2.

1 Functions and evolution

of human resource
management
Employees can be a business’s
greatest asset or worst liability.
 Human resource planning/workforce planning
• The management process concerned with anticipating an
organization’s present and future staffing needs.
• This involves which workers to be laid off (made
redundant) or which workers need to be transferred to
other divisions or branches and how many should be
recruited.
• Workforce planning targets are set by the HRM,
which should be met through recruitment, dismissal,
training, and redundancies.
 HRM-Human Resource Management

This function may include:

1. Workforce planning
2. Recruitment and selection
3. Induction and training/Professional development
4. Employee appraisal
5. Disciplinary procedures
6. Promotion and reorganization
7. Employee grievances and disciplinary procedures
8. Relations with trade unions
9. Redundancy and dismissal
10. Employee archives
11. communication with employees especially relevant to changes in the
workplace.
12. Employee’s well being
 Effective Workforce planning must consider
• Historical data from the business past experience
• Demand for the business product
• Labor turnover
• Demographic changes
• Technological changes
• Business objectives
• Changes in the production process

Effective workforce planning should be able to

reduce labor turnover!!
 Labor turnover
• Labor turnover-a measure of the percentage of
labor leaving an organization over a period of
time. Low labor turnover suggests motivated
satisfied staff and proper human resource
management and vice versa.
 
• Formula: Number of staff leaving x 100
Total Staff
 Consequences of high labor turnover
High labor turnover is harmful to businesses for a
number of reasons:
• Recruitment cost rises
• Training cost is sunk
• Employees take business secrets with them
• Harmful to business reputation
• Business can lose its competitive edge
• De-motivating for other employees
• Difficult to replace certain employees (rare skill)
 Labor turnover
Employees may leave their jobs for a variety of reasons:

• Job dissatisfaction (boredom or unpleasant manager)

• Difficulty or challenge in the job
• Dangerous job (e.g. mining)
• Lack of promotion opportunities
• Insufficient pay
• Lack of prestige
• Unpleasant co-workers
• Lack of job security
• Inconvenient location

M.J. Yate used the acronym CLAMPS to describe acceptable

reasons for employees leaving their jobs.
Challenge, Location, Advancement, Money, Prestige or Pride,
Security
External Factors affecting labor market supply
• Net Birth Rate-Difference between number of births and
deaths in a given amount of time. Clearly a high net birth
rate allows for a generous supply of labor in the long run-
many multinationals seek countries such as Indonesia due to
this.
• Net Migration Rate: Difference between Immigration
(People coming into and settling in the country from abroad)
and Emigration (People leaving the country). The higher the
number, the higher the supply of labor. The US had to allow
immigration at the turn of the 20th century due to labor
shortages during its industrialization.
• The Retirement age (The legal age at which people
may stop working and claim social security
payments.) The lower the retirement age, the lower
the supply of labor and vice versa.
• Social Attitudes: Some countries' nationals are
reluctant to undertake certain jobs (menial
jobs) and others are against women joining the
workforce or at least joining certain jobs.
• Competition: the higher the competition within
the same industry demanding the same type of
labor or skill, the more difficult and expensive it
becomes to recruit and retain workers.
• Remember, competitors are after your employees
not only your customers!!!
• Population structure (demography): the gender and age
breakdown of a population, particularly age determines
the ability to find workers. In Germany, the population is
ageing making it difficult to find younger workers and the
opposite is true in Bangladesh where the youthful
population means unemployment is high.
• Education and literacy: Highly educated populations
make it easier to find and employ labor. In China, a
populous country, literacy is nearly 93% and educated
labor is easier to find than another populous country,
India, with only 74% literacy.
• Unemployment rate: the higher
the rate of unemployment, the
easier and less costly it is to
recruit and vice versa.
• Technology: If Internet infrastructure and
ISP's are available in a country, E-working
becomes a possibility, depending on the
position, and the supply of labor available to
a business increases significantly.
 Ageing populations
• Some developed nations such as Japan and Germany have
ageing populations resulting from simultaneous low birth
rate and low death rates.
Implications to businesses are:
• Increased dependency ratio
• Reduced labor mobility occupationally and geographically
• Changes in consumption patterns
• Changes in employment patterns
 Mobility of labor:
There are two types of mobility:
• Occupational mobility-the ease with which workers may
undertake different tasks or jobs (transferrable skills) i.e.
occupationally mobile workers or the lack thereof i.e.
occupationally immobile workers.
• Geographic mobility-the ease with which workers may
transport themselves from one area to another around the
country in response to availability of jobs-particularly
dependent on transportation networks.
• Changes in the degree of labor
mobility affect businesses.
 Geographic mobility
Factors reducing geographic mobility include
• Ties to family reduce geographic mobility
• High relocation costs
• Fear of change
• Higher cost of living
• Language and cultural barriers
• Difficulty of and high cost of transportation
 Occupational mobility
Factors limiting occupational mobility are:
• Low education levels or illiteracy
• Ageing populations
• Over-specialization
 Factors affecting Labor demand
• 1. business confidence
• 2. Capital intensity
• 3. Work study-developed by Frederick Taylor to
determine the number of laborers required to
complete a task efficiently
• 4. demand for the good itself (derived demand)-
the demand for labor depends on the demand for
the product that the labor produces.
• 5. number of employees leaving-labor turnover
 E-technologies/ICT
• The invention of many new and improved
methods of communication through
internet/telephones/other… have certainly
improved labor mobility and even created
opportunities for e-working, flexi-time, and
working from home.
 Changing employment patterns
• Employment no longer must mean the
worker is physically in the business but
may entail working through:
• E-working (tele-working)
• Home working (working from home)
 Advantages of e-working and home working

