CHAPTER 1 HUMAN RESOURCE MANAGEMENT

Definition​ - development and implementation of systems in an organization for attracting,

developing and retaining a high-performing workforce.

Purpose ​- ensure employees are being used efficiently & effectively, able to contribute towards
organizational goals. ​Satisfied employees = productive + valuable asset

Development of HRM

Industrial Revolution 1850s Human Relations Approach Recent developments

- 1920s 1930s - 1950s 1950s - 2020

● Worker alienation ● Emphasis on ● Increased labour

● Exploitation of supervisory training legislation
workers ● Recreation ● Growth of
● Specialization programmes organization
● Negative Effects ● Welfare programmes ● Increasing workforce
diversity - population
& education levels
● Rapid changes -
women & skilled
workforce

Changes affecting HRM

● Technological changes
● Globalization & increased competition
● Employee education & expectations
● Workforce diversity - race, gender, working attitudes

Requirements for HRM career

● Communication skills
● Ability to bring about change
● Information technology (IT) savvy
● Numerate & able to analyse data
● Ability to understand business context, mission & goals
● High ethical standards
Functions of HR Department

Employment ● Human resource planning

● Setting policies & administering disciplinary action
systems
● Recruitment & selection
● Establishing career movement policies
● Counselling & motivating
● Terminating employees
● Records keeping
● Liaison with Immigration & Labour Department

Training & Development ● Holding induction programmes

● Providing skills training
● Organizing supervisory & management development
programmes
● Establishing & administering performance
management and appraisal systems

Payment/Reward Systems ● Developing a wage structure-compensation

(Compensation) ● Preparing information for payroll
● Establishing incentive schemes
● Advising on benefits
● Liaison with SOCSO, Income Tax, HRDF, EPF

Health & Safety ● Organizing safety programmes

● Establishing wellness programmes
● Accident investigation
● Provision of health services-insurance
● Establishing programmes to prevent sexual
harassment & violence

Employee Services/Welfare ● Overseeing canteen facilities

● Provision of transport
● Provision of recreation facilities
● Counselling
● Managing employee assistance programmes

Productivity Improvement ● Establishing & maintaining quality improvement

Schemes initiatives
● Introduction & implementation of suggestion
schemes, team problem-solving activities, Kaizen
tools and other similar programmes

Industrial Relations ● Grievance handling

● Relations with trade union representatives
● Collective bargaining negotiations
 ● Preparing for contingencies

Role of Ministry of HR

● sets policies
● prepares draft employment legislation
● enforces the employment legislation

Structure
● Ministry of HR
○ Department of Labour
■ Department of Manpower
■ Department of Skills Development
○ Department of Trade Union Affairs
○ Department of Industrial Relations
○ Department of Occupational Safety & Health

The Employment Laws

● The Employment Act 1955
● The Sabah Labour Ordinance
● The Sarawak Labour Ordinance
● The National Wages Consultative Council Act 2011
● The Employees Provident Fund (EPF) Act 1991
● The Employees Social Security Act (SOCSO) 1969
● The Occupational Safety and Health Act (OSHA) 1994
● The Factories and Machinery Act 1967
● The Children and Young Persons (Employment) Act 1966
● The Employment (Restriction) Act 1968
● The Trade Unions Act 1959
● The Industrial Relations Act 1967
● Pembangunan Sumber Manusia Bhd. Act 2001
● The Skills Development Fund Act 2004
● The National Skills Development Act 2006
● The Minimum Retirement Age Act 2012
CHAPTER 2 RECRUITMENT SELECTION & INDUCTION

Recruitment ​- ​process of attracting suitable people to apply for job vacancies

Selection ​- ​choosing the most suitable candidate among a group of applicants

Bad recruitment decision leads to

● Mistakes, accidents & loss of customers caused by employees who cannot cope with
their job
● Lowered morale amongst employee’s supervisors & co-workers who have to rework
mistakes/take over more tasks
● Defending a claim of dismissal without just cause/excuse, once the employee has been
dismissed
● Recruiting new employee for replacement
● Training new employee for replacement

Recruitment & Selection Process

1. Make decision to recruit
2. Conduct job analysis
3. Source applicants from web/applicants
4. Choose most suitable applicant
5. Offer employment
6. Hold induction programme

