Adm551 Chap 1.1 Intro - 51

An Overview of Human
Resources Management
Principles of Human Resource

Management
16 e
Bohlander | Snell
1–1
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Chapter Objectives
After studying this chapter, you should be able to
LEARNING OUTCOME 1 Explain the importance of Human Resource Management (HRM).
LEARNING OUTCOME 2 Explain the basic concepts and definitions of HRM.
LEARNING OUTCOME 3 Explain HRM and the environmental factors.
LEARNING OUTCOME 4
Explain HRM and the current global challenges.
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 of 36
Why Study Human Resources Management?
• Human Resources Management (HRM)

 The process of managing human talent to achieve an
organization’s objectives.
• “Why Study HRM?”
 Staffing the organization, designing jobs and teams,
developing skillful employees, identifying approaches for
improving their performance, and rewarding employee
successes—all typically labeled HRM issues—are as
relevant to line managers as they are to managers in the
HR department.
 Great business plans, products and services can easily be
copied by your competitors. Great personnel cannot.
3 of XX
Human Capital and HRM
• Words to describe how important people are to

organizations – Human Resources, Human Capital,
Intellectual Assets, and Talent Management.
• Human Capital - The knowledge, skills, and capabilities of
individuals that have economic value to an organization
 Human capital is intangible and cannot be managed the way
organizations manage jobs, products, and technologies.
 Valuable because capital:
• is based on company-specific skills.
• is gained through long-term experience.
• can be expanded through development.
“An organization’s ability to learn, and translate that learning into action rapidly,
is the ultimate competitive business advantage.” ( Jack Welch, General Electric) 1–4
Definition of HRM
• The process of managing human talents to achieve an

organization’s objectives (Snell & Bohlander, 2007).
• The policies and practices involved in carrying out the
“people” or human resource aspects of a management
position including recruiting, screening, training,
rewarding and appraising (Dessler, 2005).
• The utilization of a firm’s human resources to achieve
organizational objectives (Mondy & Noe, 2005).
• Philosophies, policies, procedures and practices related
to the management of people within organization
(French).
1–5
Definition of HRM
• The design of formal systems in an organization to

ensure effective and efficient use of human talent to
accomplish organizational goals (Mathis & Jackson,
2004).
• Strategic and coherent approach to the management of
an organization’s most valued assets – the people
(Armstrong).
• HRM refers to the management of the organization’s
employees.
• The purpose of HRM is to foster organizational policies
that enhance the contribution of employees make to the
effectiveness of the organization.”
1–6
The importance of HRM
• To gain / sustained competitive advantage through
people by meeting the following criteria:
– The resources must be Value - it increase when employees find
ways to decrease costs, provide uniqueness of the
product/service to the customers or with the combination of both.
– The resources must be Rare – when their skills, knowledge,
abilities, attitudes (KSA) are not the same with the competitors.
– The resources must be Difficult to Imitate - each employees
have different KSA’s and cannot be copied by others.
– The resources must be Organized – when their KSA’s can be
combined and can be rapidly used to improve the efficiency and
effectiveness of the company.
1–7
The importance of HRM
• To develop employees for the benefit of organization.

• To recognize employees as an importance asset.
• To promote management effectiveness and efficiency.
• To ensure consistent and fair treatment of employees.
• To control HR performance.
• To recommend HR policies.
• To act as strategic partner to the organization.
• Proper HR planning in the organization.
• To deal with HR issues and challenges.
• Viewed as equivalent to financial management,
production management & marketing management.
• To ensure the people employed by the organization are
being used as efficiently & effectively.
• To contribute towards achieving the organizational goals
1–8
Overview
STAFFING
SAFETY
& HRD
HEALTH
HRM
EMPLOYMENT COMPENSATION
& &
LABOR RELATIONS BENEFITS
The HRM System (Mondy & Noe, 2005)
The Functions of HRM
1. Staffing
The process through which an organization ensures that it
always has the proper number of employees with the
appropriate skills at the right jobs at the right time to
achieve the organization’s objectives. Staffing involves job
analysis, HR planning, recruitment and selection.
a. Job analysis is the systematic process of determining
the skills, duties and knowledge required for performing
jobs in an organization. It consists of job description and
job specification.
b. HR Planning is the process of comparing human
resource requirements with their availability and
determining whether the firm has a shortage or
excess of personnel. The data then used for
recruitment or other HR functions.
c. Recruitment is the process of attracting qualified

