Human Resource Management (MBA 6012)

BY : ALAZAR AMARE (PhD)

COURSE CONTENT
 CHAPTER ONE – OVERVIEW OF HRM

1.1 Meaning and concepts of HRM

1.2 Objectives of HRM
1.3 HRM functions
 Self-reading topics (Reference- Armstrong )
 HRM versus personnel management
 Role of HR practitioners vs. line manager
 Impact of HRM on organizational performance
 HR models : Michigan vs. Harvard HRM models
 CHAPTER TWO – HRM ENVIRONMENTAL
CONTEXT

2.1 External Environment

2.2 Internal Environment
 CHAPTER THREE – JOB ANALYSIS AND
DESIGN

3.1 Meaning of job analysis

3.2 Triggering factors of job analysis
3.3 Importance of job analysis
3.4 Source of job analysis data
3.5 Methods of job analysis
3.6 Process of job analysis
3.7 Outputs of job analysis
 Self-reading topics (Reference- Armstrong )
Job characteristics model of Hackman and Oldham
Job design methods : rotation enrichment, enlargement and self-
managing team
 CHAPTER FOUR – HR PLANING

4.1 Meaning of HR planning

4.2 Importance of HR planning
4.3 Process of HR planning
4.4 HR planning techniques
CHAPTER FIVE – RECRUITMENT AND
SELECTION

5.1 Recruitment
Meaning
Determinant factors
Sources\types
Alternatives to recruitment
5.2 Selection
meaning
process
determinant factors
5.3 Induction
 CHAPTER SIX – TRANING AND
DEVELOPMENT

6.1 Training : Meaning and Importance

6.2 Human resource development : Meaning and Importance
6.3 Training and development process
6.4 Methods of Training and Development
 On the job training
 Off the job training
 Vestibule training
 CHAPTER SEVEN – PERFORMANCE
APPRAISAL

7.1 Performance appraisal : Meaning and Importance

7.2 Performance appraisal vs. performance management
7.3 Participants of performance appraisal
7.4 Process of performance appraisal
7.5 Methods of performance appraisal
7.6 Challenges of performance appraisal
 CHAPTER EIGHT – COMPENSATION
MANAGEMENT

8.1 Compensation : Meaning and Importance

8.2 Types of compensation
8.3 Phases in compensation management
8.4 Job evaluation and compensation
8.5 Determinants of compensation
 CHAPTER NINE – LABOUR RELATIONS

9.1 Labor relations : Meaning and importance

9.2 Collective bargaining
9.3 Discipline and grievance handling: Individual perspective
9.4 Dispute resolution
Self-reading topic (Reference- Armstrong ) :
Psychological contract
 CHAPTER ONE – OVERVIEW OF HRM

Definitions
A specialization area under management that deals with
human element of the organization.
The policies and practices involved in carrying out the
“people” or human resource aspects of a management
position, including recruiting, screening, training,
rewarding, and appraising.
Activities and functions that managers engage in to attract
and retain employees and to ensure that they perform at a
high level and contribute to the accomplishment of
organizational goals.
Definition…
The process of attracting, developing and maintaining a
talented and energetic workforce to support organisational
mission, objectives and strategies
A distinctive approach to employment management which
seeks to achieve competitive advantage through the
strategic deployment of a highly committed and capable
workforce, using an integrated array of cultural, structural
and personnel techniques
 Objectives of HRM
Societal : responsible to the needs of society while minimizing
the negative impact
Organizational : contribute to organizational effectiveness by
putting the organization’s needs ahead of HR department’s
needs
Functional : HR department maintain an appropriate level for
the organization’s needs
Personal : HR department assist employees in meeting their
objectives along with the organization’s objectives (ex: job
opportunities in career counseling)
 What are the key HR Functions ?
Job analysis
Plan HR
Recruit
Select
Orientate
Train and develop
Appraise Performance
Compensate
Manage Labor-relations
 Human Resource Management
Processes
Acquisition