To employees
• Geographical distance and transportation are no longer
an issue
• Much wider variety of jobs open
• Absenteeism and holidays are no longer issues and as
long as the work is completed, then the employee is paid
• Flexible working hours at the employees convenience as
long as he/she meets the deadline
• Child care is no longer an issue
• Handicapped workers find it more comfortable
• Employees may be taxed at lower rates as they are
employing their own hardware, power, and home or office
• Time differences are less of a problem
 Advantages of e-working and home working
To employers
• Larger pool of labor to choose from
• Cheaper as they don’t have to offer the physical
facilities such as parking spaces or furniture
• Businesses can locate in cheaper areas not only
where labor is available
• Absenteeism and holidays are less of a problem
• Employees use their own physical facilities and
power
• Less likelihood of work conflicts
Disadvantages….
• Technical problems
• Isolation
• De-motivation
• Weaker communication
• Time differences
• Difficult to control who is working
• Secrecy/decryption/cyber crime
 Flexitime and part time
• Flexitime refers to workers who are given the ability to set
their own hours rather than conforming to the strict
working day hours of usually 8-4 or 9-5.

• Part time employment is where an employee works less

than the set full time hours of usually 8 hours a day 5 days
a week.
 Portfolio working
• Workers who conduct various jobs for various businesses,
generally on part-time basis.
• Clearly, it is flexible for the worker but may deprive
him/her of job security and a feeling of belonging.
• At times, the worker may earn significant income, while
at others earn little or no income.
• An increase in independent portfolio workers has been
seen recently in pursuit of more flexibility.

freelancing
Outsourcing, offshoring, re-shoring
• Businesses may choose from one of three options to
manufacture a product including outsourcing, off-shoring, or
re-shoring.
• Globalization has made this option more popular and
increasingly businesses are making such choices in search of
lower costs.
 Outsourcing
• Outsourcing is the process of transferring internal business
activities to an external business in the same country or abroad
(off-shore outsourcing) for one of three reasons:
1. They are unable to perform the task in-house
2. The other business can produce it with higher quality
3. The other business can produce it more cheaply
• The business receiving the task to perform is known as a
‘subcontractor’.
 Benefits and drawbacks

