This document consists out of a summary of the book "Human Resource Management; Functions, Applications and Skill Development" third edition with all of the chapters for the exam included.
HUMAN RESOURCE MANAGEMENT
Functions, Applications, and Skill Development
Summary
Lisa de Vries
University of Groningen
Pre-MSc Marketing
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,Table of Contents
Chapter 1. The new human resource management process..................................................................3
Chapter 2. Strategy-driven human resource management....................................................................8
Chapter 3. The legal environment and diversity management.............................................................14
Chapter 4. Workforce Planning............................................................................................................17
Chapter 5. Recruiting Job Candidates...................................................................................................24
Chapter 6. Selecting new employees....................................................................................................29
Chapter 7. Learning and Development.................................................................................................33
Chapter 8. Performance Management and Appraisal..........................................................................41
Chapter 11. Compensation management.............................................................................................48
Chapter 12. Incentive pay.....................................................................................................................54
Chapter 16. Gloabel issues for human resource managers..................................................................60
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,Chapter 1. The new human resource management
process
Success in our professional and personal lives is about creating relationships. The better you can
work with people, the more successful you will be in your personal and professional lives.
Human resources (HR) are the people within an organization. They’re one of the primary means of
creating a competitive advantage for the organization because management of human resources
affects company performance. If the organization can manage its human resources more successfully
than competitors, it has a much greater chance of being successful (more productive and profitable).
Employee engagement = a combination of job satisfaction, ability, and a willingness to perform for
the organization at a high level and over an extended period of time. A 2009 study showed that
companies with high levels of satisfaction and engagement outperformed those with less engaged
employees in ROI, operating income, growth rate, and long-term company valuation.
Engaged employees = those who understand what they need to do to add value to the organization
and are satisfied enough with the organization and their roles within it to be willing to do whatever is
necessary to see to it that the organization succeeds.
HRM past and present
Around the mid-1970s, HR managers were expected to be only paper pushers who could keep all of
the personnel files straight. Most HR departments provided limited services to the organization –
keeping track of job applicants, maintain employee paperwork, and filing annual performance
evaluations. The HR department was considered to be a cost center (= a division or department
within the organization that brings in no revenue or profit, it only costs money for the organization to
run this function).
We don’t want cost centers in the organization: we want revenue centers (= divisions or
departments that generate monetary returns for the organization). But HRM departments can
generate significant revenue and profit in an indirect fashion.
In today’s organization, you will most likely work in a team, perform lots of quantitative analysis on
business data, and share in decision making and other management tasks.
Productivity center = a revenue center that enhances profitability of the organization through
enhancing the productivity of the people within the organization. Today’s HR managers are no longer
running an organization cost center. Their function is to improve organizational revenues and profit.
They do this by enhancing the productivity of the people within the organization.
Productivity = the amount of output that an organization gets per unit of input, with human input
usually expressed in terms of units of time. Productivity is the end result of two components that
managers work to create and improve within the organization:
1) Effectiveness = a function of getting the job done whenever and however it must be done.
2) Efficiency = a function of how many organizational recourses we used in getting the job done.
HR management deals primarily with improving the efficiency of the people within our organization.
If our people are inefficient over long periods of time, our organization will fail.
Technology’s effect on efficiency
Senior HR managers have learned that one way to improve efficiency of their workers is through use
of technology. Using technology allows us to gather, analyse and manage large amount of data much
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,more quickly. This allows (HR) managers to find commonalities in the data that can help them create
new and more efficient processes.
New HRM challenges
Challenges HR and non-HR executives think will be most significant over the next 10 years:
1) Maintaining high levels of employee engagement
2) Developing next generation organization leaders
3) Maintaining competitive compensation and benefits offerings
4) Managing the loss of key workers and their skill sets
The HR competencies that will be the most critical:
1) Business acumen: ability to understand and apply information to contribute to the organization’s
strategic plan
2) Organizational leadership and navigation: ability to direct and contribute to initiatives and
processes within the organization
3) Critical evaluation: ability to interpret information to make business decisions and
recommendations
4) HR expertise: ability to apply the principles and practices of HRM to contribute to the success of
the business
We have pursued better selection and retention strategies for a number of years and we have
recently become much better at identifying future leaders and managing organizational relationships,
culture, and structure. Where we have still not done as well (in most organizations) is in business
acumen, especially in quantitative areas dealing with metrics and data analytics.
