HUMAN RESOURCE MANAGEMENT

OVERVIEW

Objective

! To discuss the major issues in Human Resource Management (HRM).

HUMAN
RESOURCE
MANAGEMENT

! Strategic HRM
! Skills
HUMAN ! Flexible organisations
RESOURCE ! Mechanistic and organic
MANAGEMENT ! Intrapreneurship

HUMAN
APPRAISAL HUMAN
RESOURCE
BEHAVIOUR
PLANNING
! Manpower planning ! Purpose ! Job satisfaction
! Job design ! Featurs ! Taylor
! Cost/benefit ! Procedures ! Schein
! Sources ! Types ! McGregor
! HR planning ! Reward and motivation
! Competence
RECRUITMENT
AND MOTIVATION
SELECTION

! Process ! Maslow
! Interviews ! Herzberg
! Tests ! Vroom
! Assessment centres ! Porter & Lawler

PRACTICAL
MOTIVATION
TOOLS

! Financial
! Non-financial
! Teamworking and
empowerment

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1 HUMAN RESOURCE MANAGEMENT

1.1 Introduction

Human resource management considers:

! Integration of manpower planning into strategy

! Development of human resources
! Encouraging commitment of employees to company goals

1.2 Strategic HRM

Although organisations have had “personnel” departments for many years, the modern
view (often called the HRM view) is that the management of human resources should
be:

! strategic, and
! the responsibility, to a great extent, of line managers.

1.2.1 Traditional “personnel management”

Training Industrial
relations

Recruitment
Traditional view Welfare
+ selection

Administration Health +
safety

= Specialist personnel function

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1.2.2 Modern “HRM”

! A strategic and coherent approach to the management

of . . . people . . . contribute to . . . competitive
advantage
! Involves all levels of management

Development Modern view

of human Part of
management
resources
strategy

Commitment to
values and goals

1.3 Skills and competencies

One of the core roles of HRM is to ensure that the organisation, through its human
resources, possesses the necessary skills and competencies to be able to:

! perform all the tasks involved in doing business today

! implement the strategy of the organisation

This, of course, requires continual review of the staff and strategy, often called “needs
assessment”.

1.4 The flexible organisation

Modern organisations seek to be able to modify their structure in response to customer

demands or environmental change. There are four types of flexibility that can be built
into the organisation:

! Numerical flexibility. By employing part-time or freelance staff, numbers

can be increased or decreased very rapidly to meet changes in demand

! Functional flexibility. Employees can be persuaded to perform a range of

tasks, some of which lie outside the scope of their original contract or
“normal” working patterns.

! Temporal flexibility. Hours of work can be varied to meet changing

business trends.

! Financial flexibility. The level of payment to each employee can be varied

in line with changing organisational profitability or individual performance.

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An organisation that achieves all or most of the above can be called a “flexible
organisation”.

1.5 Mechanistic and organic organisations (Burns and Stalker)

2.3.1 Mechanistic organizations: Features

Adapted to suit relatively stable operating environments.

! Clear specialisms with the tasks of management formalised into assigned,

predefined tasks.

! There is a clear hierarchy, with most key decision-making confined to senior

management.

! Requires formal rules and obedience to superiors.

! There is an emphasis on vertical communication, with problems or

uncertainty being referred to the appropriate specialist.

2.3.2 Organic organizations: Features

Better suited to dynamic environments. Continually adapt and restructure to meet

changing demands.

! Individual tasks are frequently redefined

! Control and authority have a network structure.
! Communication is less formaland often horizontal.
! Requires commitment.

1.6 Intrapreneurship

One of the most modern views on organisational management, put forward by Tom
Peters and others, is that organisations should develop employees to such an extent that
they feel and act as if they are self-employed. This view, of individuals feeling
proprietorial about their part of the organisation’s tasks, is known as intrapreneurship.

Example 1

What do you feel are the benefits, to the organisation and the individual, of
intrapreneurial behaviour?

