Aamir Nouroze Phularwan

Chapter 01 Introduction to Human Resource Management

WHAT IS HUMAN RESOURCE MANAGEMENT?
To understand what human resource management is, it’s useful to start with what managers do.
An organization consists of people with formally assigned roles who work together to achieve
the organization’s goals. A manager is someone who is responsible for accomplishing the
organization’s goals, and who does so by managing the efforts of the organization’s people.
Managing involves performing five basic functions: planning, organizing, staffing, leading,
and controlling. In total, these functions represent the management process. Some of the
specific activities involved in each function include:
➢ Planning. Establishing goals and standards; developing rules and procedures;
developing plans and forecasts
➢ Organizing. Giving each subordinate a specific task; establishing departments;
delegating authority to subordinates; establishing channels of authority and
communication; coordinating the work of subordinates
➢ Staffing. Determining what type of people should be hired; recruiting prospective
employees; selecting employees; setting performance standards; compensating
employees; evaluating performance; counseling employees; training and developing
employees
➢ Leading. Getting others to get the job done; maintaining morale; motivating
subordinates
➢ Controlling. Setting standards such as sales quotas, quality standards, or production
levels; checking to see how actual performance compares with these standards; taking
corrective action as needed
We will focus on one of these functions—the staffing, personnel management, or human
resource management function. Human resource management (HRM) is the process of
acquiring, training, appraising, and compensating employees, and of attending to their labor
relations, health and safety, and fairness concerns. The concepts and techniques every manager
need to perform the “people” or personnel aspects of management include:
• Conducting job analyses (determining the nature of each employee’s job).
• Planning labor needs and recruiting job candidates.
• Selecting job candidates.
• Orienting and training new employees.
• Managing wages and salaries (compensating employees).
• Providing incentives and benefits.
• Appraising performance.
• Communicating (interviewing, counseling, disciplining).
• Training employees, and developing managers.
• Building employee relations and engagement

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Why Is Human Resource Management Important to All Managers?

Avoid Personnel Mistakes
First, having a command of this knowledge will help you avoid the personnel mistakes you
don’t want to make while managing. For example, you don’t want
• To have your employees not doing their best.
• To hire the wrong person for the job.
• To experience high turnover.
• To have your company in court due to your discriminatory actions.
• To have your company cited for unsafe practices.
• To let a lack of training undermine your department’s effectiveness.
• To commit any unfair labor practices.

Improving Profits and Performance

More important, it can help ensure that you get results—through people. Remember that you
could do everything else right as a manager—lay brilliant plans, draw clear organization charts,
set up modern assembly lines, and use sophisticated accounting controls—but still fail, for
instance, by hiring the wrong people or by not motivating subordinates. On the other hand,
many managers—from generals to presidents to supervisors—have been successful even
without adequate plans, organizations, or controls. They were successful because they had the
knack for hiring the right people for the right jobs and then motivating, appraising, and
developing them. Remember that getting results is the bottom line of managing and that, as a
manager, you will have to get these results through people. This fact hasn’t changed from the
dawn of management. Here are two examples:
At one Ball Corp. packaging plant, managers trained supervisors to set and communicate daily
performance goals. Management tracked daily goal attainment with team scorecards.
Employees received special training to improve their skills. Within 12 months production was
up 84 million cans, customer complaints dropped by 50%, and the plant’s return on investment
rose by $3,090,000.
A call center averaged 18.6 vacancies per year (about a 60% turnover rate). The researchers
estimated the cost of a call-center operator leaving at about $21,500. They estimated total
annual cost of agent turnover for the call center at $400,853. Cutting that rate in half would
save this firm about $200,000 per year.

You may spend some time as an HR Manager

Here is another reason: you might spend time as a human resource manager. For example,
about a third of large U.S. businesses surveyed appointed non-HR managers to be their top
human resource executives. Appointing non-HR people can also be good for the manager. For
example, one CEO served a three-year stint as chief human resource officer on the way to
becoming CEO. He said the experience he got was invaluable in learning how to develop
leaders and in understanding the human side of transforming a company. However most top
human resource executives do have prior human resource experience. About 80% of those in
one survey worked their way up within HR.
HR foR sMAll Businesses And here is one other reason: you may well end up as your own
human resource manager. More than half the people working in the United States work for

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small firms. Small businesses as a group also account for most of the 600,000 or so new
businesses created every year. Statistically speaking most people graduating from college in
the next few years either will work for small businesses or will create new small businesses of
their own. Small firms generally don’t have the critical mass required for a full-time human
resource manager (let alone an HR department). The owner and his or her other managers (and
perhaps assistant) handle tasks such as signing employees on.

