Part I: An Overview to Human Resources Management

Chapter 1 An Introduction to Human Resources Management

Chapter 1 An Introduction to Human Resources Management

A Brief History of Human Resources Management Strategic Importance of HRM HRM and Organizational Effectiveness Meaning of HRM HRM Processes Who Manages Human Resources?

1.1 A Brief History of Human Resources Management

The history of HRM can be traced to England where masons, carpenters, leather workers, and other craftspeople organized themselves into guilds.

They used their unity to improve their work conditions. These guilds became the forerunners of trade unions.

A Brief History of Human Resources ManagementContd

The field further developed with the arrival of the Industrial Revolution in the latter part of the 18th century, which laid the basis for a new and complex industrial society. The Industrial Revolution was characterized by:

The development of machinery The linking of power to machines The establishment of factories employing many workers, Extensive specialization of labor that is, individual workers performing very narrow tasks was a key feature of the job design in these factories.

A Brief History of Human Resources ManagementContd

The consequence of grouping workers into shops and factories, and the specialization of labor, was a gradual emergence of more systematic attention to:

The design of jobs The choice of workers for those jobs (selection) The provision of pay and benefits (compensation) The welfare of employees both on and off the job

A Brief History of Human Resources ManagementContd

Scientific management and welfare work represent two concurrent approaches that began in the 19th century and along with industrial psychology, merged during the era of the world wars.

The Scientific Management Movement The Industrial Welfare Movement Early Industrial Psychology The Human Relations Movement

A Brief History of Human Resources ManagementContd

The scientific management movement of the late 1800s and early 1900s concentrated particularly on job design, selection, and compensation.

The name most closely associated with this movement is Frederick W. Taylor. Working in the steel industry in the late 1870s, Taylor believed the same techniques used by scientists in the laboratory experimentation, forming and testing hypotheses, and proposing theories based on research and testing could be used by management to increase efficiency in the work place. And he attempted to discover the one best way and the one fastest way to do a job.

A Brief History of Human Resources ManagementContd

For Taylor,

The science of management included systematic job design that began with observation, recording, and classification of job activities as they were typically carried out. Tasks could then be simplified and jobs made more efficient. Scientific selection involved choosing workers with the skills and capacities needed to carry out the now efficiently organized jobs. Scientific training and development meant training workers for particular task and was intended to replace the centuries-old practice of permitting workers to choose their own work methods and train themselves as best they could.

A Brief History of Human Resources ManagementContd

The Industrial Welfare Movement

In addition to directing attention to scientific management around the turn of the century, many firms were beginning to be involved in what has been called the industrial welfare movement.

A Brief History of Human Resources ManagementContd

The industrial welfare work consisted of voluntary efforts on the part of employers to improve, with the existing industrial system, the conditions of employment in their own factories. Actually, the movement extended beyond the work place to some aspects of the workers lives off the job:

Management made available various facilities such as libraries and other recreational premises, offered financial assistance for education, home purchase and improvement, provided medical care and instituted hygienic measures.

A Brief History of Human Resources ManagementContd

As an outgrowth of this movement, many business firms began to employ staff members called social secretaries or welfare secretaries. These people were employed to help with employee finances, housing, health, recreation, education, and other matters.

A Brief History of Human Resources ManagementContd

Early Industrial Psychology

Applications of psychology to business and industry, or industrial psychology, began to emerge in the 1890s and early 1900s as psychologists studied selling techniques and ways of testing job candidates. The most notable industrial psychologist was Hugo Munsterberg, whose major contributions were: The analysis of jobs in terms of their physical, mental, and emotional requirements, and The development of testing devises for selecting workers.

A Brief History of Human Resources ManagementContd

The Human Relations Movement Another early contributor to HRM was called the human relations movement.

What came to be called the human relations movement has been a major influence on modern human resources management. This movement is characterized by its focus on group behavior and workers feelings as they relate to productivity and morale. Some of its beginnings were with a group of researchers in an industrial plant near Chicago. (Elton Mayo and Fritz Roelthisberger).

