13.0 HUMAN RESOURCE MANAGEMENT

1. 13.0 HUMAN RESOURCE MANAGEMENT Definitions and key elements Models of HRM Employee resourcing Employee development Reward and performance Employment relations Globalization and HRM HRM and the state Organization and HRM HRM strategies

2. 13.1 DEFINING HRM • The responsibility of all those who manage people (IPM 1963). • Human resource management (HRM) replaces the term ‘personnel management’. • The concept of HRM was developed at Harvard Business School in the 1980s. • ‘Human resource management involves all management decisions and actions that affect the nature of the relationship between the organization and its employees – its human resources.’ (Beer et al, 1984, p.1)

3. 13.2 FACTORS IN THE EMERGENCE OF HRM • Changes in the competitive environment - need for effective labour cost strategies • Globalization, notions of best practice and the demand for flexibility • Changing industrial relations climate - individualism, weakened TUs • Opportunity for HR manager to participate in strategic decision-making

4. 13.3 HUMAN RESOURCE MANAGEMENT - BASIC ELEMENTS • Focus on business values • Support of core strategic objectives • Treating people as individuals – direct communication and reward based on contribution • Careful selection, training and development of key staff • Employee involvement and focus on communication • Culture of commitment • Integration of policies with other HR policies and with business and corporate strategy

5. 13.4 A MODEL OF HRM

6. 13.5 ACTIVITIES OF HRM They can be grouped under 4 headings Employee resourcing Employee development Pay and performance Employment relations

7. 13.6 THE CHANGING FOCUS FOR HRM Administration to strategy

8. 13.7 ULRICH’S MODEL OF HRM HR as the centralized provision of admin. services – records and advice HR as the centre of expertise providing specialist inputs as required HR as a business partner assisting in the development of business and corporate strategy

9. 13.8 HOW HRM IS PERFORMED HR manager as generalist HR manager as specialist HR functions performed by all managers HR manager in advisory capacity only HR manager working in tandem with line managers Use of HR consultants HR outsourcing in whole or part

10. 13.9 REASONS FOR THE GROWTH OF OUTSOURCING IN HR Cost Need for expert specialist knowledge and skills To provide a more efficient service Where there are global operations and a centralized approach is used

11. 13.10 EMPLOYEE RESOURCING Includes consideration of Recruitment Selection Equal opportunities and diversity Work-life balance

12. 13.11 RECRUITMENT AND SELECTION OVERVIEW Recruitment – attracting candidates to the organization Selection – choosing the most appropriate candidate Traditional approaches focus on cost and techniques and not strategy Both and important because: As a means of achieving strategic goals To achieve culture change To establish a core competence The process is expensive and mistakes costly

13. 13.12 RECENT THINKING ON RECRUITMENT AND SELECTION A two-way process where both parties can influence the outcome Job descriptions becoming less important Replaced by need for flexibility The processes present an opportunity: To change the composition of the work force To create a distinctive corporate culture To target unrepresented groups

14. 13.13 STAGES IN THE RECRUITMENT PROCESS Establish a business case for recruitment Job description and person specification and their relevance today Determine the method of recruitment External recruitment Higher cost Wider pool of candidates Via agency, advertising and web-site Internal recruitment Lower cost Knowledge of candidates Motivational But limited range of candidates

15. 13.14 SELECTION PREREQUISITES What are we looking for? Process for identifying and measuring individual differences A process to predict job performance Reliability – measure of consistency Validity – can we discriminate between suitable and unsuitable candidates with confidence? Face validity – important for acceptance In practice selection tends to be subjective

16. 13.15 SELECTION METHODS Application form Interviews Tests Assessment centres References Fringe methods e.g. graphology

17. 13.16 INTERVIEWS 1 • Poor reliability, validity and cost effectiveness • Popular with managers and candidates • Evidence of decision-making process • Decisions tend to be made in the first 4 minutes • Unfavourable information tends to count more than favourable • Interviewers have different criteria and stereotypes • Interviewers have poor recall of candidates • Bias of interviewers • Accepted behaviour at interview may not be linked to job success • Impact of different forms of interview –who is represented on the panel?

