UBMM1013

MANAGEMENT PRINCIPLES

Topic 9
Human Resource Management
Human Resource Management (HRM)
 It is refers to the design and application of formal systems in an organisation
to ensure the effective and efficient use of human talent to accomplish
organisational goals.
 Activities undertaken to attract, develop and maintain an effective
workforce within an organization.

 Managers have to find the right people, place them in the positions where
they can be most effective and develop them so they contribute to company
success.
 Hiring and keeping quality employees is one of the most urgent concerns for
today’s organisation
 Employees give a company its primary source of competitive advantage, so
talent management is a top priority for smart managers
The Strategic Role of Human Resource Management is to Drive
Organisational Performance

The Strategic Role of HRM Drive

Organisational
Performance

The Strategic Approach Building Human Capital to Drive Globalization

Perfomarnce
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The Strategic Approach

The strategic approach to HRM recognizes three key elements

•Employees are viewed •HRM is a matching

•Allmanagers are as assets. process, integrating the
involved in human •Employees, not organization’s strategy
resource and goals with the
management buildings and
machinery, give a correct approach to
company its managing human capital
competitive edge.
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The Strategic Approach

Some current strategic issues of particular concern to managers
include the following
 Right people to become more competitive on a global basis
 Right people for improving quality, innovation, and customer service
 Right people to retain during mergers and acquisitions
 Right people to apply new information technology for e-business

All of these strategic decisions determine a company’s need for skills and
employees
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Strategic Human Resource Management

HRM Environment
Company Strategy Legislation
Trends in society
Primary HRM goals and
broad HRM activities International events
Changing technology
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Maintain an Effective
HRM planning Workforce ???
Job analysis Develop an Effective
Forecasting Workforce ???

Recruiting Attract an Effective

Selecting Workforce ???

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Wage and salary
Benefits Training
Labor relations Development
Terminations Appraisal

Exhibit 1
Strategic Human Resource Management
The three primary HRM goals and broad HRM
activities outlined in Exhibit 1 are
 To find the right people
 To manage talent so people achieve their potential
 To maintain the workforce over the long term

Achieving these goals requires skills in planning, recruiting, training, performance

appraisal, wage and salary administration, benefit programs, and even termination
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Building Human Capital to Drive

Performance
 Human Capital refers to the economic value of the combined
knowledge, experience, skills and capabilities of employees
 Strategies for finding the best talent
 Enhancing skills and knowledge with training programs
 Opportunities for personal and professional development
 Providing compensation and benefits that support knowledge
sharing and appropriately reward people for their contributions to
the organisation
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Building Human Capital to Drive

Performance
The Role and Value of Human
Capital Investments

Exhibit 2
 The Role and Value of Human Capital
Investments
The importance of human capital for business results is illustrated in Exhibit 2.
• The idea is to show how investments in human capital contribute to stronger
organisational performance and better financial results
• The framework begins at the bottom (level 4) by assessing internal processes such as
workforce planning, career development, learning management, and so forth
• Managers use these activities to increase human capital capabilities (level 3), such as
employees engagement of workforce adaptability
• Enhanced capabilities, in turn, drive higher performance in key areas such as
innovation or customer satisfaction (level 2)
• Finally, improvements in key performance areas lead to improved business results
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Globalization
 Globalization requires international human resource management
(IHRM)
 IHRM specifically addresses the added complexity that results from
coordinating and managing diverse people on a global scale
 As the world becomes increasingly interconnected, some HR
practices and trends are converging globally
 IHRM Managers need a high degree of cultural sensitivity and the
ability to tailor and communicate policies and practices for
different cultures
 What works in one country may not translate well to another
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The Impact of Federal Legislation on HRM

 Federal laws are enacted to ensure equal employment opportunity
 The purpose of laws is to stop discriminatory practices
 Discrimination occurs when some applicants are hired or promoted based on criteria that
are not job relevant
 When discrimination is found, remedies include providing back pay and taking
affirmative action
 Affirmation action requires that an employer take positive steps to guarantee equal
employment opportunities for people within protected groups
 An affirmative action plan is a formal document that can be reviewed by employees and
enforcement agencies
 The goal of organisational affirmative action is to reduce or eliminate internal inequities
among affected employee groups
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The Changing Social Contract

 In the old social contract between organisation and employee, the employee could
contribute ability, education, loyalty and commitment and expect in return that the
company would provide wages and benefits, work advancement, and training
throughout the employee’s working life
 Changes in the business environment have changed the social contract, a bulletin
board at a company restructuring noted:
 We can’t promise you how long we’ll be in business
 We can’t promise you that we won’t be acquired
 We can’t promise that there’ll be room for promotion
 We can’t promise that your job will exist when you reach retirement age
 We can’t promise that the money will be available for your pension
 We can’t expect your underlying loyalty, and we aren’t even sure we want it
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The New Contract VS The Old Contract

