HRM in Context

HRM in Context

Session 1

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Concept of HRM

• Management is the process of efficiently completing activities with and through other people

• Primary functions of management are:– Planning (establishing goals)

– Organizing (determining activities)

– Leading (motivating subordinates)

– Staffing (determining people needed for the organization)

– Controlling (setting standards, monitoring activities)

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The Management Process

Planning

Organizing

Leading Staffing

Controlling

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Our Focus (HRM: We the People)

• Staffing, Personnel management or the HRM function

• Managing people is an important aspect of managing an organization

• Organizational effectiveness depends largely on the performance of people in an organization

• People constitute an organization's most vital factor in its success or failure

• It is by "men" that the other "m's" are acquired and utilized - money, machines, materials, methods and markets

• An organization may start with zero funding but will become financially viable with creativity, resourcefulness, hardworking and honest people

• Products and services can be copied by every organization within six months. But, human resources cannot be copied, they are like snowflakes.

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What is HRM?

• People become HR when they combine energy and physical strength with competencies (knowledge, skills, attitudes, potential for growth)

• HR are people who are ready, willing and able to contribute to organizational objectives

• HR of an organization include all employees engaged in various jobs at different levels

• HRM can be seen as an interaction between the human beings and the organization

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• On the one hand, – One has to put the right person on the job: well

educated, qualified, well selected & trained

• On the other, – you have to create an organization with

possibilities for people to develop themselves

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Defining 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. (Dessler)

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Defining HRM

• “Human Resource Management is concerned with the “people” dimension in management.

• Since every organization is made up of people, – acquiring their services,– developing their skills, – motivating them to high levels of performance, and

• ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives.”

• (Decenzo and Robbins)

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An Art or A Science?

• HRM is the art & science

– of acquiring, motivating, maintaining & developing people in their jobs

– in the light of their personal, professional & technical knowledge, skills, potentialities, need & values

– for the maximum achievement of individual, organization & society's goals.

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• An Art? – Being highly individual process eliciting human

behavioural skills

• A Science? – It draws from the theories & principles of

management & other disciplines

A proper mixture of both makes HRM efficient & effective

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Evolution of HRM

• Early Scientific Management Era (beginning of the 18th century)

• Industrial Revolution of 1850s

• Scientific Management in the late 1800s & early 1900s

• Human Relations Movement (1930s to 1950s)

• The HRM Era

• Behavioral Science Movement (1960s)

• The New HRM Era

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Early Scientific Management Era

– (beginning of the 18th century)• Formation of guilds (A guild is an association of craftsmen

in a particular trade.)

• Forerunners of the modern trade unions

– (later part of the 18th century)• “Welfare officers” in the UK business houses

• Schemes of unemployment benefits, sick pay

• Edward Cadbury and Joseph Rowntree

http://en.wikipedia.org/wiki/Artisan

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Industrial Revolution of 1850s

– Labor a commodity to be bought & sold

– Human work substituted by machine power

– Mass production

– Workers treated as commodities, thus exploitation

– Used and abused workers

– Widening gap between workers & owners

– Alleviation in their pitiable condition

– Advent of collective bargaining between labor & management

– Laid the foundations of the present HRM concepts

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Scientific Management (Late 1800s & early 1900s)

– Frederick Winslow Taylor

– Logic of efficiency to management

– Principles of precision (Time & motion study)

– Tasks were systematically broken down

– Emergence of personnel management (One best method; Specialization; Worker development; Incentive system; Management-Labour harmony)

– Laid the foundations of the present HRM concepts

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• Classical Organization Theory (1916)– Henry Fayol

– Basic concepts to guide the design, creation & maintenance of large organizations

– Identified the basic functions of managing organizations

– Management a process

– Managerial activities: planning, organizing, commanding, coordinating &controlling

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Human Relations Movement (1930s to 1950s)

– Chester Barnard

– Concept of organization as human cooperative systems rather than as mechanical contraception

– Cohesive leadership is necessary

– Advocated on good communication, participative management, team work, social setting, group dynamics, non-financial rewards etc.

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• Hawthorne Studies (1927 - 1932)

– Elton Mayo & Fritz Roethlisberger: General Electric’s Hawthrone plant

– Changes in the physical environment could not completely explain changes in productivity

– Importance of social factors (morale, interpersonal relationships)

– Cooperation & teamwork

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The HRM Era

• End of WW I – personnel management was recognized to fight labor shortage problems

• 1920s – Personnel management began being taught at the university level (US)

• Between the WWI & Great Depression estd. of personnel depts.

