Human Resource Management

Discussion Note Prepared for

Preparation Class of NRB
2013
• Personnel Management
• Human Resource Management
 Features of HRM
• Related with people dimension of an organisation
• An explicit relation between HRM and corporate strategy
• Commitment of employees
• Recognition of common interests and needs
• Response to influences of social, economic, political and
cultural context
• Owned by line managers and not only by personnel
specialists
• Employees are seen as assets or human/social capital.
HRM System Components
1. Inputs:
• HR plan guided by strategic Orientation
• Management inventory
• Organisation structure including
communication and decision making
framework.
• Labour market, labour laws, and trade
unions.
2. Process:
• Acquisition
• Development
• Utilisation
• Motivation
• maintenance
3. Outputs:
• Productivity
• Quality of work life
• Readiness for change
• Profits
• Goal achievement
• Job satisfaction
• Ownership, commitment, competence, congruence,
effeciency and effectiveness.
 Surroundings
1. Internal environment
• Goals, policies, structure, reward system,
organisation culture and dynamism.
2. External environment
• Technology, politics, laws, labour unions,
economic-social-cultural forces.
(which helps us to identify our strength,
weakness as well as available opportunities and
existing as well as potential threats.)
 HRM Functions/Areas of HRM
• Job Analysis
• Human Resource Planning
• Recruitment and Selection
• Training and Development
• Performance Appraisal
• Compensation and Benefits
• Health and Safety
• Employee/labour/Industrial Relation
HRM and Organisational Performance

A growing body of research shows that

progressive HRM practices can have a
significant effect on corporate performance.
The studies depicted the relationship between
specific HR practices and critical outcomes
measures such as corporate financial
performance, productivity, product and
service quality, and cost control.
 Characteristics of high performance work
systems
• Large number of highly qualified applicants for
each strategic position.
• The use of validated selection and promotion
model/procedures.
• Extensive training and development of new
employees.
• The use of formal performance appraisal and
management.
• The use of multisource (360 degree)
performance appraisal and feedback.
• Linkage of merit increases to formal appraisal
process.
• Above-market compensation for key positions.
• High percentage of entire workforce included
in incentive system.
• High differential in pay between high and low
performers.
• High percentage of workforce working in self-
managed, project-based work teams.
• Low percentage of employees covered by
union contract.
• High percentage of jobs filled from within.
Competitive Advantage through People

• Competitive advantage refers to the ability of

an organisation to formulate strategies that
places it at a favorable position relative to
other companies in the industry.
• Two major principles describes the extent to
which a business has a competitive advantage:
 1. Customer Value
• Competitive advantage occurs if customer
perceive that they receive more value from
their transaction with an organisation than
from its competitors.
 2. Maintaining Uniqueness
Competitive advantage can also be derives
from offering a product or services that your
competitors can not easily imitate or copy.
Sources of Uniqueness:
• Financial or economic capability
• Product or service capability
• Technological or operational capabilities
 To gain competitive advantage a firm need to
use different competitive strategies. Human
resources represents a competitive advantage
that can increase profits when managed
wisely.
• Innovation strategy emphasizes managing
people so that they work differently.
• Quality enhancement strategy emphasizes
managing people so that they work smarter.
• Cost reduction strategy emphasizes managing
people so that they work harder.
• Speed strategy emphasizes managing people
so that they work more efficiently.
 Managing Workforce Diversity
• Managing diversity means establishing a
heterogeneous workforce to perform to its
potential in an equitable work environment
where no member or group of members has
an advantage or a disadvantage.
• Basically, there are five reasons why diversity
has become a dominant activity in managing
an organisation’s human resources:
1. The shift from a manufacturing to a service
economy.
2. Globalization of markets.
3. New business strategies that require more
teamwork.
4. Mergers, acquisitions, and alliances that require
different corporate cultures to work together.
5. The changing labour market.
 To derive value from workforce diversity, an
organisation must do three things:
1. Communicating Diversity
Means providing an opportunities for all
workers and managers to become aware of
the different values of the various sub-groups
making up the workforce.
2. Cultivate Diversity
Workers and managers need to support and
encourage each other’s success at every
opportunity.
3. Capitalized on Diversity
Management must install a formal process
that regularly examines and focuses on
identifying each individual’s strengths,
weaknesses and options for development and
points out potential job opportunities for
candidates to consider.
Potential Areas for Diversity Management

• Racial and Ethnic Minorities

• Female workers
• Older workers
• Child workers
• Permanent vs contractual