UnderstandingHRM_20101

HRM – MGMT3017

UNDERSTANDING HRM

• Model, Philosophy & Objectives

MGMT 3017 - Dion Greenidge, Lecturer 1

• Distinguishing HRM from Personnel

Management

• Understanding the Strategic Focus

Learning Objective this Unit

By the end of this Unit, you should be able to:

1. Clearly articulate the HRM philosophy.

2. Describe the difference between HRM and 2. Describe the difference between HRM and

Personnel Management.

3. Give concise definitions for HRM.

4. Describe the various models/maps of HRM.

5. Know the history behind HRM.


Learning Objective this Unit

1. Define the key phases of HRM and detail the various HR activities involved.

5. Link HRM to the strategic planning process.

6. Understand the unitarist perspective of 6. Understand the unitarist perspective of HRM and how it differs from the pluralist perspective.

7. State the major HRM objectives.


What is Human Resource

Management?

What makes it Unique?


“HR should not be defined by what it does but by what it

delivers – results that enrich the organization’s value to

customers, investors, and employees”


customers, investors, and employees”

David Ulrich

What and Where are the Origins of

HRM?

• Has origins in USA back in the 1950’s but

did not gain wide recognition until

beginning of 1980’s.beginning of 1980’s.

• UK came on board in late 1980’s.


Beardwell & Holden (1997)

Why did HRM evolve?

• Pressures in Product markets in USA during

recession of 1980-82.

• Growing recognition in the USA that Trade

Union influence in collective employment Union influence in collective employment

was reaching fewer employees.

• US economy challenged by Japan and

others.



Why did HRM evolve?

• Attempting to cope with unsatisfactory

productivity in USA and UK.

• Need to create a work situation free of

conflict in which both employees and

employer worked toward the same goals

(unitarist perspective).



The Unitarist vs Pluralist Debate on

HRM…

• Unitarist Perspective – Employee and

employer share common goals in the

workplace. Conflict is not a normal event in workplace. Conflict is not a normal event in

the workplace.

• Pluralist Perspective – Employee and

employer do not have common goals and

conflict is accepted as a normal activity in the

workplace. Results from competing interests.


HRM Definitions

�The concept of fit with the strategic thrusts

of the organisation

�HR strategies exist to ensure that the

culture, values, structure and processes of


culture, values, structure and processes of

the organisation, and the quality, flexibility,

motivation and commitment of its members

to contribute fully to the achievement of its

objectives… should match the business

strategy Cooke 1990

HRM Definitions

�The attainment of business objectives

through the contribution it makes to the

creation of an environment in which people

commit themselves to and effectively


commit themselves to and effectively

accomplish the tasks assigned to them.(Nurse)

HRM Definitions

� Strategic HRM is largely about integration; to

ensure that HRM is fully integrated into

strategic planning; that HRM policies cohere

across policy areas and across hierarchies and across policy areas and across hierarchies and

that HRM practices are accepted and used by

line managers as part of their everyday work. (David Guest)


Why Is HR Management Important to

All Managers?

Personnel mistakes you don’t want to make:

• Having your employees not performing at

peak capacity

• Hiring the wrong person for the job • Hiring the wrong person for the job

• Experiencing high turnover

• Finding employees not doing their best

• Having your company taken to court because

of your discriminatory actions

13MGMT 3017 - Dion Greenidge, Lecturer

Why Is HR Management Important to

All Managers? (cont.)

Personnel mistakes you don’t want to make:

• Having your company cited under federal

occupational safety laws for unsafe practices

• Allowing a lack of training to undermine your • Allowing a lack of training to undermine your

department’s effectiveness

• Committing any unfair labor practices


HRM OBJECTIVES…

• Employee job satisfaction, self-actualisation

and motivation

• Employee effectiveness and efficiency

• Improved quality (innovation & Creativity)• Improved quality (innovation & Creativity)

• Cost-effectiveness and competitiveness

• Labour flexibility


(Ivancevich)

HRM OBJECTIVES…

• Employee commitment

• Increased competence (training &

development)

• Participation and autonomy• Participation and autonomy

• Creating readiness for change


(Ivancevich)

HRM OBJECTIVES…

• Rewards and incentives linked to

performance

• More organic structures

• Recognition of human resource or people • Recognition of human resource or people

issues at the strategic level


(Ivancevich)

Five Key Phases of HRM…


Continuous Environmental Scanning and

Analysis

• Interpreting and analysing changes in the

environment and developing the appropriate

HR policies and strategies


Acquisition

• HR Planning

• Internal and External Staffing

• Employee Orientation and Socialisation


Development

• Training of Employees

• Management Development

• Career Development

• Knowledge Management• Knowledge Management


Motivation

• Job Design

• Performance Management

• Rewards and Compensation

• Job Evaluation• Job Evaluation

• Discipline


Maintenance/Retention

• Commitment

• Employee safety and Health

• Employee Relations

• Industrial Relations• Industrial Relations


Human

Human Resource Management Functions

1

Human

Resource

Manageme

nt

Safety and

Health


Staffing

• Job Analysis

• Human Resource Planning

• Recruitment• Recruitment

• Selection

1-25MGMT 3017 - Dion Greenidge, Lecturer

Staffing (Cont.)

