The History and Role of Human Resource Management :The History and Role of Human Resource Management


The Manager’s Human ResourceManagement Jobs :© 2005 Prentice Hall Inc. All rights reserved. 1–2 The Manager’s Human ResourceManagement Jobs Management process The five basic functions of planning, organizing, staffing, leading, and controlling. Human resource management (HRM) The policies and practices involved in carrying out the “people” or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising.


Personnel Aspects Of A Manager’s Job :© 2005 Prentice Hall Inc. All rights reserved. 1–3 Personnel Aspects Of A Manager’s Job Conducting job analyses (determining the nature of each employee’s job) Planning labor needs and recruiting job candidates Selecting job candidates Orienting and training new employees Managing wages and salaries (compensating employees) Providing incentives and benefits Appraising performance Communicating (interviewing, counseling, disciplining) Training and developing managers Building employee commitment


Personnel Mistakes :© 2005 Prentice Hall Inc. All rights reserved. 1–4 Personnel Mistakes Hire the wrong person for the job Experience high turnover Have your people not doing their best Waste time with useless interviews Have your company in court because of discriminatory actions Have your company cited by OSHA for unsafe practices Have some employees think their salaries are unfair and inequitable relative to others in the organization Allow a lack of training to undermine your department’s effectiveness Commit any unfair labor practices


Basic HR Concepts :© 2005 Prentice Hall Inc. All rights reserved. 1–5 Basic HR Concepts Getting results The bottom line of managing HR creates value by engaging in activities that produce the employee behaviors the company needs to achieve its strategic goals.


Line and Staff Aspects of HRM :© 2005 Prentice Hall Inc. All rights reserved. 1–6 Line and Staff Aspects of HRM Line manager A manager who is authorized to direct the work of subordinates and is responsible for accomplishing the organization’s tasks. Staff manager A manager who assists and advises line managers.


Line Managers’ HRM Responsibilities :© 2005 Prentice Hall Inc. All rights reserved. 1–7 Line Managers’ HRM Responsibilities Placing the right person on the right job Starting new employees in the organization (orientation) Training employees for jobs new to them Improving the job performance of each person Gaining creative cooperation and developing smooth working relationships Interpreting the firm’s policies and procedures Controlling labor costs Developing the abilities of each person Creating and maintaining department morale Protecting employees’ health and physical condition


Functions of the HR Manager :© 2005 Prentice Hall Inc. All rights reserved. 1–8 Functions of the HR Manager A line function The HR manager directs the activities of the people in his or her own department and in related service areas (like the plant cafeteria). A coordinative function HR managers also coordinate personnel activities, a duty often referred to as functional control. Staff (assist and advise) functions Assisting and advising line managers is the heart of the HR manager’s job.


Employee Advocacy :© 2005 Prentice Hall Inc. All rights reserved. 1–9 Employee Advocacy HR must take responsibility for: Clearly defining how management should be treating employees. Making sure employees have the mechanisms required to contest unfair practices. Represent the interests of employees within the framework of its primary obligation to senior management.


Examples of HR Job Duties :© 2005 Prentice Hall Inc. All rights reserved. 1–10 Examples of HR Job Duties Recruiters Search for qualified job applicants. Equal employment opportunity (EEO) coordinators Investigate and resolve EEO grievances, examine organizational practices for potential violations, and compile and submit EEO reports. Job analysts Collect and examine information about jobs to prepare job descriptions.


Examples of HR Job Duties (cont’d) :© 2005 Prentice Hall Inc. All rights reserved. 1–11 Examples of HR Job Duties (cont’d) Compensation managers Develop compensation plans and handle the employee benefits program. Training specialists Plan, organize, and direct training activities. Labor relations specialists Advise management on all aspects of union–management relations.


HR Department Organizational Chart (Large Company) :© 2005 Prentice Hall Inc. All rights reserved. 1–12 HR Department Organizational Chart (Large Company) Figure 1–1 Source: Adapted from BNA Bulletin to Management, June 29, 2000.


Cooperative Line and Staff HR Management :© 2005 Prentice Hall Inc. All rights reserved. 1–13 Cooperative Line and Staff HR Management The line manager’s responsibility is to specify the qualifications employees need to fill specific positions. HR staff then develops sources of qualified applicants and conduct initial screening interviews HR administers the appropriate tests and refers the best applicants to the supervisor (line manager), who interviews and selects the ones he or she wants.


Employment and Recruiting—Who Handles It? (percentage of all employers) :© 2005 Prentice Hall Inc. All rights reserved. 1–14 Employment and Recruiting—Who Handles It? (percentage of all employers) Figure 1–3 Source: HR Department Benchmarks and Analysis,” BNA/Society for Human Resource Management, 2002. Note: length of bars represents prevalence of activity among all surveyed employers.


