Human Resource Management

Dr. Karim Kobeissi

Islamic University of Lebanon - 2014
 Chapter 1
Human Resource Management: An Overview
 Human Resource Management (HRM) - Definition

Human Resource Management

is “the design of formal
systems in an organization to
ensure the effective and
efficient use of human
resource to accomplish
organizational goals” Mathis &
Jackson, 2012.
 Efficiency & Effectiveness

• Doing the job efficiently means “doing things right” so

that the organization’s resources—its people, money,
and equipment—are used to their maximum.

• Getting things done effectively means “doing the right

things,” that is, tasks that help an organization reach
its goals.
 How Effectiveness & Efficiency Relate to Productivity?

Productivity is doing the right things (effectiveness) in the right

way (efficiency).

• Once you ensure employees are being effective and efficient,

you will see a rise in productivity.

• You should start measuring this productivity on a daily, weekly

and monthly basis. You can use metrics such as number of
units produced, sales or customer-satisfaction surveys.
The Nature of Human Resource Management

Human resources include all the

experience, skills, judgments, abilities,
knowledge, contacts, risk taking, and
wisdom of the individuals associated
with the organization.
The Nature of Human Resource Management (con)

All managers in organizations get things

done through the efforts of others.
Consequently, managers at every level
must concern themselves with Human
Resource Management, or HRM.
 Goals of HR Management
The top concerns of HR managers are:

1) Productivity

One of the top goals of HRM is to maximize the productivity of the organization
by optimizing the effectiveness of its employees while simultaneously
improving the work life of employees and treating employees as valuable
resources.

2) Quality and Services

Because human resources are the ones producing the products or services
offered by an organization, management has the task of ensuring that its HR
practices enhance the ability of its workforce to provide top-quality goods
and services.
 HRM Functions
The five functional areas
associated with effective
HRM are: (I) staffing, (II)
human resource
development, (III)
compensation, (IV) safety
and health, and (V)
employee and labor
relations.
 I- Staffing
• Staffing is the process through which an
organization ensures that it always has (1)
the right number of employees, (2) with the
appropriate skills, (3) in the right jobs (4) at
the right time, to achieve organizational
objectives.
• The staffing process involves (A) job
analysis, (B) human resource planning, (C)
recruitment, and selection.
 A. Job Analysis

• Job analysis is the systematic process of

determining skills, duties, and knowledge
required for performing jobs in organization

• Job analysis impacts virtually every aspect of

HRM, including planning, recruitment, and

selection.
 B. Human Resource Planning

• Human resource planning is the systematic

process of matching internal and external supply
of people with anticipated job openings over
specified period of time

• The data collected as part of the human resource

planning enables the recruitment process and
other HR actions.
 C. Recruitment and Selection

• Recruitment: is the process of attracting

a sufficient number of qualified people to

apply for jobs with an organization.

• Selection: is the process of choosing individual best

suited for a particular position and for the organization in
general.
 II- Human Resource Development

Human resource development is a major HRM

function consisting of :

A) Training and Development

B) Career planning and development

C) Organizational development

D) Performance management

E) Performance appraisal
 A. Training and Development
Training is designed to provide employees with the
knowledge and skills they need to be effective in
their present roles.

Development involves long-term

learning and professional growth
that goes beyond the employees’
current jobs.
 B. Career Planning and Development

Career planning is an ongoing

process whereby individuals set
career goals and identify ways to
achieve them.

Career development is a formal approach used by

the organization to ensure that people with the
proper qualifications and experiences are available
for promotion or reassignment when needed.
 C. Organizational Development

Organizational Development (OD) is a deliberately planned,

organization-wide effort to increase an organization's
effectiveness and/or efficiency and/or to enable the
organization to achieve its strategic goals. It is a learning and
development strategy intended to change the basics of beliefs,
attitudes and relevance of values, and structure of the current
organization to better absorb disruptive technologies, shrinking
or exploding market opportunities and resulting challenges and
chaos.
 D. Performance Management
Performance management is a goal-oriented process
that is directed toward ensuring that organizational
processes are in place to maximize the productivity of
employees, teams, and ultimately, the organization.

