Fundamentals of

Human Resource
Management

Chapter 2:
Fundamentals of HRM
 People, not buildings, make
a company successful.

Organizational goals cannot be done

Without human resources.
 Management Essentials
 Management is the process of efficiently achieving organizational
objectives with and through people.

 The primary functions of management:

1. Planning: A management function focusing on setting organizational goals
and objectives.
2. Organizing: A management function that deals with determining what jobs
to be done, by whom, where decisions are to be made, and how to group
employees.
3. Leading: A management function concerned with directing the work of
others (ensure that the right people are on the job with the appropriate skills
and motivate them to high productivity).
4. Controlling: A management function concerned with monitoring activities
to ensure goals are met.

 Common to any effort to achieve objectives are three elements: goals,

limited resources, and people.
 Importance of HRM
 Prior to the mid-1960s, personnel departments in the organizations were often
perceived as the “health and happiness” crews. Their primary job activities
involved planning for company picnics, scheduling vacations, enrolling workers
for health-care coverage, and planning retirement parties.

 Now, laws have placed on employers many new requirements concerning hiring
and employee practices. Jobs have changed; more technical employees with
greater skills are required, job boundaries become blurred; and global competition
has increased the importance of improving workforce productivity and looking
globally for the best qualified-workers. Thus, organizations need HRM specialists
trained on psychology, sociology, organization and work design, and law.

 The HRM professionals are required to ensure that the organization abides to the
legislation in hiring the best-qualified candidate without any discrimination, to
train and develop employees, to ensure that the employees maintain their
productive affiliation with the organization, to attract new applicants, … etc.

 Professionals in HR are important to the organization success and today they

serve on the executive board and participate in the development of the overall
organizational strategy.
 The Strategic Nature of HRM
 HRM must balance two primary responsibilities:
1. Assisting the organization in its strategic direction.

It involves working with line managers in analyzing organizational

designs, the culture, performance systems, and recommending and
implementing changes where necessary.

Moreover, HRM must serve the organization by determining lower-

cost strategies to its HRM practices.

2. Representing and advocating for the organization’s employees.

Setting HRM policies and practices that attract and keep employees.
 Viewpoints to HRM
 Views to HRM:
1. HRM is a staff or support function in the
organization that provides assistance in HRM
matters to line employees, or those directly
involved in producing organization’s goods and
services.
2. HRM is a function of every manager’s job.

HRM is a function of every manager’s job,

not just those who work in human resources.
 HRM Activities
 HRM primary activities are:
1. Staffing (hiring people).

2. Training and development (preparing them).

3. Motivation (stimulating them).

4. Maintenance (keeping them).

 HRM Activities
1. Staffing Function
1. Staffing (hiring people):
 Staffing: Activities in HRM concerned with seeking and hiring
qualified employees.
 It starts with employment planning which requires knowing the
organization strategic plans.
 Job analysis is required to identify the KSAs the job applicant
must possess to succeed.
 Then the recruiting process begins. The goal of recruiting is to
give enough information about the job to attract a large number
of qualified applicants and simultaneously discourage the
unqualified from applying.
 Followed is the selection process. It attempts to thin out the large
set of applications and to select an applicant(s) who will be
successful on the job.
 HRM Activities
2. Training and Development Function
2. Training and development (preparing people):
 Training and development: Activities in HRM
concerned with assisting employees to develop up-to-
date skills, knowledge, and abilities.
 Socialization allows employees to adapt to their new
surroundings. The focus is on orienting the new
employees to the rules, regulations, and goals of the
organization, department, and work unit.
 Training then begins.
 There are four areas in the training and development
phase: employee training, employee development,
organization development, and career development.
 HRM Activities
3. Motivation Function
3. Motivation (inspiring people):
 Motivation: Activities in HRM concerned with helping employees exert
at high energy levels.
 Motivation is a multifaceted process – one with individual, managerial,
and organizational implication.
 Job design plays a role in motivation.
 A level of respect is required between management and the workers;
this involves employees participation in the decisions affecting them,
listening to them, and implementing their suggestions where
appropriate.
 Motivation requires understanding to the implications of motivational
theories.
 Performance standards must be set and performance evaluation system
is designed to provide feedback to employees and address any
performance weaknesses. Performance evaluation must also be easy for
managers to use.
 Employee compensation must be established in light of performance.
 HRM Activities
4. Maintenance Function
4. Maintenance (Keeping people):
 Maintenance: Activities in HRM concerned with
maintaining employee’s commitment an d loyalty to
the organization.
 Maintenance aims to retain productive employees.
 This requires HRM to ensure a safe and healthy
working environment; caring for employees well-
being; applying employee assistance programs and
communication programs (designed to provide
information to employees).
 External Influences on HRM
 Environmental influences, directly or
indirectly, affect HRM processes.

