HUMAN RESOURCE MANAGEMENT
Introduction to HRM. Human Resource Management (HRM) refers to the process of
"designing formal systems in an organization to manage human talent for accomplishing organizational goals
The Importance of HRM. HRM contributes significantly to an organization's performance by influencing who works for the company and how those employees work. Some people view HRM as a necessary expense rather than a source of value, but effective HRM practices can impact measures like quality, profitability, and customer satisfaction.
Human Capital. Human capital refers to the employee characteristics that can add economic value to the organization. High-quality employees with valuable skills, experience, knowledge, certifications, and attitudes are considered human capital assets.
Effective human capital meets the following criteria:
1. Valuable: Employees provide needed services and perform critical functions.
2. Rare: Employees with high levels of needed skills and knowledge are uncommon.
3. Inimitable: The company's human capital is difficult for competitors to imitate or copy.
4. Non-substitutable: When employees are well-trained and motivated, they develop abilities that cannot be easily replaced.
High-Performance Work Systems (HPWS). A High-Performance Work System is an organization where technology, structure, people, and processes work together to give the company a competitive advantage in its environment.
Key Functions of HRM
1. Analyzing and Designing Jobs. This involves understanding job requirements through job analysis and designing jobs to ensure efficient work processes.
2. Recruitment and Hiring. Recruiting involves posting job vacancies through various channels and attracting candidates, while hiring involves selecting the most eligible candidates.
3. Training and Developing Employees. Training aims to broaden and deepen employees' knowledge, skills, and abilities, while development focuses on helping employees meet new or existing job challenges.
4. Managing Performance. Performance management ensures that employee activities and outputs align with organizational goals, often through evaluating observable behaviors and outcomes.
5. Planning and Administering Pay and Benefits. This involves designing reward systems that motivate employees and link their performance to compensation and benefits.
6. Maintaining Positive Employee Relations. Maintaining positive working conditions, communication channels, and addressing employee concerns are crucial for fostering good employee relations.
7. Establishing and Administering Personnel Policies. Organizations need systems to intervene when employees violate rules and maintain records for sensitive employee information.
8. Ensuring Compliance with Labor Laws. HRM must ensure that the organization adheres to laws and regulations concerning the treatment of employees.
9. Supporting Organizational Strategy. HRM supports strategy through human resource planning, identifying the required number and types of employees, and demonstrating the positive influence of HR practices on profits and stakeholders.
--- Job Analysis
Job analysis is the process of getting detailed information about jobs. It involves determining exactly what people do in their jobs and how they should perform. Job analysis is crucial for several reasons:
1. Understanding Workflow Organizations
Workflow analysis helps clarify what work needs to be done to produce a product or service.
2. Importance of Job Analysis
• Hiring: Job analysis helps identify the most qualified applicants for various positions, ensuring a good person-job fit.
• Training and Development: By understanding job requirements, organizations can create effective training and development programs tailored to specific positions. Example: Bank Mandiri can develop managerial training and interpersonal skill development programs for branch area managers based on job analysis.
• Evaluation: Job analysis provides indicators for evaluating whether work is being done as expected.
• Performance Appraisals: Job analysis aids in setting performance standards and criteria for evaluation.
• Compensation System: Accurate job analysis helps design fair and competitive compensation structures.
• Work Redesign: Job analysis can reveal the need for work adjustments or redesign for efficiency. Example: GoFood may adjust its system to reduce waiting time for drivers at restaurants based on job analysis findings.
• Human Resource Planning: Job analysis helps plan for the required workforce with specific responsibilities, skills, and knowledge. Example:
Universities can use job analysis to plan for the hiring of lecturers with appropriate qualifications for undergraduate and graduate programs.
• Career Planning: Job analysis supports designing career paths and growth opportunities for employees.
• Job Evaluation: Job analysis provides the basis for evaluating jobs and promoting employee satisfaction and growth.
• Other Benefits: Job analysis can provide valuable information for various departments beyond Human Resources, such as workflow processes and performance indicators.
3. Job Description and Job Specification
- Job Description: A list of the tasks, duties, and responsibilities (TDRs) that a job entails. These are observable components of the job.
- Job Specification: A list of the knowledge, skills, abilities, and other characteristics (KSAOs) that an individual must have to perform the job. These are not directly observable but are inferred from the TDRs.
4. Types of Job Analysis
1. Task-based Job Analysis: The most common type, focusing on the components and characteristics of work embedded within a job. It is more defensible and easier to observe and gather authentic evidence.
2. Competency-based Job Analysis: This approach considers how knowledge and skills are used to enhance performance by individuals or teams. It focuses more broadly on behaviors and their influence on future job performance.
5. Current Trends in Job Analysis
- Adaptability: Jobs are not stable; they tend to change and evolve over time.
Organizations need to be adaptable and open to change.
