CH-4 HRM.ppt

Prepared by Asfaw Wassie
HUMAN RESOURCE
MANAGEMENT:
Chapter- 4

 Introduction
 Meaning & Definition of HRM
 Scope of HRM
 HRM-Functions and Objectives
 HRM Roles
 Differences between PM & HRM

“It takes knowledgeable,
people to run a business”

“It takes conscientious,
People to run a business”

“It takes motivated
people to run a business”

It takes knowledgeable,
conscientious, and
motivated people to run a
business successfully

HRM makes all this
possible!!!

Why is HR critical to firm success?
 Service industry is expanding
 Low quality HR leads to low quality customer service.
 In the 21st century effective knowledge management
translates into competitive advantage and profits.
 Knowledge comes from a firm’s people.

“The War for Talent”
 “In the new economy, competition is global, capital is
abundant, ideas are developed quickly and cheaply, and
people are willing to change jobs often. In that kind of
environment… all that matters is talent… superior talent
will be tomorrow’s prime source of competitive advantage.”
Chambers, E. et al. (1998)
“The War for Talent.”
McKinsey Quarterly, 2-15

Extraordinary People,
Ordinary Performance?
?
Performance
Extraordinary Ordinary
Extraordinary
Ordinary
Quality of People

Ordinary People,
Extraordinary Performance?

Performance
Extraordinary Ordinary
Extraordinary
Ordinary
Quality of People

Two Mysteries
 How have some companies achieved extraordinary performance
with people who are no different from those employed by the
competition?
 If what they are doing is so understandable, why haven’t their
competitors simply replicated them and achieved similar
competitive advantages?

Competitive Advantage through People
 A worldwide study of the automobile industry showed that people-
centered practices were associated with almost twice the productivity
and quality as conventional mass production.
 Similar studies in steel, apparel, semiconductors, and oil refining
industries reveal similar positive effects for people-centered practices.
 A study of IPOs among 136 firms showed that people-centered
practices were associated with a 42% higher survival rate.

Top Performing Stocks: 1972-1992
Company Percent Increase
 Southwest Airlines 21,775%
 Wal-Mart 19,807%
 Tyson Foods 18,118%
 Circuit City 16,410%
 Plenum Publishing 15,689%
Money, October, 1992

 “I’ve tried to create a culture of caring for people in the
totality of their lives, not just at work. There’s no magic
formula. It’s like building a giant mosaic--it takes
thousands of little pieces…The intangibles are more
important than the tangibles. Someone can go out and
buy airplanes from Boeing and ticket counters, but they
can’t buy our culture, our esprit de corps.”
Herb Kelleher
CEO Southwest
WSJ8/31/99

HR and Performance

What is HRM?
•HRM is concerned with the people’s dimension
in the organization
•Facilitating the competencies and retention of
skilled force
• Developing management systems that
promote commitment
• Developing practices that foster team work
• Making employees feel valued and rewarded.

Definitions
 HRM refers to acquisition, retention, motivation and
maintenance of Human Resources in an organization. David. A.
Decenzo & Stephen P.Robbins
 HRM is the planning, organising, directing & controlling of
the procurement, development, compensation, integration,
maintenance and separation of human resources to the end
that individual, organizational and social objectives are
accomplished. Edward Flippo
 “… a strategic approach to managing employment relations
which emphasises that leveraging people’s capabilities is
critical to achieving sustained competitive
advantage, this being achieved through a distinctive set of
integrated employment policies, programmes and practices”.
Bratton and Gold

Scope of HRM
 Very Vast
 Covers all major
activities in the
working life of a
worker
-from time an
individual enters
into an organization
until he or she leaves
comes under the
purview of HRM
Prospects
of HRM
HRM
Nature of
HRM
Industrial
Relations
Employee
Maintenance
Employee
Hiring
Employee
&
Executive
Remunera
tion
Employee
Motivation

Functions of HR
MANAGERIAL
FUNCTIONS
Planning
Organizing
Directing
Controlling
OPERATIVE
FUNCTIONS
Staffing
Development
Compensation
Motivation
Maintenance
Integration
Emerging Issues

