CHAPTER 13

HUMAN RESOURCE
MANAGEMENT
Nagiah Ramasamy

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 Learning Outcomes
13.1 Explain the critical importance of the HRM function to
organizational competitiveness.
13.2 Explain the roles of the HR manager.
13.3 Discuss the reliability of the different selection techniques.
13.4 Discuss the importance of orientation, training programs, and
performance appraisals in the development of employees.
13.5 Discuss the role of remuneration in employee motivation and
performance.
13.6 Discuss the role of trade unions, the collective bargaining
process, and methods for settling worker–management disputes.
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 The Importance of HRM
• A key function where policies are designed to organize work and
maximize employee performance to achieve strategic business
objectives,
• E.g. high productivity, cost-effectiveness and profitability.
• Firms which align their HRM practices with their business strategy will
achieve superior outcomes.
• Effective HRM practices extract positive work behaviors among
employees, which lead to organizational innovation.
• Level of motivation is enhanced resulting in better retention of quality
performers.
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 The Importance of HRM
• HR POLICIES:
• Appropriately designed policies attract and retain high performing employees.
• Create an organizational climate in which the workforce is highly motivated and
committed to achieve the business objectives.
• Able to respond to changes in the increasingly competitive global marketplace.
• Identify acceptable and unacceptable organizational behavior (e.g. levels of work
performance, consumption of alcohol and smoking at work, and health and safety
practices) and regularize management decision making.
• Reflect social and/or legal influences (e.g. equal employment opportunity, affirmative
action, and remuneration)
• Codify organizational position on employment issues (e.g. uniforms, customer service).
• Formulation strongly influenced by external forces such as government policies,
industry practices, union policies and collective agreements.

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 The Importance of HRM
Deloitte Global Human Capital Trends 2014 Report
• many HR teams lack the skills and data they need to understand the
contemporary global business environment, local labor markets, shifts in
technology, evolving workforce demographics and the changing nature of
work itself.

Biggest challenges confronting contemporary organizations:

• Leadership development (86%),
• Retention and engagement (79%),
• Reskilling the human resource function (77%).

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 High Performance Work System
Includes:
• Quality of work-life programs
• Enhance the skills, knowledge and abilities
• Employee suggestion and involvement programs
• Team-based work
• Competitive remuneration.

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 The importance of HRM
Sustained shift in the work environment has led to changes in the
workplace:
• more skilled workers, more female workers, flexibility in job design
and use of ICT.
Increasing use of technology in the workplace, particularly in
knowledge-based jobs:
• work need not be performed in formal working environments,
• distancing workers from the bricks-and-mortar, nine-to-five workplace
(Towers Watson, 2012: 6)

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 Role of the HR Manager
HRM should select four key areas of activity
• Strategic partner
• Change agent
• Administrative expert
• Employee champion
• When executed well, will support HR’s position and ability to deliver
whatever the challenges that may come along (Ulrich)
• Must be able to execute these four roles, essentially complementary
rather than being in conflict.

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Exhibit 13.1 Ulrich’s Roles of the HR Manager
Future/strategic focus

Strategic Partner Change Agent

Processes People

Administrative Expert Employee Champion

Day-to-day/operational focus
Source: Ulrich, D. (1997) Human Resource Champions: The Next Agenda for Adding Value and Delivery Results, Boston: Harvard Business School Press, p. vii.

