MGMT341:
Lesson 01: An Overview of Human Resource Management
Introduction: Why Study Human Resource Management?
To succeed in the business world, every organization has to effectively manage its resources, including human resources as well as financial, physical and technological assets. Some would even argue that people are the most important resource because without them, businesses would not exist.
Developing and maintaining positive relationships among employees, colleagues and supervisors is a crucial task for HR managers. Managers at all levels need to participate in HRM activities that create a productive work environment. It doesn’t matter what your major is, what your career objectives are or who you ultimately end up working for— once you graduate, you will need to be able to apply HRM principles in your professional endeavors.
Learning Objectives
- Define human resource management and describe its major functions.
- Describe the major processes of HR development.
- Identify the external environmental factors affecting HRM and the role of the HR manager as a strategic partner.
- Describe types of HR Managers including executives, generalists, and specialists.
Lesson Readings & Activities
By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 1 Course Schedule.
What is HRM?
The following video was produced by the Society for Human Resource Management (SHRM), which is one of the leading professional organizations that promotes and supports Human Resource Managers.
What are the Basic Functions of HRM?
As the video demonstrated, Human Resource Management is an essential part of every organization. Within every business, there are five fundamental HRM functions, which are shown below in Figure 1. These five functions work together as part of an integrated HRM system. Although each function is important as an individual entity, all five of these areas are interrelated. Each builds upon the other and strengthens the organization as a whole. For example, an organization must employ workers before it can develop and reward them. Please click on each of the functions in Figure 1 below to see how it relates to the HRM process.
Staffing
Staffing sets the stage for every organization because without people, businesses would not exist. To have employees, an organization must first recruit potential workers and select from the pool of applicants.
Safety and Health, and Employee and Labor Relations
Treating labor unions and non-unionized workers in a fair and equitable manner is as essential as physical safety and health provisions. How people are treated within an organization will become known in the external environment, influencing the number and type of potential workers who apply for jobs at the organization. This leads us back to the beginning of the overall process.
Human Resource Development
Once employees are hired, it is important to ensure that they are properly trained for the jobs for which they were selected. New training and overall development provides the employees opportunity for growth, which benefits both the person and the organization. Measuring employee and organizational effectiveness keeps businesses informed about progress and helps them develop new goals.
Safety and Health, and Employee and Labor Relations
Treating labor unions and non-unionized workers in a fair and equitable manner is as essential as physical safety and health provisions. How people are treated within an organization will become known in the external environment, influencing the number and type of potential workers who apply for jobs at the organization. This leads us back to the beginning of the overall process.
Compensation
Employees need to be compensated for their performance with financial and nonfinancial rewards.
Now that you have an overview of the functions of HRM, let’s look at each function in greater detail.
Staffing
During the staffing process, organizations need to hire the most qualified individuals to complete their on-going business operations. Anticipating staffing needs can be a difficult balancing act for even the most seasoned HR professionals as they must keep in mind changes that occur due to promotion, re-assignment, relocation, retirement and any other form of job status change, including termination.
The staffing function itself has several elements, outlined in the slides below. Please use the buttons to navigate through information on each of the staffing considerations.
Human Resource Development
Once a person has joined an organization, the human resource development process begins. Click on each function of human resource development below to learn more about it.
Training
Once an employee has been selected for a position, the person needs to be trained to do the job. This may include training in skills, knowledge and even attitudes. An employee who has been properly trained is more likely to be productive, which creates a more positive situation for both the person and the organization.
Development
After the initial job training has been provided, employees can expand their skills through development opportunities. Once again, this involves looking into the future at what knowledge may be necessary for employee growth within the context of the organization. Development activities can include, but are not limited to, job enlargement, job enrichment and job rotation. Empowering employees to make decisions and handle problems are also ways in which HR development can occur. In today’s business world, there are also many opportunities for learning, which include in-person workshops and seminars as well as online “webinars".
Career Planning and Career Development
The ideas of career planning and career development are similar, although career planning is accomplished by an individual while career development is achieved by the organization. In both instances, the goal is to establish the future job needs of each entity. Employees determine the path that they intend to follow, while businesses chart out the future needs of their organizations. The objective of career planning and development is to ensure that the needs of both the employee and the organization are being met over time.
Organizational Development
Organizational development (OD) is parallel to employee career development, but applies to the organization as a whole. The goal of OD is to increase productivity and develop new opportunities for the future.
Performance Management and Performance Appraisal
The last two areas of Human Resource Development build upon Training, Development and Career Planning. It is not enough to have all of the right tools in place and plans made for the future. There must be an objective way to measure whether or not these goals are being met. In this case, we use performance management and performance appraisal. Once again, this is true for both the organization and the individual employee.