A Brief History of Human Resources ManagementContd

The Hawthorne studies

In

1924 researchers at the Western Electric Companys Hawthorne Plant near Chicago began some experiments to determine how lighting affected workers and their output. In one experiment, production increased when the lighting was improved, but in another it also increased when lighting was severely reduced.

A Brief History of Human Resources ManagementContd

After

three years of experimentation with such illogical results, the researchers concluded that, in experiments involving people, it was impossible to change one variable (lighting) without affecting other variables such as worker interaction or worker-supervisor interaction. It became clear that it was human interaction that was affecting morale and motivation, which, in turn, were affecting production.

A Brief History of Human Resources ManagementContd

The organization as a social system further inquiry and experimentation led researchers to conclude that productivity depended at least in part on the extent to which the employees became a team and cooperated wholeheartedly and spontaneously.

Worker cooperation and enthusiasm seemed to be related to the interest in the workgroup shown by the supervisor and experimenters, the lack of coercion or force, and the extent to which workers participated in making decisions and changes that would affect them. In short, the researchers came to view the industrial organization as a social system.

A Brief History of Human Resources ManagementContd

The drastic changes in technology, the growth of organizations, the rise of unions, and government concern and intervention concerning working people resulted in the development of personnel departments.

There is no specific date assigned to the appearance of the first personnel department, but around the 1920s more and more organizations seemed to take note of and do something about the conflict between employees and management. Early personnel administrators were called welfare secretaries. Their job was to bridge the gap between management and the operator (worker); in other words, they were to speak to workers in their own language and to recommend to management what had to be done to get the best results from employees.

A Brief History of Human Resources ManagementContd

The early history of personnel still obscures the importance of the HRM function to management. Until the 1960s, the personnel function was considered to be concerned only with blue-collar or operating employees.

It was viewed as a record-keeping unit that handled tenure pins and coordinated the annual company picnic. Drucker stated that the job of personnel was partly a file clerks job, partly a house keeping job, partly a social workers job, and partly firefighting, heading off union trouble.

1.2 Strategic Importance of HRM

The HRM function today is concerned with much more than filing, housekeeping, and record keeping. When HRM strategies are integrated within the organization, HRM plays a major role in clarifying the firms human resource problems and develop solutions to them.

Strategic Importance of HRM

Today it would be difficult to imagine any organization achieving and sustaining effectiveness without efficient HRM programs and activities. The competitive advantage and strategic importance of HRM to the survival of an organization will become clearer as we move deeper into the course.

Strategic Importance of HRM

HRM in the past For years the HRM function had not been linked to the corporate profit margin or what is referred to as the bottom line. The role of HRM in the firms strategic plan and overall strategy was couched in fuzzy terms and abstractions. HRM was merely a tagalong unit with peopleoriented plans, not a major part of planning or strategic thinking.

Strategic Importance of HRM

HRM at present Today, because of the recognition of the crucial importance of people, HRM in an increasing number of organizations has become a major player in developing strategic plans. Organizational and human resource plans and strategies are inextricably linked. The HRM strategies must clearly reflect the organizations strategy regarding people, profit, and overall effectiveness.

Strategic Importance of HRM

HRM today has two major roles: Operational and Strategic. Examples of the Operational roles of HRM

Compliance with EEO laws Interviewing and selecting applicants Orienting new employees Training employees and supervisors Resolving safety problems Administering wages and salaries

Strategic Importance of HRM

Examples of the strategic roles of HRM

Human resources planning Assessing workforce trends and issues Assisting in organizational restructuring and downsizing Advising on mergers or acquisitions

Strategic Importance of HRM

The strategic role of HRM emphasizes that the people in an organization are valuable resources representing a significant investment of organizational efforts. These human resources can be a source of competitive strength if they are managed effectively. Managers must understand that carrying out HRM activities and programs is strategically vital. Without managerial participation, there are likely to be major human resource problems. HRM and every other function must work together to achieve the level of organizational effectiveness required to compete locally and internationally.