individuals and encouraging them to apply for work
with the organization.
d. Selection is the process through which the
organization choose those individuals in a group of
applicants that best suited the position and the
company.
2. Human Resource Development (HRD)
HRD is a major HRM functions that consist of training and
development, career planning & development, organization
development and performance appraisal.
a. Training is designed to provide learners with the
knowledge and skills needed for their present job.
Development involves learning that goes beyond
today’s job particularly for a long term career
development.
b. Career planning is an ongoing process whereby an

individual sets career goals and identifies the means to
achieve them. Career development is a formal approach
used by the organization to ensure that people with the
proper qualifications and experiences are available when
needed.
c. Organization development is the planned process of
improving an organization by developing its structures,
systems and process to improve effectiveness and
achieving desired goals.
d. Performance appraisal is formal system of review and
evaluation of individual or team task performance.
3. Compensation and benefits

Compensation rewards people for performing
organizational work through pay and incentives.
Meanwhile benefits are an non financial rewards such
as holidays, sick leave and medical coverage.
4. Safety and Health
Safety involves protecting employees from injuries
caused by work related accidents. Health refers to the
employees’ freedom from physical or emotional illness.
5. Employee and Labor Relations
When employees are represented by union, the human
resource activity is often referred to as an industrial
relations which handles the job of collective bargaining.
Figure 1.1 provides an overall framework of HR activities. From this
figure, we can see that managers have to help blend many aspects of
management. It is the basis for our discussion throughout this chapter.
1–14
Affecting Factors to HRM
• External Factors
– Factors that affect a firm’s human resources from
outside the organization’s boundaries.
• Internal Factors
– Factors that affect a firm’s human resources from
inside organization
• All factors (internal and external) very much depending
on the strategy and policies set up by the organization
that also can have a direct impact pertaining HRM in that
particular organization.
1–15
External Factors
• Labor Force/Market
– Pool of individuals external to the firm from which the
organization obtains its workers. It always changing
and inevitably cause changes in the workforce of an
organization.
• Legal Considerations/Requirements
– Relates to federal, state and local rules and
regulations that affect the HR policies. Various issues
on laws, policies, rules & regulations imposed by the
government
1–16
External Factors
• Economic Conditions
– When the economy is booming, recruiting qualified
workers is more difficult compared to downturn in
economy of the nation.
• Technological Changes
– Technology changes rapidly and HR must cope up
with this changes to ensure the successfulness of the
organization.
1–17
External Factors
• Customers
– The people who actually use firms goods and
services that offer best quality product and after sales
service.
• Competition
– Firms may face intense competition in the market.
Competent employees guaranteed organization
successfulness over its competitors.
1–18
External Factors
• Shareholders
– The owners of a corporation that expect high return in
profits and sales revenue for their investment.
• Unions
– Comprised of employees who have joined together
for the purpose of dealing with their employer. Any
collective bargaining made will give an impact toward
the organizations directly.
• Society
– Society may also exert pressure on HRM by means of
ensuring the organizations to comply on social
responsibility.
1–19
Internal Factors
• Marketing: How organization attract people to join their

organization to select the suitable applicant etc.
• Operations: Job analysis and job design for employees
etc.
• Finance: Cost for recruitment, paying salary, budget for
training etc.
• Organizational policy: Policy on how organization
manage their employees.
• Organization performance: Performance management of
employees.
• Internal labor supply and demand: Job openings,
methods and sources of employees.
1–20
Competitive Challenges and
Human Resources Management
• Top challenges include:

 Responding Strategically to Changes in the Marketplace
 Competing, Recruiting, and Staffing Globally
 Setting and Achieving Corporate Social Responsibility
and Sustainability Goals
 Advancing HRM with Technology
 Containing Costs While Retaining Top Talent and
Maximizing Productivity
 Responding to the Demographic and Diversity
Challenges of the Workforce
 Adapting to Educational and Cultural Shifts Affecting
the Workforce
1–21
Challenge 1: Responding Strategically to
Changes in the Marketplace
• Human Resources Managers and

Business Strategy
 From administrative tasks to strategic partners.
 Human resources managers need an intimate
understanding of their firms’ competitive business
operations and strategies. They need to
understand…..
• Total quality management • Change management

