Chapter I

Introduction to Human Resource Management

Objectives
1. Compare personnel administration to strategic HRM
2. Examine the strategic value of HRM for employees, the organization and its contribution to the
workplace
3. Discuss the daily tasks of the HR manager and personnel.
4. Recall the HRM Process

Human Resource Management is an operation in companies, designed to maximize employee

performance in order to meet the employer's strategic goals and objectives. It is a process of recruiting,
selecting employees, providing proper orientation, induction and training and developing skills. More
precisely, HRM focuses on management of people within companies, emphasizing on policies and
systems.

HRM also includes employee assessment like performance appraisal, facilitating proper
compensation and benefits, encouragement, maintaining proper relations with labor and with trade
unions, and taking care of employee safety, welfare and health by complying with labor laws of the state
or country concerned.

Personnel Administration vs. Human Resource Management

The difference between Human Resource Management and Personnel Management Human
resource management involves all management decisions and practices that directly affect or influence
the people, or human resources, who work for the organization. In other words, Human resource
management is concerned with „people centric issues‟ in management. The Human Resources
Management (HRM) function includes a variety of activities, and key among them is deciding what
staffing needs you have and whether to use independent contractors or hire employees to fill these
needs, recruiting and training the best employees, ensuring they are high performers, dealing with
performance issues, and ensuring your personnel and management practices conform to various
regulations.

If we examine critically, there are many differences between them. Some are listed below:

I. Nature of relations: The nature of relations can be seen through two different perspective views
which are Pluralist and Unitarist. There is a clear distinct difference between both because in
personnel management, the focus is more on individualistic where individual interest is more than
group interest. The relationship between management and employees are merely on contractual
basis where one hires and the others perform. Whereas, HRM focuses more on Unitarist where
the word "uni" refers to one and together.
 Relation of power and management: The distribution of power in personnel management is
centralized where the top management has full authority in decision-making where even the
personnel managers are not even allowed to give ideas or take part in any decision which
involves "employees". HRM, on the other hand, sees the decentralization of power where the
power between top management is shared with middle and lower management groups. This is
known as "empowerment" because employees play an important role together with line and HR
managers to make collective and mutual decisions, which can benefit both the management and
employees themselves. In fact, HRM focuses more on TQM approach as part of a team
management with the involvement and participation of management and employees with shared
power and authority. The nature of management is focused more on bottom-up approach with
employees giving feedback to the top management and then the top management gives support
to employees to achieve mutually agreed goals and objectives.
II. Leadership and management role: Personnel management emphasizes much on leadership
style which is very transactional. This style of leadership merely sees the leader as a task-
oriented person. This leader focuses more on procedures that must be followed, punishment form
non-performance and non-compliance of rules and regulations and put figures and task
accomplishments ahead of human factors such as personal bonding, interpersonal relationship,
trust, understanding, tolerance and care. HRM creates leaders who are transformational. This
leadership style encourages business objectives to be shared by both employees and
management. Here, leaders only focus more on people-oriented and importance on rules,
procedures and regulations are eliminated and replaced with: Shared vision; Corporate culture
and missions; Trust and flexibility; and HRM needs that integrates business needs.
III. Contract of employment: In personnel management, employee‟s contract of employment is
clearly written and employees must observe strictly the agreed employment contract. The
contract is so rigid that there is no room for changes and modifications. There is no compromise
in written contracts that stipulates rules, regulations, job and obligations. HRM, on the other hand,
does not focus on one-time life-long contract where working hours and other terms and conditions
of employment are seen as less rigid. Here, it goes beyond the normal contract that takes place
between organizations and employees. The new "flexible approach" encourages employees to
choose various ways to keep contributing their skills and knowledge to the organization. HRM
today gives employees the opportunity and freedom to select any type of working system that can
suit them and at the same time benefit the organization as well. Drucker (1996) calls this
approach a "win-win" approach.
IV. Pay policies and job design: Pay policies in personnel management is merely based on skills
and knowledge required for the perspective jobs only. The value is based on the ability to perform
the task and duties as per the employment contract requirement only. It does not encourage
value-added incentives to be paid out. This is also because the job design is very functional,
where the functions are more departmentalized in which each job falls into one functional
department. This is merely known as division on labour based on job needs and skill possessions
and requirement. HRM, on the contrary, encourages organizations to look beyond pay for
functional duties. Here, the pay is designed to encourage continuous job performance and
improvement which is linked to value-added incentives such as gain sharing schemes, group
profit sharing and individual incentive plans. The job design is no more functional based but
teamwork and cyclical based. HRM creates a new approach towards job design such as job
rotation which is inter and intra-departmental based and job enlargement which encourages one
 potential and capable individual to take on more tasks to add value to his/her job and in return
enjoy added incentives and benefits.

