HUMAN RESOURCE

MANAGEMENT
Session 9 - Chapter 10

(Mamoona Arshad)
 You can get capital and erect buildings, but
it takes
people to build a business.
HUMAN — THOMAS J. WATSON, FOUNDER,
RESOURCE IBM
LEARNING OBJECTIVES
What would be learn?
• Discuss how companies use human resources management to gain competitive advantage.
• Identify various methods for selecting new employees.
• Discuss options for who appraises an employee’s performance.
• Describe the fundamental aspects of reward systems.

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IMPORTANCE OF HUMAN RESOURCE
MANAGEMENT
• The process of planning, organizing, directing (motivating), and controlling the
procurement, development, compensation, integration, maintenance, and separation of
organizational human resources to the end that organizational, individual, and societal
needs are satisfied.
Importance
• Human/ intellectual capital – knowledge, skills, and abilities.
• Core capabilities – inimitable, rare.
DUTY OF HR MANAGER
• They must know their company’s business and line managers must know how to hire
well and motivate their people.
• Must deal with tough ethical challenges.
• focus on technical issues like the legal requirements for hiring decisions.
• HR managers may have to downsize the workforce while still retaining top executives
through salaries or bonuses, or they may fail to investigate and challenge corrupt
practices of colleagues.
• HR leaders must strong advocates for at least four sets of values: strategic, ethical,
legal, and financial.
HUMAN RESOURCE MANAGEMENT
Talent management
Human Resource Management includes all activities used to attract & retain employees
and to ensure they perform at a high level in meeting organizational goals.
 Insert Image

EXAMPLE OF
BMW
https://www.youtube.com/watch?
v=QgGdGYIsVhE
BWM – HOW WOULD IT EFFECT THEIR DEMAND FORCE?

• They may need fresh graduates as old ones are retiring.

• Need to estimate also what sort of people do they need with the
on-going implementations.
BWM – WHAT A MANAGER CAN DO ABOUT JOB ANALYSIS?

• Job specification – hire those who have tech know-how,

experience of factory floor and tool handling, ability to handle
pressures
HUMAN RESOURCE PLANNING
HR Planning includes all activities managers do to forecast current
and future HR needs.
• Must be done prior to recruitment and selection
• Demand forecasts made by managers estimate the number &
qualifications the firm will need.

• Supply forecasts estimate the availability and qualifications of

current workers and those in the labor market.
- If less supply: look for overseas employees, job hunt through
universities.
- Low and middle skilled employees cant be outsourced by
technology.
• Labor deficit or labor surplus
CONT..
Job analysis – what and how aspects of job.

• Job description (JD) – Task, duties, and responsibilities.

• Job specification - skills, knowledge, and abilities to perform job.

• Benefits:
• job analysis helps increase the value that employees add because
it clarifies what is really required to perform effectively.
HRM COMPONENTS
• Component should be consistent with the others, organization
structure, and strategy.
• Recruitment: develop a pool of qualified applicants.
• Selection: determine relative qualifications & potential for a job.
• Training & Development: ongoing process to develop worker’s abilities and
skills.
• Performance appraisal & feedback: provides information about how to train,
motivate, and reward workers.
• Managers can evaluate and then give feedback to enhance worker performance.
HRM COMPONENTS
 Pay and Benefits: high performing employees should be rewarded with
raises, bonuses.
• Increased pay provides additional incentive.
• Benefits, such as health insurance, reward membership in firm.
 Labor relations: managers need an effective relationship with labor
unions that represent workers.
• Unions help establish pay, and working conditions.

If management moves to a decentralized structure, HRM

should be adjusted as well.
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 Insert Image

DEUTSCHE BAHN -
PREPARATION FOR THE
RECRUITMENT PROCESS 

https://www.youtube.com/watch?
v=8krjyPYviLM
STAFFING
Recruitment
• Internal Recruiting: positions filled within the
firm.
• Internal recruiting has several benefits:
• Workers know the firm’s culture, may not have new ideas.
• Managers likely already know the candidates.
• Internal advancement can motivate employees.

