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Human Resource Function

Human resource management (HRM)


Human Resource Management is an integrated approach to the management of people in an organization. It aims to make the most efficient use of a firms human resources. HRM includes the recruitment, selection, training, motivation, performance management and payment of all staff within a business. HRM ensures that each department within the company is provided with human resources that have right skills, qualifications and experience. HRM is vital for any organization as it actions directly affect the labor force. If an employee is satisfied, he wont probably be looking for another employment elsewhere. On the other hand, dissatisfied workers will try to leave the organization and this will increase labor turnover.

Labor productivity
Labor productivity is a way of measuring the output of employees. It can be defined as the output per worker per period of time. Labor productivity = Total output/Number of employees per period of time Productivity is often dependent on the type and quality of capital being used and the degree of operator skill. When labor productivity is increased it will increase the efficiency hence reflecting it in a lower unit cost. This would give the competitive edge to the business among its rivals. There are number of ways that we can increase the labor productivity. They are: Better education and training Better management or organization. e.g. division of labor Better working conditions Greater fringe benefits (housing allowances, medical care, bonus, meal...)

Workforce Planning (Human Resource Planning)


Effective workforce planning aims to have the right quantity and quality of employees doing the right things in the right place at the right time and at the right cost to the organization. If the HRM function can achieve this the following benefits should be obtained: The workers have the correct skills to carry out the tasks thus ensuring that rejects are kept to a minimum and quality is guaranteed. This will reduce the cost of re-working faulty items and refunding dissatisfied consumers. The business has the correct size of workforce thus ensuring that forecast production levels are achieved without having excess labor. This will help reduce the unit costs of the finished product. The correct recruitment and training of staff should ensure a motivated workforce. This in turn should lead to a lower labor turnover and higher productivity. Both of this impacts favorably upon costs.

Flexible Working
This is when an employer allows people to choose the times that they work so that they can do other things, for example spend time with their children. This is to give employees a certain degree of flexibility in their jobs. Advantages include: Recruitment, retention and motivation Increases managerial control (e.g. annualized hours) Cost savings and more productive environment (e.g. home-working) Reduced absenteeism Improved employee health and welfare

Disadvantages of flexible working include: Need to meet raised expectations of employees Cost of consideration, making adjustments, appeals and legal defenses More difficult to serve customers quality reduced Additional recruitment necessary Dissatisfaction of staff who do not qualify (e.g. non-parents) More difficult to implement change

Methods of flexible working Overtime Overtime is working beyond normal working hours. It allows a firm to increase production without employing more staff. It is particularly useful for special orders or for firms that have seasonal demand. Employees are usually rewarded by extra payments for overtime working such as time and a half or double time when paid hourly. Flexi-time A flexible hours scheme, or flexi-time, usually involve working a set of core hours, perhaps 10 a.m. until 3 p.m., with the ability to vary the hours either side of this. Alternatively, there may be a choice of working patterns that can be chosen (usually a selection of 7 or 8 hour spells between 7 a.m. and 7 p.m. This allows an employer to recruit and retain staff who have other life commitments or interests, and to schedule work across longer portions of the day, so extending customer service. It helps to retain skilled and experienced staff at difficult times in their lives e.g. female workers who have young children. Shift working Shift working refers to regular work that takes place during non-standard hours, such as a morning shift (e.g. 2 a.m. to 8 a.m.) or a night shift (8 p.m. to 2 a.m.). Shift work is essential for firms that have expensive capital machinery requiring high capacity utilization. Workers can be

rotated around the shifts alternating between morning, afternoon and evening shifts. This allows production to be continuous while not committing an employee to the same unsociable shift on a permanent basis. Tele-working Tele-working involves working from home, with employees being linked to their employers by computer, phone and sometimes fax. The benefits include, work around looking after children, enabling disabled people to work from home, and saving in accommodation costs for the employers. Home working Home working affords individuals the same benefits as teleworking and may include freelance or self employed workers such as market researchers, graphic artists and editors. Home workers can also include mobile hair dressers, financial consultants etc. Job share Jobs hare allows individuals to, quite literally, share jobs. This is ideal for people who want responsibility but only want to work half hours. Tasks are shared equally between job holders and the earnings too.

