HRM in Context Session 1 Concept of HRM

HRM in Context Session 1

Concept of HRM • Management is the process of efficiently completing activities with and through other people • Primary functions of management are: – Planning (establishing goals) – Organizing (determining activities) – Leading (motivating subordinates) – Staffing (determining people needed for the organization) – Controlling (setting standards, monitoring activities) 2

The Management Process Planning Controlling Leading Organizing Staffing 3

Our Focus (HRM: We the People) • Staffing, Personnel management or the HRM function • Managing people is an important aspect of managing an organization • Organizational effectiveness depends largely on the performance of people in an organization • People constitute an organization's most vital factor in its success or failure • It is by "men" that the other "m's" are acquired and utilized - money, machines, materials, methods and markets • An organization may start with zero funding but will become financially viable with creativity, resourcefulness, hardworking and honest people • Products and services can be copied by every organization within six months. But, human resources cannot be copied, they are like snowflakes. 4

What is HRM? • People become HR when they combine energy and physical strength with competencies (knowledge, skills, attitudes, potential for growth) • HR are people who are ready, willing and able to contribute to organizational objectives • HR of an organization include all employees engaged in various jobs at different levels • HRM can be seen as an interaction between the human beings and the organization 5

• On the one hand, – One has to put the right person on the job: well educated, qualified, well selected & trained • On the other, – you have to create an organization with possibilities for people to develop themselves 6

Defining HRM • The policies and practices involved in carrying out the "people" or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising. (Dessler) 7

Defining HRM • “Human Resource Management is concerned with the “people” dimension in management. • Since every organization is made up of people, – acquiring their services, – developing their skills, – motivating them to high levels of performance, and • ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. ” • (Decenzo and Robbins) 8

An Art or A Science? • HRM is the art & science – of acquiring, motivating, maintaining & developing people in their jobs – in the light of their personal, professional & technical knowledge, skills, potentialities, need & values – for the maximum achievement of individual, organization & society's goals. 9

• An Art? – Being highly individual process eliciting human behavioural skills • A Science? – It draws from theories & principles of management & other disciplines A proper mixture of both makes HRM efficient & effective 10

Evolution of HRM • Early Scientific Management Era (beginning of the 18 th century) • Industrial Revolution of 1850 s • Scientific Management in the late 1800 s & early 1900 s • Human Relations Movement (1930 s to 1950 s) • The HRM Era • Behavioral Science Movement (1960 s) • The New HRM Era 11

Early Scientific Management Era – (beginning of the 18 th century) • Formation of guilds (A guild is an association of craftsmen in a particular trade. ) • Forerunners of the modern trade unions – (later part of the 18 th century) • “Welfare officers” in the UK business houses • Schemes of unemployment benefits, sick pay • Edward Cadbury and Joseph Rowntree 12

Industrial Revolution of 1850 s – Labor a commodity to be bought & sold – Human work substituted by machine power – Mass production – Workers treated as commodities, thus exploitation – Used and abused workers – Widening gap between workers & owners – Alleviation in their pitiable condition – Advent of collective bargaining between labor & management – Laid the foundations of the present HRM concepts 13

Scientific Management (Late 1800 s & early 1900 s) – Frederick Winslow Taylor – Logic of efficiency to management – Principles of precision (Time & motion study) – Tasks were systematically broken down – Emergence of personnel management (One best method; Specialization; Worker development; Incentive system; Management-Labour harmony) – Laid the foundations of the present HRM concepts 14

• Classical Organization Theory (1916) – Henry Fayol – Basic concepts to guide the design, creation & maintenance of large organizations – Identified the basic functions of managing organizations – Management a process – Managerial activities: planning, organizing, commanding, coordinating &controlling 15

Human Relations Movement (1930 s to 1950 s) – Chester Barnard – Concept of organization as human cooperative systems rather than as mechanical contraception – Cohesive leadership is necessary – Advocated on good communication, participative management, team work, social setting, group dynamics, non-financial rewards etc. 16

• Hawthorne Studies (1927 - 1932) – Elton Mayo & Fritz Roethlisberger: General Electric’s Hawthrone plant – Changes in the physical environment could not completely explain changes in productivity – Importance of social factors (morale, interpersonal relationships) – Cooperation & teamwork 17

The HRM Era • End of WW I – personnel management was recognized to fight labor shortage problems • 1920 s – Personnel management began being taught at the university level (US) • Between the WWI & Great Depression estd. of personnel depts. • Labor exploitation (1930 – 50 s) resulted in labor relations movement, unions, collective bargaining (1935 -60 s) • Until the 1960 s, the personnel function was considered to be concerned only with the blue-collar employees 18

