The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 1 Chapter 1 The nature of Human Resource Management (HRM) What is management?

© FH-Prof. Dr. Herbert Gölzner Page 1

The nature of human resource management

Chapter 1The nature of Human Resource Management

(HRM)

What is management?There are a lot of different definitions!Most in common: to do something not unconciously but conciously. > Activity is goalorientedTo reach certain goals: apply certain theories, methods, approaches>HRM = deal with people but management mostly has to deal with people> HRM = Basis for management activity (not all business activity)



Activity

An Introductory Exercise

List the activities that you associate with the phrase ‘personnel management/human resource management’.

Describe the role of the line manager and the personnel specialist in these activities.

Copy of Foot/Hook p 27ff



HRM for the 21st Century

Must meet the strategic and financial needs of the business

people’s aspirations/interests

and

Corporate mission

Goals

People performance



• Businesses are diverse.Automotive industry, public companies, hospitals, hotels, restaurants, engineering companies:Different key success factors, different orientation but

• > all need to manage their human resourcesMajor Importance of HRM: a constant balancing between meeting the strategic and financial needs oft the business and meeting the people's aspirations.

• At times the balance shifted too far in one direction:1st half of 20th century: business success/performance1960s-1970s: Focus on aspirations led to hierarchical bureaucracies > stagnant business. > Success measured in terms of profitability + number ob people employed.

By the end of the 20th century: Focus on business lead to downsizing, What are effects ? > Reducing the number of people employed > create business that were lean, fit, flexible > Hierarchies > decreased > staff and function outsourced

Concentration about short-term results and Rationalization can lead to reduced business performance (Beginning of the 21st century)People don’t perform, they feel no responsibility to the company, revenge: every hour 10 minutes,…..

Example: NASA: Columbia space shuttle 2003 disintegrated over Texas (copy) HR-Managers must be aware of the risks associated with cost cutting Major purpose of HRM: to ensure employees performance > meet also peoples

aspirations


Page 5© FH-Prof. Dr. Herbert Gölzner

What do HR People Administer?

The contract of employment

The psychological contract for performance



Example of NASA:Management of humans employed both within the organization and outside the organizationThe contract of employment= legal basis of the employment relationship:Terms and conditions of employment, renumeration, basic rules of the employment relationshipWithin that framework> a psychological contract for performancePerformance may come both from employees and non-employees A major goal of the work of hrm: psychological contract for performance:broad expectations > what each party thinks > will gain from the relationship: here related to performance Meets the need of employee and organizationEmployee has also a psychological need to perform, to do well and to fulfill personal needs that for many can best be met in the employment context.



Defining HRM

HRM is commonly used in two ways.

Generic approach: describes a body of management activities

Distinctive approach to the management of people: distinct from personnel management

The term hrm is not easy to define.Commonly used in two different waysGeneric approach: Answers about questions: What are key objectivesHRM suggests a distinctive approach:> to serve the modern business more effectively than traditional personnel management.A distinctive philosohy



HRM Mark 1 – a generic approach

Four key objectives:



• Staffing objectives:- Ensuring that the business is appropriately staffed > on human resources are available > which are need > reach goals, mission - This involves: Designing organizational structures : different groups of employee, type of contracts- Before: Recruiting, selecting and developing people with the right skills to provide the services needed > best workforce which is available- Developing employment packages that are sufficiently attractive to attract and retain staff

• Performance objectives:Ensure motivation and commitment of staffTraining and development key roleReward systems attention to performance targetsassist in Disciplinary systems > if performance standard is unsatisfactory> Welfare functions > can assist performance > performance fallen because of f.e. illness, family difficulties.Employee involvement initiatives



• Change-management objectivesEffectively managing change (important + difficult)sometimes Structural: re-organization of activities or introduction of new people to rolesCultural: alter attitudes or norms (M&A)Recruitment and/or development of those with required leadership skills to drive change process

• Administrative objectivesFacilitate smooth running of the organizationMaintain accurate and comprehensive data on individualsComply with legal requirementsAdminister pay, sickness, taxation, leave etc.



Activity

Each of the four types of HR objective is important and necessary for organizations in different ways.

However, at certain times one or more can assume greater importance than the others.

