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Human Resource Management

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Human Resource Management (MGT501)
VU
Lesson 9
FUNCTIONS AND ENVIRONMENT OF HRM
After studying this chapter, students should be able to understand the following concepts:
A. Functions of Human Resource Management Department
B. Environmental Factors influencing HRM operations
Human Resource Functions in Small Businesses
Some aspects of the human resource function may actually be more significant in smaller firms than in
larger ones.
Human Resource Management Functions in Medium-Sized Firms
As firms grow and become more complex, the human resource function becomes more complex, and its
function achieves greater importance. The basic purpose of human resource management remains the same,
but the approach followed in accomplishing its objectives changes.
As a firm grows, a separate staff function may be required to coordinate human resource activities. In a
larger firm, the person chosen to do so will be expected to handle most of the human resource activities.
For a medium-sized firm, there is little specialization.
Traditional Human Resource Functions in a Large Firm
When the firm's human resource function becomes too complex for one person, separate sections are often
created and placed under a human resource manager. These sections will typically perform tasks involving
training and development, compensation and benefits, employment, safety and health, and labor relations.
AN EVOLVING HR ORGANIZATION FOR LARGE FIRMS
The HR organizational structure of large-sized firms changes as firms outsource, use company service
centers, and evolve in other ways to make HR more strategic. Regardless of an organization's design, the
five functional areas must still be accomplished. The organizational mission and corporate culture have a
major impact in determining an appropriate HR organization.
A. Functions of HRM department:
a.  Staffing
An organization must have qualified individuals, in specific jobs at specific places and times, in order to
accomplish its goals. Obtaining such people involves
Huma n R e s ourc e Ma na g e me nt
job analysis, human resource planning, recruitment,
Func tions
and selection. Job analysis is the systematic process of
determining the skills, duties, and knowledge required
Staffing
for performing specific jobs in an organization. Human
resource planning (HRP) is the process of systematically
Employee
Human
reviewing human resource requirements to ensure that
& Labor
Resource
HUMAN RESOURCE
the required numbers of employees, with the required
Relations
Development
MANAGEMENT
skills, are available when needed. Recruitment is the
FUNCTIONS
process of attracting such individuals in sufficient
numbers and encouraging them to apply for jobs with
Compensation
Safety &
the organization. Selection is the process through which
& Benefits
Health
the organization chooses, from a group of applicants,
those individuals best suited both for open positions
and for the company.
b. Human Resource Development
A major HRM function that consists not only of training and development but also individual career
planning and development activities and performance appraisal, an activity that emphasizes T&D needs.
Training is designed to provide learners with the knowledge and skills needed for their present jobs.
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Human Resource Management (MGT501)
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Development involves learning that goes beyond today's job; it has a more long-term focus. Human resource
development (HRD) helps individuals, groups, and the entire organization become more effective. It is
essential because people, technology, jobs, and organizations are always changing.
Career planning is an ongoing process whereby an individual sets career goals and identifies the means to
achieve them. Career development is a formal approach used by the organization to ensure that people with
the proper qualifications and experiences are available when needed. Through performance appraisal,
employees and teams are evaluated to determine how well they are performing their assigned tasks.
c. Compensation and Benefits
The term compensation includes all rewards that individuals receive as a result of their employment. The
reward may be one or a combination of the following:
Pay: The money that a person receives for performing a job.
Benefits: Additional financial rewards other than base pay include paid vacations, sick leave, holidays,
and medical insurance.
Non financial rewards: Non monetary rewards, such as enjoyment of the work performed or a
pleasant working environment.
d. Safety And Health
Safety involves protecting employees from injuries caused by work-related accidents. Health refers to the
employees' freedom from illness and their general physical and mental well-being. These aspects of the job
are important because employees who work in a safe environment and enjoy good health are more likely to
be productive and yield long-term benefits to the organization.
e. Employee And Labor Relations
Since 1983, union membership has fallen approximately 8 percent, to only 13.9 percent of the workforce,
the lowest level since the Great Depression. Subtracting government employees, unions represent only 9.5
percent of the private industry workforce. Even so, a business firm is required by law to recognize a union
and bargain with it in good faith if the firm's employees want the union to represent them. In the past, this
relationship was an accepted way of life for many employers. But most firms today would like to have a
union-free environment.
f.  Human Resource Research
Although human resource research is not listed as a separate function, it pervades all HRM functional areas,
and the researcher's laboratory is the entire work environment.
g. Interrelationships of HRM Functions
All HRM functional areas are highly interrelated. Management must recognize that decisions in one area will
affect other areas. The interrelationships among the five HRM functional areas will become more obvious
as we address each topic throughout the book.