• Higher quality • Quality may be

compromised if the wrong
• Lower cost as contractor is chosen
subcontractors bid to • Subcontractors need
receive the job monitoring to ensure the
• Reduced labor need job is carried out
according to specifications
especially if the skill
• May cause redundancies
in scarce
• Subcontractor may be
• Higher focus on core unethical. For instance
competencies. uses child labor.
• Higher flexibility
 Off-shoring
• Involves relocating a business overseas.
• Many businesses in developed nations relocate in
less costly locations such as India and the
Philippines.
Benefits and drawbacks of offshoring
• Businesses may reduce • Quality is often an issue
cost gaining economies
• Unethical practices
of scale
have been committed
• Businesses become
especially with labor
closer to their markets
• Unemployment in home
improving logistics
country increases
• Businesses receive
• Language and cultural
higher exposure
differences may cause
• Businesses provide
miscommunication
employment and know-
how to host countries
• Businesses can avoid
protectionism and
avoid exchange rate
fluctuations
Outsourcing versus off-shoring
 Re-shoring
• Reversing off-shore outsourcing. Businesses who originally
located abroad (off-shoring) now return back home.
• Reasons include:
1. quality issues
2. rising labor costs in the country the business moved to
3. depletion of the resource the business needs
4. increased transportation cost
5. government support for re-shoring
 Re-shoring
• Re-shoring-Governments in western nations have encouraged
re-shoring through initiatives such as ‘Made in the USA’ in
order to encourage businesses to return to the home country,
decrease unemployment and increase economic growth there.
 Recruitment
• The process of
selecting/matching prospective
employees to fill job vacancies.
Significance of recruitment
• Labor is one of the factors of production and
handles materials, machines, and other people
which are all obtained using the business
capital.
• Choosing the right employees could ensure
success and even provide a competitive edge.
• Retaining these employees may prove even
more difficult than attracting them.
 The recruitment process
• The first step in the recruitment process
starts with a vacancy arising.
• This may be due to an employee leaving, a
new job created due to a change in the
production process, growth, or re-
organization.
Internal and external recruitment
• Internal recruitment-filling a
vacancy with an existent employee.

• External recruitment-filling a
vacancy with a new employee.
External recruitment
Can be done through:
• Newspapers or magazines (specialist magazines)
• Internet
• Employment agencies
• Job centers
• Headhunting
• University fairs
• Direct contact
 Internal VS external recruitment
Internal External
• Few applicants and less
• Wider audience and
time consuming
• Cost effective
applicants
• Less down time (time • New ideas are
consumed getting familiar introduced
with the job) • Wide and varied
• Less risk experience
• Motivational
BUT
BUT
• Jealousy
• Time consuming
• No new ideas • Costly
• Leaves a vacancy • Risky
 Job analysis
• The process of examining what a particular job entails in
terms of duties, qualifications required, and the training
necessary to carry it out toward fulfilling job objectives.
 Purpose of job analysis
• Job analysis is conducted to produce
two documents:
• Job description
• Person specification
 Job description-
a document outlining the features of a particular job.
 Job description
• It is important that the ‘job description’
is well produced allowing flexibility for
the worker and employer and generally
includes a statement such as ‘….and
any other reasonable tasks assigned’.
 Advantages of job descriptions
• Enable better recruitment
• Assist in the interviewing process
• Used during the employee appraisal
• Can be helpful in case of law suits
• Can be used to determine lay off or
dismissal
• Informs employee precisely what is
expected
 Person specification
• A document profiling the ideal
candidate for a particular job
including temperament,
communication, organization and
logic skills.
 TRAPS
Job descriptions and person specifications
must be:
• Truthful
• Relevant
• Accurate
• Positive
• Short
 Job advertisements
• At this point and after producing a
job description and person
specification, a job advertisement is
displayed in a particular
publication, internet, or the business
notice board
Example
 Job advertisement
• Generally, job ads include the job title,
qualifications required, experience needed,
business name, address to reply to and deadline
for applying.
 Applications
• Now, applicants interested are likely to start sending
their CV’s (curriculum Vitae) or resumes with a cover
letter summarizing their skills and objectives to the
address in the advertisement.
• The business will look through the CV’s determining
which ones may fulfill the requirements and which ones
to be eliminated (short listing).
• The applicants believed to be qualified are asked to fill
out an application form (a standardized form including a
number of questions for which that particular business
wants information).
 The selection process
• After receiving the applications and CV’s and
short listing, the business needs to determine
which applicants to interview in order to find
the suitable employee.
• Interviewing is the face to face meeting that
reveals the prospective employee’s
personality, logic, temperament, ethic, and
motivation level.
 Interviews
Can be done:
• Face to face
• Over the phone
• Video conferencing
• Skype etc.

