Chapter 1: Perspectives on Human Resources Management: Exploring Why HRM Matters
Human Resource Management: An introduction
Learning Objectives
- Define HRM and explain its evolution over the years.
- Explain the role of HRM in organizations.
- Define, discuss and explain the major HRM activities.
- Explain the professional and personal skills needed to be successful in HRM.
- Understand the role of the Quebec HR professional order.
- Understand how the business context influences HRM.
Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must view people as intellectual capital. This will be our focus throughout the text: achieving organizational effectiveness through the use of people’s skills and abilities.
1. What Is HRM?
Human resource management (HRM) is an integrated set of processes, practices, programs, and systems in an organization that focuses on the effective deployment and development of its employees. These processes include employing people, training them, compensating them, developing policies relating to them, and developing strategies to retain them. It is, by most account, one of the most critical functions of an organization, because for an organization to be efficient, it needs employees and systems that support them. Think of an organization that you admire (you can use Fortune’s ranking of the World’s Most Admired companies). If you look closely at these companies, you’ll find that they are all built, without exception, around efficient, strong, and innovative HR processes.
1.1. HRM: A Short History
As a field, HRM has a long history. It takes root in the study of psychology, organizational behaviour, and industrial engineering. The field has undergone many changes over the last twenty years, giving it an even more important role in today’s organizations. In the past, human resource management (HRM) was called the personnel department. This department was in charge of hiring people and dealing with the paperwork related to employment. More recently, however, the personnel department has been divided into human resource management and human resource development, as these functions continue to evolve. HRM is not only crucial to an organization’s success, but it should be part of the overall company’s strategic plan, because so many businesses today depend on people to support their vision and accomplish their mission. Strategic planning plays an important role in how productive the organization is.
Figure 1.1. Examples of Differences between Personnel Management and HRM
| Personnel Management Focus | HRM Focus |
|---|---|
| Administering of policies | Helping to achieve strategic goals through people |
| Stand-alone programs, such as training | HRM training programs that are integrated with company’s mission and values |
| Personnel department responsible for managing people | Line managers share joint responsibility in all areas of hiring and management of people |
| Creates a cost within an organization | Contributes to the profit objectives of the organization |
In the book HR From the Outside In (Ulrich, Younger, Brockbank, & Ulrich, 2012), the authors describe the evolution of HR work in 4 “waves”.1 (see Figure 1).
Early 1900: Wave 1 focused on the administrative work of HR personnel, such as the terms and conditions of work, delivery of HR services, and regulatory compliance (e.g., payroll). This administrative side still exists in HR today, but it is often accomplished differently via technology and outsourcing solutions.
1970’s: Wave 2 focused on the design of innovative HR practice areas, such as, compensation, learning, and sourcing. The HR professionals in these practice areas began to interact and share with each other to build a consistent approach to human resource management. The HR credibility in Wave 2 came from the delivery of “best-practice” HR solutions.
1990’s: Wave 3 has focused on the integration of HR strategy with the overall business strategy. Human resources appropriately began to look at the business strategy to determine what HRM priorities to work on and how to best use resources. HR began to be a true partner to the business, and the credibility of HRM was dependent upon HR having a seat at the table when the business was having strategic discussions.
2000’s: In Wave 4, HRM continues to be a partner to the business, but has also become a competitive practice for responding to external business conditions. Organizations get ahead of the competition with their HRM practices.
Although each “wave” of HRM’s evolution is important and must be managed effectively, it is the “outside in” perspective that allows the human resource management function to shine via the external reputation and successes of the organization.
Figure 1.2.
2. The Role of HRM in Organizations
HRM is an ‘umbrella’ term for many different and interrelated functions. It is necessary to point out at the very beginning of this text, that every manager has a role relating to human resource management. Just because we do not have the title of HR manager it does not mean we won’t perform all or at least some of the HRM tasks. For example, most managers deal with the selection, compensation, and motivation of employees—making these aspects not only part of HRM but also part of management in general. Most experts agree on eight main roles that HRM plays in an organization. These roles are described in the following sections.
2.1. Dealing with Laws and Setting Policies & Procedures
Legislation and HRM
It is very important that human resource managers are aware of all the laws that affect the workplace and they ensure that the processes in place abide by them. An HRM manager will work under the following legal frameworks:
- Discrimination laws
- Health and safety requirements
- Compensation and benefits requirements (e.g., minimum wage and holidays)
- Labour laws
The legal environment of HRM is always changing, therefore, HRM must always be aware of changes taking place and then communicate the changes to the entire management organization. In this textbook, we have decided to address these laws in each relevant chapter instead of presenting them in a single chapter.
Policies and HRM
In addition to having to comply with the requirements mandated by law, every organization may have their own set of unique policies. These policies can be set to ensure fairness (e.g., vacation policy above and beyond those legally mandated), to enhance effectiveness (e.g., internet usage policy), or simply to reinforce the culture (e.g., dress code). Some of the roles of HRM are to identify issues that can be addressed by implementing a policy, these can range from chronic tardiness of employees to a lack of decorum in meetings. HRM, management and executives are all involved in the process of developing policies. For example, the HRM professional will likely recognize the need for a new policy or a change of policy, they will then seek opinions on the policy, write the policy, and then communicate that policy to employees. The range of policies that can be designed is endless; here are a few examples of innovative policies that can be found in some companies, including giving time-off to employees to volunteer in community organizations (to promote well-being and group work) and getting rid of job titles (to reduce hierarchy).
