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Copyright Asia Pacific ManagementPty. Ltd. 2011

MANAGING HUMAN RESOURCES

TODAY

TOPIC 1

THE HRM ENVIRONMENT

Prepared byRaymond Stone PhD

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WHY ARE HUMAN RESOURCES IMPORTANT?

Human resources provide the creative spark in any

organization

People design and produce the goods and services,control quality, market the products and services,

allocate financial resources, set the objectives and

develop the strategies for the organization

Without human resources, it is not possible for an

organization to achieve its strategic objectives

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WHAT IS HUMAN RESOURCE MANAGEMENT?

The focus of HRM is on the management ofpeople within the employer-employeerelationship.

Specifically HRM involves the productive

utilization of people in achieving theorganization's objectives and the satisfaction ofindividual needs.

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HRM UNDERPINNINGS

People create a competitive advantage

HRM strategically aligned with corporate objectives

Accepts managements right to manage

Employs a unitarist philosophy

- common objectives between organization and employees

- conflict is avoidable

- unions represent competition for employee loyalty

- bad industrial relations is a product of bad management

Strategic business partner

HRM adds value

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APPROACHES TO HRM

Instrumental HRM (hard approach):

stresses the rational, quantitative and

strategic aspects of managing human

resources.

Humanistic HRM (soft approach):

while emphasizing the integration of HR

practices withstrategic objectives, itstresses its competitive advantage is

achieved by employees.

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APPROACHES TO HRM

Instrumental Humanistic

Employees proactivecontributors to

organizationsstrategic businessobjectives

Risks creating

industrial conflict

Emphasises employeedevelopment,

collaboration,participation, trust &informed choice

Can also create union

problems

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DIMENSIONS OF EFFECTIVE PEOPLE

MANAGEMENT

Employment security

Rigorous selection

Employee participation

Open communications

Equal opportunity Fair rewards

Employee training and development

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BEST EMPLOYERS

Have credible leaders who are accessible

Maintain frequent and open communications

Recognize and reward performance

Deliver on promises to employees

Ensure that HR policies support business

objectives Provide flexible work patterns and structures

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HRM - THE BIG ISSUES

securing and maintaining talent

improving leadership development

managing work-life balance

managing demographics managing multicultural workforce

managing globalisation

managing organizational restructuring

managing external and internal environments creating learning organisations

ensuring HR is a strategic partner

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HRM & MANAGEMENT

Management is the art of getting things done through

people

It involves planning, leading, organizing and controlling

the organizations resources

HRM is concerned with the productive contribution of

people and their welfare

It is involved with the attraction, development, motivation

and reward,maintenance and exit of people

HRM is intimately related to all aspects of management

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HRM ACTIVITIESHRM involves the acquisition, development, reward and motivation,maintenance and departure of an organizations human resources. Certain keyHRM activities must be undertaken to satisfy these aims. Each of theseactivities is interrelated and together they represent the core of HRM

HR or Employee planning

Job Analysis

Recruitment and Selection Performance Appraisal

Training and Development

Career Planning and Development

Employee Motivation

Remuneration

Industrial Relations

Health and Safety

Change Management Diversity Management Culture Management

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STRATEGY

Plan of action that

* determines resource allocation

* deals with the environment

* seeks a competitive advantage

* activates the organization objectives

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COMPONENTS OF

STRATEGIC MANAGEMENT

Establish mission and key objectives

Analyse the environment Analyse and select business strategies

Implement the strategies

Monitor and evaluate performance

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STRATEGIC QUESTIONS

What is our core business?

Are we in the right business?

Can we pick the changes affecting our

business?

Who are our customers?

What are their buying criteria?

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ENVIRONMENTAL INFLUENCES

EXTERNAL INTERNAL

Political Legal

Environmental Technological Cultural Demographic Social

Business Economic Industrial relations

Organisational:

strategies culture structure systems people

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ORGANIZATIONAL STAKEHOLDERS

A stakeholder is a person or group that has avested interest in an organizations operationsand performance

owners governmentsmanagement employees

trade unions general public

special interest groups customerssuppliers

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TYPES OF STRATEGIES

GROWTH

RETRENCHMENT

STABILITY

COMBINATION

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INTERNATIONAL STRATEGIES

Global - ethnocentric orientation

Multidomestic polycentric orientation

Transnational geocentric orientation

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STRATEGY SELECTION

(SWOT ANALYSIS)

What are our strengths?

What are our weaknesses?

What are our opportunities?

What are our threats?

