Human Resource Management

Learning Objectives

• Understand the importance of Human Resource Management to the organization

• Appreciate the key functions associated with Human Resource Management

• Implement a Human Resource Planning Process

• Understand the importance of Recruitment and Selection

Learning Objectives

• Detail the main types of Compensation and Benefits Systems

• Implement an effective Performance Appraisal Process

• Understand the function of Training and Development and its importance to the organization

HRM & The Organization

What is Human Resource Management?

• Basic Definition– ‘managing the employment relationship’

(Tyson, 1987)

• Key Assumption– Employees are the most important asset of

the organization

Key Functions

Human Resource Planning

Recruitment & Selection

Compensation & Benefits

Performance Appraisals

Training & Development

Human Resource Planning

What is Human Resource Planning?

• “an effort to anticipate future business and environmental demands upon and organization and to provide personnel to fulfil that business and satisfy that demand”

(Bowey, 1974)

Human Resource Planning

• Human resource planning must be integrated within the organizations strategic plans

• Senior management must emphasize the importance of human resource planning

• Human resource planning must be based on the most accurate information available

Source: Adapted from Tyson & York, 1992

Human Resource Planning

• Human resource planning must be assigned or located within a central unit

• A clear plan must be developed with associated time-spans and scope of activity

Source: Adapted from Tyson & York, 1992

Human Resource Planning Process

Demand AnalysisDemand Analysis

Supply AnalysisSupply Analysis

Estimate Deficits/SurplusesEstimate Deficits/Surpluses

Develop Action PlanDevelop Action Plan

Demand Analysis

• Emerges from a clear understanding of the organizational strategy– Technological Changes– Products– Workforce Requirements

• Skills• Qualifications• Experience• Gender

Demand Analysis

• Managerial Estimates (Subjective)– Planned changes versus workforce requirements

• Work Study– Systematic analysis of work

• People• Skills• Resources (materials & machines)

– Man hours per output unit

Demand Analysis

• Statistical Techniques– Regression Analysis– Econometric Models

Supply Analysis

• Amount of human resources that will be available to the organization

• Sources– Internal Labor Market– External Labor Market

Internal Recruiting

• Internal Advertising

• Self Applicants

• Employee Referrals– Supervisor/Manager Recommendations

• Succession Planning

External Recruiting

• Existing Candidate Pool

• Newspaper/Internet– General– Specialized Recruitment Magazines/Internet Sites– Professional Associations

• Employment Agencies– Executive Search Agencies– Campus Recruiting

Estimate Deficits/Surpluses

• Does the supply of labor match the demand for labor?

• How many employees will be required?– Can they be secured from internal sources?– What are the challenges of securing employees

from an external source?

• How many employees will have to be let go?– For how long?– Can they be re-recruited quickly, if required?

Develop Action Plan

• From the deficits/surpluses analysis a plan that ensures that the day-to-day operational human resource needs of the organizational are catered for

• This plan includes specific detail on the management of – Recruitment & Selection– Compensation & Benefits– Performance Appraisals– Training & Development

Recruitment & Selection

The Recruitment Process

Job Analysis & Job Description

Source Candidates

The Recruitment Interview

Psychometric Testing

Reference Checks & Making an Offer

Job Analysis

• ‘The process of examining a job in detail in order to identify its component tasks The detail and approach may vary according to the purpose for which the job is being analyzed’

(Department of Employment Glossary of Training Terms, 1971)

Job Description - Key Elements

• Purpose of the Job

• Core Functions & Responsibilities– Duties– % of Time Spent on Activities– Other

• Other Functions & Responsibilities

Job Description - Key Elements

• Supervisory Responsibilities– Number of Staff– Type of Employees– Level of Authority to Hire

• Knowledge & Skills– Required– Preferred– Desirable

Job Description - Key Elements

• Fiscal Responsibility– Budgeting– Approval Privileges– Reporting & Auditing Functions

• Public Contact

• Physical Demands & Working Conditions

Seven Point Plan

1. Physical make-up; health, physique, appearance

2. Attainments; education, qualifications, experience

3. General intelligence

4. Special aptitudes

5. Interests

6. Disposition

7. Circumstances

Source: Rodgers (1952)

Five Fold Grading System

1. Impact on others; physical make-up, appearance, speech

2. Acquired qualifications; education, training, experience

3. Innate abilities

4. Motivation

5. Adjustment

Source: Munro Fraser (1954)