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Human Resource Management (MGT501)
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B. The Dynamic Human Resource Management Environment
Many interrelated factors affect
Key HR Challenges for Today's Managers
human resource management.
Such factors are part of either
Environment
the
firm's
external
Rapid Change
Legislation
environment or its internal
Workforce Diversity
Evolving Work and Family Roles
environment. The firm often
Globalization
Skill Shortages and the Rise
Rise of Internet
of the Service Sector
has little, if any, control over
Organization
how the external environment
Self-Managed Work Teams
Competitive Position: Cost,
affects  management of  its
Small Businesses
Quality, Distinctive Capabilities
human resources. In addition,
Organizational Culture
Decentralization
there
are
certain
Technology
Downsizing
Outsourcing
Organizational Restructuring
interrelationships
that
Individual
complicate the management of
Matching People and Organization
human resources.
Ethical Dilemmas and Social Responsibility
Productivity
Empowerment
Brain Drain
Job Insecurity
Prentice Hall, © 2003
I. External Environmental Factors
External Environmental factors Comprised of those factors that affect a firm's human resources from
outside the organization's boundaries.
a.  The Labor Force
The labor force is a pool of individuals external to the firm from which the organization obtains its workers.
The capability of a firm's employees determines to a large extent how well an organization can perform its
mission.
b. Legal Considerations
Another significant external force affecting human resource management relates to federal, state, and local
legislation and the many court decisions interpreting this legislation. In addition, many presidential executive
orders have had a major impact on human resource management.
c.  Society
Society may also exert pressure on human resource management. If a firm is to remain acceptable to the
general public, it must be capable of accomplishing its purpose in line with societal norms. Social
responsibility is an implied, enforced, or felt obligation of managers, acting in their official capacities, to
serve or protect the interests of groups other than themselves.
d. Unions
Union is a group of employees who have joined together for the purpose of dealing collectively with their
employer. Although unions remain a powerful force, union membership as a percentage of the
nonagricultural workforce slipped from 33 percent in 1955 to 9.5 percent today.
e.  Shareholders
The owners of a corporation are concerned about shareholders. Because shareholders have invested money
in a firm, they may at times challenge programs considered by management to be beneficial to the
organization.
f.  Competition
For a firm to succeed, grow, and prosper, it must be able to maintain a supply of competent employees.
Other organizations are also striving toward that objective.
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g. Customers
Because sales are critical to the firm's survival, management has the task of ensuring that its employment
practices do not antagonize the members of the market it serves.
h. Technology
As technological changes occur, certain skills are no longer required. This necessitates some retraining of
the current workforce. The trend toward a service economy also affects the type and amount of technology
needed.
i.  The Economy
The economy of the nation--on the whole--and of its various segments is a major environmental factor
affecting human resource management. As a generalization, when the economy is booming, it is often more
difficult to recruit qualified workers. On the other hand, when a downturn is experienced, more applicants
are typically available.
THE EXTERNAL ENVIRONMENT: PROACTIVE VERSUS REACTIVE APPROACH
Managers approach changes in the external environment proactively or reactively.
a.  Proactive Response
Proactive responsiveness involves taking action in anticipation of environmental changes.
b. Reactive Response
Reactive response involves simply reacting to environmental changes after they occur. Organizations exhibit
varying degrees of proactive and reactive behavior.
II. The Internal Environment
Factors that affect a firm's human resources from inside its boundaries are termed as internal environmental
factors. The primary internal factors include the firm's mission, policies, corporate culture, management
style of upper managers, employees, the informal organization, other units of the organization, and unions.
a. Mission
the organization's continuing purpose or reason for being. Each management level should operate with a
clear understanding of the firm's mission. In fact, each organizational unit (division, plant, and department)
should clearly understand objectives that coincide with that mission.
b. Policies
A predetermined guide established to provide direction in decision making. As guides, rather than as hard-
and-fast rules, policies are somewhat flexible, requiring interpretation and judgment in their use. They can
exert significant influence on how managers accomplish their jobs.
c. Corporate Culture
The system of shared values, beliefs, and habits within an organization that interacts with the formal
structure to produce behavioral norms.