Can you identify types of situation in which each could become the most significant or urgent?



HRM Roles and Objectives



Large company > possiblity to spcicalise in HRM areas:Training & Development, Recruiting, Measuring HR > Working in small teams or allone

Generalists: Develop policy + take responsibility for HR issues across the organisation as a whole or a division or part of the company.

Smaller businesses > dont need, or cannot afford HR managers > Consultants and advisersSize of a company to have an own HR-manager? +-250 MA

Line managers:Line manager plays a key role in hrm.Line manager = responsible for a department/area of the firm = a manager who has people to lead = a leader > Leadership = to do hr-activities.Have to combine their commitment to the task of his department + attention to their employees. > The HR-task of the line manager is one of the most often cited characteristics of hrm

Research of Purcell et al (2003) study over 3 years about :What aspects of HRM actually make a difference to performance within organisations (see Foot p 21):> Strong values> enough line managers > able to bring HR policies and parctices to life



Activity

Which of the various HR roles would you be most interested in undertaking?

The generalistic role, a specialist role, a line manager role or perhaps that of a consultant or subcontractor?

What are the main reasons for your choice?(Discribe the activities and the roles in these activites.)



HRM Mark 2 – a distinctive approach



• Something that is qualitatively different from personnel management approach

• Disagreement about how fundamental a shift is• Personnel management is workforce centered whereas

HRM is resource centered• Greater emphasis on planning, monitoring and control• HRM is totally identified with management interests• HRM concentrates more on what is done to managers

than on what is done by HR-managers to other employees• Proactive role for line managers



Evolution of Personnel and HRM

Social justice

Humane bureaucracy

Negotiated consent

Organization

HRM

A ‘new HR’?



• Social justice: Late 19th and early 20th centuryOrigins of personnel management, derived from the work of social reformers > to make live less harsh for the employeesAimed to improve the conditions of workersPatriarchic approach which led to a focus on welfareSchemes such as unemployment benefit, sick pay and subsidized housing (sozialer Wohbau)Supported by a business and ethical case

• Humane bureaucracyIncreased focus on other organizational objectivesResponsibilities included staffing, training and organization designInfluenced by both scientific management (Taylor, Fayol > raise productivity) and human relations schools (Mayo > needs of employees) of thoughtLed to focus on social relationships in the workplace and employee morale > became equally to raise productivity.

• Negotiated consentFull employment after 2nd world war > labor scarce resource Growth in trade unions Personnel managers managed the new collective institutionsMany negotiated with trade unionsFirst specialist personnel courses designed



• Organization: Late 1960sPersonnel specialists begin to deal with management and be integrated into management activityDevelopment of career pathsDevelopment of techniques of workforce planning: More quantitative, information technology > forecasting

• HRMExplained before

• A new HR?May now be a sixth stage in evolution of HR – but debatedThemes: Global perspective, Concern with legal compliance, Multi-employer networksviewing employees as individuals and seeking to engage them emotionallyFocus on employer branding and employer proposition



Activity

Think of HR management roles. To what extend can you identify in it the presence of activities inherited from each of the five stages in the development of modern HRM?



Key Environmental Developments

Globalization

Technology

Demographic Developments

Attitudes of People

Individualistic attitude:Focusing on themselves and their own career development



GlobalisationDevelopment of the international trade:> International Trade 1965: 150 million US$> International Trade 1995: 6 billion US$> International Trade 2005: 12,5 billion US$(WTO 2006)

Technology- Within 50 years, 50 million people have been reached

trough radio.- Within 33 years, 150 million people have been reached

trough tv.- It is estimated that about 1.3 milliard people use the

internet at the beginning of 2008.



