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After studying this chapter, you should be able to:
1. Define Human Resource management and explain why managers and
HR staff must work together.
2. List and define the seven categories of HR activities.
3. Identify the challenges facing HR today.
4. Describe the four roles of HR management.
5. Identify how firms gain sustainable competitive advantage through
people.
6. Explain how globalization is influencing human resources management.
7. Describe the impact of information technology on managing people.
8. Identify the importance of change management.
9. State HR’s role in developing intellectual capital.
10. Differentiate how TQM and reengineering influence HR systems.
11. Discuss the impact of cost pressures on HR policies.
12. Discuss the primary demographic and employee concerns pertaining to
HRM.
13. Provide examples of the roles and competencies of today’s HR
managers.

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1.0 INTRODUCTION
Human resource (HR) management is a field that has evolved a great deal since its
beginning about 1900. It began as primarily clerical operation concerned with payroll,
employee records, and arranging community visits. In the 1990s, globalization,
competition, mergers and acquisitions forced human resource departments to
become more concerned with costs, planning and the implications of various HR
strategies for both organizations and their employees.

Human resource is becoming more important in today’s organization, especially in

knowledge-based industries. The success or failure of an organization most of the
time relies on the knowledge, skills and ability of its employees. Many experts feel
that an organization is able to achieve greater advantage if it has valuable human
resource which is difficult to acquire, imitate and is well-managed. Human resource
management is one of the most important management functions in an organization
as it is able to obtain and develop dynamic and qualified employees.

1.1 DEFINITIONS OF HRM

Snell and Bohlander (2010) defined HRM as the process of managing human talents
to achieve an organization’s objectives. Meanwhile Gary Dessler (2009) stated that
HRM is the policies and practices involved in carrying out the “people” or human
resource aspects of a management position including recruiting, screening, training,
rewarding and appraising (Gary Dessler). Mondy and Noe (2009) defined HRM as
the utilization of a firm’s human resources to achieve organizational objectives.

Human resource (HR) management is the design of formal systems in an

organization to ensure effective and efficient use of human talent to accomplish
organizational goals. Human resource (HR) management focuses on managing the
work force in order to take care of employee and employer relations especially in
using employee and employer relations, especially in using employees productively
to reach the organization’s strategic business objectives and to fulfill employee
needs.

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1.2 FUNCTION OF HUMAN RESOURCE MANAGEMENT

Human resource management functions involve a holistic and integrated approach

that includes various activities designed to contribute to the effectiveness of an
organization. According to Mondy and Noe (2009), there are five (5) HRM function as
shown in Figure 1.1.

Figure 1.1: HRM Functions

Source: Mondy and Noe (2009)

Staffing
Staffing involves human resource planning, job analysis, recruitment and selection of
manpower. The aim of staffing is to provide an adequate supply of qualified
individuals to fill the job in an organization. Through HR planning, managers attempt
to anticipate forces that will influence the future supply and demand for employees. It
is used to ensure the organization has enough workforce and suitable employees, at
the right time and place. Human resource planning is important so that there will be
no surplus and insufficient manpower. This is also to ensure that employees are able
to carry out their duties efficiently. Employees also must be appropriately motivated
and be willing to stay with the organization for a reasonable time.

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 By studying what workers do, job analysis is the foundation for the staffing function.
Then the job description and job specifications can be prepared to be used when
recruiting applicants for the job opening. The selection process is concerned with
choosing qualified individuals to fill job in the organization.

HR Development
Human resource development is a process aimed at producing employees who are
well informed, skillful and understand their goals as well as the organization’s goals.
In addition, human resource development is designed to help employees contribute
positively to the organization through excellent and satisfactory work performance.

Compensation and Benefits

Compensation rewards people for performing organizational work through pay,
incentives and benefits. Employers must develop and refine their wage and salary
system. Also, incentive programs such as gain sharing and productivity in rewards
are growing in usage.

Health, Safety and Security

Ensuring the physical and mental health and safety of employees is vital. The
Occupational Safety and health Act has made organizations more responsive to
health and healthy concerns.

Employee and Labor Relations

The relationship between managers and their employees must be handled effectively
if both the employees and organization are to prosper together. A harmonious
employer and employee relationship ensures the stability and strength of an
organization.

Global HR
Apart of the above functions, the rapid pace at which organizations have gone global
has greatly expanded HR issues with the different cultures. This is where HR plays a
vital role in firm’s global operation.

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 Activity 1: Can you now list five functions of human resource management?

