CHAPTER 13 HUMAN RESOURCE MANAGEMENT

1. CHAPTER 13HUMAN RESOURCE MANAGEMENT Nagiah Ramasamy

2. Learning Outcomes 13.1 Explain the critical importance of the HRM function to organizational competitiveness. 13.2 Explain the roles of the HR manager. 13.3 Discuss the reliability of the different selection techniques. 13.4 Discuss the importance of orientation, training programs, and performance appraisals in the development of employees. 13.5 Discuss the role of remuneration in employee motivation and performance. 13.6 Discuss the role of trade unions, the collective bargaining process, and methods for settling worker–management disputes.

3. The Importance of HRM • A key function where policies are designed to organize work and maximize employee performance to achieve strategic business objectives, • E.g. high productivity, cost-effectiveness and profitability. • Firms which align their HRM practices with their business strategy will achieve superior outcomes. • Effective HRM practices extract positive work behaviors among employees, which lead to organizational innovation. • Level of motivation is enhanced resulting in better retention of quality performers.

4. The Importance of HRM • HR POLICIES: • Appropriately designed policies attract and retain high performing employees. • Create an organizational climate in which the workforce is highly motivated and committed to achieve the business objectives. • Able to respond to changes in the increasingly competitive global marketplace. • Identify acceptable and unacceptable organizational behavior (e.g. levels of work performance, consumption of alcohol and smoking at work, and health and safety practices) and regularize management decision making. • Reflect social and/or legal influences (e.g. equal employment opportunity, affirmative action, and remuneration) • Codify organizational position on employment issues (e.g. uniforms, customer service). • Formulation strongly influenced by external forces such as government policies, industry practices, union policies and collective agreements.

5. The Importance of HRM Deloitte Global Human Capital Trends 2014 Report • many HR teams lack the skills and data they need to understand the contemporary global business environment, local labor markets, shifts in technology, evolving workforce demographics and the changing nature of work itself. Biggest challenges confronting contemporary organizations: • Leadership development (86%), • Retention and engagement (79%), • Reskilling the human resource function (77%).

6. High Performance Work System Includes: • Quality of work-life programs • Enhance the skills, knowledge and abilities • Employee suggestion and involvement programs • Team-based work • Competitive remuneration. 

7. The importance of HRM Sustained shift in the work environment has led to changes in the workplace: • more skilled workers, more female workers, flexibility in job design and use of ICT. Increasing use of technology in the workplace, particularly in knowledge-based jobs: • work need not be performed in formal working environments, • distancing workers from the bricks-and-mortar, nine-to-five workplace (Towers Watson, 2012: 6)

8. Role of the HR Manager HRM should select four key areas of activity • Strategic partner • Change agent • Administrative expert • Employee champion • When executed well, will support HR’s position and ability to deliver whatever the challenges that may come along (Ulrich) • Must be able to execute these four roles, essentially complementary rather than being in conflict.

9. Exhibit 13.1 Ulrich’s Roles of the HR Manager Source: Ulrich, D. (1997) Human Resource Champions: The Next Agenda for Adding Value and Delivery Results, Boston: Harvard Business School Press, p. vii.

10. External Factors that Affect the HRM Function • Include the economy, employee labor unions, governmental laws and regulations, and demographic trends. • Legal environment of HRM • Principal laws on employment • Affirmative action and Diversity • Discrimination

11. HRM Process

12. Attracting Human Resources HR Planning • Strategic, long-term approach to a comprehensive staffing plan • All HR activities from recruitment through training, development and career management, to the separation of employees by retirement. • Adequate supply of the right numbers and the right type of employees, with the appropriate knowledge, skills and abilities, at the right price is crucial to the organization’s success. • A key problems with HRP: difficulties of developing accurate forecasts in a dynamic and uncertain environment

13. Attracting Human Resources • Recruitment: process of seeking and attracting a pool of qualified applicants from which candidates for job vacancies can be selected. • Internal recruitment methods • E.g. job posting via staff notices, newsletters and bulletin boards • External job market. • Blogs, webcasts, or social networking through media (e.g. Facebook, Twitter and LinkedIn) Although external recruitment tools, also reach out to internal applicants.

15. Attracting Human Resources Selection • Process of choosing the the right person for the job from a group of applicants. • Main goal - to make accurate predictions about people Selection method chosen must be both valid and reliable • Validity - how accurate the selection method is, as a prediction of job performance. • Reliability - how consistent the results are when repeated in similar situations. • Methods used must be consistent over time, consistent between selectors (inter-rater reliability) and consistent between items/questions intended to evaluate the same criterion.

16. Attracting Human Resources Selection techniques for assessing job applicants include: • Interviews • Biodata/Application form • Assessment Centre • Personality test • Work samples • Reference checking

17. Selection – The Interview • A conversation with a purpose between an interviewer and a job applicant. • Purposes • to collect information in order to predict how well the applicants would perform in the job for which they have applied, • to provide the candidate with full details of the job and organization, • to conduct the interview in such a manner that candidates feel that they have been given a fair hearing. • Most popular selection method in organizations

18. Selection – The Interview Some problems associated with the interview method: a. Interviewer doing too much talking. b. Too many closed questions used within the interview. c. Interviewers preferring candidates most like themselves (“similar-to- me” error). d. Inconsistency in the questions used with applicants - different types of information gathered from each applicant. e. Inability to put the interviewee at ease during the interview. f. Influenced by the nonverbal behavior of applicants. g. Halo effect. h. Overconfidence.