Fairness Training

Human
Resource
Management
Health and Safety (HRM) Appraisal

Labor Relations Compensation

Line and Staff Aspects of HRM
Line Manager
Is authorized (has line authority) to direct the work of
subordinates and is responsible for accomplishing the
organization’s tasks.
Staff Manager
Assists and advises line managers.
Has functional authority to coordinate personnel activities and
enforce organization policies.
 Line Managers’ HRM Responsibilities
1. Placing the right person on the right job
2. Starting new employees in the organization (orientation)
3. Training employees for jobs that are new to them
4. Improving the job performance of each person
5. Gaining creative cooperation and developing smooth working relationships
6. Interpreting the firm’s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining department morale
10. Protecting employees’ health and physical condition
Human Resource Managers’ Duties
An HR manager :
directs the activities of the people in the HR department
(line function\ line authority),
coordinates organizational-wide personnel
activities(coordination function\functional authority) and
provides HRM assistance and advice to line
managers(staff function\staff authority).
 CHAPTER TWO – HRM
ENVIRONMENTAL CONTEXT
Human resource management is a system and it affects and
is also affected by the environment in which it operates.
The major environmental factors are classified in to two
major classes:
I. External factors
II. Internal factors
I. External environmental factors are those variable which are
outside organizational boundary and still beyond the
control of the management group
 Environment …
The task environmental factor are external environmental
factors which are very closer to the organization and still do
affect the organization. It includes the. following;,
competitors suppliers, customers, regulators
II. Internal environmental factors are variables which are under
the control of the management group. It includes
Organization’s mission, compensation -policy, strategy,
structure ,work condition, supervisor’s quality.
 Environment …
 Political\legal environment : government regulations related with labor or
employment condition significantly influence HR practices:
- Recruitment and selection : EEO and Affirmative Action
- Promotion and transfer : EEO
- Leave management: laws on sick leave, maternal leave, study leave and soon.
- Compensation management : minimum wage
- Occupational health and safety : OHS laws
 Economic environment: unemployment and inflation
- Recruitment can affected by the rate of unemployment in the country and in
return this can affect compensation decision. For instance with low
unemployment rate companies might forced to set attractive remuneration or
opted for overtime.
- Compensation: definitely influenced by inflation
 Environment …
 Socio-cultural environment: factors like religion and culture can exert
significant influence on HRM practices, particularly in organization with
diverse employees. For instance UN or other international organization?
- Work family balance concept is related with social environment, particularly with
pattern of house hold like dual employment. Day care or child waiting center in
some organizations is a response to ensure work life balance.
 Technological environment also exerts an influence on HRM Practices. For
instance :
- Mode of recruitment: application via email or using solicited application system
via job application data base
- Work modality: flexi time and office work at home
- Labor relation aspect of HR can be affected by technological changes. How?
 Do competitors in the given industry influence HR practices in that industry?
How? Compensation as an example.
 Do customers affect the HR practices of a given firm? Training need for front
line staff can sourced from customers feedback. Bonafidi-occupational
qualification can sourced from customer needs.
Environment …
N.B. external environmental factors have a very strong
importance to international firms that operate with
subsidiaries across nations.
Facts on the effect of environmental factors

 Advances in technology replace face-to-face contact with

automated, Internet and telephone service.
 business process engineering (making processes more efficient
and usually reducing administrative and other associated staff).
 takeovers, mergers made employment insecure
 privatization programs of most public institutions covering
electricity, water, rail, airports and telecommunication industries
together have created uncertainty in employment
 Further more, direct government employment in the Civil
Service, Local Authorities, Education and Health has been
fundamentally altered by outsourcing
 Rapidly Changing Technologies have probably had the biggest
impact.
 In a few short years, the computer has fundamentally changed
jobs.
 The spreadsheet alone has eliminated huge numbers of jobs.
 The work that had previously been carried out by roomfuls of
mid-level analysts in finance, sales and marketing can now be
handled by one clerical person on a personal computer.
 Information technology goes further than just making offices
more productive. Organizational charts and rules are ignored by
the cable that links employees, and information now flows more
freely than ever before. Employees are linked in buildings,
around countrywide units and around the world. Networking has
moved beyond a technical definition to a way of employees
working together, often in different locations and many from a
home base.
CHAPTER THREE: JOB ANALYSIS AND DESIGN
Why do HR managers fail in HR planning ?
Why do HR managers fail to set right job description
and specification ?
Why do managers fail to set appropriate performance
standards ?
Why do manager fail to set the right compensation
plan ?
Why do managers fail in setting appropriate training
and development program?
Job Analysis
It is the systematic process of determining information on the
jobs, positions ,skills and knowledge required for
performing the jobs in an organization. It provides data
regarding the existing or the proposed jobs with in an
organization.
Occasions demanding job analysis
When a new organization is established
When job is changed significantly as a result of new
technology
On a set of cycle time
Importance of job analysis
It is a base for HR planning
It is a base for job specification
It is a base for job description
It is a base for performance standard
It is a base for improvement in work methods
It is a base for compensation plan
It is a base for HR training need assessment.
 Types of job analysis information