1.3 THE IMPORTANCE OF HRM

Here are some of the importances of HRM to the organization such as:
• To gain or sustained competitive advantage through people by meeting the
following criteria:
ƒ The resources must be Value - it increases when employees find
ways to decrease costs, provide uniqueness of the product/service to
the customers or with the combination of both.
ƒ The resources must be Rare – when their skills, knowledge, abilities,
attitudes (KSA) are not the same with the competitors.
ƒ The resources must be Difficult to Imitate - each employee has
different KSA’s and cannot be copied by others.
ƒ The resources must be organized – when their KSA’s can be
combined and can be rapidly used to improve the efficiency and
effectiveness of the company.
• To develop employees for the benefit of organization.
• To recognize employees as an importance asset.
• To promote management effectiveness and efficiency.
• To ensure consistent and fair treatment of employees.
• To control HR performance.
• To recommend HR policies.
• To act as strategic partner to the organization.
• Proper HR planning in the organization.
• To deal with HR issues and challenges.
• Viewed as equivalent to financial management, production management and
marketing management.

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 • To ensure the people employed by the organization are being used as
efficiently and effectively.
• To contribute towards achieving the organizational goals.

1.4 COMPETENCIES OF HR MANAGER

In Malaysia, HRM is a field that is expanding. Therefore, HR Manager is required to

have a good skills, knowledge and abilities to manage HR aspects as shown in Table
1.1.

Types of Competency Descriptions

Business mastery HR Managers need to have organization and environment

knowledge.
HR mastery Knowledge and skills in HR activities.
Change mastery Ability to manage change effectively.
Personal credibility Respect and trust earned through relationship with
customers.

Table 1.1: Competencies of HR Manager

Source: Snell and Bohlander (2010)

1.5 HR MANAGER ROLES

There are few roles of HR Manager as follows:

• Administrative Roles
At the most basic level, the necessary HR activities in a company are handled
by operating managers. At this level, HR Manager is mostly a clerical and
administrative support operation.

• Employee advocate roles

HR professionals spend considerable time on HR “crisis management”
dealing with employee problems that are both work and non-work related.
Employee advocacy helps ensure fair and equitable treatment for employees
regardless of personal background and circumstances.

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• Operational Roles
The operational HR role emphasizes support for the organization through
adept handling of HR problems and issues.

• Strategic Roles
For HR to play a strategic role it must focus on the long term implications of
HR issues because changing workforce demographics and workforce
shortages may effect the organization.

• Service Functions
Some of the roles of HR Manager are to serve and to assist line managers
regarding HRM, to administer various benefits programs as well as dealing
with grievances and labor relations.

• Coordinating Functions
HR Manager is responsible to coordinate HR activities to achieve
organization goals and act as the right arm to ensure the HR objectives,
policies and procedures are adopted.

• Advisory Functions
HR Manager is also expected to offer an expert advice on HR policies,
procedures, rules and regulations, policy formulation and also
implementation.

• Control Functions
HR Manager is responsible to analyze key operational areas in the
organization especially matters regarding manpower to ensure organizational
goals can be achieved.

• Line Functions
HR Manager also performs duties in directing the activities of the people in
his or her department.

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1.6 COMPETITIVE CHALLENGES AND HRM

Organizations today are under intense pressure to be better, faster and more
competitive. We often read in the newspapers about various challenges and issues
that require HR Manager to act fast. Some of the challenges include:

Globalization
Mergers, takeovers and competition among international industries and business are
expanding. To remain and compete in the market, more firms are starting to explore
the global market. Indirectly, this causes them to face issues such as culture, legal
and business practice differences. Borderless economy, free movement of means of
production (foreign workers), international actors (NAFTA, EU, APEC, WTO) that
regulates how business operates worldwide become the challenges in managing HR.
Other challenges with regard of globalization include identifying capable expatriate
managers; designing training and development program and adjusting compensation
plans (fair and equitable).

Activity 2: Visit http://cyberkembara.tripod.com/global.html and identify the

implications and effects of globalization on HRM.

Embracing New Technology

Progress in technology has done a lot to influence human resource management.
From manual employees to knowledgeable employees, innovation in technology has
caused a sudden change in form, structure and employment needs. Knowledgeable
employees need to be equipped with skills to enable them to make plans and
decisions, identify problems and solve them. To shift from “touch labor” to
“knowledge workers”, employees need to be trained and re-trained to adapt with
rapid changes in technology. Therefore, it is crucial to have trained employees and
this human capital must be trained from time to time to ensure the competencies are

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standard with the current technologies used. HRM must alert and knowing the
current technologies and manage the training schedule for the staff.

Aside from that, the use of human resource information technology has influenced a
lot of today’s human resource management practices, such as providing for up-to-
date information to aid human resource management department in forecasting,
overseeing and making decisions as well as gathering on employment, speed up the
processing of information and increase internal and external communication process.

