HRM - Literature 1 Flashcards
In order to manage the relationships between stakeholders’ organisations apply their HRM strategy, which is composed of:
- Recruitment and selection of the employees;
- Terms and conditions employees work under;
- Equal treatment within an organisation;
- Treatment of rule-breaking employees;
- Payment and rewarding policies for employees;
- Learning and development opportunities provided by an organisation.
The history of HRM (industrial welfare)
Industrial Welfare (in the 19th century)
HRM originated with the industrial revolution (middle of 19th century), following the invention of the factory system.Driven by religious values or recognition of the link between employee welfare and factory output, employers improved upon the initial dire conditions in factories through the provision of workplace and family amenities starting in the 1890s.
!!! This led to the creation of the position of the “welfare officer”, who only dealt with employee issues and was the first real case of HR practices still used today (e.g., compliance, health and safety legislation etc.)
The history of HRM (Scientific Management)
Scientific Management
In the early 20th century, Fredrick Taylor developed the “scientific management movement”, which aimed to increases productivity through greater efficiency in production practices, selection and training practices, and incentivised pay for workers. Following the production line and large factories in the 1920s, “labour managers” and “employment managers” were introduced to the workforce. They oversaw the centralisation and standartisation of certain emploment-related functions (e.g., hiring, payroll, record keeping, and dealing with issues such as absences, recruitment, and queries over bonuses etc.) The contemporary concepts of lean manufacturing and continuous improvement are rooted in the scientific movement.
!!! The tight control, resulting from the scientific approach is associated with the rise of collective action and trade unions.
Trade Unions
organised groups of workers which represent members’ interests in maintaining or improving the conditions of their employment by acting collectively as a way to challenge employer power
Industrial relations
the relationship between employers and employees, with a focus on those areas of the employment relationship where employers deal with employee representatives, such as trade unions, rather than individuals.
The history of HRM (Behavioural Science)
The third phase of HRM’s evolution, around the time of the Second World War, known as the “Hawthorne Effect” led to an emphasis on personal development, a better understanding of group work, and the importance of working conditions as a means of motivating employees. This shift in focus became known as the “behavioural science movement”. The 1960s and 70s saw the introduction of a large body of legislation, which provided rights for employees around dismissals, equal pay, pension rights, and health and safety. These changes led to the emergence of the job title “personnel officer and the business discipline of “personnel management” (PM)
The history of HRM (HRM Today)
The contemporary concept of HRM started to emerge in the 1980s, following a move to differentiate traditional PM from HRM. HRM became increasingly more focused on relationships with the individual rather than the trade union and, thus, led to the current definition of HRM: HRM is the strategic and integrated approach taken by an organisation to the management of its most valued assets, namely its people.
! This shift in HRM resulted from a decline in traditional. manufacturing industries and significant growth in the service sector and the emergence of the knowledge worker, which brought about a decline in trade union membership and the perceived significance of trade unions.
With the rise of smartphones and mobile broadband, employee’s working environment changed dramatically => tailored personal development, individual performance-related reward and non-standard hours of work.
Strategic HRM
The term strategic human resource management (SHRM) has emerged as a direct result of HRM being regarded as an essential component of business strategy. SHRM takes macro-level approach, whereas HRM operates at the micro-level.
SHRM is where HR is coordinated and consistent with the overall business objectives, goal and strategy in order to increase business performance.
HRM and the business context. Which internal (and external) factors to the organisation creates distinction with the HRM practices?
Internal factors:
- size and the structure of the organisation
- sector the organisation operates in
- organisational life cycle
- financial health of the organisation
- values and ideology of senior management
- organisational culture
- workforce characteristics
- established custom and practice
External factors:
- competition
- technology
- labour market
- legislation
- regulation and ethics
John Storey (1989) identified four critical features that he believed characterise contemporary HRM, what are these?
1) HRM is explicitly linked with corporate strategy;
2) HRM focuses on commitment rather than the compliance of employees;
3) Employee commitment is obtained through an integrated approach to HR policies in the areas of rewards, selection, training and appraisal;
4) HRM is not just the domain of specialists in the HR function; rather, HRM is owned by line managers as a means of fostering integration.
Lifecycle of the employee:
Attract & Select:
- employer branding
- organisational design
- organisational structure
- recruitment strategy
- selection techniques
- onboarding
Manage & develop:
- Organisational culture
- management style
- performance management
- motivation
- level of employee participation
- discipline and grievance
- learning
- development
Reward & Retain
- pay and benefits
- recognition
- employee engagement
- talent management
- succession planning
- career planning
- employee welfare
- employment relations
Separate:
- exit interviews
- outsourcing
- retirement
- redundancy
The different ways HR strategy can be linked to business strategy:
1) Separation model
2) fit model
3) dialogue model
4) holistic model
5) HR-driven model
HR practitioners have an impact across four different dimensions:
1) Individual level
- building effective relationships and good reputations across the business
2) Organisationally
- they are responsible for the design and delivery of appropriate HR practices that reach right across the organisation.
