Inro to HRM

MASTER IN MANAGEMENTSUMMER 2014

Human Resource Management

Course Description

This course explores the human resource management function in a corporate setting and focuses on the development of knowledge and skills that all managers and leaders need. The

course will focus on such subjects as the selection process, employment law, labor relations,

compensation administration, performance management, corporate training and maintaining effective environments. The classes are designed

to familiarize participants with current human resource practices and laws that apply to the

practice of management in organizations.

Course objectives

Developed an understanding of the Human Resource function and explained its relevance to the practice of management among line managers.

Described the challenges faced by human resource managers based on available data and current trends both in the local and global business environment.

Developed an appreciation for conducting a job analysis as a basis for employee acquisition, training and development, performance management, and compensation administration.

Discussed theory and practice of selection and recruitment, training and development, compensation administration, and performance management.

Course objectives

Discussed the application of laws and other relevant labor standards essential for managing employee relations in the Philippines.

Presented the current trends and practices in human resource management.

Identified and evaluated future trends affecting the different industry sectors and their impact on human resources management.

Identified current concerns challenging their organization’s human resources and suggested possible applications of ideal human resource management theories into practice.

Methodology

Research on Assigned ModulesJob Analysis on Specific JobsResearch Output PresentationInterview of Human Resource DirectorExperiential SharingExaminationReflection: Significant Learnings/Insights

Gained - Synthesis of the Course

Course requirements

Oral Report – Comprehensive oral and written report on assigned topics

Synthesis – a two page synthesis of the course as experienced

Research Output – A research output on the ASEAN Integration and its impact and implication on the human resource management function.

Interview Output – an output of a group interview on the human resource practices of a chosen organization.

MAY 4 , 2014

Module 1: Introduction to Human Resource Management

Lecture Coverage

The Global and Local BeginningsHuman Resource Management versus

Personnel ManagementThe Functions of Human Resource

ManagersThe Competitive Challenges of HRMThe Employee Concerns of HRMThe Responsibilities of HRThe Competencies of HR

Human Resource Management: The Beginnings

The roots of people management lie deep in the past.

The division of labour has been practised since prehistoric times.

Tasks were allocated according to skills such as ability to find food plants, track animals or cook; age, strength and health were taken into account and the oldest and youngest members were not expected to travel far from home or to be involved in the dangers of hunting.

Social customs determined separate roles and tasks for males and females.

Some functions, such as religious and political leadership or medicine, were restricted to individuals with inherited specialized knowledge.

The evolution of civilization and technology proliferated different forms of work.

In the ancient world, large numbers of people were organized to build great pyramids, fortresses, and irrigation systems.

Military leaders marshalled huge armies.Slave owners operated massive plantations

and mines.Thus, leadership, power, and organization

have been matters of study and debate for thousands of years.

The Farmer’s Almanac – a 5000-year-old Sumerian text is the oldest known HRM textbook

It includes useful tips on the supervision of farm labourers.

The text advised the farmer to prepare a selection of whips to keep men and beasts working hard.

This authoritarian approach has predominated most of history, but there has been a continuing search for less coercive ways of managing people.

In the 16th century, Niccolo Machiavelli wrote The Prince, detailing a wide range of strategies and tactics that continue to offer insights into the exercise of power.

According to Machiavelli, the ideal leader should have a degree of virtue and be regarded with both fear and love.

In 1776, Adam Smith (1723–1790) published An Inquiry into the Nature and Causes of the Wealth of Nations. This foundation text for the science of economics began by emphasizing the importance of the division of labour in achieving increased productivity, thereby anticipating the Industrial Revolution.

The UK is conventionally regarded as the first country to experience this process which then spread throughout Europe and North America and continues to transform developing countries.

At the end of the 18th, and the beginning of the 19th centuries, workers were gradually concentrated in factories and work centres, more or less under their own free will. This concentration was linked to increasing mechanization and the consequent need for machine-operating skills.

By the late 19th century, the size and complexity of the new industries demanded more sophisticated methods of control and organization, eventually evolving into modern management.

Modern Management

Much of the literature on management history is American in origin.

One of the principal originators of modern management highlighted in the US literature was, in fact, neither English nor (born) an American. The Scot, Daniel McCallum, was general superintendent of the Eric Railroad in the USA. This railroad, like other large rail companies, was finding it difficult to operate profitably, unlike smaller local railroads.

McCallum wrote:

A superintendent of a road fifty miles in length can give its business his professional attention and may be constantly on the line engaged in the direction of its details; each person is personally known to him, and all questions in relation to its business are at once presented and acted upon; and any system however imperfect may under such circumstances prove comparatively successful.