• Californian winemaker > compete with AustrianThe Austrian tourism > compete with CaribbeanThe German automotive manufacturer > with Japanese + AmericanBoing produces parts of his airplanes in China + Europe and assemble it in Seattle……

• International Trade (=cross boarder trade) : Sum of all exported goods and services.6 billion = 6 + 6 times zero > 1995 40.000 times of 19652005: double of 1965 > 83.000 times of 1965>tremendous increase of complexity and dynamic

• See model of Rieckman:Knowledge, time, ICC….Incompetence-Competencability-Compentence> How to deal with not-knowledge as a leader, as a specialist

• TechnologyDevelopments of informational technology, energy production, chemical engineering, laser technology, transportation, biotechnology are moving forward at an accelerating pace year by year. > revolutionizing the way that many industries operate. > maintain or develop their good competitive position. > E-Business > easy to compare quality, price

• Japanese automotive manufacturer > 2 year product-life-cycleProducer electronical appliances > some monthfinancial market > some hours

• Questions: Mean for HRM/Consequences?How to improve quality (see Toyota)? Develop new products and services + bring it to the market > Volatility > flexibility of people working within the company > manage international workforce > manage diversity > deal with high qualified worker/ knowledge worker > how to get people able applying evolving technologies.



Demographic development in Germany People who are potential economically active 2000-2050

Supposed net immigration:

200.000 per year



• Labor market: numbers of people and skills available. > skills shortage in recent years > impact varies form country to contry,depending: birth rate: More older peple retiring than young people enter the job, economic prosperty

• Ab 2002 Schätzwerte der 10.koordinierten Bevölkerungsvorausberechnung, Variante 5 „mittlere“ Bevölkerung: Mittlere Wanderungsannahmen W2 (jährlicher Saldo von mindestens 200 000) und mittlere Lebenserwartungsannahme L2 (durchschnittliche Lebenserwartung 2050 bei 81 bzw. 87 Jahren).

• Zu einer Reduktion der zur Verfügung stehenden Erwerbstätigen kommt es entsprechend einer Prognoserechnung des Statistischen Bundesamt (2003). Bei einem mittleren Wanderungssaldo (Einwanderung – Auswanderung) von jährlich 200.000 Menschen, ergibt sich eine Reduktion der Erwerbstätigen von etwa 51 Millionen Personen im Jahr 2000 auf ca. 41 Millionen Personen im Jahr 2050. Dies bedeutet somit, dass dem Arbeitsmarkt 2050 10 Millionen potenzielle Arbeitskräfte weniger zur Verfügung stehen als im Jahr 2000. Massiv wirken sich die geburtenschwachen Jahrgänge ab 2020 aus. In den 30 Jahren zwischen 2020 und 2050 ist bei dieser Berechnung ein Rückgang von etwa 9 Millionen potenziellen Erwerbstätigen zu erwarten.

• Not sure: Women back to the labor market, immigration• More older people, less younger people:

Question: Consequences:Be attractive for employee, increasing of recruiting good and talented employees, training & development of young co-worker, bring in older people in their workplace



Attitudes of People

Individalistic attidue

Balance between home and work lifes

Attitude to performance

11,7%

68,3%

20,0%

geringeLeistungsbereitschaft

uneindeutig

hoheLeistungsbereitschaft

highwillingness to

perform

not clear

lowwillingness to

perform



• Individualistic attitude:• Focusing on themselves and their own career development

Balance between home and work livesWillingness to seek out employers who can provide this

Bringt man mit Leistung die Qualität und die Quantität des Arbeitens in Zusammenhang, so kann als Beurteilungsmaßstab beispielsweise das Verhältnis von Ertrag zu Aufwand (Ertragswirtschaftlichkeit) oder die Höhe des Bruttoinlandsproduktes (als Maßstab des materiellen Wohlfahrtsniveaus) herangezogen werden.

• Bei Betrachtung dieser Daten zeigt sich, dass das Leistungsergebnis, trotz der immer wieder proklamierten zunehmenden Freizeitorientierung, heute beträchtlich höher ist als noch vor 40 Jahren, zu den Zeiten der „Blütejahre“ der Wirtschaft.

• Eine Befragung von Jugendlichen (15-24 Jahre) in Bezug auf das Gegensatzpaar Leistungsorientierung versus Genussorientierung zeigt, dass zwischen 1991 und 1999 eine Verschiebung zugunsten der Leistungsorientierung stattgefunden hat (Fritsch, 2000). Hondrich 1988

• Die zwei Antwortmöglichkeiten im Wortlaut:• A1: Ich betrachte mein Leben als eine Aufgabe, für die ich da bin und für die

ich alle Kräfte einsetze. Ich möchte in meinem Leben etwas leisten, auch wenn das oft schwer und mühsam ist.