• Management by Objectives (MBO) 1954 – Peter F. Drucker – Objectives must be set in all areas where performance affects the health of the enterprises • Theory X and Theory Y – Douglas Mc. Gregor – Theory X: employees dislike work – Theory Y: work is a natural act for employees 19

Behavioral Science Movement (1960 s) – Maslow’s hierarchy of needs – Frederick Herzberz’s two factor theory 20

The New HRM Era • Emergence of the new HRM theory & practice (1980 s) • Challenges of globalization, technological advances, changing customer etc. 21

Nature/Characteristics of HRM • Human focus/related to "people" • Management function – application of management principles & functions – involves planning, implementing & – controlling of acquisition, development, utilization & – maintenance of human resources • Pervasive – concerned with all levels of HR – discharged by all levels of managers 22

• Continuous commitment of people – not one time activity – high level of motivation – sense of ownership – "psychological contact-challenges & commitment" • Dynamic/responsive to environmental changes – action-oriented – e. g. performance based reward, union recognition • System – consists of interrelated acquisition, development, utilization & maintenance subsystems – utilizes the potential of the workforce to improve their productive contribution 23

• Mutuality oriented – promotes "HRM think" organization-wide – mutual influence, mutual respect, mutual rewards, mutual responsibilities • Closely linked to corporate or business strategy – links HR functions to the broader, longer-term needs of firms • Recognition of the common interests and needs – matching interests of individuals & organization – to achieve career-oriented & organizational goals 24

• Recognizes employees as important assets or human capital – investment of huge amount of money in the development of working people – "learning organization" • Includes both lines and staff managers – line authorities are authorized to direct the work of subordinates – staff managers are authorized to assist and advise line managers in accomplishing these basic goals – HR managers are staff managers 25

Objectives of HRM • Employs the skills & abilities of the workforce • Provides well-trained and well-motivated employees • Increases Employees’ job satisfaction and self-actualization • Communicates HRM Policies to all employees • Shoots-up productivity • Achieves Quality of Work Life • Increases employee commitment • Manages organizational culture • Supports employee creativity • Manages change • Maintains ethical policies and socially responsible behaviour • Goal Achievement 26

Objective Employs the skills & abilities of the workforce – Makes people’s strengths productive – Benefits customers, stockholders and employees 27

Objective Provides well-trained and well-motivated employees – Building & protecting the most valuable asset of the enterprise 28

Objective Increases Employees’ job satisfaction and self-actualization – Employees must feel that the job is right for their abilities – Job is a major source of personal identity 29

Objective Communicates HRM Policies to all employees – Everyone in the firm has to be HRM-knowledgeable – Communicating managerial decisions to relevant public in their own language – Representing the organization to the outside: trade union, government etc. 30

Objective Shoots-up productivity – Depends upon how effectively it uses its human resources – Continuously develops employees – Invite HR dept. to participate in formulating business strategy – Allows HR staffs to initiate programmes – Allow HR staffs to communicate with line managers etc. 31

Objective Achieves Quality of Work Life – Refers to employee's perception of their physical & psychological wellbeing at work – Improves quality of relationships between employees – Giving adequate opportunity for participation – Meaningful, challenging, interesting responsibilities – Freedom & autonomy to make decisions on the job – Satisfactory physical surroundings – Job safety etc. 32

Objective Increases employee commitment – Interest in mental & physical involvement in achieving organizational objectives – Motivation of people for commitment – Adopt desirable HR practices & measures 33

Objective Manages organizational culture – Guides behavior of people working in organization – Develops different work rules & guidelines – HRM policies & practices can be implemented only where people are valued 34

Objective Supports employee creativity – Effective management mechanisms like teamwork, MBO, TQM etc. 35

Objective Manages change – Workforce must rapidly shift & adjust to new technologies, skills etc. – Trains workforce to adjust in a frequently changing environment 36

Objective Maintains ethical policies and socially responsible behaviour – Any activity engaged by the HRM will be fair, truthful, honourable – People will not be discriminated against 37

Objective Goal Achievement – Helps achieve the following goals: • Personal goals (career advancement, compensation, development etc. ) • Functional goals (departmental goals) • Organizational goals (profit, survival, growth etc. ) • Societal goals (social responsibility, employment opportunities etc. ) 38

Functions / Areas of HRM • Job Analysis • Human Resource Planning • Recruitment and Selection • Training and Development • Performance Appraisal • Compensation and Benefits • Health and Safety • Employee Relations 39

Functions: Job Analysis • Most basic function • Collection of job related information to prepare job description & job specification • Job description (detail information about what a person has to be doing in the specific job) • Job specification (qualification, training, work experience & other personnel requirements to perform a particular job) • Formulates HR planning, recruitment & selection 40

Function: Human Resource Planning • Involves estimation of demand & supply of HR • To fulfil current & future HR requirements of the organization 41

