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Human Resource Management

1st Chapter Contents

Management
O Functions Approach (Planning, organizing, staffing, leading, controlling)
O Roles Approach (Interpersonal, Informational, Decisional)
O Skills Approach (Interpersonal, Technical, Conceptual)

• Human Resource Management

O Acquiring, Training, Appraising, and Compensating employees

• Why HRM is important?

• Line and Staff Authority

• Challenges to Human Resource Management

O Globalization
O Technological Trends
O Trends in Nature of Workforce
_ High-Tech jobs
_ Service jobs
_ Knowledge work and human capital
_ HR implications
_ Workforce demographic trends
O Strategic Planning in HRM
_ Workforce Diversity
_ Equal Opportunity
_ Ethical Issues
O Creating high-performance work systems
O Managing within the Law

• Human Resource Manager Proficiencies

O HR Proficiency
O Business Proficiency
O Leadership Proficiency
O Learning Proficiency
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MANAGEMENT
FUNCTIONS APPROACH

Traditionally, management is defined in terms of what managers do and what functions do they
have to perform while managing people and things. There are four functions of Management
which are as follows:

Planning
Planning is the ongoing process of developing the business' mission and objectives and
determining how they will be accomplished. Planning includes both the broadest view of the
organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal.

Organizing
Organizing is establishing the internal organizational structure of the organization. The focus is
on division, coordination, and control of tasks and the flow of information within the
organization. It is in this function that managers distribute authority to job holders.
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Leading

Leading is determining what needs to be done in a situation and getting people to do it.
Additionally, motivating employees and directing them to perform their job duties is the part of
leading function.

Controlling
Controlling is a four-step process of establishing performance standards based on the firm's
objectives, measuring and reporting actual performance, comparing the two, and taking
corrective or preventive action as necessary.

Staffing
Staffing is another function which we dropped in principles of management text because it
leads towards a separate subject that is now referred to as “Human Resource Management”.
Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting,
hiring, training, evaluating and compensating are the specific activities included in the function.

ROLES APPROACH

Mintzberg discovered that all managers usually perform ten managerial roles. He further
classified them into three groups:

1. Interpersonal

2. Informational

3. Decisional
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SKILLS APPROACH

All managers should possess these three skills at minimum.

1. Technical Skills:

The ability to apply specialized knowledge or expertise

2. Human Skills:

The ability to work with, understand, and motivate other people, both
individually and in groups

3. Conceptual Skills:

The mental ability to analyze and diagnose complex situations.

HUMAN RESOURCE MANAGEMENT (HRM)

The policies and practices involved in carrying out the “people” or human resource aspects of a
management position, including acquiring employees, training and developing them,
appraising their performance and compensating them.

WHY HRM IS IMPORTANT?

We will have a look on why the knowledge of human resource management is important and
necessary for all the managers from four perspectives.

Cost and Investment Perspective

There are two different ways to look at human resource management. One is to consider the
activities performed by human resource department as additional cost and other is to consider
these practices as investment by developing people and boosting up their productivity so as to
achieve maximum output from them and to get things done through people efficiently and
effectively in order to achieve organizational goals. Human resources are one of such assets
which are not shown in company’s balance sheets but they are in fact, if you consider, the most
important assets, and not cost. The proponents of the investment perspective think that human
resources if properly managed can turn into human capital.
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Gaining Competitive advantage through People

Competitive advantage is the firm’s ability to achieve superiority over its competitors.
Competitive advantage can be gained by many sources; Michael Porter suggested two main
sources i.e. cost leadership and differentiation. Cut throat competition in almost every sector
makes companies understand that if they have to be successful in longer run, they will need to
have sustainable competitive advantage.

Organizations can achieve sustainable competitive advantage through people if they are able to
meet the following criteria:

1. The resources must be of value

2. The resources must be rare

3. The resources must be difficult to imitate

4. The resources must be organized

Resource Perspective:

There are many resources in the organization like financial resources, technological resources,
mechanical resources and physical resources. These resources are useless if human resources
are not capable of managing them. So we can say for sure that human resources are most
important of all the resources in any organization.