Aside from the above mentioned, here are some differences in the following matters.

Personnel management Human resource management

Traditional approach of managing people in the
organization
Focuses on personnel administration, employee
welfare and labor relation
Assumes people as a input for achieving desired
output
Personnel function is undertaken for employee's
satisfaction
Job design is done on the basis of division of
labor
Employees are provided with less training and
development opportunities
Decisions are made by the top management as
per the rules and regulation of the organization
Focuses on increased production and satisfied
employees
Concerned with personnel manager
Routine function
A modern approach of managing people and their
strengths in the organization
Focuses on acquisition, development, motivation
and maintenance of human resources in the
organization.
Assumes people as an important and valuable
resource for achieving desired output.
Administrative function is undertaken for goal
achievement
Job design function is done on the basis of group
work/team work.
Employees are provided with more training and
development opportunities.
Decisions are made collectively after considering
employee's participation, authority,
decentralization, competitive environment etc.
Focuses on effectiveness, culture, productivity
and employee's participation
Concerned with all level of managers from top to
bottom
Strategic function.

The Strategic Value of HRM for Employees, and Organization

and Its Contribution to the Workplace

Every organization has its own strategic plan, includes organizations‟ long-and short-
term goals, including procedures for deciding how to allocate org resources to achieve goals.
Incorporates strategic and policies to achieve org goals while meeting employees‟ and
stakeholders‟ needs. Practices increase market value of an org by as much as 50% when
consistently followed. HRM‟s contributions to motivation, morale, retention, productivity, and
performance quality
Managing employee productivity is critical in both for-profit and not-for-profit
organization‟s success. Higher productivity levels enable firms to offer high salaries and still be
competitive. Effective practices reduce turnover, increase productivity, and directly contribute to
corporation fin performance aiding organization competitiveness through improving employee
retention and productivity. Effective HR practices can enhance employee motivation and
morale, which can positively affect organization outcomes. Effective job analysis and design can
balance the demands of a job with the resources provided to accomplish its tasks, and this
balance can contribute to work engagement. Relationship between work engagement, job
satisfaction, and BU outcomes is supported by numerous studies. HR can contribute to
employee motivation and morale by providing family friendly environment, sponsoring social
events and activities and offering opportunities for learning and career development.
HRM‟s contribution to profitability, efficiency and effectiveness Organization
effectiveness – degree to which an organization is able to meet its goals and objectives
organization efficiency – degree to which an organization is able to maximize productivity of
given resources, produce a given amount of output with minimal resources, or accomplish both
tasks.
HRM can contribute both effectiveness and efficiency by leveraging human assets
through selection, allocation, deployment, development, management, and retention. Employee
motivation, morale, retention, productivity, and performance all have a great influence on an
organizations‟ efficiency and effectiveness.HR strategic effectiveness can be measured by ROI,
economic value added (EVA) and balanced scorecards.HR should be capable of presenting
financial justification.

What is HR doing to ensure that the right people with the right skills are doing the right things in the job
that are important for the execution of the business strategy?

Shared Service Model - a way to organize the HR function that include centres of expertise,
service centres, and business partners.
Self-service- giving employees online access to HR information.
Outsourcing- the practice of having another company provide services.