• Labor exploitation (1930 – 50s) resulted in labor relations movement, unions, collective bargaining (1935 -60s)

• Until the 1960s, the personnel function was considered to be concerned only with the blue-collar employees

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• Management by Objectives (MBO) 1954– Peter F. Drucker

– Objectives must be set in all areas where performance affects the health of the enterprises

• Theory X and Theory Y– Douglas McGregor

– Theory X: employees dislike work

– Theory Y: work is a natural act for employees

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Behavioral Science Movement (1960s)

– Maslow’s hierarchy of needs

– Frederick Herzberz’s two factor theory

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The New HRM Era

• Emergence of the new HRM theory & practice (1980s)

• Challenges of globalization, technological advances, changing customer etc.

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Nature/Characteristics of HRM

• Human focus/related to "people"• Management function

– application of management principles & functions– involves planning, implementing & – controlling of acquisition, development, utilization &– maintenance of human resources

• Pervasive – concerned with all levels of HR– discharged by all levels of managers

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• Continuous commitment of people – not one time activity– high level of motivation– sense of ownership – "psychological contact-challenges & commitment"

• Dynamic/responsive to environmental changes – action-oriented – e.g. performance based reward, union recognition

• System – consists of interrelated acquisition, development, utilization &

maintenance subsystems– utilizes the potential of the workforce to improve their productive

contribution

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• Mutuality oriented – promotes "HRM think" organization-wide– mutual influence, mutual respect, mutual rewards,

mutual responsibilities

• Closely linked to corporate or business strategy – links HR functions to the broader, longer-term needs

of firms

• Recognition of the common interests and needs – matching interests of individuals & organization– to achieve career-oriented & organizational goals

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• Recognizes employees as important assets or human capital – investment of huge amount of money in the

development of working people– "learning organization"

• Includes both lines and staff managers – line authorities are authorized to direct the work of

subordinates– staff managers are authorized to assist and advise

line managers in accomplishing these basic goals– HR managers are staff managers

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Objectives of HRM• Employs the skills & abilities of the workforce

• Provides well-trained and well-motivated employees

• Increases Employees’ job satisfaction and self-actualization

• Communicates HRM Policies to all employees

• Shoots-up productivity

• Achieves Quality of Work Life

• Increases employee commitment

• Manages organizational culture

• Supports employee creativity

• Manages change

• Maintains ethical policies and socially responsible behaviour

• Goal Achievement

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ObjectiveEmploys the skills & abilities of the workforce

– Makes people’s strengths productive

– Benefits customers, stockholders and employees

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ObjectiveProvides well-trained and well-motivated employees

– Building & protecting the most valuable asset of the enterprise

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ObjectiveIncreases Employees’ job satisfaction and self-actualization

– Employees must feel that the job is right for their abilities

– Job is a major source of personal identity

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ObjectiveCommunicates HRM Policies to all employees

– Everyone in the firm has to be HRM-knowledgeable

– Communicating managerial decisions to relevant public in their own language

– Representing the organization to the outside: trade union, government etc.

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ObjectiveShoots-up productivity

– Depends upon how effectively it uses its human resources

– Continuously develops employees

– Invite HR dept. to participate in formulating business strategy

– Allows HR staffs to initiate programmes

– Allow HR staffs to communicate with line managers etc.

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ObjectiveAchieves Quality of Work Life

– Refers to employee's perception of their physical & psychological well-being at work

– Improves quality of relationships between employees

– Giving adequate opportunity for participation

– Meaningful, challenging, interesting responsibilities

– Freedom & autonomy to make decisions on the job

– Satisfactory physical surroundings

– Job safety etc.

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ObjectiveIncreases employee commitment

– Interest in mental & physical involvement in achieving organizational objectives

– Motivation of people for commitment

– Adopt desirable HR practices & measures

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ObjectiveManages organizational culture

– Guides behavior of people working in organization

– Develops different work rules & guidelines

– HRM policies & practices can be implemented only where people are valued

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ObjectiveSupports employee creativity

– Effective management mechanisms like teamwork, MBO, TQM etc.

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ObjectiveManages change

– Workforce must rapidly shift & adjust to new technologies, skills etc.

– Trains workforce to adjust in a frequently changing environment

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ObjectiveMaintains ethical policies and socially responsible behaviour

– Any activity engaged by the HRM will be fair, truthful, honourable

– People will not be discriminated against

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ObjectiveGoal Achievement

– Helps achieve the following goals:• Personal goals (career advancement, compensation,

development etc.)

• Functional goals (departmental goals)

• Organizational goals (profit, survival, growth etc.)

• Societal goals (social responsibility, employment opportunities etc.)