- Designing Efficient Jobs: While the "one best way" approach aims for maximum efficiency, designing overly efficient jobs can lead to employee boredom due to repetitiveness.
- Designing Ergonomic Jobs: Reducing physical fatigue, aches, pains, and health complaints through ergonomic job design.
- Designing Jobs That Meet Mental Capabilities and Limitations: Limiting the amount of information and memorization required, providing easy-to- understand displays, simple equipment operation, and clear instructions to accommodate mental capabilities and limitations.
- Designing Jobs That Motivate: For jobs that depend on skilled knowledge or customer satisfaction, job efficiency is not the solution. The Job Characteristic Model by Richard Hackman and Greg Oldham provides guidelines for designing motivating jobs, including: Skill variety: The extent to which a job requires a variety of skills. Task identity: The degree to which a job requires completing a "whole" piece of work from start to finish. Task significance: The extent to which the job has an important impact on other people's lives.
Feedback: The extent to which an individual receives clear information about their performance effectiveness from the work itself.
I. Introduction to Workforce Planning . Definition: Workforce planning is a systematic and data-driven process that helps organizations identify the right number of people with the right skills, in the right place, at the right time, to achieve their business objectives..
III. Workforce Planning Example
A. Business expansion scenario: A business plans to expand internationally.
B. Workforce planning considerations: Number of new sales staff needed, Languages to be covered, Location of sales staff (home country or international) and Regional skills or knowledge required
IV. Strategy of Workforce Planning, Four criteria of strategic workforce planning:
1. Size: Having the right number of people and job roles (not overstaffed or understaffed).
2. Shape: Having the right workforce configuration with required competencies and succession management.
3. Cost: Optimizing labor costs (not excessive or inadequate).
4. Agility: Having a lean and flexible workforce that can adapt to changing demands.
V. Benefits of Strategic Workforce Planning
A. Addressing demographic changes: Anticipating and preparing for an aging workforce and potential skills gaps.
B. Cost reduction: Hiring the right number of employees with the right skills, reducing overstaffing and attrition costs.
C. Effective talent management: Hiring, retaining, and developing employees with the right skills and behaviors.
D. Preparing for the future: Anticipating and planning for expected and unexpected challenges, such as market disruptions or technological advancements.
E. Flexibility: Building capabilities and allocating resources to priority areas, enabling agility.
F. Risk mitigation: Mitigating risks associated with over/understaffing, budgets, skills gaps, and more.
G. Aligning workforce strategies and organizational goals: Ensuring the workforce supports future business directions and goals.
VI. Strategic Workforce Planning Framework
Step 1: Analyzing factors such as market trends, products/services, and competitors. St ep 2: Determining organizational strategy based on Step 1. Step 3: Assessing the current workforce (quality and quantity). Step 4: Creating a workforce strategy based on insights from Steps 1-3..
VIII. Workforce Planning Process (6 steps)
A. Defining the plan: Understanding the organization's business goals and vision.
B. Analyzing the current workforce: Evaluating the skills, seniority levels, and growth of the current workforce.
C. Determining next steps: Identifying additional needs such as the number of employees, skills, or leaders required.
D. Identifying talent gaps: Finding the most pressing talent gaps that need to be addressed.
E. Implementing fixes and initiatives: Taking actions such as campus recruiting, compensation packages, or employee development programs..
F. Measuring results: Tracking progress against goals through analytics and reporting. IX. Strategic Workforce Planning Tools
9-box grid (performance-potential matrix): Mapping employees' performance and potential for key decisions on retention, promotion, and talent management.
X. Strategic Workforce Planning Best Practices
1) Establishing key stakeholders (HR, operational leaders, finance, IT, unions).
2) Maintaining a skills inventory:
Understanding the workforce's skills, experiences, and qualifications for gap analysis.
3) Using data and analytics:
Leveraging data to forecast future workforce needs based on trends and business growth.
4) Determining critical roles: Analyzing the most critical roles and required skills, experience, and attributes.
5) Considering external workforce trends: Monitoring changes in labor markets, emerging skill sets, and demographic shifts.
6) Developing a talent pipeline: Building a pool of pre-qualified candidates for future roles through sourcing, engagement, and development.
7) Adopting agile workforce planning: Continuously revisiting business strategy, gap analysis, execution, and monitoring for iterative improvement.
Forecasting HRM
Forecasting/Personnel Forecasting. Forecasting or personnel forecasting is an activity conducted by an organization to determine the supply and demand for every type of human resource needed. Through forecasting, the organization will know if there will be future labor shortages or surpluses in certain areas, departments, or management levels.
