Human Resource Management

CHAPTER 1 – HUMAN RESOURCE

MANAGEMENT: A STRATEGIC
FUNCTION
Human resource management - Activities designed to provide for and coordinate the
human resources of an organization.
The value of an organization’s human resources frequently becomes evident when the
organization is sold. Often the purchase price is greater than the total value of the
physical and financial assets. This difference, sometimes called goodwill, reflects the
value of an organization’s human resources.
Human resource management is a modern term for what was traditionally referred to
as personnel administration or personnel management.

1. HUMAN RESOURCE FUNCTION

A. Human resource function - Tasks and duties human resource managers perform.
The Society for Human Resource Management (SHRM) has identified six major
functions of human resource management:
i. Human resource planning, recruitment, and selection.
ii. Human resource development.
iii. Compensation and benefits.
iv. Safety and health.
v. Employee and labor relations.
vi. Human resource research.
B. Talent management - The broad spectrum of HR activities involved in obtaining and
managing the organization’s human resources.
C. Who performs the human resource function?
i. Operating manager - Person who manages people directly involved with the
production of an organization’s products or services (e.g., production manager
in a manufacturing plant, loan manager in a bank).
ii. Human resource generalist - Person who devotes a majority of working time
to human resource issues, but does not specialize in any specific areas.
iii. Human resource specialist - Person who devotes a majority of working time to
human resource issues, but does not specialize in any specific areas.
 D. Human resource department
Provide support to operating managers on all human resource matters
Customarily organizes and coordinates hiring and training; maintains personnel
records; acts as a liaison between management, labor, and government; and coordinates
safety programs
Requires close coordination between the human resource department and the
operating managers.
It is helpful to view the human resource department as providing three types of
assistance: (1) specific services, (2) advice, and (3) coordination.
Human resource department normally acts in an advisory capacity and does not have
authority over operating managers

2. CHALLENGES FOR TODAY’S HUMAN RESOURCE MANAGERS

HRM is much more integrated into both the management and the strategic planning
process of the 3 organization.
Diversity in the work force encompasses many different dimensions, including sex, race,
national origin, religion, age, sexual orientation, and disability. Other challenges are the
result of changes in government requirements, organizational structures, technology,
and management approaches.
Today’s human resource managers currently face several challenges. Some of the more
significant issues include an increasingly diverse workforce and changes in government
regulations, organization structures, technology, and managerial approaches.
A. Diversity in the Workforce
Half the new entrants during that time span will be women.
In addition to the possibility of having differing educational backgrounds, immigrant
employees are likely to have language and cultural differences. Organizations must
begin now to successfully integrate these people into their workforces
The increase in the percentage of older employees will have a mixed effect. The older
workforce will likely be more experienced, reliable, and stable, but possibly less
adaptable to change and retraining.
i. Globalization of HR - Defining diversity in global terms means looking at all
people and everything that makes them different from one another, as well as
the things that make them similar. Key to a successful global HR program is to
rely on local people to deal with local issues. Key human resource–related
challenges facing global companies:

2
 1. Cultural differences (53 percent).
2. Compliance with data-privacy regulations (42 percent).
3. Varying economic conditions across countries (36 percent).
4. Time zone differences (32 percent).
5. Legal environment (32 percent).
6. International compliance (26 percent)
ii. Challenges and Contributions of Diversity – organization must get away from
the tradition of fitting employees into a single corporate mold. Organizations
must create new human resource policies to explicitly recognize and respond to
the unique needs of individual employees. Greater diversity will not only create
certain specific challenges but also make some important contributions.
Communication problems are certain to occur, including misunderstandings as
well as the need to translate verbal and written materials into several languages.
Greater diversity presents new opportunities. Diversity contributes to creating
an organizational culture that is more tolerant of different behavioral styles and
wider views.
B. Regulatory Changes - Organizations face new regulations routinely issued in the
areas of environment, safety and health, equal employment opportunity, pension
reform, and quality of work life. Many of the new changes to health care and health
insurance will have to be implemented by human resource personnel and will have
a significant impact on their activities.
C. Structural Changes to Organization
i. Downsizing - Laying off large numbers of managerial and other employees.
ii. Outsourcing - Subcontracting work to an outside company that specializes in
that particular type of work.
iii. Rightsizing - Continuous and proactive assessment of mission-critical work and
its staffing requirements.
iv. Reengineering - Fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in cost, quality, service, and speed.
D. Technological and Managerial Changes within Organizations
In addition to their uses in performing the traditional functions of accounting and
payroll calculations, computerized information systems are now being used to maintain
easily accessible employee data that are valuable in job placement and labor utilization.
Since the introduction of eHR in the 1990s, the fundamentals of eHR products haven’t
changed because the basic problems they address are the same.
The costs have dropped and what used to take months to implement can now be done in
hours. Today’s employees are much more receptive to being sent to a Web site for
information.