Recruitment and Selection


Recruitment Recruitment refers to the process of attracting, screening, and selecting qualified people for a job. The recruitment process starts with a vacancy arising. Requirement is necessary when either an existing employee leaves or a new position is created.

Recruitment process The recruitment process refers to number of steps which has to be taken in order to have a successful recruitment campaign. In order to have such successful recruitment campaign a firm needs to follow a logical sequence to ensure that a suitable number of employees with the appropriate skills are employed in order to meet the manpower requirements of the business. The process needs to include details about: The job analysis procedure: Gathering all the facts relating to the tasks, responsibilities and context of the job. This is the procedure for determining the duties and skill requirements of a job and the kind of person who should be hired for it. The job description: Outlining the content of the job. This includes a list of a jobs duties, responsibilities, reporting relationships, working conditions, supervisory responsibilities, and the job title.

The person specification: The qualities and qualifications required by the candidates for the job. This is a list of a jobs human requirements, that is, the requisite education, skills, personality, and so on. Communicate your requirements: This is the procedure for advertising the vacancy both internally and externally. The selection procedure: This is the initial screening of applications, interviewing and testing. This sequence of events should ensure that the applicants fit the job on offer and that the successful candidate has the necessary skills to do the task.

Recruitment sources Internal sources This involves recruiting within the organization. Under this method details can be put on a notice board, or published by means of a circular. Advantages Foreknowledge of candidates strengths and weaknesses More accurate view of candidates skills Candidates have a stronger commitment to the company Increases employee morale Less training and orientation required It is cheap as few direct costs are incurred

Disadvantages Failed applicants become discontented Time wasted interviewing inside candidates who will not be considered The number of applicants from internal sources is likely to be limited

External Sources There are number of external sources which may be used for recruitment. Advertising This is the most common form of external recruitment as many posts are filled in response to advertisements. To be successful, the advertising should be well-worded and placed in an appropriate medium. Selection of the best medium depends on the positions for which the firm is recruiting.

Job centers These are located in High street Shopping centers and they act as an intermediary, introducing prospective applicants to employers who have notified vacancies to the job centers. The service is provided free of charge. Agencies Private employment agencies may operate on a nationwide or on a local basis and usually work on a no placement, no fee basis. The service can be quick but expensive. Most agencies specialize in certain type of vacancies. Consultants (Headhunters) This is more expensive and is used for more demanding and high-ranking positions. The services usually include advertising and making a profile. Small numbers of well matched candidates after preliminary interviews are offered to the client. University and colleges This is to attract qualified candidates from recently graduated students and to determine if the candidate is worthy of further consideration. Other forms include career offices, casual enquiries, and recommendations. Advantages of external recruitment New blood Insights from competitors Cheaper than training

Disadvantages Orientation time Morale of internals May not fit-in

Factors to be considered to select the sources of recruitment Speed The method used for attracting candidates The notice period with the previous employers The interview procedure If no suitable candidate is applied, then have to wait further longer.

Costs Important element in effective recruitment Word of mouth method cost noting Using headhunters and agencies will cost a lot Time is spent on screening, selecting for interview and cost of work which is lost or productivity which falls due to staff being involved in the selection process and not having as much time to spend on their usual task.

The HRM always have to make sure that they have selected the right person for the job. In doing so, quality should not be compromised. Even if they cant find the perfect person for the job, never employ a person who is unqualified and unsuitable.

