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Lecture Notes, Human Resource Management Notes

Module

Financial and Human Resource Management in Organisations

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HUMAN RESOURCE MANAGEMENT NOTES

Introduction

CIPD – Chartered Institute of Personnel and Development.

HRM – important to sustained organisation success, gives competitive advantage by ensuring that employees are able to make use of their expertise and ingenuity to meet corporate objectives.

HR function is: a) activity of HR (including line manager’s and HR manager’s actions); b) activity only of HR department.

Used to be called “personnel management”, including: ensuring employees’ health and safety, keeping record of number employed, dates of employment, holiday entitlement, rates of pay and training received.

Factors increasing HR function’s importance: a) Globalisation – because of increased global competition; b) UK joining EU – because of increases and changes in directives and statutes that impact employment relationship; c) Changes in social norms – employees’ welfare became more important; d) Changes in legislation – increased costs of employing people, therefore requiring more efficient utilisation of employees; e) Changing economy; f) Employees expectations are rising (CSR); g) UK’s move from manufacturing to service economy – bigger need for workers with different skills base and need to adjust to 24/7 service, technology and flexible work patterns. h) Changes in business environment: more competition, emphasis on higher quality products and lower prices and costs, the anticipation and satisfaction of customer needs; i) Increasing complexity and size of organizations.

In the Balanced Scorecard, HRM is in the Learning & Growth section.

(See Harvard and Storey’s models, p. 6, 7)

Hard HRM – emphasises costs and head count. Soft HRM – emphasises employee participation and, organizational capability, and training and development.

Differences between HRM and personnel management: a) Some claim HRM is an Americanisation of personnel management; b) Personnel management – reactive set of activities, primarily concerned with administration of employment and provision of employees’ welfare; c) HRM – proactive, strategically driven people management, focused on eliciting performance;

d) See table on p. 8 (Storey).

Senior vs. junior practitioners (according to Przwieczerska):

Senior practitioners Junior practitioners

Emphasise HRM and its strategic role = managing the performance of HR in order to achieve organization’s strategic goals.

Recognize HRM’s theoretical distinctiveness but focus on personnel management: routine administration of pay, recruitment, appraisal, grievances, redundancy, without sense of strategic purpose.

Public vs. private sector (according to Przwieczerska):

Public sector Private sector

Perceive their role in terms of personnel management, focus on bargaining and employee welfare.

Perceive their role in terms of HRM, focus on strategy and performance.

HR practice should not conflict with each other and should be taken into account while making strategies.

Countries with great involvement of HR: Japan and North America.

The role of HR manager: see Storey’s and Ulrich’s models on p. 12.

Areas where line managers will have responsibility include:

a) HR planning b) Organizational and job design and development, in order to meet unit and departmental objectives. c) Recruitment and selection d) Implementing equal opportunities e) Performance management f) Remuneration g) Training/coaching/mentoring h) Employee relations i) Disciplinary handling

When HR department ensures that managers are effective, 4 points are taken into account: a) Use of accurate role definitions and job titles; b) Recruitment and selection;

Strategic HRM

General statements:  The improvement of corporate and individual performance levels is a key priority for any organisation;  The value added by competent and committed staff is increasingly seen as important in gaining competitive advantage;  There is continuing concern about how to improve performance and sustain that improvement.

Purpose of strategic HRM: a) To ensure that organizational objectives that reflect HR capability within an organization are adopted; b) To ensure that HR are managed in such a way that organizational objectives are met.

Main features of strategic HRM: a) Integrating business and HR strategies; b) Contribution to the achievement of competitive advantage; c) Commitment to the organization’s mission and values; d) Culture of trust and commitment; e) People seen as an investment, not a cost; f) Top management driven; g) HR policies and practices are mutually supportive; h) Line managers are responsible for implementing HR policies and practices; i) Unitary employee relations.

Organizational strategy – matching internal resources with external environment. Related vocabulary: a) Mission – purpose and direction of organization aligned with values and expectations of stakeholders; b) Vision – desired future state (aspirations); c) Objective – what to be achieved and when; d) Policy – what an organization will and won’t do; e) Strategic capability – resources, activities, processes.

Decision-making process should be (according to Lynch): a) Sustainable; b) Deliverable; c) Competitive; d) Exploit linkages between the organization and its environment; e) Visionary;

Strategic planning process stages: a) Analysis (now); b) Development (want); c) Implementation (how).

Performance management and appraisal

(See “PM as a system” by Kast and Rosenweig, p. 83.)