d. Management Style of Upper Managers
Closely related to corporate culture is the way in which the attitudes and preferences of one's superiors
affect how a job is done. This situation deserves special emphasis here because of the problems that can
result if the managerial style of upper-level managers differs from that of lower-level managers.
e.  Employees
Employees differ in many ways including their capabilities, attitudes, personal goals, and personalities. As a
result, behavior that a manager finds effective with one worker may not be effective with another.
f.  Informal Organization
the informal organization is the set of evolving relationships and patterns of human interaction within an
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organization that are not officially prescribed. Such informal relationships are quite powerful.
g. Other Units of the Organization
Managers must be keenly aware of interrelationships that exist among divisions or departments and should
use such relationships to their best advantage.
h. Labor-Management Agreement
Upper management typically negotiates labor-management agreements, but managers throughout the
organization must implement the terms of the agreements. In most instances, agreements place restrictions
on the manager's actions.
C. MANAGING THE DIVERSE WORKFORCE
Any perceived difference among people: age, functional specialty, profession, sexual orientation, geographic
origin, life style, tenure with the organization, or position.
a.  Single Parents and Working Mothers
The number of nontraditional, single-parent households in the United States is growing. Because more than
half of all marriages today end in divorce, this trend is expected to continue. Often, one or more children
are involved. Of course, there are always widows and widowers who have children as well, and there are
some men and women who choose to raise children outside of wedlock.
b. Women In Business
The number of women in entry and midlevel managerial positions has risen from 34 percent in 1983 to 46
percent in 1998, meaning many more women are in the pipeline to executive spots. Today, there are more
than 9 million women-owned businesses, up from 400,000 in 1972.
c.  Dual-Career Families
The increasing number of dual-career families presents both challenges and opportunities for organizations.
As a result of this trend, some firms have revised their policies against nepotism to allow both partners to
work for the same company. Other firms have developed polices to assist the spouse of an employee who is
transferred. When a firm wishes to transfer an employee to another location, the employee's spouse may be
unwilling to give up a good position or may be unable to find an equivalent position in the new location.
Some companies are offering assistance in finding a position for the spouse of a transferred employee.
d. Workers Of Color
Workers of color often experience stereotypes about their group (Hispanics, African Americans, Asians,
etc.). At times, they encounter misunderstandings and expectations based on ethnic or cultural differences.
e.  Older Workers
The world population is growing older, a trend that is expected to continue through the year 2000. In
addition, the trend toward earlier retirement appears to be reversing itself.
f.  Persons With Disabilities
A handicap, or disability, limits the amount or kind of work a person can do or makes achievement
unusually difficult.
g. Young Persons With Limited Education Or Skills
Each year thousands of young, unskilled workers are hired, especially during peak periods, such as holiday
buying seasons. In general, they have limited education--high school or less. More jobs can be de-skilled,
making it possible for lower-skilled workers to do them.
h. Educational Level Of Employees
Another form of diversity that is now found in the workplace is that of the educational level of employees.
The United States is becoming a bipolar country with regard to education, with a growing number of very
educated people on one side and an alarming increase in the illiteracy rate on the other.
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i.
Corporate Culture
Corporate Culture is the system of shared values, beliefs, and habits within an organization that interacts
with the formal structure to produce behavioral norms. It is the pattern of basic assumptions, values,
norms, and artifacts shared by organizational members.
Key Terms
Corporate Culture The system of shared values, beliefs, and habits within an organization that interacts
with the formal structure to produce behavioral norms
Mission: The organization's continuing purpose or reason for being.
Policies: A predetermined guide established to provide direction in decision-making
The Labor Force: The labor force is a pool of individuals external to the firm from which the organization
obtains its workers
Unions: Union is a group of employees who have joined together for the purpose of dealing collectively
with their employer.