Operative functions of HR
STAFFING Job analysis, HRP, Recruitment,
Selection, Placement, Induction,
Internal Mobility
DEVELOPMENT
Competency profiling, Training and
development, Performance &
potential management, Career
management, …
COMPENSATION
& MOTIVATION
Job design, Work scheduling, Job
evaluation, Compensation
administration, Incentives and
benefits

Operative functions of HR
(contd.)
MAINTENANCE
Health, Safety, Welfare,
Social security
INTEGRATION
Employment relations, Grievance,
Discipline, Trade unions,
Participation, Collective
bargaining
EMERGING
ISSUES
HRIS, HR audit, International
HRM, Workforce Diversity

Source: HR Department Benchmarks and Analysis Survey 2004
(Washington, DC: Bureau of National Affairs, 2004), 21. To purchase
this publication and find out more about other BNA HR solutions visit
http://hrcenter.bna.com or call 800-372-1033. Used with permission.
HR Activities

Management of Human Capital
In Organizations
 Physical, Financial, Intangible and
 Human Capital
 The collective value of the capabilities, knowledge,
skills, life experiences, and motivation of an
organizational workforce.
 Also known as intellectual capital.
 Core Competency
 A unique capability that creates high value and
differentiates an organization from its competition.
 HR competencies: a source of competitive advantage.

Human Capital in Organizations
Human Capital
The collective value of the
capabilities, knowledge,
skills, life experiences, and
motivation of an
organizational workforce.
Core Competency
A unique capability that
creates high value and
differentiates an organization
from its competition.

HR Management Roles
 Administrative Role
 Clerical and administrative support operations (e.g.,
payroll and benefits work)
 Technology is transforming how HR services are delivered.
 Outsourcing HR services to reduce HR staffing costs
 Operational and Employee Advocate Role
 “Champion” for employee concerns
 Employee crisis management
 Responding to employee complaints

Changing Roles of HR Management
Note: Example percentages are based on various surveys.

Strategic Role for HR
 Strategic Role
 “Contributing at the Table” to organizational results
 HR becomes a strategic business partner by:
 Focusing on developing HR programs that enhance organizational
performance.
 Involving HR in strategic planning at the onset.
 Participating in decision making on mergers, acquisitions, and
downsizing.
 Redesigning organizations and work processes
 Accounting and documenting the financial results of HR activities.
 Some HR people get this, some don’t…CEOs want those
that do and oust those that don’t

Operational to Strategic Transformation of HR

HR Technology
 Human Resource Management System (HRMS)
 An integrated system providing information used by HR
management in decision making.
 Purposes (Benefits) of HRMS
 Administrative and operational efficiency in compiling HR
data
 Availability of data for effective HR strategic planning
 Uses of HRMS
 Automation of payroll and benefit activities
 EEO/affirmative action tracking
 HR Workflow: increased access to HR information

Uses of an HRMS
 HRMS
 Bulletin boards
 What information will be available and what is information
needed?
 Data access
 To what uses will the information be put?
 Employee self-service
 Who will be allowed to access to what information?
 Extended linkage
 When, where, and how often will the information be needed?

JOB ANALYSIS
and
HR PLANNING
________________________
Chapter Three

What is a job?
 Job
 Group of related activities and duties
 Made up of tasks
 Tasks
 Basic elements of jobs
 “what gets done”

JOB ANALYSIS INFORMATION HIERARCHY
TASK DUTY
POSITION
ELEMENT
JOB
JOB
FAMILY
OCCUPATION
CAREER
Smallest
unit into
which
work can
be
divided
Distinct
work
activity
Number
of tasks

What is Job Analysis?
 Job analysis (JA) systematically collects, evaluates, and
organizes information about jobs
 JA identifies behaviors, knowledge, skills, and abilities
(KSAs) that are critical to a job

What is the purpose of JA?
 JA lays the foundation for HRM systems:
 Selection
 Selection system developed to assess key KSAs
 Ensures that it is job-related
 Training
 Gaps in KSAs of new hires represent training needs
 Performance Appraisal
 Job analysis establishes performance standards

