HUMAN RESOURCE MANAGEMENT SYSTEM

ININPUTS PROPROCESSING OUTPUTS

Human energy and competencies

Organizational Plan

Human Resource Plan

Human resource inventory

Job Analysis Labour market

Staffing Development Utilization Maintenance

Organization Related: Goals Achievement Quality of work life Productivity Profits Readiness for change

Employee Related: Commitment, Competence, Congruence, Cost-effectiveness

ffFeedback

Internal Environment

External Environment

Inputs of HRM System

Human energy and competencies: Energy is represented by physical strength. Competencies are represented by knowledge, skills, attitudes, experiences and potential for growth. They are possessed by people

Organizational Plan: This states overall organizational goals, strategy and targets within which HRM functions

Human Resource Plan: This matches future human resource demand with supply. It indicates HR requirements

Human Resource Inventory: This represents inventory of human resources available in the organization

Job analysis: This specifies job requirements plus qualifications and skills for various jobs

Labor Market: This is the external supply for human resources

Processing of HRM System

These are the functions of HRM. Please refer to it.

Outputs of HRM System

Outputs of HRM system consist of:

a) Organizational Related Outputs Goal Achievement: HRM supports overall organizational goals

achievement. They can be profit, service, and leadership. Quality of Work Life (QWL): HRM improves the quality of relationship

between employees and their total working environment. Employees feel physically and mentally well.

Productivity: It is the efficiency relationship between input and output. HRM system brings about productivity improvements.

Profits: It is the financial output of HRM. HRM helps in increasing profits. It can be target profit or percent of sales

Readiness for Change: HRM system reduces resistance to change. Employees view change as necessary for organizational effectiveness. HRM promotes readiness for change. Change can be planned and managed.

b) Employee-related OutputsThey consist of: (4Cs)

Commitment: High commitment is achieved through better communication, mutual trust, mutual understanding, and employee loyalty to the organization

Competence: High competence is achieved for higher-level jobs. Increase in the potential of managers to assume new roles.

Congruence: High degree of harmony between the goals of individual and the goal of organization is achieved. They both work together to achieve goals.

Cost effectiveness: High cost-effectiveness is achieved in utilization of human resources. People are productively utilized. Human assets are created.

Feedback of HRM System

This component provides information to redesign HRM inputs and processing. It is based on output effectiveness. It helps to take corrective actions.

Internal Environment of HRM System

Forces in the environment provide strengths and weaknesses. They are controllable by HRM. They are

Organizational Goal: They are desired outcomes that provide frame of reference for conducting HRM. They are end results.

Policies: They provide guidelines for HRM decisions and actions. They follow from organizational goals

Structure: It is the design of jobs and relationships. It limits HRM activities. It provides a boundary to HRM. It divides HRM activities and coordinates HRM efforts.

Reward System: It ensures attraction and retention of quality human resources. It can be monetary and non-monetary

Organization Culture: It promotes or hinders mutuality of interests between management and employees. It encompasses (includes) shared norms, values, beliefs and customs that guide organizational behavior.

External Environment of HRM System

Dynamic forces in the external environment provide opportunities and pose threats. They are uncontrollable by HRM.

Political/Laws: Political forces affect the environment of HRM. Laws restrain or encourage HRM activities. Labor unions also affect them.

Economic Forces: They consist of economic systems, policies and conditions. They affect job market and reward system of employees.

Socio-cultural forces: Social forces are related to human relationships. They provide status to jobs. Cultural forces affect the practice and ways of doing jobs.

Technology: It consists of skills, methods, systems and equipment. Level of technology and speed of technological change greatly impacts HRM

Human resource management and personnel management - shift in focus

Evolution of Personnel Function

The origins of Personnel management can be traced to the concern about exploitation of people working in factories and was introduced through law of the land in most of the countries to deal with issues pertaining to grievances and welfare of the workmen.

As dynamics in relations between trade unions and management changed the personnel management responsibilities grew beyond welfare to other areas such as ensuring amicable industrial relations and effective personnel administration.

During this period the emphasis was on formulating and monitoring conformance (conformity) to rules and procedures. The last three decades saw, the changes in the competitive environment brought about by growing competition, which resulted in availability of wide choice for customers and that in turn, gave a new dimension to marketplace-customers’ preference, which in effect drives companies to continuously innovate and provide the kind of value to customer that competition cannot match.

With this shift in business dynamics, the realization dawned on companies that people and their knowledge is the only source of sustainable competitive advantage, as other resources related to materials, equipment, technology, finances etc. have proved short lived in the absence of human capital capable of deploying these resources effectively and efficiently. Companies now bank on people's domain knowledge combined with their awareness of markets (customers' expectations & competitors' moves in particular) for developing innovative new products & services and thus creating enhanced value proposition (plan) for customers. This marked change in attitude of managements saw the emergence of concept of Human Resource Management which characterizes implementation of personnel policies to maximize objectives of organizational integrity, employee commitment, flexibility and quality (Guest, 1987). 