McCallum’s Management Principles

Good disciplineSpecific and detailed job descriptionsFrequent and accurate reporting of

performancePay and promotion based on meritClearly defined hierarchy of superiors and

subordinatesEnforcement of personal responsibility and

accountabilityThe search for and correction of errors.

By 1900 the USA had undergone several decades of rapid, large-scale industrialization. Large American companies such as Heinz and Singer Sewing Machines had the characteristics of modern, highly-structured organizations. They produced standardized consumer durables for the mass market. These organizations required a supply of trained managers. Notionally selected on the basis of ability and expertise – rather than family connections – they needed to know how to organize, reward and motivate their staff. In the USA, state and private universities were opened to cater for this new professional need.

In 1903, Frederick Taylor, a Pennsylvania steel company engineer, developed the concept of Scientific Management.

Taylor believed that the secret of productivity was finding the right challenge for each person, then paying him well for increased output.

He believed that incentive wages were no solution unless they were combined with efficient tasks that were carefully planned and easily learned.

Taylor’s Principles of Scientific Management

Each part of an individual’s work is analyzed scientifically.

The most suitable person to undertake the job is scientifically chosen and is taught the exact way to do the job.

Managers must cooperate with workers to ensure the job is done in a scientific manner.

There is a clear division of work and responsibility between management and workers.

Taylor’s ideas were developed further by Frank and Lilian Gilbreth who made valiant efforts to turn human beings into automatons.

Between 1900-1915, acedemic researchers have begun to take an interest in the practical aspects of work.

Work psychology was pioneered by German Psychologist Hugo Munsterberg.

Work psychology supported some views but countered some myths of the scientific management.

The human relations movement dominated management thinking until the 1950s and was a significant influence on the development of modern HRM.

The movement gained most of its inspiration from the famous Hawthorne studies at the Western Electric Company plant of that name in Chicago from the 1920s to the early 1940s.

The human relations and human factors approaches were absorbed into a broad behavioural science movement in the 1950s and 1960s. This period produced some influential theories on the motivation of human performance.

Some Motivation Theories

Maslow’s Hierarchy of NeedsMcGregor’s Theory X and YHerzberg’s Two-factor TheoryMcClelland’s Learned Needs TheoriesEquity TheoryExpectancy TheoryReinforcement Theory

By the 1970s a fairly consistent set of activities and roles had developed for people management, which in most large organisations was perceived as a specialist management function, usually termed Personnel Management and comprising the areas of recruitment and selection, pay and conditions of service, employee welfare, industrial relations, training and development, and employee exit.

Traditional Functions of the Personnel Department

RecruitmentSelectionPromotionPayPerformance

AssessmentGrading StructuresTraining and

Development

WelfareCommunicationEmployee RelationsDismissalPersonnel

Administration.

Personnel Management to Human Resource Management

The emergence of HRM was part of a major shift in the nature and meaning of management towards the end of the 20th century.

This happened for a number of reasons, the most significant being: The loss of faith in the traditional

approach to mass production. The realization of the impact of new

technology in the workplace.

Loss of Faith in Mass Production

This was brought by the success of Japanese manufacturers in the 1970s – 1980s.

The Japanese model was characterized by: Low or semi-skilled workers Close supervision. Pay linked to quantity of output. Assembly-line technologies.

The Human Relations School also brought about the shift.

Impact of New Technology

Technology shifted managerial concern to human resources.

Rapid development of technology meant continual technological change and in turn implied the need for continuous learning.

With advancing technology and better-educated workforces, it was not enough to manage people reactively or passively.

Competitive advantage now ultimately came not from capital investment but from human resources, and these had to be managed proactively and strategically if an organisation was to be successful.

The Presentation of HRM byHarvard Business School

HRM is a radically new approach to managing people, demarcated sharply from traditional personnel management.

HRM is an integrated approach which provided a coherent program, linking all aspects of people management.

HRM represented a consistent view of people management in which employees were treated as valuable assets.

HRM is a general management function.

Rationale for Adopting the HRM Approach

HRM offers a broader range of solutions for complex organizational problems.

It ensures that an organization’s people are considered as well as its financial and technological resources when objectives are set or capabilities assessed.

It forces the explicit consideration of the individuals who implement and comprise the strategy.

Two-way links are encouraged between the formulation of strategy and its human resource implications, avoiding problems which might arise from: Subordinating strategic considerations to HR

preferences; neglecting an organization’s people as a potential source

of organizational competence and competitive advantage.

