HUMAN RESOURCE MANAGEMENT

 Human resource management (HRM) involves employing people, training them,

compensating them, developing policies relating to them, and developing
strategies to retain them.
 As a field, HRM has undergone many changes over the last twenty years, giving
it an even more significant role in today’s organisations. In the past, HRM meant
processing payroll, sending birthday gifts to employees, arranging company
outings, and making sure forms were filled out correctly—in other words, more of
an administrative role rather than a strategic role crucial to the success of the
organisation.

 Although Human Resources managers often work with people first and foremost,
they must also have the goals of the whole organisation in mind when making
decisions. Nowadays, HR professionals are ever-increasingly required to
understand how to strategically align the objectives of the HR function with an
organisation’s envisioned future direction.1

 Key Responsibilities of the HR Manager

 Keep in mind that many functions of HRM are also tasks other department
managers perform, which makes this information important, despite the career
path taken. Most experts agree on eight prime roles that HRM plays in
organisations, which are as follows:

o 1. Staffing

Staffing encompasses the whole employment process, from job advertisement to

salary negotiation. Within the staffing function, there are four main steps:

1. Development of a staffing plan

2. Development of policies to encourage multiculturalism at work
3. Recruitment. It involves finding people to fill the open positions
4. Selection

 Key Skills Required to Work in HR

 There are several skills crucial to human resource management, which can
include the following:

o Organisational skills - It implies that the ability to organise and multitask is
required. An HR manager must handle files while working continuously in many
business units.

o Communication skills are necessary for HRM as well. The ability to present
negative and positive news, work with various personalities, and coach
employees are essential in HRM.

o Critical thinking skills - Critical and creative thinking and writing are abilities
that will aid the HR manager. One of the primary duties of an HR department is
to connect the HR strategic plan with the strategic business planning.

o Specific job skills - Computer skills, knowledge of employment legislation,

writing and establishing strategic plans, and general creative thinking skills are
essential in any management position, notably in human resource management.

 Furthermore, a strong sense of fairness and ethics will make for the ideal HR
manager. Because HR collaborates with various departments to manage conflict
and negotiate union contracts and salaries, the HR professional must have a
strong understanding of business ethics and the ability to maintain
confidentiality.
 Today’s HRM Challenges
 The following are some of the significant problems that HRM experts face
in today's business world:

o There are many contemporary challenges associated with HRM.
First, it is up to everyone in the organisation to contain costs. HR
managers must examine their specific departments and illustrate
the importance and usefulness of their functions to the
organisation. HR managers can also help cut costs by controlling
beneficiary programs and salaries and offering training.

o The rapidly changing nature of technology is also a challenge in

human resource management. As new technologies are created,
workers could be able to apply creative working arrangements like
flextime.HR managers are also responsible for developing policies
 dealing with "cyberloafing" and other workplace time wasters
revolving around technology. Employee stress and lack of work-life
balance are also greatly influenced by technology.

o The human resource manager can effectively prepare for staffing

cutbacks and additions by being aware of the state of the economy.

o The ageing and changing workforce is another potential challenge

facing HR. As baby boomers retire, there will likely be few people to
replace them, and many of the talents they possess may be lost.
Furthermore, working simultaneously with multiple generations
might provide difficulties because multigenerational workforces
have diverse expectations and needs.

 Introduction
 Our communication styles can influence how successfully we
communicate with others, how well we are understood, and how well we
get along. Communication plays an essential role in HRM.
 However, mind that no one person "always" has one style. Depending on
the situation, we can adapt our style. The better we communicate, the
more we grasp our dominant communication style and the styles of others.
Thus, strong communication skills are invaluable for those working in HR
professions.
 There are four main types of communication. Given below is a description
of them:

o Expresser
o Driver
o Relater
o Analytical
o People with an expresser communication style tend to get excited.
They like challenges and rely heavily on hunches and feelings.
Depending on the type of business, this can be a downfall as
sometimes hard data should be used for decision-making purposes.
These individuals are easily identified because they dislike lengthy
information or dry explanations and become agitated if they believe
their time is being wasted.
 Role of Communication in HRM
 Listening
  Listening is another significant part of communication. There are three
main types of listening:

o Competitive or combative listening - occurs when we are focused
on sharing our point of view instead of listening to someone else.

o Inpassive listening - happens when we are interested in

hearing what the other person is saying and assume we hear and
understand what the person says correctly without verifying.

o Active listening - occurs when we are engaged in what the other

person has to say and includes confirming our interpretation of what
the speaker says is right. For example, we could restate what the
person said and then double-check that our understanding is
correct.

