Human Resource Management
In a global economy, an organization must recruit and retain the most knowledgeable, talented, skilled, and creative people. In this essay I will discuss Human Resource Management Strategy related to recruitment of best possible employees. I will include academic theories, models and quotes related to human resource management strategy. In the past term used for management of employees was personnel management. The terms 'human resource management' (HRM) and 'human resources' (HR) have largely replaced the term 'Personnel Management' as a description of the processes involved in managing people in organizations. Human resource management is a term that is implying that personnel managers should not merely handle recruitment, pay, and discharging, but should maximize the use of an organization's human resources.
Human Resource Management:
Humans are an organization's greatest assets; without them, everyday business functions such as managing cash flow, making business transactions, communicating through all forms of media, and dealing with customers could not be completed. Humans and the potential they possess drive an organization. Today's organizations are continuously changing. Organizational change impacts not only the business but also its employees. In order to maximize organizational effectiveness, human potential—individuals' capabilities, time, and talents—must be managed. Human resource management works to ensure that employees are able to meet the organization's goals.
"Human resource management is responsible for how people are treated in organizations. It is responsible for bringing people into the organization, helping them perform their work, compensating them for their labors, and solving problems that arise" (Cherrington, 1995, p. 5). There are seven management functions of a human resources (HR) department that will be specifically addressed: staffing, performance appraisals, compensation and benefits, training and development, employee and labor relations, safety and health, and human resource research.
Generally, in small organizations—those with fewer than a hundred employees—there may not be an HR department, and so a line manager will be responsible for the functions of HRM. In large organizations—those with a hundred employees or more—a human resource manager will coordinate the HRM duties and report directly to the chief executive officer (CEO). HRM staff in larger organizations may include human resource generalists and human resource specialists. As the name implies, an HR generalist is routinely involved with all seven HRM functions, while the HR specialist focuses attention on only one of the seven responsibilities.
Human resource management (HRM) is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.
The goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively. The basic premise of the academic theory of HRM is that humans are not machines; therefore we need to have an interdisciplinary examination of people in the workplace. Fields such as psychology, industrial and organizational psychology, industrial relations, sociology, and critical theories: postmodernism, post-structuralism play a major role.
One widely used scheme to describe the role of HRM, developped by Dave Ulrich, defines 4 fields for the HRM function:
- Strategic business partner
- Change agent
- Employee champion
Human resources management comprises several processes. Together they are supposed to achieve the above mentioned goal. These processes can be performed in an HR department, but some tasks can also be outsourced or performed by line-managers or other departments. The most commonly stated processes are:
- Workforce planning
- Recruitment (sometimes separated into attraction and selection)
- Skills management
- Personnel development
- Training administration
- Personnel administration
- Compensation management
- Time management
- Travel management (sometimes assigned to accounting rather than HRM)
- Payroll (sometimes assigned to accounting rather than HRM)
- Employee benefits administration
- Personnel cost planning
- HR Performance Management (comprising objective setting, appraisal and elements of skills management, development planning and compensation management)
- Industrial relations
Act of seeking prospective new employees or members for an organization. Recruitment is a vital function for an organization to maintain its personnel. Both the job description and the job specification are useful tools for the staffing process. Someone (e.g., a department manager) or some event (e.g., an employee's leaving) within the organization usually determines a need to hire a new employee. In large organizations, an employee requisition must be submitted to the HR department that specifies the job title, the department, and the date the employee is needed. From there, the job description can be referenced for specific job related qualifications to provide more detail when advertising the position—either internally, externally, or both (Mondy and Noe, 1996).
Not only must the HR department attract qualified applicants through job postings or other forms of advertising, but it also assists in screening candidates' resumes and bringing those with the proper qualifications in for an interview. The final say in selecting the candidate will probably be the line manager's, assuming all Equal Employment Opportunity Commission (EEOC) requirements are met. Other ongoing staffing responsibilities involve planning for new or changing positions and reviewing current job analyses and job descriptions to make sure they accurately reflect the current position.
Compensation and Benefits
Compensation (payment in the form of hourly wages or annual salaries) and benefits (insurance, pensions, vacation, modified workweek, sick days, stock options, etc.) can be a catch-22 because an employee's performance can be influenced by compensation and benefits, and vice versa. In the ideal situation, employees feel they are paid what they are worth, are rewarded with sufficient benefits, and receive some intrinsic satisfaction (good work environment, interesting work, etc.). Compensation should be legal and ethical, adequate, motivating, fair and equitable, cost-effective, and able to provide employment security (Cherrington, 1995).
Training and Development
Performance appraisals not only assist in determining compensation and benefits, but they are also instrumental in identifying ways to help individuals improve their current positions and prepare for future opportunities. As the structure of organizations continues to change—through downsizing or expansion—the need for training and development programs continues to grow. Improving or obtaining new skills is part of another area of HRM, known as training and development.