Function: Recruitment and Selection • Recruitment (process of making pool of qualified candidates) • Recruitment (Begins from invitation of application, end with development of list of qualified candidates) • Selection (Required number of employees are selected by the organization) • Selection (Process of reviewing application, interview, tests & informing candidates) • Information from job analysis & HR planning is used for selecting right candidates & rejecting wrong candidates 42

Function: Training and Development • Required to develop skill, ability & motivation of employees • HR dept. assess training needs, types of training & development activities • On-the-job training provides using organizational premises & facilities • Off-the-job training provides outside organizational premises 43

Function: Performance Appraisal • Process of evaluating employees' performance related strengths & weaknesses • Assess how well employees are doing in their jobs • Provides techniques of assessing the performance of employees against agreed targets • Result of evaluation used to determine training needs • Result of evaluation used to provide promotion & other forms of rewards for employees 44

Function: Compensation and Benefits • Compensation rewards people through pay, incentives & benefits against the work done • Benefits reward people with additional compensation • Benefits are indirect forms of compensation (e. g. health care) • Great source of motivating employees at work 45

Function: Health and Safety • Taking care of employees' health & safety • Employees should be made aware of hazardous situations 46

Function: Employee Relations • HR dept. develops mechanisms for developing understanding on different HR related issues between management & employees • Develop mechanism to solve conflict & work related issues at shop floor • E. g. handling grievances, labor-management meetings, and settlement of disputes etc. 47

Personnel Management Versus HRM • HRM has evolved from Personnel Management • But, Personnel Management is not HRM • HRM emerged in 1970 s • In 1989, – the American Society for Personnel Administration (ASPA) voted to change its name to – the Society for Human Resource Management (SHRM) 48

Personnel Management Versus HRM Factor: Approach Personnel Mgmt. HRM Traditional Approach Current Approach Used from the early 19 th C Used from the early 1970 s World war I, Great Govt. rules, professional, Depression technical workers, nonunionised sectors increased 49

Personnel Management Versus HRM Factor: Aim Personnel Mgmt. HRM Non-managers (specialists Managers by specifically & professionals) developing the management teams in the organization Factor: Scope Personnel Mgmt. Personnel department HRM All people working for & with the organization 50

Personnel Management Versus HRM Factor: Concern Personnel Mgmt. HRM Negotiation, administering Management of human & collective agreement energy & competencies Focus on compliance with Dynamic interrules and regulations relationships of Personnel administration, acquisition, development, compensation, employee utilization & maintenance welfare, labor relations functions Employee involvement and participation are emphasised in work 51 related decisions

Personnel Management Versus HRM Factor: Philosophy Personnel Mgmt. Workers need to be controlled & disciplined, coerced Focus for mainly profit HRM Human with respect on individual & organizational well-being 52

Personnel Management Versus HRM Factor: Focus Personnel Mgmt. HRM HR as costs HR as investments People as input in the People as valuable production process resource in the People an expense, factor organization system of production Regards investment in people as social capable of development 53

Personnel Management Versus HRM Factor: Function/technology Personnel Mgmt. HRM Routine Strategic Compliance of policies HR planning & & rules organizational strategy Manpower planning Developmental: Mechanistic: Reactive, proactive, sociocontrol oriented technical orientation, flexible participatory, creative, innovative 54

Personnel Management Versus HRM Factor: Job Design Personnel Mgmt. HRM Based on division of labor Based on team work Factor: Orientation Personnel Mgmt. Discipline, direction & control, restricted communication HRM Supportive climate for growth, performance, involvement, open communication 55

Personnel Management Versus HRM Factor: Means Personnel Mgmt. Emphasis on rules, regulations, procedures, customs, practices HRM Emphasis on strategies for development & utilization of human potential Factor: Ends Personnel Mgmt. Managing personnel function for employee satisfaction HRM Creating learning organization 56

Personnel Management Versus HRM Factor: Outcome Personnel Mgmt. HRM Committed & empowered Satisfied personnel HR Increased productivity Increased organizational effectiveness Increased profits Participative & team based organizational culture 57

Personnel Management Versus HRM Factor: Time & planning Personnel Mgmt. Short-term focused Reacts on the specific personnel problems HRM Long-term Proactive Makes system-wide interventions before any problem or change takes place 58

Personnel Management Versus HRM Factor: Information & Communication Personnel Mgmt. Mainly used as a source of power and control HRM Important sources of developing trust and commitment among the organization's employees Factor: HOD Personnel Mgmt. Administrative officer personnel HRM or Separate HR department manned by HR specialists 59