• Reengineering • Reactive change
• Downsizing • Proactive change
• Outsourcing • Six Sigma
And more….
1–22
Changes in the Marketplace (cont.)
• Total Quality Management (TQM)

 A set of principles and practices whose core ideas include
understanding customer needs, doing things right the first
time, and striving for continuous improvement.
• Six Sigma
 A process used to translate customer needs into a set of
optimal tasks that are performed in concert with one
another.
– HR facilitates organizational development of Six Sigma.
– HR helps balance the opposing needs for order and control
with the needs for growth and creativity.
1–23
• Reengineering and HRM

 Fundamental rethinking and radical redesign
of business processes to achieve dramatic
improvements in cost, quality, service, and speed.
– Requires that managers create an
environment or change.
– Depends on effective leadership and
communication processes.
– Requires that administrative systems be
reviewed and modified.
1–24
• Downsizing
 The planned elimination of jobs (“head count”).
 Layoffs
• Outsourcing
 Contracting outside the organization to have work
done that formerly was done by internal employees.
• Offshoring (Global Sourcing)
 The business practice of sending jobs to other
countries.
1–25
• Why Change Efforts Fail:

 Not establishing a sense of urgency.
 Not creating a powerful coalition to guide the effort.
 Lacking leaders who have a vision.
 Lacking leaders who communicate the vision.
 Not removing obstacles to the new vision.
 Not systematically planning for and creating short-term
“wins.”
 Declaring victory too soon.
 Not anchoring changes in the corporate culture.
1–26
Challenge 2: Competing, Recruiting, and
Staffing Globally
• Globalization
 approximately 70 to 85 percent of the U.S. economy
today is affected by international competition.
 About 10 percent of what Americans produce every
year, dollar-wise, is sold abroad.
• Impact of Globalization
 “Anything, anytime, anywhere” markets
 Partnerships with foreign firms
 Lower trade and tariff barriers
– NAFTA, EU, APEC trade agreements
– WTO and GATT
1–27
Challenge 3: Setting and Achieving Corporate
Social Responsibility and Sustainability Goals
• Corporate Social Responsibility (CSR)

 The responsibility of the firm to act in the best interests
of the people and communities affected by its
activities.
 Sustainability is closely related to corporate social
responsibility. Sustainability refers to a company’s
ability to produce a good or service without damaging
the environment or depleting a resource.
1–28
Challenge 4: Advancing HRM with Technology
• Collaborative software that allows workers anywhere

anytime to interface and share information with one
another electronically—wikis, document-sharing
platforms such as Google Docs, online chat and instant
messaging, web and video conferencing, and electronic
calendar systems—have changed how and where people
and companies do business.
• From Touch Labor to Knowledge Workers
 Knowledge Workers - Workers whose responsibilities extend
beyond the physical execution of work to include planning,
decision making, and problem-solving.
1–29
(cont.)
• Human Resources Information System (HRIS)

- A computerized system that provides current and
accurate data for purposes of control and decision-
making.
 It has become a potent weapon for lowering administrative
costs, increasing productivity, speeding up response times,
improving decision-making, and tracking a company’s talent.
 Another way in which information technology is affecting
human resources management is relational in nature --
connecting people with each other and with HR data they
need.
1–30
(cont.)
• Benefits:
 Automation of routine tasks, lower administrative
costs, increased productivity and response times.
 Self-service access to information and training for
managers and employees
 Online recruiting, screening, and pretesting of
applicants
 Training, tracking, and selecting employees based on
their record of skills and abilities
 Organization-wide alignment of “cascading” goals
1–31
(cont.)
1–32
(cont.)
1–33
(cont.)
1–34
Challenge 5: Containing Costs While Retaining
Top Talent and Maximizing Productivity
• Organizations take many approaches to

lowering labor-related costs, including….
 Carefully managing employees’ benefits
 Downsizing
 Furloughing Employees
 Outsourcing
 Offshoring
 Employee Leasing
1–35
Top Talent and Maximizing Productivity (cont.)
• Hidden Costs of a Layoff

 Severance and rehiring costs
 Accrued vacation and sick day payouts
 Pension and benefit payoffs
 Potential lawsuits from aggrieved workers
 Loss of institutional memory and trust in management
 Lack of staffers when the economy rebounds
 Survivors who are risk-averse, paranoid,
and political
1–36
• Benefits of a No-Layoff Policy