The Changing Environment Of HR Management :© 2005 Prentice Hall Inc. All rights reserved. 1–15 The Changing Environment Of HR Management HR’s changing role: “ Personnel departments” Took over hiring and firing from supervisors, payroll, and benefit plans administration. In the 1930s added “protecting the firm in its interaction with unions” responsibilities (labor relations). Assumed organizational responsibilities for equal employment and affirmative action.


A Changing HR Environment :© 2005 Prentice Hall Inc. All rights reserved. 1–16 A Changing HR Environment Globalization Technological Advances Exporting Jobs The Nature of Work Workforce Demographics


Basic trend: Use Modern HRM and Metrics to Support Company’s Strategic Goals :© 2005 Prentice Hall Inc. All rights reserved. 1–17 Basic trend: Use Modern HRM and Metrics to Support Company’s Strategic Goals Strategic HRM Metrics High performance Work Systems Technology


1. Institute Strategic Human Resource Management :© 2005 Prentice Hall Inc. All rights reserved. 1–18 1. Institute Strategic Human Resource Management Formulating and executing HR systems—HR policies and activities—that produce the employee competencies and behaviors the company needs to achieve its strategic aims.


How to AlignHR Strategy and Actionswith Business Strategy :© 2005 Prentice Hall Inc. All rights reserved. 1–19 How to AlignHR Strategy and Actionswith Business Strategy


2. HR Metrics :© 2005 Prentice Hall Inc. All rights reserved. 1–20 2. HR Metrics Absence Rate [(Number of days absent in month) ÷ (Average number of employees during mo.) × (number of workdays)] × 100 Cost per Hire (Advertising + Agency Fees + Employee Referrals + Travel cost of applicants and staff + Relocation costs + Recruiter pay and benefits) ÷ Number of Hires Health Care Costs per Employee Total cost of health care ÷ Total Employees HR Expense Factor HR expense ÷ Total operating expense Figure 1–5 Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; www.shrm.org.


HR Metrics (cont’d) :© 2005 Prentice Hall Inc. All rights reserved. 1–21 HR Metrics (cont’d) Human Capital ROI Revenue − (Operating Expense − [Compensation cost + Benefit cost]) ÷ (Compensation cost + Benefit cost) Human Capital Value Added Revenue − (Operating Expense − ([Compensation cost + Benefit Cost]) ÷ Total Number of FTE Revenue Factor Revenue ÷ Total Number of FTE Time to fill Total days elapsed to fill requisitions ÷ Number hired Figure 1–5 (cont’d) Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; www.shrm.org.


HR Metrics (cont’d) :© 2005 Prentice Hall Inc. All rights reserved. 1–22 HR Metrics (cont’d) Training Investment Factor Total training cost ÷ Headcount Turnover Costs Cost to terminate + Cost per hire + Vacancy Cost + Learning curve loss Turnover Rate [Number of separations during month ÷ Average number of employees during month] × 100 Workers’ Compensation Cost per Employee Total WC cost for Year ÷ Average number of employees Figure 1–5 (cont’d) Sources: Robert Grossman, “Measuring Up,” HR Magazine, January 2000, pp. 29–35; Peter V. Le Blanc, Paul Mulvey, and Jude T. Rich, “Improving the Return on Human Capital: New Metrics,” Compensation and Benefits Review, January/February 2000, pp. 13–20;Thomas E. Murphy and Sourushe Zandvakili, “Data and Metrics-Driven Approach to Human Resource Practices: Using Customers, Employees, and Financial Metrics,” Human Resource Management 39, no. 1 (Spring 2000), pp. 93–105; [HR Planning, Commerce Clearing House Incorporated, July 17, 1996;] SHRM/EMA 2000 Cost Per Hire and Staffing Metrics Survey; www.shrm.org.


Measuring HR’s Contribution :© 2005 Prentice Hall Inc. All rights reserved. 1–23 Measuring HR’s Contribution The HR Scorecard Shows the quantitative standards, or “metrics” the firm uses to measure HR activities. Measures the employee behaviors resulting from these activities. Measures the strategically relevant organizational outcomes of those employee behaviors.


Strategic HR Relationships :© 2005 Prentice Hall Inc. All rights reserved. 1–24 Strategic HR Relationships Figure 3–10 HR Activities Emergent Employee Behaviors Strategically Relevant Organizational Outcomes Organizational Performance Achieve Strategic Goals


Creating The HR Scorecard :© 2005 Prentice Hall Inc. All rights reserved. 1–25 Creating The HR Scorecard Must understand the company’s strategy, goals Must understand the causal links between HR activities, employee behaviors, organizational outcomes, and the company’s performance. Must have metrics to measure all the activities and results involved.