What is the purpose of JA?
 Compensation
 Relative worth of jobs measured via job evaluation
 JA helps you to select the right ee, evaluate the ee fairly,
compensate, and train the appropriate skills to the appropriate
ees
 JA also ensures your system is legally defensible and perceived as
fair (procedural justice)

Steps in Job Analysis Process
 Phase 1: Preparation for job analysis
1. Familiarization with the organization and its jobs
2. Determine the uses of the JA information (selection, training?)
3. Identify what jobs need to be analyzed
• Critical to success of the organization
• Difficult to learn
• New technology

Phase 2: Collection of JA information
1. Source of Job Data
 Job incumbents, supervisors, subordinates, customers
 Existing job descriptions
 Manuals, publications
 National Occupational Classification

2. Data collection instrument design
 Gather information systematically
 Often involves questionnaire, checklist
 Use same questionnaire for similar jobs
 Different jobs may require different instrument
 Information gathered:
 Status, key duties/tasks, KSAs, working conditions,
performance standards

3. Data collection method
 Job performance
 Observation
 Face-to-face interviews
 Questionnaires
 Employee log/diary
 Combination of above
 No “best” approach
 Trade-offs are: accuracy, time, and cost

Existing JA Methods
 Position Analysis Questionnaire (PAQ)
 Functional Job Analysis (FJA)
 Critical Incident Technique (CIT)

Position Analysis Questionnaire
(PAQ): McCormick (1972)
 Developed because of criticism that JA relied on
observation – not quantifiable
 Detailed questionnaire (tasks)
 Determines extent to which each task is applicable
to target job
 Using a 5-point scale

Functional Job Analysis (FJA)
 Fine & Wiley (1971)
 Focuses on task statements
 Task statements include:
 What? - What gets done (the action/behaviour)
 To whom or what? - The object of the action
 Why? - Purpose of the action
 How? - What facilitates the action?

Functional Job Analysis
 Tasks are rated on scales reflecting varying degrees of
involvement with Things, Data, and People as well as
math, language, etc. requirements
 Each scale is arranged hierarchically
 E.g., People scale ranges from “taking instructions” to
“leadership”

Critical Incident Technique
 Flanagan (1949)
 Identifies behaviors that indicate success or failure on the job
 Effective vs ineffective behaviors
 Critical Incidents include:
 Context - in which the incident occurred
 Behaviour - exactly what the individual did that was effective or
ineffective
 Consequences - of the behaviour and whether or not
consequences were in the employee’s control

Developing Critical Incidents
 Interview with people familiar with the job
 E.g., supervisors, subordinates, customers
 Ask them to describe specific incidents of effective / ineffective
behaviour by incumbents of target job
 Incident context – What led up to the incident (background)?
What was the situation?
 Behaviour – What exactly did the person do that was effective /
ineffective?
 Consequence - What was the outcome of the behaviour?

Using Critical Incidents
 Critical incidents are collected
 Critical incidents that are similar in context are
grouped into a behavioral item
 2 critical incidents
1. Rewarding employees for good performance
2. Publicly praising for good performance
 Could be grouped into a behavioral item “Praise/reward
subordinates for effective performance”

Using Critical Incidents
 Similar behavioral items are grouped into a
meaningful behavioral criterion
 2 behavioral items
1. “Praise/reward employees…”
2. “Counseling, giving advice to subordinates”
 Combine to form the behavioral criterion “Interactions
with subordinates”
 These form basis of selection system (e.g., interview),
performance appraisal instrument, etc.

