Lecture 1 - Fundaments of HR.pptx

FUNDAMENTS OF HUMAN RESOURCE MANAGEMENT THE ESSENCE OF HR MANAGEMENT  HUMAN RESOURCE MANAGEMENT DEFINED Organizations depend on people. They have to obtain and develop the capable, skilled, and engaged employees they need, manage their performance, reward them in ac...

FUNDAMENTS OF HUMAN RESOURCE MANAGEMENT THE ESSENCE OF HR MANAGEMENT  HUMAN RESOURCE MANAGEMENT DEFINED Organizations depend on people. They have to obtain and develop the capable, skilled, and engaged employees they need, manage their performance, reward them in accordance with their contribution, create and maintain positive employment relationships and provide for their wellbeing. In essence, this is what human resource management (HRM) is about. How HRM is practiced will vary according to the type of organization, the kind of people employed and the context in which the organization operates. “Managing people in organization”  HUMAN RESOURCE SYSTEM HR strategies, which define the direction in which it is intended that HRM should go in each of its main areas of activity. The concept of strategic human resource emphasizes the importance of integrating HR strategies with corporate strategies to ensure that the former support the achievement of organizational goals. It also stresses the need to integrate strategies covering different aspects of HR with one another. HR policies, which set out what HR does and provide guidelines defining how specific aspects of HR should be applied and implemented. HR practices, which consist of the HR activities involved in managing and developing people and in managing the employment relationship. These are part of the HR architecture and provide the core of the system.  HR PROCESSES Strategic human resource management (SHRM) – an approach to managing people that is concerned with ensuring that key issues of human resource management are dealt with strategically in order to support the achievement of organizational goals. Human capital management (HCM) – treating people as assets and achieving competitive advantage by strategic investments in those assets. Knowledge management – storing, sharing and making good use of the wisdom, understanding and expertise accumulated in an organization about its processes, techniques and operations. HR analytics – the application of mathematical, statistical and data collection techniques to obtain data on and therefore insight into HR matters concerned with the application and impact of HR employment, learning and development and reward strategies, policies and practices, and to inform evidence- based HR decisions. Digital HRM – the use of digital technologies in the form of web-based applications involving analytics, artificial intelligence (AI), cloud technologies, computer hardware and software, smart phones and social media to help deliver HRM services. HR procedures – these set out the ways in which certain actions concerning people should be carried out by the management or individual managers. Employment law compliance – ensuring that employment law requirements are met by the organization and its individual managers and employees and dealing with employment law issues if they arise.  HR PRACTICES Organization – designing organization structures, work systems and jobs and developing organizations to ensure that they function effectively. Resourcing – the employment activities of: workforce planning – establishing an organization’s people requirements so that plans can be made to satisfy them; recruitment and selection – finding the people the organization needs and deciding which applicants or candidates should be appointed to fill vacancies. talent management – ensuring that the organization has the capable and well qualified people it needs to attain its goals. It involves the systematic attraction, retention, identification and development of individuals who are of particular value to an organization.  HR PRACTICES Employment – managing the employee experience (what happens to people at work and how they feel about it) and dealing with the following aspects of employment in an organization: induction (onboarding), release and retention of employees, absence management, fulfilling the obligations of the organization to promote inclusion and manage diversity, seeking ways in which to increase flexible working to benefit both individuals and the organization and managing home and hybrid workers. Learning and development – ensuring that the organization has the capable people it needs to achieve its goals. Performance management – the continuous process of agreeing objectives for individuals and teams, aligning those objectives with the strategic goals of the organization, planning performance to achieve the objectives, reviewing and assessing progress, taking steps to improve performance when necessary and developing the capabilities of people. Reward management – the development, implementation and maintenance of a reward system that provides for contribution and merit to be recognized by financial and non-financial means. Employment relations (also known as employee relations) – managing the employment relationship and the psychological contract and relating to employees either collectively through trade unions industrial relations) or individually. Employee wellbeing – improving the quality of working life of individuals in terms of their experience of work – how satisfied they are with their job and how the organization treats them. International HRM – the process of managing people across international boundaries by multinational companies (MNCs). HR processes and procedures – implementing HRM through a variety of processes and procedures that affect the approach adopted in practice areas and support the implementation of HR strategies, policies and activities.  