Human Resource Management
Managing human resources is one of the key elements in the co-ordination and management of an organisation. An organisational workforce represents one of its most valuable resources. However, human resources are also potentially the most difficult to manage, principally because of individual difference. It is said that the extent to which the workforce is managed effectively may be a critical factor in improving and sustaining organisational effectiveness and efficiency.
Human Resource Management is defined as the process of evaluating the human resources needs of the organisation, finding suitable people to fill these needs, and optimising these resources through incentives and job enrichment, in line with the objectives of the organisation.
THE MAIN ELEMENTS OF HUMAN RESOURCE MANAGEMENT
Human resource management is concerned with all personnel matters including planning for human resource requirements, recruitment, selection and induction, training and development, performance appraisal, compensation, scheduling, administration and Trade Union negotiations and industrial relations.
- Human Resource Planning,
- Recruitment, Selection and Induction,
- Training and development,
- Performance appraisal,
- Management Training and Promotion
- Industrial Relations.
HUMAN RESOURCE PLANNING
Human Resource planning is linked to management planning. It is very important when expanding a business that the HR planning is properly executed. Human Resource planning is derived from the organisational strategy, which requires that the work and job specifications entailed by the strategic objectives are translated into the number of people required, a list of the skills to be acquired or developed and a timetable to have the required people in place.
Bowey (1974) defines human resource planning as:
“An effort to anticipate future business and environmental demands upon an organisation and to provide the personnel to fulfil that business and satisfy those demands”.
The main objectives of HR planning are:
- To ensure that the organisation finds and retains the quantity and quality of human resources that it requires.
- To ensure that the organisation makes the best possible use of human resources.
- To ensure that the organisation can manage the human resource implications of employee surpluses or deficits.
Human resources planning is not just about the numbers of people but also about the quality of personnel and how they can be best deployed throughout the organisation in order to ensure optimum organisation effectiveness and efficiency. It should therefore be clearly linked to an integrated with the organisations. It is a process, which affects every aspect of human resource management (recruitment, selection, performance appraisal, training and development, industrial relations etc), and one, which must be aligned with the corporate objectives/mission and strategic, plans of the organisation.
Tyson and York (1992) suggest that sound HR planning needs to be based on the following six principles:
- The plan has to be fully integrated with the other areas of the organisation’s strategy and planning.
- Senior management must give a lead in stressing its importance throughout the organisation.
- In larger organisations a central HR planning unit responsible to senior management needs to be established, the objective of which is to co-ordinate and reconcile the demands for human resources from different departments.
- The time span to be covered by the plan needs to be defined.
- The scope and details of the plan have to be determined.
- The plan must be based on the most comprehensive and accurate information that is available.
There are four main stages in the human resource planning process as follows:
Stage 1: Demand analysis
This stage of the process is concerned with estimating the quantity and quality of human resources required to meet the objectives of the organisation. It is based upon a thorough understanding of the organisations strategy and its implication for the workforce, planned technology change, a detailed inventory of employee characteristics (age, skill level, qualifications, performance level, etc.).
Stage 2: Supply analysis
This is concerned with estimating the quantity and quality of manpower that is likely to be available to the organisation. There are two major sources to be examined, namely, the internal labour market (existing employees) and the external labour market (the potential supply of manpower that is available outside the organisation).
Stage 3: Estimating deficit/surpluses
As a result of conducting both a demand and supply analysis, it is now possible to compare the results of the first two stages to determine whether the supply of labour available matches the demand for labour. Equally it is possible that the supply of labour exceeds or falls short of the estimates required. Depending on the results achieved at this stage of the process, the action plan will be prepared.
Stage 4: Developing action plans.
This last stage is based on the information that the preceding stages have yielded. The purpose of the action plan is to ensure that the day-to-day human resource needs of the organisation are satisfied. Plans emanating from the process will cover what the organisation must do, and how it will manage recruitment, selection, training and development, promotions etc.
EMPLOYEE RECRUITMENT SELECTION AND INDUCTION
Employee Recruitment is the process of obtaining the right people at the right time to best meet the need of the organisation. It involves finding, hiring and holding on to people who can satisfy the technical, educational and social needs of the organisation. Recruitment relies on a number of sources including promotions, advertising, employment agencies, management consultants etc.