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Functions / Areas of HRM

• Job Analysis

• Human Resource Planning

• Recruitment and Selection

• Training and Development

• Performance Appraisal

• Compensation and Benefits

• Health and Safety

• Employee Relations

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Functions: Job Analysis

• Most basic function

• Collection of job related information to prepare job description & job specification

• Job description (detail information about what a person has to be doing in the specific job)

• Job specification (qualification, training, work experience & other personnel requirements to perform a particular job)

• Formulates HR planning, recruitment & selection

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Function: Human Resource Planning

• Involves estimation of demand & supply of HR

• To fulfil current & future HR requirements of the organization

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Function: Recruitment and Selection

• Recruitment (process of making pool of qualified candidates)

• Recruitment (Begins from invitation of application, end with development of list of qualified candidates)

• Selection (Required number of employees are selected by the organization)

• Selection (Process of reviewing application, interview, tests & informing candidates)

• Information from job analysis & HR planning is used for selecting right candidates & rejecting wrong candidates

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Function: Training and Development

• Required to develop skill, ability & motivation of employees

• HR dept. assess training needs, types of training & development activities

• On-the-job training provides using organizational premises & facilities

• Off-the-job training provides outside organizational premises

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Function: Performance Appraisal

• Process of evaluating employees' performance related strengths & weaknesses

• Assess how well employees are doing in their jobs

• Provides techniques of assessing the performance of employees against agreed targets

• Result of evaluation used to determine training needs

• Result of evaluation used to provide promotion & other forms of rewards for employees

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Function: Compensation and Benefits

• Compensation rewards people through pay, incentives & benefits against the work done

• Benefits reward people with additional compensation

• Benefits are indirect forms of compensation (e.g. health care)

• Great source of motivating employees at work

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Function: Health and Safety

• Taking care of employees' health & safety

• Employees should be made aware of hazardous situations

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Function: Employee Relations

• HR dept. develops mechanisms for developing understanding on different HR related issues between management & employees

• Develop mechanism to solve conflict & work related issues at shop floor

• E.g. handling grievances, labor-management meetings, and settlement of disputes etc.

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Personnel Management Versus HRM

• HRM has evolved from Personnel Management

• But, Personnel Management is not HRM

• HRM emerged in 1970s

• In 1989,

– the American Society for Personnel Administration (ASPA) voted to change its name to

– the Society for Human Resource Management (SHRM)

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Factor: Approach

Personnel Mgmt. HRM

Traditional Approach Used from the early 19th C World war I, Great

Depression

Current Approach Used from the early 1970s Govt. rules, professional,

technical workers, non-unionised sectors increased

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Factor: Aim

Personnel Mgmt. HRM Non-managers (specialists

& professionals) Managers by specifically

developing the management teams in the organization

Factor: Scope

Personnel Mgmt. HRM Personnel department All people working for &

with the organization

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Factor: Concern

Personnel Mgmt. HRM

Negotiation, administering & collective agreement

Focus on compliance with rules and regulations

Personnel administration, compensation, employee welfare, labor relations

Management of human energy & competencies

Dynamic inter-relationships of acquisition, development, utilization & maintenance functions

Employee involvement and participation are emphasised in work-related decisions

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Factor: Philosophy

Personnel Mgmt. HRM Workers need to be

controlled & disciplined, coerced

Focus for mainly profit

Human with respect on individual & organizational well-being

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Factor: Focus

Personnel Mgmt. HRM

HR as costs People as input in the

production process People an expense, factor

of production

HR as investments People as valuable

resource in the organization system

Regards investment in people as social capable of development

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Factor: Function/technology

Personnel Mgmt. HRM Routine Compliance of policies

& rules Manpower planning Mechanistic: Reactive,

control oriented

Strategic HR planning &

organizational strategy Developmental:

proactive, socio-technical orientation, flexible participatory, creative, innovative

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Factor: Job Design

Personnel Mgmt. HRM Based on division of labor Based on team work

Factor: Orientation

Personnel Mgmt. HRM Discipline, direction &

control, restricted communication

Supportive climate for growth, performance, involvement, open communication

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Factor: Means

Personnel Mgmt. HRM Emphasis on rules,

regulations, procedures, customs, practices

Emphasis on strategies for development & utilization of human potential

Factor: Ends

Personnel Mgmt. HRM Managing personnel

function for employee satisfaction

Creating learning organization

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Factor: Outcome

Personnel Mgmt. HRM Satisfied personnel Increased productivity

Committed & empowered HR

Increased productivity Increased organizational

effectiveness Increased profits Participative & team based

organizational culture

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Factor: Time & planning

Personnel Mgmt. HRM Short-term focused Reacts on the specific

personnel problems

Long-term Proactive Makes system-wide

interventions before any problem or change takes place

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Factor: Information & Communication

Personnel Mgmt. HRM Mainly used as a source of

power and control Important sources of

developing trust and commitment among the organization's employees

Factor: HOD

Personnel Mgmt. HRM Administrative officer or

personnel Separate HR department

manned by HR specialists

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Factor: Place of work

Personnel Mgmt. HRM Formal setting: office,

factory, plant Formal, informal setting

Factor: Type of servicePersonnel Mgmt. HRM

Basic & simple functions: recruitment, selection

Varied & complex: job analysis, job design, job appraisals, maintenance, development etc.