Line and Staff Aspects of Human Resource Management

All managers have always been human resource managers, because they all get involved in
recruiting, interviewing, selecting, and training their employees. Yet most firms also have a
human resource department with its own top manager. How do the duties of this human
resource manager and department relate to the human resource duties of sales and production
and other managers? Answering this requires a short definition of line versus staff authority.
Authority is the right to make decisions, to direct the work of others, and to give orders.
Managers usually distinguish between line authority and staff authority.
In organizations, line authority traditionally gives managers the right to issue orders to other
managers or employees. Line authority creates a superior (order giver)–subordinate (order
receiver) relationship. When the vice president of sales tells her sales director to “get the sales
presentation ready by Tuesday,” she is exercising her line authority. Staff authority gives a
manager the right to advise other managers or employees. It creates an advisory relationship.
When the human resource manager suggests that the plant manager use a particular selection
test, he or she is exercising staff authority.
On the organization chart, managers with line authority are line managers. Those with staff
(advisory) authority are staff managers. In popular usage, people tend to associate line
managers with managing departments (like sales or production) that are crucial for the
company’s survival. Staff managers generally run departments that are advisory or supportive,
like purchasing and human resource management. Human resource managers are usually staff
managers. They assist and advise line managers in areas like recruiting, hiring, and
compensation.

Line Managers’ Human Resource Management Responsibilities

Line managers do have many human resource duties. This is because the direct handling of
people has always been part of every line manager’s duties, from president down to first-line
supervisors. One major company outlines its line supervisors’ responsibilities for effective
human resource management under these general headings:
1. Placing the right person in 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 company’s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining departmental morale
10. Protecting employees’ health and physical conditions

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The Human Resource Department

In small organizations, line managers may carry out all these personnel duties unassisted. But
as the organization grows, line managers usually need the assistance, specialized knowledge,
and advice of a separate human resource staff. In larger firms, the human resource department
provides such specialized assistance. Typical positions include compensation and benefits
manager, employment and recruiting supervisor, training specialist, and employee relations
executive.

THE TRENDS SHAPING HUMAN RESOURCE

MANAGEMENT
Working cooperatively with line managers, human resource managers have long helped
employers hire and fire employees, administer benefits, and conduct appraisals. Trends are
occurring in the environment of human resource management that are changing how employers
get their human resource management tasks done. These trends include workforce trends,
trends in how people work, technological trends, and globalization and economic trends.

Workforce Demographics and Diversity Trends

The composition of the workforce will continue to change over the next few years; specifically,
it will continue to become more diverse with more women, minority group members, and older
workers in the workforce. Table 1-1 offers a bird’s-eye view. Between 1992 and 2022, the
percent of the workforce that the U.S. Department of Labor classifies as “white” will drop from
85% to 77.7%. At the same time, the percent of the workforce that it classifies as “Asian” will
rise from 4% to 6.2%, and those of Hispanic origin will rise from 8.9% to 19.1%. The
percentages of younger workers will fall, while those over 55 years of age will leap from 11.8%
of the workforce in 1992 to 25.6% in 2022. Many employers call “the aging workforce” a big
problem. The problem is that there aren’t enough younger workers to replace the projected
number of baby boom–era older workers (born roughly 1946–1964) retiring. Many employers
are bringing retirees back (or just trying to keep them from leaving).

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Trends in How People Work

At the same time, work has shifted from manufacturing jobs to service jobs in North America
and Western Europe. Today over two-thirds of the U.S. workforce is employed in producing
and delivering services, not products. By 2020, service- providing industries are expected to
account for 131 million out of 150 million (87%) of wage and salary jobs overall. So, in the
next few years, almost all the new jobs added in the United States will be in services, not in
goods-producing industries.

On-Demand Workers
Anyone who has registered on Uber already knows something about on-demand workers.
At last count, Uber was signing up almost 40,000 new independent contractor drivers per
month, a rate that was doubling every few months. Today, in more and more companies like
Uber, Elance, and Airbnb, employees aren’t employees at all, but are freelancers and
independent contractors who work when they can on what they want to work on, when the
company needs them.

Human Capital
One big consequence of such demographic and workforce trends is employers’ growing
emphasis on their workers’ knowledge, education, training, skills, and expertise—in other
words on their “human capital.” Service jobs like consultant and lawyer always emphasized
education and knowledge. And today’s proliferation of IT-related businesses like Google
and Facebook demands high levels of human capital. The big change is that even
“traditional” manufacturing jobs like assembler are increasingly high-tech. Similarly bank
tellers, retail clerks, bill collectors, mortgage processors, and package deliverers today need
a level of technological sophistication they wouldn’t have needed a few years ago. So, in
our increasingly knowledge-based economy, the acquisition and development of superior
human capital appears essential to firms’ profitability and success.
For managers, the challenge here is that they have to manage such workers differently. For
example, empowering workers to make more decisions presumes you’ve selected, trained,
and rewarded them to make more decisions themselves. Employers therefore need new
human resource management practices to select, train, and engage these employees.
Assignment # 1 illustrates how one employer took advantage of its human capital.

Globalization Trends
Globalization refers to companies extending their sales, ownership, and/or manufacturing to
new markets abroad. Toyota builds Camrys in Kentucky, while Apple assembles iPhones in
China. Free trade areas—agreements that reduce tariffs and barriers among trading partners—
further encourage international trade. The North American Free Trade Agreement (NAFTA)
and the European Union (EU) are examples.
Globalization has boomed for the past 50 or so years. For example, the total sum of U.S.
imports and exports rose from $47 billion in 1960, to $562 billion in 1980, to about $5.1 trillion
recently. Evolving economic and political philosophies drove this boom. Governments dropped
cross-border taxes or tariffs, formed economic free trade areas, and took other steps to
encourage the free flow of trade among countries. The fundamental economic rationale was
that by doing so, all countries would gain and economies around the world would grow.