•Applies to employees, teams, and ultimately, the

organization
 E. Performance Appraisal

Performance appraisal is a formal system of review and

evaluation of individual performance. Sometimes it also
includes team performance. It affords employees the
opportunity to receive feedback on their strengths and areas for
development. Performance appraisal helps employees stay on
track, which often leads to greater

satisfaction and productivity.

 III- Compensation

• All rewards that

individuals receive as a
result of their employment.

• Compensation consists
of (A) direct financial
compensation, indirect
financial compensation,
and (B) nonfinancial
compensation.
 A. Financial Compensation
Organizations provide two types of financial
compensation to employees:

• Direct compensation is the pay that an employee

receives in the form of wages, salaries,
commissions, or bonuses.

• Indirect compensation is often referred to as

benefits, and includes things such as paid
vacations, sick leave, holidays, and medical
insurance.
 B. Nonfinancial Compensation
Nonfinancial compensation includes the things that an
employee receives or derives from the job or the
organization that do not have cost for the organization.
These could include the satisfaction that an employee
receives from doing the job itself, the psychological well-
being an employee feels from working on a team, or
enjoyment of the physical environment in which the
employee works.
IV- Safety and Health

Safety: Protecting
employees from injuries
caused by work-related
accidents
Health: Employees'
freedom from illness and
their general physical and
mental well-being
 V- Employee & Labor Relations

Internal employee relations are the HRM

activities associated with the movement of
employees within the organization, such as:
– Promotions
– Demotions
– Terminations
– Resignations
 Employee & Labor Relations (con)

• Businesses are required by law to

recognize a union and bargain with it in
good faith if the firm’s employees want the
union to represent them.
• Human resource activity with a union is
often referred to as industrial or labor
relations, which handles the job of
collective bargaining.
Interrelationships of HRM Functions

All HRM functions are highly interrelated and

management must recognize that decisions in
one area affect other areas.

For instance, a firm that emphasizes recruiting top-

quality candidates but neglects to provide
satisfactory compensation is wasting time and
money. If a firm pays below-market wages, the
firm will always be hiring and training new
employees, only to see the best leave for higher
wages.
DYNAMIC HUMAN RESOURCE
MANAGEMENT ENVIRONMENT
 Environment of Human Resource Management

The firm often has little, if any, control over how the external
environment impacts the task of managing its human
resources. External factors include the legal
considerations, labor market, society, political parties,
unions, shareholders, competition, customers,
technology, the economy, and unanticipated events.

Each factor, either separately or in combination with

others, can enable or obstruct the accomplishment of
HRM tasks within the firm.
Environment of Human Resource Management
 Legal Considerations

• A significant external force affecting HRM relates to

federal, state, and local legislation and the court
decisions interpreting this legislation.

• These legal considerations affect virtually the entire

spectrum of human resource policies.
 Labor Market
• Potential employees located within certain geographic
area from which employees are recruited comprise the
labor market.

• The labor market is always changing, and these shifts

inevitably cause changes in the workforce which can
affect the way management must deal with the
workforce.
 Society
• A The public does not accept, without question, the
actions of firms in the business world today.

• To remain acceptable to the general public, a firm

must accomplish its purpose while acting ethically and
responsibly (Corporate social responsibility).
 Unions
• A union is comprised of employees who have joined
together for the purpose of dealing collectively with
their employer.

• In a unionized organization, the union—rather than the

individual employee—acts as a third party to negotiate
work agreements (Wage levels, benefits..) with
management.
 Shareholders

Because shareholders have invested money in the firm,

they may at times challenge decisions made by

management which may be forced to justify the merits

of a particular program in terms of how it will affect

future projects, costs, revenues, profits, and even how

it will benefit society as a whole.

 Competition

• Firms may face intense competition in both their

product or service and labor markets.

• To compete effectively, a firm must also compete for

and retain competent employees.

 Customers

Because sales are crucial to a firm’s survival,

management has the task of ensuring that its

employment practices enhance the ability of its

workforce to provide top-quality goods and services.

This capacity is directly related to the skills and

motivation of the organization’s employees.

 HR Technology

• The development of technology places pressures on

firms to keep alongside with new HR technology.

• Technology has come to the ability of designing more

useful human resource information systems (HRIS).

