Human Resource Management (Encyclopedia of Business and Finance)
Humans are an organization's greatest assets; without them, everyday business functions such as managing cash flow, making business transactions, communicating through all forms of media, and dealing with customers could not be completed. Humans and the potential they possess drive an organization. Today's organizations are continuously changing. Organizational change impacts not only the business but also its employees. In order to maximize organizational effectiveness, human potentialndividuals' capabilities, time, and talentsust be managed. Human resource management works to ensure that employees are able to meet the organization's goals.
"Human resource management is responsible for how people are treated in organizations. It is responsible for bringing people into the organization, helping them perform their work, compensating them for their labors, and solving problems that arise" (Cherrington, 1995, p. 5). There are seven management functions of a human resources (HR) department that will be specifically addressed: staffing, performance appraisals, compensation and benefits, training and development, employee and labor relations, safety and health, and human resource research.
Generally, in small organizationshose with fewer than a hundred employeeshere may not be an HR department, and so a line manager will be responsible for the functions of HRM. In large organizationshose with a hundred employees or more human resource manager will coordinate the HRM duties and report directly to the chief executive officer (CEO). HRM staff in larger organizations may include human resource generalists and human resource specialists. As the name implies, an HR generalist is routinely involved with all seven HRM functions, while the HR specialist focuses attention on only one of the seven responsibilities.
Prior to discussing the seven functions, it is necessary to understand the job analysis. An essential component of any HR unit, no matter the size, is the job analysis, which is completed to determine activities, skills, and knowledge required of an employee for a specific job. Job analyses are "performed on three occasions: (1) when the organization is first started, (2) when a new job is created, and (3) when a job is changed as a result of new methods, new procedures, or new technology" (Cherrington, 1995).
Jobs can be analyzed through the use of questionnaires, observations, interviews, employee recordings, or a combination of any of these methods. Two important tools used in defining the job are (1) a job description, which identifies the job, provides a listing of responsibilities and duties unique to the job, gives performance standards, and specifies necessary machines and equipment; and (2) the job specification, which states the minimum amount of education and experience needed for performing the job (Mondy and Noe, 1996).
Both the job description and the job specification are useful tools for the staffing process, the first of the seven HR functions to be discussed. Someone (e.g., a department manager) or some event (e.g., an employee's leaving) within the organization usually determines a need to hire a new employee. In large organizations, an employee requisition must be submitted to the HR department that specifies the job title, the department, and the date the employee is needed. From there, the job description can be referenced for specific job related qualifications to provide more detail when advertising the positionither internally, externally, or both (Mondy and Noe, 1996).
Not only must the HR department attract qualified applicants through job postings or other forms of advertising, but it also assists in screening candidates' resumes and bringing those with the proper qualifications in for an interview. The final say in selecting the candidate will probably be the line manager's, assuming all Equal Employment Opportunity Commission (EEOC) requirements are met. Other ongoing staffing responsibilities involve planning for new or changing positions and reviewing current job analyses and job descriptions to make sure they accurately reflect the current position.
Once a talented individual is brought into an organization, another function of HRM comes into playreating an environment that will motivate and reward exemplary performance. One way to assess performance is through a formal review on a periodic basis, generally annually, known as a performance appraisal or performance evaluation. Because line managers are in daily contact with the employees and can best measure performance, they are usually the ones who conduct the appraisals. Other evaluators of the employee's performance can include subordinates, peers, group, and self, or a combination of one or more (Mondy and Noe, 1996).
Just as there can be different performance evaluators, depending on the job, several appraisal systems can be used. Some of the popular appraisal methods include (1) ranking of all employees in a group; (2) using rating scales to define above-average, average, and below-average performance; (3) recording favorable and unfavorable performance, known as critical incidents; and (4) managing by objectives, or MBO (Mondy and Noe, 1996).
Cherrington (1995) illustrates how performance appraisals serve several purposes, including:(1) guiding human resource actions such as hiring, firing, and promoting; (2) rewarding employees through bonuses, promotions, and so on;(3) providing feedback and noting areas of improvement; (4) identifying training and development needs in order to improve the individual's performance on the job; and (5) providing job related data useful in human resource planning.
COMPENSATION AND BENEFITS
Compensation (payment in the form of hourly wages or annual salaries) and benefits (insurance, pensions, vacation, modified workweek, sick days, stock options, etc.) can be a catch-22 because an employee's performance can be influenced by compensation and benefits, and vice versa. In the ideal situation, employees feel they are paid what they are worth, are rewarded with sufficient benefits, and receive some intrinsic satisfaction (good work environment, interesting work, etc.). Compensation should be legal and ethical, adequate, motivating, fair and equitable, cost-effective, and able to provide employment security (Cherrington, 1995).
TRAINING AND DEVELOPMENT
Performance appraisals not only assist in determining compensation and benefits, but they are also instrumental in identifying ways to help individuals improve their current positions and prepare for future opportunities. As the structure of organizations continues to changehrough downsizing or expansionhe need for training and development programs continues to grow. Improving or obtaining new skills is part of another area of HRM, known as training and development.
"Training focuses on learning the skills, knowledge, and attitudes required to initially perform a job or task or to improve upon the performance of a current job or task, while development activities are not job related, but concentrate on broadening the employee's horizons" (Nadler and Wiggs, 1986, p. 5). Education, which focuses on learning new skills, knowledge, and attitudes to be used in future work, also deserves mention (Nadler and Wiggs, 1986).
Because the focus is on the current job, only training and development will be discussed. Training can be used in a variety of ways, including (1) orienting and informing employees, (2) developing desired skills, (3) preventing accidents through safety training, (4) supplying professional and technical education, and (5) providing supervisory training and executive education (Cherrington, 1995).
Each of the training methods mentioned has benefits to the individual as well as to the organization. Some of the benefits are reducing the learning time for new hires, teaching employees how to use new or updated technology, decreasing the number and cost of accidents because employees know how to operate a machine properly, providing better customer service, improving quality and quantity of productivity, and obtaining management involvement in the training process (Cherrington, 1995). When managers go through the training, they are showing others that they are taking the goals of training seriously and are committed to the importance of human resource development.
The type of training depends on the material to be learned, the length of time learners have, and the financial resources available. One type is instructor-led training, which generally allows participants to see a demonstration and to work with the product first-hand. On-the-job training and apprenticeships let participants acquire new skills as they continue to perform various aspects of the job. Computer-based training (CBT) provides learners at various geographic locations access to material to be learned at convenient times and locations. Simulation exercises give participants a chance to learn outcomes of choices in a nonthreatening environment before applying the concept to real situations.
Training focuses on the current job, while development concentrates on providing activities to help employees expand their current knowledge and to allow for growth. Types of development opportunities include mentoring, career counseling, management and supervisory development, and job training (Cherrington, 1995).
EMPLOYEE AND LABOR RELATIONS
Just as human resource developers make sure employees have proper training, there are groups of employees organized as unions to address and resolve employment-related issues. Unions have been around since the time of the American Revolution (Mondy and Noe, 1996). Those who join unions usually do so for one or both of two reasonsto increase wages and/or to eliminate unfair conditions. Some of the outcomes of union involvement include better medical plans, extended vacation time, and increased wages (Cherrington, 1995).
Today, unions remain a controversial topic. Under the provisions of the Taft-Hartley Act, the closed-shop arrangement states employees (outside the construction industry) are not required to join a union when they are hired. Union-shop arrangements permit employers to hire non-union workers contingent upon their joining the union once they are hired. The Taft-Hartley Act gives employers the right to file unfair labor practice complaints against the union and to express their views concerning unions (Cherrington, 1995).
Not only do HR managers deal with union organizations, but they are also responsible for resolving collective bargaining issuesamely, the contract. The contract defines employment related issues such as compensation and benefits, working conditions, job security, discipline procedures, individuals' rights, management's rights, and contract length. Collective bargaining involves management and the union trying to resolve any issues peacefullyefore the union finds it necessary to strike or picket and/or management decides to institute a lockout (Cherrington, 1995).