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System Model of HRM

• System composed of interrelated & interacting parts to achieve desired goals

• System approach to HRM combines itself with business strategy

• Many firms in developing countries are facing problems due to their traditional practices of managing people

• The system, functions, components and objectives of modern organizations differ from traditional organizations

• HRM system is linked with organization performance, organization structure and strategic objectives of the organization

• Open system: consists of input-processing-output & feedback components

• Operates within internal & external environment

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External Environment FactorsGovernment law & regulation, Union, Eco condition, Competitiveness,

Composition of the labor force, Geographical location of the organ, Tech.Threats and Opportunities

InputsHuman Energy & competenciesOrganizational PlanHR PlanMgmt Inventory Job AnalysisLabour Market

ProcessingAcquisitionDevelopmentUlitizationMaintenance

OutputsOrganizational related outputEmployee related output

Internal Environment FactorsStrategy, Goals, Culture, Nature of the task, Group work, Leader's style & experience

Strengths and Weaknesses

Feedback

HRM System

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HRM System

1. Inputs of HRM

• Human energy & competencies (physical strength, knowledge, skills, attitudes, experiences etc.)

• Organizational plan (organizational goals, strategy, target)

• Human resource plan (matches future HR demand with supply & indicates the HR requirements)

• Management inventory (record of HR currently available in the organization)

• Job analysis (specifies job requirements, job specifications)

• Labor market (source of external supply for quality human resources)

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HRM System

2. Processing of HRM

a. Acquisition– Ensures entry of right number of people at the right place at the right time in the organization– Consists of recruitment, selection & socialization

b. Development– Ensures proper competencies of employees to handle jobs– Analyzing development needs – Employee training– Management development– Career development

c. Utilization– Ensures willingness of employees for boosting productivity by doing jobs effectively– Consists of motivation, performance appraisal, compensation etc.

d. Maintenance– Ensures retention of competent employees in the organization– Labor relations (employer-employee relations & employee discipline, grievance handling)– Employee welfare (to promote employee safety, health, social security, etc.)

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HRM System

3. Output

a. Organization-related outputs• Goal-achievement • Quality of work life (QWL) (Quality of relationship between employees & the total

working environment of the organization.) • Mechanisms of QWL:

– Learning & development– Recognition– Autonomy– Intrinsic/extrinsic rewards

• Productivity• Profits• Readiness for change

b. Employee-related outputs• Commitment (achieved through trust, understanding, communication, loyalty etc.)• Competence (changes in the environment & assume new roles)• Congruence (related to goals, harmony between individual & organizational goals)• Cost effectiveness (high cost-effectiveness)

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HRM System

4. Feedback– Provides information to redesign HRM inputs & processing based on

output effectiveness

5. Internal Environment – Forces in the internal environment are controllable by HRM– Provide strengths & weaknesses– They are organizational goals, policies, structure, reward system &

organizational culture

6. External Environment– Forces non controllable by HRM– Provide opportunities & pose threats– They are technology, politics/law, labour unions, economic forces, socio-

cultural forces

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Internal & External Environment of HRMA. External environment (outside the organization)

Government Law and Regulation– Affects organization directly

– Decisions about hiring, promotion, diversity, evaluation, employment opportunity, discrimination, compensation, benefits regulation, safety laws etc.

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Union– An organization that represents the interests of employees

– Shapes the HR policies & practices

– Union representatives are included in major HR decisions

– Recruiting, selection, promotion, compensation, etc.

– Not restricted only to the blue-collar workers

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Economic Conditions– Economic devt. of a country gives priority to the

proper mgmt. of HR

– Provides career & skill devt. opportunities

– Local companies compete with foreign ones & thus local companies reform their work processes

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Competitiveness– Effective workers?

– Quality services or good?

– New technology?

– Lower cost products?

– HRM can be a competitive advantage

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Composition & Diversity of the Labor Force– Women

– Minorities

– Older Employees

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Geographical Location of the Organization– Rural, urban area?

– Kinds of workers available

– Educational factors

– Behavioral factors (attitudes)

– Legal-political factors (stability, racists etc.)

– Economic factors (structure, inflation, constraints on ownership etc.)

– Socio-cultural factors

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Technology– Technology is a major factor in deciding about HR policy

choices

– Use of sophisticated & efficient technology

– Increased the quality & volume of the products/services

– Reduced the price level

– Coping with the technological environment demands for knowledge workers

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B. Internal Environmental Influences

Strategy– What an organization’s key executives hope to

accomplish in the long run

– Selection of a particular HR strategy, policy & practice

– Business firms differ in their HR strategy due to different business environment & competitive strategy

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Goals– The goals of organizations differ within & among

departments

– Differences in the importance of goals

– E.g. profit goals are emphasized, HRM goals are paid only minimal attention

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Organization Culture

• System of shared meaning held by members

• A firm’s way of doing business

• How it treats customers & employees

• Autonomy of the departments

• Degree of employee loyalty expressed

• A common value system

• Strong or weak culture?

