Human Resource Management

Dr. Karim Kobeissi

Islamic University of Lebanon - 2014

Chapter 1
Human Resource Management: An Overview

Human Resource Management (HRM) - Definition

Human Resource Management
is

the

design

of

formal

systems in an organization to
ensure
efficient
resource

the

effective

use
to

of

and

human

accomplish

organizational goals Mathis

& Jackson, 2012.

Efficiency & Effectiveness

Doing the job efficiently means doing things right so
that the organizations resourcesits people, money,
and equipmentare used to their maximum.
Getting things done effectively means doing the right
things, that is, tasks that help an organization reach
its goals.

How Effectiveness & Efficiency Relate to Productivity?

Productivity is doing the right things (effectiveness) in the right
way (efficiency).

Once you ensure employees are being effective and efficient,

you will see a rise in productivity.

You should start measuring this productivity on a daily, weekly

and monthly basis. You can use metrics such as number of
units produced, sales or customer-satisfaction surveys.

The Nature of Human Resource Management

Human

resources

include

all

the

experience, skills, judgments, abilities,

knowledge, contacts, risk taking, and
wisdom of the individuals associated
with the organization.

The Nature of Human Resource Management (con)

All managers in organizations get things

done

through

the

efforts

of

others.

Consequently, managers at every level

must concern themselves with Human
Resource Management, or HRM.

Goals of HR Management
The top concerns of HR managers are:
1) Productivity
One of the top goals of HRM is to maximize the productivity of the organization
by optimizing the effectiveness of its employees while simultaneously
improving the work life of employees and treating employees as valuable
resources.
2)

Quality and Services

Because human resources are the ones producing the products or services
offered by an organization, management has the task of ensuring that its HR
practices enhance the ability of its workforce to provide top-quality goods
and services.

HRM Functions
The

five

functional

associated

with

areas
effective

HRM are: (I) staffing, (II)

human

resource

development,
compensation,
and

health,

employee
relations.

(III)
(IV)
and
and

safety
(V)
labor

I- Staffing
Staffing is the process through which an
organization ensures that it always has (1)
the right number of employees, (2) with
the appropriate skills, (3) in the right jobs
(4)

at

the

right

time,

to

achieve

organizational objectives.
The staffing process involves (A) job
analysis, (B) human resource planning, (C)
recruitment, and selection.

A. Job Analysis
Job analysis is the systematic process of
determining

skills,

duties,

and

knowledge

required for performing jobs in organization

Job analysis impacts virtually every aspect of
HRM,

including

selection.

planning,

recruitment,

and

B. Human Resource Planning

Human resource planning is the systematic
process of matching internal and external supply
of people with anticipated job openings over
specified period of time
The data collected as part of the human resource
planning enables the recruitment process and
other HR actions.

C. Recruitment and Selection

Recruitment: is the process of attracting

a sufficient number of qualified people to

apply for jobs with an organization.
Selection: is the process of choosing individual best
suited for a particular position and for the organization in
general.

II- Human Resource Development

Human resource development is a major HRM
function consisting of :
A) Training and Development
B) Career planning and development
C) Organizational development
D) Performance management
E) Performance appraisal

A. Training and Development

Training is designed to provide employees with the
knowledge and skills they need to be effective in
their present roles.
Development involves long-term
learning and professional growth
that goes beyond the employees
current jobs.

B. Career Planning and Development

Career planning is an ongoing
process whereby individuals set
career goals and identify ways to
achieve them.
Career development is a formal approach used by
the organization to ensure that people with the
proper qualifications and experiences are available
for promotion or reassignment when needed.

C. Organizational Development
Organizational Development (OD) is a deliberately planned,
organization-wide

effort

to

increase

an

organization's

effectiveness and/or efficiency and/or to enable the organization

to achieve its strategic goals. It is a learning and development
strategy intended to change the basics of beliefs, attitudes and
relevance of values, and structure of the current organization to
better absorb disruptive technologies, shrinking or exploding
market opportunities and resulting challenges and chaos.