Work activites (specific tasks to be performed, Procedures to

be follwed to perform the task,complexity of the
activities,hazards and discomforts of the job)
Machines and materials used. (The type of equipements,tools,
and other resources required,)
Job performance standards(quantity standard for the job,quality
standard,time taken for the job.
 Continued…
Job context( physical working conditions, work schedule,
incentives given, job relation ships,)
Personal attributes (education and training required,
experience needed, special skill required, physical strength.
Method of job analysis
Questionnaires : set of questions developed to collect
information uniformly. It is quick and economical
method.
Interview : face to face interaction. It provides
opportunity for the interviewer to explain unclear
questions and probe in to uncertain, answers.
Observation : is method of gathering relevant
information by moving around the job positions. It is
slow method to gather information.
Employee log :is a method of gathering job data by
having the employees record their work activities in a
diary or log.
 WHO CONDUCTS JOB ANALYSIS?
Job analysis is not a one person affair.
It requires the participation of employees and their
immediate supervisors. It can be performed by HR-experts
or outside consultant.
 STEPS IN JOB ANALYSIS
 Step 1 Identify information to be collected
 Task : part of the job with specific purpose.
 Duty : Number of tasks
 Job : bundle of duties
 Job Position : one or more duties performed by one person.
 Occupation : Group of similar jobs
 Step 2. Identify source of obtaining information.
 Step 3. Choose appropriate method of collecting information
 Step 4.collect the information
 Step 5.Analyse the information
 Step 6.Dessiminate the result.
 Out puts of job analysis
Job Description : It is a statement that describes all the
features of the job; (what is being done ,how it is done , why
it is done ),
Major duties performed
Percentage of time devoted to each duty
Performance standards to be achieved
Working conditions and possible hazards
The machines and equipment's used
Job analysis output…
Job Specification It is a statement that describes all the
qualification requirement by the workers who are going to
assume positions in the organization ( it describes job
demand on the employees who do it and the human skill
that are required).
It is a profile of human characteristics such as experience,
training, education, education, ability to meet physical and
mental demand.
 Job performance standard
This is a statement that makes explicit the quantity and
quality of performance expected in basic tasks indicated in
the job description.
It is a statement of attainable and acceptable levels of
achievement on a particular task .
Standards are objectives or targets for employee effort.
Standards are criteria against which job success is measured.
 CHAPTER FOUR – HR PLANING

4.1 Meaning of HR planning

4.2 Importance of HR planning
4.3 Process of HR planning
4.4 HR planning techniques
 CHAPTER FOUR – HR PLANING
“Plan Ahead: it wasn’t raining when Noah built the ark.
RICHARD CUSHING
Is systematic method of determining future man power
requirement and availability.

Is Forecast of an organization’s future demand for and

supply of employees
Is a process of Identifying the short- run and long- run
employee needs
Human Resource Planning Process

Analyzing Organizational factors (goals, Sales and

production forecasts:, New ventures: human resource
demands change)
Analyzing external Factors (Conducting external
environmental scanning : Inflation, unemployment, and
changing workforce patterns
Social, political, and legal challenges
Technology changes:
Competitors
Forecasting human resource requirement
Analyzing current human resource situation(Plan
Retirements, Resignations, Terminations ,Deaths,
Leaves of absence, Net human resource availability)
Reconciling requirements and availability
If shortage occurs developing action plan (When the
internal supply cannot fulfill the organization’s needs. In
the short run, planners must rely on the external staffing
process to find new employees.