"Training focuses on learning the skills, knowledge, and attitudes required to initially perform a job or task or to improve upon the performance of a current job or task, while development activities are not job related, but concentrate on broadening the employee's horizons" (Nadler and Wiggs, 1986, p. 5). Education, which focuses on learning new skills, knowledge, and attitudes to be used in future work, also deserves mention (Nadler and Wiggs, 1986).
Because the focus is on the current job, only training and development will be discussed. Training can be used in a variety of ways, including (1) orienting and informing employees, (2) developing desired skills, (3) preventing accidents through safety training, (4) supplying professional and technical education, and (5) providing supervisory training and executive education (Cherrington, 1995).
Each of the training methods mentioned has benefits to the individual as well as to the organization. Some of the benefits are reducing the learning time for new hires, teaching employees how to use new or updated technology, decreasing the number and cost of accidents because employees know how to operate a machine properly, providing better customer service, improving quality and quantity of productivity, and obtaining management involvement in the training process (Cherrington, 1995). When managers go through the training, they are showing others that they are taking the goals of training seriously and are committed to the importance of human resource development.
The type of training depends on the material to be learned, the length of time learners have, and the financial resources available. One type is instructor-led training, which generally allows participants to see a demonstration and to work with the product first-hand. On-the-job training and apprenticeships let participants acquire new skills as they continue to perform various aspects of the job. Computer-based training (CBT) provides learners at various geographic locations access to material to be learned at convenient times and locations. Simulation exercises give participants a chance to learn outcomes of choices in a nonthreatening environment before applying the concept to real situations.
Training focuses on the current job, while development concentrates on providing activities to help employees expand their current knowledge and to allow for growth. Types of development opportunities include mentoring, career counseling, management and supervisory development, and job training (Cherrington, 1995).
Developing a HRM strategy
Faced with rapid change organizations need to develop a more focused and coherent approach to managing people. In just the same way a business requires a marketing or information technology strategy it also requires a human resource or people strategy.
In developing such a strategy two critical questions must be addressed.
- What kinds of people do you need to manage and run your business to meet your strategic business objectives?
- What people programs and initiatives must be designed and implemented to attract, develop and retain staff to compete effectively?
In order to answer these questions four key dimensions of an organization must be addressed. These are:
- Culture: the beliefs, values, norms and management style of the organization
- Organization: the structure, job roles and reporting lines of the organization
- People: the skill levels, staff potential and management capability
- Human resources systems: the people focused mechanisms which deliver the strategy - employee selection, communications, training, rewards, career development, etc.
Frequently in managing the people element of their business senior managers will only focus on one or two dimensions and neglect to deal with the others. Typically, companies reorganize their structures to free managers from bureaucracy and drive for more entrepreneurial flair but then fail to adjust their training or reward systems.
When the desired entrepreneurial behavior does not emerge managers frequently look confused at the apparent failure of the changes to deliver results. The fact is that seldom can you focus on only one area. What is required is a strategic perspective aimed at identifying the relationship between all four dimensions.
If you require an organization which really values quality and service you not only have to retrain staff, you must also review the organization, reward, appraisal and communications systems.
The pay and reward system is a classic problem in this area. Frequently organizations have payment systems which are designed around the volume of output produced. If you then seek to develop a company which emphasizes the product's quality you must change the pay systems. Otherwise you have a contradiction between what the chief executive is saying about quality and what your payment system is encouraging staff to do.
Hunt for Talent:
There’s been plenty of sound and fury surrounding the so-called "war for talent," a term popularized by a 1998 McKinsey and Company report. What began mainly as a concern about the perceived scarcity of managerial talent seems to have expanded into general anxiety about recruiting and retaining skilled workers in general. The impression is that top execs are daunted by a lack of managerial bench strength, that turnover data are read with the solemnity of casualty lists, that employees with technical skills are as jealously guarded as state secrets, and that HR professionals are as eager as field generals for loyal and battle-ready troops.
How much of this is business-press hype and how much reality? On one hand, there’s loads of evidence showing that recruitment and retention have indeed become increasingly important to employers, especially in the U.S. Here’s just a sample of some recent studies:
- Nearly three quarters (72%) of the 2,612 respondents to WorldatWork’s 2000-01 Total Salary Increase Budget Survey said they were concerned about recruiting and retaining top talent.
- A benchmarking study of 76 firms in North America and Europe by Arthur Andersen reports that finding and keeping talented people is HR’s biggest challenge.
- A survey of HR executives from 388 U.S. corporations conducted by RewardsPlus of America found that 52% of respondents listed recruitment and retention as their top concern. The next-highest workforce concern, the cost of benefits, was picked by just 6% of the respondents.