SAFETY AND HEALTH
Not only must an organization see to it that employees' rights are not violated, but it must also provide a safe and healthy working environment. Mondy and Noe (1996) define safety as "protecting employees from injuries caused by work-related accidents" and health as keeping "employees free from physical or emotional illness" (p. 432). In order to prevent injury or illness, the Occupational Safety and Health Administration (OSHA) was created in 1970. Through workplace inspections, citations and penalties, and on-site consultations, OSHA seeks to enhance safety and health and to decrease accidents, which lead to decreased productivity and increased operating costs (Cherrington, 1995).
Health problems recognized in the workplace can include the effects of smoking, alcohol and drug/substance abuse, AIDS, stress, and burnout. Through employee assistance programs (EAPs), employees with emotional difficulties are given "the same consideration and assistance" as those employees with physical illnesses (Mondy and Noe, 1996, p. 455).
HUMAN RESOURCE RESEARCH
In addition to recognizing workplace hazards, organizations are responsible for tracking safety- and health-related issues and reporting those statistics to the appropriate sources. The human resources department seems to be the storehouse for maintaining the history of the organizationeverything from studying a department's high turnover or knowing the number of people presently employed, to generating statistics on the percentages of women, minorities, and other demographic characteristics. Data for the research can be gathered from a number of sources, including surveys/questionnaires, observations, interviews, and case studies (Cherrington, 1995). This research better enables organizations to predict cyclical trends and to properly recruit and select employees.
Research is part of all the other six functions of human resource management. With the number of organizations participating in some form of international business, the need for HRM research will only continue to grow. Therefore, it is important for human resource professionals to be up to date on the latest trends in staffing, performance appraisals, compensation and benefits, training and development, employee and labor relations, and safety and health issuesboth in the United States and in the global market.
One professional organization that provides statistics to human resource managers is the Society for Human Resource Management (SHRM), the largest professional organization for human resource management professionals. Much of the research conducted within organizations is sent to SHRM to be used for compiling international statistics.
Cherrington, David J. (1995). The Management of Human Resources. Englewood Cliffs, NJ: Prentice-Hall.
Mondy, R. Wayne, and Noe, Robert M. (1996). Human Resource Management. Upper Saddle River, NJ: Prentice-Hall.
Nadler, Leonard, and Wiggs, Garland D. (1986). Managing Human Resource Development. San Francisco: Jossey-Bass.
Human Resource Management (Encyclopedia of Management)
Human resource management (HRM), also called personnel management, consists of all the activities undertaken by an enterprise to ensure the effective utilization of employees toward the attainment of individual, group, and organizational goals. An organization's HRM function focuses on the people side of management. It consists of practices that help the organization to deal effectively with its people during the various phases of the employment cycle, including pre-hire, staffing, and post-hire. The pre-hire phase involves planning practices. The organization must decide what types of job openings will exist in the upcoming period and determine the necessary qualifications for performing these jobs. During the hire phase, the organization selects its employees. Selection practices include recruiting applicants, assessing their qualifications, and ultimately selecting those who are deemed to be the most qualified.
In the post-hire phase, the organization develops HRM practices for effectively managing people once they have "come through the door." These practices are designed to maximize the performance and satisfaction levels of employees by providing them with the necessary knowledge and skills to perform their jobs and by creating conditions that will energize, direct, and facilitate employees' efforts toward meeting the organization's objectives.
HRM DEVELOPMENT AND IMPLEMENTATION RESPONSIBILITIES
While most firms have a human resources or personnel department that develops and implements HRM practices, responsibility lies with both HR professionals and line managers. The interplay between managers and HR professionals leads to effective HRM practices. For example, consider performance appraisals. The success of a firm's performance appraisal system depends on the ability of both parties to do their jobs correctly. HR professionals develop the system, while managers provide the actual performance evaluations.
The nature of these roles varies from company to company, depending primarily on the size of the organization. This discussion assumes a large company with a sizable HRM department. However, in smaller companies without large HRM departments, line managers must assume an even larger role in effective HRM practices.
HR professionals typically assume the following four areas of responsibility: establishing HRM policies and procedures, developing/choosing HRM methods, monitoring/evaluating HRM practices, and advising/assisting managers on HRM-related matters. HR professionals typically decide (subject to upper-management approval) what procedures to follow when implementing an HRM practice. For example, HR professionals may decide that the selection process should include having all candidates (1) complete an application, (2) take an employment test, and then (3) be interviewed by an HR professional and line manager.
Usually the HR professionals develop or choose specific methods to implement a firm's HRM practices. For instance, in selection the HR professional may construct the application blank, develop a structured interview guide, or choose an employment test. HR professionals also must ensure that the firm's HRM practices are properly implemented. This responsibility involves both evaluating and monitoring. For example, HR professionals may evaluate the usefulness of employment tests, the success of training programs, and the cost effectiveness of HRM outcomes such as selection, turnover, and recruiting. They also may monitor records to ensure that performance appraisals have been properly completed.
HR professionals also consult with management on an array of HRM-related topics. They may assist by providing managers with formal training programs on topics like selection and the law, how to conduct an employment interview, how to appraise employee job performance, or how to effectively discipline employees. HR professionals also provide assistance by giving line managers advice about specific HRM-related concerns, such as how to deal with problem employees.
Line managers direct employees' day-to-day tasks. From an HRM perspective, line managers are mainly responsible for implementing HRM practices and providing HR professionals with necessary input for developing effective practices. Managers carry out many procedures and methods devised by HR professionals. For instance, line managers:
- Interview job applicants
- Provide orientation, coaching, and on-the-job training
- Provide and communicate job performance ratings
- Recommend salary increases
- Carry out disciplinary procedures
- Investigate accidents
- Settle grievance issues
The development of HRM procedures and methods often requires input from line managers. For example, when conducting a job analysis, HR professionals often seek job information from managers and ask managers to review the final written product. Additionally, when HR professionals determine an organization's training needs, managers often suggest what types of training are needed and who, in particular, needs the training.
HISTORICAL MILESTONES IN HRM DEVELOPMENT
Table 1 identifies some of the major milestones in the historical development of HRM. Frederick Taylor, known as the father of scientific management, played a significant role in the development of the personnel function in the early 1900s. In his book, Shop Management, Taylor advocated the "scientific" selection and training of workers. He also pioneered incentive systems that rewarded workers for meeting and/or exceeding performance standards. Although Taylor's focus primarily was on optimizing efficiency in manufacturing environments, his principles laid the ground-work for future HRM development. As Taylor was
|1890-1910||Frederick Taylor develops his ideas on scientific management. Taylor advocates scientific selection of workers based on qualifications and also argues for incentive-based compensation systems to motivate employees.|
|1910-1930||Many companies establish departments devoted to maintaining the welfare of workers. The discipline of industrial psychology begins to develop. Industrial psychology, along with the advent of World War I, leads to advancements in employment testing and selection.|
|1930-1945||The interpretation of the Hawthorne Studies' begins to have an impact on management thought and practice. Greater emphasis is placed on the social and informal aspects of the workplace affecting worker productivity. Increasing the job satisfaction of workers is cited as a means to increase their productivity.|
|1945-1965||In the U.S., a tremendous surge in union membership between 1935 and 1950 leads to a greater emphasis on collective bargaining and labor relations within personnel management. Compensation and benefits administration also increase in importance as unions negotiate paid vacations, paid holidays, and insurance coverage.|
|1965-1985||The Civil Rights movement in the U.S. reaches its apex with passage of the Civil Rights Act of 1964. The personnel function is dramatically affected by Title VII of the CRA, which prohibits discrimination on the basis of race, color, sex, religion, and national origin. In the years following the passage of the CRA, equal employment opportunity and affirmative action become key human resource management responsibilities.|
|1985-present||Three trends dramatically impact HRM. The first is the increasing diversity of the labor force, in terms of age, gender, race, and ethnicity. HRM concerns evolve from EEO and affirmative action to "managing diversity." A second trend is the globalization of business and the accompanying technological revolution. These factors have led to dramatic changes in transportation, communication, and labor markets. The third trend, which is related to the first two, is the focus on HRM as a "strategic" function. HRM concerns and concepts must be integrated into the overall strategic planning of the firm in order to cope with rapid change, intense competition, and pressure for increased efficiency.|
developing his ideas about scientific management, other pioneers were working on applying the principles of psychology to the recruitment, selection, and training of workers. The development of the field of industrial psychology and its application to the workplace came to fruition during World War I, as early vocational and employment-related testing was used to assign military recruits to appropriate functions.
