Human Resource Management

HRM is management function that helps managers to recruit, select, train and
develop members for an organization. HRM is concerned with the people’s
dimensions in organizations. HRM refers to set of programs,
functions, and activities designed and carried out
Core elements of HRM
• People: Organizations mean people. It is the people who staff and manage organizations.
• Management: HRM involves application of management functions and principles for
acquisitioning, developing, maintaining and remunerating employees in organizations.
• Integration & Consistency: Decisions regarding people must be integrated and consistent.
• Influence: Decisions must influence the effectiveness of organization resulting into
betterment of services to customers in the form of high quality products supplied at
reasonable cost.
• Applicability: HRM principles are applicable to business as well as non-business
organizations too, such as education, health, recreation and the like.
• SCOPE OF HRM: -
• From Entry to the Exit of an employee in the organization Scope of HRM can be
described based on the following activities of HRM. Based on these activities
we can summarize the scope of HRM into 7 different categories as mentioned
below after the activities. Lets check out both of them.
• 7 Categories of Scope of HRM
• Introduction to HRM
• Employee Hiring
• Employee and Executive Remuneration
• Employee Motivation
• Employee Maintenance
• Industrial Relations
• Prospects of HRM
 Why is HRM Important to an
Organization?
• The role of human resource managers has changed. HRM
jobs today require a new level of sophistication.
– Employment legislation has placed new requirements on
employers.
– Jobs have become more technical and skilled.
– Traditional job boundaries have become blurred with the
advent of such things as project teams and
telecommuting.
– Global competition has increased demands for
productivity.
 Why is HRM Important to an
Organization?
• The Strategic Nature – HRM must be
– a strategic business partner and represent
employees.
– forward-thinking, support the business strategy,
and assist the organization in maintaining
competitive advantage.
– concerned with the total cost of its function and
for determining value added to the organization.
 Why is HRM Important to an
Organization?
• HRM is the part of the organization concerned
with the “people” dimension.
• HRM is both a staff, or support function that
assists line employees, and a function of every
manager’s job.
• HRM Certification
– Colleges and universities offer HR programs.
 Why is HRM Important to an
Organization?

Four basic
functions:
• Staffing
• Training and
Development
• Motivation
• Maintenance
 Human Resource Management Plan

The Holistic
Approach:
Each component
of your HR plan
must fit with
all other components,
employees, the
organization and the
community, in order
to be effective.

Your priorities will be

unique to YOUR organization
 Management Essentials
• Management involves setting goals and allocating scarce resources to achieve them.
• Management is the process of efficiently achieving the objectives of the organization with and
through people.
• Primary Functions of Management
– Planning – establishing goals
– Organizing – determining what activities need to be done
– Leading – assuring the right people are on the job and motivated
– Controlling – monitoring activities to be sure goals are met
How External Influences
Affect HRM

• Strategic Environment
• Governmental Legislation
• Labor Unions
• Management Thought
How External Influences Affect
HRM
• HRM Strategic Environment includes:
– Globalization
– Technology
– Work force diversity
– Changing skill requirements
– Continuous improvement
– Work process engineering
– Decentralized work sites
– Teams
– Employee involvement
– Ethics
 How External Influences
Affect HRM
• Governmental Legislation
– Laws supporting employer and employee
actions
• Labor Unions
– Act on behalf of their members by negotiating
contracts with management
– Exist to assist workers
– Constrain managers
– Affect non unionized workforce
 How External Influences
Affect HRM
• Management Thought
– Management principles, such as those from
scientific management or based on the
Hawthorne studies influence the practice of HRM.

– More recently, continuous improvement

programs have had a significant influence on
HRM activities.
Staffing Function Activities
• Employment planning
– ensures that staffing will contribute to the
organization’s mission and strategy
• Job analysis
– determining the specific skills, knowledge
and abilities needed to be successful in a
particular job
– defining the essential functions of the job
Staffing Function Activities
• Recruitment
– the process of attracting a pool of qualified
applicants that is representative of all groups in
the labor market
• Selection
– the process of assessing who will be successful
on the job, and
– the communication of information to assist job
candidates in their decision to accept an offer
 Goals of the Training and
Development Function
• Activities in HRM concerned with assisting
employees to develop up-to-date skills,
knowledge, and abilities
• Orientation and socialization help
employees to adapt
• Four phases of training and development
– Employee training
– Employee development
– Organization development
– Career development
The Motivation Function

