Introduction to Business (ABUS007-3-1-LK)

Lesson 6: Human Resource Management

At the end of the lesson you should be able to:
1. Define what human resource management is and describe the factors that
have contributed to its importance.
Human resource management is the process of acquiring, deploying and developing people
for organizational success.
The overall objective of Human Resource management is to study and develop new ways to:
1) Utilize human resources efficiently
2) Promote desirable working relationships among employees
3) Encourage employees to develop to their maximum potential
The importance of HRM for organizations

The HR manager provides specialist advice to other managers on how best to improve
their effectiveness and operating results, through solving or avoiding problems that arise
out of people or people related matters.
The HR manager is responsible for keeping the other managers and the whole company
informed of changes in legislation (regarding work conditions) and their relationship to the
work force.
The HR manager is responsible for getting the type of workers that the various
departments of the company.

The HR manager is responsible of making the necessary arrangements for the promotion
or transfer of workers.

The HR manager is responsible for providing training to the workers so that they would be
able to do their jobs more effectively.

2. Explain the human resource planning process.

Manpower planning requires that the firm always has enough trained and experienced people
to meet its own needs.
The stages in manpower planning are:

Analyzing of the existing situations to see if the effectiveness of the existing organization
can be improved.
Planning to determine the future manpower needs of the company. How many people and
with what abilities will the organization need to remain in operation for the next three to
ten years?
Planning for the recruitment and selection of personnel with skills needed. Top
management prepares a detailed list of the number of persons to be recruited and the
type of skills they need.

Planning for development. As an alternative, management may redeploy some of its staff
by re-training them in new skills.

Advantages of Manpower Planning:

-

The correct number of staff is recruited for each level in the organization.
The staff requirements of various departments can be examined and plans made so
that appropriate measures (like training, promotion or transfers) can be taken.
The problem of high labour turnover (if it exists) can be highlighted for further study.
The Employment Process

This is the procedure by which a firm matches its hiring needs with the available human
resources is the employment process.
This includes:
I.

Recruitment

Recruitment is the process of attracting qualified people to apply jobs. Hiring, training and
evaluating employees is a lot easier when both the employer and the prospective employee
know precisely what a job entails. This information should come from a job analysis, a
systematic study of each employees duties, tasks and work environment.
The results of job analysis are two written statements:
a) Job Description: a written summary of the duties, tasks and responsibilities associated with
a job. E.g. job title, detailed description of the tasks including work assigned, specific task,
inherent authority and area of responsibilities.
b) Job specification: a listing of the key qualifications a person needs to perform a job
successfully. E.g. the potential employees: relevant experiences, academic qualification,
attitude and appearances.

II.

Selection

Selection is the identification of appropriate candidates. It is the process of gathering

information and deciding who should be hired, under legal guidelines, for the best interests of
the individual and the organization.
A typical selection process would involve six steps:

Application forms & initial screening: The completed application forms help the employer
to discover the applications academic background, work experiences, career objectives
and other qualifications directly related to the requirements of the job. Initial screening is
carried out to separate those candidates who have the qualification that match those on
the Staff Requisition Request from those that do not.
Giving employment test: Use to measure basic competencies in specific job skills (e.g.
Visual Basic skills) and to help evaluate applicants personalities and interests. Test could
take the form of general knowledge questions, IQ tests, interviews or combination of both.
In-depth selection interviews: These are conducted by the division manager concerned or
by a selection panel. The objectives on the in-depth interviews are:
a. To find out more about the applicant as a person.
b. To assess the interpersonal skills of the applicants for the post.
2

c. To fill gaps in the candidates application form or resume.

Conducting background investigations: A background check is then conducted to ensure
the validity of the information provided by the candidates. Background checks help weed
out those candidates least likely to
succeed and identify those most likely to succeed in
a given position.
Physical examination: The purpose of medical test is to:
d. Ensure that the candidate is physically fit to perform the task.
e. Eliminate candidates with contagious diseases.
f. To protect the organization against unjustified claims for medical compensations.
Job Offer: If an applicant went through successfully all these selection stages and still
remains keen about employment, a job offer is made. The main terms of the contract of
employment are explained to the successful candidate.

III.

Induction

Induction is the systematic introduction of new employees to their new organization, job and
co-workers. It is the process of introducing the new employee to the Organization. The core of
induction programme is:

A detailed summary of the work of the department.

The policy of the company regarding discipline, holidays promotion, and the date of
payment of salaries.
The work rules, safety and health regulations.

IV.

Training and Development (T&D)

T&D includes all attempts to improve productivity by increasing an employees ability to

perform. Training is short-term skills oriented; whereas development is long term career
oriented.
Both training and development programs include three steps:

Assessing the needs of the organization and the skills of the employees to determine
training needs
Designing training activities to meet the identified needs
Evaluating the effectiveness of the training.

V.

Performance Appraisal

Performance appraisal is an evaluation in which the performance level of the employee is

measured against established standards to make decisions about promotions, compensations,
additional training or dismissal.
Performance appraisals consist of these six steps:

Establishing performance standards: Standards must be understandable, subject to

measurements and reasonable.
Communicating those standards: Employee must be told clearly and precisely what the
standards and expectations are and how they are to be met.
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Evaluating performance: It is a matter of evaluating the employees behaviour to see if it

matches standards.
Discussing results with employees: Discussing an employees successes and areas that
need improvement can provide managers with an opportunity to be understanding and
helpful to guide the employee to better performance.
Taking corrective action: Manager can take corrective action or provide corrective feedback
to help the employee perform his or her job better.
Using the result to make decisions: Decisions about promotions, compensations, additional
training or dismissal are all based on performance evaluations.

VI.

Compensation

The money or benefits or both for which an employee exchanges work. Most compensations
packages to the full-time employee consist of three parts. These parts vary in proportion
depending on the organization.

The basic wage or salary payment.

Fringe benefits: such as paid sick-leave, paid vacation and health plans that represent
additional
compensation to employees.
Incentive payments for good performance. E.g. bonuses

Objectives of the Compensation Policy

- To attract and retain employees.
- To be flexible enough to permit adjustment to changing conditions.
- To pay fair and adequate wages and salaries that take into account of skill, training,
experience and productivity.
- To pay employees on the basis of merit and output or accomplishment.
Factors Influencing the Compensation Policy
External factors:

The general economic condition of the country.

The firms earning capacity and its financial position.
The existence and extent of unionization in the firm and industry.
The size of the labour market from which it recruits workers.
Trend in cost of living. If cost of living shows a steady rise due to inflation, employers have
consider to increase in wages.

Internal factors:

The type of skills required and the extent to which the individuals productivity affect
output.
The suitability of the incentive wage payment system.
The rapidity of changes in plant processes and technology that alter the job content and
the skills required.

Questions
1. Define HRM and outline any of its two objectives?
2. Define compensation and explain any four objectives of compensation policy?
3. Briefly explain any six internal and external factors which influence the compensation
policy?
4. Explain the six steps of the selection process with one application for any industry of
your choice?