Chapter One: Introduction to HRM

Prepared by Dr. Assefa

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Introduction

 Which one is the most critical resource (Material,

Finance, HR, Capital and Time)?
 People are at the core of every organization.
Without staff organizations cannot exist. ‘People
are the only real source of ... continuing
competitive advantage (Prahalad &Hamel, 1990)
 Human: People, US
 Human Resource: people with their experience,
skills, knowledge and personal qualities
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Con’d…

 Human Resource Management: it is the

management of HR in an organization to ensure
the effective and efficient use of human talent to
accomplish the organizational goals.
 HRM is defined as the performance of all
managerial functions involving planning,
recruiting, selecting, developing, utilizing,
rewarding and maximizing the potential of the HR
to the best achievement of the organizations
objective. Prepared by Dr. Assefa .
Con’d

 Good Human Resource Management

depends on the organization having a
clear vision, mission, and values.
– Vision: It is needed to motivate staff
– Mission: It is the reason for existence
– Values: Show how the organization will do its
work and what kind of staff are needed to do
it.Vales often make an organization different from
other organization
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HRM VS Personnel Management

 Both differ in scope and orientation. HRM is the

modern way of calling Personnel Management.
 HRM is wider in scope and views HR as an
important asset or resource in an organization.
 Personnel Management is narrow in scope
and views HR as a tool for the achievement of
the goal of the organization

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 What Organizations Do

HR

Products
Product [Goods or Service]

Capital
Services Raw Materials
Information

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Views of Human Resources Management

1. View #1 -- HRM is a Separate

Department .i.e One of the major
organizational subsystems.
 In an organizational settings, there
are a number of organizational
subsystem as it is indicated in the
next slid
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 Major
Organizational
Subsystems
Human
Resources

Research &
Finance Development,
Engineering
Management
Materials,
Production,
and/or
Services Marketing
Management

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Why a Separate Department is
Useful

1. Importance of Human Resources:

Competitive Advantage
 Increasing Complexity: Global
workforce
 External Influences: Legal
Requirements
 Consistency in Treatment
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Responsibilities of
Advice and Counsel
the HR Department

Service

Policy Formulation
and Implementation

Employee
Advocacy

Strategic Partner
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The ‘Ulrich model’ of HRM

Human Resources should become:

a strategic partner with top management
an expert in administration
a champion for employees
an agent of continuous transformation (Change
Agent)

Ulrich (1998)
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View #2 -- Every Supervisor or Manager is
an HR Manager

 Every supervisor or Manager is

an HR Manager. i.e. anyone who
deals with subordinates plays a
Human Resource Management
role

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Evolution of HRM

 The origin of HRM is unknown. HRM appears to have its

origin in the United States in the 1950s. It did not gain
wide recognition until the beginning of 1980s, and in the
UK until the mid to late 1980s.
 So, HRM is properly started in the industrial revolution of
capitalism. This is because during capitalism, there was a
harsh management system.
 During this period, Human Relation Moment was made
with the help of Robert Owen. R. Owen was not happy
about the relationship between workers and owners. He
was known as the father of HRM Prepared by Dr. Assefa .
Four Major HRM Activities

The Acquisition The Development

of of
Human Resources Human Resources

The Rewarding The Maintenance

of of
Human Resources Human Resources

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How HR Functions Relate to HR
Activities

The Acquisition of
Human Resources

HR Planning
Analyzing Jobs
Recruitment The Development of
Selection Human Resources

Appraising
Training
Developing
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How HR Functions Relate to HR
Activities, continued

The Maintenance of
Human Resources

Employee Benefits
The Rewarding of Safety & Health
Human Resources Labor Relations
Compensating
(Wages & Salaries)
(Incentives)
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Goals of Human Resource Management

Facilitating Enhancing
organizational productivity and
competitiveness quality

The human resource

function in contemporary
organizations

Complying with Promoting

legal and social individual growth
obligations and development
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Organization of HRM

 Centralized Human Resource Management: every

essential decision is made at the head office.
 The advantages are
– Consistency
– Same practice
– Easy to control and
 the disadvantages are
– Delay
– Don’t meet specific needs of departments

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Organization of HRM

 Decentralized Human Resource Management: essential

decisions are made at business unit level and Human
Resource Staff at corporate level act as only advisory
level. The advantage is
– Fast response
– Meet the need of each department
– Flexible and
 the disadvantages are
– Variety of Human Resource Practices
– Difficult to control
– inconsistency
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 Core Values of HRM
 Human beings are the crucial aspects of every
organization. The greater is the commitment of
the human resources ,the more successful is the
organization.
 An individual is a whole person. He/she brings all
aspects of his/her personality, attitudes, traits
and behavior to the work place. All people
represents the organization.
 People are different from each other. They vary
in abilities, nature, personality; religion
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 Core Values of HRM

 Human resources have to be acquired, developed and

motivated to give higher performances.
 The success of an organization depends upon the
satisfaction of organizational needs and employees
needs. The effective coordination and commitment
between managers and subordinates is essential for
organizational success.
 Human relations enable people to work effectively in an
organization with other people in organization.