Job Analysis
● Technique of studying a job ​to identify the skills, knowledge, experience & other
requirements necessary to perform a job
● Useful for recruitment & selection, ​to ensure employees are given training & to set
objectives in order to manage the employees performance

Job Descriptions​ - fundamental documents valuable in a variety of HR functions, used in:

● Recruitment & selection
● Training
● Setting performance standards & appraisal
● During restructure, identify unnecessary task, overlap responsibilities

Person Specification ​- what sort of person to fill the position, information includes:
● Knowledge, skills & abilities required
● Educational qualifications & work experience required
● Physical requirements
● Personality requirements
● Career path
Internal Recruitment​ - promotion from within & transfer of existing staff
● Employment record of applicant available
● No induction needed
● Little/No cost involved
● Employee’s morale & motivation increased
● Knew employees work attitudes, ability & discipline

External Recruitment ​- sources of external applicants

● Employment agencies & consultants
● Campus recruitment
● Employee referrals
● Unsolicited applicants
● Advertising in mass media
● Internet

Selection Process​ - sources of information

● Application forms/ curriculum vitae/ biodata/ resume
● Reference checks/ social media
● Tests
● Interviews
● Assessment

Selection Interview ​- factors that influence effectiveness of selection interview

- Timing
- Venue
- Planning
- Skills of interviewer(s)
- Questioning techniques

Contract of employment ​- an agreement whereby an employer agrees to remunerate an

employee for service/work performed & the employee agrees to work for the employees
Terms & conditions of employments ​must:
- Comply with the employment laws, where relevant
- Be clear & easy to understand
- Ber attractive
Terms of contract​ - terms agreed to by the parties by way of oral agreement/in writing, the term
of a contract of employment can only be changed by mutual consent as any unilateral change
amounts to a breach of contract

Induction ​programme - helps new recruits to adjust their working environments & helps them
become productive team members in a short period of time
CHAPTER 3 TRAINING

Training ​- attempt by an organization to change employees through the learning process = they
are able to perform their jobs as efficient as possible​ | shared responsibility between all
departments

Not training your employees =

● Payment to employees when learning on the job, may take longer if not properly planned
for
● Wasted materials, sales & customers due to mistakes of untrained employees
● Time & cost wasted to undo mistakes made by untrained employees
● Lowered morale, leading to high turnover, demotivated by working with an untrained
employee
● Accident-related costs
● Higher turnover = recruitment costs, employees feel they have no prospects of further
development

Benefits of training
● Training opportunities attract & help to retain talented workers
● Increases work productivity
● Increases job satisfaction
● Keeps workers up-to-date
● Motivates workers

Learning organization ​- one which is permeated with a culture, whereby all employees
continuously attempt to increase their knowledge & skills on a cooperative basis

Training Process
1. Identify training needs
2. Set training objectives
3. Develop training programme
4. Implement \\
5. Evaluate \\

Training needs​ - problem which prevents work being done satisfactorily & which can be
overcome by training
Situations - new employees, promotion & transfer, new machinery, new products or services,
etc
Learning principles
● The learner must want to learn
● Active learning is more effective than passive learning
● Feedback/ knowledge of results is essential
● Learning is faster in teams
● Learning must be fun

E-learning ​(roles of computers in training)

● Allows learners to learn at the speed which suits them best
● Allows for savings on logistics costs
● Allows for employees to learn at times which suits them best

CHAPTER 4 MANAGING EMPLOYEE PERFORMANCE & PERFORMANCE APPRAISAL

Performance Management System - a system to ensure that every employee works in a

manner which is aligned with the organizational goals & ensures that the employee reaches his
maximum potential on the job | Designed by HR specialists & implemented by heads of
departments & all managers
This system must take into account
- Recruitment of employees, with the right attitude & ability can perform well
- Training - employee have right skills & knowledge to do the job
- Compensation & reward systems - to encourage employee to do well, year after year
- Managing the performance of individual employees - job of all manager & supervisor