Organisation Individual
! !

! !

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2 HUMAN RESOURCE PLANNING

2.1 Introduction

This section looks at issues relating to the way in which organisations plan for their
human resources.

2.2 Manpower planning

Professional manpower planning has a direct influence on an organisation’s

effectiveness. Recruitment is costly in itself but poor selection or labour shortages can
be even more expensive to the company. Careful planning is therefore essential.

2.2 Job design

This process is carried out so that work is divided between members of an organisation
in a way in which when combined, effective performance exists. It is more beneficial
if the range of tasks, duties and responsibilities are explained so an employee would be
willing to undertake them.

2.3 Cost v Benefit analysis

Before a position is created, the cost of new personnel needs to be weighed against the
benefits of increased/improved output.

Typical costs Typical benefits

! Advertising ! Increased output

! Management time ! Improved quality of product

! Fees ! Improved quality of life for employees

! Salaries and related costs ! Reduction in out sourcing costs

! Training and development ! Competitive advantage

! Additional equipment, space and ! Legal requirement

facilities

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2.4 Sources of staff

Sources

Internal External

Why? Why?
! Motivator ! Internally skills not available
! Saves costs ! Can effect culture change
! Abilities known ! Resented by internal staff
! Ill-feeling of those not chosen

Method Method
! Promotion ! Advertising
! Transfer ! Agencies
! Head-hunting
! Specialised eg university graduates

2.5 Human resource planning

This is a modern development of manpower planning, and takes a more “holistic” view
of staff as a strategic resource. It consists of manpower planning, plus planning for:

! Training and management development

! Career development and succession
! Exit (redundancy and retirement)

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3 RECRUITMENT AND SELECTION

3.1 Introduction

Recruiting the right staff is often a critical success factor to the implementation of an
organisation’s strategy.

3.2 The selection process

1. Use job specification

2. Sort out applications and curriculum vitaes

3. Decide on selection method

4. Contact applicants

5. Conduct selection method (screening)

6. Analyse information

7. Offer job

8. Negotiate terms

9. Take up references

10. Inform departments

11. Arrange induction

12. Follow-up

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3.3 Selection interviews

These are used to assess the personal qualities of an individual. The interview can take
many forms but a good guide is

(a) Be prepared − Obtain all the information

Arrange the location
Plan the questions

(b) Welcome the candidate − Initial courtesies

Brief explanation of format of interview
Attempt to relax the candidate

(c) Control the interview − Ensure all relevant points are brought
out
Keep check on the time
Encourage the candidate to talk

(d) Close the interview − Explain the next steps in the process
Exchange final courtesies

(e) Final steps − Make appropriate notes and rank for

suitability
Operate procedures for notification

3.4 Psychometric tests

SELECTION TESTS
OR PSYCHOMETRIC TESTS

INTELLIGENCE APTITUDE ATTAINMENT PERSONALITY

TESTS TESTS TESTS TESTS

! Designed to
! Designed to ! Designed to ! Designed to
assess traits
measure thinking measure innate measure
abilities skills knowledge/skills
gained previously

3.5 Assessment centre

Groups of individuals attend the centre for a number of days. Here they are tested
individually and in groups and then interviewed.

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4 APPRAISAL

4.1 Introduction

Periodic appraisal is an opportunity to discuss and plan for HR development.

4.2 Purpose

! To set performance objectives

! To assess past performance
! To help improve current performance
! To assess training and development needs
! To assess salary levels
! To assess future potential
! To assist in career planning

4.3 Features of effective appraisal

F requent Enough for grade of employee

F actual Based upon targets and measurable performance

citing factual examples not subjective traits

F irm Improvement can only start when failure is recognised

F air Uniform appraisals in different areas of the company

No bias from single appraisor or unconnected party

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4.4 Procedures

Identify assessment criteria

Prepare appraisal report

Hold appraisal interview

Review appraisal

Develop action plan

Monitor action plan

4.5 Types of appraisal

Appraisals can be carried out in a number of different ways:

! Top-down. Here a staff member is appraised by his immediate superior.