These tasks are complementary: Performance Management measures the effectiveness of the organization, while Performance Appraisals assess the efforts of each individual worker. In both instances, a fair and constructive evaluation should be made. This allows personal strengths to be capitalized upon while deficiencies that are identified can be overcome through additional training. Performance management and performance appraisals should be viewed as opportunities for continued growth as the results of each can help to shape performance goals and improve future results.
These activities do not necessarily occur in a progressive manner, although training should really begin as soon as an employee starts a new job. Employee development, career planning, career development and organizational development are interdependent simultaneous processes. Employees respond to and benefit more from an integrated approach in these areas. On the other hand, performance management and performance appraisal should occur at regular intervals (at least annually) and each builds upon the other. Taken as a whole, all of the HR development functions are intended to enhance every employee’s work experience within the organization by creating opportunities for personal growth and improvement.
Compensation
Compensation is the sum total of all rewards received in return for work. While it may seem straightforward at first glance, there is more to the compensation function than simply determining how much money each employee should receive.
While money may be the driving force for why many people work, it is not always the most significant reason, as nonfinancial rewards are also highly important. It is important for HR professionals to understand what people value with regard to compensation so that the employee’s needs are satisfied.
Direct and Indirect Financial Compensation
Employees can easily see how much they are being directly compensated, but often do not understand how significant their indirect compensation is. Many people would be surprised to learn how much they receive in indirect financial compensation through sick days, vacation days, different types of insurance and other benefits.
Nonfinancial Compensation
Employees work for a variety of reasons and motivation can come in different forms, from the need for something to do, to a desire to fulfill a sense of purpose or even because a person enjoys being busy. These rewards have no clear monetary value but they reflect how satisfied or dissatisfied the employee may be from the work, supervisor, physical environment, or the organization itself.
What are some nonfinancial rewards or examples of indirect compensation that you value?
Safety and Health
The fourth HR function deals directly with the welfare of all workers. Employers are required by law to provide a safe and healthy work environment for their employees. This includes legislation enacted by OSHA (the Occupational Safety and Health Act) as well as the "Right To Know" laws. Beyond these and other federal statutes, employers need to be concerned with state laws as well as local codes and ordinances. Employers are responsible for ensuring the safety and well-being of their employees not only because laws dictate this, but more importantly, because it’s the right thing to do. Creating a positive work environment is not only considerate, it is also practical. Studies have shown that safe work environments reduce down time due to injuries and illnesses while also contributing to employee job satisfaction.
Employee and Labor Relations
The final function of HRM is labor and employee relations.
Labor Relations
Whether an organization is unionized or not, the labor movement has had a major impact on the way in which businesses function today. Understanding the basic principles of union operations and labor relations is important to any HR professional.
The theory behind unions is simple, but powerful: collectively a group of employees has more influence than a single employee. In general, the greater the number of people who unite for a common cause, the more likely a business will respond. It is noteworthy that union membership among public sector and service employees is on the rise while it is declining in the rest of the private sector.
Employee Relations
Employee relations involve the decisions that are made in the absence of a union, or with regard to issues not covered by a labor contract. While it may seem as if there is a difference between unionized and non-unionized employees, the truth of the matter is that HR professionals should treat all employees the same, regardless of their affiliation. The ability to interact with individuals should not be affected by the presence or absence of a union contract, as HR professionals will face challenging and rewarding situations in either instance. It is important to follow ‘the golden rule’ and treat employees in the manner you would want to be treated yourself.
Who Performs HR Functions?
Before we move on, watch the brief video below titled "Human Resource Management." This clip does a nice job highlighting some of the key responsibilities of HRM professionals.
Now that you have a better understanding of what HRM entails, it would be logical to ask, “Who performs all these tasks? Who is responsible for these functions?”
Let’s begin by exploring potential members of an HR department. In larger organizations, an HR executive is the person responsible for overseeing all of the HR professionals. The executive supervises those within HR who help to accomplish all of the necessary functions. Two other job classifications include the HR Generalist--who is knowledgeable in a variety of areas within HR, and the HR Specialist—who is usually concerned with only one specific HR function (such as staffing or compensation). In smaller organizations, the HR Generalist may be the only person employed in a human resource capacity. In these instances, line managers may share some of the human resource responsibilities, such as hiring and training, while the HR Generalist oversees all other HR duties.
