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Principles of Human Resource Management Summary VUB
Summary of Principle of Human Resource Management for BA2 Business Economics at the VUB. Well structured summary without inessential information.
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Frédéric Kröger Human Resources Management – SummaryHuman Resources Management – Summary
❖ Introduction and Practicalities (Video 1)
o INTRODUCTION
o Human Resources
▪ Opposed to tangible and intangible resources
▪ What people bring to organisation
▪ One of primary means of creating competing advantage
▪ HR strategy has to be aligned with business strategy
▪ Creating workforce that is capable and motivated
Creating work environment offering opportunities to participate
o HR-PERFORMANCE LINK
▪ Investments in HR lead to better firm performance for 3 reasons
o Resource-based view
➔ People provide source of sustainable competitive advantage
▪ Resources need to work together (“bundles of resources”) to provide a
basis for competitive advantage
• Put company in a superior business position
• Identify things that the company does well relative to competitors
• Fundamental to firm’s strategy (“alignment”)
▪ For resources to establish sustainable competitive advantage conditions are
needed
• Must provide value (“heterogeneity”)
• Must be rare
• Must be inimitable
• Must be non-substitutable
o Contingency theory (“It depends”)
➔ To achieve superior firm performance HR practices need to be vertically
and horizontally aligned
▪ Choice of HR practices is determined by context where they are applied
• Vertical fit ➔ HR practices should be aligned with business strategy
• Horizontal fit ➔ HR practices should be aligned with each other
▪ In this theory, ‘best practices’ doesn’t exist
o AMO framework
➔ HR leads superior firm performance by influencing people’s abilities,
motivation and opportunities to participate
▪ Ability-Motivation-Opportunity
▪ This theory answers the question “Why HR is related to firm performance?”
Talking about the explanation of this relationship (the “Black box”)
• Employees’ skill levels
• Employees’ motivation
• Employees’ opportunities to participate
1
, Frédéric Kröger Human Resources Management – Summary
❖ HR Roles, HRM past, present and future (Video 2)
o WHY WE HATE HR?
o Most Managers would agree that …
▪ “People are the most important asset”
▪ “People make the place”
▪ “In knowledge economy, companies with best talent win”
▪ “HR execs should make most of their employees”
▪ “HR should be joined to business strategy at the hip”
o Possible Explanations
1. HR does not all aspects of business
• Most HR positions are filled with industrial-organisational psychologists
(“I/OP”)
2. HR does not contribute to the bottom line
• HR uses easy-to-measure metrics, such as degree of satisfaction
• Instead HR should develop a metric to understand financial impact HR
activities have on the success of organization
3. HR isn’t working for you
• “one-size-fits-all” approach to managing employees
• “Bad cop” or tool of top management
• But isn’t it unfair to treat all people the same?
• Individuals differ and make unique contributions (➔ talent management)
4. Corner office doesn’t get HR (and vice versa)
• Reputation to be “picnic planner”
• Corporations don’t understand nor empower HR to play strategic role
o HR ROLES (Dave Ulrich’s business partner model)
▪ Model answering questions like
• “What role does HR play in overall success of an organization ?”
• “What key problems and challenges does he face ?”
