Introduction
Human resource management: strategic approach to managing the workforce, so they help achieve the business objectives, thereby gaining a competitive advantage.
Workforce audit: check on the skills/qualifications of existing employees
HR Planning: analyzing and forecasting the number of employees and skills required in the future time period for the business to achieve its objectives.
2 steps in HR Planning:
Forecasting the number of employees required, depends on:
- Changes in law regarding workers’ rights
- Productivity levels of staff
- Demand forecasts for the firm’s product
- Labor turnover/absenteeism rate
Forecasting the skills required, depends on:
- Pace of technological change
- flexible/multi-skilled staff
Labour turnover: rate at which employees leave a company in a year
(number of employees leaving in 1 year / average number of people employed) × 100
High LT Reasons:
- Low morale
- Employee discontent
- Recruitment policy that employs the wrong people
- Area with high employment opportunities
- Certain industry Eg: fast-food
Benefits | Drawbacks (High LT) |
Low-skilled/less productive staff may leave who may be replaced with better employees | Costs of recruitment/training of replacement staff |
New ideas/practices brought in by new employees | Poor output levels & customer service due to job vacancies until new ones are recruited |
Not a drawback for a company going through rationalization | Difficult to work in groups when employees are constantly changing |
| | Difficult to maintain contact with customers |
Rationalization: reorganization of company to increase its operating efficiency. Eg: higher sales with less costs by laying off employees.
Factors that influence hR planning
Demographic change
Change | Opportunities | Constraints |
Natural population growth | Easier to recruit | High birth rate may take time to have an impact on the actual working population |
Ageing population | Older people are believed to be more experienced, loyal, reliable and have “people” skills than youths | Unadaptive to the dynamic business environment. Eg: new workplace technologies |
Net migration | Able to get employees who are highly qualified/ for low wages from other countries | Brain drain resulting in reduced competitiveness
Immigrants may need more training e.g. cultural/language issues |
Changes in labor mobility
Occupational mobility: willingness to switch to a new job that requires new skills
Geographical mobility: willingness to change one’s geographical region for a new job
Developed countries have less LM because of home ownership and “high level skills” that makes one over specialized, thereby rendering one unable to work in different industries.
Government incentives for mobility:
- Relocation grants
- Retraining programmes for the unemployed
- Advertisements for job vacancies on a national level
Technological change
- Geographical flexibility because of ICT
- Increased mechanization, reduced workforce needs
- Increased demand for educational qualifications (skilled to be able to handle new technology)
HRM Duties
Recruitment
Recruitment: identifying the need for an employee, defining the job position and the type of person needed to be filled, attracting suitable candidates & choosing the best one.
Steps:
- Job description: a detailed description of the vacant position, key tasks and responsibilities associated with it.
Contents:
- Job title
- Details of the tasks
- Responsibilities involved
- Place in the hierarchy
- Working conditions
- How the job will be assessed and performance measured
- Person specification: list of the qualities, skills and qualifications required of the applicant
- Prepare a job ad (newspaper, recruitment agencies, government job centers, firm’s premises/website
- Shortlist of applicants: based on CV, references from past employers
- Conduct interviews: sometimes based on 7 point plan
Internal recruitment | External recruitment |
No need for induction training | New ideas brought in |
Gives chance for the internal staff to progress | Resentment from the co-workers resulting from promotion avoided |
Cheaper than using advertising/recruitment agencies | Higher standard of applicants compared to internal staff |
Applicants are well known to the selection team | Would be a wide choice of potential applicants |
Culture of the organisation is well understood | |
Don’t HAVE to get used to new style of management | |
Quicker than external recruitment | |
Training
Training: work related education to increase workforce skills and efficiency
Costs: well-trained employees may be subject to “poaching” whereas undertraining employees may result in less productivity.
Types of training:
- On-the-job training: instruction at the workplace on how a job should be carried out. Eg: Induction training: introductory training programme to familiarize new recruits with organizational structure, layout of the business site, co-workers etc.
- off-the-job training: training undertaken away from the business e.g. work related college courses
- Cognitive training: exercises designed to improve one’s ability to understand and learn information. E.g. Listening, reading, visual processing of information.
- Behavioral training: designed to improve one’s ability to communicate and interact both inside and outside the organization. E.g. negotiation and influencing, conflict management, presentation, customer service and networking skills
Employee Appraisal
Employee Appraisal: assessing the effectiveness of an employee judged against present objectives.
