Cambridge International Diploma in Business

IntroductionWhat are organizational assets??

Module ContentsOverview of the HRM: definition, purposes and HRM

approachesThe employment market: features, organization

functions, technical change in HR, legal environmentMeeting human resources requirements: HR types of

contracts, selection processes, ending contracts, organizing different working patterns

Working together in groups “Team participation”: measuring performance, communication, resolving problems

Motivation and training: payment methods, fringe benefits, working conditions, training & development

ActivityQualifications, training & skill sets for HR

personnel

How to be a successful HR professional?Organizational

CapabilitiesTalent ManagerOrganizational designerCulture & change

stewardStrategy architect

Systems & ProcessesOrganizational ExecuterBusiness Ally

RelationshipsCredible Activist

I) Human Resources OverviewObjectives

Understand the meaning, purposes and organization of the HR management.

Understand why organizations must manage people effectively and efficiently

Understand different approaches to the management of human resources.

HRM: Meaning / Definition

HR management is the process of creating and maintaining

relationships between organizations and the people who work for and with

them

Purposes of the HRM

(right skill mix)

(wages & salaries, support & admin costs, social costs)

(ensures the organization has the

ability to change)

1.Providing the right mix of skillsDifferent jobs require different skillsThe HRM should ensure that the business

has enough employees with the appropriate skills to carry out all its functions

This can be done by:Determining the HR needs of the organizationDetermining the current and future job needsRecruiting and selecting employees with the

right skills, experiences

Where does the vacancy come from?Employee leaving e.g. retirement, going to

another jobEmployee promotingIncreasing workloadDepartmental or organization expansion e.g.

new province, acquiring technological systems

2.Controlling employment costsEmployment of people involves cost, what are

these costs?SalariesThe HR functions e.g. recruitingBenefits e.g. training & development, fleet,

clothing, insurance.Social costs

3.Reacting effectively to changeWhat is a change?What are the kinds of change?

Internal “personal, group, organizational”External “customer-related, environmental”

Examples:Change in customer perception towards a product

(marketing)Change in the local regulations affecting the industryChange in organizational priorities

How could the HRM ensure employees are correctly reacting to changes?Communicating with themConsulting them about the change Involving themHelp them casting away their fearsGaining their commitment and support

ActivityListing HR functions

Approaches to HR managementCentralized approach

All HR functions are carried out by a central personnel department

Dictatorial decisionsTop-down approachCauses confrontationSometimes loses

coordination between employers and employees

BU=Business Unit

HR

Approaches to HR managementDecentralized approach

Employees are involved in the workplace

Employee relations and HR management is the responsibility of all managers

Increased motivation, commitment

All HR functions are managed by both managers and HR department

HR

1.0 Assignment (a) Explain the meaning of Human Resource

Management (HRM). (b) List four purposes of HRM.

Activity Case studies

Line Managers as HR ManagersInvolved in HR & personnel mattersMotivationOrganizing workHR planningRecruitmentDiscipline

HR Modern Central RoleMonitoring legal HR mattersCentralized HR functions; recruitment &

selection, disciplinary procedures Implementing company’s policiesAdministering pay (compensations) and

benefits Industrial RelationsEmployee Welfare

Centralized or Decentralized?SizeTypeSpan of controlChain of command

The Employment MarketMeaning / DefinitionMain featuresFunction of organizationsInfluence of technical change on HRMLegal Environment

What makes the employment market?

Features of Employment MarketEmployment seekersBusinesses & organizationsChange in employment marketImpact of change

Learning new skillsAdapt to new working practices / conditionsNew industries

Features of Employment Market . . (continued)Sectors of employmentTrends in age & genderFull time employment vs. self employment

Full-time employment Vs

Self employmentFull-time employment Self employmentHigh capital investmentsIncreased job securityFixed working periodsRequires a defined set of

skillsDecisions are made by

othersDecreased riskBenefits package

Attractive growing trend for professionals and trade people

Incorporates freedom of working

Low capital investmentsSupplemented with full and

part-time employmentLonger working periodsRequires a larger set of skillsDecisions made by yourselfSubstantial financial risk

ActivityTrendsSectors of employmentComparison of employment

Organizations affecting how HR are Managed Trade & Labour Unions

Their strength varies from country to countryNegotiate with employers matters as pay, working hoursRepresent employees unfairly treatedProvide information to employees on their rightsServices, training