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Table of Contents:
  1. INTRODUCTION TO HRM:Growing Importance of HRM, Road Map of the Course
  2. ESSENTIALS OF MANAGEMENT:Concepts and Essential of Management, Managerís Roles
  3. ORGANIZATION AND COMPONENTS OF ORGANIZATION:Open versus Closed Systems, The Hawthorne Studies
  4. PEOPLE AND THEIR BEHAVIOR:Why to work in organizations?, The Goals of Organizational Behavior
  5. INDIVIDUAL VS. GROUP BEHAVIOR:What Are Roles?, Problem solving Team
  6. PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT:Records and Administration, Competitive Advantage
  7. HRM IN A CHANGING ENVIRONMENT:Productivity, New Trends at Work Place
  8. How organization Cultivate a Diverse Workforce, STEPS TOWARD MANAGEMENT OF DIVERSITY
  9. FUNCTIONS AND ENVIRONMENT OF HRM:Compensation and Benefits, Safety And Health, Interrelationships of HRM Functions
  10. LINE AND STAFF ASPECTS OF HRM:Authority, Line versus Staff Authority, Staff Manager
  11. LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences
  12. HUMAN RESOURCE PLANNING (HRP):Benefits of HR Planning, Forecasting Human Resource Availability
  13. STRATEGIC PLANNING AND HRIS:HRís Strategic Role, Human Resource Information System, Common HRIS Functions
  14. JOB ANALYSIS:Purposes of the job Analysis, Questions Job Analysis Should Answer
  15. JOB ANALYSIS:Methods of Collecting Job Analysis Information, Observation, Source of Data
  16. JOB ANALYSIS (CONTD.):SURPLUS OF EMPLOYEES FORECASTED, Diversity through Recruiting Efforts
  17. SOURCES OF RECRUITMENT:ALTERNATIVES TO RECRUITMENT, Quantity of the Applicants, Quality of the Applicants
  18. SELECTION:Initial Screening, Advantages of Successful Screening
  19. SELECTION TESTS:Characteristics of Properly Designed Selection Tests, Guidelines for Conducting an Interview
  20. SELECTION PROCESSÖ CONTD:Background Investigations, Physical Exam, Selecting Managers
  21. SOCIALIZATION:Compensation and Benefits, Team Membership, Stages in socialization Process, Training and Development Trends
  22. TRAINING AND DEVELOPMENT:Learning, Phases of Training, Why Transfer of Training Fails
  23. MAXIMIZING LEARNING:Following up on Training, Repetition, Feedback, Purposes of T & D
  24. CAREER MANAGEMENT:Individual career planning, Career Planning and Development Methods
  25. PERFORMANCE:Determinants of Job Performance, Why is performance measured?, Performance Management
  26. PERFORMANCE APPRAISAL:What to Evaluate, The Appraisal Interview, PROBLEMS IN PERFORMANCE APPRAISAL
  27. JOB EVALUATION AND PRICING:THE APPRAISAL PERIOD, Ranking method,
  28. COMPENSATION SYSTEM:Pay, Job Pricing, Compensation: An Overview, Compensation Surveys
  29. BENEFITS:Total Compensation, Discretionary Benefits (Voluntary), Workplace Flexibility
  30. ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES:Types of Pay-for-Performance Plans, Empower Employees
  31. MOTIVATION:The Motivation Process, Motivational Theories, Challenges of motivating employees
  32. OCCUPATION, HEALTH & SAFETY:Physical Conditions, Accident Investigation, Smoking in The work place
  33. STRESS MANAGEMENT:Symptoms of Stress, Managing Stress,
  34. COMMUNICATION IN ORGANIZATION:Burnout, Social Support at Work & Home, Communication in organization, Meetings
  35. TRADE UNIONS:Collective Bargaining, The HRM Department in a Nonunion Setting, Phases of Labor Relations
  36. CONFLICT AND NEGOTIATION:Transitions in Conflict Thought, Individual Conflict Management Styles
  37. POWER AND POLITICS:Sources of Power, Advantages and Disadvantages of PowerPower and Politics in Context
  38. EMPLOYEE RIGHTS AND DISCIPLINE:Contractual Rights, Management Rights, Disciplining Employees,
  39. DISCIPLINE (CONT...):Factors to Consider when Disciplining, Disciplinary Guidelines, Employee Separations
  40. LEADERSHIP:The Leaderís Behavior, Situational Theories of Leadership, Becoming a Leader
  41. REVISION (LESSON 12-21):Plans, Job Specification, Human resource planning, Selection Process, Corporate Culture
  42. REVISION (LESSON 22-26):Training, Case Study Method, Training, Performance
  43. REVISION (LESSON 27-35):Classification Method, Compensation, Empowerment, Mediation
  44. INTERNATIONAL DIMENSIONS OF HRM:Global Corporation, Type of staff members, Approaches to Global Staffing
  45. CONCLUSION & REVIEW:Strategies for Gaining Competitive Advantage, High-performance Work System