Types:
- Formative: qualitative feedback rather than a grading scale. Basically, providing suggestions/improvements in the ongoing work undertaken by the employee
- Summative: Influences employee’s pay grade, annual bonus, internal promotion. Judges an employee against predetermined benchmarks.
- 360 degree feedback, multi-source assessment/feedback: appraisal feedback info gatherer from peers, supervisors, subordinates, clients used to assess training needs and gather competence related info.
- Self-appraisal: involves an employee being asked to evaluate oneself using a form which will be used as the basis for discussion between a manager and an employee at the annual performance review meeting.
Dismissal/Redundancy
Contract of employment: a 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/ breach of discipline
Unfair dismissal: dismissing someone for a reason that the law regards as “unfair”
Redundancy: when a job is no longer required so the employee doing this job becomes redundant through no fault of his or her own
Employment patterns/Practices
Traditional employment | Modern employment |
Full time/permanent contracts | Part-time, temporary contract |
Working at the employer’s place of work | Teleworking: working from home whilst keeping contact with the office |
Regular working hours each week | Flexible working hours |
| | Portfolio working: working several jobs simultaneously |
Outsourcing: using another business (a ‘third party’) to undertake a part of the production process.
Consequences of changes in employment patterns
Flexi-time contract: allows staff to be called in at times most convenient to employers and employees, e.g. at busy times of day
Temporary contract: lasts for a fixed time period, e.g. six months
Part-time contract: less than the normal full working week of, say, 40 hours, e.g. eight hours per week
Core workers: full time, permanent
Peripheral workers: temporary, part-time, self-employed
Advantages | Disadvantages (employers) |
Reduced overhead costs since employees come in only at a specific time/telework, doesn’t stay at the office the whole day | Difficulty in communication and working in groups |
Efficiency can be measured before employees are offered a full-time contract. | Less motivation due to feeling of involvement in the business, low productivity levels of employees (telework) |
More employees available to be called upon in case of absenteeism | More employees to “manage” than full-time employees. |
Advantages | Disadvantages (employees) |
Ideal contract for certain workers (students, single parents) | Earn less than full time workers |
Able to do “portfolio working” providing variety in working life | Less job security; less motivation |
Allows one to organize their OWN working day but at home(telework) | Less social contact |
HR Practices/Strategies
Offshoring: relocation of a business process to the same/another company in another country
Reshoring(in-shoring): reversing offshoring. Transfer of a business operation back to the country of origin.
HR Non-Core Activities (outsourceable): e.g. payroll administration, employee recruitment, HR information systems (e.g. employee records), exit interviews, child care assistance
Strategic HR activities(Core): have a direct impact on organizational performance and provides it with a competitive edge e.g. HR planning, dismissals/redundancies, specialized training (e.g. organization has unique technology and skills requirements).
Benefits | Limitations (outsourcing) |
Cost savings as HR is an overhead (especially if outsourced to countries with low wages) | Not always saves costs |
Focus more on core activities production, customer service etc. | Should recruitment and training be trusted to an outside business? |
Access to HR specialists as businesses find it difficult to justify employing these specialists directly. | Outside analysts can’t always give the best ideas as they can’t really gain an insight into the culture and attitudes that exist within a business isn’t understood. |
Can use HR resources for workforce planning rather than administration | Lack of integration of the business decisions made by HR with other departments of the business |
| | distance/language creates communication problems (offshoring) |
| | Employees may not be well-informed about the laws, practices regarding HR in the country that’s outsourcing |
Hard HRM: focuses on cutting costs, e.g. using temporary and part-time employment contracts, offering maximum flexibility but with minimum training costs
Soft HRM: focuses on developing staff so that they reach self-fulfillment and are motivated to work hard and stay with the business
Limitations Soft HRM | Hard HRM |
Lack of benefit from Flexi-time contracts as this cuts costs, gains a competitive advantage | Increase recruitment/induction trying costs in the long term |
Job security for employees discourage them from being productive | Less job security demotivates employees |
Risk of having well-trained employees poached | Bad publicity regarding treatment of workers, division between core and peripheral staff – might lead to negative consumer and pressure group actions against the company. |
Flexi-time contract means that fixed costs of employment is replaced by variable costs which are easier to control | not suitable for professional, qualified employees, e.g. accountants or research scientists |
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