When the internal supply of workers exceeds the firm
demand
The hiring freeze stops the HR department from filling
openings with external supplies. Instead, present
employees are reassigned.
Voluntary departures - called attrition(resignation) -
slowly reduce the surplus
 Declare early retirements
 Layoffs are temporary loss of employment to workers
and are used in cases of short -range surplus.
Human resource planning techniques

Judgment and experience (Using informal poll, a

written questionnaire to survey line managers, HM
planners ,Nominal group technique: Present a group of
managers with a problem statement
Trend projection forecasts like Extrapolation:
Extending past rates of change into the future

Bottom up approach
Work standard approach : convert tasks to man-hour)
Key predictive factor(sales forecast, input intake…)
CHAPTER FIVE – RECRUITMENT
AND SELECTION

It is the process of attracting individuals on a timely bases ,

in sufficient number and with appropriate qualification and
encouraging them to apply for jobs with an organization.
 Factors affecting recruitment

Size of the organization

Employee turnover
Organizational growth
Nature of the job
Organizational policies
Cost of recruitment
 Source of recruitment
Internal source of recruitment
The internal supply consists of present employees who can be
promoted, transferred or demoted to fill expected openings
 Estimates of Internal Supply
Human Resource Audit(identifies employee’s job title, experiences,
age, abilities, employee’s future potential)
Succession planning (The process used to convert information about
current employees into decision about future internal job placement)
Replacement charts and summaries(
Replacement chart is visual representation of who will
replace whom if there is a job opening
is constructed by getting information from HR audit

is looked like organization chart

depicts replacement status: present performance and
future promotability .
Information in replacement chart should be kept
confidential
To protect the privacy of employees
 To avoid the dissatisfaction among employees who
are not immediately promotable
 Internal recruitment methods
Job posting
Employee referral
Skill inventory
External source of recruitment
External supply consists of people who do not currently
work for the organization
Possible sources
High schools
Vocational schools
Walk ins
Write ins
 External recruitment methods
Advertising
Employee referral
Employment agencies
Alternatives to recruitment
Overtime
Temporary employees
Subcontracting
Employee leasing
 Selection
It is the process of choosing the best among pools of
candidates
The process of choosing from a group of applicants those
individuals best suited for a particular position and an
organization.
Poor selection results in
Increased employee turn over
Absenteeism
Accidents
Job dissatisfaction
High cost of training
Productivity losses
Poor employee relation
Selecting the right person the first time
The right person is more productive.
The right employee learns faster.
The right person requires less supervision and training.
The right employee is more likely to stay on the job.
The wrong individual can be costly in time, money and
morale
 Selection process: the funnel approach
Preliminary reception of application
Preliminary interview
Selection test
Selection interview
Reference check
Hiring decision
Medical examination
 Factors affecting selection
Legal consideration
Speed of decision making
Organizational hierarchy
Application pool
 DEVELOPMENT

Why do well prepared organizational plans fail during

their implementation?
Why doe our organization failed to achieve the desired
level of profit? Or face bankruptcy ?
Why do organizational resources wastage Occur?
Why do machines frequently fail?
Why do frequent damage happen on equipments?
Why do our customers frequently complain?
Why do our employees frequently file grievance?
Training and development
T & D is one of the most important functions of Human
resource management which ensures the availability of
sufficient people with capabilities required for achieving
organization’s mission and goals.
Training is largely required to upgrade the ability of
operating staff to do their jobs for achieving results. training
mainly focuses on workers at operating level
Importance of training
To establish a sound relation between the worker and
his job
To upgrade skills and prevents obsolesnce
To prepare employees for future assignments
To increase productivity
To minimize operational errors
To enhance employee confidence and moral
To decrease employee turn over and absenteeism.
Training help employees do their current jobs