• Activities in HRM concerned with helping employees

exert at high energy levels.
• Implications are:
– Individual
– Managerial
– Organizational
• Function of two factors:
– Ability
– Willingness
• Respect
 The Motivation Function
• Managing motivation includes:
– Job design
– Setting performance standards
– Establishing effective compensation and benefits
programs
– Understanding motivational theories
 The Motivation Function
• Classic Motivation Theories
– Hierarchy of Needs –Maslow
– Theory X – Theory Y –McGregor
– Motivation – Hygiene – Herzberg
– Achievement, Affiliation, and Power Motives –
McClelland
– Equity Theory – Adams
– Expectancy Theory - Vroom
 How Important is the
Maintenance Function?
• Activities in HRM concerned with maintaining
employees’ commitment and loyalty to the
organization.
– Health
– Safety
– Communications
– Employee assistance programs
• Effective communications programs provide for 2-
way communication to ensure that employees are
well informed and that their voices are heard.
 Translating HRM Functions
into Practice
• Four Functions:
– Employment
– Training and development
– Compensation/benefits
– Employee relations
 HRM in an Entrepreneurial
Enterprise
• General managers may perform
HRM functions, HRM activities may
be outsourced, or a single generalist
may handle all the HRM functions.
• Benefits include
– freedom from many government
regulations
– an absence of bureaucracy
– an opportunity to share in the success
of the business
 HRM in a Global Village
• HRM functions are more complex when
employees are located around the world.
• Consideration must be given to such things as
foreign language training, relocation and
orientation processes, etc.
• HRM also involves considering the needs of
employees’ families when they are sent
overseas.
 HR and Corporate Ethics
• HRM must:
– Make sure employees know about corporate
ethics policies
– Train employees and supervisors on how to act
ethically
Questions????
Man Power planning
 Job Analysis
• Job Analysis is a systematic
exploration of the activities within a
job.
• It defines and documents the duties,
responsibilities and accountabilities of
a job and the conditions under which a
job is performed. ?
 Job Analysis Methods
– Observation method – job analyst watches employees directly or
reviews workers on the job.
– Individual interview method – a team of job incumbents is
selected and extensively interviewed.
– Group interview method – a number of job incumbents are
interviewed simultaneously.
– Structured questionnaire method – workers complete a
specifically designed questionnaire.
– Technical conference method – uses supervisors with an extensive
knowledge of the job.
– Diary method – job incumbents record their daily activities.
The best results are usually achieved with some combination of
methods.
 Job Descriptions
– Written statement of what jobholder does, how it is done,
under what conditions and why.
– Common format: title; duties; distinguishing characteristics;
environmental conditions; authority and responsibilities.
– Used to describe the job to applicants, to guide new
employees, and to evaluate employees.
• Job Specifications
– States minimum acceptable qualifications.
– Used to select employees who have the essential qualifications.
 Job Analysis
• Job Evaluations
– Specify relative value of each job in the
organization.
– Used to design equitable compensation program.
 Job Analysis
• The Multi-faceted Nature of Job Analysis
– Almost all HRM activities are tied to job analysis.
– Job analysis is the starting point for sound HRM.
• Job Analysis and the Changing World of Work
– Globalization, quality initiatives, telecommuting, and teams
require adjustments to the components of a job.
– Today’s jobs often require not only technical skills but
interpersonal skills and communication skills as well.
 Recruitment and selection
• Recruitment Once an organization identifies its
human resource needs through employment
planning, it can begin the process of recruiting
potential candidates for actual or anticipated
organizational vacancies.
• Recruitment brings together those with jobs to fill
and those seeking jobs.
 Recruiting Goals
• To provide information that will attract a significant pool of qualified
candidates and discourage unqualified ones from applying.
• Factors that affect recruiting efforts
– Organizational size
– Employment conditions in the area
– Working conditions, salary and benefits offered
– Organizational growth or decline
• Constraints on recruiting efforts include:
– Organization image
– Job attractiveness
– Internal organizational policies
– Recruiting costs
 Recruiting: A Global Perspective

• For some positions, the whole world is a relevant

labor market, for some local are the one.
• International co’s hire people from host countries
 Recruiting Sources
• Sources should match the position to be filled.

• Sources:
– Internal Searches
– Employee Referrals/
Recommendations
– External Searches
– Alternatives
 Recruiting Sources
The internal search
• Organizations that promote
from within identify current
employees for job openings:
– by having individuals bid for jobs
– by using their HR management
system
– by utilizing employee referrals
 Recruiting Sources
The internal search
• Advantages of promoting from within include
– morale building
– encouragement of ambitious employees
– availability of information on existing employee
performance
– cost-savings
– internal candidates’ knowledge of the
organization
 Recruiting Sources
The internal search
• Disadvantages include:
– possible inferiority of internal candidates
– infighting and morale problems
 Recruiting Sources
Employee referrals/recommendations
• Current employees can be asked to recommend
recruits.
• Advantages include:
– the employee’s motivation to make a good
recommendation
– the availability of accurate job information for the
recruit
– Employee referrals tend to be more acceptable
applicants, to be more likely to accept an offer and to
have a higher survival rate.
 Recruiting Sources

Employee
referrals/recommendations
• Disadvantages include:
– the possibility of friendship
being confused with job
performance
 Recruiting Sources
External searches
• Advertisements: Must decide type and
location of ad, depending on job; decide
whether to focus on job (job description)
or on applicant (job specification).
• Two factors influence the response rate:
– identification of the organization
– labor market conditions
 Recruiting Sources
External searches
• Employment agencies:
– Public or state employment services focus on
helping unemployed individuals with lower skill
levels to find jobs.
– Private employment agencies provide more
comprehensive services and are perceived to
offer positions and applicants of a higher caliber.
 Recruiting Sources
External searches
• Schools, colleges, and
universities:
– May provide entry-level or
experienced workers through
their placement services.
– May also help companies
establish cooperative education
assignments and internships.
 Recruiting Sources
Recruitment alternatives
• Temporary help services.
– Temporary employees help organizations meet short-term
fluctuations in HRM needs.
– Older workers can also provide high quality temporary help.
• Employee leasing.
– Trained workers are employed by a leasing company, which
provides them to employers when needed for a flat fee.
– Typically remain with an organization for longer periods of
time.
Selection – the process by which an organization
chooses from a list of applicants the person or persons
who best meet the selection criteria for the position
available, considering current environmental
conditions
 Factors Influencing Selection