Personnel management traditionally is aimed largely at non-managers, where as HRM treats management development as an equally important issue. Traditionally personnel management viewed organizational culture and leadership as issues concerned with organizational development, where as HRM highlights responsibility for managing organization culture and leadership issues. HRM concerns with setting consistent HR

policies, which reflect and communicate “core values” of the company. It is through building culture and sharing common values among people that companies are trying to ensure that their acts and decision are based on best interest of the company rather than stressing on conventional rules and procedures, thus achieving the element of speed.

The distinguishing factors

Distinguishing factors - HRM and Personnel ManagementDimensions Personnel management HRM

Focus People as input in the production process

People as strategic resource in the organization system

Scope Concern of Personnel department Concern of all levels of managers

Function Routine function Strategic Function

Job Design Job design based on division of labor Job design based on team work

Interest Organization’s interest uppermost Harmony in interests of organization and individual

Orientation Discipline, direction and control oriented

Systems-oriented with climate for growth, performance and involvement

Labor Management

Piecemeal approach; collective bargaining

Integrated approach to management of human resources; individualized performance contracts

Communication Restricted Open

Means Emphasis on rules, regulation, procedures and practices Emphasis on human energy and competencies

Ends Employee satisfaction Achieving goals

Outcome a) Satisfied personnelb) Increased Production

a) Committed human resourcesb) Increased productivityc) Readiness to changed) Increased Profitse) Quality of Work Life

Training & development

Controlled access to courses Learning organizations

HRM OutcomesThe organizational outcomes of HRM are:

1. Quality of Work Life Quality of work life refers to the quality of relationships between employees and the total working environment of the organization. It is employee’s perception of physical and psychological well being at work. It emphasizes on improving human dimension work for employee satisfaction.

Quality of work life assumes a work environment where:a. People-based employee activities are important in organizational practicesb. Policies and procedures make the work less routine and more rewarding for

employees

They include:i) Autonomy: It refers to amount of freedom employees can exercise in their

job. It involves employee participation in decision making to provide control over what they do. Ex: Employees setting their own work schedule

ii) Recognition: This involves being valued by others and appreciated of contribution to organization

iii) Belonging: This refers to being part of organization. This satisfies social need. The employees conform to the values of the organization. They are regarded a valuable part of the organization

iv) Intrinsic Rewards: They refer to internal rewards available from the job. They can be sense of challenge and accomplishment, progress and development. They are job-oriented.

v) Extrinsic Rewards: They refer to external rewards available in the form of salary, benefits, promotion, status etc.

Quality or work life is represented by the following factors:1. Equity in Compensation: The compensation should be fair and equitable. It

should reward performance.2. Safe and Healthy Work Environment: The environment should ensure safety

and health of workers.3. Development of Human Capacities: The jobs should provide opportunities for

personal growth. Development of human capacities should be emphasized.4. Social Relevance: The work environment should provide personal identity,

freedom from prejudice and a sense of community. Privacy should be respected5. Social Responsibility: Organizational actions should be socially responsible.6. Total Life Space; The job should minimize violation on personal and family

needs of employee.

2. Productivity“Productivity is the amount of work that is being produced in the organization, in terms of how much and how well.” De Cenzo and Robbins

Components of ProductivityThe key components of productivity are:a. Technology: Availability of latest technologically advanced machinery and

equipment that help improve worker efficiency.b. Innovation: Process for generating and implementing new and creative ideas.

Ex: development of new productc. Learning: It consists of proper skills. Extensive training is important for

learning new skills. Workers need to learn continuously.d. Motivation: Ability and willingness of employees for doing jobs effectively.

Increased motivation leads to increased productivity.e. Performance-reward linkage: There should be a strong linkage between

improved job performance and the desired rewards. The rewards should be appealing.

3. Readiness for ChangeOrganization needs to adapt to change to remain effective. Employees tend to resist change. The main reasons for such resistance are:a. Fear of Unknown: Employees like old ways fear uncertainty and ambiguity.

They feel uncomfortable with change.b. Security: Employees may fear threat to job security. They fear about loss of

job, pay reduction and more workloadc. Habit: Employees resist to change due to old work habits. d. Misunderstanding: Employees may not understand the purpose of change.

This creates resistance to change.e. Poor Communication: Employees may not be properly communicated about

change. They don’t like surprisesf. Lack of Involvement: Employees do not own change if they are not involved

in planning and implementing change.g. Vested Interests: Employees with vested interest feel threatened by change.

