Subject Name : Human Resource Management

Code : HRM501
Credit Hours : 3

LECTURE 1: HRM- INTRODUCTION

Dr.William @ Sui Reng Liana

 INPUT – OUTPUT MODEL

Input Process Output

Money Planning Products

Raw Materials Financial Services
Land Production
Factories Quality Control
Information Personnel
People Marketing
IT

2
 Organizations

Consist of People with various

Background

Depends on People to Operate

Organizations without
Manpower is Nothing
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• ARE PEOPLE ASSETS OR
LIABILITIES

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 The Strategic View of Human Resources

Employees are human assets

– Increase in value to organization and marketplace
when investments of appropriate policies and
programs are applied
Effective organizations recognize that employees have
value
– Much as organization’s physical and capital assets
have value

Employees are valuable source of sustainable competitive

advantage
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Sources of Employee Value

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 Sources of Employee Value

• Technical Knowledge
– Markets, processes, customers, environment
• Ability to Learn and Grow
– Openness to new ideas
– Acquisition of knowledge and skills
• Decision Making Capabilities
• Motivation
• Commitment
• Teamwork
– Interpersonal skills, leadership ability
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 Adopting an Investment Perspective

• Determines how to best invest in people

• Costs
– Out-of-pocket
– Opportunity
• Human assets become competitive advantage
• Required skills become less manual, more knowledge-
based
• Appropriate, integrated, strategy-consistent approach is
needed

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 A Dilemma

• Failure to invest in employees causes

– Inefficiency
– Weakening of organization’s competitive position
• Human assets are risky investment
• Require extra effort to ensure that they are not lost

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 Research Findings

• HR practices directly related to profitability and market

value
• Primary reason for profitability:
– Effective management of human capital
• Integrated management of human capital can result in
47% increase in market value
• Top 10% of organizations studied experienced 391%
return on investment in management of human capital

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The HR Value Chain

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 HR Metrics Are Complex

• 90% of Fortune 500 organizations evaluate HR operations

on basis of three metrics:
– Employee retention and turnover
– Corporate morale
– Employee satisfaction
• These metrics do not necessarily illustrate how HR
impacts
– Profits
– Shareholder value

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 Nature of Human Resource
Management
Human Resource (HR) Management
The design of formal systems in an organization to
ensure effective and efficient use of human talent to
accomplish organizational goals.

Who Is an HR Manager?
 In the course carrying out their duties, every
operating manager is, in essence, an HR manager.
 HR specialists design processes and systems that
operating managers help implement.

1–13
HR MANAGEMENT ACTIVITIES

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 HR Activities

• Strategic HR Management
• Equal Employment Opportunity
• Staffing
• HR Development
• Compensation and Benefits
• Health, Safety, and Security
• Employee and Labor Relations

1–15
 HR Management Challenges

• Workforce Availability and Quality Concerns

– Inadequate supply of workers with needed skills for
“knowledge jobs”
– Education of workers in basic skills

• Growth in Contingent Workforce

– Increases in temporary workers, independent contractors,
leased employees, and part-timers caused by:
• Need for flexibility in staffing levels
• Increased difficulty in firing regular employees.
• Reduced legal liability from contract employees

1–16
 HR Management Challenges

• Workforce Demographics and Diversity

– Increasing Racial/Ethnic Diversity
– More Women in the Workforce
• Single-parent households
• Dual-career couples
• Domestic partners
• Working mothers and family/childcare
– Significantly Aging Workforce
• Age discrimination

1–17
 HR Management Challenges

• Globalization of Business
– Outsourcing and increased competition
– The threat of terrorism
• Economic and Technological Changes
– Occupational shifts from manufacturing and agriculture to
service industries and telecommunications.
– Pressures of global competition causing firms to adapt by
lowering costs and increasing productivity.
• Technological Shifts and the Internet
– Growth of information technology.

1–18
 HR Management Challenges

• Organizational Cost Pressures and Restructuring

– Mergers and Acquisitions
– “Right-sizing”—eliminating of layers of management,
closing facilities, merging with other organizations, and
outplacing workers
• Intended results are flatter organizations, increases in
productivity, quality, service and lower costs.
• Costs are “survivor mentality”, loss of employee loyalty,
and turnover of valuable employees.
– HR managers must work toward ensuring cultural
compatibility in mergers.
1–19
20
 Environmental Scanning

Assessment of internal and external environmental

conditions affecting organization

• External environment - Economic, political and

competitive forces
• Internal environment
• Quality and quantity of talent
• Organizational culture
• Talent pipeline and leadership bench strength

Helps identify strengths, weaknesses, opportunities, and

threats

2–21
 Factors Affecting External Pool of
Employees
Economic and Governmental Factors - Impact HR Planning
• Government regulations affect labor supply
• Tax legislation at local, state, and federal levels

Geographic/Competitive Evaluations
• Net migration
• Direct competitors
• International competition

Changing Workforce Considerations

• Aging of the workforce

• Growing diversity of workers
• Female workers and work-life balancing concerns
• Availability of contingent workers
• Outsourcing possibilities
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 Planning for Internal Workforce Audit

Current and Future Job Audits

• Existing jobs
• Number of individuals performing each job
• Reporting relationships
• Vital KSAs (knowledge, skills, abilities)
• Jobs needed to implement future organizational strategies
• Characteristics of anticipated jobs

Employee and Organizational Capabilities Inventory

• Employee demographics
• Career progression
• Performance data
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 Human Resources as a Core
Competency
• Strategic Human Resources Management
– The use of employees to gain or keep a competitive
advantage, resulting in greater organizational effectiveness.

• Core Competencies
– The unique capabilities of employees in an organization that
create high value and that differentiate the organization
from its competition
– The source of an organization’s sustainable competitive
advantage.

2–24
Strategic HR Management Process

Figure 2–1
2–25
 Forecasting

Using information from the past and the present to

identify expected future conditions

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 HR Forecasting Methods

Judgmental Methods
• Estimates
• The rule of thumb
• The Delphi technique
• Nominal groups

Mathematical Methods
• Statistical regression
• Simulation models
• Productivity ratio
• Staffing ratios

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 HR Forecasting Planning Periods

Short-range plans - Forecast for the immediate

HR needs of an organization

Intermediate-range plans - Project one to

three years into the future

Long-range plans - Extend beyond three years

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 Forecasting External Supply of
Employees

Net migration into and out of the area

Individuals entering and leaving the workforce

Individuals graduating from schools and colleges

Changing workforce composition and patterns

Economic forecasts for the next few years

Technological developments and shifts

Actions of competing employers

Government regulations and pressures

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Estimating Internal Labor Supply for a
Given Unit

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Managing Talent Supply Imbalance

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HRM LIFE-CYCLE

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