 Generally speaking, active listening tends to work best in practice as it

provides feedback. Active listening involves four phases:

o Sensing - hearing, seeing, and receiving verbal and nonverbal
aspects of the message.

o Interpreting - this phase entails the receiver interpreting the

message into a meaningful context.

o Evaluation - this phase requires the receiver to sort fact from

opinion, including logic and emotion.

o Response - this stage requires providing feedback to the sender on

how well their message was perceived.

 Nonverbal Communication
 Nonverbal language accounts for a large part of communication. It is
easier to have misunderstandings without seeing and hearing nonverbal
clues.

For example, consider the use of digital forms of communication, such as e-mail
and text messaging. These forms of communication do not allow us to read
another’s body language, which can often result in misconceptions about what
another is saying. It can be advisable to converse in person or over the phone if
you have anything vital to say.

Nonverbal language can include:


o Facial expressions

o Eye contact

o Standing or sitting posture


o Tone of voice

o Physical gestures

o Positioning of hands

 The more adept we get at understanding body language—our own and of

others—the better we will be at effectively communicating with others.
For instance, using the same tone, speed, and posture might assist the
listener in feeling more at ease and make concepts easier to understand.
 Introduction to Strategic HRM Planning
 Personnel management was the previous name for human resource
management (HRM). Personnel management deals with activities related
to the hiring process and legal compliance. HRM today involves a high
degree of strategic planning, which requires working with other
departments and managers.
 Examples of the prime differences between Personnel Management and
HRM include the following:


Personnel Management
HRM Focus
Focus

Administering of policies Helps to achieve strategic goals through people.

Stand-alone programs, such HRM training courses that align with the goals and principle
 as training of the business

Personnel department
Line managers share joint responsibility in all areas of peop
responsible for
hiring and management.
managing people

Creates a cost within an

It contributes to the profit objectives of the organisation.
organisation

 Strategic HRM Plans and HR Plans

 Strategic HRM Plans - The Ulrich HR Model
 A popular method for strategic HRM planning is the Ulrich HR model, which
proposes categorising HR functions into four groups:

1. Strategic Partner - this HR role is focused on developing strategies that
align with the goals and objectives of the organisation as a whole.

2. Change Agent - when an organisation needs to expand, evolve or alter its

goals or objectives, the change agent is the HR role that communicates
those organisational changes internally and helps adapt the organisation
for its next stage of growth or evolution.

3. Administrative Expert and Functional Expert - the function of this HR role

is to understand and implement policies, procedures, and processes that
relate to the strategic HRM plan.

4. Employee Advocate - the function of this HR role is to assist, support and

protect current employees within the organisation.

 According to Ulrich, the model's execution must consider the corporate

objectives, obstacles, and opportunities. For example, the HR professional must
understand the dynamic nature of the HRM environment, such as changes in
labour markets, company culture and values, customers, shareholders, and the
economy. Once this occurs, HR may decide how to effectively serve the
organisation's needs in these five crucial areas.
 How to Develop a Strategic HRM Plan
 Keeping the Ulrich model in mind, consider these four aspects when
creating a good HRM strategic plan:

1. Make it applicable
 People often spend excessive time developing plans, but the plans sit in a file
somewhere and are never actually used. A good strategic plan should be the
guiding principle for the HRM function. It should be reviewed and changed as
aspects of the business change. The involvement of all members in the HR
department (if it’s a large department) and communication among everyone
within the department will improve the plan.

 Elements to Consider and Research before Creating a Strategic HRM

Plan
 Strategic HRM plans must have several elements to be successful. It is
important to note that the design of the HRM strategic plan is to focus on and
align the core objectives the organisation wants to achieve. In contrast, the HR
plan consists of detailed strategies to achieve strategic plan objectives.
 Considering the follwing steps are essential before creating the strategic HRM
plan:

o 1. Conduct a Strategic Analysis
o 2. Identify Strategic HR Issues
o 3. Prioritize Issues and Actions
o 4. Develop the HR Plan
o A strategic analysis looks at three aspects of the individual HRM department:

- Understanding the company's mission and values

- Understanding of the HRM department's mission and values

- Understanding the challenges facing the department

 For HRM to be effective, it must collaborate with the organisation and help it
achieve its objectives. It needs to be taken into account while designing HRM in
all areas.
 Key Steps for Creating a Strategic HRM Plan
 The development of the HR plan can begin to address specific issues
within the human resource department after creating the strategic HRM
 plan. The HR plan differs from the strategic plan as it is more
comprehensive and concentrates on immediate goals.
 Generally speaking, the HRM plan should include the six following
elements:

o Determine human resource needs - this section assesses the
organisation's present and future employee needs and is closely
related to the strategic strategy (e.g. the number of people, skills,
etc.)

o Determine recruiting strategy - create a plan that addresses the

best way to hire the appropriate individuals at the right time.

o Select employees - the selection process consists of the

interviewing and hiring process.

o Develop training - based on the strategic plan, what training needs

are needed?

o Determine compensation - establish pay scales and other

compensation such as health care and bonuses.

o Appraise performance - develop methods to assess and support the

productivity of employees.