D. Performance Management
Performance management is a goal-oriented process
that is directed toward ensuring that organizational
processes are in place to maximize the productivity of
employees, teams, and ultimately, the organization.
Applies to employees, teams, and ultimately, the
organization

E. Performance Appraisal
Performance appraisal is a formal system of review and
evaluation of individual performance. Sometimes it also
includes

team

performance.

It

affords

employees

the

opportunity to receive feedback on their strengths and areas for

development. Performance appraisal helps employees stay on
track, which often leads to greater
satisfaction and productivity.

III- Compensation

All
rewards
that
individuals receive as a
result of their employment.
Compensation consists
of (A) direct financial
compensation,
indirect
financial
compensation,
and
(B)
nonfinancial
compensation.

A. Financial Compensation
Organizations provide two
compensation to employees:

types

of

financial

Direct compensation is the pay that an employee

receives in the form of wages, salaries,
commissions, or bonuses.
Indirect compensation is often referred to as
benefits, and includes things such as paid
vacations, sick leave, holidays, and medical
insurance.

B. Nonfinancial Compensation
Nonfinancial compensation includes the things that an
employee receives or derives from the job or the
organization that do not have cost for the organization.
These could include the satisfaction that an employee
receives from doing the job itself, the psychological wellbeing an employee feels from working on a team, or
enjoyment of the physical environment in which the
employee works.

IV- Safety and Health

Safety:
Protecting
employees from injuries
caused by work-related
accidents
Health:
Employees'
freedom from illness and
their general physical and
mental well-being

V- Employee & Labor Relations

Internal employee relations are the HRM
activities associated with the movement of
employees within the organization, such as:
Promotions
Demotions
Terminations
Resignations

Employee & Labor Relations (con)

Businesses are required by law to
recognize a union and bargain with it in
good faith if the firms employees want the
union to represent them.
Human resource activity with a union is
often referred to as industrial or labor
relations, which handles the job of
collective bargaining.

Interrelationships of HRM Functions

All HRM functions are highly interrelated and
management must recognize that decisions in
one area affect other areas.
For instance, a firm that emphasizes recruiting topquality candidates but neglects to provide
satisfactory compensation is wasting time and
money. If a firm pays below-market wages, the
firm will always be hiring and training new
employees, only to see the best leave for higher
wages.

DYNAMIC HUMAN RESOURCE

MANAGEMENT ENVIRONMENT

Environment of Human Resource Management

The firm often has little, if any, control over how the external
environment impacts the task of managing its human
resources.

External

factors

include

the

legal

considerations, labor market, society, political parties,

unions, shareholders, competition, customers, technology,
the economy, and unanticipated events.
Each factor, either separately or in combination with
others, can enable or obstruct the accomplishment of
HRM tasks within the firm.

Environment of Human Resource Management

Legal Considerations
A significant external force affecting HRM relates to
federal, state, and local legislation and the court
decisions interpreting this legislation.

These legal considerations affect virtually the entire

spectrum of human resource policies.

Labor Market
Potential employees located within certain geographic
area from which employees are recruited comprise the
labor market.

The labor market is always changing, and these shifts

inevitably cause changes in the workforce which can
affect the way management must deal with the
workforce.

Society
A The public does not accept, without question, the
actions of firms in the business world today.

To remain acceptable to the general public, a firm

must accomplish its purpose while acting ethically and
responsibly (Corporate social responsibility).

Unions
A union is comprised of employees who have joined
together for the purpose of dealing collectively with
their employer.

In a unionized organization, the unionrather than the

individual employeeacts as a third party to negotiate
work agreements (Wage levels, benefits..) with
management.

Shareholders
Because shareholders have invested money in the firm,
they may at times challenge decisions made by
management which may be forced to justify the merits
of a particular program in terms of how it will affect
future projects, costs, revenues, profits, and even how
it will benefit society as a whole.

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

To compete effectively, a firm must also compete for

and retain competent employees.

Customers
Because

sales

are

crucial

to

firms

survival,

management has the task of ensuring that its

employment practices enhance the ability of its
workforce to provide top-quality goods and services.
This capacity is directly related to the skills and
motivation of the organizations employees.

HR Technology
The development of technology places pressures on
firms to keep alongside with new HR technology.

Technology has come to the ability of designing more

useful human resource information systems (HRIS).