The Hawthorne Studies, which were conducted in the 1920s and 1930s at Western Electric, sparked an increased emphasis on the social and informal aspects of the workplace. Interpretations of the studies emphasized "human relations" and the link between worker satisfaction and productivity. The passage of the Wagner Act in 1935 contributed to a major increase in the number of unionized workers. In the 1940s and 1950s, collective bargaining led to a tremendous increase in benefits offered to workers. The personnel function evolved to cope with labor relations, collective bargaining, and a more complex compensation and benefits environment. The human relations philosophy and labor relations were the dominant concerns of HRM in the 1940s and 1950s.
HRM was revolutionized in the 1960s by passage of Title VII of the Civil Rights Act and other anti-discrimination legislations well as presidential executive orders that required many organizations to undertake affirmative action in order to remedy past discriminatory practices. Equal employment opportunity and affirmative action mandates greatly complicated the HRM function, but also enhanced its importance in modern organizations. As discussed more fully in a later section, these responsibilities continue to comprise a major part of the HRM job. Finally, changes in labor force demographics, technology, and globalization since the 1980s have had a major impact on the HRM function. These factors also are discussed in more detail in a later section.
PRE-HIRING, HIRING, AND POST-HIRING
The major HRM activities in the pre-hire phase are human resource planning and job analysis. These activities form the cornerstone upon which other HRM practices are built. Human resource planning helps managers to anticipate and meet changing needs related to the acquisition, deployment, and utilization of employees. The organization first maps out an overall plan called a strategic plan. Then, through demand and supply forecasting it estimates the number and types of employees needed to successfully carry out its overall plan. Such information enables a firm to plan its recruitment, selection, and training strategies. For example, assume that a firm's HR plan estimates that 15 additional engineers will be needed during the next year. The firm typically hires recent engineering graduates to fill such positions. Because these majors are in high demand, the firm decides to begin its campus recruiting early in the academic year, before other companies can "snatch away" the best candidates.
Job analysis is the systematic process used for gathering, analyzing, and documenting information about particular jobs. The analysis specifies what each worker does, the work conditions, and the worker qualifications necessary to perform the job successfully. The job analysis information is used to plan and coordinate nearly all HRM practices, including:
- Determining job qualifications for recruitment purposes
- Choosing the most appropriate selection techniques
- Developing training programs
- Developing performance appraisal rating forms
- Helping to determine pay rates
- Setting performance standards for productivity improvement programs
For example, an organization may decide to use a mechanical aptitude test to screen applicants because a job analysis indicated that mechanical aptitude is an important job skill. Or, a firm may raise the pay of one of its employees because a job analysis indicated that the nature of the work recently changed and is now more demanding.
The hiring phase of human resource management is also called staffing. Staffing involves policies and procedures used by organizations to recruit and select employees. Organizations use recruitment to locate and attract job applicants for particular positions. They may recruit candidates internally (i.e., recruit current employees seeking to advance or change jobs) or externally. The aim of recruitment practices is to identify a suitable pool of applicants quickly, cost-efficiently, and legally. Selection involves assessing and choosing among job candidates. To be effective, selection processes must be both legal and technically sound, accurately matching people's skills with available positions.
Training and development are planned learning experiences that teach workers how to effectively perform their current or future jobs. Training focuses on present jobs, while development prepares employees for possible future jobs. Training and development practices are designed to improve organizational performance by enhancing the knowledge and skill levels of employees. A firm must first determine its training needs and then select/develop training programs to meet these needs. It also must also take steps to ensure that workers apply what they have learned on the job.
Through the performance appraisal process, organizations measure the adequacy of their employees' job performances and communicate these evaluations to them. One aim of appraisal systems is to motivate employees to continue appropriate behaviors and correct inappropriate ones. Management also may use performance appraisals as tools for making HRM-related decisions, such as promotions, demotions, discharges, and pay raises.
Compensation entails pay and benefits. Pay refers to the wage or salary employees earn, while benefits are a form of compensation provided to employees in addition to their pay, such as health insurance or employee discounts. The aim of compensation practices is to help the organization establish and maintain a competent and loyal workforce at an affordable cost.
Productivity improvement programs tie job behavior to rewards. Rewards may be financial (e.g., bonuses and pay raises) or nonfinancial (e.g., improved job satisfaction). Such programs are used to motivate employees to engage in appropriate job behaviors, namely those that help the organization meet its goals.
HRM departments within organizations, just as the organizations themselves, do not exist in a vacuum. Events outside of work environments have far-reaching effects on HRM practices. The following paragraphs describe some of these events and indicate how they influence HRM practices.
As mentioned previously, the enactment of federal, state, and local laws regulating workplace behavior has changed nearly all HRM practices. Consider, for instance, the impact of anti-discrimination laws on firms' hiring practices. Prior to the passage of these laws, many firms hired people based on reasons that were not job-related. Today, such practices could result in charges of discrimination. To protect themselves from such charges, employers must conduct their selection practices to satisfy objective standards established by legislation and fine-tuned by the courts. This means they should carefully determine needed job qualifications and choose selection methods that accurately measure those qualifications.
- Social, economic, and technological events also strongly influence HRM practices. These events include:
- An expanding cultural diversity at the work-place
- The emergence of work and family issues
- The growing use of part-time and temporary employees
- An increased emphasis on quality and team-work
- The occurrence of mergers and takeovers
- The occurrence of downsizing and layoffs
- The rapid advancement of technology
- An emphasis on continuous quality improvement
- A high rate of workforce illiteracy
These events influence HRM practices in numerous ways. For example:
- Some firms are attempting to accommodate the needs of families by offering benefit options like maternity leave, child care, flextime, and job sharing.
- Some firms are attempting to accommodate the needs of older workers through skill upgrading and training designed to facilitate the acceptance of new techniques.
- Some firms are educating their employees in basic reading, writing, and mathematical skills so that they can keep up with rapidly advancing technologies.
Unions often influence a firm's HRM practices. Unionized companies must adhere to written contracts negotiated between each company and its union. Union contracts regulate many HRM practices, such as discipline, promotion, grievance procedures, and overtime allocations. HRM practices in non-unionized companies may be influenced by the threat of unions. For example, some companies have made their HRM practices more equitable (i.e., they treat their employees more fairly) simply to minimize the likelihood that employees would seek union representation.
Legal, social, and political pressures on organizations to ensure the health and safety of their employees have had great impacts on HRM practices. Organizations respond to these pressures by instituting accident prevention programs and programs designed to ensure the health and mental well-being of their employees, such as wellness and employee assistance programs.
Today's global economy also influences some aspects of HRM. Many firms realize that they must enter foreign markets in order to compete as part of a globally interconnected set of business markets. From an HRM perspective, such organizations must foster the development of more globally-oriented managers: individuals who understand foreign languages and cultures, as well as the dynamics of foreign market places. These firms also must deal with issues related to expatriation, such as relocation costs, selection, compensation, and training.
Someone wishing to enter the HRM field may choose one of two routes: generalist or specialist. Entry-level HRM generalist positions are most often found in small or mid-sized organizations that employ few HR professionalsne or two people who must perform all functions. Because of their many responsibilities, HRM generalists have neither time nor resources to conduct in-depth studies or projects. They usually hire outside consultants who specialize in these kinds of services. For example, consultants might help the organization to revamp its compensation system, validate its selection practices, or analyze its training needs.
In larger organizations, each HR professional's area tends to be more focused, zeroing in on particular HRM tasks. Individuals holding these positions are called HRM specialists. Exhibits 1a and 1b describe some traditional and newer HRM specialty areas.
In most professions a direct path leads to entering the field. For instance, someone aspiring to be a lawyer, physician, accountant, or psychologist enrolls in appropriate educational programs and enters the field upon receiving a degree or license. HRM is atypical in this regard; people may enter the profession in a variety of ways. For instance, most of today's HR professionals enter the field through self-directed career changes. Approximately one-third of these individuals entered HRM by transferring from another part of the company; the remainder entered from other fields such as education, social services, accounting, sales, and administrative secretarial positions.