Phase 3: Uses of JA information
1. Job descriptions—Task requirements
 Statement that explains duties working conditions, etc. of a job
2. Job specifications—Person requirements
 Statement of what a job demands of the incumbent
 E.g., knowledge, skills, abilities (KSAs) and other characteristics
required to perform job

Phase 3: Uses of JA information
3. Performance standards
 What is expected of workers
 JA may provide performance standards for job where
performance is readily quantified, measurable, etc.
 All of these uses form foundation for various HRM systems

Human Resource Planning
(HRP)

TOPICS TO BE COVERED
 Definition of HRP
 Importance of HRP
 Steps of HRP
 Job Analysis
 HRP Process
-Organizational objectives
-HRP needs forecasting
-HRP Supply forecasting
-HR Programming
-HR Plan Implementation
-Control & Evaluation

Definition :
process by which an organization
ensures that it has the right number &
kind of people at the right place and at
the right time, capable of effectively and
efficiently completing those tasks that
help the organization achieve its overall
objectives.

Importance
Each Organization needs personnel with necessary
qualifications, skills, knowledge, experience & aptitude .
 Need for Replacement of Personnel - Replacing old, retired
or disabled personnel.
 Meet manpower shortages due to labor turnover -
 Meet needs of expansion / downsizing programs - As a
result of expansion of IT companies the demand for IT professionals are
increasing.

 Cater to Future Personnel Needs - Avoid surplus or
deficiency of labor.
 Nature of present workforce in relation with Changing
Environment - helps to cope with changes in
competitive forces, markets, technology, products and
government regulations.

Steps of HRP
1. Interfacing with strategic planning and scanning the
environment
2. Taking an inventory of the company’s current human resources
3. Forecasting the demand for human resources
4. Forecasting the supply of human resources both from within the
organization and in the external labor market
5. Comparing forecasts of demand and supply
6. Planning the actions needed to deal with anticipated shortages or
overages
7. Feeding back such information into the strategic planning
process

THE STRATEGIC ROLE OF HUMAN
RESOURCE PLANNING
 Developmental Planning for Strategic Leadership
 there is currently more interest in succession planning today
than there has been during the past 30 years.
 Because of the rapidly changing environments in which
companies must compete, there is concern that there will be a
shortage of individuals with the requisite skills and talents who
can lead companies in the twenty-first century.
 Succession planning, as well as other forms of human resource
planning, is becoming more critical to the successful
formulation and implementation of strategies.

 Assessment of Strategic Alternatives:
 information regarding critical employee knowledge bases provides
important input for strategy formulation.
 given a particular strategic alternative, it is useful for human
resource executives, as well as other executives, to be able to forecast
the human resources necessary to carry out various strategies.

 Adding Value:
 Despite some positive research results, it is typically
difficult to quantify value added in human resource
management.
 The results of some human resource programs and
policies undoubtedly have major impacts on morale and
motivation, although they are not easily translated into
dollars and cents.

MANAGERIAL ISSUES IN
PLANNING
 Personal Implications
 the planning process will have normally required the
human resource manager to communicate with other
managers, senior executives, and staff members about
the future human resource environment and the
associated staffing issues.
 Also, senior managers will have greater confidence that
the manager has thought through the implications of
potential demand and supply relationships and there is
less chance that the company will be unprepared in the
future.

 Changing Receptivity Toward Planning
 The turbulent business environment in which
companies currently operate is obviously a difficult time
in which to plan.
 However, there is substantive evidence that companies
have increased their emphasis on human resource
planning, but with some trend shifts.

 Growing restrictions on Lay off:
 growing restrictions on employers’ abilities to lay off
employees also will serve as an additional incentive for
human resource planning.

HRP Process - Determination of Quality of Personnel
Job Analysis
 process of collecting and studying information relating to
the operations and responsibilities of a specific job.
 determination of tasks which comprise the job and of skills,
knowledge, abilities and responsibilities required of the
worker for a successful performance and which differentiates
one job from all others.
 products of Job Analysis are Job Description & Job
Specification

HRP Process - Determination of Quantity of Personnel
Organizational Objectives
HR Programming
HR Needs Forecast HR Supply Forecast
HRP Implementation
Control & Evaluation
Surplus - Restricted Hiring,
Lay Off, Reduced Hours
Shortage - Recruitment &
Selection

Organizational Objectives & Policies
 Downsizing / Expansion
 Acquisition / Merger / Sell-out
 Technology upgradation / Automation
 New Markets & New Products
 External Vs Internal hiring
 Training & Re-training