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RECRUITMENT
• External recruiting: managers look outside the firm for people who have not
worked at the firm before.
• Managers advertise in newspapers, hold open houses, recruit at universities, and on the
Internet.
• External recruitment is difficult since many new jobs have specific skill needs.

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SELECTION TOOLS
References
ReferencesChecks
Checks
Interviews
Interviews Background
Background
Information
Information
Application
Applicationand
andresumes
resumes
Selection Personality
Personalitytest
test
Selection

Performance
Performancetests
tests Cognitive
Cognitiveability
abilitytests
tests
Physical
Physical
Ability
Abilitytests
tests
SELECTION PROCESS
After a pool of applicants are identified, qualifications related to the job requirements are
determined:
• Interview: almost all firms use one of two types:
• Structured interview: managers ask each person the same job-related questions.
• Unstructured interview: held like a normal conversation.
• Usually structured interviews preferred; bias is possible.
• Reference Checks : To check honesty of applicant through double check given information.
• Background Checks : includes education, prior employment, college major, etc.
• Physical Ability Test: measure strength & endurance.
• Good for physically demanding jobs.
SELECTION PROCESS
 Personality Tests: Either an ability and personality test.
• Ability test: assess if applicant has right skills for the job.
• Personality test: seek traits relevant to job performance.
• Be sure test is a good predictor of job performance.

•
Cognitive ability test: predictor of employees’ ability to learn on the job.
• Measure range of intellectual abilities, verbal communication, or numerical aptitude.
 Performance Tests: measure job performance.
• Typing speed test is one example.
• Assessment Center: candidates assessed on job-related activities over a period of a few
days.
 References: outside people provide candid information about candidate.
• Can be hard to get accurate information.
E.G. OF P&G
We get our best quality employees when we use a Total Assessment process consisting of sound
resume screening, multiple interviews, and multiple tests that…
Focus on factors that count and predict job performance
Our tests have been designed to measure performance dimensions that are clearly important and job-related,
as determined by thorough research and analysis of P&G work
Are objective and fair
Irrelevant data (appearance, contacts) is disregarded and every candidate is asked the same questions, given
the same amount of time, and compared on exactly the same metrics
Are comprehensive
Our tests have been designed to measure skills and accomplishments which generally cannot or do not
emerge from interviews. In addition, the tests allow candidates to be asked many more questions than
would be possible in an interview
Are efficient
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With large candidate volumes, tests allow us to focus our limited and valuable recruiting resources on those
candidates with the highest likelihood of success at P&G.
HRM PLANNING -
• Lay-offs
• Outplacements
• Termination - Employment at will
 Insert Image

DEVELOPING A
WORKFORCE
TRAINING & DEVELOPMENT
• Training: teach organizational members how to perform current jobs.
• Help worker’s acquire skills to perform effectively.
• Development: build worker’s skills to enable them to take on new duties.
• Training used more often at lower levels of firm, development is common with
managers.
• A Needs Assessment should be taken first to determine who needs which program
and what topics should be stressed.
TRAINING PROCESS

NEEDS ASSESSMENT

DESIGN OF TRAINING PROGRAMS

TRAINING METHODS

TRAINING EVALUATION

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DESIGNING OF TRAINING PROGRAMS
PROCESS OF IDENTIFYING TRAINING OBJECTIVES AND CONTENT