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STRATEGIC HRM

HRM strategies outline the organizations people

objectives and must be an integrated part of the

overall strategy

HRM strategic planning clarifies for employees the

services that HRM intends to provide, the methods it

will use and the performance standards it is aiming for

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STRATEGIC APPROACH TO HRM

HRM is influenced by both internal and external

environmental factors

These influence the organizations HRMobjectives, strategies and

action plans

Organizations that adopt HRM strategies and

HR policies consistent with environmentaldemands outperform organizations that do not

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HRM STRATEGIC ALIGNMENT

Strategic

vertical integration of HRM objectives and strategies with

corporate objectives and strategies

aim to achieve a direct linking of business and people

management strategies

Functional

horizontal integration of all HRM systems to ensure that they

are mutually consistent and support the organizations overallHRM objectives and strategies

aims to ensure that all HRM activities are mutually reinforcing

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ROLE OF THE HR MANAGER

Strategic partner part of the top management team

seen as contributing to the achievement of strategic objectives

Administrative expert

professionally competent

create value measure performance

Employee champion

understand needs of employees

act as employee voice

Change agent act as a catalyst for change within the organization

Manager of culture

ensure culture reflects strategy

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HRM ETHICAL ISSUESHR managers face complex, ambiguous andconflicting issues over what is right or wrong, goodor bad. Examples :

- executive pay- downsizing

- child labour

- corruption

- equal employment- employee privacy

- social networking

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HRM

THEORY OR REALITY?

Subtle form of employee manipulation and

exploitation

Promotes management control

Creates ethical dilemmas for HR managers

Companies have renamed their personnel

function. In practice, remains a non strategic,

administrative function.

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HRM OUTCOMES AND

PERFORMANCE

Evaluation of HRM performance considers:

Adaptability

Commitment

Competence Congruence

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HRM OUTCOMES AND

PERFORMANCE

Cost-effectiveness

Job satisfaction

Justice

Motivation

Performance

Trust

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SUMMARY

HR managers need to adopt a strategic

approach, be part of the top management team,

be involved in corporate planning and develop a

vision for HRM.

HRM activities must be part of a coordinated

effort to improve the productive contribution of

people in meeting the organizations strategicbusiness objectives.

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GLOBALIZATION

The winning companies in the global competitionwill be those companies that can put together the

best of research, engineering, design,manufacturing, distribution - wherever they canget it, anywhere in the world - and the best of eachof these will not come from one country or fromone continent. Scale will become the dominant

factor.Jack Welch

Former Chairman, General Electric

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GLOBALIZATION DRIVERS

Cost reduction USA manufacturing -- China

Market expansion

Tobacco companies China, Indonesia, Africa

Raw materials

Capital sources

China Hong Kong

Government regulations

Trade unions

Technology

Take jobs to labour e.g. Cartoons (Simpsons Korea (Philippines)

Taxation

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THE GLOBAL COMPETITOR

Worldwide product line with the concept of in-

built adaptability

Single identity worldwide for major products orbrands

International production schedules

Assimilation of the best aspects of local practice

Development of a global mindset

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GLOBAL MINDSET

Commitment by top management to being

internationally competitive

Acceptance of the need to employ foreigners

Development of global managers

Ongoing search for strategic alliances / joint

ventures Top management sees the world as its marketplace

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GLOBALIZING MANAGEMENT

Get a board and CEO with global vision

Select superstars for international assignments Bring the best overseas talent into head office

Recruit internationally Move the best talent internationally (regardless ofnationality)

Develop a long term view of management development language

cross cultural cross functional

Recognize and reward international experience

Place top performers with international experience inHRM

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GLOBAL ORGANIZATION HRM CHALLENGES

EEO ethic

International performance recognized and linkedto rewards and promotions

Corporate culture/corporate family Orientation training related to working in a global

company

Management training and development programs

which reflect the global nature of the organization Hiring of employees who have an internationaloutlook

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INTERNATIONAL STRATEGIESHigh Global

world is one homogeneous market

standardized products and servicesstandard quality

standardized advertising

emphasis on cost reduction and economies of scale

situated in few locations

resources are located in a limited number of locations

innovation and knowledge base centralized

cultural differences not considered important

centralized controlethnocentric view

Transnational

blend of standardization and local responsiveness

attempts to optimize costs and flexibilityresources are located where most beneficial

knowledge transfer promoted

cultural differences recognized

geocentric view

Cost

pressures

Low

Multidomestic

world is a series of local marketsadapt products and services to local needs

customize advertising

resources are located in many locations

centralized control

polycentric view

innovation and knowledge base diversified making

transfer of learning difficult

innovation focus on a specific domestic market

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STRATEGIC ORIENTATION

HK organization withinternational operations

HK multinationalorganization

HK global organization

Personal All senior and many middlemanagement positions heldby HK

Localization of somemanagement positions butall top corporate positionsheld by HK

All management positionsopen to the best peopleregardless of nationality

Decision making Highly centralized in HK,large head office

Some decentralization toregional or areaheadquarters, head office inHK

Decentralized, with smallglobal headquarters inHK (or elsewhere)