Personnel Management Versus HRM Factor: Place of work Personnel Mgmt. Formal setting: office, factory, plant Factor: Type of service Personnel Mgmt. Basic & simple functions: recruitment, selection HRM Formal, informal setting HRM Varied & complex: job analysis, job design, job appraisals, maintenance, development etc. 60

System Model of HRM • System composed of interrelated & interacting parts to achieve desired goals • System approach to HRM combines itself with business strategy • Many firms in developing countries are facing problems due to their traditional practices of managing people • The system, functions, components and objectives of modern organizations differ from traditional organizations • HRM system is linked with organization performance, organization structure and strategic objectives of the organization • Open system: consists of input-processing-output & feedback components • Operates within internal & external environment 61

HRM System External Environment Factors Government law & regulation, Union, Eco condition, Competitiveness, Composition of the labor force, Geographical location of the organ, Tech. Threats and Opportunities Inputs Human Energy & competencies Organizational Plan HR Plan Mgmt Inventory Job Analysis Labour Market Processing Acquisition Development Ulitization Maintenance Outputs Organizational related output Employee related output Feedback Internal Environment Factors Strategy, Goals, Culture, Nature of the task, Group work, Leader's style & experience Strengths and Weaknesses 62

HRM System 1. Inputs of HRM • Human energy & competencies (physical strength, knowledge, skills, attitudes, experiences etc. ) • Organizational plan (organizational goals, strategy, target) • Human resource plan (matches future HR demand with supply & indicates the HR requirements) • Management inventory (record of HR currently available in the organization) • Job analysis (specifies job requirements, job specifications) • Labor market (source of external supply for quality human resources) 63

HRM System 2. Processing of HRM a. Acquisition – Ensures entry of right number of people at the right place at the right time in the organization – Consists of recruitment, selection & socialization b. Development – Ensures proper competencies of employees to handle jobs – Analyzing development needs – Employee training – Management development – Career development c. Utilization – Ensures willingness of employees for boosting productivity by doing jobs effectively – Consists of motivation, performance appraisal, compensation etc. d. Maintenance – Ensures retention of competent employees in the organization – Labor relations (employer-employee relations & employee discipline, grievance handling) – Employee welfare (to promote employee safety, health, social security, etc. ) 64

HRM System 3. Output a. Organization-related outputs • Goal-achievement • Quality of work life (QWL) (Quality of relationship between employees & the total working environment of the organization. ) • Mechanisms of QWL: – Learning & development – Recognition – Autonomy – Intrinsic/extrinsic rewards • Productivity • Profits • Readiness for change b. Employee-related outputs • Commitment (achieved through trust, understanding, communication, loyalty etc. ) • Competence (changes in the environment & assume new roles) • Congruence (related to goals, harmony between individual & organizational goals) • Cost effectiveness (high cost-effectiveness) 65

HRM System 4. Feedback – Provides information to redesign HRM inputs & processing based on output effectiveness 5. Internal Environment – Forces in the internal environment are controllable by HRM – Provide strengths & weaknesses – They are organizational goals, policies, structure, reward system & organizational culture 6. External Environment – Forces non controllable by HRM – Provide opportunities & pose threats – They are technology, politics/law, labour unions, economic forces, sociocultural forces 66

Internal & External Environment of HRM A. External environment (outside the organization) Government Law and Regulation – Affects organization directly – Decisions about hiring, promotion, diversity, evaluation, employment opportunity, discrimination, compensation, benefits regulation, safety laws etc. 67

Union – An organization that represents the interests of employees – Shapes the HR policies & practices – Union representatives are included in major HR decisions – Recruiting, selection, promotion, compensation, etc. – Not restricted only to the blue-collar workers 68

Economic Conditions – Economic devt. of a country gives priority to the proper mgmt. of HR – Provides career & skill devt. opportunities – Local companies compete with foreign ones & thus local companies reform their work processes 69

Competitiveness – Effective workers? – Quality services or good? – New technology? – Lower cost products? – HRM can be a competitive advantage 70

Composition & Diversity of the Labor Force – Women – Minorities – Older Employees 71

Geographical Location of the Organization – Rural, urban area? – Kinds of workers available – Educational factors – Behavioral factors (attitudes) – Legal-political factors (stability, racists etc. ) – Economic factors (structure, inflation, constraints on ownership etc. ) – Socio-cultural factors 72

Technology – Technology is a major factor in deciding about HR policy choices – Use of sophisticated & efficient technology – Increased the quality & volume of the products/services – Reduced the price level – Coping with the technological environment demands for knowledge workers 73

B. Internal Environmental Influences Strategy – What an organization’s key executives hope to accomplish in the long run – Selection of a particular HR strategy, policy & practice – Business firms differ in their HR strategy due to different business environment & competitive strategy 74