Siemens; a German conglomerate

Example 1
Training objective: Develop managers’ skills to solve real problems the company faces
Training Content: Bring together managers from 150 countries. Form teams and use
“diversity in workforce” as the key to effective problem solving
Example 2
Training objective: Promote important values and objectives such as “knowledge
sharing”
Training Content: Orientation on how to share information through “Share
Net”
TRAINING
. METHODS
Tools: Which of the training tool/s should be used
Films
Videos when:
Lectures
Role-playing
Case Studies • Orienting new factory workers how to use
Coaching and Mentoring machinery
Group Discussions
On- the job Training • Teaching sales representatives how to deal
Simulations with difficult customers
Games
E- learning • Training marketing managers how to
effectively design marketing and promotional
plans
TRAINING EVALUATION
Reaction:
How satisfied are the employees with the training program?
Learning:
To what extent were the knowledge and skills enhanced?
Behavior:
How much of the on-the-job behavior changed due to training?
Results:
How much of the job performance has improved?
(e.g. increased sales/ reduced costs)
TYPES OF DEVELOPMENT
• Varied Work Experiences: Top managers must build expertise in many
areas.
• Workers identified as possible top managers given many different tasks.
• Formal Education: tuition reimbursement is common for managers taking
classes for MBA or similar.
• Long-distance learning can also be used to reduce travel.

Whatever training and development efforts used, results must be

transferred to the workplace.
 Insert Image

PERFORMANCE
APPRAISAL
PERFORMANCE APPRAISAL
• Process of assessing employee’s job performance
• job related strengths
• Assess future training and development needs
• progress toward goals
• determine ways to improve performance
• Pay and promotion decisions

• More systematic is better, for the most part

WHAT DO YOU APPRAISE?
• TRAIT APPRAISAL :“What are they like?”
Trait Scales – subjective judgments related to employee characteristics related to performance.
• BEHAVIOR APPRIASAL: “What do they actually do?
Behavior Logs – more observable aspects of performance.
Behaviorally Anchored Rating Scale (BARS)
• RESULTS APPRIASAL: “What have they accomplished?”
Management by Objectives (MBO) – objectives set by supervisor and subordinates have to be reached
within a given time.
How do you decide which appraisal tool to choose?
 Insert Image

MBO

Advantages
• it avoids the biases (objectivity)
• Employees are more committed to reaching goals
• allows employees to adapt their approach as
needed (within limits, for instance legal and
ethical).
Disadvantages
• unrealistic objectives
• can be too rigid

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WHO APPRAISES PERFORMANCE?
Supervisors
Supervisors

Peers
Peers 360-degree
360-degreeappraisal
appraisal
Sources
Sourcesofof
performance
performance
appraisals
appraisals

Self Subordinates
Subordinates
Self
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 Insert Image

DESIGNING
REWARD SYSTEM
PAY AND BENEFITS
• Pay level: how the firm’s pay incentives compare to other firms
in the industry.
• Managers can decide to offer low or high relative wages.
• Pay Structure: clusters jobs into categories based on importance, skills,
and other issues.
• Factors determine pay: Seniority, intellectual, skills

• Benefits: Some are required (social security, workers comp).

• Others (health insurance, day care, and others) are provided at the employers
option.
• Cafeteria-style plan: employee can choose the best mix of benefits for them.
Can be hard to manage.
PAY
• Base Wage
• Job Based Pay-paid for the job that is done
• Competency Based Pay-pay is linked to job-relevant skills, knowledge, and experience

• Incentive Pay-linked to job performance

• can increase motivation
• links employees to firm performance
• works well when employees trust firm
INDIVIDUAL INCENTIVES
• Piece-Rate - Pay for each unit of output
• Commissions - Pay from percentage of sales or profits
• Bonuses - Lump sum payments
• Merit Pay - Permanent increases in base pay linked to individual’s previous performance
• Seniority - Increases over time
TEAM OR ORGANIZATIONAL INCENTIVE
• Gain Sharing - teams of employees share in gains from improvements in productivity or cost saving
measures
• Profit Sharing - A percentage of profits earned by a department or company
• Stock Ownership
• Options
• Employee Stock Ownership Plans
CONCLUSION

• For developing a talent that a company needs, HR managers should

carefully plan its hiring, retain its best workforce, and always remain
cognizant of their training and development needs.
• Further, an effective appraisal system along with a carefully design
reward system is a key to retain workforce.

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