Human Resource Management Notes

Globalisation

  • Globalisation refers to the shift towards a more integrated and interdependent economy between people, companies, and governments worldwide.
  • It involves operating on an international scale.
  • It represents the compression of the world.
  • It leads to increased interconnectedness of societies.
  • It creates a borderless world.
  • It is the process by which businesses or other organizations develop international influence.

Examples of Globalisation

  • Drinking coffee from Brazil, wearing shirts from Cambodia or India, using phones made in China, and eating avocados from Mexico are everyday examples.

Debate on the Future of Globalisation

  • Some argue that the steady opening up of global markets may reverse, leading to provincialism and nationalism.
  • This could result in more protectionism and a reversal of trade agreements.
  • Others defend the benefits of economic globalisation, citing its ability to lift people out of poverty.

Convergence-Divergence Debate

  • The globalisation thesis suggests countries are becoming increasingly similar in tastes, behaviours, cultural values, and governance systems.
  • This convergence is driven by industrialisation, reduced trade barriers, globalised media, homogeneous consumer demand, digitisation, financial markets, and transparent accounting.

What is HRM?

  • HRM involves the management of employment.
  • Soft HRM recognises employees as a resource worth investing in, focusing on high commitment and involvement.
  • It includes all activities associated with managing employment relationships in the firm.
  • Key theories related to HRM:
    • Resource Based View
    • Human Capital
    • Competitive advantage
    • Organisational Capability
    • Key Resources & Capabilities
    • Value Chain Activity

International HRM

  • Deals with HRM issues arising from the internationalisation of business.
  • Focuses on HRM strategies, policies, and practices in response to internationalisation.
  • Involves managing a geographically dispersed workforce to leverage HR resources for global competitive advantage.

Strategic HRM

  • An approach to managing human resources that supports long-term business goals and outcomes with a strategic framework.
  • It focuses on longer-term resourcing issues within the context of an organisation's goals and the evolving nature of work.
  • It informs other HR strategies, such as rewards or performance, determining how they are integrated into the overall business strategy.

Key Aspects of Strategic HRM

  • HR becomes more of a strategic partner.
  • Human resources are seen as critical to the success of organisations, especially in service and knowledge economies.
  • Focus on fostering trust between managers and employees.
  • Growth in non-unionised organisations adopting Japanese management principles that emphasise critical resources.

Historical Influences

  • 18th Century Industrial Revolution
    • Shift from craftwork to machine operation.
    • Autocratic management using fear and force.
  • 1776 Adam Smith
    • The Wealth of Nations argued for economic advantages from the division of labour.
  • 19th Century (1800s) Robert Owens
    • Developed a “welfare to work” system with a paternalistic approach including housing, company stores, schools, and hospitals.
  • Post 1860
    • Welfare Secretaries were hired.
    • Employment Managers emerged amid conflict between employers and unions.
    • Employers tried to prevent union growth using “yellow dog contracts”.
  • Early 20th Century
    • Employers sought to improve productivity & efficiency through scientific management.
    • Taylor focused on first-line managers.
    • Fayol was interested in all managers' activities.
    • Weber focused on organisational structures.
  • WW1
    • Women took over traditionally men’s jobs.
    • By 1918, the Representation of the People Act in the UK gave universal suffrage to men over 21 and women over 28.

Historical Influences (Continued)

  • 1930s Human Relations Movement
    • Conflict was attributed to poor management and work systems.
  • 1939 Roethlisberger & Dickson
    • Found that social elements of workers' needs significantly influenced output and wellbeing.
  • WW2
    • Created high labour demand.
    • Slowed union growth with pay freezes and strike prohibitions.
    • More women entered the workforce.
  • 1950s Human Relation Management
    • Challenged assumptions that people did not want to work.
    • Moved focus beyond the individual to contribution to the organisation, work groups, and social structures.
  • 1960s - 1970s Quality of Work Life
    • Legislation highlighted fair employment practices in the US & UK, promoting professional HR Managers.
  • 1980s - 1990s
    • Growth in non-unionised organisations adopting Japanese management principles.
    • Decline of Unions in the UK and USA.

21st Century

  • Characterised by complexity & uncertainty.
  • More people live in cities than in the country side.
  • Issues: Obesity vs. famine.
  • Emerging economies represent more than half the global economy.
  • Predictions:
    • India will have the largest population.
    • China the largest output.
    • USA the richest per capita income.
  • Food & Water shortages - humankinds greatest challenges.
  • There are 35,000 multinational corporations globally, controlling more than 15,000 foreign subsidiaries and accounting for about one-third of the entire world production.

The HR Challenge

  • HR's challenge is to gather, assess, and understand cultural, labour, and market complexities to predict opportunities and risks.
  • This includes knowing when to enter or exit a market and integrating successfully into new local markets.

