METO Revision Document – HR PDF
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Summary
This document is a revision guide on Human Resource Management (HRM), covering topics such as HRM Outcomes, HR Planning, Staffing/Resourcing Selection, and various other aspects of HR within an organization. This document analyzes different models, like the McKinsey 7S model, and discusses important concepts like organizational structure, efficiency, and effectiveness.
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METO Revision Document -- HR ============================ Contents {#contents.TOCHeading} ======== [METO Revision Document -- HR 1](#meto-revision-document-hr) [What is HRM? 1](#what-is-hrm) [HRM Outcomes 1](#hrm-outcomes) [HR Planning 1](#hr-planning) [Staffing/Resourcing Selection 2](#staffi...
METO Revision Document -- HR ============================ Contents {#contents.TOCHeading} ======== [METO Revision Document -- HR 1](#meto-revision-document-hr) [What is HRM? 1](#what-is-hrm) [HRM Outcomes 1](#hrm-outcomes) [HR Planning 1](#hr-planning) [Staffing/Resourcing Selection 2](#staffingresourcing-selection) [Training & Development 3](#training-development) [Traditional HRM vs Human Capital 3](#traditional-hrm-vs-human-capital) [Other forms of Capital that co-influence Human Capital to create Intellectual Capital 4](#other-forms-of-capital-that-co-influence-human-capital-to-create-intellectual-capital) [Why Organisation Set Up Matters 6](#why-organisation-set-up-matters) [Typical Organisation Structures 6](#typical-organisation-structures) [Measuring Organisational Effectiveness & Efficiency 7](#measuring-organisational-effectiveness-efficiency) [Organisational Effectiveness (The McKinsey 7S Model) 8](#organisational-effectiveness-the-mckinsey-7s-model) [Summary 8](#summary) What is HRM? ------------ Element of managerial work which is concerned with acquiring, developing, and dispensing with efforts, skills and capabilities of a workforce The plans and policies used by management to direct work tasks, to evaluate, discipline and reward workers. Ability to attract, engage and retain high-performing individuals. Competitive advantage through people: viewing the work force as an asset, not an expense. HRM Outcomes ------------ Four key outcomes of HRM: - Job performance - Job satisfaction - Employee retention - Organisational behaviour HR Planning ----------- Process that identifies current and future human resources needs to achieve performance goals. Link between HRM and the overall strategic plan of an organisation. - Gaps in capabilities - Surpluses in capabilities - Meeting budgetary requirements for employee numbers - Meeting legal obligations - Informing resourcing decisions - Sets the agenda for workforce change - Human resources practices review HR Planning is a continuous process rather than a one-off activity. Staffing/Resourcing Selection ----------------------------- Types: ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Selection Method** **Advantages** **Disadvantages** ------------------------ ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- **Psychometric Tests** \- Objective measurement of abilities and personality traits.\ \- May not fully capture a candidate\'s potential or fit for the role.\ - Can predict job performance and suitability.\ - Can be expensive and time-consuming to administer.\ - Standardized and fair comparison between candidates. - Candidates may feel stressed or anxious about the testing process. **Work Sample Tests** \- Directly assesses job-related skills and performance.\ \- Can be costly and time-consuming to design and administer.\ - Provides a realistic preview of job tasks.\ - May not cover all aspects of the job.\ - High predictive validity for job performance. - Potential for bias if not standardized. **Assessment Centres** \- Comprehensive evaluation using multiple methods (e.g., simulations, exercises).\ \- Very expensive and resource-intensive.\ - High predictive validity and reliability.\ - Can be stressful for candidates.\ - Provides a holistic view of candidates\' abilities and potential. - Requires trained assessors to ensure consistency and fairness. **Interviews** \- Allows for direct interaction and assessment of communication skills.\ \- Subject to interviewer bias and inconsistency.\ - Can assess cultural fit and interpersonal skills.\ - May not accurately predict job performance.\ - Flexible and adaptable to different roles and industries. - Candidates may provide rehearsed or socially desirable responses. **References** \- Provides insights from previous employers or colleagues.\ \- May be biased or not entirely truthful.\ - Can verify candidates\' work history and performance.\ - Limited predictive validity for future job performance.\ - Relatively low cost and easy to obtain. - May not provide a comprehensive view of the candidate\'s abilities and potential. