HRM

HUMAN RESOURCE MANAGEMENT dynamic LECTURE NOTES

1. Defining human resource management

Human resources is used to describe the people who work for a company or organization.

When we talk about economic value of worker, we can use human capital instead of human resource. If you do not concern about the details, the phrase human resource and human capital are used interchangeably.

From Google definition, capital is wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.

Capital goods are man-made, durable items businesses use to produce goods and services. They include tools, buildings, vehicles, machinery, and equipment (thebalance.com). Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc (wikipedia.org).

Workers are resources of an organization, and they can produce goods and services, so we can call them human capital. The phrase human resource and human capital may have different meanings, but you do not need to worry about it now.

Human resource management involves overseeing all things related to managing an organization’s human capital. HRM is concerned not only with obtaining and keeping the number and quality of staff required but also with selecting and promoting people who ‘fit’ the culture and the strategic requirements of the organization.

When we talk about HRM, we talk about all planned and activities of an organization to build and maintain the relation between employees and the organization in order to meet both business objectives and employees expectation.

Human resource management is therefore focused on a number of major areas, including: Job analyses, Human resource planning, Recruiting and staffing, Training and development , Performance appraisal , Reward , etc.

HR functions are concerned with the management and development of people in organizations. They are involved in the development and implementation of HR strategies and policies and some or all of the following people management activities: job analyses, planning personnel needs, recruiting the right people for the job, orienting and training, managing wages and salaries, providing benefits and incentives, evaluating performance, and communicating with all employees at all levels.

Clip: What is HRM

2. Job analysis

The process of getting detailed information about jobs. A process to identify and determine in detail the particular job duties (job description) and requirements (job specification).

Job description: A list of a job’s duties.

Job specifications: A list of a job’s “human requirements,” (education, skills, personality, and so on).

The document should always include the following components:
– Job functions (the tasks the employee performs);
– Knowledge, skills, and abilities (what an employee is expected to know and be able to – as well as personal attributes);
– Education and experience required;
– Physical requirements of the job (ability to lift, see, or hear, for example).

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3. Recruitment and selection

Recruitment: the process that provides the organization with a pool of qualified job candidates from which to choose.

Selection: the process of picking or choosing the right candidate, who is most suitable for a vacant job position in an organization.

3.1. Recruitment

“The process of finding and attracting best-qualified candidate (from within or outside of an organization) for a job opening.

The recruitment process includes analyzing the requirements of a job, attracting employees to that job”. A recruitment aim to attract potential candidates from a pool of candidates. The potential candidates should be qualified to take the job. In this step, you simply post a job advert.

3.2. Selection

Selection process consists of five distinct aspects: Criteria development, Application and résumé review, Interviewing, Test administration, Making the offer.

Criteria development:

Determining which sources of information will be used and how those sources will be scored during the interview. Involves discussing which skills, abilities, and personal characteristics are required to be successful at any given job. In human resources, this is called KSAOs2, or knowledge, skills, abilities, and other personal characteristics that make a person successful on the job.

For example:
1. Two years of experience
2. A bachelor’s degree in business
3. Problem-solving ability
4. Conflict-management ability
5. Score of at least a 7.0 on IELTS test

Application and résumé review: Once the criteria have been developed (step one), applications can be reviewed. People have different methods of going through this process, but there are also computer programs that can search for keywords in résumés and narrow down the number of résumés that must be looked at and reviewed.

Interviewing & Test administration:

Interviewing: After the HR manager and/or manager have determined which applications meet the minimum criteria, he or she must select those people to be interviewed. Most people do not have time to review twenty or thirty candidates, so the field is sometimes narrowed even further with a phone interview.

Test administration: A variety of tests may be given upon successful completion of an interview. These employment tests can gauge a person’s KSAOs in relation to another candidate. The major categories of tests include the following: 1. Cognitive ability tests (measure reasoning skills, math skills, and verbal skills) 2. Personality tests 3. Physical ability tests 4. Job knowledge tests 5. Work sample

Making the offer:

The last step in the selection process is to offer a position to the chosen candidate. Development of an offer via email or letter is sometimes a more formal part of this process. Compensation and benefits will be defined in an offer.

