CHAPTER 1- NATURE &

SCOPE OF HRM
BY GEMECHU TUFA (PhD SCHOLAR IN MANAGEMENT)
BULE HORA UNIVERSITY
 What is Management? (1 of 2)

• Management is the Process of Planning, Organizing, Staffing, Leading and

Controlling.

• Management is the act of getting things done through the effort of people
resource.

• In human resources context, management means efficient and effective

utilization of human talents, knowledge, and skills.
 What Is Human Resource Management? (2 of 2)
Before defining what human resource management is, it is important to see separately what
human, resource and management is. An organization is made up of different types of resources,
namely men, material, money, information and machinery. Of this, the first one is a living one.
We can define this resource as a skilled, educated and motivated man power and it implies a
social animal. It is the human/people that make use of non-human resources. Hence, people are
the most significant resource in an organization.
Besides being a living being, human resource differs from non-human resources, because, by
nature human beings are with different and complex resources (they are heterogeneous in a sense
that they differ in personality, perception, emotions, values attitudes, motives/needs and mode of
thoughts.
Modern human resource also characterized by their level of education, skill and better awareness
of their interest and rights. In line with this, management is the act of getting things done through
the effort of this people resource.
In human resources context, management means efficient and effective utilization of human
talents, knowledge, talents and skills.
Line and Staff Aspects of Human Resource
Management
• Authority is the right to make decisions, to direct the work of others,
and to give orders.
• Managers usually distinguish between line authority and staff
authority.
Line and Staff Managers
• Line authority gives
you the right to
issue orders
• Staff authority
gives you the right
to advise others in
the organization
Line Manager’s HR Management Responsibilities (1 of 3)
• Placing the right
person in the right job
• Starting new
employees in the
organization
(orientation)
Line Manager’s HR Management Responsibilities (2 of 3)

• Training employees for jobs that are new to them

• Improving the job performance of each person
• Gaining creative cooperation and developing smooth working
relationships
• Interpreting the company policies and procedures
Line Manager’s HR Management Responsibilities (3 of 3)

• Controlling labor cost

• Developing the abilities of each person
• Creating and maintaining departmental morale
• Protecting employees’ health and physical conditions
 The Human Resources Department

FIGURE 1-1 Human Resource Department Organization Chart Showing Typical HR Job Titles
Source: “Human Resource Development Organization Chart Showing Typical HR Job Titles,” www.co.pinellas.fl.us/persnl/pdf/orgchart.pdf. Courtesy of Pinellas County Human Resources.
Reprinted with permission.
New Approaches To Organizing HR

• Reorganizing the HR function of how it is organized and delivers HR

services
• Shared Services (Transactional) HR teams: HR Shared Services is a centralized hub of HR
administrative and operational duties that are characterized by employee self-service and automation through
leveraging technology, and multi-tiered levels of service and service responses. This allows organizations to
provide standard HR services in the most efficient way.
• Corporate HR teams: HR team structure can vary depending on the size and complexity of the
organization, but may include specialists in areas such as recruitment, training, compensation and
benefits, employee relations and retention, and performance management.
• Embedded HR teams: Embedded HR teams have HR generalists (also known as "relationship
managers" or "HR business partners") assigned to functional departments like sales and production.
They provide the selection and other assistance the departments need.
• Centers of expertise: (CoE) is a partnership between one or more universities of
applied sciences, industry, governments and other organisations. Centres of Expertises play
an important role in the applied research of universities of applied sciences.
Human Resource Management Functions

1-11
Staffing
Process of ensuring the organization always has:
•Required number of employees
•Employees with appropriate skills
•Employees in the right jobs at the right time
•Constant job analysis, human resource
planning, recruitment, and selection

1-12
Job Analysis
• Systematic process of determining skills, duties, and
knowledge required for performing jobs in an
organization
• Impacts virtually every aspect of HRM

1-13
Human Resource Planning
• Matching internal and external supply of people with
anticipated job openings over a specified period of
time
• Sets the stage for recruitment and other HR actions

1-14
Recruitment and Selection
Recruitment: Attracting individuals
to apply for jobs
• Must be timely
• Applicants need appropriate qualifications
• Need sufficient number of applicants
Selection: Choosing individual best suited for a particular position and
the organization