Goals – The goals of organizations differ within & among departments – Differences in the importance of goals – E. g. profit goals are emphasized, HRM goals are paid only minimal attention 75

Organization Culture • System of shared meaning held by members • A firm’s way of doing business • How it treats customers & employees • Autonomy of the departments • Degree of employee loyalty expressed • A common value system • Strong or weak culture? • Impact on the behavior, productivity, expectations of the employees • E. g. clear guidelines on punctuality, customer service etc. 76

Nature of the Task • Degree of knowledge & ability to use IT • Degree of empowerment • Degree of physical exertion required • Degree of environmental unpleasantness • Physical location of work • Time dimension of work • Human interaction on the job • Degree of variety in the task • Task identity • Task differences & job design 77

Group Work – Directly related to the success of HRM activities – Work-group participation in designing & implementing HRM is essential 78

Leader’s Style and Experience – Experiences & leadership style of the operating manager affects HRM activities – Direction, encouragement, authority to evoke desired behaviors – Facilitates interactions that occur within work groups 79

Importance of HRM 1. Concern over productivity • Slow growth rates • Increasing evidence that a sound HRM can increase productivity 2. Need to be flexible in response to changing business environment • Trend towards "elastic" company • Outsourcing and rightsizing temporary employees • Focussing on core competence on what they do best and • outsource other non-core works, use temporary or leased employees to work on specific tasks • (E. g. Nike and other seasonal industrial and business activities) 80

3. Increasing international competition and expanded global economy • Increasing competition for products and services and opportunity for expansion 4. Increase in litigation (legal action) related to HRM • International, national and local lawsuits on the increase for wrongful doings 5. Changing characteristics of workforce • Growing diversity • Equal opportunity • Changing attitudes, less loyalty, more demands • Labour shortage/aging workforce • Job skill gaps, poor match between skills and enterprise needs 81

The Changing Environment of Human Resource Management Globalization Trends Technological Trends Changes and Trends in Human Resource Management Trends in the Nature of Workforce Demographic Trends

Globalization & Competition Trend • Firms extend to new markets abroad • Seek new foreign products, cut labor costs, forming partnerships + Customers: Lower prices, higher quality + Business owners: millions of customers - Business owners: faces global competitors at home - Employees: Less secured jobs (job off shoring) 83

Technological Trend • Technology changed the nature of almost everything we do • It changed what businesses do & how they do • E. g. Zara. A clothing store (internet based world-wide distribution network used checkout registers) • Indian Railways: largest railway system in the world provides computerized ticket-booking facility • ATM in Nepal • Bus Rapid Transit System (BRTS), Ahmedabad: equipped with GPS facility that alerts waiting passengers about the arriving buses 84

Trends in the Nature of Work • High Tech Jobs • Service Jobs • Knowledge work & human capital 85

Workforce & Demographic Trends • • Demographic Trends Generation "Y" Retirees Nontraditional Workers 86

The Changing Roles of HR Professionals HR & improving productivity HR & Corporate strategy HR & employee commitment The Changing Roles of HR Professionals HR & transfering knowledge HR & service organizations HR & responsiveness

HR & Improving Productivity • Is the quantity or volume of product/service that an organization provides • Includes capital investment, innovation, learning & employee's motivation • Changing roles of HR towards productivity improvement are: – – – Implementing employee participation prog Fostering better communication system Devt. ing better labor-mgmt relations Increasing training & devt. prog Selection & retention of highly talented & skillful employee commitment 88

HR and Corporate Strategy • Strategy is the responsibility of the company's executive team – of which HR manager is a member • Mc. Kinsey & Company suggest 7 S: strategy – structure – systems – staff – style – skill – shared values 89

HR and Employee Commitment • Commitment is a psychological state that characterized the employee's relationship with the organization • HR managers should: – Estd career oriented performance appraisal procedures – Open job-posting & job transfer practices – Create the feeling that organization cares for them – Offer training programs 90

HR and Transferring Knowledge • "Learning organization" are successful at transferring knowledge • Training & devt. plays an imp. role in promoting transfer of knowledge • HR manager should accumulate & disseminate knowledge quickly & efficiently 91

HR & Service Organization • Depends on the employees' motivation, skills & attitudes & on HR management • Satisfied employees deliver high quality services & high service generates more profits 92

HR & Responsiveness • Creating responsive employees • Responsive employees can adopt organizational change • Can create new ideas & deliver high quality services to both organization & its customers 93

HR Strategy – Concept and Perspectives Strategic Plan 'Company's long-term plan for how it will balance its internal strengths & weaknesses with its external opportunities & threats to maintain a competitive advantage over the long term. ' Strategy A course of action the company can pursue to achieve its strategic aims. Dessler 94