Internal Environmental Factors Influencing Selection

• Organization characteristics that can influence the selection
process:
– Size
– Complexity
– Technological abilityExternal

External Environmental Factors Influencing Selection

• Government employment laws and regulations
• Size, composition, and availability of local labor markets
 Selection Criteria

Experience and
Formal Education
Past Performance

Personal
Physical
Characteristics and
Characteristics
Personality Type
 Reliability and validity of Selection Criteria

• Reliability – how stable or repeatable a

measurement is over a variety of testing conditions.
• Validity – addresses the questions of:
– What a selection tool measures
– How well it has measured it
• It is not sufficient for a selection tool to be reliable
• The selection tool must also be valid
 Steps in the Selection Process

1. Preliminary
Screening

2. Employment 3. Employment
Interview Tests

4. Background 6. Physical
5. Selection
and Reference Examination
Decision
Checks
 The Selection Process

Initial Screening
– Involves screening of
inquiries and screening
interviews.
– Job description information
is shared along with a
salary range.
 The Selection Process
Employment Interview
Interviews involve a face-to-face meeting with the
candidate to probe areas not addressed by the
application form or tests
• Two strategies for effective use of interviews:
1. Structuring the interview to be reliable and valid
2. Training managers on best interview techniques
 The Selection Process
Types of Interviews:
• Unstructured interview
• Structured interview
• Behavioral Interviews
– Candidates are observed not only for what they
say, but how they behave.
– Role playing is often used.
• Stress Interviews.
 The Selection Process
Realistic Job Preview
– RJP’s present unfavorable as well as favorable
information about the job to applicants.
– May include brochures, films, tours, work
sampling, or verbal statements that realistically
portray the job.
– RJP’s reduce turnover without lowering
acceptance rates.
 The Selection Process

Employment Tests
• Mechanism that attempts to measure certain
characteristics of individuals, e.g.,
– aptitudes
– intelligence
– personality
• Should be validated before being used to
make hiring decisions
 The Selection Process
Employment Tests
• Estimates say 60% of all organizations use
some type of employment tests.
– Performance simulation tests: requires the
applicant to engage in specific job behaviors
necessary for doing the job successfully.
– Work sampling: Job analysis is used to
develop a miniature replica of the job on
which an applicant demonstrates his/her skills.
 The Selection Process
Employment Tests
– Assessment centers: A series of tests
and exercises, including individual and
group simulation tests, is used to
assess managerial potential or other
complex sets of skills.
– Testing in a global arena: Selection
practices must be adapted to cultures
and regulations of host country.
 The Selection Process
Background Investigation:
• Verify information from the application form
• Typical information verified includes:
– former employers
– previous job performance
– education
– legal status to work
– credit references
– criminal records
 The Selection Process

Background Investigation
• Do not always provide an organization with
meaningful information about applicants
• Concerns over the legality of asking for and
providing confidential information about
applicants
 The Selection Process

Physical Examinations
• Should be required only after a conditional
offer of employment has been made
 Summary
• Putting more money into selection can significantly
reduce the amount of money it must spend on
training

• A selection system will make some mistakes

– No guarantee of successful job performance
Training and Development
 Agenda
• The Socialization Process.
• Employee Orientation.
• Employee Training
• Employee Development.
• Organization Development.
• Evaluation of Training Program.
 Introduction
• Socialization, training and development are
all used to help new employees adapt to
their new organizations and become fully
productive.
• Ideally, employees will understand and
accept the behaviors desired by the
organization, and will be able to attain their
own goals by exhibiting these behaviors.
1. The socialization Process

• Socialization
– A process of adaptation to a new
work role.
– Adjustments must be made
whenever individuals change jobs
– The most profound adjustment
occurs when an individual first
enters an organization.
 1. The socialization Process
The assumptions of employee socialization:
– Socialization strongly influences employee
performance and organizational stability
– Provides information on how to do the job and
ensuring organizational fit.
– New members suffer from anxiety, which
motivates them to learn the values and norms of
the organization.
1. The socialization Process
The assumptions of employee
socialization:
– Socialization is influenced by subtle and
less subtle statements and behaviors
exhibited by colleagues, management,
employees, clients and others.
– Individuals adjust to new situations in
remarkably similar ways.
– All new employees go through a settling-
in period.
 1. The socialization Process
A Socialization Process
1. The socialization Process

The Socialization Process

– Prearrival stage:
Individuals arrive with a set
of values, attitudes and
expectations which they
have developed from
previous experience and
the selection process.
1. The socialization Process
• The Socialization Process
– Encounter stage: Individuals
discover how well their
expectations match realities
within the organization.
– Where differences exist,
socialization occurs to imbue
the employee with the
organization’s standards.
 1. The socialization Process
The Socialization Process
– Metamorphosis stage: Individuals have adapted
to the organization, feel accepted and know what
is expected of them.
 2. New-Employee Orientation
Purpose
• Orientation may be done by the supervisor, the HRM staff or
some combination.
• Formal or informal, depending on the size of the organization.
• Covers such things as:
– The organization’s objectives
– History
– Philosophy
– Procedures
– Rules
– HRM policies and benefits
– Fellow employees
 2. New-Employee Orientation

• Learning the Organization’s

Culture
– Culture includes long-standing,
often unwritten rules about what is
appropriate behavior.
– Socialized employees know how
things are done, what matters, and
which behaviors and perspectives
are acceptable.
 2. New-Employee Orientation
Roles