Convergence – Divergence Debate (Cultural Perspective)

  • National and regional cultures have substantial differences in norms, values, and belief systems that make convergence at all levels highly unlikely.
  • Human resources are difficult to standardise, with HRM often reflecting local circumstances.
  • Europe shows directional similarity but has cultural and institutional differences that make convergence less likely.

External Contexts

  • Socio-cultural: Demography, working population, gender, ethnicity, education, religion, social values.
  • Technological: Information and communication technologies, biotechnology, medical advances.
  • Economic: Macro-economic policy, markets and prices, global trends, wages and salaries, employment and unemployment.
  • Environmental: Global warming, conserving natural resources.
  • Political: Party politics, government, public policy.
  • Legal: Contract law, employment law, health and safety.
  • Ethical: Balancing stakeholder interests, ethics in the workplace, corporate social responsibility.

External Forces Shaping HRM (Last 18 Years)

  • Globalisation
  • Opening up of trade barriers & borders
  • Geopolitical issues including Trade Wars
  • Expansion and retraction of the EU (Brexit)
  • Convergence across nations
  • Labour Legislation
  • Threat of terrorism
  • Mergers & Acquisitions reshaping industries
  • World Recession
  • Technology – improving communications and creating communication barriers!

21st Century Momentous Events

  • 9/11 Terror attack on USA – undermined country’s sense of security on home ground.
  • China entry into the World Trade Organisation.
  • The world largest exporter and 2nd largest importer.
  • SARS
  • Tsunami in Japan
  • World Financial crisis
  • Middle East Rising
  • Covid
  • Brexit
  • US politics

HRM Challenges

  • Adapting hiring and retention strategies to prepare for tomorrow’s changing workforce.
  • The Ageing Workforce crisis.
  • Multi-generational work force.
  • Multi & cross cultural workforce.
  • Talent Shortages.
  • Technological advancement.
  • Geopolitics.

HR Preparing for the Future

  • Preparing a new set of globally prepared leaders.
  • Identifying skills on a local level.
  • Maintaining a comprehensive understanding of regulations and hiring laws.
  • Making the business case for CSR.
  • Integrating a Global Workforce.
  • Preparing for the complexities of hiring, managing and integrating a global workforce.

Reflecting on the External Context

  • The external context includes all the external influences that affect an organisation’s decisions and performance.
  • The 21st Century is characterised by Complexity & Turbulence.
  • Increasing diversity of customers, rivals, suppliers against a backdrop of socio-cultural, political, legal, & technological elements confronting global business.
  • Greater need to anticipate the impact on business.
  • Continuous search for improved performance, profit & efficiency.
  • Numerous stakeholders.

The Future of Leadership

  • The future requires something more than an American, European or Asian leadership model.
  • It demands a global model that applies around the world.
  • One that transcends national perspectives and delivers a powerful tool for recruiting, developing & retaining company’s future leaders.
  • The future lies in engaging & integrating a Global Workforce.

HRM: Internal and External Contexts

  • HRM strategies & practices interact with, and are part of the broader environment within which the company operates.
  • HRM strategies must reflect the organisational and national cultures in which they operate.
  • External factors shape management approaches where management style & organisation structure are key.

Key HR Activities

  • Developing & implementing HR policy
  • Promoting employee capability
  • Envisaging the future
  • Enhancing employee motivation
  • Demonstrating the HR contributions to business effectiveness
  • Business organisations align with the strategies of the business they support, and HR should follow suit.

Perspectives on HRM

  • Universalistic: Best Practice.
  • Contingency: Best Fit – aligning with the firm’s external & internal contingencies.
  • RBV: Competitive Advantage.
  • Behavioural Perspective: Desired role behaviours of employees required to meet the challenges of internal and external environments.
  • HRM systems can contribute to organisational effectiveness by managing and controlling such desirable behaviours.

Analysing Internal Resources

  • Through a process of internal resource analysis, business strategists look for significant resource strengths, weaknesses and capabilities (SWOT).
  • Need to know what the resource constraints are (GAPs Analysis).
  • The process should indicate how resources may be redeployed to improve the efficiency of the organisation (Workforce Planning).
  • A firm may have unique & valuable resources, however if it does not have the ability to use those resources effectively then it will not create or sustain a distinctive competence.

Internal Context - Important Questions

  • What are our current capabilities?
  • Where are the gaps?
  • What is the current resource profile?
  • What are the pivotal positions required to deliver on strategic plans?
  • Is the organisation structure fit for purpose?

Resource Base View (RBV)

  • An organisation can secure a sustainable competitive advantage over its competitors by identifying and using core distinctive competences.