Strategy & HRM • HR & top mgmt. together makes the company's design strategy • Strategy acts as a framework to design specific HR activities • This, in turn, produces the employee competencies & help business implement its business strategy • Strategic HRM is concerned with the development & implementation of people strategies which are integrated with corporate strategies 95

E. g. of the importance of HRM & strategy President "Double sales revenue to Rs. 16 m fiscal year 2012" VP of sales Double sales in East & West VP of Production Add one new production line at plant Sales Manager, East "Hire 4 new salespersons, add 100" more customers Sales Manager, West "Move 6 central salespeople to the West VP of HR Add, train 6 sales people Recruiting Mgr "Identify & attract 20 good sales candidates" Training Mgr Train 4 new salespersons & retrain all others within 4 months 96

Types of Strategy Corporate-level strategy "What businesses are we in? " Business 1 Competitive Strategy "How will we compete? " Functional Strategy Sales Dept. "How do we support the business's competitive strategy? " Functional Strategy Production "How do we support the business's competitive strategy? " Functional Strategy HR Dept. "How do we support the business's competitive strategy? 97

Strategic HRM Formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims. Dessler 98

• In formulating HR mgmt policies & activities, the manager's aim must be to produce the employee skills & behaviors that the company needs to achieve its strategic aims • Strategic plan implies certain workforce requirements • Givesn these requirements, HRM formulates HR strategies to produce the desires workforce skills 99

Linking Company-Wide and HR Strategies

HR Strategies • 'Courses of action HR uses to help the company achieve its strategic aims' Dessler • 'HR strategy involves a central philosophy of the way that people are managed in an organization, and translation of this into personnel policies and practices, and its integration with business strategy and within itself' Hall and Torrington • HR Strategies refer to building a competent & committed workforce for achievement of organizational strategic objectives 101

Four Strategic Roles of HRM 1. Strategic Selection 2. Strategic Appraisal 3. Strategic Rewards 4. Strategic Development 102

Strategic Role of HRM 1. Strategic Selection • Develop the process of internal movement of people across positions • Hire new employees • Match the employees available in the organization with the jobs • 3 different strategic roles: – design a selection system supporting organization’s strategy – e. g. if the company plans to start a new business, HRM ensures the right person to work on new business – monitoring internal flow of personnel to match emerging business strategies – e. g. if a company wants to follow an innovative market strategy to compete in the market HRM ensures selection of quality & highly creative employees in the organization – Matching the key business executives to business strategies 103

Strategic Role of HRM 2. Strategic Appraisal • Devote the most significant managerial time to appraise performance of employees • Main role: – Distribute scarce rewards on an equitable basis – Measure performance such as profitability, return on investment, market value of share etc. – Assess the current inventory of talents working in organizations for HR planning – Identify the training and development needs by identifying strengths and weaknesses of the HR 104

Strategic Role of HRM 3. Strategic Rewards • Link rewards to the long-term business objectives & strategies • Can be done by introducing various forms of rewards: – Pay, Promotion, Career opportunities, Positive feedback, Opportunities to learn, Job security, Respect from co-workers 105

Strategic Role of HRM 4. Strategic Development • Role of equipping human resources with skills & knowledge • Strategic development of the increasing knowledge-based workforce • Some methods used: developing training, opportunities for self-development etc. 106

Environment of HRM in Nepalese Organizations • Mainly concerned with utilizing human energies • Least concerned with developing human competencies & potential for growth of employees • People not considered as a source of competitive advantage and important assets • HRM is not given a strategic role • Human resources are viewed as a cost rather than assets by management • Lack of mutual trust between labor and management • Multiplicity of unions, union rivalries, politicization of unions etc. 107

Conti… • HR aspects are not considered in policy and plan • Legal framework has remained weak; "Weak implementation of laws" • Newly developed concepts & approaches of managing HR are still not in use • Managers tend to see organizations in terms of power, prestige, domination, hierarchical & mechanistic structure & poor information & communication systems • Overstaffing in mostly public enterprises while private lack professionalism being mostly family owned • Widespread corruption with massive indiscipline • HRD and HR planning is an area of least priority 108

Conti… • Job rotation is not linked to career planning of employees • Private sector organizations are more aware of the management of the HR rather than the public sector undertakings • Recruitment, selection, placement process is followed in all organized enterprises • No 'good fit' between the national HR development priority & the HRD strategy • Human Resource Inventory is prepared by organizations but updating of inventory is lacking 109

Conti… New Trends • Globalisation & information technology has facilitated innovative approaches to HRM • Pioneer has been the first joint venture bank, NABIL • INGOs & other private companies have started adopting modern practices • Organizations have started advertising for vacancies; organizations use external agencies for recruitment • Government employees are selected by Public Service Commission 110

