Human Resource Management. Search for:. Purpose of Human Resource Management. Learning Objectives Demonstrate the mission of human resource management, in both the broader organizational perspective and the narrower individual one. Key Takeaways Key Points Human resource management HRM views people as organizational assets and internal customers and works to create job satisfaction and employee efficiency and effectiveness.
HR leads the employment life cycle, from attracting and hiring the right employees to facilitating performance reviews and eventually processing terminations. Key Terms human capital : The stock of competencies, knowledge, and social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.
Human resources : People are assets for an organization. Human Resource Planning Human resource planning identifies the competencies an organization needs to fulfill its goals and acquires the appropriate people.
Learning Objectives Express the way in which planning, evaluation and improvement can create competency relative to developing human resources. Key Takeaways Key Points The human resource planning process identifies organizational goals and matches them with the competencies employees need to achieve those goals. A plan is made to either develop necessary competencies from within the organization or hire new people who already have them.
Operation Plan :. Operation plans are prepared at the lowest business profit centre level. These plans are supported by the HR plans relating to recruitment of skilled personnel, developing compensation structure, designing new jobs, developing leadership, improving work-life, etc. Day-to-day business plans are formulated by the lowest level strategists.
Day-to-day HR plans relating to handling employee benefits, grievances, disciplinary cases, accident reports, etc. Environment influences human resource management as well as business.
Environmental scanning helps to know the nature and degree of environmental influence on human resource plan as well as business plan. Managers have to scan the following environmental factors in particular:. Social factors including cultural factors, religious factors, child-care, educational programmes and priorities. Technological developments including information technology, people soft, automation and robotics.
Economic factors including international, national and regional factors. Political factors including legal issues, laws and administrative factors. Industry growth trends, competitive trends, new products, new processes, services and innovations. The environmental scanning will help the managers to foresee the possible changes and make the adjustments in order to prevent the possible negative effects and get ready for the positive effects.
In addition to scanning the external environmental factors, organisations like Infosys, Satyam, Volvo and Southwest Airlines scan internal environmental factors. Organisations conduct cultural audits to know the impact of attitudes, values and activities of employees.
As observed by Sears, employee positive attitude has direct and positive impact on customer satisfaction and revenue. Most of the companies benchmark their standing and progress against each other as environmental scanning and HR planning are aimed at competitive advantage. Benchmarking is identifying the best HR practices like training and compensation in the industry, compare them with those of the firm and take steps to improve the practices to match with those of the best practices in the industry.
Target for benchmarking need not be a competitor, but the best in the industry, or companies in other industries. The linkage between strategy and HR should focus on the development of core competencies. These competencies helped these companies to have leverage by learning faster than others. Core competency is a portfolio of employee skills. Companies invest in training of these employees, provide them with freedom and autonomy and offer higher salaries.
Companies invest less in developing these employees, but provide short-term financial benefits. This category of employees possesses skills, which are of less strategic value like clerks, receptionists, drivers, security, etc. This category of employees is normally hired from external agencies on contact basis. Organisations do not invest in training these employees and the employment relations are transactional.
Companies do not employ them on regular basis, given their tangible link to the strategy but establish long- term alliances and partnerships with them.
HR managers make decisions with regard to whom to employ internally, whom to contract externally and the type of the employment relationship to be maintained. HR manager also considers the cost-benefit approach of internal employment vs. Ensuring Fit and Flexibility :. Alignment between strategic planning and programmes, policies and practices of HR is vital and need to achieve two types of fit viz. Growth strategy of the company is to be aligned with recruiting people with creative and innovative skills, providing freedom to them and investing on training for developing such skills.
Internal fit brings alignment among various HR policies and practices in order to establish configuration that is mutually reinforcing. Efficiency and creativity come from integrated effort of job design, HR Plan, recruitment and selection, training, performance management, compensation and motivation.
Therefore, there should be integration among all HR functions. In addition, management should follow either individual approach or team approach for all HR functions. Successful external and internal strategy and HRM alignment helps the organisation to increase organisational capability and competitive advantage.
Cohort Analysis :. It is an analysis of risk factors of groups in which a group having one or more similar characteristics is closely monitored over time simultaneously with another group. It is one type of clinical study design and should be compared with a cross-sectional study.
Cohort studies are largely about the life histories of segments of populations, and the individual people who constitute these segments. This method is used where case study approach is not feasible, creates too many statistical problems, or generally produces unreliable results.
This is also called follow up study. Cohort analysis helps to separate growth metrics from engagement metrics and helps to measure growth and identify growth problems.
In his article entitled Increasing Organizational Effectiveness through Better Human Resource Planning and Development, Edgar Schein suggests that the process of HR planning and developing staff must take into account two important sets of needs — the needs of the company, and the needs and desires of the individual employees.
In addition staffing processes also form a part of the model. When doing an internal scan for purposes of human resource planning the questions that should be addressed. What knowledge, skills, abilities and capabilities does the organization have? What elements deter the organization from reaching its goals? How has the organization changed its organizational structure? How is it likely to change in the future?
How has the organization changed with respect to the type and amount of work it does and how is it likely to change in the future? How has the organization changed regarding the use of technology and how will it change in the future?
How has the company changed with respect to the way people are recruited? What is being done well? What can be done better? Are current programmes, processes or services contributing to the achievement of specific organizational goals?
When doing an external scan of the environment for purposes of human resources planning HR planning , we should look for:. In order to do human resource planning, we need to have a sense of both the current external environment, and anticipate things that may happen in the future in the labour market place. We do this via an external scan or environmental scan that can address the following issues and questions.
How is the current external environment? What elements of the current environment are relevant to the company? Which are likely to inhibit the company from arriving its goals? What key forces in this environment need to be addressed and which ones are less critical? What is the impact of local trends on the company demographic, economic, political, intergovernmental, cultural, technology, etc. Are there comparable operations that provide a similar service?