Performance management - an approach to create shared vision of objectives and strategy of organization by helping employees understand and recognise their part in contributing to them; and manage and enhance the performance of both individuals and the organization. It is a strategic and integrated approach deliver sustained success to organisations by improving the performance of the people who work in them and by developing the capabilities of teams and individuals. Prime interest is in the performance of the organization. Performance of individuals is a means to an end, not an end in itself. For HR, often the focus is on the individual aspect, but interdependency between individuals necessitates collaboration

a) Integrated – links individual employees and teams to business objectives; b) Integrative – represents a tool that can be used to align people both to business plan and each other, by adapting a strategic approach through interventions.

Performance planning: a) A planning meeting is often the first stage of a PM cycle; b) Objectives are usually agreed for the next 12 months; c) Alternatively, these can be broken down into quarterly targets (‘milestones’) that can be reviewed and amended as circumstances change; d) A performance planning discussion often takes place with the performance review meeting: taking account of any development needs that have arisen over the past year; e) The performance plan creates a framework for focus on performance, clarifies roles and forms a basis for assessing progress in the future; f) The essential requirement of the plan is the establishment of performance objectives.

 These involve identifying the criteria important for effective performance of the job and then rating the individual against those criteria;  An appraiser uses evidence from direct observation of the employee, or by reports from others, to make judgements about the appraisee’s performance, and rate them accordingly;  Self-appraisal – allowing the appraisee to comment on their own achievements and contribute to the next performance plan is increasingly common (CIPD, 2004);  Multi-source (360°) appraisal – an attempt to provide more breadth and balance in assessment is also growing in popularity (Fletcher, 2005); feedback from: subordinates, peers, superiors and sometimes customers and suppliers too; looks at wider working relationships, mainly used for appraisal of managers.

Common problems: a) Lack of regular feedback; b) Appraisers not working with staff they appraise; c) Lack of follow-up; d) Time pressures; e) Viewed as tedious routine; f) Paperwork becomes more important than motivational aspects; g) Inadequately trained appraisers; h) Complex to administer.

Components of motivation: a) Direction; b) Effort; c) Persistence.

Motivated person is involved in goal-directed behaviour. a) Intrinsic motivation – the self-generated factors which influence people to behave in a particular way; b) Extrinsic motivation – what is done to or for people to motivate them to behave in a particular way.

Extrinsic Motivation = what is done to or for people to motivate them. Factors: a) Rewards:  Increased pay;  Praise, recognition and respect;  Learning and development;  Promotion. b) Punishments:  Criticism;  Discipline.

Intrinsic Motivation = People motivate themselves. Factors include:  Responsibility;  Freedom to act;

 Scope to use & develop skills;  Interesting & challenging work;  Opportunity for advancement.

Expectancy theory (Vroom):

Targets affect behaviour (Goal Theory, Locke): a) Challenging but achievable, agreed targets motivate; b) People wish to avoid penalties, achieve rewards; c) Some may adjust behaviour to meet targets/standards; d) Or engage in dysfunctional behavior = adjust behaviour to be perceived to meet targets by undesirable means (e. avoiding appraisal meetings); e) Note: for these effects, the penalties/rewards need not be monetary or even explicit.

Dysfunctional behaviour (Smith): a) Tunnel vision; b) Sub-optimization; c) Myopia; d) Ossification; e) Gaming; f) Misrepresentation; g) Focus only on target; h) Narrow objectives at expense of coordination; i) Short-termism; j) Avoid innovation/risk; k) Manipulate indicators of performance to achieve reward; l) Creative accounting & fraud.

Targets – 3 questions: a) What are the dimensions of good performance organisation wishes to encourage? Different targets lead to different behaviour. b) How are appropriate standards of performance to be set, both for the whole organisation and its segments (including Individuals)? Targets can be ambitious, realistic, pessimistic, Imposed, forcefully negotiated, agreed. c) What penalties/rewards are to be associated with (non)/achievement of performance targets?

HR planning

Determining the need to fill the vacancy by reorganisation, or by recruitment of new employee (internally and/or externally)

Job analysis

Job Description and Person Specification

Application form

Job vacancy is advertised

Replies /applications received

Preliminary shortlist of candidates

Selection process

Decision making and offers made

Applicant(s) accept or reject offer

If acceptance, applicantcommences employment, induction and socialisation starts

Techniques of job analysis – vital for accurate construction of job descriptions and personnel specifications; include observation, interviewing, questionnaires, repertory grid, critical incidents and the outcomes of appraisal and training.

Issues in job analysis:

a) Time consuming; b) Tends to be job focused rather than person focused; Dangers of exaggeration and “Hawthorne Effect” (type of reactivity in which individuals modify or improve an aspect of their behavior in response to their awareness of being observed) when gathering information; c) Lack of flexibility; d) Bureaucracy and inaccuracy.