The process of Recruitment and Selection involves a number of stages: Recruitment
- Manpower planning/Needs Analysis: As part of manpower planning, a needs analysis can be used to identify staff requirements.
- Job Description: The vacancy is discussed with the department manager and a job description is drawn up. The job description is a detailed description of the job, which is to be carried out by the new employee, who exactly they report to, and their place in the organisational structure.
- Attributes/Aptitudes Required: The necessary attributes/aptitudes required of the candidate would include skill, knowledge, experience etc.
- Establishing Conditions: The conditions of employment, which include the type of contract, hours of work and rate of pay, are laid down.
- Job Advertisement Drawn up: The job advertisement is drawn up which invites interested applicants to write in for an application form or to send in a Curriculum Vita with a cover letter.
- Advertised Internally: A vacancy that is filled internally will usually mean promotion for the successful employee.
- Advertised Externally: The Company may avail of the services of an employment agency at this stage.
The purpose of selection is to select from those applicants coming forward at the recruitment stage, the one who appears most suitable for the position. Selection involves:
- Short-listing: Using pre-determined selection criteria a number of the original applicants are short-listed and invited to attend an interview.
- Interview and other selection procedures: Interviews are held to select the best person for the vacant position. The interview may be supplemented with various selection tests.
- Offers are made: The successful candidate is offered the position and if it is accepted the unsuccessful candidates are notified.
- Induction and Training: New employees will need to be inducted into the organisation and trained.
A variety of factors influence the recruitment decision. Before any criteria may be set, those involved need to have a clear understanding of the nature and purpose of the position to be filled. This entails developing answers to the following questions, what has to be done in this job? How is it done? What background, knowledge, attitudes and skills are required for a job of this nature?
In short-listing or ranking applications (CV’s) for a particular position, the following could be used:
- Professional and academic qualifications: Ideally the candidate should have qualifications appropriate to the role.
- Previous Experience: Preferable candidates have a proven track record in a comparable environment (e.g. direct experience in the areas in question in the same industry or the potential to progress quickly).
- Fit. Ideally there should be an appropriate match or fit between the candidates and the job. (e.g. the candidate is not over qualified for the post or currently earning a substantially higher salary etc).
- Achievement: Ideally the candidate has demonstrated achievement in work and other areas (e.g. has demonstrated evidence that he/she is a self- starter, shown initiative, is a good finisher etc.)
- Personality traits: Ideally the candidate should have the appropriate personal and managerial characteristics. However this would be difficult to assess from a CV. Some organisations hold screening interviews typically over the phone before the final shortlist is decided.
The most commonly used selection technique is the interview. Interviews can be one on one or involve a panel of experienced interviewers. The interview should ideally be a two way process – the interviewer(s) will require certain information about the candidate, and the interviewee will require information about the firm. The key to success in interviews is preparation by both the interviewer(s) and the interviewee.
The Rodger’s Seven Point Plan specifies the following criteria that can be used to judge candidates during an interview:
- Physical make up
- Special aptitudes
Though widely used by all organisations, interviews do not always allow the interviewer to assess specific skills or proficiencies, and for that reason and also to avoid interview bias, many organisations supplement interviews with selection tests. The most popular selection tests include the following:
- Intelligence Tests: These are designed to measure thinking abilities.
- Aptitude Tests: These are tests of skills such as verbal, numerical, as mechanical ability.
- Personality Tests: These try to determine if the candidate’s personality is suitable for the particular vacancy.
- Proficiency Tests: These measure the depth of knowledge or grasp of skills that have been learned in the past, for example typing skills.
After selection a period of induction will normally take place.
The new employees told about the firm in general, the numbers employed, products produced, markets, etc.
Information will be given on hours of work, rates of pay, overtime, holidays, pension provisions, safety, and discipline and grievance procedures.
Many organisations work from an induction checklist or form to ensure that important information regarding procedures, policies and rules are not omitted during the induction period.
EMPLOYEE TRAINING AND DEVELOPMENT
As business and technology is changing rapidly the organisation needs to develop new skills to keep a pace. It is not always possible or practical to take on new staff to address the skill shortages. Therefore these skills need to be developed internally as part of a Learning Organisation approach.