• Impact on the behavior, productivity, expectations of the employees

• E.g. clear guidelines on punctuality, customer service etc.

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Nature of the Task• Degree of knowledge & ability to use IT

• Degree of empowerment

• Degree of physical exertion required

• Degree of environmental unpleasantness

• Physical location of work

• Time dimension of work

• Human interaction on the job

• Degree of variety in the task

• Task identity

• Task differences & job design

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Group Work

– Directly related to the success of HRM activities

– Work-group participation in designing & implementing HRM is essential

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Leader’s Style and Experience– Experiences & leadership style of the operating

manager affects HRM activities

– Direction, encouragement, authority to evoke desired behaviors

– Facilitates interactions that occur within work groups

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Importance of HRM

1. Concern over productivity• Slow growth rates

• Increasing evidence that a sound HRM can increase productivity 2. Need to be flexible in response to changing business environment• Trend towards "elastic" company

• Outsourcing and rightsizing temporary employees • Focussing on core competence on what they do best and

• outsource other non-core works, use temporary or leased employees to work on specific tasks

• (E.g. Nike and other seasonal industrial and business activities)

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3. Increasing international competition and expanded global economy• Increasing competition for products and services and opportunity for expansion

4. Increase in litigation (legal action) related to HRM• International, national and local lawsuits on the increase for wrongful doings

5. Changing characteristics of workforce• Growing diversity

• Equal opportunity

• Changing attitudes, less loyalty, more demands

• Labour shortage/aging workforce

• Job skill gaps, poor match between skills and enterprise needs

The Changing Environment of Human Resource Management

Globalization Trends

Technological Trends

Trends in the Nature of Work

Workforce Demographic Trends

Changes and Trends in Human Resource

Management

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Globalization & Competition Trend

• Firms extend to new markets abroad• Seek new foreign products, cut labor costs,

forming partnerships+ Customers: Lower prices, higher quality+ Business owners: millions of customers- Business owners: faces global competitors at

home- Employees: Less secured jobs (job off shoring)

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Technological Trend

• Technology changed the nature of almost everything we do

• It changed what businesses do & how they do• E.g. Zara. A clothing store (internet based world-wide

distribution network used checkout registers)• Indian Railways: largest railway system in the world

provides computerized ticket-booking facility• ATM in Nepal• Bus Rapid Transit System (BRTS), Ahmedabad:

equipped with GPS facility that alerts waiting passengers about the arriving buses

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Trends in the Nature of Work

• High Tech Jobs• Service Jobs• Knowledge work & human capital

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Workforce & Demographic Trends

• Demographic Trends• Generation "Y"• Retirees• Nontraditional Workers

The Changing Roles of HR Professionals

HR & improving productivity

HR & Corporate strategy

HR & employee commitment

HR & transfering knowledgeThe Changing Roles of HR Professionals

HR & service organizations

HR & responsiveness

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HR & Improving Productivity

• Is the quantity or volume of product/service that an organization provides

• Includes capital investment, innovation, learning & employee's motivation

• Changing roles of HR towards productivity improvement are:– Implementing employee participation prog– Fostering better communication system– Devt.ing better labor-mgmt relations– Increasing training & devt. prog– Selection & retention of highly talented & skillful employee

commitment

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HR and Corporate Strategy

• Strategy is the responsibility of the company's executive team – of which HR manager is a member

• McKinsey & Company suggest 7S: strategy – structure – systems – staff – style – skill – shared values

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HR and Employee Commitment

• Commitment is a psychological state that characterized the employee's relationship with the organization

• HR managers should:– Estd career oriented performance appraisal procedures– Open job-posting & job transfer practices– Create the feeling that organization cares for them – Offer training programs

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HR and Transferring Knowledge

• "Learning organization" are successful at transferring knowledge

• Training & devt. plays an imp. role in promoting transfer of knowledge

• HR manager should accumulate & disseminate knowledge quickly & efficiently

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HR & Service Organization

• Depends on the employees' motivation, skills & attitudes & on HR management

• Satisfied employees deliver high quality services & high service generates more profits

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HR & Responsiveness

• Creating responsive employees

• Responsive employees can adopt organizational change

• Can create new ideas & deliver high quality services to both organization & its customers

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HR Strategy – Concept and Perspectives

Strategic Plan'Company's long-term plan for how it will balance its internal strengths & weaknesses with its external opportunities & threats to maintain a competitive advantage over the long term.'

StrategyA course of action the company can pursue to achieve itsstrategic aims.

Dessler

Strategy & HRM

• HR & top mgmt. together makes the company's design strategy

• Strategy acts as a framework to design specific HR activities

• This, in turn, produces the employee competencies & help business implement its business strategy

• Strategic HRM is concerned with the development & implementation of people strategies which are integrated with corporate strategies

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E.g. of the importance of HRM & strategy

President"Double sales revenue to Rs.