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Employee - Employability; personal - Job security

responsibility
- Partner in business improvement - A cog in the machine
- Learning; skill development - Knowing

Employer - Creative development opportunities - Standard training programs

- Lateral career moves; incentive - Traditional compensation package
compensation
- Challenging assignments - Routine jobs
- Information and resources; - Limited information
decision-making authority
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Innovations in HRM

 Becoming an Employer of Choice

 Using Temporary and Part-Time Employees
 Promoting Work/Life Balance
 Rightsizing the Organization
 Finding the Right People

Human Resource Recruiting Selecting

Planning (HRP)
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Human Resource Planning

 Forecasting of human resource needs and the
projected matching of individuals with expected
vacancies
 By anticipating future human resource needs, the
organisation can prepare itself to meet competitive
challenges more effectively than organisations that
react to problems only as they arise
 Human Resource Planning
Human Resource Planning begins with several questions

 What new technologies are merging, and how will these affect the work system?
 What is the volume of the business likely to be in the next five to ten years?
 What is the turnover rate, and how much, if any, is avoidable?

The responses to these questions are used to formulate specific questions pertaining to HR
activities, such as following

 What types of engineers will we need, and how many?

 How many administrative personnel will we need to support the additional engineers?
 Can we temporary, part-time, or virtual workers to handle some tasks?
ATTRACTING AN EFFCTIVE WORKFORCE

??? ??? ??? ???

Company’s Needs Matching Model Employee contributions

Strategic goals Ability

Currents & future competencies Education & experience
Market changes Match with
Creativity
Employee turnover Commitment
Corporate culture Expertise & knowledge

Company Inducements Employee’s Needs

Pay & benefits Stage of career

Meaningful work Match with values
Personal
Advancement Promotion aspirations
Training Outside interest
Challenge Family concerns
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Recruiting
 Recruiting = activities or practices that define the
characteristics of applicants to whom selection procedures
are ultimately applied
● Internal – promote-from-within policies used by many
to fill high-level positions
● External = recruiting newcomers from outside the
organisation
 Recruiting
 Assessing Organizational Needs ???
???
???
 Realistic Job Previews
 Legal Considerations
 E-cruiting
 Innovations in Recruiting
 Recruiting
Assessing Organizational Needs
•Basic building blocks of human resource management include job analysis, job
descriptions, and job specification

Job analysis
•The systematic process of gathering and interpreting information about the essential
duties, tasks, and responsibilities of a job

Job description
•A concise summary of the specific tasks and responsibilities of a particular job

Job specification
•An outline of the knowledge, skills, education, and physical abilities needed to
adequately perform a job
 Recruiting
Realistic Job Previews (RJP)
•A recruiting approach that gives applicants all pertinent and realistic
information (positive and negative) about the job and the organisation
•RJPs contribute to greater employee satisfaction and lower turnover because
they facilitate matching individuals, jobs, and organisation
•Individuals have a better basis on which to determine their suitability to the
organisation and “self-select” into or out of positions based on full information
 Recruiting
Legal Considerations
• Organisation must ensure that their recruiting
practices conform to the law
• Equal employment opportunity (EEO)

• Affirmative action
 Recruiting
E-cruiting
•Today, much recruiting is done via internet
•E-cruiting, or recruiting job applicants online, dramatically
extends the organisation’s rercruiting reach, offering access
to a wider pool of applicants and saving time and money
 Recruiting
Innovations in Recruiting
• Organisations look for ways to enhance their recruiting success
• One highly effective method is getting referrals from current
employees
• Many organisations offer cash awards to employees who submits
names of people who subsequently accept employment because
referral by current employees is one of the cheapest and most reliable
methods of external recruiting
• Some organisations also turn to nontraditional sources to find
dedicated employees, particular in a tight labor market
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Selecting
 The next step for managers is to select desired employees from the pool of
recruited applicants
 In the selection process, employers assess applicants’ characteristics in an
attempt to determine the “fit” between the job and applicant characteristics

?? ??
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Selecting
 Several selection devices are used for assessing
applicant qualifications
 The most frequently used are
a) The application form
b) Interview
c) Employment test
d) Assessment center
 Selecting
Application form
•The application form is used to collect information about
the applicant’s education, previous job experience, and
other background characteristics
•Biographical information inventories can validly predict
future job success
 Selecting
Interview
•The interview serves as a two-way communication
channel that allows both the organisation and the
applicant to collect information that otherwise might be
difficult to obtain
•However, the interview is not generally a good predictor
of job performance ???
???

•Overcome the limitations? ???