To avoid some common mistakes a manager commit while managing people:

Human resource management knowledge is important because it can help managers avoid
some common mistakes in managing people in an organization. For example, managers don’t
want to:

1. Hire wrong person for the job

2. Experience high turnover

3. Have their people not doing their best

4. Waste time conducting useless interviews

5. Take their company to court because of discriminatory actions

6. Commit any unfair labor practices

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7. Allow a lack of training to undermine their department’s effectiveness

8. Perform unsafe practices

9. Let their employees think that their salaries are unfair as inequitable relative to others
in the organization.

LINE AND STAFF AUTHORITY:

Before going directly to the concepts of line and staff authority, we will first define what
authority is.

Authority:

The right to make decisions, direct others’ work, and give orders is generally referred to as
Authority.

Line Authority:

Line authority gives manager the right (or authority) to issue orders to other managers and
employees. It creates a superior-subordinate relationship.

Staff Authority:

Staff authority gives the manager the right (or authority) to assist or to advise other managers
or employees.

Line Manager:

A manager who is authorized to direct the work of subordinates and is responsible for
accomplishing the organizational tasks. Examples include production managers and sales
managers.

Staff Manager:

A manager who assists or advises the line managers. Examples include human resource
managers and quality control managers.
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CHALLENGES TO HUMAN RESOURCE MANAGEMENT

1. GLOBALIZATION

“Globalization is the firms’ tendency to extend their sales, ownership, and/or manufacturing to
new markets abroad”. Look around you and you will find many companies which are having
their operations in more than one country. Examples include Nokia, Coca Cola, Mercedes Benz,
Microsoft, Dell, Zara and many more. More Globalization means more competition, and more
competition means more pressure to be world class- to lower costs, to make employees more
productive and to do things better and less expensively. Globalization is a serious challenge to
human resource managers because boundary less organizations may have to opt outsourcing
for meeting the challenges of staffing. Both workers and companies have to work harder and
smarter than they did without globalization.

2. TECHNOLOGICAL TRENDS

Another challenge faced by human resource managers is to stay competitive in terms of

adopting and using new technologies in order to have their cost and time saved in longer run.
Advancements in information technology have enabled organizations to take advantage of
information explosion. With computer networks, unlimited amounts of data can be stored,
retrieved and used in a wide variety of ways, from simple record keeping to controlling complex
equipment. Organizations are connected via computer-mediated relationships and they are
giving rise to a new generation of “virtual workers” who works from home, hotels, their cars or
wherever their works take them. Technology can only be managed by those workers who have
got considerable skills that’s why numbers of jobs that were performed in production are
becoming less due to interference of technology oriented methods of production i.e. machines
and robots. This results in a shift from “touch workers” to “knowledge workers” where
employees’ responsibilities expand to include a richer array of activities such as planning,
decision making and problem solving.

3. TREENDS IN NATURE OF WORKFORCE

3.1. High tech jobs

With the advent of technology, more of the factory jobs are becoming high-tech which means
the job now involves technology in performing several activities that were previously done
manually. This results in reduction of many jobs because with latest equipment and machinery,
less people are required in production jobs.
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3.2. Service Jobs

Globalization, competition and technology are the trends that force the companies to go
abroad for their production where they find minimum cost of obtaining and using the resources
including human resources. Many companies are shifting their production to China and other
Asian countries. With increased efficiency in production, many of the jobs are now created in
services industry giving rise to the services economy. The net effect is that manufacturers have
been squeezing slack and inefficiencies out of the entire production system, allowing
companies to produce more products with fewer employees. So, in many developed countries
like America and much of Europe, manufacturing jobs are down, and services jobs up.

3.3. Knowledge work and Human Capital

Those who will stay in the best jobs will require more education and more skills which is why as
we described earlier, there is seen a shift from “touch or manual workers” to “knowledge
workers”. For managers, this means a growing emphasis on knowledge workers i.e. people who
are good in terms of skills and education than touch workers. This results in the development of
a concept, Human Capital, which is “the knowledge, education, training, skills and expertise of
firms’ workers”.