3) Contextually
- their understanding of the internal and external environments specific to their organisation, are vital in developing the appropriate HR strategy
4) Strategic level
- they have a role in developing leader, manager, and employee perceptions of the HR function as adding value and enabling them to deliver on the business strategy, rather than just managing the more basic operations of the employment relationship.
The following competencies are needed in the mix of the HRM function:
1) credible activists
- trusted; take action positively as needed by business
2) capability builders
- deliver the appropriate HR practices, to build and sustain the workforce
3) change champions
- responding to the external pressures and pace of change, engaging key stakeholders, enabling flexible and adaptable capabilities in the organisation.
4) innovators and integrators
- using latest scientific evidence and business insights to continuously develop new HR practices, in a sustainable and integrated manner
5) technology proponents
- skills to leverage available technologies, that facilitate the effective and efficient delivery of HR practices. Also use HR analytics, so they are positively impacting the business strategy.
Line managers
managers who have employees directly reporting to them and who have a higher level of responsibility than those employees.
! The various day-to-day HR practices need to developed to line managers in order to allow for faster decision-making that is more in tune with business needs.
The Michigan model of HRM
Also known as the “fit” or the “contingency” model. Developed by Michigan Business School. Stressed the importance of that alignment, firstly between the HR strategy and the business strategy. Secondly, between the HR practices themselves.
The 5 key areas on which HRM should focus:
1) Selection of the most suitable individuals to meet the needs of the business;
2) Managing performance to achieve corporate objectives
3) Appraising performance and providing feedback
4) Providing rewards for appropriate performance that achieve specific goals
5) Developing employees to meet the needs of the business
Criticism of this model include one-way nature of the HR and business strategy relationship and the lack of recognition of employee interests and behaviour choice.
Guest Model of HRM
This model represents a compromise between the low-involvement and high-involvement approaches of the previous two models (universal and michigan/fit/contingency models). Four key principles, if followed, combine to increase organisational effectiveness:
1) Strategic integration: HR policies must be aligned to the needs of the business strategy, and the various aspects of HRM must be consistent and mutually supportive
2) High commitment: commitment is sought, in that employees are expected to identify closely with the interests of the organisation and behave accordignly
3) Flexibility: this involves the ability and willingness of employees to demonstrate flexibility and adaptability to change as business demands change
4) High quality: this quality of management and staff is important in achieving high performance.
Universal approach to HRM
- Stakeholders include shareholders, leaders, managers, employees, government, etc.
- Each stakeholder has unique, legitimate interests.
- HRM strategy should align with business strategy and reflect stakeholders’ interests.
- Consider situational factors: economic climate, labor market status, workforce characteristics, trade union membership, legislation.
- Stakeholders’ interests + situational factors = foundation for HR practices.
- Outcome: Changes in organizational behaviors or capabilities, leading to specific organizational outcomes.
- Criticisms: Complexity and high involvement approach.
Strategic HRM Contingency Approach
The contingency or “best fit” approach is the belief that organisational context provided the direction as to which HR practices should be chosen. Proponents of this view believe there is no universal answer to the choice of HR practices. The choice is contingent on the context of the organisation and its business strategy. So, each organisation can choose a different set of practices, depending on their organisation-specific context and strategy. External alignment is the key issue.
Strategic HRM Universalist Approach
The Universalist approach focuses on the existence of one set of HRM “Best practices” aimed at creating and enhancing high levels of employee commitment and performance; these will result in superior levels of organisational performance, regardless of the context in which the organisation operates and the competitive strategy of the firm. Pfeffer’s seven HRM practices are:
1) recruiting the right people
2) high wages clearly linked to organisational performance
3) employment security
4) information sharing
5) investment in training and skill development
6) self-managed teams and decentralised decision-making
7) reduced status differentials
these hr practices are also referred to as high involvement and high commitment. In recent years there has been a rise in the use of low-involvement HRM with the growing use of zero-hours contract.
Human resource information system
HRIS is a software system for data entry, tracking and information needs of the HR function. Even when organisations use an HRIS, the data is often not utilised within the organisation to support decision-making.
Human resource (HR) analytics
Human resource analytics is the use of people-related data in analytical processes to address business issues. HR analytics is regarded as an essential capability to ensure HR’s future as a strategic management function for transforming organisational performance for the better.