3. High-Performance Work Systems :© 2005 Prentice Hall Inc. All rights reserved. 1–26 3. High-Performance Work Systems High-performance work system (HPWS) practices: High-involvement employee practices (such as job enrichment and team-based organizations), High commitment work practices (such as improved employee development, communications, and disciplinary practices) Flexible work assignments. Practices that foster skilled workforces and expanded opportunities to use those skills Expand employee fairness systems


Benefits of a High Performance Work System (HPWS) :© 2005 Prentice Hall Inc. All rights reserved. 1–27 Benefits of a High Performance Work System (HPWS) Generate more job applicants Screen candidates more effectively Provide more and better training Link pay more explicitly to performance Provide a safer work environment Produce more qualified applicants per position More employees are hired based on validated selection tests Provide more hours of training for new employees Higher percentages of employees receiving regular performance appraisals.


4. HR and Technology :© 2005 Prentice Hall Inc. All rights reserved. 1–28 4. HR and Technology Benefits of technological applications for HR Intranet-based employee portals through which employees can self-service HR transactions. The availability of centralized call centers staffed with HR specialists. Increased efficiency of HR operations. The development of data warehouses of HR-related information. The ability to outsource HR activities to specialist service providers.


The Bottom Line :© 2005 Prentice Hall Inc. All rights reserved. 1–29 The Bottom Line


Effects CFOs Believe Human Capital Has on Business Outcomes :© 2005 Prentice Hall Inc. All rights reserved. 1–30 Effects CFOs Believe Human Capital Has on Business Outcomes Figure 1–6 Source: Steven H. Bates, “Business Partners,” HR Magazine, September 2003, p. 49


The New HR Manager :© 2005 Prentice Hall Inc. All rights reserved. 1–31 The New HR Manager New Proficiencies HR proficiencies Business proficiencies Leadership proficiencies Learning proficiencies


HR Professional Certification :© 2005 Prentice Hall Inc. All rights reserved. 1–32 HR Professional Certification HR is becoming more professionalized. Society for Human Resource Management (SHRM) SHRM’s Human Resource Certification Institute (HRCI) SPHR (senior professional in HR) PHR (professional in HR) certificate


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Human Resource Management in China:Challenges and Strategic Trends :Human Resource Management in China:Challenges and Strategic Trends


Overview: Past, Present, Future :© 2005 Prentice Hall Inc. All rights reserved. 1–35 Overview: Past, Present, Future 1949-1994: Government policies made most HR-type decisions unnecessary 1994-2005: New policies meant rapid advance in HRM practices Future: What HRM practices will power China’s companies toward further world-class competitiveness? 4 points: Strategic HR; HPWS; Metrics; and HR Technology


The Past: 1949-1994 :© 2005 Prentice Hall Inc. All rights reserved. 1–36 The Past: 1949-1994 Central planning system: Unified labor allocation system determines who works where and number and nature of employees firms hire Fixed national wage scales decide pay “Iron” rice bowl (lifetime employment) “Iron” position system (manager tenure) “Iron” wage system (managers exercised little or no control over pay) Period of extraordinary employment growth


A Transition Period :© 2005 Prentice Hall Inc. All rights reserved. 1–37 A Transition Period 1978—some government encouragement for firms to hire, fire, institute bonus plans 1984—steps to link performance, wages 1985—some workers eligible for incentive pay 1992—Regulations emphasizing that new market economy required enterprises to make own business decisions


The Present: 1994-2005 :© 2005 Prentice Hall Inc. All rights reserved. 1–38 The Present: 1994-2005 1994-2005 Great progress adapting HR practices to the new global markets and competition, as in Watson-Wyatt 2003 survey: linking pay to performance & strategy, recruitment practices, etc. As firms faced challenges of increased inter-enterprise employee mobility, and of attracting and keeping employees


Still Work to Do: for Example, :© 2005 Prentice Hall Inc. All rights reserved. 1–39 Still Work to Do: for Example, 31% of small firms make no use of HR IT Relatively little outsourcing of HR activities 39% of firms could not measure HR results Professor Xiao: China must formulate policies recognizing value of human resources, and upgrade professional training State Council’s Development Center: Enterprises lag in developing leaders