Conti… • Public enterprises have legally prescribed performance appraisal system but they have become rituals practically • Some organizations offer ‘voluntary retirement’ schemes • Professionalism has been gradually increasing • Labor unions are powerful in Nepalese organizations since 1990 s • IT revolution has already arrived 111

Environment of HRM in Nepalese Organizations Timeline Details Remarks 1935 Industrial Council constituted First of its kind 1936 Biratnagar Jute Mills Industrial revolution First of its kind First modern industry 1937 First commercial bank, Nepal Bank Limited Contributed to the growth of more industries 1947 First politically motivated labour movement at Biratnagar Jute Mills Labour leaders succeeded in making some welfare facilities available to the workers 112

Conti… 1951 Democracy installed, Central secretariat for labour administration Ministry of Industry and Commerce come into existence 19511960 Formations of trade unions legalized Focus, however more on political issues rather than on labour & welfare matters 1957 First Industrial Policy formulated Part of the first five-year plan that began a year earlier 1959 Nepal Industrial Development Corporation established Provided financial and technical assistance to private entrepreneurs Nepal Factory and Factory Workers Act enacted Welfare Officer in factories of over 250 workers Regulations on leave, pension & provident fund, compensation for disability or death, working hours 113

Conti… 1960 -1990 Panchayat system Trade unions had to operate underground as they were not legally permitted to function Only the officially sponsored and controlled labour organization, as one of the six "class organizations", was permitted to operate A potential candidate had to enrol as member in one of these six organizations to run for election to the national legislature 114

Conti… 1965 Establishment of Federation of Nepalese An umbrella body of Chamber of Commerce and Industries employers (FNCCI) First of its kind Establishment of public sector manufacturing enterprises Minimum wage fixed 1966 Nepal joins the International Labour Organization (ILO) as a member state First regional labour office established in Biratnagar HRM still confined to personnel administration & labor relations functions Human resource assessment & planning program begins Process of establishing regional labour offices begins 115

Conti… 1967 Central Bureau of Labour Affairs established Recommended Ministry of Planning (now National Planning Commission) 1974 Bonus Act, 1974 Bonus must not exceed 10% of net profit & six months wages & salaries 1990 Restoration of democracy Multi party democratic system boosts labour movement 116

Conti… 1992 Labour Act replaces Nepal Factory and Factory Workers Act Labour relations become an important function of HRM Deals with employment & job security, working hours, remuneration, health, safety & welfare measures, workers’ participation, code of conduct, punishment & dispute settlement Amendment was made in 1998 1993 Trade Union Act enacted Now three national-level trade unions registered: DECONT, GEFONT, NTUC 117

Conti… 1995 Nepal ratifies Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144) Provides labor courts to deal with labor disputes Labour Court Regulation Act, 1995 2000 Child Labour Act enacted Deals with child’s definition, employment, hours of work, wage payment & punishment Below 16 years are child and below 14 years must not be employed 118

Conti… 1996 -2006 Maoist Movement - April onwards 2006 People’s Movement II, Loktantra established (Restoration of democracy). - - Political tussle between all actors. Royal Massacre in June 2001. King takes over direct power in February 2005 in the form of a military coup. Draft to amend Labour Act; Tri-partite tussle takes new heights, mostly based on political grounds. Nepal becomes Federal Democratic Republic; abolishes Monarchy. Maoists join mainstream politics giving up their ten-year-long armed conflict; Forms government after winning a majority through Constituent Assembly Elections; Their trade union All Nepal Trade Union Federation (A-N-T-U-F) turns active. Labour Union tussle) including interparty factional politics) continues, mostly based on political grounds. 119

New Trends • The dynamics of HR in Nepalese organizations (varied culture, social background, rising expectations, changing work attitudes, demands in standard system) • Changing conditions & external pressure (Govt. regulations, competition, unions, low productivity of workforce, high indiscipline, traditional admn. , short-term) • Changing role of HRM in view of social factors (demanding society, growing pressure to hire locals, ethnic groups & minorities) • Governmental & local factors (Trade union act, Labour act, Minimum wage directives, Bonus act etc. ) • Changing employee standards & professionalism (entry of educated, young managers, professionalism, career orientation, quota system) • Changes in employee role & values (quality of worklife, equity, participative decision making, work life – personal life balance) 120

Other Present Trends • "Weak implementation of laws, " accuses employers as well as labour unions • Newly developed concepts and approaches of managing HR are still not in use in many Nepalese organizations • The "old school of thought" on HRM still existing in traditional organizations where managers tend to see organizations in terms of power, prestige, domination, hierarchical and mechanistic structure and poor information and communication systems 121

• Overstaffing in mostly public enterprises while private lack professionalism being mostly family owned and those with reach towards the centre • Legal framework largely only welfare oriented as well as short range-oriented • Rampant corruption with massive indiscipline • But globalisation and information technology has facilitated innovative approaches. International NGOs and other private companies have started adopting modern practices 122