Training and development is the process of improving employee performance through learning. All training and development programmes undertaken should be linked to the organisation’s long-term strategy. As well as the task related skills required to implement the strategy, the focus should be on developing employees and manager to make them more productive. Training and development can sometimes be linked with the reward structure, which further reinforces desired behaviour.
The main forms of employee training and development are as follows:
- Employee Orientation Programmes: Process of introducing employees to the organisation and its mission, to work colleagues, to supervisors, and to the various policies, practices and objectives of the organisation.
- On the Job Training: The employee learns by doing or watching others directly within the workplace. On the job training also includes coaching job rotation temporary promotions, job rotations etc. Many commentators argue that the future workplace will be a place of continuous learning not simply in the employee’s initial period with the organisation.
- Off the Job Training: This includes internal and external training programmes to develop a variety of skills, and foster personal development, away from the immediate workplace environment. Many colleges, university and other institutions offer part time courses for those in employment
- Apprentice Programmes: This involves a new worker working alongside a master technician or experienced professional to learn the appropriate skills or procedures.
Evaluating the Success of a Training Program
The cost of training represents a major investment for an organisation and management will want to evaluate the effectiveness of the training. The following methods proposed by Kirkpatrick can be used to evaluate the success of a training program:
- Training-Cantered Evaluation: Here the focus is on evaluating if the correct training methods are being used.
- Reaction-Centred Evaluation: This method seeks to evaluate the reaction of the trainees to the training. This is the most widely used evaluation strategy.
- Learning-Centred Evaluation: This seeks to measure the level of learning that has been achieved. It involves testing trainees after the training.
- Job-Related Evaluation: This method focuses on evaluating the degree of behaviour change on the job after the training. It measures the learning, which has been applied in the workplace.
- Cost-Benefit Evaluation: This method compares the benefits that have accrued from the training with the costs incurred. For example has the training resulted in increases in sales, improved customer service, or reduction in costs?
Performance Appraisal can be defined as: “A procedure and process which assists in the collection, checking, sharing, and use of information collected from and about people at work for the evaluation of their performance and potential for such purposes as staff development and the improvement of that work performance” (McMahon and Gunnigle, 1994).
Performance appraisal is a formal assessment of how well employees are doing their jobs, and it is a key function of human resource management. Its purpose is to achieve and sustain high performance standards in an attempt to ensure organisational survival. Tyson and York (1992) identify six major objectives of the performance appraisal process:
- To determine how far people are meeting the requirements of their jobs and whether any changes or action are required for the future.
- To determine developmental needs in terms of work experience and training.
- To identify people who have potential to take on wider responsibilities.
- To provide a basis for assessing and allocating pay increments and similar rewards.
- To improve communication between managers and their staff.
- To develop motivation and commitment by providing regular and scheduled opportunities for feedback on performance and discussion of work, problems, suggestions for improvement, prospects, etc.
The organisation must be clear on the purpose of the appraisal system and all employees must understand this purpose. The evaluation must be fair and non-discriminatory and measure performance on important job elements and not traits that are irrelevant to job performance.
As with all control systems, the first step is the establishment of performance standards. This can be a difficult process as valid performance measures are difficult to establish. Next the employee’s performance must be measured and compared with the standards expected. Then decisions can be made in regard to that performance – is training required, or are rewards to be allocated.
Research by McMahon and Gunnigle (1994) suggest that performance/objective or resultsorientated appraisal methods are the most widely used. However, many organisations use key elements of different appraisal schemes in evaluating employees, with self-appraisal techniques becoming quite popular.
Trait Rating Scale (also called Graphic Rating Scale)
In this method of performance appraisal the traits or characteristics related to the workers job are set out and the rater assesses the extent to which the worker demonstrated these traits. The traits might include job related features such as knowledge and skills and personality qualities such as initiative, intelligence, reliability etc. A scale is developed for each trait and employees are assessed and given a rating. For example if the scale was 1-5; a rating of 1 would indicate poor performance, while a rating of 5 would indicate exceptional performance. Trait rating scales do not always provide an accurate measure of performance as it can be difficult to relate traits to actual job performance. Also managers have found it difficult to judge the level of particular traits in employees.