HR professionals entering the field directly out of college (about one-third of all HR professionals) traditionally come from a variety of academic backgrounds, including business, psychology, and liberal arts. More recently, however, HRM new hires have earned degrees in some area of business, such as HRM, management, or general business. For instance, when it hires recent graduates for entry-level HRM positions, Bell Atlantic considers business school graduates with concentrations in business administration, finance and commerce, management, or industrial relations. A survey of HR professionals revealed the following college majors: HRM (17 percent), business administration (23 percent), management (13 percent), psychology (12 percent), and labor/industrial relations (10 percent).
As one might expect, large organizations provide the greatest opportunities for HRM career growth. Most senior-level HR professionals take one of two paths up the corporate ladder. Some begin their careers as specialists and eventually become managers of their specialty units. To advance beyond this level, they must broaden their skills and become HRM generalists. The other path to securing a senior-level HRM position is to begin as an assistant HRM generalist at a small plant or unit within the organization and advance into an HRM managerial role at successively larger plants or units. An HRM career in manufacturing might progress as follows:
- The individual is hired as an HRM assistant at a manufacturing plant.
- Within five or six years, the individual advances to the HRM manager's post at the plant.
- Between six and ten years, the HR professional becomes the HRM manager at a larger plant.
- During the eleven-to-fifteen-year range, the person reaches a senior-level HRM position at the divisional level and has several HRM generalists and/or specialists reporting to him or her.
- Between fifteen and twenty years, the person reaches a senior-level executive position, such as vice president of human resources.
HR professionals primarily are responsible for developing HRM practices that enhance a firm's competitive advantage. HR professionals also have the responsibility to ensure that employees are treated ethically. Almost all HRM decisions have ethical consequences. Despite the abundance of laws designed to ensure fair treatment at the workplace, employees often are treated in an unethical manner. In some instances, employers skirt the law; in others, the letter of the law is followed, but employees are nonetheless treated unfairly by management or by other employees. One survey revealed that the most serious ethical problems involve managerial decisions regarding employment, promotion, pay, and discipline that are based on favoritism, rather than ability or job performance.
HR professionals play three roles in the area of workplace ethics. One role is monitoring: they must observe the actions of organizational members to ensure that all individuals are treated fairly and legally. Second, HR professionals investigate complaints bearing on ethical issues, such as sexual harassment or violations of employees' privacy rights. Third, HR professionals serve as company spokespeople by defending the company's actions when confronted by a regulatory agency or the media.
Furthermore, HR professionals should act ethically themselves. When faced with ethical dilemmas, HR professionals must be willing to take a strong stand, even if it means putting their jobs at risk. If they choose to turn a blind eye, they become part of the problem and thus must assume some of the blame.
HR professionals should be guided by the Society for Human Resource Management Code of Ethics, which dictates that HR professionals should always:
- Maintain the highest standards of professional and personal conduct
- Encourage employers to make fair and equitable treatment of all employees a primary concern
- Maintain loyalty to employers and pursue company objectives in ways consistent with the public interest
- Uphold all laws and regulations relating to employer activities
- Maintain the confidentiality of privileged information
Dessler, Gary. Human Resource Managemen. 10th ed. Englewood Cliffs, NJ: Pearson/Prentice-Hall, 2004.
Kleiman, Lawrence S. Human Resource Management: A Managerial Tool for Competitive Advantage. Cincinnati: South-Western College Publishing, 2000.
Lado, A.A., and M.C. Wilson. "Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective." Academy of Management Review 19, no. 4 (1994): 69927.
Noe, Raymond A., et al. Human Resource Management: Gaining a Competitive Advantage. 5th ed. Boston: McGraw-Hill, 2006.
SHRM Online. Society for Human Resource Management. Available from <<a href="http://www.shrm.org">http://www.shrm.org>.
Human Resource Management (Encyclopedia of Small Business)
Human Resource Management (HRM) is the term used to describe formal systems devised for the management of people within an organization. These human resources responsibilities are generally divided into three major areas of management: staffing, employee compensation, and defining/designing work. Essentially, the purpose of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees. This mandate is unlikely to change in any fundamental way, despite the ever-increasing pace of change in the business world. As Edward L. Gubman observed in the Journal of Business Strategy, "the basic mission of human resources will always be to acquire, develop, and retain talent; align the workforce with the business; and be an excellent contributor to the business. Those three challenges will never change."
Until fairly recently, an organization's human resources department was often consigned to lower rungs of the corporate hierarchy, despite the fact that its mandate is to replenish and nourish the company's work force, which is often citedegitimatelys an organization's greatest resource. But in recent years recognition of the importance of human resources management to a company's overall health has grown dramatically. This recognition of the importance of HRM extends to small businesses, for while they do not generally have the same volume of human resources requirements as do larger organizations, they too face personnel management issues that can have a decisive impact on business health. As Irving Burstiner commented in The Small Business Handbook, "Hiring the right peoplend training them wellan often mean the difference between scratching out the barest of livelihoods and steady business growth Personnel problems do not discriminate between small and big business. You find them in all businesses, regardless of size."
PRINCIPLES OF HUMAN RESOURCE MANAGEMENT
Business consultants note that modern human resource management is guided by several overriding principles. Perhaps the paramount principle is a simple recognition that human resources are the most important assets of an organization; a business cannot be successful without effectively managing this resource. Another important principle, articulated by Michael Armstrong in his book A Handbook of Human Resource Management, is that business success "is most likely to be achieved if the personnel policies and procedures of the enterprise are closely linked with, and make a major contribution to, the achievement of corporate objectives and strategic plans." A third guiding principle, similar in scope, holds that it is HR's responsibility to find, secure, guide, and develop employees whose talents and desires are compatible with the operating needs and future goals of the company. Other HRM factors that shape corporate culturehether by encouraging integration and cooperation across the company, instituting quantitative performance measurements, or taking some other actionre also commonly cited as key components in business success. HRM, summarized Armstrong, "is a strategic approach to the acquisition, motivation, development and management of the organization's human resources. It is devoted to shaping an appropriate corporate culture, and introducing programs which reflect and support the core values of the enterprise and ensure its success."
POSITION AND STRUCTURE OF HUMAN RESOURCE MANAGEMENT
Human resource management department responsibilities can be broadly classified by individual, organizational, and career areas. Individual management entails helping employees identify their strengths and weaknesses; correct their shortcomings; and make their best contribution to the enterprise. These duties are carried out through a variety of activities such as performance reviews, training, and testing. Organizational development, meanwhile, focuses on fostering a successful system that maximizes human (and other) resources as part of larger business strategies. This important duty also includes the creation and maintenance of a change program, which allows the organization to respond to evolving outside and internal influences. The third responsibility, career development, entails matching individuals with the most suitable jobs and career paths within the organization.
Human resource management functions are ideally positioned near the theoretic center of the organization, with access to all areas of the business. Since the HRM department or manager is charged with managing the productivity and development of workers at all levels, human resource personnel should have access tond the support ofey decision makers. In addition, the HRM department should be situated in such a way that it is able to effectively communicate with all areas of the company.
HRM structures vary widely from business to business, shaped by the type, size, and governing philosophies of the organization that they serve. But most organizations organize HRM functions around the clusters of people to be helpedhey conduct recruiting, administrative, and other duties in a central location. Different employee development groups for each department are necessary to train and develop employees in specialized areas, such as sales, engineering, marketing, or executive education. In contrast, some HRM departments are completely independent and are organized purely by function. The same training department, for example, serves all divisions of the organization.
In recent years, however, observers have cited a decided trend toward fundamental reassessments of human resources structures and positions. "A cascade of changing business conditions, changing organizational structures, and changing leadership has been forcing human resource departments to alter their perspectives on their role and function almost over-night," wrote John Johnston in Business Quarterly. "Previously, companies structured themselves on a centralized and compartmentalized basisead office, marketing, manufacturing, shipping, etc. They now seek to decentralize and to integrate their operations, developing cross-functional teams Today, senior management expects HR to move beyond its traditional, compartmentalized 'bunker' approach to a more integrated, decentralized support function." Given this change in expectations, Johnston noted that "an increasingly common trend in human resources is to decentralize the HR function and make it accountable to specific line management. This increases the likelihood that HR is viewed and included as an integral part of the business process, similar to its marketing, finance, and operations counterparts. However, HR will retain a centralized functional relationship in areas where specialized expertise is truly required," such as compensation and recruitment responsibilities.