 These influences are grouped in four

areas:
1. The dynamic environment
2. Governmental legislation
3. Labor unions
4. Current management practices
HRM Primary Activities

Staffing
Staffing
••HRM
HRM Planning
Planning
••Recruiting
Recruiting
••Selection
Selection
Training &
Training & Development
Development
Maintenance
Maintenance ••Orientation
Orientation
••Safety
Safety &
& health
health HRM
HRM ••Employee
Employee training
training
••Communications
Communications
Goals ••Employee
Employee development
development
••Employee
Employee relations
relations Goals ••Career
Career development
development

Motivation
Motivation
••Job
Job design
design
••Performance
Performance appraisals
appraisals
••Rewards
Rewards & & compensation
compensation
••Employee
Employee benefits
benefits

External Influences
 Translating HRM Functions
into Practice
 More than half of the HR departments offer administrative services to the organization.
These might include: operating the company’s credit union, making childcare arrangements,
providing security, or operating in-house medical or food services.

 Yet, in a typical organization, the HRM functions are found in four distinct areas: (1)
employment, (2) training and development, (3) compensation/benefits, and (4) employee
relations.

 Employment promotes staffing activities.

 Training and development helps the employees to maximize their potential. The focus is to
enhance the employees’ personal qualities that lead to greater organizational productivity. It
also includes career development activities and employee counseling.

 Compensation management is concerned with paying employees and administering their

benefits package.

 Employee relations are concerned with ensuring effective communications among

organizational members. It includes top management commitment, effective upward
communication, determining what is to be communicated, allowing for feedback, and
information sources (the HRM department, immediate supervisor, and employee relations
department ).
 HRM Value
Quality HRM services improved both
the financial well-being of
the organization and shareholder value, and
created a flexible, work friendly environment
with properly recruited and trained
quality workers.
 The Changing Nature of HRM
 As organizations change structures, movement has been away from
centralized functional areas towards more self-contained units.

 HRM professionals are assigned to strategic business units or market-

driven units to handle all HRM operations. While a headquarters HRM
staff remains to coordinate the activities, the HRM representative is
expected to perform all the HR functions. Accordingly, the movement is
toward generalist positions in HRM.

 Another trend is the shared services: sharing HRM activities among

geographically dispersed divisions. (Few generalists handle the routine
local matters, such as recruiting, policy implementation, grievances, and
employee training. Specialized services, such as organization
development and compensation and benefits, are offered by the centralized
unit and provide more cost-effective, high-quality HR services).

 Top management has made a decision to outsource some of the work

HRM professionals once handled.
HRM in an Entrepreneurial Enterprise
 The owner-manager often is responsible for and
performs the HR activities.

 In other situations, small-business human resource

departments are staffed with one individual and
possibly a full-time secretary. Hence, they are
forced to be HRM generalists, handling all HR
activities.

 There is no specialized staff; there may be a

tendency to use outside consultants to assist in
performing all HRM activities.
 HRM in a Global Village
 The HR function must adapt to a changing and far
more complex environment.

 HRM activities become more complex when

organization’s employees are located around the
world, and additional human management activities
often are necessary that would be considered
invasions of employee privacy in domestic
operations.

 HRM should properly prepare employees for

international assignments.
 HR and Corporate Ethics
 HRM’s role is to ensure that ethics exist in an
organization and are adhered to.

 As keepers of corporate policies and employee

documents, HRM must make sure that employees
know about corporate policies and train employees
and supervisors on how to act ethically in
organizations.