HRM and Organizational Effectiveness

HRM activities play a major role in ensuring that an organization will survive and prosper. Around the world, managers recognize that human resources deserve attention because they are a significant factor in topmanagement strategic decisions that guide the organizations future operations.

HRM and Organizational EffectivenessContd

Three crucial elements are needed for firms to be effective:

mission and strategy, organizational structure, and Human resources.

However, it is important to remember that people do the work and create the ideas that allow the organization to survive. Even the most capital-intensive, best- structured organizations need people to run them.

HRM and Organizational EffectivenessContd

People limit or enhance the strengths and weaknesses of an organization. Current changes in the environment are often related to changes in human resources, such as shifts in the composition, education, and attitudes of the employees. The HRM function should provide for or respond to these changes.

HRM and Organizational EffectivenessContd

To sum up, if the objectives of the HRM function are to be accomplished, top managers will have to treat the human resources of the organization as the key to effectiveness. To do this to accomplish the important objectives of HRM management must regard the development of superior human resources as an essential competitive requirement that needs careful planning, hard work, and evaluation.

Meaning of HRM

Human Resources Management is the term increasingly used to refer to the philosophy, policies, procedures, and practices related to the management of people within an organization. It is a function performed in organizations that facilitates the most effective use of people (employees) to achieve organizational and individual goals.

Meaning of HRMContd

Terms such as personnel, human resources management, industrial relations, and employee development are used by different people to describe the unit, department, or group concerned about people. The term human resources management is now widely used. Changes in terminology reflect the increased significance associated with the management of people in organizations as well as the broader perspective from which the field is currently viewed.

Meaning of HRMContd

In the past, personnel management had a strong functional focus; that is, personnel specialists were primarily concerned with the administration of specific employee-related functions such as hiring, training, wage setting, and disciplinary action. A more modern view is that all personnel functions are interrelated; that is, each function affects the others. Moreover, how well these functions are managed has a tremendous effect on organizations ability to meet its overall objectives.

Meaning of HRMContd

It is now generally accepted that human resources management encompasses a dynamic, organizationwide perspective that is action oriented and based on theory and research from many disciplines and is necessarily interrelated with strategic planning. More and more it is recognized that HRM must be an integral part of the strategic planning of the top executive team of the organization.

HRM Processes

Organiza tion Improve ment

Human Resourc es Planning

Job Analysi s and Design Staffing

Protection and Represent ation Compen sation and Reward

Human Resources Manageme nt

Perform ance Appraisa l

Training and Develop ment

HRM ProcessesContd

All the processes are linked in the diagram to depict the idea that they interact and are interdependent. What happens in one process tends to influence events in one or more of the others. For example, offering an unusually high salary in recruiting and hiring efforts (part of the staffing process) may cause serious problems in the management of the compensation and reward process. People already in the payroll may complain bitterly about what they are paid and press for a readjustment.

HRM ProcessesContd

The quality of the design and management of the systems used to control and direct human resources processes is directly related to an organizations overall effectiveness.

In some organizations, the human resources systems may be very primitive or haphazardly designed. In others, the systems used in HRM can be so cumbersome that the organization is strangled by its own bureaucracy. Example of a supervisor wanting to hire a word processing specialist. Systems in human resources management must be designed to further, not impede, the attainment of organizational goals.

HRM ProcessesContd
A brief description of the fundamental processes in human resources management will help familiarize you with the scope and challenges of this field. (1)Human resources planning - is the process of assessing the organizations human resources needs in light of organizational goals and changing conditions and making plans to ensure that a competent, motivated workforce is employed.

HRM ProcessesContd

The planning process will vary from organization to organization but may include such activities as :

assessing the climate and the prevailing leadership style in the organization analyzing skill levels among employees assessing the availability of skills in the external labor market determining the need for expanding or reducing the size of various units, and making plans for appropriate action.

The planning process is closely related to the staffing process and, ideally, is a major aspect of the overall planning of the organization. HRP is the subject of chapter 5.

