Human resource management

Human resource management def

Refers to the processes of recruiting, developing and managing employees to help an organisation achieve its goals while supporting employees in their roles (Armstrong, 2020)

Independency of functions

Refers to how different departments or functions within a business work together to achieve organisational goals. Allows for improved efficiency, which leads to shared resources and knowledge

Five functions of HRM

Recruitment and selection

Performance Management

Training and development

Compensation and benefits

Employee relations

What is HR involved in

Writing job descriptions: clearly defining the role and required skills to attract the right applicants

Conducting interviews: evaluating candidates’ skills, cultural fit, and alignment with the organisation’s vision

Onboarding: introducing new hires to the company’s processes, policies, and culture to integrate them successfully

Performance management

Ensures that employees’ contributions align with organisational objectives. It involves setting goals, establishing clear objectives, regular reviews to provide feedback and development plans

Compensation and benefits

Salaries and wages - fairly compensated

Incentives - Bonuses, profit-sharing or stock options to reward outstanding performance

Benefits - non-monetary perks like health insurance, retirement plans, and wellness programs

Example of compensation and benefits

Netflix sets itself apart by offering competitive pay and unique benefits such as unlimited vacations days. These incentives help the company attract and retain top talent in a competitive market

Origins of HR

Industrial revolution (18th-19th Century) - shift to factory systems led to the need to manage labour efficiently. Early practices focused on controlling working hours and conditions

Scientific Management (early 20th century) - introduced scientific management to improve task efficiency. They focus on productivity but neglect worker morale

Modern HRM (1960s onwards)

Focus on the strategic alignment of employee goals with business objectives, expanding roles in diversity, training, and employee engagement

Personnel management

Reactive and solve problems as they arise. Limits tasks such as recruitment, payroll and compliance. Employees are seen as resources to fulfil tasks, primarily monetary rewards.

Human resource management

Proactive creating plans for the future, encompasses training and employee well-being. Combines monetary and non-monetary

Importance of HRM

In most organisations, people are now the biggest asset

The knowledge, skills and abilities have to be deployed and used to the maximum effect if the organisation is to create value

Linking HRM with the organisation’s strategic goals can improve business performance, foster innovation and flexibility and contribute to competitive advantage

Workforce projections

Jobs will increase by 0.5% p.a during 2025-2035

The service sector largely drives job growth in 2035

The highest job increase is projected in the health sector, followed by the food and beverages sector (statista, 2023)

Human resource planning

Recruit required number of staff, retain number and quality then let go of those not required. Utilize staff (cheaper to retain), improve skills and motivation.

Aims of HRP

Attract and retain employees. Anticipate potential surpluses or shortfalls which need to be justified. Dwvelop a well-trained, flexible workforce.

Workforce planning

a process that helps an organisation match its current workforce with future needs. It involves predicting how many employees are needed, checking if the current workforce has the right skills, and creating plans to fill any gaps.

Difference between HRP/WFP

Scope - HRP covers human resource planning, including organisational development and employee engagement. WFP is focused specifically on workforce size, skills, and talent gaps

Focus - HRP involves long-term strategic planning, while WFP is more tactical, dealing with the workforce day-to-day and short term needs

Demand analysis

Includes forecasting the number of employees and the type of roles required to meet the future organisational goals. The analysis considers market trends, technological advancements, and business expansion plans

Supply analysis

Supply analysis evaluates the current workforce’s capacity, skills, and competencies. This analysis identifies whether the existing workforce can meet demands outlined in the strategic plan or if there are any skill shortages or surpluses

Gap analysis

Gap analysis identifies disparities between the current workforce supply and future demand. It helps identify areas of overstaffing, understaffing, or skill shortages

Action planning

Involves developing strategies to address the gaps identified in the gap analysis. This might include recruitment, upskilling existing employees, or restructuring teams

Quantitative methods

Trend analysis: analysing past data on supply and demand to predict future workforce needs

Scenario planning: involves considering different future scenarios and their potential impact on workforce needs

Workforce analytics: using data to identify patterns, forecast trends, and support decision-making

Qualitative methods

Competency mapping: identifying the competencies needed for future roles

Focus groups and surveys: gathering insights from employee and managers about workforce needs

Challenges in planning

Rapid Technological Advancements - difficulty in predicting future skill requirements

Globalisation and diversity - adapting to multicultural and geographically dispersed teams

Economic volatility - adjusting workforce plans during economic downturns

Internal resistance - resistance from management or employees to change

Job analysis

a systematic process of gathering, documenting, and analysing information about the job, duties, responsibilities, and the necessary skills and qualifications

Job descriptions

includes information about daily activities, reporting, relationships, tools or equipment used, and the working environment

Job specifications

focus on the qualifications, skills, experience, and attributes necessary to perform the job.