Managing Change
Technology and globalization are two main factors that force change to happen. An
organization that always maintains its status quo will not be able to compete in a
market that is fast developing and competitive. Change can happen reactively or
proactively. Reactive change is due to external influences while proactive change is
the manager’s initiative to grab opportunities available, especially in a fast changing
industry such as the technology industry.

Organization should manage change effectively by focusing on proactive change and

not reactive change – envision the future, communicate the vision, set clear
expectations for performance and develop the capability. Change in business
environment forcing organization to change in terms of responsibilities, job
assignments and work processes. However, change does not happen
spontaneously. The challenge is, most organizational members are trapped in
comfort zone whereby they are afraid and resist changing for a better.

Managing and developing talent or human capital

An organization needs to manage its human resource well if it intends to compete in
global market. Human resources that have economic value by way of knowledge,
skills and ability give a huge impact on the organization. In order to form a valuable
manpower, organizations need to strategize to ensure its resources are
knowledgeable, skillful and experienced. To gain competitive advantage from human
capital, organization must focus in developing employee KSA because all staffs have
unique skills and potential. Plus, continuous training will enhance their performance.
However, the challenge is employees own their KSA. When they leave a company,
they take their KSA with them and any investment the company has made is lost.

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 Responding to the market
Fulfilling customer’s expectations and needs are important for an organization to be
able to compete in the local and foreign market. Customers demand becoming
complex and sophisticated to please. With thousands of choices that customer can
choose from, makes the standard is raised higher. Aspects such as quality,
innovation and responsiveness will put at stake. HRM is facing problem on how to
cope with the market demand. This situation challenged HRM on how to produce
staff that have innovative and ‘X’ factor to adapt this situation.

Containing Cost or Cost Reduction

Some of the important elements to enable an organization to have competitive
advantage and to maximize its effectiveness are cost reduction and increase in
productivity. Human resource cost is one of the biggest expenditure components in
an organization, especially organizations that specialize in knowledge and services.
Usually, organizations will have to rearrange their firms due to cost reduction through
downsizing, outsourcing and mergers.

Most of the time, these actions cause employee surplus, which then forces the
management to reduce the number of employees through the process of ‘lay-off’
staff. However, such efforts have greater impact towards HRM such as losing the
most valuable employees, lost of confidence and job security among employees etc.
This issue needs to be handled wisely and fairly to avoid problems and employees
dissatisfaction that might damage the organization’s performance.

Other challenges
• Economic and technological changes
Several economic changes have altered employment and occupational
patterns as well as major change from manufacturing and agriculture to
service industries and telecommunications. The growth of information
technology also particularly that linked to the internet, has led to many
changes throughout organization of all types.

• Growth in contingent workforce.

Today contingent workers (temporary workers, independent contractors,
leased employees and part-timers) represent more than 20% of the
workforce. Many employers operate with a core group of regular employees

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 with critical skills and then expend and contract the workforce through the use
of contingent workers.

• Demographic issues
It is more diverse racially, women are in labor force in much greater numbers
than ever before, and the average age of workforce is now considerably older
than before. As a result of these demographic shift, HRM in organizations has
had to adapt to a more varied labor force both externally an internally.

• Work/family balancing.
Employees are no longer willing to do overtime even though they are offered
higher pay. As a result, ‘family friendly’ concept has been introduced by
organization in reacting to this demand.

• Organizational restructuring and mergers/acquisitions.

Many organizations have restructured in the past few years in order to
become more competitive. Also, merger and acquisitions (M&A) of firms in
the same industries have been made to ensure global competitiveness. HRM
challenges in dealing with the human consequences of change.

Activity 3: Ask your HR Manager at your office about the challenges he facing
in managing human resource.

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1.7 SUMMARY

People have always been central to organizations, but their strategic importance is
growing in today’s knowledge-based world. An organization’s success increasingly
depends on the knowledge, skills and abilities of its employees. Managers must
develop strategies for identifying, recruiting and hiring the best talent available,
developing these employees in ways that are form specific, helping them to generate
new ideas and generalize them through the company, encouraging information
sharing and rewarding collaboration and teamwork.

1. What are the challenges faced by personnel administration (PA)?

2. Identify how globalization is influencing PA.
3. Describe the impact of IT on PA.
4. Discuss the role of Personnel Manager.
5. Describe the criteria necessary for firms to achieve sustained competitive
advantage through people.
6. Justify the statement “All managers are involved in HRM”.
7. What HRM functions that must be performed regardless of the size of
organization?
8. How can human resource management contribute to a company’s
success?
9. What skills are important for success in human resource management?
Which of these skills are already strengths of yours? Which would you like
to develop?
10. Will technology eliminate the need for human resources managers?

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Study Notes

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