Components of a Performance Management System

- Organizational plans, including setting of objectives established for all levels down to the
individual worker
- Implementation of the work by the individual worker, accompanied by appropriate forms
of monitoring by the worker’s manager/supervisor
- Appraisal of the work of the individual worker
- Follow-up action taken after the appraisal
Objectives ​- without clear objectives, employees PM cannot be achieved. Must be informed
earlier as employees will try to achieve their own objectives.
Must be
- Capable of achievement by the employee
- Measurable
- Accepted by the employee - not doing something illegal/unethical
- Not too high level
Performance objectives may relate to
- Quantity of output
- Quality of output
- Behaviour of employee
- Development of employee

Benefits of a Performance Appraisal System

- Encourages quality performance by rewarding those who do well
- Improves current performance by giving workers feedback
- Assists in identifying training needs
- Provides documentation if disciplinary proceedings are needed - domestic inquiries/
labour court
- Provides a channel of communication between managers & their subordinates

Effective Appraisal Systems ​- ​should be

- Integrated into a performance management system
- Receive top management support - provide resource & training
- Customized to the needs of the organization
- Acceptable & understandable by employees
- Reliable & unbiased as far as possible

- Employees current work is evaluated = can improve

- To achieve objectives, employees must set own objectives/ targets
- Employees to be given necessary training to achieve desired output
- PM info to be used for employee future career development
- Great performance should be compensated accordingly
- Training for employees having difficulties
- Employees - further monitoring or not?
- Sometimes employee will be more productive if transferred to another department
Potential Bias in Performance Appraisal
- Recency effect ​- manager remember only recent happenings
- Halo effect​ - give more marks if manager likes the person
- Central tendency​ - give safe grading, high marks > asked by management, low marks >
subordinate on ‘strike’
- Prejudice & Stereotyping
- Fatigue ​- later assessment will be done hurriedly due to tiredness

Appraisal Methods
- Comparative methods ​- compare between subordinates. Weakness of method - can’t
show strength/ weaknesses of employee
- Trait rating scales ​- most popular method, using combination of personality, behaviour
& success. Different trait for different jobs
- Essay technique ​- not popular, manager must have good vocabulary

Skills needed for Effective Performance Management

- Observation of performance ​- purpose of appraisal is to give feedback, make
employees aware of their strengths/ weaknesses. Goals to be negotiated with
subordinate
- Coaching ​- teaching, one-to-one guide
- Counselling ​- identify problems, offer solutions, manager must have listening skills,
combination of non-directive counselling, giving advice, give information

Follow-up after appraisal

- Set objectives for next time period
- Give rewards for good performers - bonuses/ increments
- Provide retraining for non-performers
- Take disciplinary action for non-performers but must be careful & document it -
employee can go to Industrial Court for wrongly dismissal due to poor performance
CHAPTER 5 PAYMENT SYSTEMS & WORKING HOURS

Importance of wage systems

- Wages are ​important to employees ​- standard of living & status
- Important to employers ​- cost of production
- Important to society ​- competitiveness of businesses
- Attract potential employees & retain best performer
- Low wages, low spending = domestic economy will not grow
- Increasing wages = increasing cost/price @ labour becomes too expensive
- System of working hours = attract potential employees

Goals of wage systems

- Maximize profits
- Attract employees through attractive package
- Retain best employees
- Motivate employees for effective performance
- Systems with simple administration

Types of wage systems

Time-related system - Wages paid for hourly, weekly, monthly basis.

Widely used because easy to understand &
monitor
- Employees guaranteed steady income
- Disadvantage - no incentive for employee to work
hard as same pay for bad performer

Place rated/piece-work system - Staff paid according to number of units produced

/payment by results
- Higher output = higher rates paid
- Effective when job has short learning cycle/easy to
learn
- Control/monitor work & effort, not machinery
controlled
- No breaks/stoppages in production
- Staff motivated to produce more to earn more
salary
- Disadvantages - quality of work produced affected
- Too fast = prone to accidents
- Low wages = tired to make more money, high
wages = becomes lazy
Factors affecting levels of pay
Internal - Compensation policy of organization
- Worth of the job
- Employee’s relative worth
- Employer’s ability to pay

External - Labour market

- Cost of living
- Collective bargaining
- Legal requirements

Legislation relevant to remuneration

1. The Employment Act
2. The Sabah Labour Ordinance
3. The Sarawak Labour Ordinance
4. The National Wages Consultative Council Act

- Frequency of wage payment

- Timing of wage payment
- Mode of payment
- Advances on wages
- Deductions from wages
- Situations when not required to pay
- Failure to pay wages
- Minimum wages

