Chapter Outline
· The Human Resource Management Process:
· Identifying and Selection Competent Employees:
· Providing Employees with Needed Skills and Knowledge:
· Retaining Competent, High-Performing Employees:
· Contemporary Issues in Managing Human Resources
Most organizations admit that, their employees have played very important role in the success.
Why is HRM Important:
HRM is important for three reasons;
· First, highly skilled HR can become competitive advantage of an organization.
· Second, HR is a part of organizational strategy, treating employees well is highly important to achieve competitive advantage.
· Finally, the way organizations treat their employees, it effects organization’ performance in both positive and negative way. Work practices, which lead to both high individual and high organizational performance are High Performance Work Practices. Commitment to involving employees, improving their skills, knowledge and abilities etc.
External Factors that Affect the HRM Process:
External factors which effects directly HRM process are Economy, Labor Unions, governmental laws and regulations and demographic trends. Each of these is explained one by one below;
The economy’ Effect on HRM:
The global economic turndown has greatly affected the employment trends. Initially people had permanent jobs and then pensions, but now as economic conditions are getting worst, recessions, contract jobs, so people don’t even expect permanent jobs and benefits after retirement
Employee Labor Unions:
It is an organization, which represents workers and try to protect their interests through collective bargaining with organization’s management.
Where unions are strong, many HRM decisions and actions are influenced by these unions including, recruitment, hiring criteria, layoffs, promotions, training of employees etc.
In US around 12.3% of employees are unionized, lowest is in France i.e., 9.6%, 75% in Australia, 27.4% in Canada.
It is noticed that, this trend of labor unions is declining in private sector and climbing in public sector.
Legal Environment of HRM:
Organization’ HRM policies are governed by country’ law. For example, decisions about benefits, compensations to employees, who to hire, who to fire without the discrimination of race, color and gender.
For example: Employment laws protect the employees on job, who have a specific religious dress code, i.e., hijab for Muslim women. But if the dress is not suitable for job, then companies have the right to refuse such employee, like wearing Arabic dress and applying for firefighting job.
· Affirmative Action:
Affirmative action is to introduce policies in the organization to avoid discrimination and allowing equal play ground to all applicants. As employment law target managers, so managers have started introducing affirmative actions.
· Work Councils:
These people link employees with management, they are often nominated or elected and management consults with them while taking any important decision.
· Board Representatives:
These are board member, who represents the interests of organization’s employees.
Demographic Trends:
Demographic trends are affecting HRM practices worldwide. Companies now search for most suitable employees from anywhere in the world and hire him.
If we take example from within the Pakistan, foreign doctor surgeons are working in hospitals, Pakistani Doctors render their services in foreign countries. Foreign engineers are working in many reputable construction companies and vice versa, many Pakistani engineers are working in foreign countries. Etc.,
Every organization needs an employee who can perform tasks with perfection or nearer to perfection, (as its obvious, perfection don’t exist). And it also has been a challenge for companies to find competent and talented employees.
In this first phase of HRM process, three tasks are involved, which are; Human Resource Planning, Recruitment and Decruitment, and Selection. Each one is described below.
Human Resource Planning:
HR planning is to make sure that the organization have the right number of employees working at the right position at the moment. Through effective planning companies avoid shortage and surplus of employees.
HR Planning include two steps, 1st is Current assessment and 2nd is Meeting Future Needs.
Current Assessment:
Managers do HR planning by inventorying current employees working in the organization. In this inventory includes the employee’ attributes like, age, skill, language spoken, special capabilities, prior employment etc.
If companies maintain this much record it will be easier for companies if they want to move an employee to some other department, other city or other country, in less than a minute companies can get the suitable names for the post.
· Job Analysis: It is a part of current assessment; it is to analyze job and behavior and skills required for that particular job. This information can be taken by asking employees or observing them working.
· Job Description: after completing the job analysis, write down the job description.
· Job specification: Job specification is the minimum qualification an employee must have to perform the particular job.
Job description and job specification are important documents, which help managers in recruitment and selection.
Meeting Future HR Needs:
Future HR needs depend upon the vision, mission and strategies of company. If company wants to expand then HR will have major role in, don’t let the company go understaffed or overstaffed.
Recruitment and Decruitment:
If there are positions vacant in the organization, managers should use the information gathered while doing the job analysis in recruiting, and if employees are in surplus, then managers may want to reduce the workforce through decruitment.
· Recruitment:
Online recruitment process is cheap and fast than other sources of recruitment. But quality of applicants is not so good. Research suggests that, employee referrals produce best candidates, as employee’ reputation is on stake and he knows job requirements and quality of referral candidate.