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External Factors that Affect the HRM Function
• Include the economy, employee labor unions, governmental laws and
regulations, and demographic trends.
• Legal environment of HRM
• Principal laws on employment
• Affirmative action and Diversity
• Discrimination

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 Goals of HRM
1. Attract quality workforce – HR planning & forecasting, job analysis,
recruitment, selection
2. Develop quality workforce – training & development, performance
management
3. Maintain/Retain quality workforce

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 Job analysis
• 2 components
1. Job description
2. Job specification

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HRM Process

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 Attracting Human Resources
HR Planning
• Strategic, long-term approach to a comprehensive staffing plan
• All HR activities from recruitment through training, development and career
management, to the separation of employees by retirement.
• Adequate supply of the right numbers and the right type of
employees, with the appropriate knowledge, skills and abilities, at the
right price is crucial to the organization’s success.
• A key problems with HRP: difficulties of developing accurate forecasts
in a dynamic and uncertain environment

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 Attracting Human Resources
• Recruitment: process of seeking and attracting a pool of qualified
applicants from which candidates for job vacancies can be selected.
• Internal recruitment methods
• E.g. job posting via staff notices, newsletters and bulletin boards
• External job market.
• Blogs, webcasts, or social networking through media (e.g. Facebook, Twitter
and LinkedIn) Although external recruitment tools, also reach out to internal
applicants.

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 Attracting Human Resources
Selection
• Process of choosing the the right person for the job from a group of applicants.
• Main goal - to make accurate predictions about people
Selection method chosen must be both valid and reliable
• Validity - how accurate the selection method is, as a prediction of job
performance.
• Reliability - how consistent the results are when repeated in similar situations.
• Methods used must be consistent over time, consistent between selectors
(inter-rater reliability) and consistent between items/questions intended to
evaluate the same criterion.

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 Attracting Human Resources
Selection techniques for assessing job applicants include:
• Biodata/Application form
• Interviews
• Assessment Centre
• Personality test
• Work samples
• Reference checking
• Medical examination

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 Selection – The Interview
• A conversation with a purpose between an interviewer and a job
applicant.
• Purposes
• to collect information in order to predict how well the applicants would
perform in the job for which they have applied,
• to provide the candidate with full details of the job and organization,
• to conduct the interview in such a manner that candidates feel that they have
been given a fair hearing.
• Most popular selection method in organizations

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 Selection – The Interview
Some problems associated with the interview method:
a. Interviewer doing too much talking.
b. Too many closed questions used within the interview.
c. Interviewers preferring candidates most like themselves (“similar-to- me”
error).
d. Inconsistency in the questions used with applicants - different types of
information gathered from each applicant.
e. Inability to put the interviewee at ease during the interview.
f. Influenced by the nonverbal behavior of applicants.
g. Halo effect.
h. Overconfidence.
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 Human Resource Development
• Need driven by changes in the environment
• Can be classified as
• Business and economic change
• Technological change
• Organizational change
• Social, legal and other changes.

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 Human Resource Development
Management Development
• Essential for managers. to manage organizational resources and
achieve the strategic business objectives.
• E.g. formal education or varied work experiences, sponsor managers
to attend MBA or related programs, or provide tuition
reimbursement.
• Alternative approach - use varied work experiences, provide a range
of different tasks.

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 Human Resource Development
Training
• Purpose
• Teach organizational members how to perform current jobs - assist employees to acquire
skills to perform effectively.
• Provide opportunities for employees to build their skills and knowledge - prepare them for
new job opportunities within the company.
• Give employers a better chance of retaining employees - an investment for employees and
employers.
• 3 general categories of training formats:
• On-the-job
• On-site but not on-the-job,
• Off-the-job
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 Human Resource Development
Orientation or Induction
• Systematic introduction of the new employees to their jobs, co-workers, to the organisation
and its culture.
• Need to accelerate new employees integration, make them operationally competent.
Career development
• Ever-changing work environment
• Employees vulnerable to career disruption or stagnation,
• Career planning is critical.
• Job security centres not on having a job but on being employable.
• Employees must continue to develop their skills, to possess the competencies that the market
needs.
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 Performance Appraisals
• Performance Management - Systematic process for improving organizational
performance by developing the performance of individuals and teams.
• Holistic process - ensures that the following are developed and effectively carried
out:
• setting of corporate, department, team and individual objectives;
• performance appraisal system;
• reward strategies and schemes;
• training and development strategies and plans;
• feedback, communication and coaching;
• individual career planning;
• mechanisms for monitoring the effectiveness of performance system and interventions.
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 Performance Appraisals
Can be performed by self, by the superior or by a variety of people.
• Self-appraisals - supplement that performed by the manager,
• Peer appraisal - usually carried out in team settings, co-workers provide
appraisal feedback,
• Multi-person evaluation/ 360 Degree method - feedback is sought from
a variety of people able to evaluate a manager
• include peers, customers, superiors and self.
• more tedious,
• employees and managers derive greater benefit from it, feedback from various
parts of the organization.
Behaviourally anchored rating scales/BARS
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 Remuneration and Motivation
• Employee motivation
• central concern to managers, looking for ways to gain ‘added value’ from
their employees.
• encourage employees to increase effort and be more productive.