! Bottom-up. A staff member appraises his boss.
! 180-degree. Superior and subordinate appraise one-another.
! Peer. Staff appraise those with whom they work.
! 360-degree. Everyone appraises everyone else!

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4.6 Appraisal, reward and motivation

There are two views on the discussion of remuneration in appraisals:

! Remuneration is, or should be, directly linked to performance. It is therefore

appropriate to discuss remuneration alongside performance.

! Discussing remuneration in appraisals leads to a “complaint session” and

other issues are seldom dealt with constructively. Remuneration is an
organisational issue, not a personal one between superior and subordinate.

4.7 Competence assessment

Often organisations build in testing (see section 3.4) alongside appraisals, so the skills,
competences and knowledge of the employee can be monitored and any development
needs identified. This may be done as part of a system of “management development”
workshops and courses.

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5 HUMAN BEHAVIOUR THEORY

5.1 Introduction

Much of this material will be familiar from your study of paper 1.3 – Managing People.

There are four factors which affect performance and attitudes in work: abilities,
motivation level, perception and personality.

ABILITIES

INDIVIDUAL
PERSONALITY PERFORMANCE MOTIVATION
AT WORK

PERCEPTION

5.1.1 Abilities

! Aptitude – Physical or mental capacity to perform tasks.

! Learning – Acquisition of abilities via training or experience

5.1.2 Motivation level

Driving forces, such as values, beliefs, attitudes, needs and goals, which channel
behaviour.

5.1.3 Perception

Selection and arrangement of stimuli into meaningful patterns based on attitudes and
experience.

5.1.4 Personality

This refers to an individuals characteristics and behaviour patterns. It tends to stay

relatively constant.

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5.2 Job satisfaction

Research has shown that there is not a definite link between the level of job satisfaction
and output or productivity. Indeed, there seems little correlation between the extent to
which individuals like their job and the amount of effort they are willing to put in.
Most theorists now agree that the level of satisfaction with the job is related to the
individuals’ pre-conception of its nature. If they are disappointed by the characteristics
of work they will be dissatisfied.

However, as this dissatisfaction manifests itself in undesirable ways, managers should

seek to ensure that employees are satisfied.

5.3 Taylor

Frederick Winslow Taylor (1856-1917), as part of his theory of “scientific

management”, put forward the following view of behaviour.

! Man is a rational animal, motivated by economic gain

! Man reacts to economic stimuli as an individual
! Man, like a machine, can be treated in a standard fashion

5.4 Schein

In 1965 Professor Edgar Schein published a classification of human behaviour under

four headings.
! Rational-economic man Concerned with the pursuit of self-interest and
maximisation of gain

! Social man Concerned with social needs and wanting on-

the-job relationships

! Self-actualising man Needs challenge, responsibility and a sense of

pride in his work

! Complex man Motives vary with different tasks, work

groups and organisational climate

5.5 McGregor

Douglas McGregor put forward a different view, preferring a whole range of behaviour
patterns between two extremes. He called these extremes “Theory X” and “Theory Y”.

X x x x x Y

individuals

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Theory X Theory Y

! Man dislikes work and will seek to ! Work is as natural as rest or play
avoid it

! Man must be coerced, controlled and ! Man will exercise self-direction

directed towards accepted goals

! Man will avoid responsibility and ! Commitment to task is a function of

seek security rewards available

! Average human learns to seek

responsibility

! Imagination and creativity are widely

distributed

! Intellectual potential is only ever

partially utilised

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6 THEORIES OF MOTIVATION

6.1 Introduction

Much of this material will be familiar from your study of paper 1.3 – Managing People.

Motivation is a measure of the employee’s willingness to do work.

Motivation is important to managers as it is believed to be directly linked to

productivity – highly motivated people work harder and produce more.

