2.1 Functions & evolution of human resource management

Introduction

• Human resource management (HRM): strategic approach to the effective management of an organization’s workers so that they help the business achieve its objectives and gain a competitive advantage.

Human resource planning

• Human resource or workforce planning: analyzing and forecasting the numbers of workers and the skills of those workers that will be required by the organization to achieve its objectives.

• Workforce audit: check on the skills and qualifications of all existing employees.

• Human resource planning involves two main stages:

  1. Forecasting the number of employees required
  2. Forecasting the skills required

Labor turnover

• Labor turnover measures the rate at which employees are leaving an organization. It is measured by:

  

Changes in labor mobility

• Occupational mobility of labour: extent to which workers are willing and able to move to different jobs requiring different skills.

• Geographical mobility of labor: extent to which workers are willing and able to move geographical region to take up new jobs.

Recruitment

• Recruitment: process of identifying the need for a new employee, defining the job to be filled and the type of person needed to fill it, attracting suitable candidates for the job and selecting the best one.

  • Steps:
  1. Establish the exact nature of the job vacancy and draw up a job description (= detailed list of the key points about the job to be filled, stating all the key tasks and responsibilities of it)
  2. Draw up a person specification (= detailed list of the qualities, skills and qualifications that a successful applicant will need to have)
  3. Prepare a job advertisement reflecting the requirements of the job and the personal qualities looked for
  4. Draw up a shortlist of applicants
  5. Conduct interviews

Training

• Training: work-related education to increase workforce skills and efficiency.

• Types of training:

  • On-the-job training: instruction at the place of work on how a job should be carried out.
  • Induction training: introductory training program to familiarize new recruits with the systems used in the business and the layout of the business site; this form of training is usually on-the-job.
  • Off-the-job training: all training undertaken away from the business, e.g. work-related college courses.
  • Cognitive training: exercises designed to improve a person’s ability to understand and learn information.
  • Behavioral skills training is designed to improve an individual's ability to communicate and interact with others both inside and external to the organization.

Appraisal of employees

• Employee appraisal: process of assessing the effectiveness of an employee judged against preset objectives.

• Types of appraisal

  • Formative appraisal is based on a range of formal and informal assessment methods employed by supervisors not only to monitor an employee’s progress, but also to support and provide guidance for improvement.
  • It typically involves qualitative feedback (rather than scores or grades for achievement) that focuses on the details of performance and ways of improving it.
  • Goal: gathering feedback that can be used by the instructor/supervisors and the employees to guide improvements in the ongoing work being undertaken by the workers.
  • Summative appraisal
  • Goal: measuring the level of an employee’s success or proficiency in meeting predetermined benchmarks.
  • 360-degree feedback
  • Not using a supervisor as the sole means of providing appraisal feedback, but using many people who come into contact with the employee as sources of appraisal feedback information.
  • Self-appraisal
  • Employee self-appraisal, within a performance management or annual performance review system, involves asking the employee to self-evaluate his/her job performance.

  Dismissal of employees

  • Contract of employment: legal document that sets out the terms and conditions governing a worker’s job.

  • Dismissal: being removed or “sacked” from a job due to incompetence or breach of discipline.

  • Unfair dismissal: ending a worker’s employment contract for a reason that the law regards as being unfair.

  • Redundancy: when a job is no longer required so the employee doing this job becomes redundant through no fault of his/her own.

Employment patterns and practices

• Teleworking: staff working from home but keeping contact with the office by means of modern IT communications.

• Portfolio working: working pattern of following several simultaneous employments at any one time.

• Outsourcing: using another business (a “third party”) to undertake a part of the production process rather than doing it within the business using the firm's own employees.

• Flexi-time contract: employment contract that allows staff to be called in at times most convenient to employers and employees, e.g. at busy times of day.

• Temporary employment contract: employment contract that lasts for a fixed time period, e.g. six months.

• Part-time employment contract: employment contract that is for less than the normal full working week of, say, 40 hours, e.g. eight hours per week.

Outsourcing, offshoring and re-shoring as HR strategies

• Offshoring: relocation of a business process done in one country to the same or another company in another country.

• Re-shoring (in-shoring): reversal of offshoring; the transfer of a business process or operation back to its country of origin.

How innovation, ethical considerations and cultural differences influence human resource practices and strategies

• Innovation in HRM

  • Higher productivity
  • Higher labour retention
  • Attraction of high-quality employees
  • Greater contribution from employees to problem solving at work and the generation of new ideas

• Innovation through HRM

  • Matrix organizational structure that allows for project teams to work through major developments
  • Delegation to junior managers to give them the authority to show initiative and take important decisions
  • Extensive and continuous training programs
  • Regular appraisals to identify training needs and career plans
  • Entrepreneurial culture that encourages risk-taking and does not penalize failure but rewards success well

• Ethical considerations

  • Lack of cultural awareness
  • Bribery
  • Pay

• Cultural differences

  • Culture of the organization
  • Hard HRM: approach to managing staff that focuses on cutting costs, e.g. using temporary and part-time employment contracts, offering maximum flexibility but with minimum training costs.
  • Soft HRM: approach to managing staff that focuses on developing staff so that they reach self-fulfillment and are motivated to work hard and stay with the business.
  • National cultures