Following are some sources and their advantages and disadvantages.
· Decruitment:
Decruitment is to fire an employee, its neither easy nor pleasant approach for managers to adopt.
Selection:
Once applications are received, now its time to select a candidate out of that pool. It is very important for organization to hire the best suitable candidate, as wrong selectin can ruin the image of organization in the market.
What is Selection:
Selection involves prediction about which candidate will be successful if hired. Selectin outcomes can produce four types of results,
· Accept – successful
· Accept – unsuccessful
· Reject – successful
· Reject – unsuccessful
Major emphasis of selection procedure is to minimize the possibilities of reject error and accept errors, to do this manager should use procedures which are both valid and reliable.
Validity and reliability:
There is a relationship between selection device and some relevant criteria of a valid selection device. Managers are supposed to support a selection device they use to differentiate applicants is validly related to job performance.
A selection device should produce consistent results assuming that characteristics being measured are stable. Five key factors which are used to test the reliability of selection device are:
· Employee retention.
· Performance evaluation.
· Number of first-year hires who make it into potential training programs.
· Number of employees who are promoted.
· What surveys of new hires indicate?
Types of selection Tools:
Common selection tools are, application forms, written and performance tests, interviews, background investigations and physical tests.
Following picture shows the strengths and weaknesses of each selection tool.
Realistic Job Previews:
Managers need to put both the negative and positive things about job and the organizations so that applicant don’t think that they are misled during the hiring process. If clear picture was not told to applicants, then it can produce three outcomes, which are;
· Mismatched applicant will not withdraw from the selectin process.
· Employee will become dissatisfied and leave the organization.
· The new hires may become disillusioned and less committed with the job.
The negative things that a manager can tell the applicant may be like, less opportunities to speak with co-workers due to nature of job, less chances of promotion, extra work hours etc.
If managers have completed the selection process, now organization should have competent employees who can perform successfully on the job. But for this, employee’ possessed skills are not enough, employees need orientations and training, so that they can give their best and perform consistently with organization’ goals.
Orientation:
When a person starts a new job, he needs some kind of introduction about his organization, this introduction is called as orientation. There are two types of orientations;
· Work unit orientation: this is the introduction of employees working unit, with his manager, how goals are accomplished, how these goals contribute to organizational goals, introduction with team mates etc.
· Organization orientation: it includes introduction of organizational goals, procedures, rules, history philosophy, HR policies and sometimes visit of facilities.
Orientation process varies from company to company, some companies have formal orientation and some adopt more informal ways. Orientation transforms an outsider-insider, and makes new employee feel comfortable in the organization it lowers the chances of poor performance and reduces the probability of quick resignations.
Employee Training:
Employee training is an important activity of HRM. Training demand varies from job to job, and managers decide, what type of training should be given to employees and when they need it.
Types of Training: Types of trainings may include, management/supervisory skills, compliance information (i.e., sexual harassment), conflict resolution, communication/interpersonal skills, team building or customer skills.
Training Method: Organizations can provide trainings to employees through traditional ways. Many organizations have resources, accessibility and cost benefits so they adopt technology-based trainings methods. Some training methods are described in following picture:
Once organization have invested in recruiting, selecting, orientation and training employees, now organizations want to retain them, especially the competent and high performing employees. Two methods are used to retain employees are; employee performance management and second is compensation and benefits program.
Employee Performance Management:
Managers set performance standards to evaluate whether their employees are performing their jobs effectively and efficiently. This is called as Performance Management System.
Performance Appraisal Methods:
Appraising an employee is never easy, especially when he is not performing well. Managers can use any of the following seven methods to evaluate employee performance fairly;
· Written Essay: Evaluator writes employee’s strengths and weaknesses, potential and past performance and provides suggestions for improvement.
Plus points: Simple to use.
Negative points: It may be a better evaluation of evaluator’ writing ability than of employee’ actual performance.
· Critical incident: It is to evaluate the critical behavior that differentiates effective and ineffective performance.
Plus point: evaluator will find rich examples, behaviorally based.
Negative Point: time consuming, lacks quantification.
· Graphic Rating Scale: Popular method in which there is a list of performance factors, and evaluator rates each employee on each factor.
Plus point: it is not time consuming and provides quantitative data.
Negative Point: this method don’t provides in-depth details on job behavior.
· BARS (Behaviorally Anchored Rating Scale): it is a combination of critical incident and graphic rating scale. But the scaled items are examples of actual job behaviors.
Plus point: focus on specific and measurable job behaviors.