Determining Labor Demand: Demand Forecasting. Demand forecasting is developed based on specific jobs or skills relevant to the organization's current and future conditions. Demand forecasting involves building statistical models and graphs to predict labor demand based on a leading indicator. A leading indicator is an objective measure that accurately predicts future labor demand. Example: If the leading indicator is the volume of document delivery via the post office (X), then the demand for postmen (Y) can be predicted. If the volume of document delivery is expected to decrease, there is likely to be a low demand for workers with skills suitable for this work.
Determining Labor Supply: Internal Labor Supply. Labor supply is about how many people currently hold job positions within the company. This analysis is then modified to reflect near-future changes caused by retirements, promotions, transfers, voluntary turnover, and terminations.
Determining Labor Surplus or Shortages. Labor surpluses and labor shortages can be identified by comparing the figures or results from the labor supply and demand analyses.
Goal-Setting and Strategic Planning. The objectives set are derived from the results of the labor supply and demand analysis and should include a specific description of the organization's conditions (what needs to be met in terms of occupations and skill areas and when it needs to be achieved).
Organizational Responses. An organizational response to an excess workforce is downsizing, which is the planned elimination of a large number of human resources designed to improve organizational effectiveness. A common organizational response to labor shortages is to hire temporary employees or outsource.
Downsizing. Downsizing is the planned elimination of a large number of human resources designed to improve organizational effectiveness. Companies may downsize for reasons such as reducing costs, introducing new technology or robots that reduce the need for a large workforce, or changing the location of business operations for economic reasons.
Early Retirement and Buyout Programs. Companies may offer early retirement and buyout programs to older workers because labor costs for older employees are sometimes higher due to their greater seniority, higher medical costs, and higher pension contributions. Additionally, older workers often occupy the best-paying job positions, which can hinder recruitment or impede advancement for younger workers.
Outsourcing. Outsourcing involves the use of human resources from outside the organization for a wide range of jobs within an organization.
- Offshoring: The company moves its entire operations to another country.
- Immigration: The process of bringing foreign workers into the country.
Changing Pay and Working Hours. Companies facing labor shortages may try to garner more hours from the existing workforce instead of hiring new employees on a full-time or part-time basis. In the face of a labor surplus, organizations can sometimes avoid lay offs if they can force their employees to take pay cuts.
Selection & Placement
Personnel Selection Process: The personnel selection process is the procedure of selecting which individuals will be accepted or rejected for a particular job position or task within an organization.
Selection Method Standards: There are five essential standards that should be met by any personnel selection method used by an organization:
a. Reliability: Reliability refers to the consistency and dependability of the selection process in accurately predicting a candidate's future job performance in the workplace.
b. Validity: Validity refers to whether the selection process genuinely measures what it is intended to measure accurately. It determines how well the information obtained from the selection process corresponds with reality or fits the actual situation it's being applied to.
c. Generalizability: Generalizability refers to the extent to which the results or findings from a personnel selection process can be applied or generalized across different contexts, situations, or job roles.
d. Utility: Utility refers to the usefulness, value, or practical benefit of the information obtained from a personnel selection process. The key problem is that there are typically very few high-performing candidates and a large group of potentially poor-performing candidates in any selection process.
e. Legality: The legality standard refers to ensuring that the personnel selection process complies with all relevant laws and regulations.
Types of Selection Methods: Personality Inventories, Work Sample Tests, Honesty Tests , Drug Tests, Interviews, Reference Checks, Biographical Information (education, employment history, etc.), Physical Ability Tests
Interviews: Interviews usually take the form of a dialog or conversation between the job applicant and the employer's representative(s). Interviews are an effective selection method; however, they can be costly and subjective if not conducted properly.If interviews are not designed and conducted with proper care, they can become unreliable, have low validity, and be prone to bias.
Biographical Information: Biographical information includes details about a candidate's educational background, employment history, and references. While this information is usually checked before interviews, it is generally considered a weak indicator for predicting future success on the job. Applicants do not always tell the complete truth on application forms or resumes.
Physical Abilities: Physical ability tests are used to assess whether candidates have the necessary physical capabilities required to perform a particular job effectively and safely. These tests not only evaluate physical strength and endurance but also check if the candidate is physically prone to accidents when carrying out job-related tasks.
Cognitive Abilities: Cognitive ability tests are designed to evaluate a candidate's mental capabilities and aptitudes. These tests typically measure abilities such as verbal comprehension, quantitative reasoning, and logical reasoning ability.Cognitive ability tests are generally considered valid and reliable predictors of job performance across various roles.
Personality Inventories: Organizations might use personality inventories or assessments as part of the selection process to identify candidates whose values, traits, and personalities align with the organization's culture and team dynamics. The goal is often to create a strong team culture by selecting individuals with similar personalities and values. However, it is important to note that a diverse workforce with varied backgrounds and perspectives can also offer positive results and drive innovation.To prevent potential negative effects of relying solely on personality assessments, it is advisable to consider personality scores or feedback from other sources, such as previous employers or references.