Capabilities & Competencies

  • Resource Capabilities: product of an organisations structure & control systems; specify how and where decisions are made; the types of behaviours that are rewarded; cultural norms and values.
  • Distinctive Competencies: A firm must possess unique and valuable resources and the capabilities and skills necessary to exploit those resources; intangible resources are very difficult to imitate; capabilities are almost invisible to outsiders; rarely reside in a single individual in the firm – rather a group or team.

Critical HR Activities & Organisational Lifecycle

  • Start-up: Recruitment, Selection & Staffing - Attract the best talent; Compensation & Benefits - Meet or exceed labour market rates; Training & Development - Define future skills requirements; Employee Relations - Set basic employee relations philosophy & organisation
  • Growth: Recruitment, Selection & Staffing - Recruit the right people at the right price for the right place; Compensation & Benefits - External- Internal market challenges; Training & Development - Focus on Management & organisation development; Employee Relations - Main good relations.
  • Maturity: Recruitment, Selection & Staffing - Succession planning; Compensation & Benefits - Formal C&B structures. Control C&B; Training & Development - Maintain flexibility & skills of workforce; Employee Relations - Keep finger on the pulse – Morale & Motivation.
  • Decline: Recruitment, Selection & Staffing - Manage internal labour market shifts; Compensation & Benefits - Tight cost control; Training & Development - Retraining & Counselling; Employee Relations - Main good relations.
 Outer context
 Socio-economic
 Technical
 Political-legal
 Competitive

 Inner context
 Culture
 Structure
 Politics/leadership
 Task-technology

 HRM context
 Role
 Definition
 Organisation

Strategic HRM framework for MNCs

  • External Factors: Industry/sector characteristics (Global, regional, national, local characteristics), Interorganizational networks and alliances
  • Internal/Organizational Factors: MNE Structure, Mechanisms of coordination (Mode of operation), MNE strategy (Corporate level, Business level, Corporate governance), Experience in managing international operations, Organizational culture
  • Strategic HRM: HR function strategy, HR practices
  • MNE Concerns and Goals: Competitiveness Efficiency, Balance of global integration & local responsiveness, Flexibility, Sustainability

McKinsey ‘Seven S’ Framework

  • Emphasis is in the connectiveness of the factors leading to successful performance
  • Hard Elements
  • Soft Elements

HR Supporting the Business

  • HR must be organised to reflect the requirements of the business organisation.
  • Globalisation requires a business model that is adaptable with employees who openly welcome new ways of thinking.
  • Primary challenge to organisations today is to maintain & increase competitiveness in the face of continually changing demands.
  • Employee capability has emerged as a crucial factor distinguishing successful flexible organisations from those who are vulnerable to decline or fail.

Challenges for the Future

  • HR leaders need to make sure they understand the model of the business they support.
  • HR must understand how the business organisation matches with its vision and strategy.
  • Align the HR organisation with the business strategy.
  • Differentiate between transactional v transformational work.

Leveraging capabilities for competitiveness: Key HR competencies for global HR practitioners

Recap Capabilities & Competencies

  • Core capabilities are knowledge sets (Leonard,1998)
  • Core competencies are a ‘bundle’of skills & technologies that enable an organisation to provide benefits tocustomers
  • Not product specific
  • Is the sum of learning across individual skill sets
  • Is competitivelyunique
  • Is an ‘intangible’asset
  • Represents a gateway to thefuture (Hamel & Prahalad,1994)

HR competencies for global HR practitioners

  • The business contextrequired to succeed in 21C has raised the bar on HRprofessionals.
  • They are expected to play new roles, and to be able to play those roles, they need newcompetencies
  • “HR competencies are the values, knowledge, and abilities of HR professionals” (Ulrich,2008:2).

Strategic v FunctionalCompetencies

  • Strategic HR competencies:
    • Business-related - enabling HR practitioners to align HR strategies with businessstrategies (strategic decision-making, organisational change and development).
    • Includes an ability to relate to customers.
  • Functional HR competencies:
    • The delivery of HR operations (recruitment,employee selection and remuneration).
    • Includes personal credibility, HR delivery and HR technology.