1-15
Performance Management
• Goal-oriented process to ensure organizational
processes are in place to maximize productivity
• Applies to employees, teams, and
ultimately, the organization

1-16
Performance Appraisal
• Formal system of review and evaluation
• Individual
• Team

1-17
Human Resource Development
• Major HRM functions include:
• Training
• Development
• Career planning
• Career development
• Organization development

1-18
Training and Development
• Training: Providing learners with knowledge and skills needed for
their present jobs
• Relatively short-term focus

• Development: Offering learning that goes beyond present job

• Relatively long-term focus

1-19
 Career Planning and Development

• Career planning: Ongoing process

• Individual sets career goals
• Identifies means to achieve them
• Career development: Formal approach used by the organization
• Ensures a pipeline of people with proper qualifications and experiences

1-20
Organization Development
Planned and systematic attempt to:
• Make the organization more effective
• Create a positive behavioral
environment

1-21
Compensation
All rewards that individuals receive as a result of
their employment
• Financial compensation
• Nonfinancial compensation

1-22
Financial Compensation
• Direct (Core Compensation): Pay employee receives in form of wages,
salaries, bonuses, or commissions
• Indirect (Employee Benefits): Benefits employee receives such as
paid vacations, sick leave, holidays, medical insurance

1-23
Nonfinancial Compensation
Satisfaction that employees receive from:
• Job itself
• Psychological and/or physical environment

1-24
Employee and Labor Relations
• Businesses are required by law to recognize a union
and bargain with it in good faith if the firm’s
employees want union representation
• Human resource activity with a union is often referred
to as industrial (labor management) relations

1-25
Internal Employee Relations
Internal Labor Relations: Movement of employees within the
organization Examples:
• Promotions
• Demotions
• Terminations
• Resignations

1-26
Safety and Health
• Safety: Protecting employees from injuries caused by
work-related accidents
• Health: Employees' freedom from illness and their
general physical and mental well-being
Interrelationships of HRM Functions

• All HRM functions are interrelated so that each

function affects the others
• For example, a pay-for-performance compensation
plan depends upon reliable and valid performance
appraisal practices

1-28
Who Performs Human
Resource Management Tasks?
• Human resource professionals
• Line managers
• HR outsourcing
• HR shared service centers
• Professional employer organization (employee
leasing)

1-29
Human Resource Professional
• Historically, the HR professional was responsible for each of the six HR
functions
• Acts in advisory or staff capacity
• Works with other managers to help them deal with human resource
matters
• Today, HR departments continue to get smaller

1-30
Employees as Human Capital
• Capital refers to the factors that enable companies, for
example, to generate income, higher economic value, strong
positive brand identity, and reputation. There is a variety of
capital, including financial capital:
• Cash
• Capital equipment (for example, state-of-the-art robotics used in
manufacturing)

• Human capital, as defined by economists, refers to sets of collective skills,

knowledge, and ability that employees can apply to create value for their
employers

1-31
Dynamic Human Resource Management Environment

1-32
Legal Considerations

• Federal, state, and local legislation

• Court decisions
• Presidential executive orders

1-33
Labor Market
• Potential employees located within
certain geographic area
• Demographic shifts (more older
workers) are associated with workforce
preparedness
• Always changing

1-34
Society
Firm must accomplish its purpose while
complying with societal norms
• Ethics: Deals with what is good and bad, or
right and wrong, and with moral duty and
obligation
• Corporate social responsibility: Implied,
enforced, or felt obligation of managers to
serve or protect interests of groups other than
themselves

1-35
Political Parties
• Related to society are political parties
• Differing opinions on how HRM should be
accomplished (government intervention such
as laws vs. market forces)

1-36
Unions

• Group of employees who have joined together to

collectively bargain with their employer
• The union becomes a third party when dealing with
the company

1-37
Shareholders
• Owners of a corporation
• Have invested money in the firm
• May challenge programs put forth by management
to be beneficial to the organization

1-38
Competition
• In product or service and labor markets
• Firms must maintain a supply of competent
employees
• Bidding war often results

