicants?

The interviewThe interview is widely used as a selection tool or technique and it holds a central position in the recruitment and selection function.

Definition:An art of conversation through which fitness of a person for a particular job is measured. The interviewer looks for behaviors that indicate fitness or unfitness for a job. The information he obtains helps to fill out the details of a mental picture, which he is trying to complete. It is a picture, which either fits the applicant onto the job or rules him out.

Aims of interviews To verify written information given by the applicant Clarify any written details about the candidate or the firm To measure/assess the personality of the candidate To test the expression power, social skills and physical attributes of the candidate

which cannot be obtained in writing. Obtain additional information through direct contact.

The interview process can be divided into:-1) The pre-interview stage - This involves arrangements for interviews such as:

- Setting the time, inviting the candidates, giving them directions, serving refreshments, informing receptionists or security to expect the interviewees

- Selecting a quite and comfortable waiting room, providing reading material and access to the cloak room

- Book interviewing room, arrange, brief interviewers/panelists, meals etc.

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- Comfortable sitting arrangements such as a round table – no barriers

2) The interview stageThis is the face-to-face conversation. Purpose is to obtain any information about a candidate which will enable a valid prediction to be made of his or her future performance on the job in comparison with other candidates. It involves processing and evaluating evidence about capabilities of a candidate in relation to the job specification

An interview should be planned around the job specification and questions should cover all the factors e.g.

- qualifications- Experience- Knowledge- Skills- Physical and personality characteristics etc

The approach: Use a biographical approach – e.g. tell us about yourselfWelcoming remarksExplain plan of the interviewBiographical interviewAllow for probing questionsSummarise with employment conditions, pay, fringe benefits etc

The following should be done by the interviewer.- Plan for the interview- Establish rapport with candidate- Encourage the candidate to talk- Cover all the areas as planned- Probe where necessary- Maintain control over the direction and time taken by the interview- Listen.

Don’t:- Start the interview unprepared Plunge too quickly into demanding questions Ask leading questions Jump to conclusion on inadequate evidence Pay too much attention to isolated strengths or weaknesses Talk too much Ask negative questions or tricky questions which can disorient the candidate e.g. Do

you smoke or drink, ethnic etc

3) The post – interview stage

After the interviews have been done, the last stage is to assess the candidates.The criteria could be a standardized format drawn in advance of the interview stage with several criteria’s for assessing and selecting the best candidates.The criteria accrued normally conform with the factors in the job application i.e.

Qualifications and training

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Experience Knowledge and skills – as acquired, training or natural

abilities Overall impression – appearance, manner and speech,

physique, health etc. Personality characteristics – leadership, drive,

dependability, persistence, self-reliance, sociability etc.Types of interviews

1. Individual interviews – where only one interviewer is present2. Panel interviews – where more than two interviewers are present to interview

the candidate.3. Selection Boards – Large and involves people with different interests4. Group selection – up to 6-8 candidates face a panel and involve exercise and

tests e.g. of typists, computer specialists etc.

Characteristics of a good interview

Proper conduct – polite, friendly, listen, give candidate attention and be in control of interviews.

Show interest in each applicant Patience – not interrupting a candidate who is slow in responding. Concentration – not intolerant and impulsive - may not assess candidate fairly. Timing for interview – convenient e.g. not at night or holiday.

Closing – good summary at end of the interview.

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