HRIS
A system which seeks to merge the activities associated with
human

resource

management

(HRM)

and

information

technology (IT) into one common database through the use of

enterprise resource planning (ERP) software.
The goal of HRIS is to merge the different parts of human
resources, including payroll, labor productivity, and benefit
management into a less capital-intensive system than the
mainframes used to manage activities in the past.
HRIS are used to obtain and track relevant information for
human resource decisions.

Economy
When economy is booming, it is often more
difficult to recruit qualified workers.

In economic downturn, more applicants are

typically available.

Unanticipated Events
Unanticipated events are occurrences in the external
environment
earthquakes).

that

cannot

These

be

events

foreseen

(e.g.,

cause

major

modifications in the performance of many human

resource functions in the affected firms.

HRS CHANGING STRATEGIC ROLE

HRs Changing Role: Questions

Today there is no longer a typical HR department. Many organizations
continue to perform the majority of HR functions internally, but not
always by the HR department itself. As internal operations are
examined, questions are raised, such as:

1) Can some HR tasks be performed more efficiently by line managers

or outside vendors?
2) Can some HR tasks be centralized or eliminated?
3) Can technology perform tasks that were previously done by HR
personnel?
One apparent fact is that all functions are being examined for efficiency
and are subject to cost-cutting, including HR.

Human Resource Manager

Historically, the HR manager was responsible for each
of the five HR functions.
Acts in advisory or staff capacity.
Works with other managers to help them deal with
human resource matters.
Today, HR departments continue to get smaller
because others outside the HR department are now
performing certain HRM functions.

HR Outsourcing
HR outsourcing is the process of hiring external HR
professionals to do the HR work that was previously done
internally. This permits HR to focus on more on operational
and strategic roles.
The key to HR outsourcing success is to determine which
functions to outsource, the extent to which they should be
outsourced, and which functions to keep in-house.
HR outsourcing is done in three ways: (1) discrete services, (2)
multi-process services, and (3) business process outsourcing.

1) Discrete Services
With discrete services, one element of a
business process or a single set of high-volume
repetitive functions is outsourced to a third party
Typically transactional HR activities
Example: Payroll & retirement plan administration

2) Multi-Process Services
Complete outsourcing
of one or more human
resource processes.
Example: Procter &
Gamble outsourced
training operations.

3) Business Process Outsourcing

Business process outsourcing (BPO) represents
the transfer of the majority of HR services to a third
party.
Example: Kraft Foods Inc. and IBM signed a multiyear BPO agreement, in which IBM performs
workforce

administration,

compensation,

and

performance reporting for all of Krafts 98,000

employees spread across 72 countries.

HR Shared Service Centers (SSCs)

A shared service center
takes routine HR activities
dispersed throughout the
organization

and

consolidates them in one

place.

Professional Employer Organization

A professional employer organization (PEO) is a company
that leases employees to other businesses. When a decision is made to
use a PEO, the company releases its employees, who are then hired by
the PEO. The PEO then manages the administrative needs associated
with employees, pays their salaries, and manages their benefits.

The PEO typically charges a fee based on the number of leased

employees. Because the PEO is the employees legal employer, it has the
right to hire, fire, discipline, and reassign an employee. However, the client
company maintains enough control so it can run the day-to-day operations
of its business.

Line Managers Performing

HR Tasks

Involved with human resources

by nature of their jobs
Now performing some duties
typically done by HR

EVOLUTION OF HUMAN RESOURCE

MANAGEMENT

Human Resource Executives,

Generalists, and Specialists

Traditional Human Resource Function in Large Firms

Included separate sections.
Sections are placed under an HR manager.
Each HR function may have a supervisor and staff.
HR manager works closely with top management in
formulating policy.

The Evolving HR Organization

HR outsourcing
HR shared service
centers
Professional employer
organization
Line manager
HR becoming more
strategic

A Possible Evolving HR Organization Example

President
and CEO
Vice
President,
Operations

Vice
President,
Strategic
Human
Resources

Training &
Development
(Outsourced)

Vice
President,
Finance

Compensation
(Shared Service
Centers)

Vice
President,
Marketing

Director
of Safety
and
Health

Staffing (Line Managers, use of

Applicant Tracking Systems)