o Dave Ulrich’s Model
Managing & supporting change process
Creating added value - Preparing people for change
- Translate corporate strategy into (“change readiness”)
specific, supportive HR-activities - Organizational culture
- Aligning HR-processes - Conflict/problem resolution
- HR information systems (e.g. - Action plans, monitoring
scorecards, dashboards) progress, and making change last
Working relationships
- Unions
- Job analysis - Employee involvement &
- Recruitment & Selection participation
- Training & Development - Communication & trust
- Career Management - Monitoring work stress and job
- Compensation Systems satisfaction (“work engagement”)
- Psychological contract
o HR Roles in context
▪ HR professionals are operating within a certain organizational and national
context
▪ Context can alter the importance or relevance of various HR roles
E.g. Role of employee champion may be more pronounced when there is a
strong presence of trade unions
2
,Frédéric Kröger Human Resources Management – Summary
o HISTORY OF HRM
o Early Beginnings
▪ HRM probably earliest evolved management function
▪ Managing of HR has occurred since first organization of people (tribes)
• Tribes formed (particularly when they evolved from hunting to farming) a
division of labor which recognition of differing productivity of individuals
▪ Division of Labor ➔ Different persons have different roles in productive
society
▪ With division of labor, issues of managing human ressources emerged
o Pre-Industrial society (before 1750)
▪ Rural areas → Agrarian society
• Most people lived as farmes. Hours were flexible, depending on what
work was needed to collet crops, …
▪ Urban areas
• Most workers self-employed or worked in small businesses. Work was
skill-based
• Guilds and craftsmen carried out the tasks that are now part of personnel
management
▪ Association of craftsmen → mutual aid and protection, and furtherance of
professional interests
▪ Guild regulations → determined who could work at a trade, which skills
are needed, and when to work
o Industrial Revolution (late 18th)
▪ Shift from agricultural to industrial/manufacturing society
▪ Technology made possible development of machines which raised worker
productivity and promoted growth of large-scale industrial enterprises
▪ But machines replaced human labor, giving rise to ‘factory system’, and
changing traditional employment relationships
▪ 2 Consequences :
1. Rationalization of work
Finding ways to increase work process effectiveness by simplifying it
Another form of labor division
Less skill-based but more task-based
▪ Skilled contractors became tenders of machines and performed highly
specialized routine tasks
▪ Within particular task, division of labor increases skills by repetition
▪ Division of labor does not so much destroy skill as limit it to a particular
field of development
2. New manufacturing system also created need to supervise large numbers of
workers, and management practices were autocratic and paternalistic
▪ No concern for safety and welfare
o Personnel management (1880 – 1930)
• Four developments have led to emergence of personnel management
▪ Industrial Welfare
• Because management was autocratic there was a labor problem
▪ Strikes, go-slow practices, personnel turnover, child labor, …
• Some firms began to delegate handling of certain parts of labor function
▪ Welfare office to oversee lunchrooms, wash-up facilities, …
▪ Joint manager-worker safety committees
▪ Hiring offices
▪ Training programs and factory schools
3
, Frédéric Kröger Human Resources Management – Summary
▪ Scientific Management
• How to organise work as efficiently as possible?
• Engineers, sociologists, psychologists focused on strategies and developed
news approaches to managing workers
▪ Method → Studying the job scientifically, breaking it down into
components and determining the best way to perform the job
• Taylor’s 4 principles
1. Look at each job scientifically (not ‘trust your guts’)
2. Scientifically select, train, and develop each worker
3. Supervise workers
4. Clear hierarchy between managers and workers
▪ He also recommended to pay workers according to output
• But
▪ This approached diminished worker autonomy
▪ At same time Max Weber suggested to organize work with rules and
systems (Bureaucracy)
Resulting autocratic management systems led to greater levels of conflict
▪ Personnel departments grew and focused on job analysis as basis of
employee selection, training, performance appraisal, compensation
▪ Human Relations
• Human Relations movement was propelled by the Hawthorne studies
▪ In 1930s, “employment managers” began to argue that conflict was not
inherent in labor relations but caused by poor management and work
systems
→ Researchers conducted series of experiments at Hawthorne plant of
WEC to examine effects of different work systems on worker productivity
→ Formed basis of Human Relations Movement
• Illumination experiments
▪ Investigating relationship btw light intensity and employee productivity
▪ Basic Idea → As lighting was increased, productivity would increase too
▪ Observation → No significant differences were observed
▪ Conclusion → Other factors must play role
• Relay-assembly tests (Mayo & Roethlisberger)
▪ Evaluate effect rest periods and hours of work would have on efficiency
▪ Observation → Output did rise in response to shorter hours and the
introduction of rest breaks
→ But output continued to rise regardless of any changes the researchers
made to the experiment
→ Output remained high when researchers decreed a return to baseline
working conditions
▪ Conclusion → Nobody understood
• Bank-wiring tests
▪ Study social relationships and social structures within group of bank wirers
▪ Observation → Workers combined to slow down production
→ The most admired worker among the group was the one who
demonstrated greatest resentment of authority by slowing down prod.
▪ Conclusion → Nobody understood
• Conclusion :
▪ Hawthorne studies challenged prior Tayloristic assumptions about human
behavior
1. Workers are not only motivated by pay and good physical
working conditions. Social and psychological needs must also be
satisfied in order to increase prod. and job satisfaction
2. Informal relations among workers influence their behaviors and
performance more than formal relations in the organization
3. Employees perform better if allowed to participate in decision-
making affecting their interests
4. Employees work more efficiently when they believe that
management is interested in their welfare, when given
attention, when treated with respect and dignity
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