Variations in HR Departments
The answer to, “Who performs HRM functions?” can vary greatly based on the point of history in which one is living. Traditionally, HRM has been a staff function advising and supporting line managers. It used to have a more prominent role in many large organizations, but there has been a significant shift in recent years. While some organizations still have HR departments within their operations, others outsource these functions to firms that specialize in providing HR support from the outside (such as ADP and Accenture). Typically, some control of HR is maintained by the organization.
For companies that have retained their HR departments, many are smaller than they have been in the past. In these instances, the role of the HR professional has become more strategic. No longer is the focus solely on the management functions discussed in this lesson. HR professionals assume a more active role, participating in and contributing to a wide-range of business decisions.
Outsourcing HRM Functions
Outsourcing of HR functions is now quite common. Two options include Shared Service Centers (SSC) and Professional Employer Organizations (PEO). SSCs are also known as “centers of expertise” as they strive to consolidate routine tasks that are performed in a variety of areas into one location. The more common examples for SSCs include payroll, training and development, and benefits administration.
PEOs are different in that these organizations lease employees to other businesses for the purpose of handling their HR needs. This type of employee leasing arrangement creates a beneficial situation because HR needs are met by professionals without having a dedicated HR department within the organization. SSCs and PEOs have become more common with the recent streamlining of organizations and the downturn in our economy.
The role of the HR professional continues to evolve and will likely continue to develop and respond to the changes in the global business world.
Measuring HRM Performance
Whether a company retains all of its HRM functions, shares these responsibilities with another firm, or outsources them altogether, it is important to measure the effectiveness of HR activities. After all, if you don’t know how you’re measuring up, there is no way to plan for improvement. Common metrics include measurements of the effectiveness of recruitment and selection, employee satisfaction with compensation and employee productivity.
HRM must also be able to justify their role within the organization, often using Return on Investment (ROI) as the main source of measurement. As you will see later in this course, the actual development and use of these HRM metrics will depend upon the needs of each organization and will likely vary over time, but must strive to accurately reflect the results of the task being measured.
HRM Environment
Now that you have basic understanding of the major functions and processes in HRM and who performs them, we will take a look at the HRM environment. This includes the internal environment of the organization itself and the external environment of the industry, society and world in which the organization operates.
The internal environment of an organization is comprised of the organization’s business functions, such as marketing, operations, finance, etc. However, HRM does not operate solely within the context of an organization, but is also influenced by external factors. These factors of the external environment include, but are not limited to, customers, shareholders, society, competition, the labor market, the economy and technology.
Globalization
Gnokii/Wikimedia Commons
Globalization is major factor in the external environment that has become more prominent in recent years. With advancements in travel and technology, the business world is becoming more global in nature than ever before, leading to increasing diversity in the workplace. People in other countries can become employees who work virtually without setting foot in a corporate office. Likewise, companies in other countries can compete with businesses around the world, as physical presence is not necessary for the completion of tasks. Integration of world economies and societies require HR managers to think and act globally.
Ethical HRM
Globalization increases the importance of ethical decision making in all areas. With more people affected by an organization’s decisions, it is vital that all stakeholders are considered.
Ethics is an area that is challenging to teach because it encompasses an individuals’ values and morals, which may vary across the globe. What one person might consider unethical, another may view as acceptable. The right decision is not always clearly evident. An ethical person operates in a manner that is honest, legal, and fair. Ethical professionals are concerned with how their decisions affect the welfare of the people with whom they interact. HR professionals have a responsibility to ensure that all of their business interactions are conducted in an ethical manner at all times.
Human Resource Research
Just as people change, Human Resource Management is a dynamic field. Human Resource Research supports all other HRM functions, helps identify issues and problems, and helps develop solutions. Research is conducted on all five of the HRM functions regularly. The Society for Human Resource Management (SHRM), which was mentioned earlier in this lesson, devotes an entire section of their website to research. SHRM reports the results of its research on its website, its magazine and in other sponsored publications. Many other researchers, from university professors to professional news organizations, also conduct research and report the findings for public use.
Human Resource Management is a dynamic industry and it is vital to regularly review information on the hot topics that are important to both employers and employees. Knowing the current trends helps organizations respond to the environment and plan for the future.
This leads us to the first assignment, Current Event Memo 1. In each of the 5 Current Event Memo assignments throughout the course, you will find and share a current event that is relevant to HRM. You will then read your classmates’ Current Event postings and vote (through a star rating in Angel, with 5 stars being the best) on your favorite one. The Current Event posting that receives the highest average rating will become the Event of the Week, which everyone will read and discuss. Through this process, you will begin to dig into the research and news to see how prevalent HRM is in the world.
You can find more details about how to write and post Current Event 1 in the activities section of this lesson. I look forward to reading them!