The CEO’s Role in Orientation

• Senior management are often visible during
the new employee orientation process.
• CEOs can:
– Welcome employees.
– Provide a vision for the company.
– Introduce company culture -- what matters.
– Convey that the company cares about employees.
– Allay some new employee anxieties and help them
to feel good about their job choice.
 2. New-Employee Orientation

HRM’s Role in Orientation

• Coordinating Role: HRM instructs
new employees when and where
to report; provides information
about benefits choices.
• Participant Role: HRM offers its
assistance for future employee
needs (career guidance, training,
etc.).
 3. Employee Training
Definitions
– Employee training
a learning experience designed to
achieve a relatively permanent
change in an individual that will
improve the ability to perform on the
job.
– Employee development
future-oriented training, focusing on
the personal growth of the employee.
 3. Employee Training
Determining Training Needs
 4. Methods of Employee Training
• On-the-job training methods
– Job Rotation
– Understudy Assignments
• Off-the-job training methods
– Classroom lectures
– Films and videos
– Simulation exercises
– Vestibule training
5.Employee Development

• This future-oriented set of

activities is predominantly
an educational process.
• All employees, regardless
of level, can benefit from
the methods previously
used to develop
managerial personnel.
5.Employee Development

Employee development methods

– Job rotation involves moving
employees to various positions in
the organization to expand their
skills, knowledge and abilities.
– Assistant-to positions allow
employees with potential to work
under and be coached by
successful managers.
 6. Employee Development Methods

Employee development methods

– Committee assignments provide
opportunities for:
• decision-making
• learning by watching others
• becoming more familiar with
organizational members and problems
– Lecture courses and seminars benefit
from today’s technology and are often
offered in a distance learning format.
 6. Employee Development
Methods
Employee development methods
– Simulations include case studies, decision games
and role plays and are intended to improve
decision-making.
– Outdoor training typically involves challenges
which teach trainees the importance of
teamwork.
 8. Evaluating Training and
Development Effectiveness
Evaluating Training Programs:
• Typically, employee and manager opinions are
used,
– These opinions or reactions are not necessarily valid
measures
– Influenced by things like difficulty, entertainment
value or personality of the instructor.
• Performance-based measures (benefits gained) are
better indicators of training’s cost-effectiveness.
Performance Management
and Compensation & Benifits
 Why Do Performance
Management?
• Communicate goals, mission, values,
purpose
• Improve working relationships
• Improve management
• Identify and communicate strengths and
areas for improvement
• Provide feedback
• Develop
• Monitor
• Support
84
 KEY CONCEPTS & DEFINITION
• Performance management is based on the principle of
management by agreement or control rather than
management by command.
• The real concept of Performance management is associated
with an approach to creating a share vision of the purpose and
aims of the organisation. Helping employee to understand and
recognise their part of the job.
• Performance management is a means of getting better results
from the organisation, teams and individuals by understanding
and managing performance within an agreed framework of
planned goals, standards and competence requirements.
• A strategic and integrated approach to delivering sustained
success to organisations by improving the performance of the
people who work in them and by developing the capabilities of
teams and individual contributors (armstrong and baron, 1998)
 KEY CONCEPTS
• An agreed framework of planned goals, standard and
competence: an agreement between the manager
and the individual
• A process: PM is not just a system of forms and
procedures. It is about the actions which people take
to achieve the day to day delivery of results.
• Shared understanding
• An approach to managing and developing people
• Achievement: Ultimately PM is about the achievement of job
related success for individuals, so that they can make the best
use of their abilities, realise their potential and maximise their
contributions to the success of the organisation
• Performance management as an integrated force
 PRINCIPLES OF PERFORMANCE MANAGEMENT

• It translate corporate goals into individual, team, department

and divisional goals.
• It helps to clarify corporate goals
• It is continuous and evolutionary process, in which
performance improves over time
• It relies on consensus and cooperation rather than control or
coercion.
• It encourages self-management of individual performance.
• It requires continuous feedback
• It measures and assess all performance against jointly agreed
goals
• It should apply to all staff, and it is not primarily concerned
with linking performance to financial reward.
 Performance Management
An iterative process of goal-setting, communication,
observation and evaluation to support, retain and develop
exceptional employees for organizational success.

Set Goals Communicate

Evaluate Observe
 Focus of Performance
Management
Progress and success toward goal achievement
Assessing Needs
• The employee’s goals
• The department’s goals
• The organization’s goals
Hence the purpose of Performance Management is
– Feedback - let employees know how well they have
done and allow for employee input.
– Development – identify areas in which employees
have deficiencies or weaknesses.
89
 What do Employees Expect?
• Clear expectations
• Positive/constructive feedback on a regular basis
• Involvement in goal setting
• Be treated fairly and consistently
• Sharing of information and resources
• Job/career enrichment opportunities

Planning for the Process

• Review employee’s job description
• Understand the performance measurement system
• Review notes from the year
• Understand employee expectations
 Receiving Feedback
• Have an open mind
• Avoid defensiveness
• Listen for meaning
• Seek out resolution
• Give guidance
• Utilize effectively

91
 Following factors are considered

• Focus on • Knowledge
performance issues
• Ongoing
• Clear expectations
• Detailed
• Improvement
• Monitored
• Productivity
• Objectivity • Consistent
• Accuracy • Fair
• Performance, not • Timely
person • Motivational
 KEY ACTIVITIES
Performance Management System can be described as a
continuous self renewing cycle which shows a clear link to business
plans, so that objectives agreed with individuals and teams are
integrated with and support the achievement of business
objectives. The main activities are:
• Role definition: in which the key results areas and competence
requirements are agreed.
• The performance agreement or contract expectations): Objectives
and standard of performance, performance measure and
indicators, competences, corporate core values and requirements.
• The personal development plans: Action agreed to improve
performance, develop knowledge, skills and competences.
• Managing performance throughout the year
• Performance review: measurement, feedback, exchange of views,
agreement on action plans.