18. 13.17 INTERVIEWS 2 • Popularity a function of: • Face validity • Valid for certain criteria - verbal fluency, motivation • Managers exercise judgement • PR exercise • Absence of a better method • Reliability and validity increased by: • Training interviewers • Structured interviews • Planning • Use of situational questions • Focus on effective past behaviour

19. 13.18 TESTS • Psychometrics - intelligence, aptitude, personality • Used by many firms but not extensively but growth in use • Subjects all to same experience • Candidates like job related tests • Language skills tests? • Cultural variations • Issues of cultural bias • Useful for collecting information from large numbers in little time • Problems and cost of validation

20. 13.19 ASSESSMENT CENTRES • Based on group selection methods • Involve discussion, exercises, tests, interviews • Attempt to elicit realistic job behaviour - good preview • Tests interaction skills, working under pressure • Focus on competences and wide range of behaviour • Tend to have higher validity than other methods • Increasingly used – can test adaptability, teamwork, quick thinking, handling difficult situations etc. • Expensive -number of trained assessors needed

21. 13.20 WHICH SELECTION METHOD? A function of: • Selection criteria • Acceptability of methods • Availability of qualified staff • Time/cost • Administrative convenience • Laws and regulations

22. 13.21 EQUAL OPPORTUNITIES AND DIVERSITY Equal opportunities: ensuring the organization complies with laws dealing with discrimination against specific groups. Diversity management: a strategic approach base on the assumption that organizations are more effective if all are valued. There is overlap between the two concepts.

23. 13.22 WHY DIVERSITY I Rationale Moral imperative Legal and financial case Business and strategic case

24. 13.23 WHY DIVERSITY II Consequences of not managing diversity: • Failure to recruit qualified people • Failure to promote best able people • Promoting less able because they fit existing profiles • Discrimination via ignorance, inaccurate perception and stereotypes and ethnocentric values • Excluding groups from the social life of the organization

25. 13.24 THE BUSINESS CASE FOR DIVERSITY MANAGEMENT • Greater selection choice • Wider range of creative ideas from diverse groups • Matches profile of customers – visibility and knowledge • Widen market share through satisfying needs of diverse groups • Avoids bad publicity and legal action • Motivates employees • Reduces absenteeism and turnover (which is highest for women and ethnic minorities)

26. 13.25 APPROACHES TO DIVERSITY MANAGEMENT Monitoring statistics Affirmative action Changing the culture of the organization

27. 13.26 WORK-LIFE BALANCE Focus on the number of hours worked. The belief that a good work-life balance leads to improved effectiveness Focus on arrangements for child care Focus on arrangements for other caring Tendency for managers to view it as an employee responsibility

28. 13.27 EMPLOYEE DEVELOPMENT Training Management development Employee branding

29. 13.28 TRAINING AND DEVELOPMENT Importance Potentially strong impact on business strategy Source of competitive advantage Source of national economic advantage Developments Stronger links with employee resourcing Focus on employee flexibility Focus on employee potential Shift from manual to soft skills Focus on management development and leadership

30. 13.29 TRAINING AND DEVELOPMENT PROCESS Analysis of training and development needs Deciding on the method to be used Who does the training and development? Evaluation

31. 13.30 PAY AND PERFORMANCE Pay and reward systems Performance management

32. 13.31 OVERVIEW OF REWARD SYSTEMS Intrinsic rewards job satisfaction esteem self-fulfillment Extrinsic rewards basic pay overtime performance related pay non-pay rewards such as cars, housing costs

33. 13.32 FACTORS DETERMINING PAY Notions of equity Supply and demand Economic environment Nature of the job Goals of the organization Technology Institutional and regulatory factors e.g Legal minimum wage Significance of collective bargaining Government policy on pay Tax systems

34. 13.33 DEVISING A PAY SYSTEM A series of questions: What is the basic rate? What kind of pay scale? How do staff progress along the scale? Should there be an incentive scheme? If so what type of incentive scheme? What kind of non-pay rewards or incentives?