The selection process


Employee testing and selection is the use of various tools and techniques to select the best candidates for the job. These tools cover the selection process, basic testing techniques, and background and reference checks, ethical and legal questions in testing, types of tests, and work samples and simulations. Selection tests Practical test are common where an easily tested skill is required such as certain secretarial skills or ability to speak a foreign language. If such tests are being involved in selection process, candidates could be notified of such tests in advance Psychological tests are used to assess aspects of candidates such as motivation, personality, and attitudes. Those involved with the application and interpretation of such tests should be well trained. Results of such tests must be handled with caution References This is very common once a primary selection is done as a way of confirming a choice or doing final check on candidates. A reference can be: o o o o o Biased in favor of candidates due to personal friendship Biased against the candidate due personal dislike Biased in favor of candidates as referee wants to get rid of them Biased against the candidates as referee wants to keep them Impartial and accurate

Interviews Interviews are still the primary method of selection. An interview is a conversation with a purpose. Interviews are mainly of two forms: Panel interviews: This involves when team of interviewers meeting the candidate together. It is less time consuming and more convenient administratively than one to one interview. Each interviewer may have different areas to be interviewed. One-to-one interviews: This is when Candidates are interviewed by single interviewer. This approach is more likely to be thorough and rigorous questioning and should encourage candidates to relax and talk freely. Interviews should focus on: Evidence on the applicants ability to do the job Evidence on the applicants motivation in applying the job Provision of information about the organization, the job and the terms and conditions of employment on which the applicant might be engaged

Employee Induction
Induction is process meant to help the new employee to settle down quickly into the job by becoming familiar with the people, the surroundings, the job, the firm and the industry. Induction is an introductory training programme designed to familiarise new recruits with the basic running of the firm including health and safety, security systems and administration procedures. It is also an opportunity to meet key personnel. Induction program could include Introduction to other employees Physical layout of the work place Essential procedures, such as about wages Important safety provisions such as fire evacuation procedures Information about the organization: history and development, trading policies, company projects, HR policies, responsibilities of each department etc

Advantages of induction Employee retention Create good impression It creates good adhesion It takes less time to familiarize Less turnover ratio, increase productivity, No chaos and Cost reduction.

Training and Development


Training involves improving the skills, knowledge and attitudes of employees so as to become more efficient and productive. Training and development is primary concern of HR department. But, all the managers should be concerned with drawing out the full potentialities of their staffs. Top managers has responsibility to ensure that it allocates sufficient money and resources to finance and support development activities Line managers have responsibility to ensure that they encourage their staffs to develop themselves and allocation of time for training. Employees have a responsibility to ensure that they develop their knowledge, skills and experiences HRD is responsible for ensuring that all training programs are identified, planned for and implemented and evaluated in a cost effective way.

Objectives of training Improve the efficiency of workforce Make workers multi-skilled and flexible Introducing a new process or new machinery Reduce wastage of material and time Adapt to change

Benefits of Training Improved customer service and public relations Staff become more competent at their jobs Staff become more flexible Fewer complaints Better morale and attitudes Less turnover and absenteeism More involved and caring employees Changes become easier to introduce Reduced waste The organization's image improves

Costs of Training Urgency of need Training time Costs Employee turnover Short-term worker While the employee is being trained the firm is losing the production that the worker would have contributed

Training methods Training methods could be either on-the-job training or off-the-job training On-the-job training On-the-job training is instruction at the place of work on how the job should be carried out. It might consist of observing how an experienced operator carries out the task or being talked through the job by a supervisor. Whichever method chosen, it is usually cheaper than off -thejob training and more suitable to the company. On-the-job methods include: Job rotation: Where the trainee is given several jobs in succession, to gain experience of a wide range of activities (e.g. a graduate management trainee might spend periods in several different departments) Attachments or secondments: Trainees spend periods of time in various departments, often as an assistant to a more senior member of staff, in order to gain knowledge and experience of the organization and its activities from different perspective. Action learning: Trainees learn a new job by doing it under the supervision of an experienced person Job shadowing (sitting by Neil): Trainees learn the job by watching or working with an experienced post-holder. There is possible difficulty here, though, in that bad habits can easily be passed on to an impressionable trainee. Advantages of on-the-job training Generally more cost effective Less disruptive to the business - i.e. employees are not away from work Training an employee in their own working environment, with equipment they are familiar with and people they know can help they gain direct experience to a standard approved by the employer