HUMAN RESOURCE MANAGEMENTEY RESPONSIBILITIES
Human resource management is concerned with the development of both individuals and the organization in which they operate. HRM, then, is engaged not only in securing and developing the talents of individual workers, but also in implementing programs that enhance communication and cooperation between those individual workers in order to nurture organizational development.
The primary responsibilities associated with human resource management include: job analysis and staffing, organization and utilization of work force, measurement and appraisal of work force performance, implementation of reward systems for employees, professional development of workers, and maintenance of work force.
Job analysis consists of determiningften with the help of other company areashe nature and responsibilities of various employment positions. This can encompass determination of the skills and experiences necessary to adequately perform in a position, identification of job and industry trends, and anticipation of future employment levels and skill requirements. "Job analysis is the cornerstone of HRM practice because it provides valid information about jobs that is used to hire and promote people, establish wages, determine training needs, and make other important HRM decisions," stated Thomas S. Bateman and Carl P. Zeithaml in Management: Function and Strategy. Staffing, meanwhile, is the actual process of managing the flow of personnel into, within (through transfers and promotions), and out of an organization. Once the recruiting part of the staffing process has been completed, selection is accomplished through job postings, interviews, reference checks, testing, and other tools.
Organization, utilization, and maintenance of a company's work force is another key function of HRM. This involves designing an organizational framework that makes maximum use of an enterprise's human resources and establishing systems of communication that help the organization operate in a unified manner. Other responsibilities in this area include safety and health and worker-management relations. Human resource maintenance activities related to safety and health usually entail compliance with federal laws that protect employees from hazards in the workplace. These regulations are handed down from several federal agencies, including the Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA), and various state agencies, which implement laws in the realms of worker's compensation, employee protection, and other areas. Maintenance tasks related to worker-management relations primarily entail: working with labor unions; handling grievances related to misconduct, such as theft or sexual harassment; and devising communication systems to foster cooperation and a shared sense of mission among employees.
Performance appraisal is the practice of assessing employee job performance and providing feedback to those employees about both positive and negative aspects of their performance. Performance measurements are very important both for the organization and the individual, for they are the primary data used in determining salary increases, promotions, and, in the case of workers who perform unsatisfactorily, dismissal.
Reward systems are typically managed by HR areas as well. This aspect of human resource management is very important, for it is the mechanism by which organizations provide their workers with rewards for past achievements and incentives for high performance in the future. It is also the mechanism by which organizations address problems within their work force, through institution of disciplinary measures. Aligning the work force with company goals, stated Gubman, "requires offering workers an employment relationship that motivates them to take ownership of the business plan."
Employee development and training is another vital responsibility of HR personnel. HR is responsible for researching an organization's training needs, and for initiating and evaluating employee development programs designed to address those needs. These training programs can range from orientation programs, which are designed to acclimate new hires to the company, to ambitious education programs intended to familiarize workers with a new software system.
"After getting the right talent into the organization," wrote Gubman, "the second traditional challenge to human resources is to align the workforce with the businesso constantly build the capacity of the workforce to execute the business plan." This is done through performance appraisals, training, and other activities. In the realm of performance appraisal, HRM professionals must devise uniform appraisal standards, develop review techniques, train managers to administer the appraisals, and then evaluate and follow up on the effectiveness of performance reviews. They must also tie the appraisal process into compensation and incentive strategies, and work to ensure that federal regulations are observed.
Responsibilities associated with training and development activities, meanwhile, include the determination, design, execution, and analysis of educational programs. The HRM professional should be aware of the fundamentals of learning and motivation, and must carefully design and monitor training and development programs that benefit the overall organization as well as the individual. The importance of this aspect of a business's operation can hardly be over-stated. As Roberts, Seldon, and Roberts indicated in Human Resources Management, "the quality of employees and their development through training and education are major factors in determining long-term profitability of a small business Research hasshown specific benefits that a small business receives from training and developing its workers, including: increased productivity; reduced employee turnover; increased efficiency resulting in financial gains; [and] decreased need for supervision."
Meaningful contributions to business processes are increasingly recognized as within the purview of active human resource management practices. Of course, human resource managers have always contributed to overall business processes in certain respectsy disseminating guidelines for and monitoring employee behavior, for instance, or ensuring that the organization is obeying worker-related regulatory guidelinesut increasing numbers of businesses are incorporating human resource managers into other business processes as well. In the past, human resource managers were cast in a support role in which their thoughts on cost/benefit justifications and other operational aspects of the business were rarely solicited. But as Johnston noted, the changing character of business structures and the marketplace are making it increasingly necessary for business owners and executives to pay greater attention to the human resource aspects of operation: "Tasks that were once neatly slotted into well-defined and narrow job descriptions have given way to broad job descriptions or role definitions. In some cases, completely new work relationships have developed; telecommuting, permanent part-time roles and outsourcing major non-strategic functions are becoming more frequent." All of these changes, which human resource managers are heavily involved in, are important factors in shaping business performance.
THE CHANGING FIELD OF HUMAN RESOURCE MANAGEMENT
In recent years, several business trends have had a significant impact on the broad field of HRM. Chief among them were new technologies. These new technologies, particularly in the areas of electronic communication and information dissemination and retrieval, have dramatically altered the business landscape. Satellite communications, computers and networking systems, fax machines, and other devices have all facilitated change in the ways in which businesses interact with each other and their workers. Telecommuting, for instance, has become a very popular option for many workers, and HRM professionals have had to develop new guidelines for this emerging subset of employees.
Changes in organizational structure have also influenced the changing face of human resource management. Continued erosion in manufacturing industries in the United States and other nations, coupled with the rise in service industries in those countries, have changed the workplace, as has the decline in union representation in many industries (these two trends, in fact, are commonly viewed as interrelated). In addition, organizational philosophies have undergone change. Many companies have scrapped or adjusted their traditional, hierarchical organizations structures in favor of flatter management structures. HRM experts note that this shift in responsibility brought with it a need to reassess job descriptions, appraisal systems, and other elements of personnel management.
A third change factor has been accelerating market globalization. This phenomenon has served to increase competition for both customers and jobs. The latter development enabled some businesses to demand higher performances from their employees while holding the line on compensation. Other factors that have changed the nature of HRM in recent years include new management and operational theories like Total Quality Management (TQM); rapidly changing demographics; and changes in health insurance and federal and state employment legislation.
SMALL BUSINESS AND HUMAN RESOURCE MANAGEMENT
A small business's human resource management needs are not of the same size or complexity of those of a large firm. Nonetheless, even a business that carries only two or three employees faces important personnel management issues. Indeed, the stakes are very high in the world of small business when it comes to employee recruitment and management. No business wants an employee who is lazy or incompetent or dishonest. But a small business with a work force of half a dozen people will be hurt far more badly by such an employee than will a company with a work force that numbers in the hundreds (or thousands). Nonetheless, "most small business employers have no formal training in how to make hiring decisions," noted Jill A. Rossiter in Human Resources: Mastering Your Small Business. "Most have no real sense of the time it takes nor the costs involved. All they know is that they need help in the form of a 'good' sales manager, a 'good' secretary, a 'good' welder, or whatever. And they know they need some-one they can work with, who's willing to put in the time to learn the business and do the job. It sounds simple, but it isn't."
Before hiring a new employee, the small business owner should weigh several considerations. The first step the small business owner should take when pondering an expansion of employee payroll is to honestly assess the status of the organization itself. Are current employees being utilized appropriately? Are current production methods effective? Can the needs of the business be met through an arrangement with an outside contractor or some other means? Are you, as the owner, spending your time appropriately? As Rossiter noted, "any personnel change should be considered an opportunity for rethinking your organizational structure."
Small businesses also need to match the talents of prospective employees with the company's needs. Efforts to manage this can be accomplished in a much more effective fashion if the small business owner devotes energy to defining the job and actively taking part in the recruitment process. But the human resource management task does not end with the creation of a detailed job description and the selection of a suitable employee. Indeed, the hiring process marks the beginning of HRM for the small business owner.