Employers associations and professional bodiesAdvice & support servicesEx Hong Kong Management Association, American

Society of Training & DevelopmentLocal chambers of trade / commerce / industryResearch, PR, lobbying, negotiation, maintaining

professional standards

Organizations affecting how HR are Managed . . continuedGovernment Agencies

Encourages co-operation between employers & employees

Resolve disagreementsGovernmental departments responsible for

employment, industry & tradeSettling industrial disputes

Organizations influencing the way HR are managedTrade Union “Labor Union” - EMPLOYEES

Could represent one small industry or many different industries

Their strength vary from country to anotherTheir services:

Negotiate with employers over some matters i.e. pay, working periods, working practices, etc.

They represent the employee(s) in cases of unfair treatment or discrimination. They resolve the issue either by negotiation or by legal actions

Source of information, benefits and training for employees

Organizations influencing the way HR are managedEmployers’ Associations

They represent the interests of employers either in one small industry or many different industries

Their services: Research Public relations Negotiation Lobbying

Organizations influencing the way HR are managedProfessional Bodies or Associations

They are regarded as trade unions for it members who belong to one profession i.e. Lawyers and doctors syndicate

Their services: Public relations Negotiation Maintaining professional standards

Activity1. Trade unions2. Organizations

Development of new technologyComputer Aided Manufacturing – CAM

Computer controls machinery & equipmentReduces the need of labourAccurateHigh quality product

Computer Integrated Manufacturing – CIMComputer controls entire production lineReducing the need of labourAvoiding boredom of repetitive routine jobs

Development of new technology . . . continuedComputer aided design (CAD)

Design can be tested using computer programsCar and many other household repairers identify

problems using hand held computersBank cashiers use computer terminals for money

deposits & withdrawalsElectronic funds transfer at point of sale (EFTPOA)

Retailers have electronic tills linked directly to the banking system

Avoids need for customers to carry cashUpdate stock records

Office applicationsComputers

The influence of technical change on HRMReducing number of labour neededTraining Acquiring learning new skills

Activity3. Technological change

The Legal EnvironmentTerms & conditions of employmentWagesEqual opportunitiesMaternity / paternityHealth & safetyTraining

Case StudyApplied Chemical Co.

III. Meeting HR RequirementsDifferent Types of Employment ContractsRecruitment & Selection ProcessHow the contract of employment can end

The Contract of employmentType of employment contracts: full time part

time, free lance, fixed term, service contractLegal agreement between employer & employeeFollows an offer of employmentIncludes:

Name of employer - Name of employeeJob title - Commencement dateHours of work – remuneration level & benefitsTermination notice – grievance & disciplinary

proceduresContract duration

ContractsFull time vs. part timeFixed term contracts vs. services contract

ActivityMeeting HR requirements 1

Employment vacancies are due to:Employee resigned, retiredBusiness expandingIntroducing new productsIncreased work load

Recruitment & Selection ProcessJob descriptionPerson specificationJob advertisementJob application, applicants’ responseReceiving applications, closing date, sortingInterviewsSelecting the right candidateEmployment offer & employment contractEnding the contract of employment

Job descriptionsDefinition: a detailed statement identifying what a job

entails; nature of the work, responsibilities, tasks, measurement of performance, accountability

Importance: help in advertising for suitable applicants, only appropriate applicants will apply, serves as guidelines for selection process

Includes:Job titleDutiesResponsibilitiesAccountability

Prepared by HR & department managers

Personal SpecificationsIt describes the qualities, attributes and

characteristics required in a person to carry out a particular jobPhysical and mental abilitiesSkillsAcademic backgroundProfessional experienceAge, gender

Job Advertisement & Attracting candidatesJob advertisement based on JD & job specificationInternal announcementExternal announcement

Advertisement Attractive Sufficient job information Where & how to apply Closing date

Recruitment agenciesHead hunting

In depth readingJob descriptions

Job application, applicants’ responseEmployers providing more details on the job

details on the business (websites)Details on the job, sometimes JD

Application formsCVs / resumesCreating a pool of candidates

ActivityJob announcement AdvertisementApplication formResume / CV

Receiving applications, closing date, sortingReceiving applications until closing dateSorting according to preset criteria, JDShort listingInterviews scheduling

InterviewsOne to one interviewsPanel interviewsPlanned / structured interview vs.

unstructuredInterview tests;