 HRIS
• A system which seeks to merge the activities associated with
human resource management (HRM) and information
technology (IT) into one common database through the use of
enterprise resource planning (ERP) software.

• The goal of HRIS is to merge the different parts of human

resources, including payroll, labor productivity, and benefit
management into a less capital-intensive system than the
mainframes used to manage activities in the past.

• HRIS are used to obtain and track relevant information for

human resource decisions.
 Economy

• When economy is booming, it is often more

difficult to recruit qualified workers.

• In economic downturn, more applicants are

typically available.
 Unanticipated Events

Unanticipated events are occurrences in the external

environment that cannot be foreseen (e.g.,

earthquakes). These events cause major

modifications in the performance of many human

resource functions in the affected firms.

HR’S CHANGING STRATEGIC ROLE
 HR’s Changing Role: Questions
Today there is no longer a typical HR department. Many organizations
continue to perform the majority of HR functions internally, but not
always by the HR department itself. As internal operations are
examined, questions are raised, such as:

1) Can some HR tasks be performed more efficiently by line managers

or outside vendors?

2) Can some HR tasks be centralized or eliminated?

3) Can technology perform tasks that were previously done by HR

personnel?

One apparent fact is that all functions are being examined for efficiency
and are subject to cost-cutting, including HR.
 Human Resource Manager
• Historically, the HR manager was responsible for each
of the five HR functions.

• Acts in advisory or staff capacity.

• Works with other managers to help them deal with

human resource matters.

• Today, HR departments continue to get smaller

because others outside the HR department are now
performing certain HRM functions.
 HR Outsourcing
• HR outsourcing is the process of hiring external HR
professionals to do the HR work that was previously done
internally. This permits HR to focus on more on operational
and strategic roles.

• The key to HR outsourcing success is to determine which

functions to outsource, the extent to which they should be
outsourced, and which functions to keep in-house.

• HR outsourcing is done in three ways: (1) discrete services, (2)

multi-process services, and (3) business process outsourcing.
 1) Discrete Services

• With discrete services, one element of a

business process or a single set of high-volume
repetitive functions is outsourced to a third party

• Typically transactional HR activities

• Example: Payroll & retirement plan administration

2) Multi-Process Services

• Complete outsourcing
of one or more human
resource processes.
• Example: Procter &
Gamble outsourced
training operations.
 3) Business Process Outsourcing

• Business process outsourcing (BPO) represents the

transfer of the majority of HR services to a third party.

• Example: Kraft Foods Inc. and IBM signed a multi-year

BPO agreement, in which IBM performs workforce
administration, compensation, and performance
reporting for all of Kraft’s 98,000 employees spread
across 72 countries.
 HR Shared Service Centers (SSCs)

A shared service center

takes routine HR activities
dispersed throughout the
organization and
consolidates them in one
place.
 Professional Employer Organization
• A professional employer organization (PEO) is a company
that leases employees to other businesses. When a decision is made to
use a PEO, the company releases its employees, who are then hired by
the PEO. The PEO then manages the administrative needs associated
with employees, pays their salaries, and manages their benefits.

• The PEO typically charges a fee based on the number of leased

employees. Because the PEO is the employees’ legal employer, it has the
right to hire, fire, discipline, and reassign an employee. However, the client
company maintains enough control so it can run the day-to-day operations
of its business.
Line Managers Performing
HR Tasks

• Involved with human resources

by nature of their jobs
• Now performing some duties
typically done by HR
EVOLUTION OF HUMAN RESOURCE
MANAGEMENT
Human Resource Executives,
Generalists, and Specialists
 Traditional Human Resource Function in Large Firms

• Included separate sections.

• Sections are placed under an HR manager.

• Each HR function may have a supervisor and staff.

• HR manager works closely with top management in

formulating policy.
The Evolving HR Organization
• HR outsourcing
• HR shared service
centers
• Professional employer
organization
• Line manager
• HR becoming more
strategic
 A Possible Evolving HR Organization Example

President
and CEO

Vice
Director
Vice President, Vice Vice
of Safety
President, Strategic President, President,
and
Operations Human Finance Marketing
Health
Resources

Training & Compensation Staffing (Line Managers, use of

Development (Shared Service Applicant Tracking Systems)
(Outsourced) Centers)