Working Hours - restrictions on WH established by the Employment Act & Sabah, Sarawak
Labour Ordinance
1. No employee shall be required under his contract to work: more than 8 hours per day
2. More than 48 hours per week
3. More than 5 consecutive hours without a 30-minute break
Overtime ​- work done outside the normal hours of work is permitted up to a maximum of 104
hours per month
- Cannot be made compulsory except in certain circumstances & in certain industries
- Must be paid at premium rates
Advantages Production/service levels increase without hiring extra workers
Provides opportunity for workers to increase their income

Disadvantages - Higher cost per hour of labour

- Causes fatigue = prone to accidents
- Causes dissatisfaction amongst workers
Shift work system
- Double day
- Triple shift
- Continuous
- Semi-continuous
- Split shift
- Rotating/fixed shift

Alternative work schedules

- Flexitime - open early, advantage - staff motivated, less cost. Disadvantage - working
different time than superior, meetings become difficult
- Job-sharing - share a job with another person, advantage - can take over when one is on
leave. Disadvantage - difficult to compare performance for both employee
- Part-time - choosing certain days to work, advantage - save costs, less salary
- Teleworking - work from home, less transport & admin charges, difficult to be promoted
because not seen by superior
CHAPTER 6 BENEFITS & REWARDS

Why provide benefits?

- Compulsory under the following laws: Employment Act, Sabah Labour Ordinance,
Sarawak Labour Ordinance, etc.
- Help attract staff to join organization
- Help retain existing employees
- Increase morale of employees = higher productivity

Statutory Benefits
1. Maternity leave
2. Sick leave
3. Annual leave
4. Paid public holidays
5. Contribution to Employees Provident Fund
6. Contribution to Employees Social Security Organization/Purchase of insurance policy

Non-statutory benefits
Time payments a) Marriage
b) Birth of a child (paternity leave)
c) Personal emergencies
d) Pilgrimage
e) Studies
f) Death of a relative

Health care a) Payment of medical bills

b) Hospitalization benefits
c) Payment of optical bills
d) Payment of dental bills

Other a) Insurance (other than SOCSO)

b) Financial services, loan to buy car/house at lower rates
c) Discounted goods/services
d) Retirement benefits
e) Educational assistance
Incentives & Rewards
- Drive behaviour to higher levels
- Create competition
- Help to retain best performers
To be effective, reward schemes must:
1. Allow many employees to be rewarded
2. Be perceived as fair
3. Drive suitable behaviours
4. Be perceived as attractive
Financial rewards - Wages increments
- Bonuses
- Profit-sharing schemes
- Commissions based on sales made

Non-financial rewards - Performance awards

- Letter of appreciation
- Long service awards
- Sponsorship to attend conferences
- Award ceremonies
- Token of appreciation
CHAPTER 8 IMPROVING PRODUCTIVITY & EMPLOYEE COMMITMENT

Importance of Productivity
- Fierce competition in business
- Productivity = effort
- Manpower planning by HR - to ensure right people with right attitude & knowledge
- Company need employees to produce results
- More important than recruiting/selection

Suggestion Scheme ​- a means for channeling worker’s ideas on how to improve work
processes
Results is
Write down idea Submit idea Idea is evaluated approved/rejected by
management

- Good ideas can improve the competitive position - increasing productivity, efficiency &
give higher quality product & services
- Motivate employees by giving ideas, promote interest & awareness, and continuously
improving work situation - increase job satisfaction & productivity
- Manager & employees at all levels can contribute ideas
- Without formal scheme, employee won’t submit ideas - no personal gain, lack of
confidence, peer pressure to keep quiet

Quality Control Circles ​- a group of workers who meet regularly in order to identify, analyse &
solve work-related problems (Innovative & Creative Circle, ICCs)
- Consists of 5-15 volunteers from the same department/section/unit
- Makes oral presentation of their solution to the management before implementing it
A successful QCC should have:
● Appropriate support structure; steering committee & facilitators
● Training; leadership, public speaking, brainstorming
● Management support; top management & manager give priority
● Publicity; excitement & pride, slogan & posters
● Suitable rewards system; improvement = profitable & high wages
● Positive organisational climate; trust & good relationship
Total Quality Management ​- objective = to create an organization where everyone is working
to make the organization the best in its field
Techniques​:
+ 5S - Seiri, Seiso, Shitsuke, Seiton & Seiketsu
+ Benchmarking - comparing with other businesses or industries.
+ ISO Certification - products are trustworthy & reliable.