Performance Management is done in order to evaluate the

employee performance
 SOME COMMONLY IDENTIFIED PERFORMANCE VARIABLES

• Commitment: Attitudinal and behavioural commitment:

Commitment is thought to result in better quality, lower
turnover, a greater capacity for innovation and more flexible
employees commitment is affected by personal
characteristics, experiences in the job role, personal policies,
structural factors.
• Empowerment: More responsibilities, commitment and
involvement
• Leadership
• Culture
• Flexibility Learning
 Evaluating Employee
Performance - Agenda
• Purpose of performance management system
• Difficulties in performance management
system
• Steps of the Appraisal process
• Appraisal methods
 Performance Evaluation

• The performance management

systems need to include:
– decisions about who should evaluate
performance
– what format should be used
– how the results should be utilized
 Difficulties in Performance Management
Systems

– Focus on the individual: Discussions of

performance may elicit strong emotions and may
generate conflicts when subordinates and
supervisors do not agree.
– Focus on the process: Company policies and
procedures may present barriers to a properly
functioning appraisal process.
– Additionally, appraisers may be poorly trained.
The Appraisal Process
 Appraisal Methods
Three approaches:
• Absolute standards
• Relative standards
• Objectives
 1. Absolute Standards
Evaluating absolute standards:
• An employee’s performance is measured against established
standards.
• Evaluation is independent of any other employee.
– Essay Appraisal: Appraiser writes narrative describing employee
performance & suggestions.
– Critical Incident Appraisal: Based on key behavior incident
illustrating effective or ineffective job performance.
– Checklist Appraisal: Appraiser checks off behaviors that apply to
the employee.
– Adjective Rating Scale Appraisal: Appraiser rates employee on a
number of job-related factors.
– Forced-Choice Appraisal: Appraisers choose from sets of
statements which appear to be equally favorable, the statement
which best describes the employee.
– Behaviorally Anchored Rating Scales (BARS): Appraiser rates employee on
factors which are defined by behavioral descriptions illustrating various
dimensions along each rating scale.
 2. Relative Method
• Employees are evaluated by comparing their
performance to the performance of other employees.
• Group Order Ranking: Employees are placed in a
classification reflecting their relative performance, such
as “top one-fifth.”
– Individual Ranking: Employees are ranked from
highest to lowest.
– Paired Comparison:
• Each individual is compared to every other.
• Final ranking is based on number of times the
individual is preferred member in a pair.
 3. Achieved Outcome
Method
Management by Objectives (MBO)
– includes mutual objective setting and evaluation
based on the attainment of the specific objectives
– Common elements in an MBO program are:
• goal specificity
• participative decision making
• an explicit time period
• performance feedback
– Effectively increases employee performance and
organizational productivity.
Creating More Effective Performance Management Systems
 PERFORMANCE DEVELOPMENT PLANS

• Promote a climate of continuous learning

• Help sustain employee performance
• Enhance job or career related skills
• Enable employees to keep up to date
• Motivates employees to learn
• As part of performance appraisal/review
• When an employee initiates a request for
development opportunities
 PERFORMANCE MANAGEMENT & MOTIVATION

• Goal setting theory of motivation (Lock 1960s)

• Goals should be specific
• Goals should be attainable and demanding
• Goals should be agreed as desirable
• Feedback of performance should be made
• Expectancy theory (Vroom)
• Individuals must perceive that they possess the necessary
skills (expectancy)
• Individuals must perceive that if they perform well they will
be rewarded (instrumentality)
• Individuals must perceive that the rewards are attractive
(valance
 ETHICAL CONSIDERATION

• Respect for the individual: People should be treated as `ends

in themselves` and not merely as `means to other ends`.
• Mutual respect: the parties involved in performance
management processes should respect each other's needs
and preoccupations.
• Procedural fairness: the procedures incorporated in
performance management should be operated fairly to limit
the adverse effect on individuals.
• Transparency: people affected by decisions emerging from
the performance management process should have the
opportunity to scrutinise the basis upon which decisions were
made.
Compensation & Benifits
 Objectives of compensation
• Efficiency
– Quality
– Performance
– Cost

• Fairness

• Compliance
Introduction
 Types of Reward Plans
Intrinsic versus Extrinsic Rewards
• Intrinsic rewards (personal satisfactions) come
from the job itself, such as:
– pride in one’s work
– feelings of accomplishment
– being part of a work team
 Types of Reward Plans
Intrinsic versus Extrinsic Rewards
• Extrinsic rewards come from a source outside
the job
– include rewards offered mainly by management
– Money
– Promotions
– Benefits
 Types of Reward Plans
Financial versus Non-financial Rewards
• Financial rewards include:
– wages
– bonuses
– profit sharing
– pension plans
– paid leaves
– purchase discounts
• Non-financial rewards emphasize making life on
the job more attractive; employees vary greatly on
what types they find desirable.
 THE USE OF INFORMAL REWARDS IN RECOGNISING
PERFORMANCE