HRM ProcessesContd
(2)Job analysis and design

Job Analysis has typically been viewed as the subprocess of investigating the tasks and behaviors associated with a particular job. Various systems used in job analysis include observations by experts, questionnaires filled out either by job incumbents or expert observers, and/or interviews. Typically, the information obtained from job analysis is used to write job descriptions and, in turn, to create job specifications.

HRM ProcessesContd
Job design is the process that determines the tasks to be performed by individuals and groups and establishes the rules, schedules, and working conditions under which people perform those tasks. While some of the older techniques for managing this process remain, such as time-and-motion study and work simplification, newer techniques that make different assumptions about jobs and people have emerged. Time-and-motion study and work simplification, for example, have given way to interest in job enlargement and selfmanaged teams. Reengineering, an organization-wide approach to the design of jobs, has only recently come into vogue.

HRM ProcessesContd
(3)Staffing is the process that results in the continuous assignment of workers to all positions in the organization. This broad process includes the following activities: attracting qualified people to the organization; selecting from among candidates; bringing new people aboard and assigning and orienting them to their jobs;

HRM ProcessesContd
(4)Training and development. The training and development process is a complex mixture of activities intended to improve the performance of individuals and groups within the organization. Almost all employees in any organization need some initial training, or orientation, when they start new jobs. Training and development is discussed in chapter 9.

HRM ProcessesContd
(5)Performance Appraisal and Review - is the ongoing evaluation of individual and group contributions to the organization and the communication of those evaluations to the persons involved. Such evaluations are made for a variety of purposes: to provide feedback about performance, to determine the need for training, to make decisions about pay increases, to select people for promotion, or to make judgments about the need for discipline.

HRM ProcessesContd
(6)Compensation and Reward. The compensation and reward process is the flow of events that determines what wages, salaries, and incentives are paid and what supplemental benefits and nonfinancial rewards are provided. The presence or absence of rewards and recognition is important to employee morale and performance. Compensation and reward are discussed in chapters 11, 12 and 13.

HRM ProcessesContd
(7)Protection and Representation. Most organizations have formal or informal ways to protect employees to some extent, at least from arbitrary and impulsive treatment and physical danger and health hazards. In addition, individuals and groups may represent the interests of others, again informally or in an organized, formal fashion.

HRM ProcessesContd

This broad process of protection and representation can be divided into three important sub processes:

the accommodation process, the collective bargaining process (found in unionized organizations), and the health and safety management process.

HRM ProcessesContd

The accommodation process refers to the extent to which management listens and responds to or accommodates the needs, wants and complaints (or grievances) of organization members.

People working in organizations expect to be treated fairly; moreover, they feel they have the right to be heard and to be respected as individuals. Morale is severely affected when there is a sense of unfair treatment or when workers perceive that management does not care about their feelings, complaints, and suggestions.

HRM ProcessesContd

The collective bargaining process refers to those events that establish a formal agreement between workers and management in the unionized situation regarding such matters as wages and employee benefits, working hours, working conditions, and grievance procedures.

The process includes both the negotiation and administration of the labor-management contract.

HRM ProcessesContd

The health and safety management process includes activities and events that serve to protect organization members from illness and physical dangers in the work place and to assist them with their physical and emotional health. The process also includes protection of the surrounding community from pollution and toxic substances. For many organizations, protecting the health and safety of human resources is a prime social responsibility that is reinforced by the increased awareness among workers and the general public of health and safety issues.

HRM ProcessesContd
(8)Organization Improvement. The organization improvement process is the flow of events, including the necessary strategies, through which the people in the organization improve the organizations effectiveness. In general, the objective of the strategies and the systems that are used is to increase the level of cooperation, teamwork, and performance throughout the organization.

Who Manages Human Resources?

Every manager in the typical organization has major responsibilities in all of the processes normally included under human resources management as they relate to all employees under his/her authority. For example,

Who Manages Human Resources?...Contd

In the area of staffing, the manager usually interviews the few best or finalist candidates referred by the HR department and makes the final selection. In the area of appraisal, the manager conducts, at intervals, formal appraisals of each subordinate using procedures developed by the HR department in cooperation with top managers and monitored by the department.