Another approach that is used to measure performance is called behavior observation scale
Behavior Observation Scale
This approach focuses on what the individual actually does, rather than on their capabilities and other qualities. The employee is rated on how frequently they perform specific behaviours associated with particular dimensions of the job. These would be behaviours that are critical to the success of the particular job. For example an important dimension of a salesperson’s job would be customer service. So a sales person would typically be assessed on behavior that showed excellence in customer service. They would also be assessed on other dimensions of their job.
Appraisal might be more useful to the appraisee, and lead in the longer term to greater improvement if it is conducted either by the employee themselves or by a colleague of equal occupational status (Hannagan, 2005). Self-appraisal may enable a more critical analysis of one’s strengths and weaknesses as the possible career consequence of admitting mistakes is removed. However there are problems with self appraisal as people will tend to overstate their successes and ignore their failings where an appraisal may form the basis for future career development.
360 Degree Appraisal (also called 360 Degree Feedback)
In this appraisal method feedback is collected from a variety of sources in addition to the manager, including peers, customers, suppliers and senior and junior staff. If a balanced view is taken, the resulting appraisal will be more informed than feedback from a single source.
The feedback process needs to be carefully managed. Special training is required for those involved in managing the process so that information collected can be used to improve the overall work and behaviour.
The disadvantage of the 360-degree appraisal is that it is expensive, time-consuming and requires high level of resources
Improving the Performance Appraisal Process
Performance appraisals or reviews should be part of a continuous overall performance management process that involves:
- Identifying performance of individuals and teams
- Measuring performance of individuals and teams
- Developing performance of individuals and teams
- Aligning performance with the strategic goals of the organisation
The Performance Management Process has a number of components, which include:
- Prerequisites: Involves gaining a knowledge of the organisation’s mission and strategic goals and a knowledge of the job in question
- Performance Planning: This should set out the areas of a job for which the employee is responsible for producing result, the specific objectives to be achieved and performance standards to be used to evaluate how well employees have achieved each objective.
- Performance Execution: The employee responsibilities include a commitment to achieving goals, and collecting and sharing performance data and communication with supervisor. Manager’s responsibilities include observation of performance and providing feedback and resources.
- Performance Assessment: Could involve management assessment, self-assessment and other sources including peers, customers etc. Multiple assessments are necessary to increase employee ownership of process, increase commitment to system and provide information to be discussed at the review.
- Performance Review: This is discussed in the next section
- Performance Renewal: The performance management cycle begins again, using insights and information from previous phases
These topics are covered in detail elsewhere in the manual. In the next section we will look briefly at performance review and improvement
Overview of Appraisal Meeting
During the review (appraisal) meeting three aspects of performance are addressed:
- Past: The employees behaviours and results are reviewed against objectives and standards
- Present: The level of compensation to be received as a result of the review is discussed
- Future: A set of new goals for the future are agreed and development plans are drawn up
Six Steps for Conducting Productive Performance Reviews
- Identify what the employee has done well and poorly
- Solicit feedback
- Discuss the implications of changing behaviours
- Explain how skills used in past achievements can help overcome any performance problems
- Agree on an action plan
- Set a follow-up meeting and agree on behaviours, actions, and attitudes to be evaluated
The following are some guidelines that could be used to improve performance:
- Performance feedback/coaching
- Identification of individual strengths and weaknesses
- Identify causes of performance deficiencies
- Tailor development of individual career path
Source: Performance Management by Herman Aguinis (2005) Publisher: Prentice Hall
The basis of good Industrial relations in an organisation is the assurance that good work is rewarded with good pay and benefits. In order to hold on to good staff an organisation must ensure that they are being adequately compensated. The choice of a payment system is an important consideration for organisations. The money that a person receives for carrying out work can be a major source of motivation and therefore it is imperative that an organisation maintains an appropriate and equitable payment system. The particular package offered will be determined by a variety of factors, not least among them the organisation’s ability to pay, labour market conditions, comparable rates/levels elsewhere and possibly the bargaining strength of the Trade Union.
Employee compensation can come in the form of various pay schemes including:
- Salary systems: These are fixed and are based on weekly, biweekly or monthly pay periods.
- Hourly wage or day work: This is used for blue collar and clerical workers.
- Piecework: With this method employees are paid according to the number of items they produce hourly or daily.
- Commission plans: These are based on a percentage of sales achieved by the employee.
- Bonus plans: These are normally applicable to executives and salespeople and are used as an incentive for them to accomplish or surpass certain objectives.