TREATING EMPLOYEES AS STAKEHOLDERS Employees have a stake in their organization that is just as important as the stake held by owners and senior management. The attention given to the interests of employees has to equal the attention given to the interests of the business. Treating employees as people rather than as exploitable resources Comparison between HRM and people management COMPARISON BETWEEN HRM AND PEOPLE MANAGEMENT  FUNDAMENTS OF HUMAN RESOURCE MANAGEMENT HUMAN CAPITAL MANAGEMENT  DEFINITION Human capital management (HCM) is an approach to managing people which recognizes their value and the importance of measuring that value. It regards people as assets and emphasizes that competitive advantage is achieved by strategic investments in those assets. Human capital management (HCM) is concerned with the knowledge, skills, abilities and capacity to develop and innovate possessed by people in an organization and the added value they therefore provide. It treats them as assets to be invested in through resourcing, talent management and learning and development policies and practices. The aim is to enhance the value of the organization’s human capital so that the business can perform successfully in the short and longer term and achieve competitive advantage. HCM also involves measuring the value of an organization’s human capital, assessing the contribution of people and measuring the effectiveness of the HR practices used to manage them.  THE CONSTITUENTS OF HUMAN CAPITAL Human capital consists of intellectual, social and organizational capital. The intellectual knowledge possessed by people is enhanced by the interactions between them (social capital) and generates the institutionalized knowledge possessed by an organization (organizational capital). Types of the Capital: 1) Intellectual capital 2) Social capital 3) Organizational capital  MEASURING HUMAN CAPITAL Human capital management is concerned with measuring the value of people – establishing their contribution to organizational performance in order to provide insight into the strengths and weaknesses of the organization’s approach to managing this key resource.  MEASURING HUMAN CAPITAL Absolute measures: A single rater, eg the head of HR, makes an overall assessment using a scale including items such as levels of education, training, skills and abilities, and performance – but this is a subjective judgement from someone who may not have the information required to make it. Multiple raters – this reduces individual bias but is still largely subjective. Aggregation of individual measures to a higher level of analysis (team or organization) – the challenge is to find individual levels of analysis that can be aggregated.  MEASURING HUMAN CAPITAL Specific measures: workforce composition: demographics data including age, gender and ethnicity; recruitment and retention: number of resignations/vacancies/applications, length of service; skills, qualifications and competencies: levels of expenditure on training, types of training provided, length of time to reach competence levels, data on training needs; performance management: performance management results, productivity and profitability data, targets set and met, levels of customer satisfaction, customer loyalty; employee relations and voice: findings from employee attitude surveys; pay and benefits: overall wage bill costs, distribution of individual performance-related pay awards, level of total reward package; regulatory compliance: includes data on theb compliance of employees to established standards and guidelines for working practices in particular disciplines;  APPROACHES TO HRM RAISED BY HUMAN CAPITAL THEORY What are the key performance drivers that create value? What skills have we got? What skills do we need now and in the future to meet our strategic aims? How are we going to attract, develop and retain these skills? How can we develop a culture and environment in which organizational and individual learning takes place that meets both our needs and the needs of our employees? How can we provide for both the explicit and tacit knowledge created in our organization to be captured, recorded and used effectively? What should we do to demonstrate to our employees that they are valued?  FUNDAMENTS OF HUMAN RESOURCE MANAGEMENT THE CONTEXT OF HR  THE CONTEXT OF HRM Typical approaches to HRM and typical organizations don’t exist. In accordance with contingency theory, the situation of an organization – its context – will strongly influence how it operates. Internal and external environmental factors exert considerable influence on how the organization functions. This includes the need for concern over the impact of the organization on issues such as pollution. Environmental factors will have a direct effect on the organization’s human resource management policies and practices.  