Human Resource Roles

FUNCTION ROLE

Planning and organizing for work, people and HRM

Strategic perspectiveOrganization designChange managementCorporate wellness management

People acquisition and development

Staffing the organizationTraining and developmentCareer managementPerformance managementIndustrial relations

Administration of policies, programmes and practice

Compensation managementInformation managementAdministrative managementFinancial management

Ideal Types of Personnel and Human Resource Management

Characteristics Personnel Management


Strategic nature Predominantly dealing with day-to-day issues Ad-hoc and reactive in nature: a short-term perspective rather than strategic

Dealing with day-to-day issues; but proactive in nature and integrated with other management functionsA deliberately long-term, strategic view of human resources

Psychological contract

Based on compliance on the part of the employee

Based on seeking willing commitment of the employee



Job Design Typically Taylorist/Fordist

Typically team-based

Organizational Structure

Hierarchical Tendency to vertical integration

Flexible with core of key employees surrounded by peripheral shells High degree of outsourcing

Remuneration Collective base rates ‘Pay by position’Any additional bonuses linked to Taylorist work systems

Market-based Individual and/or team performance ‘Pay for contribution’



Recruitment Sophisticated recruitment practices for senior staff onlyStrong reliance on external local labour market for most recruitment

Sophisticated recruitment for all employeesStrong internal labour market for core employees. Greater reliance on external labour market for non-core

Training and Development

Limited and usually restricted to training non-managerial employees. Narrowly job-related. Management development limited to top executives and fast-track candidates

Transformed into a learning and development philosophy transcending job-related training.A learning organisation culture



Employee Relations Perspective

Pluralist: collectivist; low trust

Unitarist: individualistic; high trust

Organization of the Function

Specialist/professional Separated from line management Bureaucratic and centralised

Largely integrated into line management for day-to-day HR issues Specialist HR group to advise and create HR policy

Welfare role Residual expectations No explicit welfare role

Criteria for success of the function

Minimising cost of human resources

Control of HR costs, but also maximum utilisation of human resources over the long term

HRM in the Philippines

HRM practice in the Philippines came about with the entry of Western multinational corporations.

The first unit established was the personnel office whose primary purpose was to recruit, select, and place employees.

Soon, the wages and benefits, labor employee relations, and the training units were added to its functionalities.

When dissatisfaction grew with the uncritical application of Western-developed motivation theories, professionals and social scientists initiated studies of the Filipino workforce.

Research into what motivates the Filipino worker and the Filipino manager have been published: Torres’ Filipino Pakikikapwa Lanuza’s P-I-C-K Theory Tinio’s People-Places-Purpose Theory Andres’ Filipino Hierarchy of Needs

The Challenge of Human ResourcesManagement Today

There’s an old joke that goes…The organization of the future will be so

technologically advanced that it will be run by just one person and a dog. The person will be there to feed the dog, and the dog will be there to make sure the person doesn’t touch anything.

“In many fast-growing economies, it may be easier to access money and technology than good people.” – Ed Gubman

Competitive advantage belongs to companies that know how to attract, select, deploy, and develop talent.

The Challenge of Human Resource Management

Competitive Challenges

Globalization

Technology

Managing Change

Human Capital

Responsiveness

Cost Containment

Human Resource

Management

HR Planning, Recruitment and

Staffing

Job Design, Training and Development

Employee Appraisal

Communication

Compensation and Benefits

Employee Relations

Employee Concerns

Diversity (Educ., Age, Gender, Background)

Job Security

Employee Rights

Privacy Issues

Work Attitudes

Family Concerns

HR as a Business

Administrative Services

and Transactions

Activities:Compensation,

hiring and staffing

Emphasis:Resource efficiency, effectiveness, and

service quality

Business Partner Services

Activities:Developing an

effective HR system and helping

implement business plans, talent management

Emphasis: Knowing the business and

exercising influence – problem solving, designing effective systems to ensure

needed competencies.

Strategic Partner Services

Activities:Contributing to

business strategy based on

considerations of human capital,

business capabilities,

readiness, and developing HR

practices as strategic

differentiatorsEmphasis:

Knowledge of HR and of the business,

competition, the market, and

business strategies.

Challenge 1: Competing, Recruiting,and Staffing Globally

Impact of globalization: the competency of offering customers

“anything, anytime, anywhere.” Losing national identities. Expanding operations. International competition. Free-trade agreements. Issues in corporate social responsibility.