Disadvantages of on-the-job training Teaching or coaching is a specialist skill in itself; unless the trainer has the skills and knowledge to train, this would mean that the training will not be done to a sufficient standard The trainer may not be given the time to spend with the employee to teach them properly, which would mean substandard training has been achieved and learning has only been half done The trainer may possess bad habits and pass these on to the trainee

Off-the-job training Off-the-job training can be defined as all forms of training apart from that at the immediate work place. Off-the-job training involves employees taking training courses away from their place of work. This is often also referred to as "formal training". Off the job training courses might be run by the business' training department or by external providers. Off-the-job training methods include: Competency based training: The main role is to fill the gap between existing level of knowledge and skill and the desired level of knowledge and skills. Organization identifies key competencies for each level of the organization and develops training programmes to meet the requirements. Professional education: The purpose of education should not be confused with that of training. Education doesnt necessarily make the person better at the job, but it enables them to become more adaptable and ready to learn. The purpose is to broaden the person and provide a wider perspective on business issues. Advantages of off-the-job training External course is usually delivered by experts who are particularly skilled and experienced at delivering the subject in a professional and understandable manner. Employee can focus on the training - and not be distracted by work Opportunity to mix with employees from other businesses

Disadvantages of off-the-job training Employee needs to be motivated to learn May not be directly relevant to the employee's job Costs (transport, course fees, examination fees, materials, accommodation) Employees absence from work. While the worker is absent, his or her colleagues have to take up the work load or the firm has to hire another person for the period of absence, thus adding to the financial cost e.g. the use of supply teachers.

Labor Turnover
Labor turnover is the rate at which employees are leaving the organization as a proportion of the total workforce. High turnover might be indicative of poor wages, poor working conditions, unsympathetic management and low morale. Labor turnover = number of leavers per year/average number of staff * 100 Reasons for labor turnover Inadequate wage levels leading to employees moving to competitors Poor morale and low levels of motivation within the workforce

Recruiting and selecting the wrong employees in the first place, meaning they leave to seek more suitable employment A buoyant local labor market offering more (and perhaps more attractive) opportunities to employees

Costs of labor turnover Additional recruitment costs Lost production costs Increased costs of training replacement employees Loss of know-how and customer goodwill Potential loss of sales (e.g. if there is high turnover amongst the sales force) Damage that may be done to morale and productivity (an intangible cost)

Reducing labor turnover Training Delegation Team working Improved working conditions Hiring the right people from the start Setting the right compensation and benefits Review compensation and benefits packages at least annually

Why should a business be concerned about an increase in labor turnover? An increase in labor turnover might indicate that employees are dissatisfied with management, dissatisfied with working conditions or are unhappy about the rate of pay. Whatever the reason a firm should be concerned because replacing employees on a regular basis is costly in terms of time and money. Every replacement results in recruitment costs such as advertising, interviewing and induction training. Departing employees represent lost skills and lost investment in training and expertise. These can only be replaced once the new recruits have gained sufficient experience.

Labor absenteeism
Labor absenteeism is the rate of workforce absence as a proportion of the total number of employees. Employees can be absent for a variety of reasons such as sickness and industrial injury. However, it is often used to describe situations where the employees are absent without good reason. Labor absenteeism = number of staff absent/staff total * 100 Reasons for labor absenteeism Genuine sickness, bereavement, bullying, stress

Some employees simply playing the system Predictable / traditional absenteeism e.g. Monday / Friday, when there is a major sporting event during the day or at the end of a shift pattern

Reducing labor absenteeism Understand the causes Set targets and monitor trends Have a clear sickness & absence policy Provide rewards for good attendance Consider the wider issues of employee motivation

Motivation
Motivation is process or factors that cause people to act or behave in a certain way. This is the internal and external forces that lead an individual to work toward a goal. Motivation is the reason behind a specific behavior particularly human behavior. Reasons for motivation may vary such as basic needs, an object, goal, state of being or ideal. Motivation for behaving in a certain way could also be due to morality.