 Compensation and Benefits

 Introduction
 A compensation plan refers to all aspects of a compensation package (e.g.
wages, salaries and benefits). There are a few fundamental aspects of
compensation packages that must be taken into account before devising
the compensation strategy. These foundations can help formulate a
compensation strategy that satisfies the organisation’s objectives and is
in line with the strategic HRM plan.
 The following fundamental inquiries should be answered to evaluate the
performance of the organisation's current pay programmes (if any):

o From the employee’s perspective, what is a fair wage?

o Are wages too high to achieve financial health in your organisation?

 o Does the pay scale reflect the importance of various job titles within
the organisation?

o Is your compensation good enough to retain employees?

o Are state and federal laws being met with your compensation
package?

o Is your compensation philosophy evolving along with changes in the

labour market, the industry, and the organisation?

 Compensation and Benefits

 Understanding Compensation Philosophy
 After addressing the fundamental questions, the HR manager can identify
where the company may have weaknesses in their compensation package
and develops new philosophies in line with the strategic plan, which
benefits the organisation. Some possible compensation policies might
include the following:

o Are salaries higher or lower depending on the location of the
business?

o Are salaries lower or higher than the average in your region or area?

o Should there be a specific pay scale for each position in the

organisation, or should salaries be negotiated on an individual
basis? If there is no set pay scale, how can you ensure individual
salary offers are non-discriminatory?

o What balance of salary and other rewards, such as bonuses, should

be part of your compensation package?

o When giving raises, will the employee’s tenure be a factor, or will

pay increases be merit-based only or a combination of both?

 1. Internal and External Factors in Determining Compensation

Strategy
 One major internal factor is the compensation strategy that the
organisation chooses to adopt. There are three main types of
compensation strategies which are as follows:

 o Market Compensation Policy - involves paying the going rate for a
particular job within a specific market based on research and salary
studies.

o Market Plus Policy - refers to paying higher salaries than average.

For example, this type of policy may be more suited to highly
competitive and rapidly changing high-technology industries.

o Market Minus Policy - involves paying less than the market rate.
For example, an organisation may decide to pay lower salaries but
offer more benefits.

 External pay factors can include the current economic state. Inflation and
the cost of living in a given area can also help determine compensation in
a given market. After an organisation has evaluated the internal and
external influences influencing pay, it can begin to build an internal
payment system.
 It is also essential to ensure that all compensation plans are legally
compliant in the country or countries an organisation operates within. For
example, employers cannot pay employees under the minimum wage rates
set by the government.
 2. Job Evaluation Systems
 Once you have determined your compensation strategy based on internal
and external factors, you will need to evaluate jobs, develop a pay system,
and consider pay theories when making decisions.
 There are several ways to determine the value of a job through job
evaluation. Usage of a job evaluation system is critical to assess the
relative worth of one job vs another. It is the first step in setting up a
payment system.

There are several ways to perform a job evaluation:


o Job Ranking System - job titles are listed and ranked in order of
importance to the organisation.
 o Paired Comparison System - individual jobs are ranked against one
other, and an overall score is assigned to each work, determining
the highest-valued job to the lowest-valued job.

o 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.

o Point-Factor System - determines the value of a job by calculating

the total points assigned to it. The points given to a specific job are
called compensable factors. These can range from leadership ability
to specific responsibilities and skills required for the job.

 3. Developing a Pay System

 Once you have performed a job evaluation, you can move to the third step,
developing a payment system or pay grading. It is the process of setting
the pay scale for specific jobs or types of jobs.
 Click on the tabs below to find out more about the main types of pay
systems organisation's use.

o Pay Grade Scale
o Going Rate Model
o Management Fit Model
o Variable Pay System
o Broadbanding Systems
o The first method to pay grade is to develop various pay grade levels.
Then once these levels are developed, each job is assigned a pay
grade. When employees receive raises, their raises stay within the
range of their pay grade until they receive a promotion that may
result in a higher pay grade.

Since there is little opportunity for pay discrimination, this system has the
advantage of being fair. Another advantage of this method is that it can be easier
for HR to manage as pay grades are streamlined.
 One of the downsides of pay grading is the possible lack of motivation for
employees to work harder, as pay progression is not based on managerial
judgement.