• A2: Ich möchte mein Leben genießen und mich nicht mehr abmühen als nötig. Man lebt schließlich nur einmal, die Hauptsache ist doch, dass man etwas von seinem Leben hat.



• hat, Leistungsbereitschaft durch einen Index zu messen. Er hat zu diesem Zweck drei Typen der Leistungsbereitschaft definiert: Hoch leistungsbereit, gering leistungsbereit, uneindeutig.

• Als uneindeutig bezeichnete Hondrich diejenigen Befragten, die weder alle Bedingungen der einen noch der anderen Kategorie erfüllten. Diese Gruppe ist irgendwo zwischen den Polen besonders hoher und besonders geringer beruflicher Leistungsbereitschaft einzuordnen.

• Es ergab sich folgendes Bild (siehe Abbildung 14):• Es zeigt sich, dass einen hoher Anteil der Befragten der Kategorie uneindeutig

zuzuordnen ist. Gerade diese Gruppe stellt aber für die Führung eine wichtige Gruppe dar. Diese Gruppe kann relativ leicht motiviert oder auch demotiviert werden. Dies ist eine bedeutende Erkenntnis für die Personalführung. Interessant ist auch eine Untersuchung, die folgende Frage gestellt hat: „Wann haben Sie das Gefühl, etwas geleistet zu haben?“Die Ergebnisse sind in Abbildung 15 ersichtlich.

Questions: Consequences?Other expecations regarding psychological contractLeadership



HRM Debates

Key Environmental Developments

Psychological Contract

HR Strategy: Best Practice v. Best Fit

Future of Work – Different Perspectives



• What are major trends > evolving in the business environmentWhat HR managers should be doingPsychological ContractExpectations employees have about the role they play and what employer provides in returnSwitch from old to new approach – involves less job security and requires less loyaltyInstead: given more development opportunities, given more employee flexibility > Reflects the needs of present business environmentDebate about the extent to which change has taken place

HR Strategy: Best PracticeCertain HR practices that will help organizations achieve competitive advantageClear link between HR activity and business performanceBest practice bundle – advanced selection methods, commitment to employee involvement, investment in T and D, individualized reward systems, etc.

HR Strategy: Best FitIdentifies link between HRM practice and achievement of competitive advantageAll is contingent on particular circumstancesHR policies are required that fit and are appropriate to situationsKey variables include – size, dominant product market, etc.

Future of Work – One PerspectiveSpeculative and impossible to proveA world of work different in many respects than is currently experiencedShift towards knowledge work > Knowledge leadership‘Job’ as we know it will become rarer > self-employmentLong-term work guarantees a thing of the past

Future of Work – A Different PerspectiveContinuation of established approaches Some reversal of trends that developed in 1980s and 1990s > no fall in number of manual jobs: Continuation of traditional approaches towards employment



Activity

How would you characterize your current psychological contract at work?

To what extend and in what ways does it differ from psychological contracts you have experienced in previous jobs or from those of your friends and family?



Philosophy of HRM

HRM is a series of activities which ensures peoples performance, in order to reach the business goals.

HR-managers have to foster and demand line managers in order they bring HR practice to life

More soft HRM than hard HRM



• Different HRM philosophy in different companies and books.Philosophy taught in our courses

• Soft HRM: behavioral approachHard HRM: quantitative, measure approachThe two are not mutually exclusive

• Torrington/Hall/Tayler:‘HRM is a series of activities which: first enables working people and the organization which uses their skills to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled.’ (Torrington, Hall and Taylor, 2005, p.14)



Summary (1 of 2)

HRM is fundamental to all management activities

Generic HRM describes a body of management activities

Specific approach to HRM signifies a particular approach to carrying out these activities

HRM managers are concerned with meeting 4 distinct sets of organisational objectives



Summary (2 of 2)

HRM activities are carried out in various ways through the organisational structure

Current debates over HRM generally focus on the extent and nature of responses needed toface changes in the business environment

There are three main current HRM debates: psychological contract; best practice versus best fit and the future of work

Documents

The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 1 Chapter 1 The nature of Human Resource Management (HRM) What is management?