Motivation theories
There are number of motivation theories. They are described as follows. Elton Mayo Mayo believed that Workers are not just concerned with money but could be better motivated by having their social needs (non-financial factors) met whilst at work. This theory focused on managers taking more of an interest in the workers, treating them as people who have worthwhile opinions and realizing that workers enjoy interacting together. Herzbergs two factor theory Herzberg Portrays two different factors hygiene factors and motivator factors as the primary causes of job dissatisfaction and job satisfaction. Hertzberg identified environmental factors such as salary, quality of supervision and working conditions as causes of dissatisfaction if not met and not, as previously thought, as motivators. They could prevent demotivation but not motivate on their own. In contrast he stressed that status, recognition, achievement, advancement and personal development were far more important as positive motivators. In other words it is the job itself that can create satisfaction. Frederick Taylors scientific approach He believed that Workers do not naturally enjoy work and so need close supervision and control. He argued that Man is a rational economic animal concerned with maximizing his economic gain. He believed that it is money that motivates the individuals work harder. According to his theory workers would respond to wage system like piece rate. This theory ignores the many

differences between people. There is no guarantee that a "best way" will suit everyone. And whilst money is an important motivation at work for many people, it isn't for everyone. Taylor overlooked the fact that people work for reasons other than financial reward such as responsibility and recognition.

Abraham Maslows Hierarchy of needs The best-known theory of motivation is Abraham Maslows hierarchy of needs. He hypothesized that every human being has a hierarchy of five needs. He maintains that a person does not feel a higher need until the needs of the current level have been satisfied.

Maslow thought that a hierarchy of needs motivated workers. At the lowest level was physical need in other words sufficient money to meet the individuals basic requirements. Incentive schemes are used by some organizations in order to increase productivity. Money, however, may only be a short term form of motivation. Social friendships are also very important as a motivator. When these motivators have been met Maslow thought that further motivation could only be achieved by self-realization and self-development. In other words Maslow thought all of these were motivators of one kind or another. Job satisfaction This is the Satisfaction derived by an employee through the performance of his job. Dissatisfaction could be caused by monotony, repetition, lack of control and stress. Job design aims to enhance job satisfaction and performance, methods include job rotation, job enlargement, job enrichment and empowerment and team working.

Job enrichment Job enrichment aims to motivate employees by giving workers the opportunity to use a wider range of abilities. It is based on the work of Herzberg who suggested an enriched job should contain a range of tasks and challenges, a complete unit of work that would provide greater satisfaction and direct feedback on employee performance. The range of tasks is extended vertically, to enrich the quality of the job for the worker. Job enlargement Assembly line work is notoriously repetitive which may result in workers becoming bored and disenchanted with their work. In extreme cases this could result in a regular exodus from the workforce as employees seek more interesting or demanding work. Job enlargement is considered to be one of the ways in which staff can be motivated. It consists of increasing the number of tasks and possibly responsibilities involved in a job. This may succeed but it depends largely on how different the tasks are and the amount of responsibility given. It could result in more of the same type of work in which case it will soon become as repetitive and boring as the original single task. However, it could provide enough variety to maintain the interest of the employees. Job rotation Job rotation is an approach to management development where an individual is moved through a schedule of assignments designed to give him or her breadth of exposure to the entire operation. It offers leaning and development opportunities to staffs as skills are gained and passed on to others as well. Empowerment Empowerment is the granting of employees greater control over their working lives. It entails giving employees more authority to organize their own work and to take decisions without reference to managers. It has the potential to produce more motivated workers with improved productivity and lower labor turnover. Team working Teamwork involves breaking down production into large units and using groups or teams of employees to complete these tasks. Teamwork is intended to increase motivation by offering the employees greater responsibility. The team decides not only who does each job but how the job itself is done. This adds much greater variety to the work as well as an expectation that the team will keep improving how the tasks are done.