2.2. Job analysis and job design
Organizations rely on the execution of numerous and varied tasks. These tasks, which are often carried by employees, have to be structured in such a way to maximize efficiency. They should be clear and distinct from each other. They should also be performed by capable employees. HRM is responsible for the definition and organizations of these tasks through the processes of job analysis and job design.
2.3. Talent Acquisition
You need the right people to perform tasks and get work done in the organization. Even with the most sophisticated machines, humans are still needed, therefore, one of the major tasks in HRM is staffing. Staffing involves the entire hiring process from posting a job to negotiating a salary package. Within the staffing function, there are four main steps:
- Development of a staffing plan allows HRM to see how many people they should hire based on revenue expectations.
- Development of policies to encourage multiculturalism at work. Multiculturalism in the workplace is becoming more and more important as there is an increasing amount of people from a variety of backgrounds in the workforce.
- Recruitment. This involves finding the right people to fill the open positions.
- Selection. At this stage, people will be interviewed and selected and a proper compensation package will be negotiated. This step is followed by training, retention and motivation.
2.4. Training and Development
Once we have spent the time to hire new employees, we want to make sure they are trained to do the job and continue to grow and develop new skills. This results in higher productivity for the organization. Training is also a key component in employee motivation. Employees who feel they are developing their skills tend to be happier in their jobs, which results in an increase of employee retention. Examples of training programs might include the following:
- Job skills training, such as how to use a computer program
- Training on communication
- Team-building activities
- Policy and legal training, such as sexual harassment training, safety training and ethics training
2.5. Performance Assessment and Management
Employee performance is one of the main objectives of the HRM professional. Basically, people have to be good at what they do. In a coffee shop, baristas have to produce a great cup of coffee, within a certain amount of time, and serve it to the customer in a pleasant manner. Every job is different and quite complex when you think of the different ways in which performance is defined. It is the role of the HRM professional to devise systems to measure this performance with precision and use this information to help the employee and the organization. Performance appraisal systems may include:
- A 360 appraisal process
- A behavior checklist
- A graphic rating scale
- MBO or management by objectives
However, assessing performance is only the beginning. Once a measure of performance is obtained, the HRM professional uses it for multiple purposes, including:
- Provide feedback for employees
- Determine compensation (e.g., bonus, raise, etc.)
- Take disciplinary measures
2.6. Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair, meets industry standards, and is high enough to entice people to work for the organization. Compensation includes anything the employee receives for his or her work. In addition, HRM professionals need to make sure the pay is comparable to what other people performing similar jobs are being paid. This involves setting up pay systems that take into consideration the number of years with the organization, years of experience, education, and similar aspects. Examples of employee compensation include the following:
- Pay
- Health benefits
- Retirement plans
- Stock purchase plans
- Vacation time
- Sick leave
- Bonuses
- Tuition reimbursement
2.7. Labour Relations
A labour union, also called a trade union or worker’s union, is an organization that represents the collective interests of employees. HRM professionals are involved in the negotiation (collective bargaining) and management of union contracts. These contracts typically cover compensation, work schedules, benefits, discipline, and other work-related processes. Unions are very prevalent in Canada and especially in the province of Quebec. As such, an understanding of labour unions is very important to be effective.
2.8. Health and Safety
Safety is a major consideration in all organizations. Oftentimes new laws are created with the goal of setting federal or state standards to ensure worker safety. Unions and union contracts can also impact the requirements regarding worker safety in the workplace. It is up to the human resource manager to be aware of worker protection requirements and ensure the workplace is meeting both federal and union standards. Worker protection issues might include the following:
- Chemical hazards
- Heating and ventilation requirements
- Use of “no fragrance” zones
- Protection of private employee information
2.9. HR Analytics
Like every function in organizations, HRM has been drastically affected by technology. Today, a vast amount of information is collected about employees via Human Resource Information Systems (HRIS). This information, in turn, can be used to support management decisions using sophisticated analytical tools. For example, a financial institution can implement monthly satisfaction surveys and investigate predictors of ‘dips’ and ‘jumps’ in satisfaction. It could uncover that those employees that work on the investment side of the business tend to be very sensitive to end-of-quarter results. Knowing this, they could implement special communication efforts aimed at reassuring those employees at critical moments of the year. We take a closer look at this exciting and relatively new HR function in Chapter 11 “HR Analytics”.
3. HRM as an Integrated Set of Processes.
While HRM can be described as a set of different processes, it is important to consider the interdependence of each of these processes. In other words, each HR process is connected with other HR processes. The effectiveness of HRM lies in how well integrated these processes are and how they are aligned to support the mission and strategy of the organization. For example, a new policy on workplace bullying will only be effective if employees are trained to understand and respect it. In addition, that policy has little chance of taking hold if it is not part of the performance appraisal process. Finally, in a unionized environment, the policy will have to be designed with the cooperation of the labour union so that it is integrated into the collective agreement.
References
Ulrich, D., Younger, J., Brockbank, W. and Ulrich, M. (2012), “HR talent and the new HR competencies”, Strategic HR Review, Vol. 11 No. 4, pp. 217-222.