Communication Instruction and advice fromHK head office tosubsidiaries

Regional headquarters arethe main source ofcommunications, but withinstructions and advicecoming from HK head office

Two-way communicationbetween overseasoperations and headoffice and among thevarious overseasoperations

HRM policies andpractices

Predominantly HK withsome modification to satisfyforeign requirements

HK for expatriates, withseparate localized policiesand practices for foreign

employees in each location

Benchmarked on bestinternational practice

Corporate culture HK Mix of HK and local International

HR Strategy Ethnocentric Polycentric Geocentric

International HRstrategy

Global Multidomestic Transnational

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INTERNATIONAL HR STRATEGIES

ETHNOCENTRIC international operations have little autonomy key decisions made at corporate HQ key positions held by expatriates

POLYCENTRIC each international operation treated as a separate entity some local decision making autonomy

usually managed by local nationals GEOCENTRIC

truly international - global business best people hold key positions irrespective of nationality HQ anywhere

REGIOCENTRIC international operations are divided into regions e.g. Asia Pacific best people within region hold key positions little transfer/interaction outside of region

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Major differences between

Domestic HRM and International HRM

additional activities such as taxation, international relocation,expatriate remuneration, cross cultural training and repatriation

increased complexities such as currency fluctuations, foreign HR

policies and practices, and differing labour laws

increased involvement in the employees personal life - that is,

assistance with personal taxation, voter registration, housing,childrens education, health, recreation and spouse employment

a more complex employee mix, such as a mix of more people from

different cultures and ethnic backgrounds as more significant part of

the workforce

more complex external influences, such as different cultures, politicalsystem ethics and laws

increased risks, such as emergency exits for illness, personal security,

kidnapping and terrorism

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HR PLANNING (EMPLOYEE PLANNING)

Attempts to anticipate future business and environmentaldemands on the organization and to meet the peoplerequirements dictated by these conditions

Concerned with the demand and supply of labour

Purpose is to ensure that the right number of people withthe correct skills are available at a specified time in thefuture

Must be an integrated part of the organizations strategic

planning process Human resource planning is the responsibility of all

managers and not just the Human Resource department

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HR PLANNING vs.

STRATEGIC HRM PLANNING

Human Resource

Planning [HRP]

Employment planning

Places it at the

operational level of the

organisation

Concerned with detailed

forecasts of employee

supply and demand

Strategic HRM Planning

Concerned with defining

organization

objectives

philosophy

strategy

It precedes HR planning

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HR PLANNING IS CONCERNED WITH

Acquisition

Development

Departure

Entryof people intothe organization

Development ofemployee skills

Exit of employeesfrom the organization

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HR PLANNING ISSUES

What mix ofknowledge, skills andabilities do we require

now? What mix will we

require in the future?

Do we have the rightnumber of qualifiedemployees today?

How will employeenumbers change in thefuture?

How do our labourcosts and productivitycompare with ourcompetitors?

Where will we find thepeople we need?

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ENVIRONMENTAL INFLUENCES

Women in the work force Ageing population

Casualization of the work force

Skills shortages

Acquisitions, mergers and divestures

Flexible work schedules

Outsourcing Globalization

Academic standards

Employee literacy

Quality of life expectations

Pollution

Government regulations

Telecommuting

Union attitudes

Community attitudes

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EFFECTIVE HR PLANNING

Effective HR Planning ensures that:

the available talent is correctly allocated labour costs are controlled

employee numbers are appropriate

productivity is improved talented employees are retained

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ORGANIZATION CULTURE

Organizations psychological and social climate forms its

culture

Culture represents values, beliefs, assumptions and symbols thatdefine how the organization conducts its business

Organizational culture tells employees

how things are done

what kind of behaviour is rewarded Organizations with strong positive cultures have a much better

chance of success than those with weak or negative cultures

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Copyright Asia Pacific Management

Pty. Ltd. 2011

CORPORATE CULTURES

Kodak

integrity, respect for the individual, trust, credibility and

continuous improvement

Hewlett Packard

respect for the individual, a dedication to affordable

quality and reliability, a commitment to community

responsibility and a view that the company exists to maketechnical contributions for the advancement and welfare of

humanity

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THE SEVEN HP VALUES

Passionate about customers

Showing trust and respect for individuals

High level of contribution and achievement

Speed and agility when taking action

Delivering meaningful innovation

Results through teamwork Uncompromising integrity in business

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CULTURE AND STRATEGY

Important for management to foster a culture that promotesthe achievement of the organizations strategic businessobjectives

Campbells Soups beat the competition winning is what weare all about

Honda destroy Yamaha Philip Morris winning beating others in a good fight Nike crush the opposition