• Remuneration - central to the employment relationship.

• Used to increase employee effort and output towards achieving the strategic
business objectives.

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 Pay systems
Three more commonly used pay systems
• Seniority-based pay - Pay increases are based on:
• employee's length of time on the job
• notion of employee loyalty to the organization
• experience gained on the job
• Skill-based pay
• Compensates employees based 0n job-related skills, competencies and
knowledge possessed.
• Purpose - motivate employees to gain additional skills, competencies and
knowledge that will increase their personal satisfaction and value to the
organization.
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 Pay systems
Performance-Related Pay (or Performance-based pay)
• Objective
• Develop a productive, efficient, effective organization that enhances
employee motivation and performance.
• Aims
• Attain strategic goals, reinforce organizational norms, motivate to higher
performance and to recognize differential contribution.
• Individual's increase in salary is solely or mainly dependent on his/her
appraisal or merit rating

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 Link between performance and pay
• PRP can provide a source of motivation to the organization’s
workforce.
• Difficulties linking of performance to pay.
• employees may concentrate their efforts towards the achievement of
performance objectives and neglect other elements of their job
• individualistic nature of PRP systems undermines the team-working ethos and
flexibility often desired within organizations
• pay reward under the PRP system will be ineffective and demotivating if the
reward is perceived to be low.

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 Performance Model
• Key ingredients for effective performance - Ability (A), motivation (M)
and opportunity (O)
• P = ƒ(A x M x O). All three ingredients (AMO) must be present.
• Adequate motivation - the desire and willingness of a person to
expand effort to reach a particular goal or outcomes.
• Having motivated employees would lead to outcomes
• For e.g. produce high quality products and deliver high quality services.

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 Managing Labor Relations
Industrial relations (or labor relations) involves:
• employees and their trade unions,
• employers and their trade unions (known as associations),
• governments and the industrial courts in a tripartite relationship.

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 Trade Unions
• A formal organization that represents workers in a trade, occupation,
industry or enterprise
• Seeks to protect workers’ interests through collective bargaining.
• Unions classified In Malaysia as:
• Private sector employees’ unions, public sector employees’ unions, unions in
statutory bodies and local authorities, and employers’ unions.
• Private sector unions – further classified as either national or in-house
(enterprise) unions.
• National unions attempt to cover all workers in the same trade, occupation or
industry

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 Trade Unions
The main services provided for members, include:
• negotiation and representation
• protection and improvement of pay and conditions of service
• offering legal representation if members have problems at work
• considering and deciding upon strikes, lockouts and similar industrial action affecting the members
• protecting workers’ basic rights through negotiations with employers (once every three years in
Malaysia)
• offering advice on labor disputes, protecting members against unfair labor practices such as unlawful
dismissals
• providing advice and training for laid-off workers
• promoting social and educational welfare of members.

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 Trade Unions - Collective Bargaining
Collective bargaining
• process of negotiation with the intended conclusion of a collective
agreement
• takes place between a single employer (or a group of employers) and
a trade union.
• binding on the parties and on workers who are employed or
subsequently employed in the establishment to which the agreement
relates, regardless of whether they are members of the union or not.

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