Job Description - ExampleJOB

Title ………… ResponsibilityLocation ……… ……………………… No of Subordinates … Budget ………………

AUTHORITY

Responsible to …………… …Responsible for ………… ……

RESPONSIBILITIES

60% of time …………… …25 % of time ………… ……15 % of time ………… ……

WORKING ENVIRONMENT

Sourcing Candidates

• Internal Recruiting

• External Recruiting

Internal Recruiting

• Advantages

• Disadvantages

External Recruiting

• Advantages

• Disadvantages

Screening Resumes

• Relevance of Education & Experience– Is the candidates experience and educational

record appropriate for the position on offer?

• Interests & Abilities– What are the candidates interests and abilities?– Will these interests and abilities contribute to their

performance on the job?

Efficiency of the Recruitment Interview

• Highly effective if based on a detailed job description

• Structured interviews, based on pre-set questions, are more effective than unstructured interviews

Functions of the Interview

Mutual Preview

Assessment

Negotiation

Source: Adapted from Anderson & Shackelton (1993)

Mutual Preview - Function

• Informal discussion that explains the selection process and the job on offer

• Provision of a detailed and Realistic Job Preview

Interviewer’s Objectives

• To ‘set the scene’ for the candidate and the organization

• To inform the candidate of the organization’s selection procedures

Candidate’s Objectives

• To understand what the selection procedure will be and what will be involved during each stage of the procedure

• To obtain an indication of what the job will entail so that they can also decide their suitability and interest in the position

• To get a better ‘feel’ for the organization

Assessment - Function

• Formal discussion guided by job description and a number of pre-set questions

Interviewer’s Objectives

• To document answers to pre-set questions

• To probe candidate further on critical aspects of the job

Candidate’s Objectives

• To provide the interviewer with sufficient information to guide and influence their decision

Negotiation - Function

• Negotiation of outstanding points

• Can be directed and led by both interviewer and candidate

• May take place during interviewer or at the offer stage of the recruitment process

Interviewer’s Objectives

• To ensure that the offer is mutually acceptable to the candidate and the organization and that all potential areas of conflict are resolved

• To smooth the transition from job to role

Candidate’s Objectives

• To expand and agree all contractual and non-contractual terms and conditions

• To smooth the transition from job to role

The Recruitment Interview - Advantages

• Quick and relatively easy to perform

• Perceived by the candidate as a natural part of the recruitment process

• Allows the organization to get to know a candidate

• Allows the candidate to find out more about the organization

The Recruitment Interview - Disadvantages

• Open to errors• Difficult for interviewer to discriminate

between relevant and irrelevant information• Different conclusions can be reached

dependent on the type of interview conducted• Early impressions can negatively and

inappropriately influence the interviewer’s judgement

Psychometric Testing

• Cognitive Tests– General Intelligence– Spatial Ability– Numerical Ability

• Personality Tests– 16PF (Cattell et al , 1970)– Occupational Personality Questionnaire (Saville &

Holdsworth, 1984)

Validity

• Face– Does the test look right?– Is it acceptable to th candidate and the

organization?– Will it produce useful and relevant

information?– Does the test come from a recognizable

source?

Validity

• Construct– Does the test measure what it sets out to

measure?– Does it correlate with other tools that

measure the same thing?

• Predictive– Does the test predict how well an individual

is going to perform within the job?

Reference Checking

PreparationPreparation

Data CollectionData Collection

InterpretationInterpretation

Preparation

• Ensure that questions are relevant to the position on offer

• Verify information already received– Qualifications– Length of Service– Duties– Responsibilities

• Look for factual information

Data Collection

• Establish a rapport with the referee and explain the purpose of the reference check

• Ensure that you follow pre-set questions

• Keep to the facts

• Be alert to the responses given by the referee

• Document all answers

Interpretation

• Be careful not to accept all information at face value

• Use the information in conjunction with that gathered from other sources to evaluate the candidate