Note: impact on people management

teams selection rewards

learning and innovation

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CRITICISMS OF CORPORATE CULTURE

danger of indoctrination

lack of flexibility loss of individuality

unquestioning acquiescence

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NATIONAL CULTURE

Culture is a difficult and complex concept

Described in terms of

communication

trust

a collection of societal norms and values

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NATIONAL CULTURE AND

CORPORATE CULTURE

National culture greater impact on shaping

employee behaviour

Note, importance of

self selection (screen out companies)

employee selection (screen out individuals)

Ensure increased likelihood of a good fit betweenindividual and organization culture

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DESCRIPTIONS OF CULTURE

Hofstedes cultural dimensions individualism/collectivism power distance

uncertainty avoidance

masculinity/femininity

time orientation

Halls communication dimensions high context

low context

Fukuyamas ethical habits high trust

low trust

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COLLECTIVISTIC VS INDIVIDUALISTIC CULTURES

Highlights emphasis given to individuals or groups

Individualist cultures emphasize independence focus on competency short emphasis

competition conflict confrontation

Collectivist cultures emphasize integration into a group group welfare focus on relationships

long term emphasis cooperation conflict

accommodation collaboration withdrawal use of 3rd parties

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HIGH POWER DISTANCE CULTURES

Acceptance of an unequal distribution of power social class organization position

More likely to comply with legitimate power defer to those of higher rank or status behave appropriately

Leadership tends to be autocratic or paternalistic

decisions are made at the top communications are downward

Organizations are hierarchical

utilize status symbols

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FAMILY POWER

Chinese organizations have many similarities to traditional family authority vested in Father deference to Father as family head loyalty to Father and family obedience to FatherNote: These may be more important than ability in a Chinese organization

Power relationship is more personalized and less dependent on abureaucratic system of rules

Power remains legitimate if it is used for the benefit of the family

Must have concern for welfare treat with respect

(similar to duties and obligations of a Father)

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DIMENSIONS OF NATIONAL CULTURE

Source: Bangert DC & Pirzada K (1992) Culture and Negotiation The International Executive, Vol. 34, No. 1, pp. 53,

Power Distance Individual/ Collectivism

Country Index Index

Australia 36 90

Great Britain 35 89

Hong Kong 68 25

Indonesia 78 14

Japan 54 46

Korea, Rep. of 60 18

New Zealand 22 79

Philippines 94 32

Singapore 74 20

Taiwan 58 17

Thailand 64 20

USA 40 91

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TRUST

Trust involves honesty, truthfulness & reliability. It is also associatedwith cooperation, predictability and confidence

Culture influences how willing a person is to trust someone from adifferent background

Reduced propensity to trust is associated with high power distance,

high context and low trust cultures The more ethnocentric a culture is, the greater the perceived social

distance between cultural ingroups and outgroups

Where clear distinctions are made between in and out groups (e.g.collectivistic cultures and high context cultures) cheating of outgroup

members is acceptable The extent to which people are prepared to trust another party dependson their propensity to trust and on their perceptions of the other partysability, benevolence and integrity

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PERSONAL CHARACTERISTICS AND TRUST

propensity to trust perceptions of ability, benevolence & integrity similarity of values

predictable likeable

ingroup/outgroup membership Outgroup members are perceived as less

honest reliable open trustworthy concerned with welfare

categorization as an outgroup member creates distrust negative interpretations of the other parties actions conflict

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Australian Negotiators ChineseNegotiators

less risk aversefavor informality

downplay status

more willing to trust

more risk aversefavor formality

emphasize status

less willing to trust

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LOW CONTEXT CULTURES(Australia, Canada, UK, USA)

What counts is the legal contract, not the social context Look for meaning in what is said

Communications are direct Environment, situation and non verbal behaviour are less critical Directness is valued Personal relationships and loyalty less important, focus is on objectives Distinctions between in and out groups are less important

HIGH CONTEXT CULTURES(China, Japan, Korea)

The written contract is less important than status, reputation and socialrelations

Look for meaning in what is NOT said Communications are indirect Environment, situation and non verbal behaviour are critical Subtlety is valued Personal relationship and loyalty are very important Sharp distinctions are made between in an dout group

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CULTURAL DIMENSIONS SUMMARY

Australia, USA, Hong Kong and China

Sources: Fukuyama, 1995; Hall, 1976; Hofstede, 1984; Hofstede, 1998.

Individualism

PowerDistance Trust Context

Australia High Low High Low

USA High Low High Low

HongKong

Low High Low High

China Low High Low High

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VALUE DIFFERENCES

Youth vs Age

Change vs Tradition

Informality vs Formality Frankness Vs Diplomacy

Individualism Vs Groupism

Rights vs Obligations

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KEY HRM CROSS CULTURAL ISSUES

Communications

Ethics

Trust

Management style Equal employment opportunity

Performance appraisal

Training and development

Remuneration Industrial relations

Health and safety

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