- Profit sharing plans: These give employees a share of the profits on top of their normal pay.
- Fringe Benefits: Compensation may also come in the form of Fringe Benefits, which may include such features as sick pay, holiday pay, pension plans and health plans.
Determining Rates of Pay
The HR department will have a policy on determining rates of pay. Such a policy is necessary in order to attract top calibre staff and to motivate current employees. In order to determine the rate of pay for a specific job a job evaluation will be carried out. Currie (2007) highlights the following methods of job evaluation:
- Ranking System: The approach involves comparing jobs with one another without a detailed analysis of the jobs. Jobs are then ranked according to size. Pay is determined based on a jobs position in the rank. A criticism of this approach is that it tends to be subjective in the absence of a standard for assessing job sizes.
- Job Classification: In this approach a set of grouping or pay grades are set out in advance. Then a general job description is produced for each for the jobs in each group. Each job is compared with the general job descriptions and placed in the appropriate group which determines the pay grade for that job.
- Points Rating Method: With this method each job is analysed on the basis of factors such as qualifications and skills required, level of responsibility, job complexity, etc. Each factor or element carries a number of points. By assessing the degree to which a particular element is present in a job, a number of points are allocated to the job. The overall number of points allocated to a job determines the level of pay. This is probably the most commonly used method of job evaluation.
OTHER ASPECT OF HR
For a variety of reasons everyone cannot work from 9 to 5. Many manufacturing firms run 24 hours in three shift schedules and financial firms and stockbrokers now deal 24 hours a day. These factors added to the problem of traffic congestion means that it is not logical for everyone to start work at the same time. The scheduling of employees involves the search for the ideal balance between the needs of individuals and those of the organisation. Apart from conventional 9 to 5 scheduling other forms of scheduling include:
- Flexible Plans: These allow an employee some say in the hours they work, as long as they work the required number of hours. Flexible plans normally require an employee to be at work during a core time such as between 2pm and 4pm. Some work types such as assembly line processes are unsuitable for this form of working.
- Job Sharing Plans: In this arrangement two part-time employees share one full-time job.
- Compressed Workweeks: An example of this is where an employee works four 10-hour days and has three days off.
- Teleworking: This form of working, which involves people working remotely, usually from home, is developing rapidly as new telecommunications technologies are developed.
Management Training and Promotion
In a constantly changing business environment the need for the retraining and development of managers becomes increasingly important. Also to hold onto good managers the firm must show that there is a rewarding career path for them at the firm.
Internal management training programmes include the following elements:
- On the Job Coaching: This is where a senior manager teaches a lower-level manager new skills and provides direction.
- Understudy Positions: This involves young managers working as assistants to established managers and even taking over when they are away.
- Job Rotation: This enables mangers to see the operation of different department or units of the organisation.
- Off the job Courses and Training: Management development programmes have become widespread, especially in universities and management development firms and large organisations may have in-house development programmes.
It is difficult to develop a company policy in relation to promotion but where such a policy is developed it should be linked to the long-term strategy of the organisation. People with potential can be actively sought within the organisation, given the opportunity to obtain varied experience and skills and developed as a pool of candidates for promotion.
The long-term success of firms depends on the ability to continuously formulate and implement good strategy. Good strategists must pay attention to their own succession and promotions and transfers to top management should be strategically controlled.
Human Resource Administration
The administration of personnel involves, work controls (time cards), pay administration, tax returns, holidays and sickness calculations etc. This work is quite time consuming for organisations and it is therefore worth considering the computerisation of as much of the work as possible.
Trade Union Negotiations and Industrial Relations
Industrial relations are a key element of the overall HR environment for any organisation. Industrial relations would typically address such issues as pay and conditions. Strategies aimed at coping with the business environment can be rendered ineffective by internal strife. Successful strategy implementation should therefore take account of employee relations by creating a climate of enhanced cooperation.