Different HR analytics definitions
1) Fitz-Enz and Mattox define HR analytics as “primarily a communication device, bringing together data from disparate sources such as surveys, records and operations to paint a cohesive, actionable picture of current conditions and likely futures”. They argue that HR analytics is not just statistics, but an understanding of interactions and relationships is also an important part.
2) Edwards and Edwards have more narrow definition and define HR analytics and define it as “the systematic application of predictive modelling using inferential statistics to existing HR people-related data in order to inform judgments about possible causal factors driving key HR-related performance indicators.”
3) Mondare et al. have the broadest definition and define HR analytics as a process that demonstrates the direct impact of people on importnat business outcomes. Inferential statistics make predictions about populations based on a sample of the population. Causal factors are determinants.
4) Lewler et al. distinguish HR analytics and HR metrics by arguing that HR metrics are measurement of specific HR outcomes, e.g., efficiency, effectiveness and impact. HR analytics are techniques used to show the impact of HR activities through the analysis of HR metrics.
5) Marler and Boudreau’s research shows that HR analytics is often defined by authors as either analysis or decision-making process.
The definition adopted in the chapter defines HR analytics as an “HR practice enabled by information technology that uses descriptive, visual and statistical analyses of data related to HR processes, human capital, organisational performance, and external economic benchmarks to establish business impact and enable data-driven decision-making”
An HR analytics strategy should meet 3 aims:
1) Connect HR data with business data to explore how the HR function influences outcomes at the organisational level
2) Enable HR leaders to design and implement HR management activity in an efficient and effective manner
3) Allow the organisation to measure the effectiveness of HR to deliver its objectives.
Forms of HR analytics analysis
1) Descriptive: the primary focus at the description level is on cost-reduction and process improvement. Efficiency-based HR metrics provide the basis of investigation at this level. The aim of descriptive analytics is to describe relationships and current and historical data patterns through data mining and periodic reports.
examples: employee turnover rate, the cost of new hires, training costs.
2) predictive: predictive analysis includes techniques such as statistics, modelling and data mining that use current and historical facts to make predictions about the future through the use of probability.
example: the probability of selecting the right employees for promotion
3) Prescriptive: prescriptive analytics moves beyond prediction by providing decision options for workforce optimisation. It is used to analyse complex data to predict outcomes and show potential impacts, where various alternative scenarios are presented.
example: return on investment from different learning and development programmes resulting in changes to the bottom line
The sources of data:
1) People - includes basic demographic information, e.g., age, gender, and nationality, specific qualifications and skills of the employee, individual reward and remuneration
2) Programme - includes employee attendance, participation in training and development activities, leadership development and key projects.
3) Performance, includes performance ratings from supervisors, performance rating from peers and customers if using 360-degree feedback, goal attainment, talent and succession plans and assessments.
Bersin recommends a four-level process in the development of HR analytics capabilities in organisations, which allows a gradual build-up of analytical skills and capacities. The four levels are:
1) Develop junior analysts’ capabilities in defining metrics and ensure that the key data is collected, reported and stored in a usable manner.
2) Creation of a reporting function that links HR information to business objectives. Furthermore, relevant external data is presented in a visually interesting and understandable format. Following these steps, the data can be used to persuade senior management that there is a need of action on strategic matters.
3) Strategic analytics using modelling and statistical tools which focuses on aspects such as the segmentation and optimisation of talent.
4) Predictive skills allow organisations to forecast risk by designing algorithms.
Categorical variables compromise a number of categories, e.g., job type, job level. There are three types of categorical measures:
1) Binary variables; only consist of two categories, e.g, a driving licence as you either do or do not have it;
2) Nominal variables; consist of three or more categories, e.g, nationality;
3) Ordinal variables; categorical variables that can be ranked, e.g., ranking employees based on their education level.
Continuous variables can be measured on a numerical scale, e.g., employee salary. A “likert-type scale” is usually used to measure the strength of employee attitudes in organisation, e.g., scale ranging from 1 (very dissatisfied) to 5 (very satisfied). Variables measured via various forms can be analysed using a number of sophisticated software programs, e.g., advanced excel, spss and the R project.
The workforce planning:
the workforce planning is ensuring the right number of people with the necessary skills are employed in the right place at the right time to help deliver an organisation’s short- and long-term objectives.
The human resource planning cycle:
1) Stocktaking
(the identification of the factors likely to shape the operation of the firm)
- External and internal factors are assessed separately. Issues relating to the economic climate, employment legislation and technological advancement are all likely to influence the present and future plans of the firm.