35. 13.34 TRENDS IN PAY With emphasis on service – rewarding appropriate behaviour rather than output Reduction in the use of collective bargaining to determine pay Reward based on individual contribution and potential Offering employees a bundle of benefits with some degree of choice

36. 13.35 PERFORMANCE MANAGEMENT Focus on employee appraisal Increased attention on performance due to: Increased competition Increased use of targets Link to culture change Link to downsizing and delayering

37. 13.36 PURPOSE OF PERFORMANCE MANAGEMENT Communication of goals and shared vision Setting individual goals Getting employees to self-monitor performance Motivation and commitment Improving communication Identifying training needs Managing career development Mentoring and counselling Identify future talent Management control Help with pay, promotion and disciplinary issues

38. 13.37 DIFFICULTIES WITH PERFORMANCE MANAGEMENT Too many objectives Too many objectives that are conflicting Time-consuming Difficulties in making judgements and assessing Negative impact of critical comments Dominant purpose is often management control

39. 13.38 EMPLOYMENT RELATIONS Shift from industrial relations to employment relations Collective bargaining declined but still important in the public sector Some attempts to move to partnership arrangements between employers and employees Increased focus on discipline and grievance procedures Increased focus on communication and involvement Development of procedures dealing with flexible labour

40. 13.39 EMPLOYEE INVOLVEMENT Links with HRM Types of involvement Representative – e.g. works councils Direct e.g. briefing groups, emails Task-based e.g. job enrichment

41. 13.40 CHANGES DUE TO GLOBALIZATION Growth of global firms Increase in competition Operation in a variety of environments Economic, political, legal and cultural diversity Managing a distributed labour force Variations in power and control with acquisitions and joint ventures Job mobility, down-sizing and delayering

42. 13.41 IMPACT OF GLOBALIZATION ON HRM Managing staff in cross-border situations Need to develop effective international managers Need to develop policies and practices for different locations Need to understand why policies and practices need to vary Need to manage more complex information flows Need to develop ways of delivering business strategies cost-effectively

43. 13.42 APPROACHES TO GLOBAL HRM Universalist – based on convergence and best practice Contextualist – variations to fit economic, political, legal and cultural differences Globalist – an effective mix of universalist and contextualist approaches

44. 13.43 HRM AND THE STATE • Considerable influence on HR policies and its development as a function • Institutional framework and control of labour markets • Employment legislation • Manpower policies on the supply and demand of labour • Third party intervention

45. 13.44 INSTITUTIONAL FACTORS • Anglo-Saxon model - emphasis on free market, job mobility, managerial autonomy, individualism and weakening of TUs • Social market model - emphasis on employee welfare and representation codified in law • Asian model - emphasis on corporate values, selection and induction and paternalistic approaches to welfare

46. 13.45 IMPACT OF VARIATIONS IN ECONOMIC SYSTEM • Many HR policies and practices are dependent on the legal, cultural and institutional framework • Legal obligations vary between countries • Institutions in the labour market vary • Different values underpin employment relations • Leads to variations in pay, training, employee involvement, employment relations etc.

47. 13.46 ORGANIZATIONAL ASPECTS OF HRM • Development of HRM as a specialist activity linked to growth in size and complexity • Conflicts between HR specialists and other managers • Difficulties of HR managers proving their value • Key role of organizational culture in modern HRM • Devolution of HR roles to line managers • Increase in the use of outsourcing

48. 13.47 RELATIONSHIP BETWEEN HR AND SENIOR MANAGEMENT

49. 13.48 HR STRATEGIES Best practice Best fit - with the cultural and institutional framework - with corporate and business strategies Corporate differentiation via HRM

50. 3.49 DIFFERENTIATION THROUGH HRM I • Linked to the resource-based-view approach to strategy to achieve competitive advantage. • Involves a unique bundling of human resource policies and practices into a coherent system that is difficult to copy. • Focus on ‘high performance work systems’ (HPWS) with emphasis on commitment and involvement.