Ability in specific areas Mental abilitiesPsychometric – IQ - behavioral – situational -

stress

Selecting the right candidateMatching JD & job specificationApplicationInterview performanceTest resultsEmployment offer

Starting dateCompensation / pay

ActivitiesJob specificationReferencesAssessing candidates

Ending the contract of employmentResignationRetirementRedundancy, job/function ceases to existDismissal

Skill Inventory Your company has the following

vacancies: computer programmer catering staff Accountant Receptionist Cleaner Senior Marketing Product

Manager Fork-lift truck driver General clerical assistant Semi-skilled general labourer Accountant Regional HR Director Management trainee

Task: Advise the HR department (by completing the grid) which medium you would use for each post

Media VacancyLocal newspaperNational newspaperInternetLocal RadioTVProfessional JournalsRecruitment AgenciesUniversity Appointment BoardOther (Specify)

Skill InventoryConsequences of wrong candidate

selectionConsider a salesperson’s career, draw the

possible consequences and costs incurred in selecting the wrong candidate

Source: Charles A. Peck, Compensating Field Force Sales Representatives, Report No.828, New York Conference Board, 1982

IV. Working Together1. Different ways of organizing work2. How organizations measure & monitor

people’s performance3. Systems for communication & resolving

problems

1. Different Patterns of WorkDay work (8-9 hours)Shift systems (24 hours)

StrainAntisocialCompensated

FlexitimeMotivationIncrease productivity

In Depth Job enrichment / enlargement

Pattern of workDay work system:

Typically most people work for a certain set of hours per day for 5 or 6 days a week i.e. 8 hrs/day

Breaks could be established during these working periods for a reason i.e. Hot climate

Shift system:Employees work for their normal hours per day, but different

teams of employees work at different set of hours i.e. 3 shifts * 8 hrs in a 24 hr cycle

Considered “Antisocial” for early or late workers, thus maybe paid better

Flexitime system:Organizations allow some employees to work hours which suit

them, with start and end times being at the employee’s discretion, however, a set number of hours must be worked in a particular period.

ActivitiesOrganizing work

2. Measuring & Monitoring Performance at WorkComparing performance to:

Standards; JD, person specification, job holdersTargets; sales target – production units

Realistic Achievable Agreed with jobholder If not: Demotivation

Key accountabilities & competencies

2. Measuring & Monitoring Performance at Work . . .continued

Accountabilities: responsibilities, maximizing sales for example

Competencies: knowledge & skills required, communication skills

Appraisal systemMeaningone to one - 360 degrees

Measuring and monitoring performance at work

Appraisal systemsAppraisal is the process of assessing the progress and

effectiveness of employeesIt typically involves an interview between an employee

(appraisee) and the employee’s direct manager (Appraiser)

A well-structured appraisal will:Help employee accept credit of being valuedDiscuss areas of concerns of both partiesDiscuss forthcoming targetsSupport the employee i.e. need for trainingMay involve other people contacted with the employee

(360 Degrees Appraisal)

ActivityPerformance appraisal documentMeasuring performance

3. Communicating & Resolving ProblemsImpact of employer – employee problems / conflicts

Disruption / tensionLoss of productivity & profitDissatisfactionUncertaintyUnemployment

Possible systems of resolving problems include: Individual problem solving mechanisms Improvement MechanismsFormal consultations & negotiations systems

Individual Problem Solving MechanismsGrievance procedure: employees can seek to

resolve complaints

Disciplinary procedure: employers seek to put their employees back on the right track

Grievance Procedure is the means by which employees can seek to resolve complains of alleged or real breaches of the terms and conditions of their employment

The complain should be first discussed with the employer’s immediate manager

If unresolved, the employee may seek discussion with higher management level

A formal investigation of the complain should be conducted.

Disciplinary Procedures is the process by which employees are reprimanded, punished or even dismissed in the event of their failure to work according to their employment contract and/or company code of conduct

•Problem will be discussed giving the employee given date to improve

•If there was no improvement; formal warning in writing

•Continued failure to improve; final warning in writing

•Employee’s dismissal

•Fraud, fighting at work, severe negligence = gross misconduct = instant dismissal

Improvement MechanismsAimed at avoiding problems through

communicating and involving employees in their work

Communications designed to increase employees awareness, involvement and commitment to their employer, including:Company magazine / newspaperReports on the company to employeesRegular department or briefing sessions

Improvement Mechanisms . . contdOther improvement mechanisms aim to

increase employees motivation by involving them in improving company’s overall performance:Suggestion schemesAttitude surveysQuality circlesTotal quality managementCustomer care programs

Total quality management (TQM) is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and other organizational objectives.