16 m fiscal year 2012"

VP of salesDouble sales in

East & West

VP of ProductionAdd one new

production line at plant

VP of HRAdd, train 6 sales

people

Sales Manager, East

"Hire 4 new salespersons,

add 100" more customers

Sales Manager, West

"Move 6 central

salespeople to the West

Recruiting Mgr

"Identify & attract 20 good sales

candidates"

Training MgrTrain 4 new

salespersons & retrain all

others within 4 months

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Types of Strategy

Corporate-level strategy"What businesses are we in?"

Business 1Competitive Strategy

"How will we compete?"

Functional StrategySales Dept.

"How do we support the business's competitive

strategy?"

Functional StrategyProduction

"How do we support the business's competitive strategy?"

Functional StrategyHR Dept.

"How do we support the business's

competitive strategy?

Strategic HRM

Formulating and executing human resource policies and practices

that produce the employee competencies and behaviors

the company needs to achieve its strategic aims.

Dessler

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• In formulating HR mgmt policies & activities, the manager's aim must be to produce the employee skills & behaviors that the company needs to achieve its strategic aims

• Strategic plan implies certain workforce requirements

• Givesn these requirements, HRM formulates HR strategies to produce the desires workforce skills

Linking Company-Wide and HR Strategies

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HR Strategies

• 'Courses of action HR uses to help the company achieve its strategic aims'Dessler

• 'HR strategy involves a central philosophy of the way that people are managed in an organization, and translation of this into personnel policies and practices, and its integration with business strategy and within itself' Hall and Torrington

• HR Strategies refer to building a competent & committed workforce for achievement of organizational strategic objectives

Four Strategic Roles of HRM

1. Strategic Selection

2. Strategic Appraisal

3. Strategic Rewards

4. Strategic Development

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Strategic Role of HRM

1. Strategic Selection

• Develop the process of internal movement of people across positions

• Hire new employees

• Match the employees available in the organization with the jobs

• 3 different strategic roles:– design a selection system supporting organization’s strategy

– e.g. if the company plans to start a new business, HRM ensures the right person to work on new business

– monitoring internal flow of personnel to match emerging business strategies

– e.g. if a company wants to follow an innovative market strategy to compete in the market HRM ensures selection of quality & highly creative employees in the organization

– Matching the key business executives to business strategies 103


2. Strategic Appraisal

• Devote the most significant managerial time to appraise performance of employees

• Main role:– Distribute scarce rewards on an equitable basis

– Measure performance such as profitability, return on investment, market value of share etc.

– Assess the current inventory of talents working in organizations for HR planning

– Identify the training and development needs by identifying strengths and weaknesses of the HR

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3. Strategic Rewards

• Link rewards to the long-term business objectives & strategies

• Can be done by introducing various forms of rewards:– Pay, Promotion, Career opportunities, Positive feedback,

Opportunities to learn, Job security, Respect from co-workers

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4. Strategic Development

• Role of equipping human resources with skills & knowledge

• Strategic development of the increasing knowledge-based workforce

• Some methods used: developing training, opportunities for self-development etc.

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Environment of HRM in Nepalese Organizations

• Mainly concerned with utilizing human energies

• Least concerned with developing human competencies & potential for growth of employees

• People not considered as a source of competitive advantage and important assets

• HRM is not given a strategic role

• Human resources are viewed as a cost rather than assets by management

• Lack of mutual trust between labor and management

• Multiplicity of unions, union rivalries, politicization of unions etc.107

Conti…

• HR aspects are not considered in policy and plan

• Legal framework has remained weak; "Weak implementation of laws"

• Newly developed concepts & approaches of managing HR are still not in use

• Managers tend to see organizations in terms of power, prestige, domination, hierarchical & mechanistic structure & poor information & communication systems

• Overstaffing in mostly public enterprises while private lack professionalism being mostly family owned

• Widespread corruption with massive indiscipline

• HRD and HR planning is an area of least priority

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Conti…

• Job rotation is not linked to career planning of employees

• Private sector organizations are more aware of the management of the HR rather than the public sector undertakings

• Recruitment, selection, placement process is followed in all organized enterprises

• No 'good fit' between the national HR development priority & the HRD strategy

• Human Resource Inventory is prepared by organizations but updating of inventory is lacking

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Conti… New Trends

• Globalisation & information technology has facilitated innovative approaches to HRM

• Pioneer has been the first joint venture bank, NABIL

• INGOs & other private companies have started adopting modern practices

• Organizations have started advertising for vacancies; organizations use external agencies for recruitment

• Government employees are selected by Public Service Commission

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Conti…

• Public enterprises have legally prescribed performance appraisal system but they have become rituals practically