Small business consultants strongly urge even the most modest of business enterprises to implement and document policies regarding human resource issues. "Few small enterprises can afford even a fledgling personnel department during the first few years of business operation," acknowledged Burstiner. "Nevertheless, a large mass of personnel forms and data generally accumulates rather rapidly from the very beginning. To hold problems to a minimum, specific personnel policies should be established as early as possible. These become useful guides in all areas: recruitment and selection, compensation plan and employee benefits, training, promotions and terminations, and the like." Depending on the nature of the business enterprise (and the owner's own comfort zone), the owner can even involve his employees in this endeavor. In any case, a carefully considered employee handbook or personnel manual can be an invaluable tool in ensuring that the small business owner and his or her employees are on the same page. Moreover, a written record can lend a small business some protection in the event that its management or operating procedures are questioned in the legal arena.
Some small business owners also need to consider training and other development needs in managing their enterprise's employees. The need for such educational supplements can range dramatically. A bakery owner, for instance, may not need to devote much of his resources to employee training, but a firm that provides electrical wiring services to commercial clients may need to implement a system of continuing education for its workers in order to remain viable.
Finally, the small business owner needs to establish and maintain a productive working atmosphere for his or her work force. Employees are far more likely to be productive assets to your company if they feel that they are treated fairly. The small business owner who clearly communicates personal expectations and company goals, provides adequate compensation, offers meaningful opportunities for career advancement, anticipates work force training and developmental needs, and provides meaningful feedback to his or her employees is far more likely to be successful than the owner who is neglectful in any of these areas.
Armstrong, Michael. A Handbook of Human Resource Management Practice. Kogan Page Limited, 1999.
Burstiner, Irving. The Small Business Handbook. Prentice Hall, 1988.
Green, Paul C. Building Robust Competencies: Linking Human Resource Systems to Organizational Strategies. Jossey-Bass, 1999.
Gubman, Edward L. "The Gauntlet is Down." Journal of Business Strategy. November-December 1996.
Johnston, John. "Time to Rebuild Human Resources." Business Quarterly. Winter 1996.
Reece, Barry L., and Rhonda Brandt. Effective Human Relations in Organizations. Boston: Houghton Mifflin, 1993.
Roberts, Gary, Gary Seldon, and Carlotta Roberts. Human Resources Management. Washington, D.C.: Small Business Administration, n.a.
Rossiter, Jill A. Human Resources: Mastering Your Small Business. Upstart Publishing, 1996.
Solomon, Charlene Marmer. "Working Smarter: How HR Can Help." Personnel Journal. June 1993.
Ulrich, Dave. Delivering Results: A New Mandate for HR Professionals. Harvard Business School Press, 1998.
Human Resource Management (HRM) (Encyclopedia of Business)
Human resource management (HRM), or human resource development, entails planning, implementing, and managing recruitment, as well as selection, training, career, and organizational development initiatives within an organization. The goal of HRM is to maximize the productivity of an organization by optimizing the effectiveness of its employees while simultaneously improving the work life of employees and treating employees as valuable resources. Consequently, HRM encompasses efforts to promote personal development, employee satisfaction, and compliance with employment-related laws.
To achieve equilibrium between employer and employee goals and needs, HRM departments focus on these three general functions or activities: planning, implementation, and evaluation. The planning function refers to the development of human resource policies and regulations. Human resource managers attempt to determine future HRM activities and plan for the implementation of HRM procedures to help companies realize their goals.
Implementation of HRM plans involves four primary activities: acquisition, development, compensation, and maintenance. Acquisition entails the hiring of workers most likely to help a company attain its goals. The development function encompasses the training of workers to perform their tasks in accordance with company strategy. This activity also involves company efforts to control and change employee behavior via reviews, appraisals, incentives, and discipline. Compensation covers the payment of employees for their services. Maintenance requires structuring labor relationshe interaction between a company's management and its unionized employeesnd ensuring compliance with federal and state employment laws. Finally, the evaluation function includes the assessment of a company's HRM policies to determine whether they are effective.
Key principles and practices associated with HRM date back to the beginning of mankind. Mechanisms were developed for the selection of tribal leaders, for example, and knowledge was recorded and passed on to youth about safety, health, hunting, and gathering. More advanced HRM functions were developed as early as 1000 and 2000 B.C. Employee screening tests have been traced back to 1115 B.C. in China, for instance. And the earliest form of industrial education, the apprentice system, was started in ancient Greek and Babylonian civilizations before gaining prominence during medieval times.
Since the inception of modem management theory, the terminology used to describe the role and function of workers has evolved from "personnel" to "industrial relations" to "employee relations" to "human resources." While all of these terms remain in use, "human resources" most accurately represents the view of workers by contemporary management theory: as valuable resources managed in the same manner as other valuable resources, according to the authors of Human Resource Management.
The need for an organized form of HRM emerged during the industrial revolution, as the manufacturing process evolved from a cottage system to factory production. As the United States shifted from an agricultural economy to an industrial economy, companies were forced to develop and implement effective ways of recruiting and keeping skilled workers. In addition, industrialization helped spur immigration, as the country opened its borders to fill industrial positions. Filling these jobs with immigrants, however, created an even greater need for adequate management of employees.
Between the 1880s and the 1940s, immigration rose significantly and remained robust until World War II. Advertisements circulated throughout the world depicting the United States as the land of opportunity where good-paying industrial jobs were plentiful. As a result, the country had a steady stream of low-skill, low-cost immigrant workers who occupied manufacturing, construction, and machinery operation positions. Even though these employees performed largely routine tasks, managers faced serious obstacles when trying to manage them since they spoke different languages.
Early human resource management techniques included social welfare approaches aimed at helping immigrants adjust to their jobs and to life in the United States. These programs assisted immigrants in learning English and obtaining housing and medical care. In addition, these techniques promoted supervisory training in order to increase productivity.
While some companies paid attention to the "human" side of employment, however, others did not. Therefore, other factors such as hazardous working conditions and pressure from labor unions also increased the importance of effective management of human resources. Along with the manufacturing efficiencies brought about by industrialization came several shortcomings related to working conditions. These problems included: hazardous tasks, long hours, and unhealthy work environments. The direct cause of employers seeking better HRM programs was not poor working conditions, but rather the protests and pressures generated by workers and organized labor unions. Indeed, labor unions, which had existed as early as 1790 in the United States, became much more powerful during the late 1800s and early 1900s.
There were two other particularly important contributing factors to the origination of modem HRM during that period. The first was the industrial welfare movement, which represented a shift in the way that managers viewed employeesrom nonhuman resources to human beings. That movement resulted in the creation of medical care and educational facilities. The second factor was Frederick W. Taylor's (1856-1915)Scientific Management, a landmark book that outlined management methods for attaining greater productivity from low-level production workers.
The first corporate employment department designed to address employee concerns was created by the B.F. Goodrich Company in 1900. In 1902 National Cash Register formed a similar department to handle worker grievances, wage administration, record keeping, and many other functions that would later be relegated to HRM departments at most large
U.S. companies. HRM as a professional discipline was especially bolstered by the passage of the Wagner Act in 1935 (also known as the National Labor Relations Act), which remained the basic U.S. labor law through the 1990s. It augmented the power of labor unions and increased the role and importance of personnel managers.
During the 1930s and 1940s the general focus of HRM changed from a focus on worker efficiency and skills to employee satisfaction. That shift became especially pronounced after World War II, when a shortage of skilled labor forced companies to pay more attention to workers' needs. Employers, influenced by the famous Hawthorne productivity studies and similar research, began to emphasize personal development and improved working conditions as a means of motivating employees.
In the 1960s and 1970s the federal government furthered the HRM movement with a battery of regulations created to enforce fair treatment of workers, such as the Equal Pay Act of 1963, the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974 (ERISA), and the Occupational Safety and Health Act of 1970. Because of these acts, companies began placing greater emphasis on HRM in order to avoid lawsuits for violating this legislation. These regulations created an entirely new legal role for HRM professionals. Furthermore, during the 1970s, HRM gained status as a recognized profession with the advent of human resource programs in colleges.