Lack of clarity on the HR role

  • HR activities are not exclusive to the HR department and line managers “havetheir own theories onhow bestto manage”.
  • “What HR does is subject to the actions of others outside theHR department overwhom they have no control, yet the HRdepartment is commonly held accountable”

HR Role is Evolving

  • Operational
  • Strategic
  • Emotional

Key Deliverables forHR

  • Strategy Execution
  • Administrative Efficiency
  • Employee Contribution
  • Change
  • ROI

HR Competency Model

  • HR professionals must master competencies dealing both with people and business issues

HR from the Outside-In

  • Creating value from the outside-in
  • Understanding the external elements (Strategy)
  • Stakeholders (Employees, Customers,Investors, Community)
  • Talent (Competence,Commitment, Contribution)
  • Organisation (Culture,Capabilities)
  • Leadership
  • HR Department (Centralise, Decentralise, Shared Services) must be linked to the business structure
  • Practices must be aligned to strategy
  • Analytics

The HR Role isEvolving

  • Culture & Change steward
    • Helps shape acompany’s culture.
    • Develop disciplines to make change happen throughoutthe organisation.
    • Help turn what is knowninto what is done.
  • Talent Manager/Organisational Designer
    • Talent without a supporting organisation will not be sustained.
    • A good organisation will not deliver results withouttalented individuals with the right competencies in criticalroles

Business Ally

  • Good understanding ofthe parts of the business e.g. finance, marketing, R&D, engineering & what they must achieve ,how they work together, so thatthey can help the business organise to makemoney

Strategy Architect

  • Need to have visionfor the future.
  • Recognise business trends & their impact on thebusiness.
  • Have an ability to linkthe internal organisation to external customer expectations.

HR Evolving Roles

  • Analytical Designer:
    • Data & Analytics
    • Credible Activist
  • Operational Executor:
    • Policies need to be drafted, adapted,and implemented.
    • Support employees administrative needs (pay, relocation, hiring, training).

HRA Analytics

  • “An HR practice enabled by information technology that uses descriptive, visual, and statistical analyses of data related to HR processes, human capital, organisational performance, and external economic benchmarks to establish business impact and enable data-driven decision making”
  • “People Analytics is an area of HRM practice, research and innovation concerned with the use of information technologies, descriptive and predictive data analytics and visualisation tools for generating actionable insights about workforce dynamics, human capital, and individual and team performance that can be used strategically to optimise organisational effectiveness, efficiency and outcomes, and improve employee experience“

Evolution ofHRA

  • 1980’s:
    • HR Metrics
    • Compensation
    • Staffing Hiring Retention
    • Investments in training and development
  • 1990’s:
    • One size fitsall mentality
  • 2000’s:
    • Return on Investment (ROI)
    • Measuring the Impact of HR activities on Performance
    • Advancement of Technology Human Capital competitive advantage
  • 2018:
    • World of HR metrics& software converge,new horizons for creating business intelligenceon the people side of the business

Analytics

  • Statistics is a majorpart.
  • Also involves a mental framework & logical understandingof the information athand& theproblemsthatneedtobe solved.
  • Viewed as a ‘communicationsdevice’
  • Byprovidingan evidencedbasedapproachto decisionmaking,itisseenas a logicalmethod that enables technological manipulation of information to provide insight onrelevant.

HRAnalytics

  • HRAnalytics is not HR Metrics -Itinvolves more sophisticated analysis of HR-relateddata.
  • It does notfocus exclusively on HR functional data.
  • Itinvolves integrating data from differentinternal functions and data externalto the firm & uses ITto collect, manipulate, and report data.
  • It is about supporting people relateddecisions.
  • HRAnalytics is aboutlinkingHR decisions to business outcomes and organizational performance.

Different Levels ofAnalysis

  • Descriptive: Past; Trends
  • Predictive: Evaluating why past trends happen; What if scenarios
  • Prescriptive: Rarely used; Designs treatments for fixing current issues

Challenges within the HRFunction

  • “The HR function is lagging behind otherfunctional areas of managementin the adoption of analytics technology and in the analysis of big data”
  • little evidence that HR analytics is developing into a ‘must have capability’.
  • Many in the HR profession do not understand analytics or big data, while analytics teams do not understandHR.
  • As a result, the costly analytics capabilities provided by the latestforms of HRIS are failing to deliver strategicHR analytics capabilities.
  • A different approach to HR analytics is needed, which starts with the question of how HR data can be used to create, capture, leverage and protect value, then seeks to develop answers to these questions through more advanced forms of longitudinal multivariatemodelling.

FinalThoughts

  • “ForHR professionals to respond to changing business conditions, they must demonstrate new competencies.HR professionals who would have been successful in previous decades would not be effective today”
  • “Future research should move away from the one-size-fits-all universalist approach and adopt a situationalist approach to enable a more contextualised understanding of what shapes HR competency requirements”
  • HR professionals need to move towards becoming business partners and use their knowledge and skills to achieve an alignment between the HR capabilities and both the internal and external business requirements

TheFuture

  • Any HR Strategy must define the HRorganisation & the roles within that HR organisation.
  • HR Leaders mustconsider what is the role of HR in the future.
  • We must movebeyond traditionalroles.
  • Analytics will play akey role