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Training & Development ---------------------- Importance of training for the employer - Uncertain environment: obsolete skills - Redesigning jobs: broader responsibilities - Organisational restructuring: M&A - Mobility of current workforce - Globalisation: cultural assumptions, diversity Importance of training for the employee - New KSAO (knowledge, skills, abilities, other characteristics) - Employment Security - Career - Flexibility - Marketability Traditional HRM vs Human Capital -------------------------------- **Human Capital** **Definition:** Human Capital refers to the economic value of an employee\'s skills, knowledge, experience, and abilities. It emphasizes the investment in employees as valuable assets to the organization. **Key Components:** - **Skills and Knowledge**: The expertise and competencies that employees bring to their roles. - **Experience**: The practical knowledge gained through work and life experiences. - **Abilities**: The innate talents and capabilities of employees. - **Education and Training**: The formal and informal learning that enhances employees\' capabilities. **Objectives:** - **Value Creation**: Enhancing the value employees bring to the organization through their skills and knowledge. - **Investment**: Viewing employees as assets that require investment in training and development. - **Productivity**: Improving organizational productivity through the effective utilization of human capital. - **Innovation**: Leveraging employees\' creativity and expertise to drive innovation and competitive advantage. **Comparison** **Aspect** **Human Resource Management (HRM)** **Human Capital** ----------------------- --------------------------------------------------------------- ------------------------------------------------------------- **Focus** Managing HR processes and functions Investing in and maximizing the value of employees **Approach** Administrative and strategic Economic and value-based **Key Activities** Recruitment, training, performance management, compensation Developing skills, knowledge, and abilities **Objective** Enhancing organizational efficiency and employee satisfaction Creating value and improving productivity through employees **View of Employees** Employees as resources to be managed Employees as valuable assets and investments **Measurement** HR metrics (e.g., turnover rates, training hours) Economic value of skills, knowledge, and experience Other forms of Capital that co-influence Human Capital to create Intellectual Capital ------------------------------------------------------------------------------------- **Social Capital** - **Definition**: The value derived from relationships and networks within and outside the organization. - **Importance**: - **Collaboration**: Facilitates teamwork and knowledge sharing among employees. - **Trust**: Builds trust and cooperation within the organization and with external partners. - **Support**: Provides a support system that enhances employee well-being and job satisfaction. - **Examples**: Team-building activities, mentorship programs, and community engagement initiatives. **Structural Capital** - **Definition**: The supportive infrastructure, processes, databases, and organizational capabilities that enable human capital to function. - **Importance**: - **Efficiency**: Streamlines operations and reduces costs through effective processes and systems. - **Knowledge Management**: Captures and institutionalizes knowledge, making it accessible across the organization. - **Innovation**: Provides the foundation for developing and implementing new ideas and technologies. - **Examples**: IT systems, organizational processes, and intellectual property such as patents and trademarks. **Organizational Capital** - **Definition**: The value derived from the organization\'s culture, leadership, and overall structure. - **Importance**: - **Culture**: Shapes the behavior and attitudes of employees, fostering a positive work environment. - **Leadership**: Provides direction and inspires employees to achieve organizational goals. - **Structure**: Defines roles, responsibilities, and communication channels, ensuring effective coordination. - **Examples**: Organizational culture initiatives, leadership development programs, and organizational design. **Client Capital** - **Definition**: The value derived from relationships with clients and customers. - **Importance**: - **Customer Loyalty**: Builds long-term relationships that lead to repeat business and referrals. - **Feedback**: Provides valuable insights for improving products and services. - **Satisfaction**: Enhances customer satisfaction and brand reputation. - **Examples**: Customer relationship management (CRM) systems, client feedback mechanisms, and loyalty programs. **Network Capital** - **Definition**: The value derived from an organization\'s internal and external networks. - **Importance**: - **Knowledge Exchange**: Facilitates the sharing of industry insights, trends, and best practices. - **Opportunities**: Provides access to new markets, technologies, and business opportunities. - **Support**: Enhances support through professional networks and collaborative partnerships. - **Examples**: Industry associations, professional networks, and strategic alliances. **Intellectual Capital** - **Definition**: The collective knowledge, information, intellectual property, and experience that create wealth. - **Importance**: - **Competitive Advantage**: Provides a unique edge through proprietary knowledge and innovations. - **Value Creation**: Enhances the value of products and services through intellectual assets. - **Sustainability**: Supports long-term growth and sustainability through continuous learning and innovation. - **Examples**: Patents, trademarks, proprietary technologies, and organizational knowledge. Why Organisation Set Up Matters ------------------------------- **1. Alignment with Strategy:** - **Purpose**: Ensures that the organizational structure supports the company\'s vision