Job descriptions: a) Useful for writing recruitment advertisements, briefing agencies and advising potential recruits; b) Also valuable in determining employment contracts and communicating employer expectations; c) Common format.

Issues with job descriptions: a) Emphasis on the tasks to be performed rather than the skills of the person doing the job and their performance; b) Problems of coping with change and keeping up to date; c) Development of Accountability Profiles where the emphasis is on ‘what gets done’ rather than ‘what workers do’; d) “I’m not doing that – it’s not in my job description.”

Person specifications: a) Establishes selection criteria focussing on ‘people’ attributes; b) Essential and desirable criteria; c) Danger of unfair discrimination; d) Similar issues of inflexibility, inaccuracy and coping with rapid change.

Internet recruitment: a) Decisions on employer website, cyber agencies, links to newspapers and journals; b) Catching surfers; c) Cost savings; d) Massive potential recruitment pool; e) Speed and ease; f) Electronic shortlisting.

Issues with Internet recruitment: a) Web poachers stalking ‘passive’ employees; b) Too many unsuitable applicants; c) Confidentiality; d) Technical problems; e) Lack of backup beyond advertising of vacancy; f) Excludes some groups/individuals.

b) Is only by assessing the outcome of previous initiatives that organisations can abandon those that are least effective and build upon those that are most effective.

Reasons to train/develop employees: a) Achieving full job performance; b) Full development of employee potential; c) Improved morale; d) Improved quality; e) Greater customer satisfaction; f) Less waste of resources; g) Better utilisation of resources; h) Reduced cost and increased productivity. i) Reduced need for supervision.

Requirements for successful training: a) Be the appropriate solution to the problem; b) Have the support of management and the individual; c) Meet correctly identified needs; d) Be carried out in an environment favourable to learning.

Identifying training needs: a) Training Needs Analysis (TNA) – company-wide; b) Training needs may also be identified as a result of:  Job analysis (identifies knowledge and competence of the jobholder needs to meet required standards) – this helps managers to identify a “competence gap”, which may be filled by training;  Performance appraisal;  Individuals may identify their own training needs to carry out particular tasks;  During the selection process, assessment or development centres.

Systematic training: a) Examine = identify training needs at the organisational, team and individual levels; b) Plan = Plan and design training to meet these needs; c) Do = Implement the training plan effectively; d) Review = Assess the results of the training.

Types of training: a) On-the-job training, examples:  E-learning;  Training by a colleague who knows how to do the job;  Project or assignment related to the job;  Being coached by their manager. b) Off the job training, examples:  External training course;  Day release or evening classes.

Employee reward, ethics and corporate social responsibility (CSR)

Motivators: a) Increased pay; b) Praise, recognition and respect; c) Learning and development; d) Promotion; e) Being consulted and involved in decisions that affect us; f) Responsibility; g) Freedom to act; h) Scope to use & develop skills; i) Interesting & challenging work; j) Opportunity for advancement; k) Punishments:  Criticism;  Discipline.

Reward strategy (Armstrong) – defines the intentions of the organisation on how its reward policies and processes should be developed to meet the business requirements. It is driven by business needs. a) Competitive pay; b) Equitable pay system; c) Performance improvement; d) Devolution of pay decisions to line managers; e) Involvement of employees in reward matters; f) Team work; g) Increasing competence and skill base. Aims: a) Encourage effort towards corporate goals; b) Reinforce company values; c) Clarify employee priorities; d) Attract and retain high quality people; e) Deliver clear message to poor performers; f) Avoid de-motivating valued employees; g) Motivate the majority of reliable performers as well as the high fliers. Expectations: a) For employer:  Support values and performance standards;  Underpin goal-orientated behaviour;  Assist change initiatives;  Provide value for money/control costs;  What the organisation can afford;  Attract and retain the best people. b) For employee:  Support values and performance standards;  Underpin goal-orientated behaviour;  Assist change initiatives;  Provide value for money/control costs;  What the organisation can afford;  Attract and retain the best people.

a) Johnson argues that ‘all the practices have an ethical foundation, HR deals with the practical consequences of human behaviour’; b) The unitarist perspective and often ruthless treatment of employees prompted Hart to declare that ‘the entire concept of HRM is devoid of morality’.

Ethics in business environment: a) Rapidly increasing rate of product demand, innovation and obsolescence; b) Aggressive and exploitative marketing; c) Escalation of materialist values; d) Rise in secular concerns and loss of spirituality; e) Increased isolationism, self-serving attitudes and cynicism; f) Agency theory (Friedman) openly maintains that ‘the social responsibility of business is to its shareholders ... the business of business is business’; g) Business ethics is now a significant issue for organisations and HR practitioners. h) Key drivers:  Globalisation of markets and labour forces (‘McDonaldisation’);  Intensification of both competition and monopolies (‘Coca Colonisation’);  Technological change: Information Communication Technology (ICT) creating new opportunities but also new dilemmas: surveillance, erosion of privacy.