Globalization and HRM

Deal with better informed employees.Language barriers for gauging knowledge

and skill base.Implementation of training programs to

understand other cultures and practices.

Challenge 2: Embracing New Technology

E-commerce becoming the norm.Generation of virtual workers.Shift from “touch labor” to “knowledge

workers.”Knowledge workers – are employees who

contribute to the company not through manual labor, but through what they know about customers or a specialized body of knowledge.

Influence of Technology in HRM

Human Resource Information Systems – the most central use of technology in human resource management.

HRIS automates routine activities – payroll processing, maintaining employee records, administering benefits program.

Factors to be Evaluated in Choosing a HRIS

Fit of the application to the firm’s employee base.

Ability to upgrade or customize the software.Compatibility with current systems.User friendliness.Availability of technical support.Time required to implement and train

members to use the HRIS, including HR and Payroll personnel, managers, and employees.

Initial costs and annual maintenance costs.

Challenge 3: Managing Change

In highly competitive environments, where competition is global and innovation is continuous, being able to manage change has become a core competency sought by organizations.

Types of Change: Reactive Change Proactive Change

Managing Change through HR

Reasons why change efforts fail: Not establishing a sense of urgency. Not creating a powerful coalition to guide the

effort. Lacking leaders who have a vision. Lacking leaders who communicate the vision. Not removing obstacles to the new vision or

motivating employees. Not systematically planning for and creating

short-term “wins”. Declaring victory too soon. Not anchoring change in the corporate culture, or

failing to maintain the momentum of the change.

Managing Change through HR

Key Elements of Successful Change Management Linking change to the business strategy. Creating quantifiable benefits. Engaging key employees, customers, and their

suppliers early. Integrating required behavior changes. Leading clearly, unequivocally, and consistently. Investing to implement and sustain change. Communicating continuously and personally. Selling commitment to the change, not

communication to the change.

Challenge 4: Managing Talent

The success of organizations who compete with people depends upon its ability to manage talent or human capital.

Human capital describes the economic value of employees’ knowledge, skills, and capabilities.

What CEOs say about Human Capital

“If you look at our semiconductors and melt them down for silicon, that’s a tiny fraction of the cost. The rest is intellect and mistakes.” – Gordon Moore, Intel


“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage.” – Jack Welch, General Electric


“Successful companies of the 21st century will be those who do the best jobs of capturing, sharing and leveraging what their employees know.” – Lew Platt, Hewlett-Packard

Human Capital and HRM

Human capital is intangible and cannot be managed the way organizations manage jobs, products, and technologies.

To build human capital in organizations, managers must continue to develop superior knowledge, skills, and experience within their workforce.

Beyond the need to invest in developing employees, organizations have to find ways of using the knowledge that currently exists within their firms.

Robert Buckman (CEO, Buckman Laboratories) on Human Capital

“If the greatest database in the company is housed in the individual minds of the associates of the organization, then that is where the power of the organization resides. These individual knowledge bases are continually changing and adapting to the real world in front of them. We have to connect these individual knowledge bases together so that they do whatever they do best in the shortest possible time.”

Challenge 5: Responding to the Market

Managers must also meet customer requirements of quality, innovation, variety, and responsiveness.

The speed and effectiveness of responding to customer concerns require organizations to constantly align its management processes with customer needs.

Management Innovations that have direct implication for HR: Total Quality Management Reengineering

Total Quality Management and HRM

Total Quality Management is a set of principles and practices where core ideas include understanding customer needs, doing things right the first time, and striving for continuous improvement.

TQM techniques were developed by Dr. W. Edward Deming

Deming’s 14 Points on TQM

1. Create constancy of purpose for improving products and services.

2. Adopt the new philosophy.3. Cease dependence on inspection to achieve quality.4. End the practice of awarding business on price

alone; instead, minimize total cost by working with a single supplier.

5. Improve constantly and forever every process for planning, production and service.

6. Institute training on the job.7. Adopt and institute leadership.

Deming’s 14 Points on TQM

8. Drive out fear.9. Break down barriers between staff areas.10. Eliminate slogans, exhortations and targets for the

workforce.11. Eliminate numerical quotas for the workforce and

numerical goals for management.12. Remove barriers that rob people of pride of

workmanship, and eliminate the annual rating or merit system.

13. Institute a vigorous program of education and self-improvement for everyone.

14. Put everybody in the company to work accomplishing the transformation.

Reengineering and HRM

Reengineering is defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, services and speed.

Reengineering requires that management create an environment for change.

Reengineering efforts depend on effective leadership and communication processes.