 4. Pay Decision Considerations

 Besides the motivational aspect of creating a pay structure, there are some
other considerations.
 1. Size of the Organisation
 First, the size of the organisation and the expected expansion of the
organisation will be a factor. For example, if you are the HR manager for a ten-
person company, then a going rate or management fit model may be the most
appropriate choice. But if your company expands, it could be wise to create a
more formal pay structure.
 2. Whether the Organisation operates Internationally or Globally
 If your organization also operates overseas, consideration is how domestic
workers will be paid in comparison to the global market and in what currency. It
is essential to ensure that the chosen pay structure is fair to employees who live
and work in more expensive countries.
 3. Level of communication and employee involvement in compensation
 If you want to increase the motivation that can be produced by fair and equal
compensation, you must outline your payment system. Furthermore, if
practicable, requesting that your employees complete pay attitude surveys, for
example, can help to develop a clear compensation structure that results in
higher performing employees.
 5. Determining Types of Pay
 After a payment system has been developed, we can begin to look at
specific methods of paying our employees. We can divide our total pay
system into three categories: pay, incentives, and other types of
compensation:

o Pay is the hourly, weekly, or monthly salary an employee earns.

o Incentives, commonly known as pay-for-performance incentives,

are frequently granted for exceeding predetermined performance
benchmarks, such as set sales goals.

o Other types of compensation can relate to health benefits (e.g.

health, dental or life insurance), fringe benefits (e.g. sick leave,
 paid vacation time, gym membership) and retirement plans (e.g.
401(k) plans in the US).

 The following are desirable traits of incentive plans:


o Clearly communicated

o Attainable but challenging

o Easily understandable

o Tied to company goals

 The key points from this module are:

 Human resource management (HRM) is the process of hiring people,
training them, compensating them, developing policies relating to them,
and developing strategies to retain them. HRM can be divided into the
following areas:

o Staffing

o Development of Workplace Policies

o Compensation and Benefits Administration

o Employee Retention and Motivation


o Training and Development

o Dealing with Laws Affecting Employment

o Employee Health and Safety

o Awareness of External Factors

 The key challenges for HRM professionals in the modern business world
include:

o Cost containment - HR Managers of human resources must
demonstrate to the organisation the necessity and importance of
their roles.
 o Fast-changing technology - HR managers are also responsible
for devising policies dealing with 'cyber loafing' and other
workplace time wasters revolving around technology.

o Economic factors - changes in the economy can represent

challenges for the human resource manager.

o Ageingand changing workforce - working with multiple generations

at once can create challenges as different expectations and needs
arise from a multigenerational workforce.

 Communication plays an essential role in HRM. There are four main styles
of communication:

o Expresser - people of this style rely primarily on intuition and
feelings and dislike facts.

o Driver - people with a driver style like to have their way and tend to
be decisive.

o Relater - people with a relater style like positive attention and want
to be regarded warmly.

o Analytical - people with this analytical communication style will ask

a lot of questions and behave methodically.

 Listening is another essential central part of communication. There are

three main types of listening:

o Competitive or combative listening - occurs when we are focused
on sharing our point of view instead of listening to someone else.

o Inpassive listening -happens when we are interested in hearing

what the other person says but assume that we hear and
understand what the person says correctly without verifying.

o Active listening - involves verifying that our understanding of what

the speaker says is correct. This style has four key
phases: sensing, interpreting, evaluation and response.

 Nonverbal language accounts for a large part of communication.

Misunderstandings are more likely when nonverbal cues are not seen and
 heard. Nonverbal language can include facial expressions, eye contact,
tone of voice, posture and physical gestures.
 The Ulrich HR model is a common approach to strategic HRM planning,
which suggests that HR functions should be classified into four
categories:

o Strategic Partner - aligning the HR function with the organisation's
needs.

o Change Agent - the ability to foresee and adapt to change

throughout the entire organisation.

o Administrative Expert and Functional Expert - the capacity to

comprehend and put into practice rules, procedures, and processes
related to the HR strategic plan.

o Employee Advocate - The ability to help, defend, and support

present employees inside an organisation.

 The following steps should be taken into consideration before creating the
strategic HRM plan:

o Conduct a Strategic Analysis

o Identify Strategic HR Issues

o Prioritise Issues and Actions

o Develop the HRM Plan

 After creating the HRM strategic plan, the HRM plan can be developed to
address specific issues within the human resource department.
 A compensation plan refers to all aspects of a compensation package (e.g.
wages, salaries and benefits). Five guidelines should be taken into
consideration when developing a compensation strategy:

o Internal and External Factors
o Job Evaluation Systems
o Developing a Pay System
o Pay Decision Considerations
o Determining Types of Pay
o Internal and External Factors in Determining Compensation
Strategy:
Internal factors include the selection of a compensation strategy such as a
market compensation (i.e. going rate) policy, market plus or market minus
policy.

External pay factors can include the current economic state, such as inflation
and the cost of living.