• Some organizations offer ‘voluntary retirement’ schemes

• Professionalism has been gradually increasing

• Labor unions are powerful in Nepalese organizations since 1990s

• IT revolution has already arrived111

Environment of HRM in Nepalese Organizations

Timeline Details Remarks

1935 Industrial Council constituted First of its kind

1936 Biratnagar Jute Mills Industrial revolution

First of its kind

First modern industry

1937 First commercial bank, Nepal Bank Limited

Contributed to the growth of more industries

1947 First politically motivated labour movement at Biratnagar Jute Mills

Labour leaders succeeded in making some welfare facilities available to the workers

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Conti…

1951 Democracy installed,

Ministry of Industry and Commerce come into existence

Central secretariat for labour administration

1951-1960

Formations of trade unions legalized Focus, however more on political issues rather than on labour & welfare matters

1957 First Industrial Policy formulated Part of the first five-year plan that began a year earlier

1959 Nepal Industrial Development Corporation established

Nepal Factory and Factory Workers Act enacted

Provided financial and technical assistance to private entrepreneurs

Welfare Officer in factories of over 250 workers

Regulations on leave, pension & provident fund, compensation for disability or death, working hours

113

Conti…

1960-1990 Panchayat system

Trade unions had to operate underground as they were not legally permitted to function

Only the officially sponsored and controlled labour organization, as one of the six "class organizations", was permitted to operate

A potential candidate had to enrol as member in one of these six organizations to run for election to the national legislature

114

Conti…

1965 Establishment of Federation of Nepalese Chamber of Commerce and Industries (FNCCI)

Establishment of public sector manufacturing enterprises

Minimum wage fixed

An umbrella body of employers

First of its kind

HRM still confined to personnel administration & labor relations functions

1966 Nepal joins the International Labour Organization (ILO) as a member state

First regional labour office established in Biratnagar

Human resource assessment & planning program begins

Process of establishing regional labour offices begins

115

Conti…

1967 Central Bureau of Labour Affairs established

Recommended Ministry of Planning (now National Planning Commission)

1974 Bonus Act, 1974 Bonus must not exceed 10% of net profit & six months wages & salaries

1990 Restoration of democracy

Multi party democratic system boosts labour movement

116

Conti…

1992 Labour Act replaces Nepal Factory and Factory Workers Act

Labour relations become an important function of HRM

Deals with employment & job security, working hours, remuneration, health, safety & welfare measures, workers’ participation, code of conduct, punishment & dispute settlement

Amendment was made in 1998

1993 Trade Union Act enacted Now three national-level trade unions registered: DECONT, GEFONT, NTUC

117

Conti…1995 Nepal ratifies Tripartite

Consultation (International Labour Standards) Convention, 1976 (No. 144)

Labour Court Regulation Act, 1995

Provides labor courts to deal with labor disputes

2000 Child Labour Act enacted Deals with child’s definition, employment, hours of work, wage payment & punishment

Below 16 years are child and below 14 years must not be employed

118

Conti…

1996-2006 Maoist Movement - Political tussle between all actors.- Royal Massacre in June 2001.- King takes over direct power in

February 2005 in the form of a military coup.

- Draft to amend Labour Act; Tri-partite tussle takes new heights, mostly based on political grounds.

April 2006 onwards

People’s Movement II, Loktantra established (Restoration of democracy).

- Nepal becomes Federal Democratic Republic; abolishes Monarchy.

- Maoists join mainstream politics giving up their ten-year-long armed conflict; Forms government after winning a majority through Constituent Assembly Elections; Their trade union All Nepal Trade Union Federation (A-N-T-U-F) turns active.

- Labour Union tussle (including interparty factional politics) continues, mostly based on political grounds.

119

New Trends• The dynamics of HR in Nepalese organizations (varied culture, social background,

rising expectations, changing work attitudes, demands in standard system)

• Changing conditions & external pressure (Govt. regulations, competition, unions, low productivity of workforce, high indiscipline, traditional admn., short-term)

• Changing role of HRM in view of social factors (demanding society, growing pressure to hire locals, ethnic groups & minorities)

• Governmental & local factors (Trade union act, Labour act, Minimum wage directives, Bonus act etc.)