4. Compensation and Benefits

Most of us, no matter how much we like our jobs, would not do them without a compensation package. A compensation package can include pay, health-care benefits, and other benefits.

4.1. Goals of a Compensation Plan

First, the compensation package should be positive enough to attract the best people for the job. An organization that does not pay as well as others within the same industry will likely not be able to attract the best candidates, resulting in a poorer overall company performance.

Second, once the best employees and talent come to work for your organization, you want the compensation to be competitive enough to motivate people to stay with your organization.

Third, compensation can be used to improve morale, motivation, and satisfaction among employees. If employees are not satisfied, this can result not only in higher turnover but also in poor quality of work for those employees who do stay. A proper compensation plan can also increase loyalty in the organization.

Finally, pay systems can also be used to reward individual or team performance and encourage employees to work at their own peak performance.

4.2. Types of Pay

We can divide our total pay system into three categories: pay, incentives, and other types of compensation. Pay is the hourly, weekly, or monthly salary an employee earns. An incentive, often called a pay-for-performance incentive, is given for meeting certain performance standards, such as meeting sales targets.

4.3. Pay Theories: equity theory

Concerned with the relational satisfaction employees get from pay and inputs they provide to the organization. People will evaluate their own compensation by comparing their compensation to others’ compensation and their inputs to others’ inputs.

In other words, people will look at their own compensation packages and at their own inputs (the work performed) and compare that with others. If they perceive this to be unfair, in that another person is paid more but they believe that person is doing less work, motivational issues can occur. In HR, we need to look at two factors related to pay equity: internal pay equity and external pay equity. Internal pay equity focuses on employees within the same organization. Within the same organization, employees may look at higher level jobs, lower level jobs, and years with the organization to make their decision on pay equity.

Play the game below, and you will learn more about internal equity theory.

External pay equity refers to what other people in similar organizations are being paid for a similar job.

Play the game below, and you will learn more about external equity theory.

4.4. Job Evaluation Systems

The value of the job is a major factor when determining pay. Job evaluation is defined as the process of determining the relative worth of jobs to determine pay structure.

One of the simplest methods, used by smaller companies or within individual departments, is a job ranking system. In this type of evaluation, job titles are listed and ranked in order of importance to the organization.

In a job classification system, every job is classified and grouped based on the knowledge and skills required for the job, years of experience, and amount of authority for that job.

Play the game below, and you will learn more about Job Evaluation.

4.5. Pay Systems

Once you have performed a job evaluation, you can move to the last step, which we call pay grading. This is the process of setting the pay scale for specific jobs or types of jobs.

The popular method to pay grade is to develop a variety of pay grade levels.

5. Training 

Any effective company has training in place to make sure employees can perform his or her job.

During the recruitment and selection process, the right person should be hired to begin with. But even the right person may need training in how your company does things.

Lack of training can result in lost productivity, lost customers, and poor relationships between employees and managers. It can also result in dissatisfaction, which means retention problems and high turnover. All these end up being direct costs to the organization.

5.1. Steps to take in training an employee

There are four steps that generally occur: First, the new employee goes through an orientation, And then he or she will receive in-house training on job-specific areas, Next, the employee should be assigned a mentor, And then, as comfort with the job duties grows, he or she may engage in external training.

5.1.1. Orientation

Process used for welcoming a new employee into the organization.

Starting a new job can be stressful. One goal of an orientation is to reduce the stress and anxiety people feel when going into an unknown situation. If employees know from the start what the expectations are, they tend to perform better. Likewise, if employees learn the values and attitudes of the organization from the beginning, there is a higher chance of a successful tenure at the company.

A well-done orientation makes for a better prepared employee, which means less time having to teach the employee.

If an orientation is done right, it can help get the employee up to speed on various policies and procedures, so the employee can start working right away. It can also be a way to ensure all hiring paperwork is filled out correctly, so the employee is paid on time.