1-39
Customers
• People who actually use firm’s goods and services
• Employment practices should not antagonize
members of the market that the firm serves
• Workforce should be capable of providing top-
quality goods and services

1-40
HR Technology
Rapid technological changes provide:
• Increased sophistication
• Ability to design more useful human resource
information systems (HRIS)

1-41
 LO 5
Economy
• When economy is booming, it is often more difficult
to recruit qualified workers
• In economic downturn, more applicants are typically
available

1-42
 LO 5

Unanticipated Events
• Unforeseen occurrences in external environment
• Require a tremendous amount of adjustment with
regard to HRM

1-43
 LO 6

Corporate Culture and HRM

Corporate culture: System of shared values, beliefs, and
habits within an organization that interacts with the
formal structure to produce behavioral norms

1-44
 LO 7

Employer Branding
The firm’s corporate image or culture created to attract
and retain the type of employees the firm is seeking. It
is what the company stands for in the public eye.

1-45
 LO 8

Human Resource Management in Small Businesses

• Many college graduates obtain jobs in small

businesses
• Same HR functions must be accomplished
• Manner in which they are accomplished may differ
• For example, a staffing mistake in hiring an incompetent employee who alienates
customers may cause the business to fail. In a larger firm, such an error might be much
less harmful.
• Small businesses often do not have a formal HR unit or an HRM specialist

1-46
LO 9
Country Culture and Global Business

• A country’s culture is a set of values, symbols,

beliefs, languages, and norms that guide
human behavior within the country
• Cultural differences between countries are a
major factor influencing global business
• Cultural misunderstandings are common

1-47
 LO 10

Describe the HR Profession

Various designations are used within the HR

profession:
• Executive: A top-level manager who reports directly to the corporation’s CEO or
to the head of a major division

• Generalist: Employee who may be an executive, performs tasks in a variety of

several or all of the six functional areas of HRM

• Specialist: Employee who may be an HR executive, manager, or non-manager

who is typically concerned with only one of the six functional areas of HRM
1-48
 LO 10
Human Resource Executives, Generalists,
and Specialists

1-49
 LO 10

Competency Model for HR Professionals

1-50
 LO 10

Describe the HR Profession

• Profession: A vocation characterized by the existence of a common
body of knowledge and a procedure for certifying members
• Performance standards are established by members of the profession
rather than by outsiders; that is, the profession is self-regulated
• Most professions have effective representative organizations that
permit members to exchange ideas of mutual concern (e.g., Society
for Human Resource Management)

1-51
 LO 10

Expected Growth of the HR Profession

• Employment of HR professionals is projected to grow

13 percent from 2012 to 2022
• Employment growth largely depends on the
performance and growth of individual companies

1-52
 III.
Today’s New Human Resource
Management
Today’s New Human Resource Management

• A Brief History of Personnel/Human Resource Management

• Distributed HR and the New Human Resource Management
• Trends Shaping HR: Digital and Social Media
A Quick Summary

FIGURE 1-4
What Trends Mean for
Human Resource
Management
HR and Strategy

Strategic Human Resource Management

• Strategic human resource management – means formulating and
executing human resource policies and practices that produce the
employee competencies and behaviors that the company needs to
achieve its strategic aims.
Improving Performance: The Strategic
Context

Building L.L. Bean

Let’s take a look at the heart of their strategy.

HR and Performance

The Human Resource Manager is expected to spearhead employee

performance.
Three Levers can be applied to do so:
1. Department Lever
2. Employee Cost Lever
3. Strategic Results Lever
HR and Evidence Based Management
• Evidence-based human resource management – is
the use of data, facts, analytics, scientific rigor,
critical evaluation, and critically evaluated
research/case studies to support human resource
management proposals, decisions, practices, and
conclusions.
HR and Adding Value

• Adding value – means helping the firm and its employees improve in
a measurable way as a result of the human resources manager’s
actions.
HR and Performance and Sustainability

• It is about measuring companies in terms of maximizing profits but

also on their environmental and social performance as well.
HR and Employee Engagement

• Employee engagement – refers to being psychologically involved in,

connected to, and committed to getting one’s job done.