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Competitive Challenges for HRM

 Managing Change
 Cultural Diversity
 Work & Family Issues
 Developing Human Capital
 Globalization

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Competitive Challenges for HRM

 Cost Containment
 Downsizing & Layoffs
 Quality & Teamwork
 Advances in Technology
 Continuous Quality Improvement

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New Trends in the workplace

 The past two decades have witnessed a

dramatic transformation in how firms are
structured. Tall organizations that had many
management levels are becoming flatter as
companies reduce the number of people
between the chief executive officer (CEO) and
the lowest-ranking production employee in an
effort to become more competitive.
 This transformation has had enormous
implications for the effective utilization of human
resources Prepared by Dr. Assefa .
New Trends in workplace
 Education: Now a day organizations are available with
the opportunity of having more knowledge and skilled
workers, increase in the education level of society’s
continuously providing the highly educated work force in
the organizations.
 Work time: Flextime—the practice of permitting
employees to choose, with certain limitations, their own
working hours. Compressed Workweek—any
arrangement of work hours that permits employees to
fulfill their work obligation in fewer days than the typical
five-day workweek. This approach adds many highly
qualified individuals to the labor market by permitting
both employment and family needs to be addressed.
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 New Trends in the workplace

 Standard of living: High employment rate, low inflation

and Steady economic growth provide opportunity and
rising living standards. Technological advance improved
living standards for most.

 Expectations & demand: People's expectations that their

employers will behave ethically are increasing, so much
that many firms and professional organizations have
created codes of ethics outlining principles and standards
of personal conduct for their members. For different
associations, there’re ethical codes.
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New Trends in workplace

 Diversity and gender issues at work place: Managing

diversity means planning and implementing
organizational systems and practices to manage people
so that the potential advantages of diversity are
maximized while its potential disadvantages are
minimized. Managers are striving for racial, ethnic, and
sexual workplace balance as a matter of economic self-
interest. A study found that cultural diversity contributes
to improved productivity, return on equity, and market
performance.

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The HRM Context
Contingency theory
– Contingency theory tells us that definitions of HR
aims, policies and strategies, lists of activities,
and analyses of the HRM roles of line managers and
the role of the HR function are valid only if they
are related to the situation of the organization in
its environment.
– HRM context can be classified as external and
internal Environment

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The external Environment

 The external environment consists of

social, political, legal and economic
developments and competitive pressures.
 External forces are those forces that
human resource management of a given
organization has no control and these
include: political-legal, economic,
technological, and cultural.

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Eternal Environment….

 Political-legal includes the following:

– Lawmaking body (parliament) to enact labor acts;
– Law implementing body (government); and
– A watchdog (judiciary) to ensure that other two work
within the confines of the constitution and in
public interest
– Labor laws example conditions of employment, working
conditions, job security, compensation, health and
safety, human resource planning, recruiting and
selection, placement, training and development,
remuneration, employee relations etc.

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Eternal Environment….

 Economic
– The economic environment comprises different
interest groups that interact and affect
directly or indirectly the operation of an
organization.
– Interest groups that should be considered in the
economic environment are the following:
Suppliers, Customers, Competitors, Economic
growth and Globalization.

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 Eternal Environment….
 Culture
– Behavior derives form invisible attributes such as
values, beliefs, and customs etc. which are acquired
by an individual as a member of a society.
– Culture creates the type of people who become members
of an organization.
– Attitudes of workers towards jobs and organizations
are a result of their cultural background (like,
dislike, apathy towards work).
– Work ethics, achievement needs and effort reward
expectations, which determine individual behavior,
are result of culture.
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The Internal Environment

 Human resource management is also challenged

by different factors that are within the
organization and under the control of the
management. Internal forces are like:
– Strategy
– Task
– Leadership
– Unions
– Organizational culture

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Assignment

1. How do our staff fit within our organization’s vision,

mission and values?
2. Identify at least four major HR challenges currently
facing organizations and managers. How they affect
organizations?
3. What are the roles of HR Mangers in your
Organization
4. What are the new trends in the workplace at your
organization?
5. Discuss about the HRM Context
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