Concept of IHRM • As an effect of the increasing trend of globalization, most companies do business abroad • Doing so presents firms with various management challenges • Plans for marketing & producing goods abroad are required • Employer needs to install those mgmt. systems it will require to manage in overseas activities • These mgmt. systems include organization structures, managerial controls, worldwide banking relationships, HRM systems for recruiting, selecting, training, appraising & compensating its workers abroad 123

Concept of IHRM • With the growth of MNCs, the imp. of the subject IHRM is now growing • Managing HRs internationally creates questions & challenges all its own • For e. g. , – "Should we staff the local offices with locals or the parent country employees? " – "How should we appraise and pay our local employees? " – "How should we deal with the unions in our offices abroad? " – "How will cultural differences abroad impact the sorts of employee selection, appraisal and compensation policies we use? " 124

Definition of IHRM • The human resource management issues and problems arising from the internationalization of business, and the human resource strategies, policies and practices which firms pursue in response to the internationalization process • Sculllion • Thus, IHRM is different from managing HRM at the national level • Factors such as increasing global & local competition, stock market responses, host country & parent company's relations & other international factors affect IHRM policies & practices 125

Importance of IHRM • An increasing no. of MNCs are in operation in many countries in recent years • There is a growing need for effective management of HR in these organizations • To implement international business strategies by developing appropriate HR strategies for the recruitment & devt. of 'international managers' • To minimize financial and human costs of failure in overseas appointments 126

Issues in IHRM How Intercountry Differences Affect HRM Legal & Industrial Relations Framework • Legal guidelines regarding matters such as employment discrimination, labor relations, and safety & health • E. g. Minimum legally mandated holidays range from none in the UK to 5 weeks per year in Luxembourg • E. g. While Italy has no formal requirements of employee representatives on boards of directors, they're required in Denmark for companies with more than 30 employees • Relations among the worker, the union, & employer also vary from country to country • E. g. U. S. practice of employment at will does not exist in Europe, where firing or laying off workers are usually expensive • Thus, managers have to be aware of & generally adapt their human resource 127 policies & practices to the countries in which they're operating

Issues in IHRM How Intercountry Differences Affect HRM Cultural Factors • Countries differ widely in their cultures • For e. g. In a study of 330 managers from HK, China and the U. S, U. S. managers tended to be most concerned with getting the job done, Chinese managers were most concerned with maintaining a harmonious environment & HK managers fell between these extremes • E. g. In Germany, you should never arrive even a few mins. late & should always address senior people formally, with their titles • Thus, cultural differences do influence human resource policies & practices 128

Issues in IHRM How Intercountry Differences Affect HRM Economic Systems • Differences in economic systems also translate into differences in human resource management policies • Some countries are more wedded to the ideals of free enterprise than are others • E. g. France, though a capitalist society, imposed tight restrictions on employer's right to discharge workers, & the limited no. of hrs. an employee could legally work each week • Differences in labor costs are also substantial • E. g. Portuguese workers average about 1, 980 hrs. of work annually, while German workers average 1, 648 hrs. 129

Ethical Issues in HRM • Ethics is a system of moral principles & attitudes that guide our action to be morally correct, fair & justice • They are expression & exhibition of standards of moral conducts • Ethics guide the whole organization about acceptable principles of what is morally right or wrong • Ethics govern the members of a profession, business or society 130

Importance of Ethical Issues in HRM • Ethics correspond to basic human needs • Ethical values create credibility with the public • Values give the mgmt credibility with its employees • Values help to make better decisions • Ethics and profit go together • Laws cannot protect the society, ethics can 131

HR roles in the areas of workplace ethics Monitoring Role -Fair treatment -Legal actions -Moral behavior Investigation Role -Sexual harassment -Violation of employee's privacy rights -Roots of a conflict Advocacy Role -Company spokesperson -Defends company's actions -Faces media -Confronts regulatory agencies 132

Areas of Ethical Misconduct in HR • • Cash & incentive issues Performance appraisal issues Race, gender, age & disability issues Employment hiring issues Privacy issues Safety and health issues Termination & layoffs issues Employee responsibilities 133

Points to discuss on Ethical Issues in HRM • How do you view "layoff"? • How much does an appointment letter matter at workplace? • Does age matter on productivity? • Does gender matter on productivity? • Does being "differently able" matter on productivity? • What if a worker has diseases such as AIDS? Is it ethical to fire him? • Does marriage affect productivity? What about children? • Does workplace diversity have negative impact on society? What about indigenous groups? Does job reservations help? • How would you deal with sexual harassment upon you at workplace? 134