Encouraging Commitment
Importance of committed employees
- Want their organization to succeed.
- Want to help their organization to succeed.
- Will take the initiative and ‘walk the extra mile’ to ensure the success of their
organization.
To encourage commitment:
+ Recruit the right people
+ Provide appropriate training so that employees can perform well
+ Pay employees at fair rates
+ Reward employees who perform well
+ Implement fair systems, including disciplinary systems

Career Management Issues

● Succession planning ​- a systematic technique for ​ensuring top management and other
key positions can be filled quickly in the event of the unexpected loss of a senior officer​.
Organization groom employee to take up that position. If staff knew about it, they would
be arrogant. If staff don’t know, they might join another company.
● Glass ceilings ​- female employees not promoted, bias towards gender. But, some
female staff prefer to stop work to take care of their elderly & family/do teleworking.
Reducing their chances to be promoted.
● Management of expatriates ​- foreigners with high qualifications.
CHAPTER 9 DISCIPLINARY SYSTEMS & TERMINATION OF SERVICE

Disciplinary Systems ​- must be fair & just

● In a fair disciplinary system, employees know the rules, and know what they can do and
what they cannot do.
● When employees behave in an unacceptable manner, they are punished.
● The purpose of punishment - to change the employee’s behaviour & to send a warning
to other employees that unacceptable behaviour will not be tolerated.

Penalties ​- When employees commit misconduct, they may be penalized/ become severe until
dismissal/time to let staff go
- Oral warning
- Written warning(s)
- Suspension without pay
- Demotion or downgrading
- Dismissal
● None of the penalties must be used until the manager is satisfied that the staff is guilty of
misconduct.
● Facts about wrongdoing must be checked and if true must be documented.
● Before punishment, employees must be given a chance to explain. He can be issued a
letter of warning/asked to give a show cause letter explaining why action should not be
taken on him.
● Oral warnings should have counselling and documentation.
● Managers must keep records or document their disciplinary actions.
● Downgrading can only be done if staff are in a graded job. In the manager/executive
position it is not advisable because of the different nature of work.
● Companies can suspend employees without pay if their letter of contract has a clause to
impose that penalty.
● Same with the bonus/annual increment. If there is a contractual requirement to pay, the
company cannot take that benefit from the employee.
Transfer ​- a lateral move of an employee from one job to another/from one department to
another/from one site to another.
It can be from one branch to another (relocation), changes job in the same organisation/different
job but same level & same pay/move to another department with the same job.
Employers transfer employees;
+ To fill up new jobs, new locations,
+ Remedial; staff have no chemistry with old boss
+ To fill vacancies for experienced workers
+ To solve employees problems
+ To provide training to employees
Employees may request transfers
● For personal, non-work related reasons e.g. spouse is working elsewhere
● To have an opportunity to learn new things,
● To overcome boredom, some variety in working life.
Transfer is a managerial prerogative​. ​Employers have the right to transfer an employee, but
the right is subject to:
- Must have the clause in the contract of employment. If an employee refuses, he/she can
take action.
- The reason for the transfer must be a legitimate business reason – needs of business.
- The reason for the transfer must not be for the purpose of harassing/victimizing the
employee.
- The transfer must not be to the detriment of the employee’s terms & conditions of
employment. If the cost of living in a new place is higher, you must pay a living
allowance.
- Cost of transfers: financial & psychological cost. Companies should pay for transport ,
lodging, hotel and food allowance for families & time off for family to settle.
- Financial cost can be calculated.
- Employee might not be agreeable to transfer, making him unhappy & unproductive.
- Families may resist/object the decision - issues
Promotion ​- reassignment of an employee to a job at a higher level in the organization.
Employees see promotion as higher pay and benefits, status & respect.
However, in a high level of hierarchy, it's not easy to get promotions. Promotion opportunities
motivate employees, providing the promotion system is perceived as being fair and transparent.
● Promotion from within policy
● Formal/informal promotion