How might that change? How would that affect the company? Where does the work of the company come from? How might that change and how would it affect the organization? How might the external environment differ in the future? What forces at work might change the external environment? What implications will this have for the organization? What kinds of trends or forces affect similar work in other jurisdictions?
Human Resource Planning HRP anticipates not only the required kind and number of employees but also determines the action plan for all the functions of personnel management. HRP offsets uncertainties and changes to the maximum extent possible and enables the organisation to have right men at right time and in right place. It provides scope for advancement and development of employees through training, development, etc.
It helps to anticipate the cost of salary enhancement, better benefits, etc. It helps to anticipate the cost of salary, benefits and all the cost of human resources facilitating the formulation of budgets in an organisation. To foresee the need for redundancy and plan to check it or to provide alternative employment in consultation with trade unions, other organisations and government through remodeling organisational, industrial and economic plans.
To foresee the changes in values, aptitude and attitude of human resources and to change the techniques of interpersonal, management, etc. To plan for physical facilities, working conditions and the volume of fringe benefits like canteen, schools, hospitals, conveyance, child care centres, quarters, company stores, etc. Diagram 1 outlines a workforce planning process that combines end-user-based demand planning with predictive supply analytics. Diagram 1. Workforce Planning Process.
Following the workforce planning activities outlined in the diagram results in these benefits:. The concepts of planned versus reactive risk management, and developing the right metrics are perhaps the most crucial levers to drive support for workforce planning.
By shifting workforce planning from a top-down strategic exercise that is only geared towards provoking thought about the future to an operational exercise designed to manage talent risk, workforce planning becomes a concrete activity with specific financial implications.
By providing metrics to quantify the risk, it provides something even more concrete for leaders to manage. Within the demand planning component of workforce planning, an organization determines the head count it needs in each job role for each organizational unit.
Traditionally, a single person has conducted this work or a center of expertise has created plans and reports for internal customers. However, the future is inherently uncertain.
Considering this uncertainty, centrally-generated reports and plans are interesting, but understandably have not resulted in the business gaining long-term adoption of the plans, or the workforce planning process. There are two keys to moving beyond this demand planning impasse.
The first is cultural. Organizations should avoid confusing planning with the plan, and should value planning as much, if not more, than the actual plan. The plan will not happen. The future is far too uncertain. Planning, however, is a competency that helps managers deal with such uncertainty more quickly and effectively.
The second key is to move from top-down planning to bottom-up planning, which requires technology that al- lows end users to evaluate various factors and define talent demand for their business area. This bottom-up planning can be rolled up for various corporate-wide outputs such as the corporate workforce plan, the budget feed, the real estate plan, the reforecast, and more.
But, it also can be conducted as needed as part of a frequent recalibration of talent needs based on the state of the business. A lower-performance organization will have managers decide in a vacuum on their need for talent. In this setting, the industry experience of managers and the amount of data available to make the decision defines the quality of the output. In a high-performance organization, managers are guided through the decision-making process. For example, a manager may be led through a decision tree based on strategic objectives and job criticality.
Alternately, a manager may be provided with demand drivers and conduct what-if scenarios that help determine the appropriate number of workers for the workload based on a combination of historical staffing levels and productivity objectives. In the ideal situation, a manager could be provided a detailed proforma demand plan that describes the staffing level for job roles based upon how the organization typically staffs against work volumes and other demand drivers.
Then the manager can be led through decision- making to ask questions such as:. In summary, a technology-enabled bottom-up approach to demand planning creates a more accurate plan and enables a planning culture where managers use data to make staffing decisions — and are more equipped to evaluate how changes to business objectives and environment should impact staffing levels. Within the internal supply analysis component of workforce planning, an organization evaluates whether it has the supply internally to meet its demand.
On a quantitative basis, the process is to evaluate talent supply by job role after attrition: turnover, retirement and internal job movement. On a qualitative basis, it is important to also look at capability and performance, even within jobs that are fully staffed.
To derive a supply forecast, a lower performance organization will simply carry forward historical turnover rates or use industry benchmarks. This approach is not sufficiently actionable—at best it is only interesting data to consider as part of workforce planning; at worst, it is incorrect. A high-performance organization will use predictive analytics to identify the risk of turnover, retirement, and workforce mobility of specific individuals.
Machine learning statistics packages allow an organization to conduct complex multivariate analysis that incorporates employee demographics, employer actions and workplace conditions, and external economic conditions.
Diagram 2 illustrates some of the factors that can be used for predicting turnover, retirement and mobility, as well as the rough importance of such factors in predictive studies. Bring clarity to the hiring process to find the best candidates for your company. After hiring your new employees, bring them on board. Find more ideas on how to develop your own employee onboarding process , and then get started with this onboarding timeline template.
Keep your current employees and new hires happy by offering competitive salary and benefit packages and by properly rewarding employees who go above and beyond.
Retaining good employees will save your company a lot of time and money in the long run. Institute regular performance reviews for all employees. Identify successes and areas of improvement. Keep employees performing well with incentives for good performance.
A strong company culture is integral in attracting top talent. Beyond that, make sure your company is maintaining a safe work environment for all, focusing on employee health, safety, and quality of work life. Once your human resource management process plan has been in place for a set amount of time, you can evaluate whether the plan has helped the company to achieve its goals in factors like production, profit, employee retention, and employee satisfaction.
Now that you know the steps to strategic human resource planning, it's time to adapt those steps to your own organization and determine how to execute. There are a number of reasons to document your strategic human resources plan, particularly in a visual format like a flowchart.
Through documentation, you standardize the process, enabling repeated success. Documentation also allows for better evaluation, so you know what parts of your plan need work.
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