 A fiercely loyal, more productive workforce
 Higher customer satisfaction
 Readiness to snap back with the economy
 A recruiting edge
 Workers who aren’t afraid to innovate, knowing
their jobs are safe.
1–37
• Employee Leasing
 The process of dismissing employees who are
then hired by a leasing company (which handles
all HR-related activities) and contracting with that
company to lease back the employees.
1–38
Challenge 6: Responding to the Demographic
and Diversity Challenges of the Workforce
• In a recent survey, almost half of the organizations reported

that the biggest investment challenge facing them over the
next ten years is obtaining human capital and optimizing their
human capital investments. Why is this so? Changes in the
demographic makeup of employees, such as their ages,
education levels, and ethnicities, is part of the reason why.
1–39
and Diversity Challenges of the Workforce
Demographic Changes Managing Diversity

 More diverse workforce  Being aware of
– Ethnic and cultural characteristics common
challenges to employees, while also
managing employees as
 Aging workforce
individuals
 More educated workforce
– Necessity of basic skills
training
1–40
and Diversity Challenges of the Workforce (cont.)
1–41
and Diversity Challenges of the Workforce (cont.)
1–42
Challenge 7: Adapting to Educational and
Cultural Shifts Affecting the Workforce
• Over the years, the educational attainment of the U.S.

labor force has risen dramatically. Figure 1.5 shows that
it clearly pays to get a college education. An education
also helps a person stay out of the ranks of the
unemployed.
• For example, in 2010, the unemployment rate of people

ages twenty to twenty-four hit 17 percent. But those in
the same age range with college degrees fared better.
The unemployment rate for them was a little over 9
percent.
1–43
Cultural Shifts Affecting the Workforce (cont.)
• Other Factors:
 Cultural and Societal Changes Affecting the Workforce
 Employee Rights
 Privacy Concerns of Employees
 Changing Attitudes toward Work
 Balancing Work and Family
The Partnership of Line Managers
and HR Departments
• Successful organizations combine the experience of line managers with the

expertise of HR managers to develop and utilize the talents of employees to
their greatest potential. Line managers are non-HR managers who are
responsible for overseeing the work of other employees.
• Just as there are different types of line managers who specialize in different
functions—operations, accounting, marketing, and so forth—there are
different types of human resources managers who specialize in different HR
functions.
and HR Departments (cont.)
• Responsibilities of Human Resources Managers

1. Strategic advice and counsel
2. Service
3. Policy formulation and implementation
4. Employee advocacy
• Competencies Human Resources Managers Require

 Business mastery
 HR mastery
 Personal credibility
and HR Departments (cont.)
Key Terms
corporate social responsibility managing diversity

downsizing
offshoring
employee leasing
globalization outsourcing
human capital proactive change
human resources information
reactive change
system (HRIS)
human resources management reengineering
(HRM)
Six Sigma
knowledge workers
total quality management
(TQM)

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An Overview of Human

Principles of Human Resource

LEARNING OUTCOME 1 Explain the importance of Human Resource Management (HRM).

LEARNING OUTCOME 2 Explain the basic concepts and definitions of HRM.

LEARNING OUTCOME 3 Explain HRM and the environmental factors.

• Human Resources Management (HRM)

• Words to describe how important people are to

• The process of managing human talents to achieve an

• The design of formal systems in an organization to

• To develop employees for the benefit of organization.

The HRM System (Mondy & Noe, 2005)

c. Recruitment is the process of attracting qualified

b. Career planning is an ongoing process whereby an

3. Compensation and benefits

• Marketing: How organization attract people to join their

• Top challenges include:

• Human Resources Managers and

• Total quality management • Change management

• Total Quality Management (TQM)

• Reengineering and HRM

• Why Change Efforts Fail:

• Corporate Social Responsibility (CSR)

• Collaborative software that allows workers anywhere

• Human Resources Information System (HRIS)

• Organizations take many approaches to

• Hidden Costs of a Layoff

• Benefits of a No-Layoff Policy

• In a recent survey, almost half of the organizations reported

Demographic Changes Managing Diversity

• Over the years, the educational attainment of the U.S.

• For example, in 2010, the unemployment rate of people

• Successful organizations combine the experience of line managers with the

• Responsibilities of Human Resources Managers

• Competencies Human Resources Managers Require

corporate social responsibility managing diversity

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