• Staffing - Process through which organization ensures it always has proper number of employees with appropriate skills in right jobs at right time to achieve organizational objectivesobjectives

• Job analysis - Systematic process of determining skills, duties, and knowledge required for performing jobs in organization


Staffing (Cont.)

• Human resource planning - Systematic process of

matching internal and external supply of people

with job openings anticipated in the organization

over specified period of time

• Recruitment - Process of attracting individuals on

a timely basis, in sufficient numbers, and with

appropriate qualifications, to apply for jobs with

an organization


Staffing (Cont.)

• Selection - Process of choosing from a group

of applicants the individual best suited for a

particular position and the organization


Measuring Quality of Hire in Today’s

Environment

• How do you measure quality of hire and set

standards for new-hire performance?

• Quality of hire is stressed these days

• Developers of automatic tracking systems are • Developers of automatic tracking systems are

actively involved in trying to come up with the

answer to the question of “quality of hires”

• In a few years, some standards will emerge on how

you measure and represent your talent management


Human Resource Development

• Training

• Development

• Career Planning

• Career Development• Career Development

• Organizational Development

• Performance Management

• Performance Appraisal


Human Resource Development (Cont.)

• Training - Designed to provide learners with

knowledge and skills needed for their present

jobs

• Development - Involves learning that goes • Development - Involves learning that goes

beyond today's job; more long-term focus

• Career planning - Ongoing process whereby

individual sets career goals and identifies

means to achieve them



• Career development - Formal approach used

by organization to ensure that people with

proper qualifications and experiences are

available when neededavailable when needed

• Organization development - Planned and

systematic attempts to change the

organization, typically to a more behavioral

environment



• Performance management - Goal-oriented process directed toward ensuring organizational processes are in place to maximize productivity of employees, teams, and ultimately, the of employees, teams, and ultimately, the organization

• Performance appraisal - Formal system of review and evaluation of individual or team task performance


Compensation

Compensation - All

rewards that

individuals receive individuals receive

as a result of their

employment


Compensation

• Direct Financial Compensation - Pay that person receives in form of wages, salaries, bonuses, and commissions

• Indirect Financial Compensation (Benefits) - All financial rewards not included in direct financial rewards not included in direct compensation such as paid vacations, sick leave, holidays, and medical insurance

• Nonfinancial Compensation - Satisfaction that person receives from job itself or from psychological and/or physical environment in which person works


Safety and Health

Employees who work in

safe environment and

enjoy good health are enjoy good health are

more likely to be

productive and yield

long-term benefits to

organization.


Safety and Health

• Safety - Involves protecting employees from

injuries caused by work-related accidents

• Health - Refers to employees' freedom from

illness and their general physical and mental illness and their general physical and mental

well being


Employee and Labor Relations

• Business is required by law to

recognize union and bargain with it in

good faith if firm’s employees want

union to represent them union to represent them

• Human resource activity is often

referred to as industrial relations

• Most firms today would rather have

union-free environment


Human Resource Research

• Human resource

research is not

separate function.separate function.

• It pervades all HR

functional areas.


Interrelationships of HRM Functions

• All HRM functions are

interrelated

MGMT 3017 - Dion Greenidge, Lecturer 1-40

interrelated

• Each function affects

other areas

HR’s Changing Role

• The metamorphosis of personnel into human

resource management reflects the fact that in

today’s business environment, highly trained

and committed employees are often a firm’s and committed employees are often a firm’s

main real sustainable competitive advantage.


HR’s Changing Environment

• Globalization

– refers to firms’ tendency to extend their sales,

ownership, and/or manufacturing to new markets

abroad abroad



• Technological advances

• Nature of work

– service jobs

– outsourcing – outsourcing

– human capital



• Growing emphasis on “knowledge workers”