The value of informal rewards, that is, spontaneous non-

monetary forms of recognition, as employee motivators is
increasingly today for two reasons:
1. Traditional rewards such as compensation and promotion-
although still important- as becoming less and less effective
in motivating today's employees to achieve high
performance.
2. Informal rewards are effective and highly desired by today's
employees.
Drucker points out:
Economic incentives are becoming rights rather than rewards.
Merits raises are always introduced as rewards for
exceptional performance
 INFORMAL REWARDS ARE EFFECTIVE

• MANAGER PERSONALLY CONGRATULATES EMPLOYEES WHO

DO A GOOD JOB.
• MANAGERS WRITE PERSONAL NOTES FOR GOOD
PERFORMANCE
• Manager publicly recognises employees for good
performance
• Manager holds morale-building meetings to celebrate
success.
• Informal rewards has following positive reinforcement
characteristics:
*Directly reinforcing of desired behaviour
*Immediate in their use
*Delivered personally
*valued by their individuals
 Development of a Base Pay
System

Job Analysis

Job Evaluation

Pay Survey

Job Structure

Pay Structure & Grades

 Development of a Base Pay System
Job Evaluation
• Use of job analysis information to determine the relative value of each job in relation to all jobs within
the organization.
– The ranking of jobs
– Labor market conditions
– Collective bargaining
– Individual skill differences
Job Evaluation Methods
Ordering method: A committee places jobs in a simple rank order from highest (worth highest pay) to
lowest.
Classification method:
Jobs are placed in classification grades , Compare their descriptions to the classification description
and benchmarked jobs, Look for a common denominator such as skills, knowledge, or
responsibility
Point method:
Jobs are rated and allocated points on several identifiable criteria, using clearly defined rating scales.
Jobs with similar point totals are placed in similar pay grades., Offers the greatest stability.

Establishing the Pay Structure

• Compensation surveys
– Used to gather factual data on pay rates for other organizations
– Information is often collected on associated employee benefits as well
 A Final Thought
The conventional definition of management
is getting work done through people, but
real management is developing people
through work.

- Agha Hasan Abedi

117
Organization Development
 Organization Development
• What is change?
• OD efforts support changes that are usually made
in four areas:
– The organization’s systems
– Technology
– Processes
– People
• Two metaphors clarify the change process.
– The calm waters metaphor describes unfreezing the
status quo, change to a new state, and refreezing to
ensure that the change is permanent.
– The white-water rapids metaphor recognizes today’s
business environment which is less stable and not as
predictable.
 Organizational Change
Starting point for setting change program is
definition of total change strategy.
OD strategy is a plan for integrating different
activities to accomplish objectives.

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 Three Basic Approaches to
Organization Change
1. Structural
2. Technical
3. Behavioral
Developing strategy includes planning activities
to resolve difficulties and build on strengths.

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 Structural Approach to Change
Changes that relate elements of organization to
one another.
Includes removing or adding layers to hierarchy.
Downsizing associated with restructuring.
Changes can involve decentralization and
centralization.

An Experiential Approach to
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 Technical Approach to Change
Changes in machinery, methods, automation,
and job design.
Changes help companies become more
productive.

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 Behavioral Approach to Change

Emphasizes better utilization of human

resources by improving:
– Morale.
– Motivation.
– Commitment of members.
OD traditionally associated with behavioral
strategies.

An Experiential Approach to
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 Changes Require All Strategies
Structural, technological, and behavioral
strategies not OD change strategies per se.
Determining feature of an OD strategy is process
used to arrive at strategy.

An Experiential Approach to
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 Figure 8.1
Integrated Approach to Change

An Experiential Approach to
Chapter 8
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edition
Overview of Major OD Intervention
Techniques
Intervention techniques focus on 4 categories:
1. Individual or interpersonal level.
2. Team or group level.
3. Intergroup level.
4. Total organizational system level.

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 Key Words and Concepts
• Behavioral strategies - places emphasis on
human resources.
• OD intervention - actions designed to improve
the health of the client system.
• OD strategy - a plan for change using
structural, technical, and behavioral methods.

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 • Parkinson’s Laws - summarizes the problems
of inefficient practices in organizations.
• Second-order consequences - indirect
consequences that result from change.
• Stream analysis - method useful in planning
that plots interventions over period of time.

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 • Structural strategies - alters framework that
relates parts of organization to one another.
• Technological strategies - changes in
machinery, methods, and job design.
• Virtual meetings - meetings that occur
electronically over telecommunications
lines and Internet.

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Human Resource Planning &
Organizational strategies
Human Resources as a Core Competency
Strategic Human Resources Management - Organizational use of
employees to gain or keep a competitive advantage against
competitors.
Core Competency - A unique capability in the organization that
creates high value and that differentiates the organization
from its competition.

HR-Based Core Competencies

Organizational Culture - The shared values and beliefs of the
workforce
Productivity - A measure of the quantity and quality of work
done, considering the cost of the resources used. A ratio of the
inputs and outputs that indicates the value added by an
organization.
Quality Products and Services - High quality products and
services are the results of HR-enhancements to organizational
performance.
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 Factors That Determine HR Plans

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 Human Resource Planning
Human Resource (HR) Planning - The process of analyzing
and identifying the need for and availability of human
resources so that the organization can meet its
objectives.
HR Planning Responsibilities - Top HR executive and
subordinates gather information from other managers
to use in the development of HR projections for top
management to use in strategic planning and setting
organizational goals
Business and HR Planning Issues
– Attracting and retaining qualified outsiders
– Management succession between generations of owners
– Evolution of HR activities as business grows
– Family relationships and HR policies
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 HR Planning Process

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 HR Planning Process
• HR Strategies
– The means used to anticipate and manage the
supply of and demand for human resources.
• Provide overall direction for the way in which HR
activities will be developed and managed.