HR Demand Forecast
process of estimating future quantity and quality of manpower
required for an organisation.
 External factors - competition, laws &
regulation, economic climate, changes in
technology and social factors
 Internal factors - budget constraints,
production levels, new products & services,
organizational structure & employee separations

Some techniques
 Rules of Thumb, and the Delphi Technique
 Rules of thumb are simple guidelines that are used to predict
demand for human resources.
 “bottom-up” approach in which unit managers estimate their
specific human resource needs for the next period.
 The Delphi technique, an iterative judgment refinement technique
based on the collection of expert opinion, is sometimes categorized
as a qualitative demand forecasting technique.

 Operations Research and Management Science
Techniques:
 Linear programming, integer programming, and
network optimization techniques can be used to
determine optimal personnel flows through
organizations.
 The use of such planning techniques runs counter to the
trend toward more reliance on less sophisticated
approaches.

 Regression Analysis:
 Regression analysis is a robust statistical technique
having applicability to forecasting demand for human
resources.
 Multiple regression analysis allows the forecaster to
control for several potential influences on the number
of employees needed in a particular specialty.

HR Supply Forecast
process of estimating future quantity and quality of
manpower available internally & externally to an
organisation.
Supply Analysis
 Existing Human Resources
 Internal Sources of Supply
 External Sources of Supply

Existing Human Resources
Capability / Skills Inventory using HR Information System
General Information -
Name: Present Address: Department:
Sex: Designation:
DOB: DOJ:
Marital Salary:
Status: Permanent Address: Grade:
Qualification -
Degree/Diploma Institution Class Year of Pass
Experience/Skills -
Job Title/ Organisation Brief Skill/
Appointment Responsibilities Specialisation
Outstanding Achievement / Additional Information -
Awards Performance Disciplinary Action
Promotions Merit Rating Absenteeism
Achievements
Career Plans:

Some techniques
 Replacement Charts:
 describe a company’s organizational structure in terms
of individuals occupying various managerial and
professional positions.

 Succession Planning:
 Succession planning tends to be directed toward a longer-range
time horizon and is more focused on development. It is also more
concerned with the development of pools of potential
replacements, as opposed to individuals.
 involves more elaborate planning for skill development of potential
replacements, is more systematic in the assessment of potential
replacements and their developmental needs

 Markov Analysis:
 Provides a practical and versatile technique for
forecasting internal supply. As such, the techniques can
serve the strategic purpose of evaluating the availability
of human resources required for different strategies.

 Renewal Models:
 These models reflect the movement or flow of
employees through companies as they are “pulled”
upward to fill vacancies in higher-level job categories
 Age cohorts or job category can be the focus of analysis.

 Computer Simulations:
 Simulations have the advantage of allowing the forecaster to create
a number of different future scenarios by altering the values of the
simulation’s parameters.
 Through this process, the forecaster can determine variations in
forecasted values according to different formulations of future
conditions and can plan alternative courses of actions to reduce
uncertainty and manage risk.

SELECTING FORECASTING
TECHNIQUES
 Purpose of Planning
 Organizational Characteristics
 Industry Characteristics
 Environmental Turbulence: companies with
moderate levels of workforce volatility are more
inclined to engage in human resource planning.
 Other Considerations: cost, time horizon, level of
sophistication, availability of appropriate data,
availability of detailed data,….

HR Programming
Balancing Demand and Supply
 Vacancies filled in by the right employee at the
right time

HR Plan Implementation
 Recruitment, Selection & Placement
 Training & Development
 Retraining & Redeployment
 Retention Plan
 Downsizing Plan

Control & Evaluation
Are Budgets, Targets & Standards met?
Responsibilities for Implementation &
Control
Reports for Monitoring HR Plan

HRM Project
Students are required to visit a business organization
and conduct the following assessment:
1. Assess how HR is viewed by the top management
and the attention given to HR Department
2. Assess the HR practices and functions of the
organization in detail
3. Assess how HR functions and practices are coherent
and integrated.
4. Assess the link between the business strategies and
HR strategies.

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