Demonstrating the strategic value of HR:

HR analytics and evidence-based HR

For HR to contribute to business goals there is increasing recognition that it is necessary

to use data to answer questions such as “m which practices are effective” “which practices are
cost effective?” and to project the outcomes of the changes on employees attitude, behaviour,
and company profit and costs.
Evidence-based HR – demonstrating that human resource practices have a positive influence
on the company‟s bottom line or key stakeholders (employees, customers, community,
stakeholders).
HR or Workforce analytics – the practice of using data from the HR data-bases and other data
sources to make evidence-based human resource decision.
Big Data – information merge from a variety of sources, including HR databases, corporate
financial statements, and employees‟ surveys, to make evidenced-based HR decisions and
shows that HR practices can influence the organizations bottom-line.
Role of HR in Workplace

Human resources (HR) departments play a pivotal role in setting the cultural tone of a
company. The policies they issue and the way they conduct business diffuses through the
company. Employees may take their cue on how to do their jobs from HR from the moment the
company hires them. HR departments must model how they want other departments and
individual employees to act to create as positive a workplace culture as possible. Two of HR's
main functions are to attract and retain high-quality professionals, and the culture they promote
in the company affects these functions.
Communication

HR departments that do not talk with their managers and employees on a regular basis,
but instead simply issue directives and policies without consulting anyone, spread a negative
feeling throughout the company. Other departments may take their cues from HR and not
communicate clearly with customers or other people with whom the company works regularly. If
an HR department learns what people in the company want and tries to align that with the vision
of upper management, the result will likely be more harmonious than if it merely sends out a
written policy and expects compliance.
Confrontations

HR staff members often don't like to confront employees when they do something wrong.
To prevent them from disobeying company rules, they write down the rules. However, in the
case of a workplace dress code policy several pages long, it may be easier and more conducive
to a positive workplace culture to discuss major infractions with individuals privately and have a
shortened version of the dress code with more general guidelines. The latter types of policies
grate on employees' nerves and are too difficult to follow in many cases. When discussions do
need to occur over an employee's attire, HR can take the attitude of giving feedback instead of
threatening an employee.
Publications
One of HR's major functions is to hire. When they write and disseminate job
descriptions, the tone in which they write the descriptions can affect how a potential candidate
feels about the company. The description gives a feeling for how the company's structure and
culture is organized. Other literature about the company that HR publishes can also affect the
public's views of it. Publications that are more upbeat can help change employees' attitudes
about each other and HR.
Openness

When an HR department promotes itself as being open and easily approachable, it helps
employees feel that HR will advocate on their behalf. Employees may also feel more
comfortable approaching management when they have work-related problems. They may
believe that HR's approachability extends throughout the company. When HR organizes a
charity benefit, for example, or a program by which employees can donate unused sick or
vacation days for employees in need, it also helps employees feel that they are valued and
promotes a team spirit throughout the company.

Focus on Effectiveness
In order to devote more hours to value-added planning and consulting activities, HR leaders are
using a variety of tactics to reduce the time and effort spent on routine tasks and administrative
services. This is being achieved in ways such as:
 New HR service delivery models
 New technology
 Process improvements
 A variety of outsourcing approaches
 New HR service metrics
 Developing HR talent with business insight

Many will agree that a value-generating HR function concentrates on outcomes and results that
promote organizational effectiveness. By focusing on effectiveness, HR professionals measure
how their work enhances:
 Strategy execution
 Business and HR efficiency
 Commitment and productivity of employees
 Organizational capacity for continuous learning and change

Focus on Efficiency

While the quest for effectiveness is critical, it is equally important that many organizations
simultaneously need to focus on increased efficiency. This is based on the premise that an HR
function will create business value via two primary drivers:
1. The allocation of scarce HR resources. How dollars and people are allocated to HR
activities should reflect the business activities that create a competitive advantage. For
example, many organizations devote too many resources (both in terms of dollars and
employees) to developing training and development programs that do not create any
type of distinct competitive advantage. If these programs are developed simply to
comply with regulations or to offer the organization liability protection in the case of a
lawsuit, then why not spend less on an outsourced solution and/or an off-the-shelf
program? If HR succeeds in smarter resource allocation, it follows that the group will
 operate more efficiently and will deliver far greater value. In fact, anecdotal evidence
suggests that high-performing organizations may spend as much as 25% less on HR
while delivering greater value.
2. Providing insights into how employees create value Employees contribute to company
success in a variety of ways. The formula for success is efficient work processes and
wise utilization of investments combined with the right kind of employees: skilled,
productive, and cost effective. The specifics of this formula vary with the types of
business activities and whether the focus of the activity is value creation, effectiveness,
or efficiency. One size does not fit all. HR practitioners must have the business savvy
and insight to develop a balance of standardized and customized services that deliver
the most value.

