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Chapter 1 Human Resource Management

Chapter 1 Human Resource Management

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Chapter 1 Human Resource Management
Learning Objectives
Explain what is meant by human resource management
Understand the relationship between human resource management and management
Describe the HR manager’s role
Understand the human resource management activities performed in organisations
Explain the meaning of strategy
Explain the meaning of strategic human resource management
Describe a strategic approach to human resource management
Appreciate the strategic challenges facing human resource management
Chapter Outline
This chapter introduces the concept of Human Resource Management (HRM) and its role withinorganisations. It is divided into several sections that describe the activities involved in HRM and therelationship between HRM and an organisation’s business strategy. The material contained in this chapter serves as the basis upon which the entire book is built.
What is Human Resource Management?
The focus of human resource management (HRM)
 
is on managing people within the employer-employeerelationship. It involves the productive use of people in achieving the organisation's strategic businessobjectives
 
and the satisfaction of individual employee needs. HRM is a major contributor to the success of anenterprise because it is in a key position 'to affect customers, business results and ultimately shareholder value'. Ineffective HRM is a major barrier to employee satisfaction and organisation success.
HRM and Management
The purpose of HRM is to improve the productive contribution of people, and should therefore be related toall other aspects of management. There are two basic approaches to HRM:
 
instrumental HRM -
 
(or 
hard)
approach that stresses the rational, quantitative and strategic aspects of managing human resources; andhumanistic HRM
-
(or soft) approach that emphasises the integration of HR policies and practices withstrategic business objectives, but recognises that competitive advantage is achieved by employees withsuperior know-how, commitment, job satisfaction, adaptability and motivation.
The new role of HR Managers
As HRM becomes more business oriented and strategically focused, four key roles for HR managers can beidentified:
 strategic partner 
– a strategic partner role requires the ability to translate business strategy into action. Thisrole allows the HR manager to become part of the business team.
administrative expert 
– to become administrative experts
 
HR professionals must be able to: re-engineer HR activities through the use of technology, rethinking and redesigning work processes and the continuousimprovement of all organisational processes; see HR as creating value; and measure HR results in terms of efficiency (cost) and effectiveness (quality).
employee champion
– The HR professional must be able to relate to and meet the needs of employees.
change agent 
– The HR manager needs to act as a change agent
,
serving as a catalyst for change within theorganisation; by leading change in the HR function and by developing problem-solving communication andinfluence skills.
 
HRM Activities
HRM involves the acquisition, development, reward and motivation, maintenance and departure of anorganisation's human resources. To do this successfully HRM must do all of the following:
 Job analysis
 Human resource planning 
 Employee recruitment 
 Employee selection
 Performance appraisal 
 Human resource development 
Career planning and development 
Compensation
 Benefits
 Industrial relations
 Health and safety programs
Manage diversity
Strategy
What is strategy?
'Strategy defines the direction in which an organisation intends to move and establishes the framework for action through which it intends to get there.' The purpose of strategy is to maintain a position of advantage bycapitalising on the strengths of an organisation and minimising its weaknesses. To do this, an organisationmust identify and analyse the threats and opportunities present in its external and internal environments.
What is strategic management?
Strategic management is the process whereby managers establish an organisation's long-term direction, setspecific performance objectives, develop strategies to achieve these objectives in the light of all the relevantinternal and external circumstances and undertake to execute the chosen action plans. The aims of strategicmanagement are to help the organisation to achieve a competitive advantage and to ensure long-term successfor the organisation.
Components of strategic management
Strategic management involves
Strategy formulation -
selecting an organisation's mission, or purpose, andkey objectives; analysing the organisation's internal and external environments; and selecting appropriate business strategies, and
Strategy implementation -
designing an organisation's structure and control systemsand evaluating the selected strategy in achieving the organisation's key objectives.
Organisational mission and objectives -
Mission statements are the operational, ethical and financialguiding lights of companies. The organisation's mission provides the context and direction for the formulationand evaluation of HRM objectives, strategies and action plans. The mission statement identifies why theorganisation exists and what its focus is.
Environmental analysis -
This includes
External environmental 
analysis which identifies strategic oppor-tunities and threats, and analysis of the
internal environment 
which aims to identify the organisation'sstrengths and weaknesses.
Strategy selection -
This involves generating a series of strategic options based on the organisation'sobjectives and a comparison of its internal strengths and weaknesses and its external opportunities andthreats. Alternative strategies are evaluated to identify which one will best achieve the organisation's objec-tives. The aim is to select the strategy that gives the best alignment or fit between the external and internalenvironments.
 
Strategy implementation -
It is critical for successful strategy implementation that employees accept thechanges demanded by the new or revised strategies. Similarly, an organisation's structure must be designed toenhance the implementation of a strategy.
Performance evaluation -
Management must decide how to monitor and measure performance so theeffectiveness of a strategy can be evaluated. This may involve a
management by objectives
(MBO) approach- setting performance objectives, measuring performance, comparing actual performance with targeted performance and taking any corrective action required.
Feedback -
Strategic management is an ongoing process. The implementation of a strategy must bemonitored to determine the extent to which it is realising the organisation's major strategic objectives. It isimportant to determine whether the strategy is being implemented as planned, and whether it is achieving thedesired results.
Conflict, politics and strategic change -
Conflict and politics arise with strategic change. Agendas, conflictover resources and the need for change may produce power struggles within the organisation. Managersoften have to make decisions and plan in rapidly changing environments, so it is important that they remainfocused on short and long-term objectives.
Types of strategiesGrowth -
An organisation can expand either through internally generated growth or through acquisitions,mergers or joint venture. Growth may be concentrated on building existing strengths or on moving into newor unrelated areas of business.
Retrenchment -
The emphasis of retrenchment is on performance improvement by increasing productivity,cost cutting, downsizing, re-engineering, and selling or shutting down business operations.
Stability -
This is a neutral strategy that attempts to maintain the status quo by pursuing established businessobjectives; and is often used when an organisation is performing well in a low-risk environment or when anorganisation needs to consolidate after a period of rapid growth or restructuring.
Combination -
An organisation can pursue more than one strategy at the same time.
Choosing strategies
Different types of organisational strategies produce a need for particular HR strategies. It is important thatHR strategies accurately reflect an organisation's master business strategy to ensure an appropriate fit whichenables HR action plans to support the master strategy and the direction of the organisation.
Need for HR strategy
Increasing pressures have forced managers to critically rethink their approaches to HR management. Merging business strategies and HRM activities has become a critical source of competitiveness for organisations.Managers consequently must adopt a strategic mindset or way of looking at and thinking about themanagement of people. HR managers have a responsibility to ensure that HRM is strategically aligned withthe organisation's overall business objectives.
Aims of HRM strategy
HRM strategies outline the organisation's people objectives and must be an integrated part of its overall business strategy. They must focus on what line management sees as the main business issues. HRM activitiescan then be clearly related to the direction of the business.
Strategic organisation and strategic HRM objectives
Organisations can improve their environment for success by making choices about HR planning, staffingappraisal, compensation, training and development and labour relations that are consistent with and support

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The wealth of nations and of corporations is primarily dependent upon their respective "citizen populations" and their individual and collective KSA attributes. Thus, education and training in this knowledge based environment are essential to global participation strategies in all future scenarios, since the human factor provides the real competitive edge given technology parity potentialities.
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