Overall
Strategic Plan

Human Resources Strategic

Plan

HR Activities
© 2002 Southwestern College
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 Benefits of HR Planning
• Better view of the HR dimensions of business decisions
• Lower HR costs through better HR management.
• More timely recruitment for anticipate HR needs
• More inclusion of protected groups through planned
increases in workforce diversity.
• Better development of managerial talent

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 Forecasting HR Supply and Demand
• Forecasting
– The use of information from the past and present to identify expected future conditions.
• Forecasting Methods
– Judgmental
• Estimates—asking managers’ opinions, top-down or bottom-up
• Rules of thumb—using general guidelines
• Delphi technique—asking a group of experts
• Nominal groups—reaching a group consensus in open discussion
– Mathematical
• Statistical regression analysis—
• Simulation models
• Productivity ratios—units produced per employee
• Staffing ratios—estimates of indirect labor needs
• Forecasting Periods
– Short-term—less than one year
– Intermediate—up to five years
– Long-range—more than five years

© 2002 Southwestern College

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Forecasting
Methods

Figure 2–8
2–139
Estimating Internal Labor Supply for a Given Unit
 Managing Human Resource Surplus or Shortage
• Workforce Reductions and the WARN Act Identifies employer requirements for layoff advance notice.
• 60-day notice to employees before a layoff , timers policy.
• Imposes fines for not following notification procedure.
• Has hardship clauses for unanticipated closures or lack of business continuance capabilities.
• Workforce Realignment “Downsizing”, “Rightsizing”, and “Reduction in Force” (RIF) all mean reducing the number
of employees in an organization. Following are the approaches
– Attrition and hiring freezes
– Early retirement buyouts
– Layoffs
– Outplacement services provided to displaced employees to give them support and assistance:
• Personal career counseling
• Resume preparation and typing services
• Interviewing workshops
• Referral assistance
Dealing with Downsizing
• Investigate alternatives to downsizing
• Involve those people necessary for success in the planning for downsizing
• Develop comprehensive communications plans
• Nurture the survivors
• Outplacement pays off
Causes are Economic—weak product demand, loss of market share to competitors , Structural—technological
change, mergers and acquisitions
 Assessing HR Effectiveness
• Diagnostic Measures of HR Effectiveness
– HR expense per employee
– Compensation as a percent of expenses
– HR department expense as a percent of total
expenses
– Cost of hires
– Turnover rates
– Absenteeism rates
– Worker’s compensation per employee

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Overview of the HR
Evaluation Process

Figure 2–10
2–143
 HR Performance and Benchmarking
• Benchmarking
– Comparing specific measures of performance against
data on those measures in other “best practice”
organizations
• Common Benchmarks
– Total compensation as a percentage of net income
before taxes
– Percent of management positions filled internally
– Dollar sales per employee
– Benefits as a percentage of payroll cost

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 Doing the Benchmarking Analysis
• Return on Investment (ROI)
– Calculation showing the value of expenditures for
HR activities.

C
ROI 
AB
A = Operating costs for a new or enhance system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period

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 Uses of an HR
Information System
(HRIS)

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 Designing and Implementing an HRIS
• HRIS Design Issues
– What information available and what is information needed?
– To what uses will the information be put?
– What output format compatibility with other systems is required?
– Who will be allowed to access to the information?
– When and how often will the information be needed?
Accessing the HRIS
• Intranet
– An organizational (internal) network that operates over the Internet.
• Extranet
– An Internet-linked network that allows employees access to information provided
by external entities.
• Web-based HRIS Uses
– Bulletin boards
– Data access
– Employee self-service
– Extended linkage
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 Linking HRP WITH Organizational strategy
• Human resource planning is a process by which an organization ensures that
– it has the right number and kinds of people, at the right place, at the right time, capable
of effectively and efficiently completing those tasks that will help the organization
achieve its overall strategic objectives.
• Linked to the organization’s overall strategy and planning to compete domestically and
globally.
• Overall plans and objectives must be translated into the number and types of workers
needed.
• Senior HRM staff need to lead top management in planning for HRM issues.
• Ensures that people are available to meet the requirements set during strategic planning.
• Assessing current human resources
– A human resources inventory report summarizes information on current workers and
their skills.
• Human Resource Information Systems
– HRIS are increasingly popular computerized databases that contain important
information about employees.
Linking Organizational Strategy to Human Resource Planning
• Assessing current human resources
– Succession planning
• includes the development of replacement charts
• portray middle-to-upper level management positions that may become vacant in the
near future
• lists information about individuals who might qualify to fill the positions
• Determining the Demand for Labor
– A human resource inventory can be developed to project year-by-year estimates of future
HRM needs for every significant job level and type.
– Forecasts must be made of the need for specific knowledge, skills and abilities.
• Predicting the Future Labor Supply
– A unit’s supply of human resources comes from:
• new hires
• contingent workers
• transfers-in
• individuals returning from leaves
– Predicting these can range from simple to complex.
• Matching Labor Demand and Supply
– Employment planning compares forecasts for demand and supply of workers.
– Special attention should be paid to current and future shortages and overstaffing.
– Recruitment or downsizing may be used to reduce supply and balance demand.
– Rightsizing involves linking staffing levels to organizational goals.
 Linking Organizational Strategy to Human Resource
Planning
• Predicting the Future • Where Will We Find
Labor Supply Workers
– migration into a
– Decreases in internal community
supply come about – recent graduates
through:
– individuals returning from
• Retirements military service
• Dismissals – increases in the number
• Transfers-out of unemployed and
• Lay-offs employed individuals
• Voluntary quits seeking other
• opportunities, either
Sabbaticals part-time or full-time
• Prolonged illnesses
• The potential labor supply
• Deaths can be expanded by
formal or on-the-job
training.
Linking Organizational Strategy to Human Resource Planning