GAPS

TRAINING

New employee Current Job

capacities demand
Human resource development

This is designed to improve the overall effectiveness of

managers in their present positions and to prepare them for
greater responsibility when they are promoted .
It helps managers gain experience skill and attitudes to
become or remain a successful leader in their enterprise.
 Importance of development

Increase managers capability

Enhance effectiveness
Facilitate environmental adaptation
Improve decision making
Managerial succession
Development helps the individual handle their future
responsibilities

DEVELOPMENT

Current Job
Future Job
demand demand
Training Cost
?
“Expense” OR “Investment”
Training and development process
 Training and development need assessment .
 Job requirement – Employee capability = training need
 During training need assessment analysis must be made at three basic
levels
 Organizational level
 Task level
 Person (Employee) level.

 Establishing training and development objectives

 Select methods and media
 Implement the actual program
 Conduct evaluation and follow up
 Types of training and development programs

On the job training

Off the job training
Vestibule training
On the job training
Is conducted at the work site to develop the skills of
workers
The employee placed in the context of real work
situation and learns by doing the job under the
supervision of experienced worker or the supervisor.
Eg. Typing training, car driving ,job rotation,
apprenticeship.
 Advantages of on the job training

The trainee is motivated and become productive

Its transference is high
It helps the workers easily convert what is learned to
practice.
 Off the job training

This kind of training takes place out side the trainees work
environment.
It includes trainings like lecture, conference, seminars
Vestibule training
Is a kind of training given in an artificial environment
which is very closer to the real job context.
Eg training a pilot in a computer simulated environment,
role playing, case study, in basket exercise, management
game
This method solves the short comings of both on the job
and off the job training in terms of cost and practicality.
 CHAPTER SEVEN –
PERFORMANCE APPRAISAL
Is an integrated human resource management practices
that includes a formal review of employee’s current and
past performance relative to performance standards .
It is the periodic review of employee performance
primarily to help them achieve the results expected
It is a process by which the appraiser identifies and
communicates the expected performance standards and
then evaluates or measures the performance against the
standard.
Importance of performance appraisal
Appraisal provides information for promotion, training and
salary decisions
Provides an opportunity to review an employee’s work related
behavior with the goal correcting deficiencies
Appraisal help to manage and improve firm’s performance.
It provides feedback on deficiencies of HR-functions
Who will conduct appraisal ?
Appraisers are required to
Have an opportunity to observe appraise at work
Have an ability to use different appraisal techniques
Have an ability to interpret what is measured in to meaningful
result.
Have willingness and motivation to evaluate performance
fairly and rationally
Appraisal process
Set clear performance standards
Communicate standards to employees
Measure performance
Compare actual performance with standards and Determine
gaps
Communicate the gap with employees
Take corrective action
Appraisal methods
With the critical incidents method, the appraiser writes
down what an employee did that was especially
productive or counterproductive.
With graphic rating scales, performance factors are
listed such as quantity and quality of work, depth of
knowledge, or initiative, cooperation. The appraiser then
rates each factor on an incremental scale.
Paired comparison method, ranking employees by
making a chart of all possible pairs of the employees for
each trait and indicating which is the better employee of
the pair
MBO, assesses employees on how well they accomplish a
specific set of objectives that have been determined to be
critical in the successful completion of their job.
A 360-degreereview seeks feedback for the person being
rated from a variety of sources: such as peers, supervisors,
and customers
Problems associated with employee performance appraisal
Hallo effect : the problem that occurs when the supervisor’s
rating of subordinates on one trait biases the rating of that
person on other trait
Central tendency
Similarity effect
Strictness/Leniency biases
Primacy/ Recency effect
 CHAPTER EIGHT – COMPENSATION
MANAGEMENT
the process of determining a cost-effective pay structure that
attracts and retains competent employees, provides
incentives for hard work, and ensures that pay levels will be
perceived as fair.
Types of compensation
Financial
Non Financial
 Transactional/tangible

Pay
Base pay Benefits
Contingent pay Pension
Cash bonuses Holidays
Long term Health cares
incentives
Shares
Individu Profit Sharing Commu
al nal