Talent management

where organizations optimize the entire talent lifecycle, including hiring, employee engagement, retention, and skills development

Talent identification

Individual who achieves high level of performance or may not be achieving high levels at present but have untapped potential which can be exploited by the organisation

Recruiting talent

Employers need to ensure that their branding makes the organisation attractive to top talent and that they have structures recruitment processes to assess cultural fit.

Google’s rigorous hiring process focuses on assessing creative problem-solving and collaboration.

Onboarding

Helps new hires acclimate to the organisational culture and roles, boosts productivity and reduces turnover in critical early months

Recruitment

The process of attracting, screening and selecting qualified individuals, for example Google receives over 3 million applications yearly but hires less than 1%

Selection

Choosing the suitable candidate from the pool, for example amazon uses AI-based screening for faster candidate evaluation

Benefits of effective recruitment and selection

• Helps achieve organisational goals by hiring competent employees

• Reduces turnover and hiring costs - poor hiring can cost companies up to 30% of an employee’s annual salary

• Enhances productivity and workplace culture

Internal recruitment

Promotions, transfers and employee referrals. Can be cost effective and faster, boosting morale. However can have a limited talent pool and possible resentment

External recruitment

Job portals, social media, recruitment agencies. They offer fresh talent and diverse skills. However, it can become costly and time consuming

Methods of recruitment

Traditional - job posting, walkins

Modern methods - social media, AI- driven hiring

Headhunting - directly reaching out to potential candidates

The selection process

1. screening applications

2. initial interviews

3. assessments

4. final interview

5. reference/backround checks

6. job offer and negotiation

Selection methods

Interviews (stuctured/unstructured)

Assessment centres (group exercises)

Testing (cognitive ability tests)

GDPR

The data protection act 2018 ensures organisations handle personal data responsibly and transparently

Strategies for diversity and inclusion

Blind recruitment, diverse interview panels and inclusive job desriptions mitigate bias

Challenges in recruitment

Talent shortages - lack of skilles professionals

Bias in hiring

High turnover rates

Well-being

Refers to a holistic state of health encompassing physical, mental, emotional and social factors

Work life balance

Managing work responsibilities while maintaining a fulfilling personal life, critical for reducing stress and increasing performance

Dimensions of well-being

Physical: good health, regular exercise, proper nutrition and adequate sleep

Mental: emotional intelligence, stress management

Occupational: job satisfaction, work environment, purpose-driven

Importance of well being

Under the equality act 2010, mental health conditions can be classified as disabilities. Employers are legally required to make reasonable adjustments for employees with such conditions and prevent discrimination (law of duty)

Factors influencing well being

The workplace culture - does organisation encourage work life balance

Family and personal commitments - caregiving responsibilities?

Poor work-life balance

• Increase in bad physical health e.g obesity, cardiovascular disease and fatigue.

• Mental burnout e.g emotional exhaustion and decrease motivation

• Impact on productivity lead to disengagement and high turnover

Strategies to improve wb & wlb

• Priorities self-care by engaging employees in hobbies and exercise.

• Adopt hybrid work model blending remote and office work flexibility.

• HR could design and implement mental health resources and gym memberships

• Encourage inclusivity with policies that support disabilities and caregivers

Legal compliance & EDI

HR must ensure legal requirements that compile with labour laws, paid leave policies and anti-discrimination. They need to address gender pay gaps and parental leave rights.

Scandinavian case study

Work life balance in Scandinavian countries include shorter workweeks, leading to higher productivity. Parental leave hours are encourage more family time. Cultural attitudes prioritise peoples quality of life.

Performance management

A core HR function that ensures employees contribute effectively to business success.