Employment Planning and the Strategic Planning Process

Strategic HRM
 The Strategic Management
• Strategic Management
– The process of identifying and executing the
organization’s mission by matching its capabilities
with the demands of its environment.
• Strategy
– A chosen course of action.
• Strategic Plan
– How an organization intends to balance its internal
strengths and weaknesses with its external
opportunities and threats to maintain a competitive
advantage over the long-term.

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 Business Vision and Mission
• Vision
– A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
– Spells out who the company is, what it does, and
where it’s headed.

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 Types of Strategies
Corporate-Level
Strategies

Vertical Geographic
Diversification Consolidation
Integration Expansion
Strategy Strategy
Strategy Strategy

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 Types of Strategies (cont’d)
Business-Level/
Competitive Strategies

Cost Leadership Differentiation Focus/Niche

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What is Strategic HRM?
• It is how an organization uses its
people to help form and execute
its business strategy

Why is Strategic HRM Vital?

• Because an organization must have people
who are involved in the development of the
business strategy, understand it, are
committed to it, and can make a contribution
to its success
12/07/21 TE Murphy 157
 Strategic Human Resource
Management
• Strategic Human Resource Management
– The linking of HRM with strategic goals and
objectives in order to improve business
performance and develop organizational cultures
that foster innovation and flexibility.
• Involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors that the company needs
to achieve its strategic aims.

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 Strategic Human Resource Challenges

Basic Strategic Challenges

Expanded role of
Corporate productivity and Increased HR team
employees in the
performance improvement involvement in design of
organization’s
efforts strategic plans
performance efforts

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 Human Resource Management’s
Strategic Roles

Strategic
Planning
Roles

Strategy Strategy
Execution Formulation
Role Role

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Creating the Strategic Human Resource
Management System

Components of a Strategic HRM

System

Human Resource Human Resource Policies Employee Behaviors and

Professionals and Practices Competencies

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Steps in the Strategic HRM Process
• New Business Strategy • Orient, Train and
• SWOT Analysis
• Assess HR Capacity Develop
• Develop Core Competencies • Evaluate Performance
• Test and Evaluate
• Initiate HR Practices • Establish Career and
• HR Must be a Key Player in Succession Plans
this Process.
• Design New Organization • Set Total Reward
• Assess new core System
competencies
• Recruit

12/07/21 TE Murphy 162

 HRM Integration
• HR Practices Must be Linked to Achieving the Business
Strategy
• Each HR Practice must be Designed, Aligned, and Measured
Using an Integrated Set of Metrics
• Your organization’s human resource strategies, initiatives and
activities should all be included in your Human Resource
Management Plan. It is this plan that will help you focus and
prioritize your HR activities.
• Establish Metrics to Evaluate Practices
• Evaluate Organizational Capacity
What are the competencies of a Strategic HRM Executive?
• Be a Strategist - Know the Business
• Be an Administrator - Deliver the Basics
• Be a People Champion
• Be a Change Agent

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 Collective bargaining
• Objectives of workers and unions
• Impact on HR:
- New processes
- Adjustments to regular processes
• Impact on HR, bottom line
• Union growth, or lack thereof
Benefits of a Strategic Approach to HR
• Facilitates development of high-quality
workforce through focus on types of people
and skills needed
• Facilitates cost-effective utilization of labor,
particularly in service industries where labor
is generally greatest cost
• Facilitates planning and assessment of
environmental uncertainty, and adaptation
of organization to external forces
Copyright © 2005 South-Western. All rights reserved. 1–165
 The Five P’s Model of SHRM
• Philosophy - Statements of how organization values and treats employees;
essentially culture of the organization
• Policies - Expressions of shared values and guidelines for action on
employee-related business issues
• Programs - Coordinated and strategized approaches to initiate, disseminate,
and sustain strategic organizational change efforts necessitated by strategic
business needs
• Practices - HR practices motivate behaviors that allow individuals to assume
roles consistent with organization’s strategic objectives
Three categories of roles:
• Leadership
• Managerial
• Operational
• Processes - Continuum of participation by all employees in specific activities
to facilitate formulation and implementation of other activities
 Reading 3.3

The Five P’s Model of SHRM

• Successful SHRM efforts begin with
identification of strategic needs
• Employee participation is critical to linking
strategy and HR practices
• Strategic HR depends on systematic and
analytical mindset
• Corporate HR departments can have impact
on organization’s efforts to launch strategic
initiatives
Copyright © 2005 South-
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ORGANIZATION STRATEGIC PLAN

Your HR Plan must build

on your
values
and
support
your
strategic plan

ORGANIZATION VALUES