and strategic goals. - **Example**: A company shifting to a customer-centric strategy may need to reorganize to focus more on customer service and support. **2. Adaptability:** - **Purpose**: Allows the organization to respond quickly to changes in the market, technology, or competitive landscape. - **Example**: A tech company adopting agile methodologies to stay competitive in a fast-paced industry. **3. Efficiency:** - **Purpose**: Streamlines operations, reduces redundancies, and improves communication and coordination. - **Example**: A manufacturing firm reorganizing to reduce production bottlenecks and improve workflow. **4. Employee Engagement:** - **Purpose**: Enhances job satisfaction and motivation by creating clear roles, responsibilities, and career paths. - **Example**: A company implementing a flatter structure to empower employees and encourage innovation. Typical Organisation Structures ------------------------------- **1. Functional Structure:** - **Description**: Organizes employees based on specialized functions (e.g., marketing, finance, production). - **Advantages**: Simplifies control mechanisms, clear responsibilities, specialization. - **Disadvantages**: Functional silos, lack of coordination between functions. **2. Project-Based Structure:** - **Description**: Organizes employees around specific projects or products. - **Advantages**: Cross-functional collaboration, focus on project goals. - **Disadvantages**: Duplication of effort, coordination challenges. **3. Matrix Structure:** - **Description**: Combines functional and project-based structures, with employees reporting to both functional and project managers. - **Advantages**: Balances different business dimensions, integrates knowledge. - **Disadvantages**: Complicated decision-making, multiple bosses. **4. Multidivisional Structure:** - **Description**: Organizes the company into semi-autonomous divisions based on products, services, or geographic regions. - **Advantages**: Flexibility, control by performance, specialization. - **Disadvantages**: Duplication of effort, fragmentation. **5. International Structure:** - **Description**: Organizes the company based on geographic regions or global functions. - **Advantages**: Balances regional and central control, integrates global knowledge. - **Disadvantages**: Complex decision-making, regional vs. central power struggles. **6. Agile and Holocratic Structures:** - **Description**: Focus on lean, flexible, and customer-oriented setups with self-organized teams. - **Advantages**: Increased adaptability, customer focus, individual responsibility. - **Disadvantages**: Mainly unproven outside of smaller companies or specific industries. Measuring Organisational Effectiveness & Efficiency --------------------------------------------------- **1. Efficiency Metrics:** - **Spans and Layers**: Analysing the number of direct reports per manager and organizational layers. - **Ratios**: - Revenue per head - Cost per head - Resource cost/net sales ratio - **Other Measures**: - Sales per head (sales force) - Billed utilization (service team) **2. Effectiveness Metrics:** - **Goal Achievement**: Assessing the extent to which organizational goals and objectives are met. - **Customer Satisfaction**: Measuring customer feedback and satisfaction levels. - **Employee Engagement**: Evaluating employee satisfaction, retention, and productivity. - **Innovation**: Tracking the number of new products, services, or processes developed. Organisational Effectiveness (The McKinsey 7S Model) ---------------------------------------------------- **1. Strategy:** - **Definition**: The plan devised to maintain and build competitive advantage. - **Importance**: Aligns the organization\'s actions with its goals and market conditions. **2. Structure:** - **Definition**: The way the organization is arranged, including roles, responsibilities, and communication channels. - **Importance**: Ensures efficient workflow and coordination. **3. Systems:** - **Definition**: The processes and procedures used to manage and operate the organization. - **Importance**: Supports the execution of strategy and daily operations. **4. Shared Values:** - **Definition**: The core beliefs and cultural elements that guide behaviour and decision-making. - **Importance**: Creates a cohesive and motivated workforce. **5. Style:** - **Definition**: The leadership approach and management style within the organization. - **Importance**: Influences organizational culture and employee behaviour. **6. Staff:** - **Definition**: The employees and their general capabilities. - **Importance**: Ensures the organization has the right people with the right skills. **7. Skills:** - **Definition**: The competencies and capabilities of the organization and its employees. - **Importance**: Drives performance and competitive advantage. Summary ------- - **Frequent Organizational Change**: Organizational change is becoming more common due to dynamic competitive environments, but success rates are often low. - **Flexible and Agile Models**: New organizational models are emerging to create leaner, more customer-oriented structures, though they are mainly unproven outside specific contexts. - **Holistic View**: Organizational effectiveness requires looking beyond structure to include all 7 elements of the McKinsey 7S model. - **Role of Managers**: Managers in engineering and technology must adapt, drive, and lead organizational development to achieve strategic goals.