Employee turnover tends to be higher when employees don’t feel valued or are not given the tools to perform. An employee orientation can show that the organization values the employee and provides tools necessary for a successful entry.

5.1.2. In-house training

In-house training programs are learning opportunities developed by the organization in which they are used. This is usually the second step in the training process and often is ongoing. In-house training programs can be training related to a specific job, such as how to use a particular kind of software. In a manufacturing setting, in-house training might include an employee learning how to use a particular kind of machinery.

5.1.3. Mentoring

A mentor is a trusted, experienced advisor who has direct investment in the development of an employee. A mentor may be a supervisor, but often a mentor is a colleague who has the experience and personality to help guide someone through processes. While mentoring may occur informally, a mentorship program can help ensure the new employee not only feels welcomed but is paired up with someone who already knows the ropes and can help guide the new employee through any on-the-job challenges.

5.1.4. External training

External training includes any type of training that is not performed in-house. This is usually the last step in training, and it can be ongoing. It can include sending an employee to a seminar to help further develop leadership skills or helping pay tuition for an employee who wants to take a marketing class. To be a Ford automotive technician, for example, you must attend the Ford ASSET Program, which is a partnership between Ford Motor Company, Ford dealers, and select technical schools.

5.2. Types of training

These types are usually used in all steps in a training process (orientation, in-house, mentorship, and external training).

5.2.1. Technical training

Type of training meant to teach the new employee the technological aspects of the job. In a retail environment, technical training might include teaching someone how to use the computer system to ring up customers. In a sales position, it might include showing someone how to use the customer relationship management (CRM) system to find new prospects.

5.2.2. Quality training

Quality training refers to familiarizing employees with the means of preventing, detecting, and eliminating non quality items, usually in an organization that produces a product.
Training employees on quality standards, including ISO standards, can give them a competitive advantage. It can result in cost savings in production as well as provide an edge in marketing of the quality-controlled products.

5.2.3. Skills training

Skills training as the things you actually need to know to perform your job. A cashier needs to know not only the technology to ring someone up but what to do if something is priced wrong. This training includes proficiencies needed to actually perform the job.

For example, an administrative assistant might be trained in how to answer the phone, while a salesperson at Best Buy might be trained in assessment of customer needs and on how to offer the customer information to make a buying decision.

5.2.4. Professional training

In some jobs, professional training must be done on an ongoing basis. Professional training is a type of training required to be up to date in one’s own professional field. For example, tax laws change often, and as a result, an accountant for H&R Block must receive yearly professional training on new tax codes.

5.2.5. Team training

Team training is a process that empowers teams to improve decision making, problem solving, and team-development skills to achieve business results. Often this type of training can occur after an organization has been restructured and new people are working together or perhaps after a merger or acquisition.

5.3. Training delivery methods

5.3.1. On-the-job coaching

Refers to an approved person training an employee on the skills necessary to complete tasks. A manager or someone with experience shows the employee how to perform the actual job. The selection of an on-the-job coach can be done in a variety of ways, but usually the coach is selected based on personality, skills, and knowledge. This type of skills training is normally facilitated in-house. The disadvantage of this training revolves around the person delivering the training. If he or she is not a good communicator, the training may not work. Likewise, if this person has “other things to do,” he or she may not spend as much time required to train the person and provide guidance.

5.3.2. Mentoring

Mentoring is a process by which an employee can be trained and developed by an experienced person. Normally, mentoring is used as a continuing method to train and develop an employee. One disadvantage of this type of training is possible communication style and personality conflict. It can also create overdependence in the mentee or micromanagement by the mentor. This is more different than on-the-job coaching, which tends to be short term and focuses on the skills needed to perform a particular job.

5.3.3. Web-Based Training Delivery

Web-based training delivery has a number of names. It could be called e-learning or Internet-based, computer-based, or technology-based learning. No matter what it is called, any web-based training involves the use of technology to facilitate training.

5.4. Designing a training program

Designing a training program includes 4 steps. Needs assessment, Make training plans, Deliver training program, Measuring effectiveness of training.