THE CONTEXT OF HRM The internal environment: The internal environment of an organization consists of its social system (the ways in which work groups are organized and the interactions that take place) and its technical system (the ways in which the work is organized and carried out to deliver products or services to customers, clients or the public). The other contextual factors are the sector in which the organization operates (eg public, private, voluntary, manufacturing, service), and its size, complexity, technology, culture and financial circumstances. Two other important factors are the type of people it employs and the presence or absence of trade unions. The external environment: The external environment impacts on organizations through the forces of national and international competition, the state of the financial and labour markets, economic and societal trends, the deregulation of markets and the impact of globalization. Another major influence is the constant state of change in the external environment, which may be turbulent, even chaotic, as a result of such events as the Covid-19 pandemic and, in the UK, Brexit. This is about the impact of ‘VUCA’ (volatility, uncertainty, complexity and ambiguity).  THE LABOUR MARKET The labour market is the place where employers seek workers and workers seek employment. In the latter half of 2021 serious problems in the supply of labour emerged. They had existed before but, according to the CIPD (2021), were intensified by the Covid-19 pandemic not, as was often assumed, by Brexit. The intensity of this problem may diminish over time but the likelihood is that labour shortages of one sort of another will persist for a variety of reasons. The problems for employers may be compounded further by demographic and population trends, which do not point to a growth in the workforce.  FUNDAMENTS OF HUMAN RESOURCE MANAGEMENT THE FUTURE OF WORK  THE FUTURE OF WORK The nature of work is changing rapidly. Work is the exertion of effort and the application of knowledge and skills to achieve a purpose. Most people work to earn a living – to make money. But they can also work because of the other satisfactions it brings, such as doing something worthwhile, a sense of achievement, the opportunity to use and develop capabilities, companionship and the scope to exercise power. Within organizations, the nature of the work people carry out and what they feel about it are expressed in the employment relationship and by the psychological contract. This is summed up by the term ‘the employee experience’ which covers everything that happens to people during the course of their employment.  THEORIES EXPLAINING THE MEANING OF WORK Labour process theory: idea was that surplus is appropriated from labour by paying it less than the value it adds to the labour process. Agency theory: Agency or principal agent theory indicates that principals (owners and managers) have to develop ways of monitoring and controlling the activities of their agents (staff). Exchange theory: Exchange theory explains organizational behavior in terms of the rewards and costs incurred in the interaction between employers and employees. Unitary and pluralist frames of reference: One of the often-expressed aims of human resource management is to increase the engagement of people and their commitment to the organization by getting them to share its values and integrate their own work objectives with those of the organization. The job demands-resources model: The job demands-resources model classifies job attributes and other related work experiences into two broad categories: (1) job demands that can be challenging such as complexity, responsibility, workload, or a hindrance, for example role ambiguity, conflict and overload, and (2) job resources, for example autonomy, supervisory support, feedback, access to information, development opportunities. Attitudes to work: Attitudes to work vary. Some people just see work as a means to an end while others see it as a source of fulfillment.  THE FACTORS AFFECTING WORK The nature of work is changing. Organizations are functioning more flexibly. They tend to specialize more and are organized organically, ie they are relatively informal. The factors affecting work: The impact of emerging technologies Work intensification  WHAT IS HAPPENING TO WORK NOW? Zero-hours contracts: Zero-hours contracts are most common in retail and hospitality and in situations where work fluctuates unexpectedly so that the employer cannot always guarantee it. Home and hybrid working: Home working is defined as the situation when someone works full or part time at home. Hybrid working takes place when someone works for part of the week at home and the rest of the week in their normal place of work. More people have been working at home.  THE FUTURE OF WORK CONCLUSION The main trends are the increased use of new technology, the pursuit of flexibility by employers, the continued existence of the gig economy, the use of zero-hours contracts and a large proportion of employees in some organizations working from home full or part time. But while these trends are important there are other more fundamental issues concerning responsible business and social justice. Thank You! Questions?