Consequences of poor ethical standards: a) Short term gain may result from the cut-throat tactics of the free market but business will survive in the long run by adopting standards of conduct acceptable to society, customers, employees, etc.; b) Ethical business failures can support corruption, waste, exploitation, poverty and environmental damage c) The collapse of major enterprises: eg, Enron and World Com damages trust and confidence in the world economy d) Klein (2000) cites ethical problems as:  Environmental abuse – Esso;  Abuse of human rights – Shell;  Abuse of animal rights – KFC, McDonald’s;  Exploitation of third world suppliers – Wal-mart;  Unscrupulous and health damaging policies / marketing – Philip Morris.

There is a conflict between huge gain and maintaining ethical standards.

The moral maze: a) Consequentialism:  Utilitarianism;  Happiness for the greatest number;  The end justifies the means. b) Non-consequentialism  Kantianism;  What is right for one is right for all;  Universal moral rules;  Treat others as you would be treated.

Approaches: a) Consequentialist (e., utilitarianism) – morality of an act is determined by its consequences: e., people should do the greatest good to the greatest number of people; b) Deontological – duty ethics applying reason to creating moral absolutes; c) The ethics of human rights – people are entitled to a set of basic human rights; d) Virtue ethics – acting as a good person; e) Stakeholder analysis – recognition of rights and needs amongst those affected by organisations.

Ethical issues in HRM. a) The extent to which ethical guidelines (e., CIPD standards) exist for HRM and can be applied in practical situations; b) The extent to which common principles and standards can be invoked globally; c) The role of HR practitioners; Winstanley argues that the HR function holds the moral ‘stewardship’ of organisations.

Unethical practices in HRM: a) Off-shoring and exploiting cheap labour markets; b) Using child labour; c) Reneging on company pension agreements; d) Longer working hours; e) Increasing work stress; f) Increasing job insecurity; g) Dubious practices in hiring and firing employees; h) Increasing surveillance and control; i) Conflict between ‘doing well’ and ‘doing good’; j) Decline in management integrity.

Corporate Social Responsibility: a) Crowe’s definition: all the ways in which a company relates to society from purchasing to product disposal, from human resources to human rights; b) Social audit (Medawar) aims to augment reporting on financial performance by showing impact on the community and its environment; c) Social responsibility enhances company brand and can lead to better recruitment and retention.

Characteristics of CSR: a) Understanding society and the role of each player; b) Building networks and alliances; c) Openness to new ideas and questioning the status quo; d) Building internal and external relationships; e) Taking a strategic view; f) Harnessing diversity.

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Lecture Notes, Human Resource Management Notes

Module: Financial and Human Resource Management in Organisations

13 Documents
Students shared 13 documents in this course

University: University of Westminster

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HUMAN RESOURCE MANAGEMENT NOTES
Introduction
CIPD – Chartered Institute of Personnel and Development.
HRM – important to sustained organisation success, gives competitive advantage by
ensuring that employees are able to make use of their expertise and ingenuity to
meet corporate objectives.
HR function is:
a) activity of HR (including line manager’s and HR manager’s actions);
b) activity only of HR department.
Used to be called “personnel management”, including: ensuring employees’ health
and safety, keeping record of number employed, dates of employment, holiday
entitlement, rates of pay and training received.
Factors increasing HR function’s importance:
a) Globalisation – because of increased global competition;
b) UK joining EU – because of increases and changes in directives and statutes
that impact employment relationship;
c) Changes in social norms – employees’ welfare became more important;
d) Changes in legislation – increased costs of employing people, therefore
requiring more efficient utilisation of employees;
e) Changing economy;
f) Employees expectations are rising (CSR);
g) UK’s move from manufacturing to service economy – bigger need for workers
with different skills base and need to adjust to 24/7 service, technology and
flexible work patterns.
h) Changes in business environment: more competition, emphasis on higher
quality products and lower prices and costs, the anticipation and satisfaction
of customer needs;
i) Increasing complexity and size of organizations.
In the Balanced Scorecard, HRM is in the Learning & Growth section.
(See Harvard and Storey’s models, p. 6, 7)
Hard HRM – emphasises costs and head count.
Soft HRM – emphasises employee participation and, organizational capability, and
training and development.
Differences between HRM and personnel management:
a) Some claim HRM is an Americanisation of personnel management;
b) Personnel management – reactive set of activities, primarily concerned with
administration of employment and provision of employees’ welfare;
c) HRM – proactive, strategically driven people management, focused on
eliciting performance;

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