19. Human Resource Development • Need driven by changes in the environment • Can be classified as • Business and economic change • Technological change • Organizational change • Social, legal and other changes.

20. Human Resource Development Management Development • Essential for managers. to manage organizational resources and achieve the strategic business objectives. • E.g. formal education or varied work experiences, sponsor managers to attend MBA or related programs, or provide tuition reimbursement. • Alternative approach - use varied work experiences, provide a range of different tasks.

21. Human Resource Development Training • Purpose • Teach organizational members how to perform current jobs - assist employees to acquire skills to perform effectively. • Provide opportunities for employees to build their skills and knowledge - prepare them for new job opportunities within the company. • Give employers a better chance of retaining employees - an investment for employees and employers. • 3 general categories of training formats: • On-the-job • On-site but not on-the-job, • Off-the-job

22. Human Resource Development Orientation or Induction • Systematic introduction of the new employees to their jobs, co-workers, to the organisation and its culture. • Need to accelerate new employees integration, make them operationally competent. Career development • Ever-changing work environment • Employees vulnerable to career disruption or stagnation, • Career planning is critical. • Job security centres not on having a job but on being employable. • Employees must continue to develop their skills, to possess the competencies that the market needs.

23. Performance Appraisals • Performance Management - Systematic process for improving organizational performance by developing the performance of individuals and teams. • Holistic process - ensures that the following are developed and effectively carried out: • setting of corporate, department, team and individual objectives; • performance appraisal system; • reward strategies and schemes; • training and development strategies and plans; • feedback, communication and coaching; • individual career planning; • mechanisms for monitoring the effectiveness of performance system and interventions.

24. Performance Appraisals Can be performed by self, by the superior or by a variety of people. • Self-appraisals - supplement that performed by the manager, • Peer appraisal - usually carried out in team settings, co-workers provide appraisal feedback, • Multi-person evaluation/ 360 Degree method - feedback is sought from a variety of people able to evaluate a manager • include peers, customers, superiors and self. • more tedious, • employees and managers derive greater benefit from it, feedback from various parts of the organization.

25. Remuneration and Motivation • Employee motivation • central concern to managers, looking for ways to gain ‘added value’ from their employees. • encourage employees to increase effort and be more productive. • Remuneration - central to the employment relationship. • Used to increase employee effort and output towards achieving the strategic business objectives.

28. Pay systems Three more commonly used pay systems • Seniority-based pay - Pay increases are based on: • employee's length of time on the job • notion of employee loyalty to the organization • experience gained on the job • Skill-based pay • Compensates employees based 0n job-related skills, competencies and knowledge possessed. • Purpose - motivate employees to gain additional skills, competencies and knowledge that will increase their personal satisfaction and value to the organization.

29. Pay systems Performance-Related Pay (or Performance-based pay) • Objective • Develop a productive, efficient, effective organization that enhances employee motivation and performance. • Aims • Attain strategic goals, reinforce organizational norms, motivate to higher performance and to recognize differential contribution. • Individual's increase in salary is solely or mainly dependent on his/her appraisal or merit rating

30. Link between performance and pay • PRP can provide a source of motivation to the organization’s workforce. • Difficulties linking of performance to pay. • employees may concentrate their efforts towards the achievement of performance objectives and neglect other elements of their job • individualistic nature of PRP systems undermines the team-working ethos and flexibility often desired within organizations • pay reward under the PRP system will be ineffective and demotivating if the reward is perceived to be low.

31. Performance Model • Key ingredients for effective performance - Ability (A), motivation (M) and opportunity (O) • P = ƒ(A x M x O). All three ingredients (AMO) must be present. • Adequate motivation - the desire and willingness of a person to expand effort to reach a particular goal or outcomes. • Having motivated employees would lead to outcomes • For e.g. produce high quality products and deliver high quality services.  

32. Managing Labor Relations Industrial relations (or labor relations) involves: • employees and their trade unions, • employers and their trade unions (known as associations), • governments and the industrial courts in a tripartite relationship.

33. Trade Unions • A formal organization that represents workers in a trade, occupation, industry or enterprise • Seeks to protect workers’ interests through collective bargaining. • Unions classified In Malaysia as: • Private sector employees’ unions, public sector employees’ unions, unions in statutory bodies and local authorities, and employers’ unions. • Private sector unions – further classified as either national or in-house (enterprise) unions. • National unions attempt to cover all workers in the same trade, occupation or industry

34. Trade Unions The main services provided for members, include: • negotiation and representation • protection and improvement of pay and conditions of service • offering legal representation if members have problems at work • considering and deciding upon strikes, lockouts and similar industrial action affecting the members • protecting workers’ basic rights through negotiations with employers (once every three years in Malaysia) • offering advice on labor disputes, protecting members against unfair labor practices such as unlawful dismissals • providing advice and training for laid-off workers • promoting social and educational welfare of members.

35. Trade Unions - Collective Bargaining Collective bargaining • process of negotiation with the intended conclusion of a collective agreement • takes place between a single employer (or a group of employers) and a trade union. • binding on the parties and on workers who are employed or subsequently employed in the establishment to which the agreement relates, regardless of whether they are members of the union or not.