Drives Profits
1. Hiring
2. Inducting or on-boarding people into the organisation properly
3. Training
4. Setting performance pay structures, incentives and rewards
5. Setting Key Performance Metrics or KPI‟s that align employee performance to profits.
6. Managing Performance to continually improve and monitor, setting boundaries and when
required disciplining for improvement
7. Employee engagement this is an area that is vitally important and of itself has many
steps.
8. Aligning employees to the vision, mission and purpose of the organisation which
includes the core values of the business or “The way we behave around here”
9. Giving recognition where it is due and listening to the employees to ensure rewards and
recognition are in align with their desires
10. Ensuring safety at work and compliance with legislation
11. Ensuring company compliance with Employment Law
12. Working with company directors to maximise returns for the business while maintaining
a high performing work force with minimal disruptions
13. Maintaining a balanced workforce with sufficient employees to cover all areas while
minimising cost overruns in payroll
14. Working with Finance on employee benefits in line with budget and forecasts

What Does HR Actually Do?

Key Responsibilities

Ask any employee what an HR department is, and you‟ll get an answer that primarily
deals with the most uncomfortable aspects of work: HR violations, layoffs, and firing. But the
truth is that human resources is there to support employees. It‟s quite literally a resource for
humans.
Here are some of the tasks your HR department is busy completing every day.
1. Recruit candidates - HR needs to understand the organization‟s needs and make sure
those needs are met when recruiting for new positions. It‟s not as simple as just throwing
an ad up on Indeed: you‟ll need to analyse the market, consult stakeholders, and
manage budgets.
2. Hire the right employees - Human resources is in charge of arranging interviews,
coordinating hiring efforts, and on-boarding new employees. They‟re also in charge of
making sure all paperwork involved with hiring someone is filled out and making sure
that everything from the first day to each subsequent day is navigated successfully.
3. Process payroll- Payroll is its own beast. Every payday must have taxes calculated and
hours collected. Expenses need to be reimbursed and raises and bonuses need to be
added in as well. If you think it‟s a chore doing taxes just once a year, imagine what it
must be like to be in HR and make sure they‟re properly deducted every pay period.
4. Conduct disciplinary actions - This responsibility may be why HR tends to get a bad
rap. When navigated inappropriately, disciplinary actions can lead to the loss of a
valuable employee and can even result in litigation or a poor reputation. But when
handled appropriately, disciplinary action can result in the success of an employee.
5. Update policies - Policies need to be updated (or at least examined) every year as the
organization changes. It‟s HR‟s job to make official updates to policies and to suggest
changes to policies when they no longer serve the company or the employees.
Sometimes a policy should be updated as a reaction to an occurrence. HR should
always be included in and consulted with regarding these decisions.
6. Maintain employee records - Maintaining HR records is mandated by law. These
records help employers identify skill gaps to help with the hiring process and to analyze
demographic data and comply with regulations. They also contain personal details and
emergency contacts for each employee.
7. Conduct benefit analysis - Staying competitive is of prime importance when trying to
attract the best talent. A promising recruit may choose a different company with lesser
pay if the benefits are more attractive. HR should routinely investigate similar companies
to see if their benefits are compatible. For instance, your organization may consider
including pet insurance in its list of benefits.
8. Providing career growth - Stagnation is bad for business, and it‟s smart to keep your
best employees with the company. HR can provide career paths to help guide each
employee to a long future within the company. HR can then check in periodically to
further guide employees on their career paths.
9. Offering continuing education - Sometimes the career growth mentioned above
requires additional training. Your organization may provide educational assistance, and
HR can help determine which classes and training programs would be best for an
 employee on his or her designated career path. HR can also work with managers to
ensure that the employee‟s work schedule is flexible enough to allow the employee to
attend classes.
10. Training and supporting managers - Managers aren‟t born. They‟re created. HR can
help provide management guidance to managers, making sure that department and
teams are as healthy and functional as possible. This may include periodically sending
managers to formal trainings and retreats
11. Supporting health and wellness - It‟s important to remember that employees are
people. They‟ll need help weathering mental illness, health issues, debt, pregnancies,
adoption, and myriad other life occurrences. HR can help support employees through
any of these and other circumstances.