By the end of the 1970s, virtually all medium-sized and large companies and institutions had some type of HRM program in place to handle recruitment, training, regulatory compliance, dismissal, and other related issues. HRM's importance continued to grow during the 1980s for several reasons. Changing workforce values, for example, required the skills of HRM professionals to adapt organizational structures to a new generation of workers with different attitudes about authority and conformity. Shifting demographics forced changes in the way workers were hired, fired, and managed. Other factors contributing to the importance of HRM during the 1980s and 1990s were increasing education levels, growth of service and white-collar jobs, corporate restructuring (including reductions in middle management), more women in the workforce, slower domestic market growth, greater international competition, and new federal and state regulations.
THE FOCUS OF HRM
Businesses and organizations rely on three major resources: physical resources, such as materials and equipment; financial resources, including cash, credit, and debt; and human resources or workers. In its broadest sense, HRM refers to the management of all decisions within an organization that are related to people. In practice, however, HRM is a tool used to try to make optimum use of human resources, to foster individual development, and to comply with government mandates. Larger organizations typically have an HRM department and its primary objective is making company goals compatible with employee goals insofar as possible. Hence, for a company to attain its goals, it must have employees who will help it attain them.
Towards this end, R. Wayne Pace, writing in Human Resource Development, identifies seven underlying assumptions that provide a foundation and direction for HRM. First is the acknowledgment of individual worth, suggesting that companies recognize and value individual contributions. Second is that employees are resources who can learn new skills and ideas and can be trained to occupy new positions in the organization. Third is that quality of work life is a legitimate concern, and that employees have a right to safe, clean, and pleasant surroundings. A fourth assumption is the need for continuous learning; talents and skills must be continually refined in the long-term interests of the organization.
A fifth assumption supporting the existence of an organized HRM within a company or institution is that opportunities are constantly changing and companies need methods to facilitate continual worker adaptation. Sixth is employee satisfaction, which implies that humans have a right to be satisfied by their work and that employers have a responsibility and profit motivation to try to match a worker's skills with his or her job. The seventh and final assumption is that HRM encompasses a much broader scope than technical trainingmployees need to know more than the requirements of a specific task in order to make their maximum contribution.
THE ROLE, POSITION, AND STRUCTURE OF HRM DEPARTMENTS
In Personnel Management, Paul S. Greenlaw and John P. Kohl describe three distinct, interrelated fields of interest addressed by the HRM discipline: human relations, organization theory, and decision areas. Human relations encompass matters such as individual motivation, leadership, and group relationships. Organization theory refers to job design, managerial control, and work flow through the organization. Decision areas encompass interests related to the acquisition, development, compensation, and maintenance of human resources. Although the method and degree to which those areas of interest are handled vary among different HRM departments, a few general rules characterize the responsibilities, positioning, and structure of most HRM divisions.
HRM department responsibilities, other than related legal and clerical duties, can be classified by individual, organizational, and career areas. Individual management entails helping employees identify their strengths and weaknesses, correct their shortcomings, and then make their best contribution to the enterprise. These duties are carried out through a variety of activities such as performance reviews, training, and testing. Organizational development focuses on fostering a successful system that maximizes human, and other, resources. This important duty also includes the creation and maintenance of a change program, which allows the organization to respond to evolving outside and internal influences. The third responsibility, career development, involves matching individuals with the most suitable jobs and career paths.
The positioning of HRM departments is ideally near the theoretic organizational center, with maximum access to all divisions and management levels. In larger organizations the HRM function might be headed by a vice president, while smaller entities will have a middle-level manager as head of HRM. In any case, because the HRM department is charged with managing the productivity and development of workers at all levels, the top HRM manager ideally has access to, and the support of, key decision makers. In addition, the HRM department should be situated in such a way that it has horizontal access, or is able to communicate effectively with all divisions within the company. Horizontal access allows HRM to integrate, educate, and train the workforce, and to facilitate changes that affect one division and indirectly influence other segments of the company or institution.
The structure of HRM departments differs according to the type and size of the organization that they serve. But many large organizations (including governments, institutions, manufacturing companies, and service firms) organize HRM employee development functions around various clusters of workershey conduct recruiting, administrative, and other duties in a central location. Different employee development groups for each department are necessary to train and develop employees in specialized areas, such as sales, engineering, marketing, or executive education. In contrast, some HRM departments are completely independent and are organized purely by function. The same training department, for example, serves all divisions of the organization.
HRM IMPLEMENTATION ACTIVITIES
To fulfill their basic role and achieve their goals, HRM professionals and departments engage in a variety of activities in order to execute their human resource plans. HRM implementation activities fall into four functional groups, each of which includes related legal responsibilities: acquisition, development, compensation, and maintenance.
Acquisition duties consist of human resource planning for employees, which includes activities related to analyzing employment needs, determining the necessary skills for positions, identifying job and industry trends, and forecasting future employment levels and skill requirements. These tasks may be accomplished using such tools and techniques as questionnaires, interviews, statistical analysis, building skill inventories, and designing career path charts. Four specific goals of effective human resource planning are:
- Sustaining stable workforce levels during ups and downs in output, which can reduce unnecessary employment costs and liabilities and increase employee morale that would otherwise suffer in the event of lay-offs.
- Preventing a high turnover rate among younger recruits.
- Reducing problems associated with replacing key decision makers in the event of an unexpected absence.
- Making it possible for financial resource managers to efficiently plan departmental budgets.
The acquisition function also encompasses activities related to recruiting workers, such as designing evaluation tests and interview methods. Ideally, the chief goal is to hire the most-qualified candidates without encroaching on federal regulations or allowing decision makers to be influenced by unrelated stereotypes. HRM departments at some companies may choose to administer honesty or personality tests, or to test potential candidates for drug use. Recruitment responsibilities also include ensuring that the people in the organization are honest and adhere to strict government regulations pertaining to discrimination and privacy. To that end, human resource managers establish and document detailed recruiting and hiring procedures that protect applicants and diminish the risk of lawsuits.
The second major HRM function, human resource development, refers to performance appraisal and training activities. The basic goal of appraisal is to provide feedback to employees concerning their performance. This feedback allows them to evaluate the appropriateness of their behavior in the eyes of their coworkers and managers, correct weaknesses, and improve their contribution. HRM professionals must devise uniform appraisal standards, develop review techniques, train managers to administer the appraisals, and then evaluate and follow up on the effectiveness of performance reviews. They must also tie the appraisal process into compensation and incentive strategies, and work to ensure that federal regulations are observed.
Training and development activities include the determination, design, execution, and analysis of educational programs. Orientation programs, for example, are usually necessary to acclimate new hires to the company. The HRM training and education role may encompass a wide variety of tasks, depending on the type and extent of different programs. In any case, the HRM professional ideally is aware of the fundamentals of learning and motivation, and must carefully design effective training and development programs that benefit the overall organization as well as the individual. Training initiatives may include apprenticeship, internship, job rotation, mentoring, and new skills programs.
Compensation, the third major HRM function, refers to HRM duties related to paying employees and providing incentives for them. HRM professionals are typically charged with developing wage and salary systems that accomplish specific organizational objectives, such as employee retention, quality, satisfaction, and motivation. Ultimately, their aim is to establish wage and salary levels that maximize the company's investment in relation to its goals. This is often successfully accomplished with performance based incentives. In particular, HRM managers must learn how to create compensation equity within the organization that doesn't hamper morale and that provides sufficient financial motivation. Besides financial compensation and fringe benefits, effective HRM managers also design programs that reward employees by meeting their emotional needs, such as recognition for good work.
The fourth principal HRM function, maintenance of human resources, encompasses HRM activities related to employee benefits, safety and health, and worker-management relations. Employee benefits are non-incentive-oriented compensation, such as health insurance and free parking, and are often used to transfer nontaxed compensation to employees. The three major categories of benefits managed by HRM managers are: employee services, such as purchasing plans, recreational activities, and legal services; vacations, holidays, and other allowed absences; and insurance, retirement, and health benefits. To successfully administer a benefits program, HRM professionals need to understand tax incentives, retirement investment plans, and purchasing power derived from a large base of employees.
Human resource maintenance activities related to safety and health usually entail compliance with federal laws that protect employees from hazards in the workplace. Regulations emanate from the federal Occupational Safety and Health Administration, for instance, and from state workers' compensation and federal Environmental Protection Agency laws. HRM managers must work to minimize the company's exposure to risk by implementing preventive safety and training programs. They are also typically charged with designing detailed procedures to document and handle injuries.