• If any doubt exists seek other references

Checking References - Key Points

• Be Consistent

• Ask the same questions about each applicant

• Ask questions relating to the candidate’s ability to perform the job

• Cross-Check References from several sources

• Document all information received

Giving References - Key Points

• Be Honest• Verify the identity of the individual seeking the

reference• Reply directly to the questions being asked• Keep your answers to job related activity• Make sure that any negative information

given can be supported by documented evidence

Compensation & Benefits

Major Compensation Schemes

Flat Rate OnlyFlat Rate Only

Flat Rate Plus Payment By ResultsFlat Rate Plus Payment By Results

Merit PayMerit Pay

Profit/Gain SharingProfit/Gain Sharing

PieceworkPiecework

Flat Rate Only

• Most popular compensation option for organizations

• Easy to administer, understand an provides stability of earnings for employees– Hourly– Weekly– Monthly

• Best used where performance criteria difficult to define

Flat Rate Plus Payment By Results

• Growing in popularity

• Mix of flat rate and bonus payments

• Immediacy of reward increases motivation levels

• Can be difficult to administer

• Often hard to find an accurate measure of performance

Merit Pay

• Bonuses paid on the basis of a systematic assessment of performance

• Performance evaluated against set objectives and from this a bonus or merit payment is paid

• Often hard to find an accurate measure of performance

Profit/Gain Sharing

• Bonuses are paid on the basis of overall company performance

• Bonus paid either on the basis of monetary or in terms of company shares

• Profit/Gain Sharing increases employees awareness of the overall performance of the organization

Piecework

• Employees are paid only for the work that they have completed

• Can cause considerable conflict with employees as it does not gaurantee a minimum income

Performance Appraisals

Why Have Performance Appraisal?

• Performance Appraisal offers several advantages at the level of the:– Individual

• Recognition of past effort• Developmental requirements can be uncovered

– Team• Alignment of effort with objectives• Motivation of team members

– Organization• Development of staff• Achievement of key objectives• Best and focused utilisation of human resources

Plan Work & Identify Skills

Observe & Document

Performance

Observe & Document

Performance

Performance Appraisal

Discussion

Performance Appraisal

Discussion

Development ReviewDevelopment Review

Performance ReviewPerformance Review

Reward ReviewReward Review

ProductionSales

ServiceProfits

Productivity

ProductionSales

ServiceProfits

Productivity

Business PlanJob Description

Performance Goals

Business PlanJob Description

Performance Goals

PAST

PRESENT

FUTURE

Appraisal Overview

The Appraisal Process

• Components

– People• Manager• Employee• Peers

– Information• Facts• Opinions

– Emotion• Positive• Negative

Preparation

Involvement

CommunIcatIon

Appraisal Procedure

• Agree Objectives

• Monitor Performance

• Give Sufficient Notice

• Prepare Necessary Documentation

• Prepare Location

Appraisal Procedure

• Conduct Appraisal

• Complete Documentation

• Implement Plans

Eight Appraisal Techniques

1. Ranking

2. Paired Comparisons

3. Critical Incident

4. Free-Form/Narrative

5. Self-Assessment

6. Assessment Centre

7. Performance

8. Rating

Source: Adapted from Gunnigle & Flood , 1990

Ranking

• Appraiser ranks employees from the worst to the best based on specifica characteristics or on overall job performance

Ranking

• Strengths– Simple– Facilitates comparisons

• Weaknesses– Subjective– Poor basis for decisions– Degree of difference between employees

difficult to specify

Paired Comparisons

• Appraiser ranks employees two at a time and decisions on which is superior are included in the final ranking order for the whole organization

Paired Comparisons

• Strengths– Simple– Ease of decision making

• Weaknesses– Complicated within a large workforce– Challenges asociated with ranking

Critical Incident

• Appraiser observes incidents of good and bad performance and employs this information for judging and leading the performance appraisal

Critical Incident

• Strengths– More objective than previous techniques– Job related

• Weaknesses– Time consuming– Requires skilled observation

Free-Form/Narrative

• General free-written evaluation by the appraiser

Free-Form/Narrative

• Strengths– Flexible

• Weaknesses– Comparisons challenging– Subjective

Self-Assessment

• Appraisee evaluates themselves based on a particular template that has been supplied by the organization

Self-Assessment

• Strengths– Promotes self-analysis– Participative– Facilitates discussion

• Weaknesses– Appraisee may be more lenient– Conflict can occur between appraiser and

appraisee

Assessment Centre

• Appraisee receives a series of assessments supplied, performed and evaluated by specialized external assessors

Assessment Centre

• Strengths– Objective– Range of techniques employed– Range of demensions analyzed

• Weaknesses– Expensive– Not necessarily job specific

Performance

• Appraiser evaluates the degree to which the appraisee has achieved specific objectives

Performance

• Strengths– Objective– Job related– Participative

• Weaknesses– Requires awareness of measurable targets

Rating

• Appraiser specifies on a scale to what degree relevant characteristics are possessed by the appraisee

Rating

• Strengths– Ease of comparison– Capacity to assess characteristics from the

very simple to the complex

• Weaknesses– Subjective– Personality and behavioral traits difficult to

measure

Training & Development

What is Training?