and human capital

• Human capital• Human capital

– refers to the knowledge, education, training, skills,

and expertise of a firm’s workers


Environment of Human Resource Management

EXTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT

OperationsMarketing

Legal Considerations

Tech

nology

SocietyUnions

Unanticip

ated Events

1-45

1

Human

Resource

Management

Other

Functional

Areas

Finance

Economy

Shareh

olders

Customers Competition Labor Market

Safety and

Health

Unanticip

ated Events

MGMT 3017 - Dion Greenidge, Lecturer

Labor Market

• Potential employees

located within

geographic area from geographic area from

which employees are

recruited

• Always changing


Legal Considerations

• Federal, state and

local legislation

• Court decisions• Court decisions

• Presidential

executive orders


Society• No longer content to accept, without

question, the actions of business

• Ethics - Discipline dealing with what is

good and bad, or right and wrong, or

with moral duty and obligation


with moral duty and obligation

• Corporate social responsibility - Implied,

enforced or felt obligation of managers

to serve or protect interests of groups

other than themselves

Unions

• Group of employees who

have joined together for

purpose of dealing

collectively with their


collectively with their

employer

• Becomes a third party

when dealing with the

company

Shareholders

• Owners of corporation

• Because they have invested money in

firm, they may at times challenge


firm, they may at times challenge

programs considered by

management to be beneficial to

organization

Competition

• Firms may face intense competition in both their product or service and labor markets

• Must maintain a supply


• Must maintain a supply of competent employees

• Bidding war often results

Customers

• People who actually use firm’s

goods and services

• Management has task of

ensuring its employment


practices do not antagonize

members of market it serves

• Workforce should be capable

of providing top-quality goods

and services

Technology

• The world has never before seen

technological changes occur as rapidly as

they are today.

• Created new roles for HR professionals


• Additional pressures on them to keep

abreast of technology

• In 2008 survey of CEOs worldwide, 83%

ranked change as most important issue

confronting their organization

Cyberwork

• Possibility of never-ending workday

• BlackBerrys, cell phones, text messaging, and e-mail create endless possibilities for


endless possibilities for communication

• Some workers believe their employer wants them available 24/7

Economy

• In general, when economy

is booming, it is often more

difficult to recruit qualified

workers.


workers.

• When a downturn is

experienced, more

applicants are typically

available.

Unanticipated Events

• Occurrences in external environment that could not be foreseen

• Every disaster, whether

MGMT 3017 - Dion Greenidge, Lecturer

• Every disaster, whether manmade or by nature, requires a tremendous amount of adjustment with regard to human resource management

56

Demographic and Workforce Trends

• Labor force growth is not expected to keep

pace with job growth

• Labor force is getting older

• Shift to nontraditional workers • Shift to nontraditional workers


Gen Y

• May be “the most high maintenance

workforce in the history of the world”

• Their capacity for using information • Their capacity for using information

technology will also make them the most

high-performing


The Strategic Role of

Human Resource Management

• Main responsibility facing human resource

managers is to institute policies and practices

that produce the employee competencies and

behaviors the company needs to achieve its behaviors the company needs to achieve its

strategic goals


The Strategic Role of

Human Resource Management (cont.)• Strategy

– the company’s plan for how it will balance its

internal strengths and weaknesses with external

opportunities and threats in order to maintain a

competitive advantage competitive advantage


HR’s Role in Executing Strategy

• Study found that mergers and/or acquisitions

in which the human resource teams had been

involved were more likely to have been

successful successful


Strategy and HR – Albertson’s

• Albertson’s human resource management team

chose a computer system from Unicru of Portland,

Oregon that collects and analyzes the information

entered by applicants online.

• It ranks applicants based on the extent to which they

exhibit the customer-focused traits that predict

success in retail jobs and helps track candidates

throughout the screening process.


Two Strategic Human Resource

Challenges

1. Focus on boosting competitiveness, reducing

costs, and improving employee performance

2. Be more involved in both formulating and

implementing company strategy implementing company strategy


Corporate Strategy


Basics of Strategic Planning

• Corporate-level strategy

– identifies the portfolio of businesses that

comprise the company and the ways in which

these businesses relate to each otherthese businesses relate to each other



• Business-level/competitive strategy

– identifies how to build and strengthen the

business’s long-term competitive position in the

marketplacemarketplace


HR and Competitive Advantage

• Competitive advantage

– “any factors that allow an organization to

differentiate its product or service from those of

its competitors to increase market share” its competitors to increase market share”



• Functional strategies

– identify the basic courses of action that each of

the business’s departments will pursue in order to

help the business attain its competitive goals help the business attain its competitive goals


HRM MODELS/MAPS


A LOOK AT SOME APPROACHES…

1. Devanna et al.

2. Beer et al.

3. David Guest


The Matching Model of HRM

Political

Forces

Cultural

ForcesEconomic

ForcesMission &

Strategy


Forces

Economic

ForcesEconomic

Forces

Strategy

Devanna et al.