TQM empowers an entire organization, from the most junior employee to the CEO, with the responsibility of ensuring quality in their processes.

In particular, TQM provides management with the ability to ensure quality through more streamlined and effective process-improvement channels.

A great range of organizations have deployed TQM, including small companies, large companies, and government departments (e.g., NASA.

TQM is no more relevant to any one type of organization than any other; on the contrary, it is a philosophy appropriate to any situation in which quality assurance is important.

Improvement Mechanisms

In depth readingOrganizational Suggestion Schemes

Formal Consultation & Negotiation Systems

These systems aim largely to seek the views of others before coming to a decision.

Based on regular meetings and discussions between employer & employees

CommitteesOf general scope (discuss general matters

between employees and employer) i.e. Works Council, Workers Directors

Of specific scope (discuss specific matters of interest) i.e. Health & Safety Committee

Committees examples & dynamics Work councils;

Discuss employees matters Consists of elected representatives of employees +

representatives of management of the company Objective: act as two channel of communication between

employees & management of a business Work directors;

Some larger businesses appoint them in company board They represent the views of employees at the highest level in

the company at board meeting Health & safety committee

Established to: Consult Discuss Take action Avoid and resolve problem in specific area

Activities Communicating & Resolving Problems

V. Motivation & TrainingMotivations theoriesDifferent methods of paymentThe use of fringe benefits How the nature of work contributes to

motivationThe main features of training & development

Why do people work??MoneySecurityJob SatisfactionA sense of self importanceA sense of belonging

Maslow’s Hierarchy of Needs (1935)Physiological needs, basic; food, water,

shelter, warmthSafety & securitySocial needs; belonging to a family or a groupNeeds for recognition & esteemSelf realization & achieving personal goals

Maslow’s hierarchy of needs

Personal growth & fulfillment

Achievement, status, responsibility, reputation

Family, affection, relationships, work group, etc

Protection, security, order, law, limits, stability, etc

Basic life needs, air, food, drink, shelter, warmth, sex sleep, etc

McGregor’s Theory X & Theory YTheory X: Organizations

Assume employees dislike work & avoid it

They must be persuaded to work with high wages

Controlled with strict supervision

Threatened with punishment as motivation

Theory Y: PeoplePeople enjoy workWill strive to meet

targets & objectivesCommitment is

increased when they feel ownership of their jobs; through increased responsibility & participation in decision making

McGregor’s Theory X and Theory Y

McGregor’s Theory X & Theory YTest

Implementation of Theory YDelegating responsibility to employeeConsulting employees about their work,

problems, or concernsParticipation in decision making

Herzberg’s Hygiene Motivator Theory

Hygiene Factors Pay Satisfactory working

conditions Helpful organizational

policies Management & supervision

Motivation factors Relating to the job itself Interesting job Achievement

opportunities job provides

Recognition Promotion Added responsibility

•Hygiene factors are important

•Businesses can improve employees motivation by improving the nature and content of the actual job

Essentially, hygiene factors are needed to ensure an employee is not dissatisfied. Motivation factors are needed in order to motivate an employee to higher performance

Herzberg’s Hygiene/motivator theory

Motivation in PracticePeople are individualsMotivators vary from individual to individualTheories can give general guidanceBusinesses MUST tailor their own motivation

strategies to their workforceEffective motivation package MUST include

both financial & non-financial incentives (fringe benefits)

Financial Incentives Wages: based on fixed hourly rate paid for the number of hours

worked Incentive for employees to work longer hours so as to increase the

wage they receive Employees may maximize the time they take to do the job to increase

their wages Salaries: a method of pay based on a year’s work regardless of the

hours it takes Employees would work hard during their contractual hours in order to

avoid working unpaid overtime There is no additional payment for hours worked in excess

Piece work: a method of pay based n output, how many pieces or units employee produced Only appropriate for workers who produce identifiable and uniform

units Can encourage employees to work harder and produce more Can lead to poor quality if quality is sacrificed for speed

Financial Incentives . . . continued Bonuses & Commissions:

Bonus: an extra payment in recognition of employee’s contribution to company’s success

Commissions: normally paid to sales executives and similar employees who have a responsibility of selling company’s products