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Economic Trends
Although globalization supported a growing global economy, the past 10 or so years were
difficult economically. As you can see in Figure 1-2, gross national product (GNP)—a measure
of the United States of America’s total output—boomed between 2001 and 2007. During this
period, home prices (see Figure 1-3) leaped as much as 20% per year. Unemployment remained
docile at about 4.7%. Then, around 2007–2008, all these measures fell off a cliff. GNP fell.
Home prices dropped by 10% or more (depending on city). Unemployment nationwide soon
rose to more than 10%.

Why did all this happen? It’s complicated. Many governments stripped away rules and
regulations. For example, in America and Europe, the rules that prevented commercial banks
from expanding into new businesses such as investment banking were relaxed. Giant,
multinational “financial supermarkets” such as Citibank emerged. With fewer regulations,
more businesses and consumers were soon deeply in debt. Homebuyers bought homes with
little money down. Banks freely lent money to developers to build more homes. For almost 20
years, U.S. consumers spent more than they earned. The United States became a debtor nation.
Its balance of payments (exports minus imports) went from a healthy positive $3.5 billion in
1960, to a huge minus (imports exceeded exports) $497 billion deficit more recently.31 The
only way the country could keep buying more from abroad than it sold was by borrowing
money. So, much of the boom was built on debt.
Around 2007, all those years of accumulating debt ran their course. Banks and other financial
institutions found themselves owning trillions of dollars of worthless loans. Governments
stepped in to try to prevent their collapse. Lending dried up. Many businesses and consumers
stopped buying. The economy tanked.

Technology Trends
It may be technology that most characterizes the trends shaping human resource management
today. For example, the consulting firm Accenture estimates that social media connections via
tools like LinkedIn will soon produce as many as 80% of new recruits—often letting line
managers bypass the human resource management unit.
Five main types of digital technologies are driving this transfer of functionality from HR
professionals to automation.

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1. Employers increasingly use social media tools such as Twitter, Facebook, and LinkedIn
(rather than, say, as many employment agencies) to recruit new employees.
2. Employers use new mobile applications, for instance, to monitor employee location and
to provide digital photos at the facility clock-in location to identify workers.
3. The feedback, fun, and objectives inherent in gaming support many new training
applications, and websites such as Knack, Gild, and True Office enable employers to
inject gaming features into training, performance appraisal, and recruiting.
4. Cloud computing and more intuitive user interfaces enable employers to monitor and
report on things like a team’s goal attainment and to provide real-time evaluative
feedback.
5. Data analytics basically means using statistical techniques, algorithms, and problem-
solving to identify relationships among data for the purpose of solving particular
problems (such as what are the ideal candidate’s traits, or how can I tell in advance
which of my best employees is likely to quit?). When applied to human resource
management, data analytics is called talent analytics.

THE NEW HUMAN RESOURCE MANAGER

When asked, “Why do you want to be an HR manager?” many people basically say, “Because
I’m a people person.” Being sociable is certainly important, but it takes much more. What does
it take to be a human resource manager today? Recently, the Society for Human Resource
Management (SHRM) introduced a new “competency model” (called the SHRM Body of
Competency and Knowledge™); it itemizes the competencies, skills, and knowledge and
expertise human resource managers need.
Here are the competencies (with definitions) SHRM says today’s HR manager should be able
to exhibit:
➢ Leadership & Navigation The ability to direct and contribute to initiatives and
processes within the organization.
➢ Ethical Practice The ability to integrate core values, integrity, and accountability
throughout all organizational and business practices.
➢ Business Acumen The ability to understand and apply information with which to
contribute to the Organization’s strategic plan.
➢ Relationship Management The ability to manage interactions to provide service and to
support the organization.
➢ Consultation The ability to provide guidance to organizational stakeholders.
➢ Critical Evaluation The ability to interpret information with which to make business
decisions and recommendations.
➢ Global & Cultural Effectiveness The ability to value and consider the perspectives and
backgrounds of all parties.
➢ Communication The ability to effectively exchange information with stakeholders.
SHRM also says human resource managers must have command of the basic knowledge in the
functional areas of HR, such as employee relations. The basic knowledge of principles,
practices, and functions they need here should cover:
➢ Talent Acquisition & Retention
➢ Employee Engagement

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➢ Learning & Development

➢ Total Rewards
➢ Structure of the HR Function
➢ Organizational Effectiveness & Development
➢ Workforce Management
➢ Employee Relations
➢ Technology & Data
➢ HR in the Global Context
➢ Diversity & Inclusion
➢ Risk Management
➢ Corporate Social Responsibility
➢ Employment Law & Regulations
➢ Business & HR Strategy
Every manager develops the skills he or she needs to carry out the human resource management
related aspects such as
➢ Recruiting
➢ Selecting
➢ Training
➢ Appraising
➢ Incentivizing employees
➢ Providing employees with a safe and fulfilling work environment.