Training refers to the acquisition of knowledge, skills and abilities

required to perform effectively in any given role

Knowledge, Skills & Abilities

• Knowledge is information specific and particular to a subject, enabling a person to understand a subject to an acceptable level

• Skill is a developed aptitude or ability in a particular intellectual or physical area

• Attitude is an internal state which affects one’s choice of action towards some objects, persons or events

Training & Development Perspectives

FragmentedFragmented

FormalizedFormalized

FocusedFocused

The Fragmented Approach

• Training is not linked to organizational goals• Training is perceived as a luxury• Non systematic approach to training• Training is directive and delivered by trainers• Training occurs with the training department• Knowledge-based courses• Focus on training not development

The Formalized Approach

• Training is directly linked to human resource needs

• Systematic developmental training linked to appraisals

• Knowledge based courses broadened to skill based

• Line manager involvement in the development of the course content

The Formalized Approach

• Training still performed by trainers but the range of skills required increases

• Pre- and post - course activities increase

• Training linked to individual needs

The Focused Approach

• Training and continuous development by employees is now perceived as essential for organizational survival and an integral part of organizational strategy

• Training becomes a source of competitive advantage

• On-the-job development• Self selection for specialized training courses

The Focused Approach

• Training non-directive with the exception of knowledge based training courses

• New forms of training delivery explored, such as open courses and e-learning

• Measurement of learning becomes critical to the organization

The Training Cycle

IDENTIFYIDENTIFY

DEVELOPDEVELOPEVALUATEEVALUATE

IMPLEMENTIMPLEMENT

The Training Cycle

• IDENTIFY– Identify issues affecting the business

performance– Caution: Not all those identified can be

resolved via training

• DEVELOP– Prioritise those identified and develop

training objectives

The Training Cycle

• IMPLEMENT– Employ training solution

• EVALUATE– Compare employee/team performance

before and after training

Training Needs Analysis

The systematic process of determining and ordering training goals, measuring

training needs and deciding on priorities for training action

Training Need

• The difference between the actual and required human performance in some specific areas of operations, where improved training is the most economical way of eliminating the difference

Not Everything is a Training Need!

Business Need

Training Need

Work Environment Need

Performance Need

Benefits of Training Needs Analysis

• Organisational Focus on Performance

• Identifies Routes to Closing Organisational Performance-Gaps

• Through Involvement Builds Internal Commitment To Achieving Organisational Targets

• Separates Non-Training Needs - ‘Training Not the Only Panacea’

Difficulties with Training Needs Analysis

• Time-Consuming

• Generates High Expectations

• Requires Top-Level Support & Understanding

• May Isolate Certain Categories of Staff

Training & Development

Accepted Core Competencies• Identify and analyse the learning, training &

development needs of employees

• Plan, recommend, implement and monitor the effectiveness of learning and development initiatives that meet the present and emerging business needs of the organisation and its employees

Training & Development

New Core Competencies• Recognise developments and trends in HRM and within

the organisation’s external and internal business environment that are significant to both the organisation and the employees

• Develop, implement, forecast and monitor effective placement, deployment and release processes, to meet the organisation’s needs

• Build internal capacity and lead change

Summary

• An appreciation of Human Resource Management offers considerable benefits to the organization

• Human Resource Planning emerges from a clear understanding of the organizational strategy

• Ownership of the Recruitment and Selection Process must reside within the organization

Summary

• There are five main Compensation and Benefits Systems– Flat Rate Only– Flat Rate Plus Performance By Results– Merit Pay– Profit/Gain Sharing– Piecework

• Performance Appraisal offers several advantages at the level of the:– Individual– Team– Organization

Summary

• Training refers to the acquisition of knowledge, skills and abilities required to perform effectively in any given role

• Remember Not Everything is a Training Need