They like to maintain status quo. Change may erode power base.h. Social Factors: Employees may feel threat to existing social relationships

from change

HRM brings readiness for change by:a) Education and communication to employees about changeb) Participation and involvement of employees in planning and implementing of

changec) Facilitation and support to employee through training and educationd) Negotiating and agreement with employees about changee) Giving roles to key employees in designing and implementing changef) Overcoming resistance to change.

Challenges of HRMHRM operates in a dynamic environment. The changing political-legal, socio-cultural and technological forces pose challenges to HRM. The major Challenges are:

1. Globalization: Globalization has facilitated trade without borders, which lead to operations in several countries. HR work gets complicated because of this as they have to balance culture, employee laws, customs and business practices. Finding best skill among different countries pose challenge before HR as they need to relocate employees on the need based, adjust compensation plan for fair plan and retain employees.

2. ComplexityModern organizations are increasing in size. With the increase in size, complexities of managing them are also increasing. Competent and committed human resources are

needed to cope with the challenges of size and complexities. This has posed challenge to HRM.

3. Technological ChangeTechnology is changing rapidly. Human resources in organizations need to acquire new competencies to cope with the rapid technological change. The need is growing for computer and information technology-friendly human resources.Technological changes rapidly changes nature of job and skills required to perform them. This possesses challenge for HRM to avoid skill deficiencies.

4. Work Force DiversityThe varied personal characteristics that make the workforce heterogeneous as ethnicity, culture, religion, language, education, value, expectation and etc. is workforce diversity. The composition of work force is getting diverse in organizations. It is getting heterogeneous. It is getting bi-modal educated professionals at one extreme and low-skilled service workers at another extreme. Contingent workforce consisting of part-time, temporary and contract employees is increasing. Work culture is changing. Retooling of skills of human resources is needed on a continuous basis. This has posed challenge to HRM

5. Less Attached EmployeesThe trend is toward temporary employment controlled by contract .Employees are less loyal to organizations and more concerned with having interesting jobs. Virtual offices have emerged. Employees work on freelance basis for different organizations at different times. Their expectations are also changing. Less attached employees pose challenge to HRM.

6. New HRM ConcernsHRM concerns are increasing for the management of work teams, virtual teams, reengineering and total quality management. Human resource outsourcing is increasing. Social responsibility has become important. The nature of industrial relations is changing. Interests of weaker sections of society, especially women, are important. The nature of industrial relations is changing. Interest of weaker sections of society, especially women, is important. Such concerns pose challenges to HRM.

7. Management of ChangeThe future belongs to those who can learn to best manage change. Committed and competent employees are essential to manage change. Human resource management plays an important role in fostering employee commitment to change. Effective management of change is a challenge for HRM.

8. Learning OrganizationsOrganizations are getting knowledge-based. They need continuous learning and knowledge up-date. They need to fine ways to expand employee capacity through continuous learning. They need knowledge workers whose jobs are designed around the acquisition and application of information. Leaning organizations pose a challenge to HRM.

ExtractedAgrawal, Govinda Ram. Human Resource Management in Nepal. 2011. M.K Publishers and Distributors, 2011.

David A. Decenzo, Stephen P. Robbins. Fundamentals of Human Resource Management. 8th. John Wiley & Sons.

Other Internet Sources

HUMAN RESOURCE PLANNING

An Organizational FrameworkThe strategic planning process in an organization is both long and continuous. At the beginning of the process, the organization’s main emphasis is to determine what business it is in. This is commonly referred to as developing the mission statement.

Defining the organization’s mission forces key decision makers to identify the scope of its products or services carefully. Why is mission statement important? It’s the foundation on which every decision in the organization should be made. Take, for instance, a part of Home Depot’s mission statement- to be the world’s largest home improvement retailer. The mission statement does clarify for all organizational members what exactly the company is about. Mission statement can be changed at any time, after careful study and analysis of the environment.

After reaching agreement on what business the company is in and who its consumers are, senior management then begins to set strategic goals. During this phase, these managers define objectives for the company for the next 5 to 20 years. These objectives are broad statements that establish targets the organization will achieve. After these goals are set, the next step in the strategic planning process begins- the corporate assessment. During this phase, a company begins to analyze its goals, its current strategies, its external environment, its strengths and weaknesses, and its opportunities and threats, in terms of weather they can be achieved with the current organizational resources. Commonly referred to as a “gap” or SWOT (strengths, weaknesses, opportunities and threats) analysis,” the company begins to look at what skills, knowledge and abilities are available internally, and where shortages in terms of people skills or equipment may exist.