Negative Point: it is difficult to develop and time consuming.
· Multi-person Comparison: employees are rated in comparison with their team-mates.
Plus point: compares employees with one another.
Negative Point: legal concerns and this method is difficult with large number of employees.
· MBA: employees are evaluated on the basis of, how well they achieve their goals.
Plus point: focus on goals and its result oriented.
Negative Point: time consuming method.
· 360-Degree Appraisal: taking feedback from supervisors, coworkers and employees.
Plus point: It’s a more thorough method
Negative Point: Time consuming method.
Compensation and Benefits:
Employees expect to receive appropriate compensation from their employer. It is an important part of HRM process to develop an effective and appropriate compensation system. It helps in attracting and retaining talented employees.
Benefits may include, base wages and salaries, incentive payments, discount vouchers, trips, etc.
· Skill based pay: this is a compensation system in which employee’ skills are rewarded regardless of his job title. This reward system is more successful in manufacturing organizations than in service organizations.
· Variable Pay: it is a performance-based reward system.
There are four contemporary concerns, HR is facing in today’ world, which are; Managing downsizing, Sexual harassment, work-life balance and controlling HR costs. These concerns are described below;
Managing Downsizing:
Downsizing or Layoffs is the planned elimination of employees from the jobs. It can be in result of economic downturns, decreasing market share, when organizations have too many employees or poorly managed operations.
We have examples of Volkswagen, McDonald’s, Boeing who laid off their employees during the most recent recessions.
how managers deal with this downsizing, because downsizing leave great frustration, stress, anxiety upon the employee being laid off and the survivors.
Following are some ways, in which managers can reduce the trauma for both the employee being eliminated and the survivors.
Managing Sexual Harassment:
Sexual harassment is a major issue in both private and public organizations. Sexual harassment is unwanted action or activity of sexual nature that explicitly or implicitly effects an individual’ employment, performance or work environment. Harassing is just anything which make individuals feel uncomfortable.
It can happen between members of opposite sex or even of the same sex.
Managers of the organization should be aware of, what constitutes such harassing environment. If employees don’t report, then manages should ask them.
There are two things which are important, which court wants to know, first whether managers know about this harassment and second if they know, what they have done and what steps they have taken to stop this in future.
Workplace Romance:
Workplace romance is to like someone, or thinking about a relationship, thinking about and having a date on work place. A survey found that 43 percent of single males and 28 percent of single females said that, they are open to date a coworker. It may be due to hectic jobs and long working hours.
But workplace romance can become problem, if someone stop dating or avoid romance then conflict may rise and can lead to sexual harassment accusations. It also can damage the repute of organization.
What managers can do about this workplace romance, as males and females work together so it is inevitable and it happens. Management can take serious steps to control this.
I’ve witnessed it, two senior employees, who were in relationship, were terminated from jobs. This became a clear message for other employees in the organization.
Managing Work-Life Balance:
Smart managers know that employees don’t leave their families and personal lives behind, when they are at work. They know employees have their sick children, wife and elderly parents who need special attention. Heavy workloads and increased travel demands have made it difficult for employees to balance the work with their personal lives.
Family Friendly Benefits:
It is a kind of program in which, there is on-site child care, summer day camps, flextime, time off for school functions, job sharing, part-time employment and telecommunication.
A survey found that, 87 percent of employees believe that, if top-management creates an environment that help managing work life-balance, will have competitive advantage over its rivals.
Another research shows, there is a positive relationship between work-life initiatives and an organization’ stock price.
Some employees Segment, i.e., scheduling their work hours which are less likely to conflict with their personal lives. E.g., job-sharing, part-time job hours etc.
Some employees prefer Integration, e.g., an on-sit child care etc.
Controlling HR Costs:
According a survey, just obesity cause $47 billion to US companies annually. HR costs i.e., employee health benefits and employee pensions are raising day by day. These costs need to be controlled.
Employee Health Care Costs:
Many organizations are providing opportunities, i.e., medical check-ups, medical insurances to their employees to lead a healthy lifestyle to avoid health issues.
Organizations face less productivity problems due the presence of obese employees, it may be due to mobility problem or their laziness. Companies are providing healthy food in cafeterias and vending machines, so that, their employees take healthy food.
In case of smokers, if they refuse to quit smoking, companies often consider firing option.
Employee Pension Plan Costs:
Employee pension plan is another cost, which companies want to control. Many big companies like IBM have closed its pension plan to new hires back in 2004.
At one side companies want to attract talented employees by offering them benefits and on the other side companies want to reduce these costs. Companies need to bring balance with offering benefits and keeping costs in mind.