Who Manages Human Resources?...Contd

In the area of compensation, the manager makes final decisions about pay increases; these decisions must be in line with the formal plan establishing rules of progression (again, with rule compliance monitored by the HR department) and with budgetary allocations approved by top management.

Who Manages Human Resources?...Contd

Non-supervisory employees may also contribute to the management of the various human resources processes. For example,

Engineers in the design department of an aircraft manufacturing company might interview college graduates who are candidates for entry-level engineering jobs. Production workers who are members of self-managed work teams might participate in the selection and training of new team members. Shop stewards (officers of a union who are also employees of the company) are likely to be involved in processing grievances and grievance hearings. All employees may be involved in making suggestions about the organization of tasks and the flow of work.

Who Manages Human Resources?...Contd

Top executives, including the HR executive, have a dominant role in establishing ethical standards for managing human resources, as well as for all organizational activities. In turn, managers and employees at all levels have important roles in influencing and upholding ethical standards.

Who Manages Human Resources?...Contd

Structure of the Human Resources Department In organizations large enough to have a human resources or personnel departments, the personnel director and his/her staff play a key role in the design and monitoring of human resources systems.

Even in very small organizations, some person or persons perhaps the president or owner or that persons assistant will coordinate human resources activities for the entire enterprise. Regardless of organization size, the fundamental human resources processes must be managed.

Who Manages Human Resources?...Contd

Larger organizations more likely to employ persons with specialized expertise to help design and implement human resources systems. A full-time specialist tends to emerge when organizations have about one hundred employees.

Who Manages Human Resources?...Contd

A typical human resources department in a small company employing a few hundred persons.
Human Resources Director

Assistant HR Director

Personnel Assistant

Administrative Assistant

Who Manages Human Resources?...Contd

Structure of a department in a corporation with several thousand employees.

Senior Vice President, HR

Director, Recruitment & Selection

Director, Compensatio n & Benefits

Director, Labor Relations

Director, Training & Development

Director, Employee Relations

Who Manages Human Resources?...Contd

Relationship with Other Departments What organizational charts do not show is that human resources managers usually share responsibility for personnel activities with other managers. For example, human resources departments typically do not make the final hiring decisions for accounting and manufacturing departments. Rather controllers or manufacturing directors, respectively, have the final say.

Who Manages Human Resources?...Contd

But HR departments typically do have major responsibility for designing and overseeing major components of the hiring system, including initial screening and referral. Similarly, HR departments are likely to do much of the human resources planning, most of the advertising and recruiting, and much of the interviewing. But these activities are usually performed in cooperation with other managers throughout the organization.

Who Manages Human Resources?...Contd

The human resources staff typically does not have final decision-making authority over pay increases but is active in designing pay systems, administering those systems, and monitoring decisions made about pay to ensure that those decisions are based on uniform guidelines and are in agreement with the overall compensation plan.

Who Manages Human Resources?...Contd

In short, human resources departments are typically responsible for the effective management of the various personnel systems, and their activities are usually conducted in cooperation with the management group. Most of the key human resources policy decisions are made jointly by the human resources director and other top managers.

Who Manages Human Resources?...Contd

This sharing of decision making particularly where the various managers make decisions relating to one phase of a system and the human resources director makes decisions relating to another can strain relationships. For example, to enforce an agreed-upon policy, the personnel director might inform a department head that a subordinates pay may not be increased beyond the top of the range unless there has been an appropriate increase in responsibilities. The department head may not like this restriction. Also, the personnel director might become too zealous in monitoring policy and be perceived as setting policies that do not have broad managerial support.

Who Manages Human Resources?...Contd

If there has been broad management participation in establishing human resources policies, these kinds of tensions are not likely to be very serious or very lasting. Nevertheless, because some managers may not appreciate the organization-wide implications of human resources decisions, the human resources director may need to conduct an ongoing effort to educate other managers and supervisors about the unique role of the department.