Step 1, Needs assessment and learning objectives:

This part of the framework development asks you to consider what kind of training is needed in your organization. We evaluate the organization, workers, and jobs to determine training need.

Step 2, Make training plans:

+ Consideration of learning styles. Learning styles is important to development of training programs.

+ Training method. What is the best method? Is web-based training more appropriate, or should on the job training be used? Most training programs will include a variety of training methods.

+ Budget. How much money do you have to spend on this training?

+ Audience. Who will be part of this training? Do you have a mix of roles, such as accounting people and marketing people? 

+ Content. What needs to be taught? How will you sequence the information?

+ Schedule, facility…

Step 3, Deliver training program:

+ Prepare Internal training: List participates, Choose and invite lecturers, Setup facilities, et cetera.

+ Prepare External training: Choose partner for training, Sign contract, et cetera.

+ Communication. How will employees know the training is available to them?

+ Deliver training program.

+ HR managers may need to follow the training process.

Step 4, Measuring effectiveness of training. 

+ How will you know if your training worked? 

+ What ways will you use to measure this? 

+ Once you have determined the training needed, you can set learning objectives to measure at the end of the training.

6. Performance appraisal

A performance evaluation system is a systematic way to examine how well an employee is performing in his or her job. Performance evaluations can also be called performance appraisals, performance assessments, or employee appraisals.

6.1. Performance appraisal methods

6.1.1. Graphic Rating Scale

The graphic rating scale, a behavioral method, is perhaps the most popular choice for performance evaluations. This type of evaluation lists traits required for the job and asks the source to rate the individual on each attribute.

6.1.2. Essay Appraisal

In an essay appraisal, the source answers a series of questions about the employee’s performance in essay form. This can be a trait method and/or a behavioral method, depending on how the manager writes the essay. These statements may include strengths and weaknesses about the employee or statements about past performance.

6.1.3. Ranking Methods

Employees in a particular department are ranked based on their value to the manager or supervisor. This system is a comparative method for performance evaluations. The manager will have a list of all employees and will first choose the most valuable employee and put that name at the top. Then he or she will choose the least valuable employee and put that name at the bottom of the list. With the remaining employees, this process would be repeated. Obviously, there is room for bias with this method, and it may not work well in a larger organization, where managers may not interact with each employee on a day-to-day basis.

6.1.4. Management by Objectives (MBO)

First, the manager and employee sit down together and develop objectives for the time period. Then when it is time for the performance evaluation, the manager and employee sit down to review the goals that were set and determine whether they were met.

To write objectives, they should be SMART:

Specific. There should be one key result for each MBO. What is the result that should be achieved?

Measurable. At the end of the time period, it should be clear if the goal was met or not. Usually a number can be attached to an objective to make it measurable, for example “sell $1,000,000 of new business in the third quarter.”

Attainable. The objective should not be impossible to attain. It should be challenging, but not impossible.

Result oriented. The objective should be tied to the company’s mission and values. Once the objective is made, it should make a difference in the organization as a whole.

Time limited. The objective should have a reasonable time to be accomplished, but not too much time.

6.2. Designing a Performance Appraisals program

Step 1: The first step in the process is to determine how often performance appraisals should be given. The advantage to giving an evaluation twice per year, of course, is more feedback and opportunity for employee development. The downside is the time it takes for the manager to write the evaluation and discuss it with the employee. If done well, it could take several hours for just one employee. Depending on your organization’s structure, you may choose one or the other. For example, if most of your managers have five or ten people to manage (this is called span of control), it might be worthwhile to give performance evaluations more than once per year, since the time cost isn’t high.

Step 2: Determining who should evaluate the performance of the employee is the next decision. It could be their direct manager (most common method), subordinates, customers or clients, self, and/or peers.

Step 3: Choice the right method

Step 4: Set the target

6.3. Completing and Conducting the Appraisal

• Best Practices in Performance Appraisals
• Training Managers and Employees
• Organizing the Performance Appraisal Process
• Performance Appraisal Interviews

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