• Changing employee standards & professionalism (entry of educated, young managers, professionalism, career orientation, quota system)

• Changes in employee role & values (quality of worklife, equity, participative decision making, work life – personal life balance)

120

121

Other Present Trends

• "Weak implementation of laws," accuses employers as well as labour unions

• Newly developed concepts and approaches of managing HR are still not in use in many Nepalese organizations

• The "old school of thought" on HRM still existing in traditional organizations where managers tend to see organizations in terms of power, prestige, domination, hierarchical and mechanistic structure and poor information and communication systems

122

• Overstaffing in mostly public enterprises while private lack professionalism being mostly family owned and those with reach towards the centre

• Legal framework largely only welfare oriented as well as short range-oriented

• Rampant corruption with massive indiscipline

• But globalisation and information technology has facilitated innovative approaches. International NGOs and other private companies have started adopting modern practices

123

Concept of IHRM

• As an effect of the increasing trend of globalization, most companies do business abroad

• Doing so presents firms with various management challenges

• Plans for marketing & producing goods abroad are required

• Employer needs to install all those mgmt. systems it will require to manage in overseas activities

• These mgmt. systems include organization structures, managerial controls, worldwide banking relationships, HRM systems for recruiting, selecting, training, appraising & compensating its workers abroad

124

Concept of IHRM

• With the growth of MNCs, the imp. of the subject IHRM is now growing • Managing HRs internationally creates questions & challenges all its own

• For e.g.,– "Should we staff the local offices with locals or the parent country employees?"

– "How should we appraise and pay our local employees?"

– "How should we deal with the unions in our offices abroad?"

– "How will cultural differences abroad impact the sorts of employee selection, appraisal and compensation policies we use?"

125

Definition of IHRM

• The human resource management issues and problems arising from the internationalization of business, and the human resource strategies, policies and practices which firms pursue in response to the internationalization process

• Sculllion

• Thus, IHRM is different from managing HRM at the national level

• Factors such as increasing global & local competition, stock market responses, host country & parent company's relations & other international factors affect IHRM policies & practices

126

Importance of IHRM

• An increasing no. of MNCs are in operation in many countries in recent years

• There is a growing need for effective management of HR in these organizations

• To implement international business strategies by developing appropriate HR strategies for the recruitment & devt. of 'international managers'

• To minimize financial and human costs of failure in overseas appointments

127

Issues in IHRMHow Intercountry Differences Affect HRM

Legal & Industrial Relations Framework• Legal guidelines regarding matters such as employment discrimination, labor relations,

and safety & health

• E.g. Minimum legally mandated holidays range from none in the UK to 5 weeks per year in Luxembourg

• E.g. While Italy has no formal requirements of employee representatives on boards of directors, they're required in Denmark for companies with more than 30 employees

• Relations among the worker, the union, & employer also vary from country to country

• E.g. U.S. practice of employment at will does not exist in Europe, where firing or laying off workers are usually expensive

• Thus, managers have to be aware of & generally adapt their human resource policies & practices to the countries in which they're operating

128


Cultural Factors • Countries differ widely in their cultures

• For e.g. In a study of 330 managers from HK, China and the U.S, U.S. managers tended to be most concerned with getting the job done, Chinese managers were most concerned with maintaining a harmonious environment & HK managers fell between these extremes

• E.g. In Germany, you should never arrive even a few mins. late & should always address senior people formally, with their titles

• Thus, cultural differences do influence human resource policies & practices

129


Economic Systems• Differences in economic systems also translate into differences in human

resource management policies

• Some countries are more wedded to the ideals of free enterprise than are others

• E.g. France, though a capitalist society, imposed tight restrictions on employer's right to discharge workers, & the limited no. of hrs. an employee could legally work each week

• Differences in labor costs are also substantial

• E.g. Portuguese workers average about 1,980 hrs. of work annually, while German workers average 1,648 hrs.

130

Ethical Issues in HRM

• Ethics is a system of moral principles & attitudes that guide our action to be morally correct, fair & justice

• They are expression & exhibition of standards of moral conducts

• Ethics guide the whole organization about acceptable principles of what is morally right or wrong

• Ethics govern the members of a profession, business or society

131

Importance of Ethical Issues in HRM

• Ethics correspond to basic human needs

• Ethical values create credibility with the public

• Values give the mgmt credibility with its employees

• Values help to make better decisions

• Ethics and profit go together

• Laws cannot protect the society, ethics can

132

HR roles in the areas of workplace ethics

Monitoring Role-Fair treatment-Legal actions-Moral behavior

Advocacy Role-Company spokesperson-Defends company's actions -Faces media-Confronts regulatory agencies

Investigation Role-Sexual harassment-Violation of employee's privacy rights-Roots of a conflict

133

Areas of Ethical Misconduct in HR

• Cash & incentive issues• Performance appraisal issues • Race, gender, age & disability issues• Employment hiring issues• Privacy issues• Safety and health issues• Termination & layoffs issues• Employee responsibilities

134

Points to discuss on Ethical Issues in HRM

• How do you view "layoff"?

• How much does an appointment letter matter at workplace?

• Does age matter on productivity?

• Does gender matter on productivity?

• Does being "differently able" matter on productivity?

• What if a worker has diseases such as AIDS? Is it ethical to fire him?

• Does marriage affect productivity? What about children?

• Does workplace diversity have negative impact on society? What about indigenous groups? Does job reservations help?

• How would you deal with sexual harassment upon you at workplace?

Documents

HRM in Context