Maintenance tasks related to worker-management relations primarily entail: working with labor unions, handling grievances related to misconduct such as theft or sexual harassment, and devising systems to foster cooperation. Activities in this arena include contract negotiation, developing policies to accept and handle worker grievances, and administering programs to enhance communication and cooperation.
EVALUATION OF HRM METHODS
One of the most critical aspects of HRM is evaluating HRM methods and measuring their results. Even the most carefully planned and executed HRM programs are meaningless without some way to judge their effectiveness and confirm their credibility. The evaluation of HRM methods and programs should include both internal and external assessments. Internal evaluations focus on the costs versus the benefits of HRM methods, whereas external evaluations focus on the overall benefits of HRM methods in achieving company goals. Larger human resource departments often use detailed, advanced data gathering and statistical analysis techniques to test the success of their initiatives. The results can then be used to adjust HRM programs or even to make organizational changes.
The authors of Human Resources Management posit four factors, the "four Cs," that should be used to determine whether or not an HRM department or individual program is succeeding: commitment, competence, cost-effectiveness, and congruence. In testing commitment, the HRM manager asks to what extent do policies enhance the commitment of people to the organization? Commitment is necessary to cultivate loyalty, improve performance, and optimize cooperation among individuals and groups.
Competence refers to the extent to which HRM policies attract, keep, and develop employees: Do HRM policies result in the right skills needed by the organization being available at the proper time and in the necessary quantity? Likewise, cost-effectiveness, the third factor, measures the fiscal proficiency of given policies in terms of wages, benefits, absenteeism, turnover, and labor/management disputes. Finally, analysis of congruence helps to determine how HRM policies create and maintain cooperation between different groups within and outside the organization, including different departments, employees and their families, and managers and subordinates.
In addition to advanced data gathering and analysis techniques, several simple observations can be made that provide insight into the general effectiveness of a company's human resources. For example, the ratio of managerial costs to worker costs indicates the efficiency of an organization's labor force. In general, lower managerial costs indicate a more empowered and effective workforce. Revenues and costs per employee, when compared to related industry norms, can provide insight into HRM effectiveness.
Furthermore, the average speed at which job vacancies are filled is an indicator of whether or not the organization has acquired the necessary talents and competencies. Other measures of HRM success include employee complaint and customer satisfaction statistics, health insurance and workers' compensation claims, and independent quality ratings. In addition, the number of significant innovations made each year, such as manufacturing or product breakthroughs, suggest HRM's success at fostering an environment that rewards new ideas and is amenable to change.
Besides evaluating these internal aspects of HRM programs, companies also must assess the effectiveness of HRM programs by their impact on overall business success. In other words, companies must link their evaluation of HRM methods with company performance to determine whether these methods are helping their business by increasing quality, reducing costs, expanding market share, and so forth. Ultimately, companies must make sure that they have the right amount of properly skilled employees performing tasks necessary for the attainment of company goals and that greater revenues and profits result from HRM efforts to increase the workforce and improve worker training and motivation.
The field of HRM is greatly influenced and shaped by state and federal employment legislation, most of which is designed to protect workers from abuse by their employers. Indeed, one of the most important responsibilities of HRM professionals lies in compliance with regulations aimed at HRM departments. The laws and court rulings can be categorized by their affect on the four primary HRM functional areas: acquisition, development, compensation, and maintenance.
The most important piece of HRM legislation, which affects all of the functional areas, is Title VII of the Civil Rights Act of 1964 and subsequent amendments, including the Civil Rights Act of 1991. These acts made illegal the discrimination against employees or potential recruits for reasons of race, color, religion, sex, and national origin. It forces employers to achieve, and often document, fairness related to hiring, training, pay, benefits, and virtually all other activities and responsibilities related to HRM. The 1964 act established the Equal Employment Opportunity Commission (EEOC) to enforce the act, and provides for civil penalties in the event of discrimination. Possible penalties include forcing an organization to implement an affirmative action program to actively recruit and promote minorities that are underrepresented in a company's workforce or management. The net result of the all encompassing civil rights acts is that HRM departments must carefully design and document numerous procedures to ensure compliance, or face potentially significant penalties.
In addition to the civil rights acts, a law affecting acquisition, or resource planning and selection, is the Equal Pay Act of 1963. This act forbids wage or salary discrimination based on sex, and mandates equal pay for equal work with few exceptions. Subsequent court rulings augmented the act by promoting the concept of comparable worth, or equal pay for unequal jobs of equal value or worth. The important Age Discrimination in Employment Act of 1967, which was strengthened by amendments in the early 1990s, essentially protects workers 40 years of age and older from discrimination. The Fair Credit Reporting Act also affects acquisition activities, as employers who turn down applicants for credit reasons must provide the sources of the information that shaped their decision. Similarly, the Buckley Amendment of 1974 requires certain institutions to make records available to individuals and to receive permission before releasing those records to third parties.
The major laws affecting HRM development, or appraisal, training, and development, are the civil rights act, the equal pay act, and the age discrimination in employment act. All of those laws also affected the third HRM activity, rewards, or salary administration and incentive systems. In addition, however, HRM reward programs must comply with a plethora of detailed legislation. The Davis-Bacon Act of 1931, for instance, requires the payment of minimum wages to nonfederal employees. The Walsh Healy Public Contracts Act of 1936 ensures that employees working as contractors for the federal government will be compensated fairly. Importantly, the Fair Labor Standards Act of 1938 mandates employer compliance with restrictions related to minimum wages, overtime provisions, child labor, and workplace safety. Other major laws affecting rewards include: the Tax Reform Acts of 1969, 1976, and 1986; the Economic Recovery Tax Act of 1981; the Revenue Act of 1978; and the Tax Equity and Fiscal Responsibility Act of 1982.
Perhaps the most regulated realm of the HRM field is maintenance (or benefits), safety and health, and employee/management relations. Chief among regulations in this arena is the Occupational Safety and Health Act of 1970, which established the Occupational Safety and Health Administration. That act was designed to force employers to provide safe and healthy work environments and to make organizations liable for workers' safety. The sweeping act has ballooned to include thousands of regulations backed by civil and criminal penalties, including jail time and fines for company executives. Also of import are state workers' compensation laws, which require employers to make provisions to pay for work-related injuries, and forces HRM managers to create and document safety procedures and programs that reduce a company's liability. The Wagner Act of 1935 is the main piece of legislation governing union/management relations, and is a chief source of regulation for HRM departments. Other important laws related to HRM maintenance include: the Norris-Laguardia Act of 1932, the Social Security Act of 1935, the Taft-Hartley Act of 1947, and the Landrum-Griffin Act of 1959.
FORCES CHANGING HRM
In the 1990s several forces were shaping the broad field of HRM. The first key force, new technologiesarticularly information technologyrought about the decentralization of communications and the shake-up of existing paradigms of human interaction and organizational theory. Satellite communications, computers and networking systems, fax machines, and other devices were facilitating rapid change. Moreover, since these technologies helped blur the lines between work time and personal time by enabling employees to work at home, HRM professionals began adopting "management by objective" approaches to human resources instead of the traditional "management by sight" method.
A second important change affecting HRM was new organizational structures that began to emerge during the 1980s and continued through the 1990s. Because many companies began expanding their operations and diversifying their products and services, the central decision-making system failed to respond quickly enough to managers' needs and concerns. Therefore, companies started scrapping traditional, hierarchical organizational structures in favor of flatter, decentralized management systems. Consequently, fewer managers were involved in the decision-making process and companies were adopting more of a team approach to management. HRM professionals, as the agents of change, were charged with reorganizing workers and increasing their efficiency. These efforts also resulted in the proliferation of part-time, or contract, employees, which required human resource strategies that contrasted with those applicable to full time workers.
A third change factor was accelerating market globalization, which was increasing competition and demanding greater performance out of workers, often at diminished levels of compensation. To compete abroad, companies were looking to their HRM professionals to augment initiatives related to quality, productivity, and innovation. Other factors changing HRM include: an accelerating rate of change and turbulence, resulting in higher employee turnover and the need for more responsive, open-minded workers; rapidly changing demographics; and increasing income disparity as the demand for highly educated workers increases at the expense of lower-wage employees.
SEE ALSO: Compensation Administration; Employee Motivation; Hiring Practices
updated by Karl Heil]
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