1. Goal setting

2. Performance appraisal

3. Feedback and communication

4. Employee development

Importance of PM in HR

Aligns employee efforts with company goals, improves motivation and job satisfaction. Ensures fairness in rewards and promotions under UK employment law.

Theories of performance management

Goal-setting theory - state specific, challenging goals leading to higher performance

Expectancy theory - suggests employees put in more effort when they believe their work leads to desired outcomes

Equity theory - focuses on fairness in the workplace employees compare their efforts and rewards to others

The performance management cycle

Step 1: setting clear employee objectives using smart goals

Step 2: reviewing and providing feedback

Step 3: review performance (annual or biannual) to see if employees have met goals

Step 4: Recognise contributions through pay rises or incentives

Performance appraisal methods

360-degree feedback - collect performance evaluations from multiple sources, including managers and peers. Provide holistic view of employee strengths and weaknesses.

Management by objectives (MBO) - set smart goals, encourage employees to take responsibility

Rating scales - employees are rated on a numerical or descriptive scale based on key performance criteria. It is easy but may lack depth.

Types of performance related pay

Merit-based pay - salary increases based on individual performance

Commissions - employees earn a percentage of sales, commonly in retail and finance

Bonuses - one-time payments for achieving specific targets e.g investment banks kike Barclays rewarding top performers with annual bonuses

Benefits of prp

Increase motivation, retain top talent, aligns individual and business goals

Weaknesses of prp

May create unhealthy competition, this can lead to bias, and its not always effective

Managing underperformance

Applauding success and forgiving failure. Disciplinary procedures should be last resort. 5 steps to manage performance:

1. identify and agree on problem

2. establish reasons for shortfall

3. decide and agree on action required

4. resource the action

5. monitor and provide feedback

Turnover and absenteeism

Turnover is the percentage of employees leaving an organisation within a specific period.

Absenteeism is the percentage of unplanned employee absences due to illness, stress or disengagement.

Control, power and authority

Control - employers use rules, policies and performance management to direct employee behaviour

Power - exists in different forms, including legitimate, coercive and reward

Authority - the right to make decisions and enforce obedience

Types of power

Coercive - a manager threatening disciplinary action for non-compliance

Reward - offering bonuses for high performance

Legitimate - CEO making strategic decisions (Amazon UK has been criticised for its strict control mechanisms, such as productivity tracking)

Bases of power

Legitimate - belief that a person has the formal right to make demands and expect others to be compliant

Expert - a persons high level of skill and knowledge

Referent - a persons perceived attractiveness, worthiness and right to others respect

Coercive - the belief that a person can punish others for non-compliance

Informational - a persons ability to control information that others need to accomplish something

Importance of employee relations

• Increases productivity

• Reduces turnover

• Enhances organisational reputation

Key theories on employee relations

Unitarist perspective: views organisation as a cohesive team where management share same goals. Conflict is considered unnecessary and avoidable.

Pluralist perspective: Recognises the workplace consists of multiple stakeholders, conflict is viewed as inevitable but manageable through negotiation.

Radical: Workplace conflict stems from the inherent power imbalances between employers and employees. Suggests management seeks to maximise profit by exploiting labour, leading to struggles over wages and working conditions.

Key legislations affecting ER

1. Employment rights act 1996 - protects against unfair dismissal

2. Equality act 2010 - ensures fair treatment regardless of race, gender, disability

3. Trade union and labour relations act 1992 - regulates trade union activities

4. Health and safety at work act 1974 - ensures employee safety in the workplace

Role of trade unions

Trade unions represent workers in dealing with employers, advocating for fair wages, safe working conditions and employee rates.

• Collective bargaining - negotiate salaries, benefits and working conditions

• Dispute resolution - assisting workers in resolving conflict with employers through formal grievance procedures

• Legal support - legal aid and advice to employees facing unfair treatment or dismissal

• Workplace advocacy - ensuring employers comply with labour laws and policies

Conflict resolution in employee relations

Mediation - a neutral third party helps resolve disputes

Arbitration - a legally binding decision is made

Grievance procedures - formal process for handling complaints

Future trends in ER

Hybrid and remote working models - impact on communication and team cohesion

Diversity and inclusion - greater focus creating inclusive workplaces

Mental health and well-being - growing recognition of psychological safety at work

Remote working - shift in communication dynamics, increased autonomy. social isolation, adaption to tech