The availability and management of talent will also be influenced by a variety of external factors. Jay Jamrog, Executive Director of Research at HRI, elucidated how these factors may play out. Perhaps his most fundamental point was that companies will be operating in a time of great change and uncertainty. The five institutions on which civilizations are founded – family, religion, government, industry and education – are being transformed as we move from an industrial to a postindustrial global economy. Such transitional periods in history tend to be rife with crises as well as opportunities. Below is an outline of many of the major changes that will affect the future.
The Economy Is Changing
The traditional industrial economy is quickly giving way to what Business Week has labeled the "creative economy." The idea is that advanced nations have gotten so efficient at producing food and physical goods that most work now revolves around either providing services or producing "abstract" goods such as software, news, books, entertainment, research, advertising, etc. In this new economy, capital spending on information technology has more than tripled over the last four decades, reaching 35% of such spending in 1999. At the same time, the number of U.S. patents has grown by 70% in just ten years. Managing information, often in the pursuit of creating new products and services, has become fundamental to the economy. Increasingly, the talent that companies need is the talent to analyze, communicate, entertain and invent.
New Technologies Are Driving Up Productivity
New technologies, along with new work processes to take advantage of them, are paying off in terms of greater productivity. Over the last five years, the U.S. productivity growth rate has doubled, reaching 2.8% per year. This is the best productivity performance since the 1960s. Federal Reserve Chairman Alan Greenspan has said that "most of the gains in the level and growth rate of productivity since 1995 appear to have been structural, largely driven by A survey of CEO’s conducted by “Chief Executive Magazine” in 2004 revealed the highest level of concern for the recruitment and retention of talent since the year 2000. And with good reason, US Labor Department statistics indicate: Employee attrition continues at a rate of 10% and is rising; Discontent among employees with as many as 60-80% indicating they will seek employment elsewhere. The younger talent pool is not large enough or skilled enough to assume current positions being vacated.
Not only is it difficult to recruit skilled workers, but also to retain them. In the past, companies expected job loyalty, but today, we hear stories of employees accepting other job offers only weeks after being hired. We have to wonder if people have changed or is it that employers are not able to satisfy employees. Although many segments of the economy have a surplus of qualified people, the insurance industry has a shortage of people. To win the battle for workforce share, agencies must rethink their strategies to effectively recruit, motivate, and retain committed employees.
Today's high-performing employees are looking for more than compensation packages and benefits. So the first step in attracting talent is to examine the agency's strengths and determine if employees have benefits to sell. Employees today might move to another job for better compensation, but they are also looking for growing, successful companies which provide an employee friendly environment where they can participate in the decision-making and be part of the team.
It is important for human resource professionals to be up to date on the latest trends in staffing, performance appraisals, compensation and benefits, training and development, employee and labor relations, and safety and health issues in the global market. Business is fast and fiercely competitive, and labor force growth has slowed down in developed nations. The war for talent has heated up, helping women and ethnic minorities move up in organizations. The old-boy’s network just won’t cut it in a world where proven performance is the only criterion firms care about. In this high-speed, diverse world, the best companies put a great deal of effort into the selection process, making sure people have top-notch talents suitable for the needs of the organization. In a global economy, an organization must recruit and retain the most knowledgeable, talented, skilled, and creative people. talented people want room to grow and an opportunity to shine in an organization with a meaningful mission. The companies that provide this may well be the most successful organizations of the next 10 to 20 years.
- A Handbook of Human Resource Management Practice, 10th edition, Armstrong. M. (Kogan Page) London 2006
- A Handbook of Human Resource Management Practice, 10th edition, Armstrong. M. (Kogan Page) London 2006
- Encyclopædia Britannica: "[Personnel administration] is also frequently called personnel management, industrial relations, employee relations, and manpower management."
- Columbia Encyclopedia: "personnel management - see industrial management."
- HRM is also seen by many to have a key role in risk reduction within organizations.
- Smit, Martin E.J.H. (2006), "HR, Show me the money; Presenting an exploratory model that can measure if HR adds value",
- Marchington Mick and Adrian Wilkinson(2005) Human Resource Management at work London CIPD
- Ulrich, Dave (1996) "Human Resource Champions". Harvard Business School Press
- Cherrington, David J. (1995). The Management of Human Resources. Englewood Cliffs, NJ: Prentice-Hall.
- Mondy, R. Wayne, and Noe, Robert M. (1996). Human Resource Management. Upper Saddle River, NJ: Prentice-Hall.
- Nadler, Leonard, and Wiggs, Garland D. (1986). Managing Human Resource Development. San Francisco: Jossey-Bass.
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