Questions should be designed in a

manner that compels informative
answers to assist with the selection
process.
 Interviews
• The main purpose of interviews is to select
the candidate that best matches the vacant
job’s requirement in terms of qualification
and personality.
• In order to do so, questions should be open
ended, i.e. the answer isn’t yes or no, but
gives the interviewee the opportunity to
reveal more about himself/herself than
there is in the application or the CV. Two
types of questions can be asked:
• Behavior based
• Situation based
Behavioral VS situational Q’s
• Behavior type questions aim to reveal the
candidate’s disposition, thought pattern,
and ethics.

• Situation type questions aim to reveal how

the candidate would react in a particular
situation (usually given a hypothetical
situation).
 Models of interview selection criteria
Munro-Fraser’s 5 fold grading
Alec Roger’s 7 point plan system
• Make-up and physical • Impact on others, e.g.
mannerisms and physical
appearance make-up
• Attainments, e.g. • Qualifications, e.g. acquired
education knowledge, experience, and
training
• General intelligence
• Innate (natural) abilities, e.g.
• Specialized aptitudes special aptitudes and ability
• Interests, e.g. sports to comprehend
• Motivation, e.g.
• Disposition, e.g. determination and success
outlook, temperament, rate
and reliability • Emotional adjustment, e.g.
the ability to handle stress
• Circumstances, e.g. able
and get on with people
to work weekends
 Further testing??
If the interviewing is inconclusive,
further testing may be done such as:
• Psychometric testing
• Aptitude tests
• Intelligence tests
• Trade tests
 Psychometric testing
• Gauge of the candidate personality
 Aptitude tests
• Gauge of the candidate’s skills and
abilities. This often assists the
business in placing the employee
where his/her abilities will be
utilized.
 Intelligence tests
• Gauge of the candidate’s intelligence
 Trade tests
• Gauge of the candidate’s specific skill
 References
• Prospective employees are then asked to
procure written testimonies from independent
sources such as past managers, professors, or
colleagues attesting to their strengths and
ethos.
• References serve as the final confirmation of
the prospective employee’s suitability.
Contract of employment
Once the suitable candidate is chosen, a contract
of employment is drawn up outlining the terms
and conditions that both parties must abide by.
Contents of a contract of employment generally include:
• Job title
• Role and specifications
• Date of commencement and end
• Pay including rate and frequency
• Holidays and sick privileges
• Pension or social security
• Period of notice in case of termination
• Disciplinary procedures
• Names and signatures of both parties
 Induction and training
• The new employee(s) need to be introduced to
their colleagues, the physical environment in
which they will work, the facilities of the
business, and the ‘way things are done’.
• This often includes a tour of the premises,
overview of company policies, and meeting key
staff.
 mentors
• Sometimes, the business will assign a certain
individual to act as a mentor or ‘buddy’ to the new
recruit to ensure there’s minimal confusion and
speedy easing into the new job.
• Successful induction is advantageous in that:
• It can ensure sound working practices
• Introduces new recruits to the corporate culture
• The new recruit is more comfortably settled
• Higher morale often maintaining the recruit to
stay on.
 Disadvantages of induction
• Time consuming
• Key staff have to be made available
• The new recruit can be overwhelmed with all
the new information often forgetting most of
it.
 The recruitment process
Vacancy arises Job analysis person specification

Job description Job advertisement applications

Shortlisting Interviews further testing selection

Contract Induction Start employment!!!

 Types of training
• On the job (including induction and
mentoring)
• Off the job
• Cognitive
• behavioral
 On the job
• On the job-learning the skill by sitting with
an experienced employee.
 Off the job training
• Learning the skill in a technical college or
center by experts.
Off the job VS on the job (advantages)