Stakeholder

Interest•Shareholders•Management•Employees•Government•Community•Unions

Situational

HRM Policy•Employee influence•HR flow•Rewardsystems

HR Outcomes

•Commitment•Competence•Congruence•Cost-effectiveness

Long-Term

Consequences

•Individual well-being•Org.effectiveness

Map of the HRM Territory


Situational

Factors•Workforce Characteristics•Business strategy•Management philosophy•Labour market•Unions•Task environment•Laws/social values

systems•Worksystems

effectiveness effectiveness•Societalwell-being

Beer et al.

David Guest HRM Process

E'VIRO'ME'T OF BUSI'ESS

Strategy Integration High Commitment


E'VIRO'ME'T OF BUSI'ESS

High Quality Flexibility

The Human Resource Cycle

Rewards


Selection Performance Appraisal

Training

Fomburn, Tichy, & Devanna (1984)

A Model of Human Resources as a Source

of Sustained Competitive Advantage

Human

resource

practices


Human

Capital

pool

Human

resource

behaviour

Sustained

competitive

advantage

Wright, McMahon, & McWilliams (1994)

Distinguishing HRM from Personnel

Management


Addresses Issues Related to…

1. Beliefs and Assumptions

2. Strategic Aspects

3. Line management3. Line management

4. Key levers


HRM Philosophy…

• People as a critical resource to be developed

for future benefit to the organisation

• A resource to be invested in, not controlled.• A resource to be invested in, not controlled.


PM philosophy…

• People as an expense to be controlled to

ensure profitability of organisation.

• Is operational in focus and scope.• Is operational in focus and scope.


Strategic Human Resource

Management

• Strategic human resource management

– formulating and executing HR systems that

produce the employee competencies and

behaviors the company needs to achieve its behaviors the company needs to achieve its

strategic aims


Linking Corporate and HR Strategies


HR’s Role in Formulating Strategy

• HR participates by supplying information

regarding the company’s internal human

strengths and weaknesses


High-Performance Work System

• High-performance work system

– an integrated set of human resource management

policies and practices that together produce

superior employee performancesuperior employee performance


Seven Interdependent Environmental Forces that have

Driven and Directed Change in HRM

Skill supply

Training and retraining

“The HR Responses”

•Competitive Restructuring

•Decentralisation


Training and retraining

Organisational restructuring

Review of work systems

Cultural management

Selection and Retention

Employee relations

Rewards Management

•Decentralisation

•Interrnationalisation

•Acquisitions and Mergers

•Quality Focus and Processes

•Technological Change

•New Concepts of Service

management

Business Strategy

�Defines the direction in which the business is

going to achieve sustainable competitive

advantage… and focuses on activities that will

lead to the achievement of [Vision], Mission,


lead to the achievement of [Vision], Mission,

meet expectations of owners, manage changes

imposed by the external and internal

environments, add value through effective use

of resources and capitalise on distinctive

competences of the organisation. (Cooke 1990)

Human Resource (HR) Strategies

�Creating a strategic focus

�Developing more integration of activities via project teams

�Achieving flexibility in response to change


�Achieving flexibility in response to change

�Developing a climate of trust and co-operation

�Need to formalise systems and processes as business grows in size and complexity

Human Resource (HR) Strategies

�Unified remuneration system

�Achieving appropriate balance between the

flexible and informal approach necessary in a

rapidly developing and innovative


rapidly developing and innovative

organisation

�Creating career development

�Continuous system of training employees

�Clarifying new roles and responsibilities

Key Strategies for successful

businesses in the Future

�Recognising the value of HR

�Missioning and Co-missioning

Career centred and motivational systems


�Career centred and motivational systems

�Homeostasis: Internal and external balance

Draper (1991)

Key Strategies for successful

businesses in the Future

�Appropriate culture

�Conditions to develop and train each

valuable employee


valuable employee

� Strategic focus of HRM and HRD

� Focus on high quality and excellence

A Model of Strategic Change and

HRM…

• Hendry and Pettigrew (1990) developed a

model of strategic change & HRM.

• Model addresses issues of external • Model addresses issues of external

environmental influences on business

organisations, and the impacts on the practice

of HRM.


Hendry/Pettigrew

Key Aspects of Model…

• The Outer Context – Socio-economic.

Technical, political-legal & competitive

factors/forces.

• Inner Context – Culture, structure, politics, • Inner Context – Culture, structure, politics,

leadership, task-technology & business

outputs.

• Business Strategy Content – Objectives,

product-market, strategy & tactics.


Hendry/Pettigrew

Key Aspects of Model…

• HRM Context – Role, Definition,

Organisation & HR outputs.

• HRM Content – HR flows, work systems,

reward systems & employee relations.


Hendry/Pettigrew

Linking Forward…

• Next lecture we will link this section to the HR

Acquisition Phase, and look at the topic of HR

planning in organisations.

• This will be covered over a period of two

weeks.


Documents

UnderstandingHRM_20101