3.4. Nature of Work: Implications for HR

The changes in trends of nature of workforce encourage that all the managers must know
human resource management practices and policies in order to cope up with the challenges in
internal and external environment. For example, key to effectively managing technology is not
the technology itself but the people who manage it.

3.5. Workforce Demographic Trends

Workforce demographic trends are making finding and hiring good employees more of a
challenge throughout the world. Demographical factors may include age, gender, national
origin etc. Consider age for example, workforce in America, China, Germany and Western
Europe is older than the workforce in India and Pakistan which faces the challenges of inducting
a younger workforce due to the average age being less. India’s average is estimated to be 29 in
2020. More of the females are getting educated and are joining workforce which results in
adopting different methods of how people were managed before. They expect flex-time and a
child-care centre to be present at workplace so that they can perform their duties efficiently
and effectively.

4. STRATEGIC PLANNING IN HRM

Strategy

Strategy is referred to as a long-term action plan to achieve organizational goals.

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Strategic planning

Strategic Planning is a process in which a company decides on how it will match its internal
strengths and weaknesses with external opportunities and threats in order to maintain and to
sustain competitive advantage

Strategic Human resource management

Strategic human resource management means formulating and executing human resource
policies and practices that produce the employee competencies and behaviors the needs to
achieve its strategic aims.

4.1. Workforce Diversity

Workforce diversity management is a challenge for human resource managers. Diversity can
bring benefits and also poses numerous threats. Workforce diversity generally refers to the
variety or multiplicity of demographic features that characterize a company’s workforce,
particularly in terms of age, race, gender, culture, religion, national origin etc.

4.2. Equal Employment Opportunity

Equal employment opportunity aims to ensure that anyone, regardless of age, gender, race,
color, disability, religion, or national origin, has an equal opportunity based on his or her
qualifications. Providing EEO is a challenge for human resource managers.

4.3. Ethics in HRM

Ethics refers to the standards someone uses to decide what his or conduct should be. One
survey found six ethical issues that need attention of the human resource managers. These
issues are; workplace safety, security of employee records, employee theft, affirmative action,
comparable work and employees’ privacy rights.

5. CREATING HIGH-PERFORMANCE WORK SYSTEMS

HR can impact organizational performance in three ways: through the use of technology,
through effective HR practices, and by instituting High performance work systems to maximize
the competencies and abilities of employees throughout the organization.

High-Performance Work Systems

A high performance work system is an integrated set of human resource management policies
and practices that together produce superior employee performance.
These practices may include:

Selective hiring
Extensive training
Information sharing
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Emphasis on high-quality work

Pay-for-performance
Measurement of management practices
Transformational leadership

6. MANAGING WITHIN LAW

Human resource managers need to be fully aware of the laws related to managing people and
they must perform all the activities remaining within the law. These laws can include safety and
health laws, equal employment opportunity law, labor laws, laws related to wages and
compensation etc.

HUMAN RESOURCE MANAGER PROFICIENCES

One study found four categories of proficiencies that HR managers must possess while
designing the practices and policies related to HRM. These proficiencies are discussed next.

HR Proficiency

HR Proficiency represents traditional knowledge and skills in such areas as employee selection,
training, appraising and compensation.

Business Proficiency

Business Proficiency requires that human resource managers must be familiar with other
business functions like strategic planning, marketing, and production. They should also be
familiar with finance so that they can “speak CFO’s language” by explaining top management in
measurable terms that what are the cost and benefits of HR practices.

Leadership Proficiency

HR managers also require leadership proficiency. For example they need the ability to work
with and lead management groups, and to drive the changes required.

Learning Proficiency

HR Managers must also posses learning proficiency because the competitive landscape is
changing so quickly and new technologies and being continuously introduced. He or she must
have the ability to stay abreast of and apply all the new technologies and practices affecting his
or her profession.
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CONTEXT OF HUMAN RESOURCE MANAGEMENT