Learning and Work environment

development Organizational culture
Training Leadership
Career Communications
development Involvement,Recognitions,Auto
nomy,achevement,responsibilit
y

Relational/
Intangible
Financial compensation
Direct Financial compensation
Performance based wages, salaries,
commissions and bonuses
Indirect Financial compensation
Paid leaves, insurance benefits etc
Major phases of Compensation
Management
1. Evaluation by using job analysis information to ensure
internal equity

2. Conduct wages and salaries surveys to determine

external equity

3. Price job to determine the rate of pay (Matching

external and internal equity)
JOB EVALUATION METHODS: Two common methods

Job Ranking

Job Grading
Factors to be considered during job evaluation(compensable factors)

Skill
1. Knowledge
2. Experience
3. Initiative and Ingenuity
Effort
4. Physical Demand
5. Mental or Visual Demand
Responsibility
6. Equipment or Process
7. Material or Product
8. Safety of Others
9. Work of Others
Job Conditions
10. Working Conditions
11. Hazards
Job Ranking by hypothetical Health
Care
Ranking Order Annual Pay Scale
1. Office manager $28,000
2. Chief nurse 27,500
3. Bookkeeper 19,000
4. Nurse 17,500
5. Cook 16,000
6. Nurse’s aide 13,500
Job Grading
Is systematic method by which each job is assigned to a
grade by matching standard descriptions with each job’s
description
 Jobs Number of Pay
Positions
 GRADE 6 Chef 2 $19.50-$30.00/hr.

 GRADE 5 Manager 1 $10.50-$20/hr.

Sous-Chef 1

 GRADE 4 Assistant Manager 2 $6.50-$11.00/hr.

Lead Cook 2
Office Manager 1
 GRADE 3 General Cook 5 $5.50-$7.00/hr.
Short Order Cook 2
Assistant to LeadCook 2
Clerk 1

Server 45 $5.00-$6.00/hr.
 GRADE 2 Hostess 4
Cashier 4

Kitchen Helper 2 $4.50-$5.25/hr.

 GRADE 1 Dishwasher 3
Janitor 2
Busser 6
Security Guard 2
Factors Affecting Compensation

 Organizational policy
 Prevailing wage rates
 Demographic shifts and relative supply & demand
relationship affect compensation.
Union Power
Wage rates may be out of proportion to the relative worth of
the jobs.
Unions may limit management’s flexibility
Government constraints
The Fair Labor Standards Act (FLSA) sets minimum-wage,
overtime pay, equal pay, child labor, & record-keeping
requirements. Back-pay claims.
 CHAPTER NINE – LABOUR RELATIONS

Labor relations refers to the relationship that exists between an

organization and a union. It has evolved over time and is
governed by legislation.
The role of the union is to be the voice of employees, particularly
during collective bargaining.
Collective bargaining produces a collective agreement
(substantive and procedural)which is a legal document
outlining the terms and conditions of employment.
If an employee or union feels that the company is
violating the collective agreement, a grievance may be
initiated
Substantive agreement (workload, compensation,
overtime, leave of absence, health and safety issues)
Procedural agreement(procedures on different disciplinary
cases)
 Discipline is applied when counseling an employee does

not resolve performance-related issues.

 Is management action that encourages compliance with

organization standards.
 Two types of discipline: preventive and corrective.
 Preventive discipline Corrective discipline

 Actions taken to encourage  Actions that follow a rule

employees to follow standards and infraction.
rules so that infractions are
prevented.

 Basic objective: to encourage self-  Basic objective: to discourage

discipline through employee further infractions and ensure
participation. future compliance with
standards through penalties.
 Proactive
 Reactive
PROGRESSIVE discipline
Counseling
Oral reprimand
Written reprimand
Suspension
Discharge
 Order: stronger penalties for repeated offenses
 Purpose: to give employee an opportunity to take
corrective action before serious penalties are applied.
 Due process: follow rules and procedures for disciplinary

action  to avoid going to court

 All documents must be recorded promptly
 Dispute resolution
Conciliation
Mediation
Arbitration