3
 i. Telecommuting - Working at home by using an electronic linkup with a central
office.
ii. Empowerment - Form of decentralization that involves giving subordinates
substantial authority to make decisions.
iii. Self-managed work teams - Groups of peers are responsible for a particular area
or task.
E. Human Resource Management in the Future
If tomorrow’s human resource managers are to earn the respect of their colleagues and
top management, they must overcome certain negative impressions and biases
sometimes associated with human resource management.
Human resource managers should become well-rounded businesspeople. The following
suggestions can help human resource managers become more familiar with their
businesses:
i. Know the company strategy and business plan.
ii. Know the industry.
iii. Support business needs.
iv. Spend more time with the line people.
v. Keep your hand on the pulse of the organization.
vi. Learn to calculate costs and solutions in hard numbers.
HR professionals who thoroughly understand their businesses will help overcome the
common idea that human resource people are unfamiliar with the operating problems
and issues facing the organization.
Human resource managers should also become fully knowledgeable about present and
future trends and issues in HR and other related fields.
Finally, human resource managers should promote effective human resource utilization
within the organization. Human resource managers should stress the importance of
increasing profits through effectively using the organization’s human resources.

3. ORGANIZATIONAL PERFORMANCE AND THE HUMAN RESOURCE

MANAGER
Human resource managers can have a direct impact on organizational performance
in a number of specific ways:
i. Reducing unnecessary overtime expenses by increasing productivity during a
normal day.
ii. Staying on top of absenteeism and instituting programs designed to reduce
money spent for time not worked.
iii. Eliminating wasted time by employees through sound job design.

4
 iv. Minimizing employee turnover and unemployment benefit costs by practicing
sound human relations and creating a work atmosphere that promotes job
satisfaction.
v. Installing and monitoring effective safety and health programs to reduce lost-
time accidents and keep medical and workers’ compensation costs low.
vi. Properly training and developing all employees so they can improve their value
to the company and do a better job of producing and selling high-quality
products and services at the lowest possible cost.
vii. Decreasing costly material waste by eliminating bad work habits and attitudes
and poor working conditions that lead to carelessness and mistakes.
viii. Hiring the best people available at every level and avoiding overstaffing.
ix. Maintaining competitive pay practices and benefit programs to foster a
motivational climate for employees.
x. Encouraging employees, who probably know more about the nuts and bolts of
their jobs than anyone else, to submit ideas for increasing productivity and
reducing costs.
xi. Installing human resource information systems to streamline and automate
many human 20 resource functions.
A. Metrics and the HR Scorecard
i. Metrics - any set of quantitative measures used to assess workforce
performance. Ex. analysis of the cost per hire.
ii. HR Scorecard - A measurement and control system that uses a mix of
quantitative and qualitative measures to evaluate performance.

2. COMMUNICATING HUMAN RESOURCE PROGRAMS

Communication - Transfer of information that is meaningful to those involved.
A human resource manager’s first step in becoming an effective communicator is to
develop an appreciation for the importance of communication. The problem is not that
human resource managers tend to belittle the importance of communication; rather,
they often fail to think consciously about it.
A. Guidelines for Communicating Human Resource Programs
i. Avoid communicating in peer group or “privileged-class” language – level of
communication should be determined by the receiving audience and not by the
instigator of the communication.
ii. Don’t ignore the cultural and global aspects of communication - Be careful with
words, symbols, and expressions.
iii. Back up communications with management action - Promises made either orally
or in writing must be backed up by actions if they are to succeed.

5
 iv. Periodically reinforce employee communications
v. Transmit information and not just data
1. Data - Raw material from which information is developed composed of
facts that describe people, places, things, or events and that have not been
interpreted.
2. Information - Data that have been interpreted and that meet a need of
one or more managers.