The SWOT analysis should lead to a clear assessment of the organization’s internal resources- such as capital, worker skills, patents, and the like. It should also indicate organizational departmental abilities such as training and development, marketing, accounting, human resources, research and development, and management information systems. An organization’s best attributes and abilities are called its strengths. And any of those strengths that represent unique skills or resources that can determine the organization’s competitive edge are called its core competency. On the other hand, those resources an organization lacks or activities the firm does poorly are its weaknesses. SWOT analysis serves as the link between the organization’s goals and ensuring that the company can meet its objectives-that is, establishes the direction of the company through strategic planning.

The company must determine what jobs need to be done and how many and what types of workers will be required. Thus, establishing the structure of the organization assists in determining the skills, knowledge, and abilities required of jobholders. And, all jobs in the organization must be tied to the company’s mission and strategic direction

Concept of Human Resource Planning (HRP) It is the starting point of Human Resource Management It is essential for acquisition function of HRM It sets HRM Goals and ways of achieving them.

“HRP is the process of predetermining future human resource needs and choosing courses of actions needed to satisfy those needs. “

Characteristics of HRPThe characteristics of Human Resource Planning (HRP) are;

a) Goal Directed: Human Resource Planning is directed towards achieving HR goal as well as overall organizational goals.

b) Future-oriented: HRP estimates the size and composition of future work force. It involves forecasting

c) Quantitative and qualitative: HRP estimates right number of employees needed with right skills and competencies at right time. It is both quantitative and qualitative.

d) System-oriented: HRP matches demand and supply forecasts to determine future human resources shortages and surpluses. Action plans are prepared to fulfill human resource gaps.

e) Time horizon: HRP can be short or long term. It has a timetable. Short term is one year and long term is five years and more.

f) Part of corporate planning: HRP can be formulated at strategic, tactical and operational levels. It follows from corporate planning

g) Part of acquisition function: HRP is concerned with the acquisition function of human resource management. It is the starting point.

Importance of HRP

HR planning makes the organization move and succeed in the 21st Century that we are in. Human Resources Practitioners who prepare the HR Planning program would assist the Organization to manage its staff strategically. The program assists to direct the actions of HR department.

The program does not assist the Organization only, but it will also facilitate the career planning of the employees and assist them to achieve the objectives as well. This augment motivation and the Organization would become a good place to work. HR Planning forms an important part of Management information system.

HR has an enormous task-keeping pace with the all the changes and ensuring that the right people are available to the Organization at the right time. It is changes to the composition of the workforce that force managers to pay attention to HR planning. The changes in composition of workforce not only influence the appointment of staff, but also the methods of selection, training, compensation and motivation. It becomes very critical when Organizations merge, plants are relocated, and activities are scaled down due to financial problems.

Human Resource Planning is the starting point of HRM. The following points indicate its importance

1. Uncertainty ReductionGlobalization, new technologies, organizational restructuring and workforce diversity produce uncertainties.

Human resource planning reduces uncertainty by predetermined future human resource requirements. It matches demand and supply forecasts to determined future shortages and surpluses of human resources. It helps to cope with risk and uncertainty.

2. Objective FocusedHuman resource planning focuses on achievement of objectives of the organization. Demand forecasts for human resources are based on the objectives, strategies and revenue plans of the organization. HR plans are linked to overall corporate plan. This facilitates better coordination for objectives achievement.

HRP is needed to implement organizational strategies3. Environmental Adaptation

Human Resource planning assess the competencies of current human resources through Human Resource Inventory. It assesses job requirements through Job Analysis. Existing human resources can adapt to changing technological, political, legal, economic, social and cultural forces through HR planning.

4. Acquisition of Human Resources

Human resource planning determines future human resource needs. It facilitates recruitment and selection of employees to fill job vacancies. It also facilitates succession planning, career planning, and employee development. Labour laws are complied.

5. Utilization of Human ResourcesHuman Resource Planning ensures that the organization acquires the quality and quantity of human resources it requires. Existing human resources are properly placed and deployed to ensure their productive utilization.

6. Development of Human ResourcesHuman Resource Planning anticipates skill requirements for various levels of human resources. This provides adequate lead time for planning of training and development programs. Investment in human resources can also be planned. HRP creates awareness about human resource development

7. Control of Human ResourceHuman resource Planning sets standards for controlling the quantity and quality of employees. This facilitates control of human resource costs. Human resource control is not possible without human resource planning.

8. Improved Labour RelationsHuman Resource Planning promotes awareness about the importance of human resources at all levels of organization. This ensures commitment of managers to HR goals. This also assists in collective bargaining with labor unions. Top management support, sound information systems and employee

participation are the essence of effective human resource planning