Off the job On the job

• Newest skills may be • Relatively cheaper
learned from experts • Relevant to the way
• Wide range of skills the business does
can be learned things
• No distractions with • Less disruption to
more focus operations as new
• Networking can be recruit is producing
done through meeting on site
other employees in the • Establishes better
industry rapport among
workers
 Disadvantages
Off the job On the job
• Costly • Worker may pick up
• Loss of output as bad habits
worker is off site • Internal trainers may
• May be irrelevant to the not be experts with the
business needs latest information
• Worker may not learn • Disruption to the
simply by hearing or trainer’s work while
seeing with no practice training
• Worker may leave
rendering the training
cost sunk
 Cognitive training
• The development of mental skills that
would improve performance such as
mathematical skills.
 Cognitive training
Cognitive training has several advantages
• Increase intelligence of trainees making them more productive
• Suitable for professions with highly skilled employees such as
accountants, teachers, and engineers.
 Behavioral training
• Personal skills/soft skills
 Behavioral training
• Advantages of behavioral training include:
• Higher emotional intelligence
• Better team-working spirit
• Lesser conflict in the work place
• Higher motivation
• Easier conflict resolution
• Anger management
• It is an ethical business practice
 Employee appraisal
• Once the new recruit has had a chance to work
and produce having learned the skill, an
appraisal must be done to ensure he/she is
fulfilling their job description requirements.
 Methods of appraisal
• Formative
• summative
• 360 appraisal-collecting information about the
appraisee from all those he/she works with
• Upward appraisal-by the employee’s
subordinates
• Self appraisal-assessment by the appraisee
 Formative appraisal
• An ongoing continuous process in which
employees receive constant feedback regarding
their performance.
 Summative appraisal
• The formal process of evaluating an employee’s performance
and whether he/she has fulfilled his/her job description.
 Summative appraisal
• Usually, the employee is met with after the appraisal and told
his/her strengths and weaknesses. Thereafter, a goal is set for
areas that require improvement.
360 appraisal
 Appraisal…
• It is paramount to have regular
appraisals of an employee in order
to acknowledge his/her strengths
and inform him of his/her
weaknesses so that they may be
improved.
 Advantages and disadvantages of
employee appraisal
• Employee is aware of the strengths and feel motivated
• He/she is aware of which areas he must work to improve
• Allows managers to assess who should be promoted
• Provides opportunity for staff to communicate concerns to
managers
BUT
• Time consuming and costly
• Appraisals are usually carried out annually or at best bi-
annually and this makes regular monitoring difficult
• It can be an awkward exercise for both parties
• Subjective not objective
• Appraisers may lack experience rendering the appraisal less
effective
• There must be a follow up session between appraiser and
appraisee and this is even more time consuming
 Generally…
• HRM must ensure that their labor force works well
together with team spirit and cohesion of purpose to attain
the efficiency necessary to compete.
• Hence, a motivated, well trained, and goal oriented staff is
the chief asset a business has and HRM can achieve that
through managerial EOS.

• HOW???
 By looking at 3 indicators
It is imperative to the business success
that they examine their labor on the
whole for:
• Labor absenteeism
• Wastage levels
• Labor productivity
 Labor absenteeism
• Labor absenteeism-a measure of the percentage of
absent staff over a period of time. Low absenteeism
suggests motivated committed staff and proper human
resource management and vice versa. 
• Formula: Number of staff absent x 100
Total Staff
 Wastage levels
• Wastage levels: a measure of the wastage
percentage of materials, time etc. the more
motivate, trained, and committed the
employees, the lower the wastage levels and
vice versa.
• Formula: Total waste x 100
Total output
 Labor productivity
• Labor productivity-a measure of
output per labor over a period of
time. A high productivity leads to
higher efficiency and suggests
satisfied motivated trained labor and
vice versa.
• Formula: Total output
Total Staff
 Redundancy and dismissal
• Redundancy occurs when the business no longer needs a
worker due to lower demand or a change in the business
method of production (e.g. technology).

• Dismissal occurs when a worker is incompetent at his/her

job or breaches the contract of employment.
 Redundancy …
• Also known as retrenchment/layoff.
• It may occur under two conditions:
• Voluntary redundancy-employer asks volunteers
to be laid off.
• Compulsory redundancy (involuntary)-employer
lays off workers of his/her choosing either by LIFO
(Last In First Out). The newest employees are laid
off. It can also be done through ‘retention by
merit’, i.e. the best employees are retained and
the lesser performing ones laid off.
 Dismissal…
• Dismissal is justified and fair under these conditions:
• Incompetence-worker doesn’t perform well
• Misconduct-workers behavior is unacceptable
• Gross misconduct-workers behavior is either illegal or
the mistakes made are major
• Legal requirements-worker doesn’t meet the legal
requirements necessary.
 Unfair dismissal…
• Occurs when a worker is dismissed without a
valid reason.
• He/she may legally sue and demand
reinstatement.
• Unfair dismissal causes include discrimination
or constructive dismissal.
• Constructive dismissal is when a worker is
unable to continue working under the
uncomfortable working conditions that the
employer creates to drive the worker out of
the job.