- The numbers employed, the profile of the workforce, training provision history, work conditions, performance reviews, team dynamics, and so on, are just some organisational factors that shape how employees behave and perform in their roles.
2) Forecasting
- the stage of the human resource planning cycle where the organisation must predict the demand for and supply of labour in order to meet the strategic goals of the firm.
- Examining past business trends can help a firm make more sound predictions for the future.
- An important dimension of assessing the internal supply of labour is what the HR function describes as succession planning, which refers to the process through which a successor for a departing staff member can be found in a way that minimises any disruption to the organisation.
3) Develop action plans
- Action planning is the stage in the human resource planning cycle where the organisation makes a specific plan regarding how best to use the workforce to help meet the strategic goals of the firm. Action plans would typically involve recruitment, retraining or redeployment as appropriate.
- Talent management is the systematic and integrated approach taken within an organisation to the attraction, recruitment, engagement and retention of those employees who have been identified to be of particular value to the strategic development of the firm.
4) Implementation
5) Assess and adjust plans if required
Key talent identification terms:
1) Underperformers are those employees who are currently not aching a high level of performance and have little potential to make a key contribution to the strategic development of the firm.
2) Key performers are those employees who are currently achieving a high level of performance but have little potential to make a key contribution to the strategic development of the firm.
3) Untapped potentials are those employees who are currently not achieving a high level of performance but with the necessary changes have the potential to make a key contribution to the strategic development of the firm.
4) HIPOs (High potentials)/stars are those employees who are currently achieving a high level of performance and have the potential to make a key contribution to the strategic development of the firm.
The Recruitment Process?
The first stage in the recruitment process is a job analysis. Detailed information about the role and responsibilities of the vacant position is gathered in this stage, usually by someone in HR. The key outputs of the job analysis are a job description and a person specification.
Job analysis
The process used to gather detailed information about the various tasks and responsibilities involved in a position. Through this process, the knowledge, skills, abilities, attitudes and behaviours associated with successful performance in the role are also identified.
Job Description
The detailed breakdown of the purpose of the role and the various tasks and responsibilities involved in a particular job.
Person Specification
This specifies the type of person needed to do a particular job. It essentially translates the job description into human terms.
What is the difference between formal and informal methods in terms of vacancies?
Formal methods are those where the vacancy is officially advertised, and informal methods are those where candidates find out informally about a potential vacancy. Candidates may also send spontaneous (unsolicited) applications to the organisation, which is also recognized as an informal method of recruitment.
Internal Recruitment
Takes place when a vacancy is advertised to potential candidates from within the existing employee base in the organisation. It is cost-effective since the job vacancy advert can be posted on the intranet site, and as the “new recruit” is actually an existing employee, who is already familiar with the organisational culture, products and processes. Internal recruitment is important for staff development as well as staff morale in the organisation.
External recruitment
It occurs when a vacancy is advertised to potential candidates outside the existing employee base in the organisation. External and internal recruitment mirror each other in terms of advantages and disadvantages.
E-recruitment
The use of the internet to help attract candidates to apply for vacancies in the organisation. Social networking sites potentially offer speed, efficiency and the ability to target and attract specific candidates in the recruitment process. For candidates, it potentially offers multiple sources of information about the employer and the possibility of contact with existing employees to gain a more realistic job preview. The main disadvantage is the sheer number of potential applicants that result from an online job advert, which can then be difficult to filter and shortlist.
International recruitment
Used where the vacant position requires skills and/or competencies that are not readily available in the national context. International recruitment is often used for senior executive positions, where the best person for the job is sought, regardless of nationality. However, the costs associated with overseas recruitment can be high. If the candidates are shortlisted, the organisation will have to cover transport costs for interviews and relocation. There may also be issues to be dealt with in relation to immigration laws and work visas.
Shortlisting
sifting process where those candidates who most closely match the predetermined job-specific requirements are separated out from all other applicants. A shortlisting matrix is used to evaluate each candidate against these criteria. The selection criteria used in this matrix are drawn from the job requirements and person specifications and should have already been identified prior to the position being advertised.
Online Screening
A useful way for organisations to reduce the number of applicants; however, it may eliminate suitable candidates who actually meet the criteria but have not used the specific words searched for by the ATS. As part of the online screening process, organisations can also use online ability tests and personality questionnaires as an initial method of screening applications.
What does person-organization fit refers to?
it refers to the extent to which a person and an organisation share similar characteristics and/or meet each other’s needs.
What does person-job fit refers to?
It is the degree to which there is a match between the abilities of the person and the demands of the job, or the desires of a person and the attributes of the job.