6.2 Abraham Maslow

Maslow proposed that man’s needs are arranged in a hierarchy, to be satisfied

sequentially.

Example 2

Complete Maslow’s hierarchy of needs:

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! PHYSIOLOGICAL (BASIC) − Once satisfied, it is no longer needed

for a while eg food, liquid, shelter,
sleep

! SECURITY − Need for predictability and order.

! SOCIAL − Need to belong, be accepted by others

! ESTEEM − Need for achievement, status, respect

and recognition by others

! SELF ACTUALISATION − Realising own potential for self-

development

6.3 Frederick Herzberg

In the 1950s Herzberg published research based on a survey of 200 accountants and
engineers about events at work which had removed or provided job satisfaction.

Those factors which the survey suggested should be present, maintained and
undisturbed to prevent dissatisfaction, Herzberg called “hygiene factors”

! Company policy
! Supervision
! Salary
! Relationship with peers/subordinates
! Working conditions
! Status
! Security

Other factors which contributed to high levels of job satisfaction he called “motivators”

! Achievement
! Recognition
! Work itself
! Responsibility
! Advancement
! Growth

6.4 Victor Vroom

Vroom believes that people will expend effort if they believe:

! in the worth of the goal

! that performing the task will lead to achievement of the goal.

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FORCE = VALENCY x EXPECTANCY

Strength of Strength of Probability of

motivation need action leading
to outcome

These go hand-in-hand.
If either is zero, there will
be no motivation.

6.5 Porter and Lawler

A more complex process theory of motivation, which takes into account a wide range
of factors to determine effort (or motivation).

Value of
rewards
Ability to Perceived
do a specified equitable
task rewards

Intrinsic
Satisfaction
rewards
Performance
Effort accomplishment
Extrinsic
rewards

Perception
of task
required
Perceived
effort _ reward
probability

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7 PRACTICAL MOTIVATION TOOLS

7.1 Introduction

One of the great (and unresolved) debates concerns the role of money as a motivator.
We can look at the arguments, but conclusions must be drawn on an individual basis.

7.2 Financial motivators

! Maslow: Money satisfies basic needs directly and

higher needs indirectly

! Herzberg: Hygiene factor, unless salary implies status.

! Vroom 
 It depends on how much you need it!
! Porter and Lawler 

We can see, perhaps, situations where payment by results (in terms of commission or
piece-rates) or performance-related pay might be appropriate.

7.3 Non-financial motivators

Various non-financial tools are available to motivate staff

! Participation in the management process and decision making

! Environmental factors such as office layout and quality of tools
! Job design

− Job enrichment − Greater variety, challenge, responsibility.

− Job enlargement − Widen the job by increasing the number of operators.

− Job rotation − Exchange of jobs to break monotony.

! Social factors such as working in a team

! Opportunity for self development through promotion and variety of work

7.4 Teamworking and empowerment

It is now recognised that managers can improve motivation by creating the right
environment and culture. This can be as simple as encouraging participation and
collaboration.

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FOCUS

You should now be able to:

! define the strategic role of human resources

! understand skills and competencies

! discuss workforce adaptability

! explain intrapreneurship

! formulate the human resource plan

! identify and evaluate appropriate recruitment methods

! advise on succession planning

! understand the appropriate motivational and supportive policies

! describe the links between objectives, appraisal, reward and motivation

! assess appraisal methods

! discuss appraisal and competence assessment

! evaluate the role of teamworking and empowerment.

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EXAMPLE SOLUTIONS

Solution 1 – Intrapreneurship

The benefits are:

Organisation Individual
! Improved productivity ! Improved motivation level
! Reduced absenteeism and staff ! Greater variety of work
turnover
! Improved flexibility
! Higher rates of innovation

Example 2 – Maslow

SELF-ACTUALISATION
OR
SELF-FULFILMENT

EGO AND ESTEEM

SOCIAL

SAFETY AND SECURITY

PHYSIOLOGICAL/BASIC

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