Labor Demographics
Business no longer have a “typical” worker: there’s diversity in terms of gender, ethnicity and religion
abounds within the organization. Aging of the workforce, skills shortages, and many other factors
affect the ability of HR to provide the organization with the right numbers and types of employees.
Companies in developed countries are seeing a reduction in the number and quality of potential
skilled employees, as well as greater gender, ethnic, and age diversity. All of this means that
managers of a 21st century organization will need to be more culturally aware and able to deal with
individuals with significantly different work ethics, cultural norms, and even languages.
Knowledge workers and the pace of change
Knowledge workers = workers who “use their head more than their hands” and who gather and
interpret information to improve a product or process for their organizations.
One of the most critical issues that HR managers face is the fact that technology is outpacing our
ability to use it. Computers get faster and faster, but the human beings who use them don’t. If
people in the organization can figure out ways to take advantage of the technology better and
quicker than our competitors, then we can create sustainable competitive advantage.
Critical dependent variables
Management of people is necessarily different from managing money or other material resources
because people have free will and can do things in any way they see fit. So HR managers and all other
leaders in organizations need to learn how to indirectly control their human resources. The things
that managers must control to compete in today’s business environment, but can’t directly
manipulate because people have free will, are called dependent variables (can only be affected
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, through indirect means). To affect these dependent variables in any meaningful way, they have to
control some other variable: independent variable (can independently directly control it).
Most important and most difficult things that managers deal with:
1) Productivity
2) Employee engagement
3) Turnover: the permanent loss of workers from the organization (voluntary and involuntary)
4) Absenteeism: temporary absence of employees from the workplace
All of these issues deal with people, not computers, building, finances. Managers have no direct
control over these things. They only affect these items through indirect actions. As managers, we
always need to be doing things that will improve productivity and employee engagement and that
will reduce absenteeism and turnover. Everything in HRM revolves around these four critical items.
The importance of strategic HRM
Strategy and strategic planning look at our organization and environment -both today and in the
expected future- and determine what we as an organization want to do to meet the requirements of
that expected future.
Instead of waiting for someone to quit and then going out and finding a replacement, HR managers
are now actively seeking out talent for their organization and, if there is something going wrong,
figuring out how to assist the line management team in fixing the problem. The function of HR has
been redesigned to enhance the other (line) functions of the business.
Strategy and strategic planning deal with the concept of creating sustainable competitive advantage,
a capability that creates value for customers that rivals can’t copy quickly or easily and that allows
the organization to differentiate its products or services from those of competitors. The only place we
can consistently create advantage that our rivals can’t quickly match is through the successful use of
our human resources.
The influence of social media
Some of the common areas where social media is put to use:
- Recruiting and selection. Recruiters scour social media platforms like LinkedIn for talented
individuals whose profile fits a job. Also many candidates use social media to check out the potential
employer and review the company’s social media tools. Selection may be supported by Skype
interviewing.
- The onboarding process. Once the person is selected to join the organization, social media can again
be used to assist in many steps needed to get the person up to speed and capable of contributing to
the company. We can use it to teach organizational culture; create an FAQ area to answer common
questions. The use of social media to inform and enculturate new members of the organization is
really unlimited.
- Training and development. Social media platforms can easily be used to provide training for current
jobs, or developmental information to employees. Formal mentoring and development communities
can help with training and development for the new employee.
- Performance management. Social media platforms give companies the means for continuous
feedback to their employees. They can also provide permanent records of the good, bad, and ugly of
each employee’s work.
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