TRENDS IN HUMAN RESOURCE MANAGEMENT
The following is a summary of the main trends that will impact human resource management:
- Skill requirements will increase in response to technological change
- Future workforces will be significantly more educated and more diverse
- Advances in technology will change the way training is delivered
- Organisational emphasis on human performance management will accelerate
- Low skilled jobs are increasingly moving to countries with lower costs
- Individuals will be required to assume more personal responsibility for their own educational, development and training throughout their working life
- The workforce increasingly needs to be flexible to respond to change Part-time contracts and temporary work is increasing
- Employees are changing jobs more frequently
- Closer alignment of pay with achieving organisational objectives
- Employees will be expected to take on more job responsibility
INFORMATION SYSTEMS IN HUMAN RESOURCE FUNCTIONS
Payroll systems capture employee data such a timesheets (hours worked) and records wages paid to employees. Computer based payroll systems help businesses make prompt and accurate payments to their employees as well as reports to management, employees and government agencies concerning earnings, taxes, and other deductions. They may also provide management with reports analysing labour costs and productivity.
Employee Records System
Information Systems are used to maintain employee records, which include basic employee data such as name, address, educational qualifications, salary, job title, date of hiring, positions held and dates. These systems may also be used to record details of performance appraisals. These systems can provide a range of management reports.
Training Related Systems
Employee training and retraining is an important task of the HR function. Information systems are used to deliver training and record training records. Two examples of the use of computer systems to deliver training are:
- Computer-based training (CBT)
- Web Based Training (WBT)
Computer-based training (CBT) services are where a student learns by executing special training programs on a computer. CBT is especially suitable for training people to use computer applications because the CBT program can be integrated with the applications so that students can practice using the application as they learn.
Some of the advantages of computer-based training include:
- It is possible to integrate multiple forms of media like text, audio, video, and animation. This provides variety and gives learners a way to use the visual, auditory, and kinaesthetic learning
- Many CBT systems and programs allow the learner to access the content in any order instead of following one set, linear path like audio and videotape
- They can provides access to huge pools of information
- The learner can access the training material from their desk
- Training can be paced to the learner’s speed and ability
- Learners can start class anytime of the day or night
- It is a cost effective way to delivery training to staff without major disruption to normal business as staff do not have to leave their desk
A disadvantage of CBT for some students is the lack of face-to-face interaction with instructors and other learners.
Web Based Training (WBT) is similar to Computer Based Training (CBT) except that it delivers the content over the Internet or an organisation’s intranet via a computer with access to the Web. Usually, learners will need to be signed up for the training to receive a password and gain access to the website.
Like Computer Based Training, WBT can use a wide variety of media, including text, graphics, sound, video, and animation. If you have the right equipment and access to the training, you can use it at any time, in any place in the world. Companies with employees in different locations can save on travel costs by offering training over the Web. Learners have the advantage of attending “class” without leaving the desk, office, or home. Because Web Based Training is easy to update, the content can be kept more current. Ongoing improvements to computer technology will allow Web Based Training to get even better, faster, and more interactive with improved graphics and sound. (Source: Steinbach, R, 2000)
IMPACT OF E-COMMERCE
Companies are using the Internet in a number of different ways to recruit employees. These include the following:
Posting job Vacancies on the Company Web Site
Organisations will often advertise Job vacancies on their own Web site. This is a very cost effective way of advertising vacancies and is used by many larger companies. A disadvantage of this approach particularly for smaller companies is that it may not attract sufficient numbers of appropriately qualified or experiences candidates.
Jobsites Operated by Recruitment Companies
Organisations can use Jobsites to assist in the recruitment of employees by either posting vacancies on these websites or searching through resource databases of CVs posted by
Many Recruitment sites are operated by “virtual” recruitment companies. These do not have a high street presence, as would be the case with a traditional recruitment firm.
Some Jobsites are operated by traditional Recruitments companies, which can offer additional services to the jobseeker and the employer. These services might include career planning and pre-screening of employees before sending them to the employer for interview.
Communicating with Job Applicants via E-mail
E-Mail provides a quick and efficient way of communication with job applicants. It can help speed up the recruitment process by allowing documents such as CVs and Application forms to be sent in electronic format and reduces the need to handle paper documents.
Limitations with E-Recruitment
While online recruitment sites have grown in size and visits, there are many competing ways to find a job and only about 25% of those who post a job resume even get an interview. Most jobs are local jobs, and personal networks remain the most common way people find jobs along with local newspaper classifieds and just calling employers. One can conclude from this that online job sites have their limitations
Other issues include worries about confidentiality where jobseekers are sending personal details over the Internet, and employers may be inundated with CVs from unsuitable candidates.