Profit sharing: employees are paid a share of company’s profits usually in the form of annual cash bonus Employees strive for the increase of profit of the company as they will

receive a share of this profit Pensions: schemes intended to provide employees with an income

after retirement Contributory schemes: employees pay into the scheme by regular

deductions from their pay, usually with a additional contribution by the employer

Non contributory: where the scheme is entirely funded by the employer

Non-Financial Incentives & Fringe BenefitsFringe benefits are subject to income tax in many

countries, examples of non-financial benefitsCompany carsCheap loansSubsidized food and accommodation; canteens, staff

cafeteria, staff restaurantsHealth & insuranceCompany stocks optionReduced prices for company products

ActivitiesIncentives

Management TheoriesFredrick Taylor: Scientific Management

Taylor believed that the industrial management of his day was amateurish (unprofessional), that management could be formulated as an academic discipline, and that the best results would come from the partnership between a trained and qualified management and a cooperative and innovative workforce. Each side needed the other, and there was no need for trade unions.

Taylor's scientific management consisted of four principles:Replace rule-of-thumb work methods with methods based on a scientific study of the tasks. Scientifically select, train, and develop each employee rather than passively leaving them to train themselves. Provide "Detailed instruction and supervision of each worker in the performance of that worker's discrete task". Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to

planning the work and the workers actually perform the tasks.

Managers and workersTaylor had very precise ideas about how to introduce his system:It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced

cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.

Workers were supposed to be incapable of understanding what they were doing. According to Taylor this was true even for rather simple tasks.

The introduction of his system was often resented by workers and provoked numerous strikes. Taylor believed the labourer was worthy of his hire, and pay was linked to productivity. His workers were able to earn substantially more than those in similar industries and this earned him enemies among the owners of factories where scientific management was not in use.

http://en.wikipedia.org/wiki/Frederick_Winslow_Taylor

Management Theories . . continuedElton Mayo is known as the founder of the Human Relations Movement

He carried out a number of investigations to look at ways of improving productivity, for example changing lighting conditions in the workplace. What he found however was that work satisfaction depended to a large extent on the informal social pattern of the work group. Where norms of cooperation and higher output were established because of a feeling of importance, physical conditions or financial incentives had little motivational value. People will form work groups and this can be used by management to benefit the organization. He concluded that people's work performance is dependent on both social issues and job content. He suggested a tension between workers' 'logic of sentiment' and managers' 'logic of cost and efficiency' which could lead to conflict within organizations.

Summary of Mayo's Beliefs:Individual workers cannot be treated in isolation, but must be seen as members of a group. Monetary incentives and good working condition are less important to the individual than the need to

belong to a group. Informal or unofficial groups formed at work have a strong influence on the behavior of those workers in a

group. Managers must be aware of these 'social needs' and cater for them to ensure that employees collaborate

with the official organization rather than work against it.

http://en.wikipedia.org/wiki/Elton_Mayo

Motivation & the Nature of WorkJob satisfactionJob enrichment & job enlargementJob rotationDeveloping working relationship

ActivityJob satisfaction surveyThe container store videoMotivation & job satisfaction

Training & DevelopmentImportance:

Employees to know how to do their jobsAdapting to changing circumstances as new

technologiesEmployer gains:

employees’ increased motivation & commitment Increased quantity & quality of output

Employees gains: Enhanced career & promotion prospects Feeling of being valued

Training & Development . . continuedTraining Methods:

Internally: Subject to office pressure & distractions

Externally: More expensive Takes employees out of workplace Exposure to different ideas & cultures

Types of TrainingInduction trainingOn the job trainingOff the job training

Induction Training (orientation)Initial introductory program designed to ease new

employees into an organizationIntroduce new employees to the businessFamiliarize new employees with practices of the

organizationNew employees to feel comfortable with their new

employerGive new employees confidence & competence in their

working environmentHelp them carry out their jobs

On-the-job TrainingTraining carried out at the actual place of workLearning job specific skills Individual training for employees to be able to carry

out their duties & their specific tasksDelivered by staying close to a an experienced

worker / senior colleague Advantage: immediate gain of productivityDisadvantage: quality of training highly depends n the

abilities of the trainer

Off-the-job TrainingAll forms of training carried out away from the

actual workplaceAim to develop more skills and knowledgeDelivered both externally & internally

ActivityDefining trainingInvesting in trainingInduction training

Case StudyMotivation in the building trade