Reengineering requires that administrative systems be reviewed and modified.

Challenge 6: Containing Costs

Companies today are facing sharply rising costs.There is extreme pressure to improve

productivity in order to maximize efficiency and keep prices competitive.

Like other managers, human resource managers are under pressure to show top management the financial results of their department.

Firms are taking many approaches to lowering labor-related cost including actions such downsizing, outsourcing, offshoring, and employee leasing.

Downsizing

Downsizing is the planned elimination of jobs.Downsizing is no longer regarded a fix when

times are tough.It has become a tool continually used by

companies to adjust to changes in technology, globalization, and the firm’s business direction.

While some companies improve efficiency with layoffs, others have remained and established a policy of “no layoffs”.

Costs Associated with Layoffs:

Severance and retiring costs.Accrued vacation and sick day payouts.Pension and benefit payoffs.Potential lawsuits from aggrieved workers.Loss of institutional memory and trust in

management.Lack of staffers when economy rebounds.Survivors who are risk averse, paranoid,

and political

Benefits from a “No Layoffs” Policy

A fiercely loyal, more productive workforce.Higher customer satisfaction.Readiness to snap back with the economy.A recruiting edge.Workers who are not afraid to innovate,

knowing their jobs are safe.

Outsourcing, Offshoring, and Employee Leasing

Over the years, employment relationship between companies and employers has shifted from relationship-based to transactions-based.

The internet has created a workforce that is constantly scanning for new opportunities.

More people are choosing to work on a freelance, or contract basis or to work part-time, especially women and senior citizens.

Remedies used by companies include outsourcing, offshoring and employee leasing.

Outsourcing – hiring someone outside the company to perform business processes that could be done within a firm.

Offshoring (global sourcing) involves shifting work to overseas locations.

Costs associated with offshoring include finding foreign vendors, productivity loss during transition, domestic layoff costs, language difficulties, international regulatory challenges, and political and economic instability that can threaten operations.

To minimize problems, line and HR managers have to work together with the firm’s other functional groups to define and communicate transition plans, minimize the number of unknowns, and help employees identify their employment options.

Employee leasing - is a contractual arrangement in which the leasing company, also known as a professional employer organization (PEO), is the official employer.

A PEO takes – typically a larger company – takes over the management of a smaller company’s HR tasks and becomes a coemployer to its employees.

The value of employee leasing lies in the fact that an organization can essentially maintain its work relationships with its employees but shift some employment costs to the PEO, in return for a fee.

Demographic and Employee Concerns

Demographic Changes Diversity/immigration challenge Age distribution of the workforce Gender distribution of the workforce Education of the workforce

Cultural Changes Employee rights Concern for privacy Changing attitudes towards work Balancing work and family

Responsibilities of the HR Manager

Advice and CounselServicePolicy Formulation and ImplementationEmployee AdvocacyStrategic PartnerChange ChampionHarness the Benefits of Technology

Competencies of the HR Manager

Business Mastery – HR professionals need to know the economic and financial capabilities of their organization.

HR Mastery – HRs should develop expert knowledge in the areas of staffing, development, appraisals, rewards, team building, and communication.

Change Mastery – HR professionals have to be able to manage change processes.

Personal Credibility – HR professionals must establish personal credibility in the eyes of their internal and external customers.

HR Competencies by Arthur Young

Business Mastery

HR Mastery

Personal Credibilit

y

Change Mastery

HR Competencies by R. Grossman

Credible Activist

Cultural Steward

Talent Manager/

Organizational Designer

StrategicArchitect

Business Ally Operational Executor

References

Ateneo de Manila University Press. (2009). Human Resource Development: The Philippine Experience. Manila: Ateneo de Manila University Press.

Diamante, M. (2007). Human Resource Management: Local and Global Perpspectives. Quezon City: C & E Publishing.

Henderson, I. (2011). Human Resource Management for MBA Students. United Kingdom: CIPD.

Milkovich, G. T., & Newman, J. M. (2002). Compensation, 7th Edition. New York City: McGraw-Hill.

Noe, R. E., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2010). Human Resource Management, Gaining a Competitive Advantage. New York City: McGraw-Hill/Irwin.

Payos, R. P. (2010). Human Resource Management: From the Practitioner's Point of View. Manila: Rex Book Store.

Price, A. (2007). Human Resource Management in the Business Context. London: Thompson Learning.

Snell, S., & Bohlander, G. (2011). Human Resource Management Principles. Pasig City: Cengage Learning Asia Pte Ltd (Philippine Branch).

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Inro to HRM