The Future: Some Assumptions :© 2005 Prentice Hall Inc. All rights reserved. 1–40 The Future: Some Assumptions 1. Continued move to market economy, quality, efficiency, productivity 2. “Collision effect” caused by labor moving to cities 3. Rising labor shortages, as in Guangdong and Fujian now 4. Will lead to more demanding workers, more emphasis on productivity through people, and so to Strategic HR, HPWS, Metrics, HR Technology


China HRM Surveys :© 2005 Prentice Hall Inc. All rights reserved. 1–41 China HRM Surveys Literature review of articles published since 2000 pertaining to HRM activities in China Primarily refereed research studies, and empirical reports


HRM Environment in China Today :© 2005 Prentice Hall Inc. All rights reserved. 1–42 HRM Environment in China Today Straining to produce required management talent (Ministry of Personnel) Labor shortages Migration (2003-2010 ~106m people to cities; 17% 1976, 49% 2010) Rising turnover (8% 2001, 14% 2005)


Summary :© 2005 Prentice Hall Inc. All rights reserved. 1–43 Summary China’s employment system is straining to produce the management talent employers require. Because of governmental and other constraints, labor shortages are not confined to professional and managerial personnel. Rising turnover rates are exacerbating the labor shortages. It is therefore surprisingly difficult to recruit, hire, and retain employees.


Continued :© 2005 Prentice Hall Inc. All rights reserved. 1–44 Continued Recruitment sources in China are similar in some respects to those in the West. However there is a sizeable disparity between China’s need for employee recruitment and related services and the availability of those services. Poaching employees is a serious matter. The employer should verify that the applicant is free to sign a new employment agreement.


Continued :© 2005 Prentice Hall Inc. All rights reserved. 1–45 Continued The dominant employee selection method involves analyzing the applicant’s résumé and then interviewing the person. Employers use psychometric tests sparingly.  Workers are highly career oriented, and gravitate towards employers that can provide the best career advancement training and opportunities.


continued :© 2005 Prentice Hall Inc. All rights reserved. 1–46 continued Training and development is of huge importance to both employees and employers in China, both for skill building and socialization, and as a sign of the firm’s commitment to employees’ careers. Most employers appraise employee performance. Many use modern goal-oriented performance management systems.


Continued :© 2005 Prentice Hall Inc. All rights reserved. 1–47 Continued Pay for performance is very popular in China. Most international firms and, increasingly, even state owned enterprises, use performance-based pay plans. Employers put relatively high percentages of wages into China's version of Social Security, and into pension and housing funds and medical and unemployment insurance payments.


Continued :© 2005 Prentice Hall Inc. All rights reserved. 1–48 Continued Employees in China tend to express low levels of satisfaction with their compensation and benefits. Hewitt found that only 25% of employees were satisfied with their benefits. China’s Labor Law requires employers to provide a comprehensive safety and hygiene system for employees. Employers are improving safety and hygiene conditions.


Continued :© 2005 Prentice Hall Inc. All rights reserved. 1–49 Continued After years of non-adversarial union-management relations, unions in China, while still cooperative, are becoming more aggressive. Instituting employees relations-type philosophies, leader training, and communications and morale programs will mean changing the culture and practices at many firms.


The New HR Manager :© 2005 Prentice Hall Inc. All rights reserved. 1–50 The New HR Manager New Proficiencies HR proficiencies Business proficiencies Leadership proficiencies Learning proficiencies


The New HR Manager (cont’d) :© 2005 Prentice Hall Inc. All rights reserved. 1–51 The New HR Manager (cont’d) The Need to “Know Your Employment Law” Equal employment laws Occupational safety and health laws Labor laws


Effects CFOs Believe Human Capital Has on Business Outcomes :© 2005 Prentice Hall Inc. All rights reserved. 1–52 Effects CFOs Believe Human Capital Has on Business Outcomes Figure 1–6 Source: Steven H. Bates, “Business Partners,” HR Magazine, September 2003, p. 49


HR Professional Certification :© 2005 Prentice Hall Inc. All rights reserved. 1–53 HR Professional Certification HR is becoming more professionalized. Society for Human Resource Management (SHRM) SHRM’s Human Resource Certification Institute (HRCI) SPHR (senior professional in HR) PHR (professional in HR) certificate


HR and Technology :© 2005 Prentice Hall Inc. All rights reserved. 1–54 HR and Technology Benefits of technological applications for HR Intranet-based employee portals through which employees can self-service HR transactions. The availability of centralized call centers staffed with HR specialists. Increased efficiency of HR operations. The development of data warehouses of HR-related information. The ability to outsource HR activities to specialist service providers.


Strategy and the Basic HR Process :© 2005 Prentice Hall Inc. All rights reserved. 1–55 Strategy and the Basic HR Process Figure 1–8