 Approaches to overcome the limitations
of the interview
A series of interviews
•Some put candidates through a series of interviews, each one conducted by a different person and each one probing a different aspect of the candidate

Panel interview
•The candidate meets with several interviewers who take turns asking questions

Computer-based interviews
•Some organizations also supplement traditional interviewing information with computer-based interviews
•This type of interview typically requires a candidate to answer a series of multiple-choice questions tailored to the specific job
•The answers are compared to an ideal profile or to a profile developed on the basis of other candidates
•Computer-based interviews is valuable for searching out information regarding the applicant’s honesty, work attitude, drug history, candor,
dependability, and self-motivation
•The prediction of job performance will be more accurate based on the information generated by computer-based interviews
 Selecting
Employment test
•A written or computer-based test designed to measure a
particular attribute such as intelligence or aptitude
Assessment center
•A technique for selecting individuals with high managerial
potential based on their performance on a series of
simulated managerial tasks
 Managing Talent

Training and Performance Appraisal

Development
 Training and Development
• Training and development represent a planned
effort by an organisation to facilitate employees’
learning of job-related skills and behaviours

On-the –Job Corporate Promotion from within Mentoring and Coaching

Training universities
 Training and Development
On-the-Job Training
•A type of training in which an experienced employee “adopt” a new employee to teach him or her how to perform job duties

Corporate Universities
•A corporate university is an in-house training and education facility that offers broad-based learning opportunities for employees

Promotion from Within

•Another way to further employee development is through promotion from within, which helps companies retain and develop valuable
people
•Promotions provide more challenging assignments, prescribe new responsibilities, and help employees grow by expanding and
developing their abilities
 Training and Development
Mentoring and Coaching
•For many management and professional jobs, traditional on-the-job training is
supplemented or replaced by mentoring and coaching
•With mentoring, an experienced employee guides and supports a newcomer or
less experienced employee
•Coaching is a method of directing, instructing, and training a person with the
goal to develop specific management skills.
 Performance Appraisal
 Process of observing and evaluating an employee’s
performance, recording the assessment, and
providing feedback to the employee
 Steps ??
 Performance Appraisal
Assessing Performance Accurately
•To obtain an accurate performance rating, managers acknowledge that jobs are
multidimensional and performance thus may be multidimensional as well

360-degree feedback Performance review

ranking system
 Performance Appraisal
360-degree feedback
•A process that uses multiple raters, including self-rating, to appraise employee performance and guide development

Performance review ranking system

•This method is increasingly coming under fire because it essentially evaluates employees by pitting them against one another
•As most commonly used, a manager evaluates his or her direct reports relative to one another and categorizes each on a scale
•It provides an effective way to assess performance and offer guidance for employee development
Performance Appraisal

Performance Evaluation
Errors ??

Rating problems

Stereotyping Halo effect

 Performance Appraisal
Stereotyping
• Stereotyping, which occurs when a rater places an employee into a
class or category based on one or a few traits or characteristics
• Some managers may stereotyping an older workers as slower and
more difficult to train

Halo effect
• Halo effect, in which a manager gives an employee the same rating
on all dimensions even if his or her performance is good on some
dimensions and poor on others
Performance Appraisal
Performance Evaluation
Errors ??

Rating problems

Stereotyping Halo effect

Approach to overcome??

???
 The behaviorally anchored rating scale
(BARS)
BARS
•The behaviourally Anchored Rating Scale (BARS) is
developed from critical incidents pertaining to job
performance.
•Each job performance scale is anchored with specific
behavioural statements that describe varying degrees of
performance.
•By relating employee performance to specific incidents,
rater can more accurately evaluate an employee’s
performance. Example ??
 The behaviorally anchored rating scale
(BARS)
Example

Exhibit 3
 The behaviorally anchored rating scale
(BARS)
Example

•Exhibit 3 illustrates the BARS method for evaluating a production line supervisor.
The production supervisor’s job can be broken down into several dimensions, such as
equipment maintenance, employee training, or work scheduling.
•A behaviourally anchored rating scale should be developed for each dimension. The
dimension in Exhibit 3 is working scheduling.
Good performance is represented by a 4 or 5 on the scale and inacceptable
performance as a 1 or 2.
If a production supervisor’s job has eight dimensions, the total performance
evaluation will be the sum of the scores for each of eight scales.
 Maintaining an Effective Workforce

Compensation and Termination

benefits
 Maintaining an Effective Workforce
Compensation and benefits
• An organisation’s compensation structure includes wages and / or salaries and
benefits such as health insurance, paid vacations, or employee fitness centers
Termination
• The value of termination for maintaining an effective workforce is two-fold
• First, employees who are poor performers can be dismissed. Productive
employees often resent disruptive, low-performing employees who are allowed to
stay with the company and receive pay and benefits comparable to theirs
• Second, employers can use exit interviews as a valuable HR tool, regardless of
whether the employee leaves voluntarily or is forced out
• An exit interview is an interview conducted with departing employees to determine
why they are leaving