HRM process
The general HRM processes are as follows:
1. Recruitment

It is a positive process of posting job openings and attracting prospective employees to

apply for their desired job openings in an organisation so that the eligible candidate can be
selected.
2. Selection

Selection is quite a necessary process in HRM. It involves eliminating the unsuitable

candidates through the process of tests or interviews and identifying the suitable ones, which
are the best fit for the positions.
3. Hiring

This entails to the process of officially offering the job to the ideal candidate and giving them
the date of joining.
4. Training and development

The hired candidates are given training and their skills are brushed so that they become
more efficient in their work and handle future challenges.
Performance management
There should be proper management of the work done and the future goals.
Performance management refers to appraising the performance of the employees and
enhancing it. For such a management, it is necessary to encourage the employees so as to
raise their confidence levels. This can be done by providing them with fair rewards so that they
work in their optimum productivity levels.
Remuneration to employees and benefits
 Fair salary or remuneration plays a very important role in motivating an employee to
accomplish organisational goals. If the employees get rewards for their best performance, they
will get job satisfaction. The rewards not just includes salaries, but it also includes incentives
and fringe benefits.
Employee Relations
There should be a sound relation between the employee and the organisation. There are
various factors which motivate as well as demotivate the employees to stick with the
organisation. These factors include working environment, labor law and relations,
compensation, etc. The employers must ensure all these factors to build employee relationships
that in turn garner better employee retention.

Telling terms

1. Sustainability- the company‟s ability to meet its needs without sacrificing the ability of the
future generation to meet their needs.
2. Stakeholders – the various interest groups who have relationship with , and
consequently, whose interest are tied to organization.
3. Intangible assets – a type of company assets including human capital, customer capital,
social capital, and intellectual capital.
4. Knowledge workers – employees who owns intellectual means of producing a products
or service.
5. Empowering – giving employees responsibility and authority to make decision.
6. Learning organization – a culture of lifelong learning in which employees are continually
trying to learn new things.
7. Change – the adoption of new idea or behavior by a company.
8. Employee engagement – the degree to which employees are fully involved in their work
and strength of their job and company commitment.
9. Talent management – a systematic planned st5ratigic effort by a company to attract,
retain, develop, and motivate highly skilled employees and managers.
10. Alternative work arrangement – independent contractors, on-call workers, and contract
company workers who are not employed full-time by the company.
11. Balanced scorecard – a means of performance measurement that gives managers the
chance to look at their company from the perspective of the internal and external
customers, employees, and shareholders.
12. Total quality management (TQM) – a cooperative form of doing business that relies on
the talents and capabilities of both labor and management to continually improve the
quality and productivity.
13. Six sigma process – system of measuring, analyzing, improving, and controlling
processes once they meet quality standards.
14. Lean thinking – a process used to determine how to use less effort, time, equipment,
and space but still meet customer‟s requirement.
15. Internal labor force – labor force of current employees.
16. External labor market – persons outside the firm who are actively seeking employment.
17. Ethics – the fundamental principles of right and wrong by which employees and
companies interact.
18. Offshoring – exporting jobs from developed to less developed counties.
19. Reshoring – moving jobs from overseas to Philippines.
20. Social networking – websites and blogs that facilitates interactions between people.
21. Human resource information system (HRIS) – a system used to acquire, store,
manipulate, analyze, retrieve, and distribute HR information.
22. Cloud computing – a computing system that provide information technology
infrastructure over a network in a self-service, modifiable, and on-demand model.
23. HR dashboard – HR metrics such as productivity and absenteeism that are accessible to
employees and managers through the company intranet or human resource information
system.
24. High-performance work system – work system that maximize the fit between the
company‟s social system and technical; system.
25. Virtual teams- teams that are separated by time, geographic distance, culture and/or
organizational boundaries and rely exclusively on technology to interaction between
team members.