Remuneration
All companies need some sort of payment policy which will enable to recruit, motivate and retain staff it needs. Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment.

Incentives and bonuses Incentives: Payments linked to the achievement of previously set and agreed targets. They aim at encouraging better performance and then reward it, usually fixed proportion to the extent to which target has reached. Bonuses: Essentially rewarded for success and are paid either at the time the individual or group achieves something outstanding, or at a given point in the year. This could be optional. The amount paid out depends upon the recommendations or decisions of the employees boss, the CEO, BOD and is constrained only by budgetary limits.

There are number of incentives schemes: Time based wages Time-based wages is one method of rewarding employees for their labor. It is payment for the length of time spent working rather than the quantity of output achieved. It is a simple method to administer as it requires only a record of attendance. This system is often adopted where remuneration is difficult to relate to output, for example with nurses, teachers or maintenance workers. The main disadvantage for the employer is that it relies on trust. The employee is expected to give a fair days work for the agreed remuneration. Some firms prefer to ensure they get a satisfactory output by employing supervisors to oversee the work of time-based operatives. Salary A salary is a fixed regular payment made by an employer, often monthly, for professional or office work. It differs from time-based wages in that it is not strictly related to the actual number of hours worked and any extra hours worked do not normally attract any overtime payment. Piece work Output-based wages are directly related to the output each individual or group of workers produces. Such schemes normally establish an output norm for the average worker for which a basic wage is paid. Output achieved in excess of this is rewarded by bonus payments. One advantage of this method is that it should provide an incentive for workers to be productive and needs less supervision. There is no incentive to waste time or produce items that are likely to be rejected. Where the bonus is dependent on group targets the method can build team spirit. It may, however, lead to rushed work, lower quality production and an increase in rejects, which the operator might not be paid for. The employee often has to depend on other workers to keep production flowing and so could be adversely affected by slower workers or machine breakdown. The non-availability of raw materials or components will reduce the earning potential of the workers.

An employee share ownership scheme Employee share ownership is a means of obtaining a greater commitment of staff to the welfare of the company by offering a financial incentive in the form of shares. As the value of the shares is directly related to the success of the company and its profit level it serves as an incentive for workers to not only work hard but to reduce costs and to suggest improvements. The main drawback is that the worker must be committed to the company for a substantial period of time in order to achieve significant benefits from the share scheme. The financial incentive may not be enough to overcome the boredom of the job. Profit sharing Employees receive cash shares of the firms profits at regular intervals. Payment by results groups The group can work towards an agreed target and then distribute it equally among them. This saves employer monitoring performance of the workers individually. The problem is when they start complaining about some members not being participate equally but receiving the same rewards. Fringe benefits These are benefits receive in addition to salaries and wages. E.g. company pension scheme, company car, subsidized medical care, discounts when buying company products, free education to employees children, provision of leisure facilities and an ESOS. Apart from higher wages what other steps can a business take to motivate employees to remain with the company? The HRM department can motivate employees to remain with the company by recognizing that they must be treated as separate individuals. Each person will have different needs and desires from the job they are doing. These needs must be identified and fulfilled. Training and self-development are important as they recognize the personal worth of the individual to the company. The development of teamwork is important, as most workers require a social environment within which to develop their personal relationships. Job enrichment is also an effective means of increasing worker motivation, as is job enlargement. The elimination of boredom and monotony by frequent rotation is a good means of reducing dissatisfaction. Finally employees can be motivated by better working conditions. This might include longer holidays, shorter working hours, improved pension rights or the provision of social and sporting amenities. The basic rewards in the form of pay and working conditions are also important. Assuming that the basic wage is sufficient then one or preferably a combination of the factors above should help to retain and motivate the workforce.