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MANAGEMENT COLLEGE OF SOUTHERN AFRICA
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MBA - Human Resource Development
Table of Contents
BIBLIOGRAPHY ...................................................................................................................................120
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INTRODUCTION TO THE
HUMAN RESOURCE DEVELOPMENT
STUDY GUIDE
1. Introduction
Welcome to the module on Human Resource Development which is a part of the MBA programme.
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• Journal Articles
Journal articles have been prescribed for each part. They are available from the EBSCO,
Emerald and Sabinet databases that are accessible through the http://mymancosa.com
website.
These journal articles will provide you with an understanding of HRM and HRD. It is imperative
that you acquire and read these journal articles, as they form a key part of the curriculum.
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Case Studies
Case studies form an integral part of developing competence in HRM and HRD. Two case studies,
based on companies operating in the HRM and HRD environment are included in Appendix A and
Appendix B of this study guide
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of Human Resource Management (HRM). This overall outcome will be
achieved through the learner’s mastery of the following specific outcomes, in that the learner will be
able to:
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ESSENTIAL READING
Learners are required to read ALL of the relevant textbook parts and journal
articles listed below.
Textbooks:
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill.
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1.1 Introduction
The role human resource management (HRM) plays within organisations has changed dramatically.
Having excluded HRM from participating actively in business decisions for most of its existence,
organisations now require HRM to play an active role in the fight to be successful and remain
competitive. HR professionals must play a number of new roles to be successful, one being the
strategic-partner role which involves linking the HRM practices, systems, policies with the strategic
initiatives of the company. This process is known as strategic human resource management. Despite
the benefits that can be derived from this process, the strategic use of human resources within
companies frequently remains an after thought (Grobler et.al., 2014).
Given the fact that HRM goes beyond the administrative tasks of personnel management and
encompasses a broad vision of how management would like the people resources to contribute to the
success of the organisation, the adoption of a professionally accepted HRM standard for South Africa,
according to the SABPP (2013), can help all South African organisations move up the change curve
more rapidly. They believe that a set of clear, formal standards for HR will set the minimum requirement
for what is considered good HR management practice in any organisation. The project is being
managed by the South African Board for People Practices (SABPP), which is the HR professional and
quality assurance body of South Africa.
The purpose of the national HR standards development initiative, therefore, is to formulate a consistent
set of HR Standards for South Africa, including HR metrics to measure the bottom-line impact of HR on
business. While still recognising unique operating contexts, industry and company differences, national
standards will create a consistent framework for high quality HR work practised by true professionals
throughout the country. All participating HR Directors, their companies and professional bodies will be
acknowledged as the pioneers in setting HR standards for South Africa (SABPP).
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Figure 1.1 provides an overview of the strategic management process, and how HRM should be
aligned with this process.
The(Strategic(Management(Process(
Strategy(Formulation( Strategy(Implementation(
HR(Practices(
External( Recruitment(&(Selection(
Analysis( Training(&(Development(
Opportunities( Performance(Management(
Threats( Compensation(&(Incentives(
( Employee(Relations( (
Emergent(Strategies(
Figure 1.1: The Strategic Management Process (adapted from Noe et al, 2015)
As an organisation grows, and maintaining effective and efficient management practices become more
complex the need for regarding HRM as a strategic imperative is realised. This new strategic
accountability implies that HRM must be able to provide evidence that it contributes to the mission and
goals of the organisation, and ultimately ‘the bottom line’.
Strategic human resource management (SHRM) is the development of a consistent, aligned collection
of practices, programmes and policies to facilitate the achievement of the organisation’s strategic
objectives. SHRM includes all people management activities and it is crucial to ensure that it is aligned
to and supports the overall organisational strategy. This will result in ensuring that the function of
managing people is a priority and that all HR policies, activities and programmes are in line with the
organisational strategy (Nel and Werner; 2014).
It is critical that SHRM is aligned with the organisational strategic plan in order to improve
organisational competitiveness.
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Saatchi & Saatchi was one of the most famous businesses in the global advertising industry for over
thirty years, but rapid expansion in the 1980s saw the company face disaster. The 1980s boom
experienced by the agency was quickly followed by a bust that exposed the gaping debts at the
agency, hitting the company’s share price hard. This resulted in the organisation’s founders – the
Saatchi brothers – being sacked by the board, and, after several failed chief executive appointments,
Kevin Roberts was brought in to lead the organisation in 1997.
The ‘strategic problem(s)’ Roberts faced was essentially one of firm viability. Although advised to make
wholesale redundancies in order to reduce headcount costs, he refused to do so, instead he focused
on restoring firm viability through a strategic orientation of Saatchi & Saatchi as an ‘ideas company’.
This involved moving away from its status as an ‘advertising agency’ to a company that transformed its
clients’ business model, brands and reputation through the use of an ideas brief and brand navigation
rather than relying upon a simple advertising campaign. The shift was demonstrated in the new ways
Saatchi pitched for business. Instead of traditional pitches focusing on advertising campaigns, it
broadened its focus to include the client’s business strategy. The decision to reorient the company as
an ideas company was not an original one, since the possibilities of developing this strategy were being
generally mooted within the industry at the time when Saatchi & Saatchi was facing problems.
However, the organisation was able to gain first-mover advantage through being the first to use it so
extensively as a form of strategic leverage. This was critical in order for it to retain its status as a roster
agency for global clients such as Proctor and Gamble, General Mills and Toyota.
However, whilst it could be stated that viability was largely secured through this strategic change, it
could also be argued that it also rested upon the ability of the existing staff to enact it. The Saatchi
example, therefore, shows that an important relationship existed between strategy and staff
competencies; whilst there is an important need to identify the ‘right’ strategy that will leverage the
organisation against its competitors, this will be dependent upon the existence, maintenance, or
acquisition (at the right price and right number) of staff capable of enacting it. In this case, Saatchi staff
were not being asked to do something they could not do.
Source : (Grobler et.al, 2014)
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It is of utmost importance that all people-related business issues be considered during strategy
formulation. These issues are identified in the HRM function. Mechanisms or structures for integrating
the HRM function into strategy formulation may help the strategic planning team make the most
effective strategic choice. Once that strategic choice is determined, HRM must take an active role in
implementing it (Noe et. al., 2015).
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systems that ensure those employees are acting in ways that promote the achievement of the goals
specified and agreed upon in the strategic plan (Nel and Werner, 2015).
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Halcrow’s first projects outside the UK, were undertaken in the 1980s, such work now accounting for
nearly 40 per cent of an annual turnover in excess of 200 million with the Group currently undertaking
projects in over 70 countries. Recent projects in which Halcrow have been involved include the Channel
Tunnel Rail Link, road construction near the Stonehenge World Heritage Site, the International
Congress Centre in Rome, Kuala Lumpur International Airport, new and refurbished stands for Chelsea
Football Club, coordination of wetland conservation and river basin management for the Danube and its
tributaries and managing pollution risk from the animal mass burial sites arising from the UK’s 2001 foot
and mouth disease outbreak.
Halcrow was founded in 1868 by Thomas Meik, the company becoming Sir William Halcrow & Partners
in 1941. In 1985 a private limited company bearing the same name was formed, the most recent
change being in 1998, when the various Halcrow Group Limited. The Halcrow Trust owns 90 per cent
by its employees. Halcrow has grown extensively over the past decade and now operates through a
network of 29 UK and 32 international offices. As part of this growth, the number of employees has
increased from 1700 to nearly 5000 worldwide. Approximately 80 percent of Halcrow’s employees are
classified by the Group as professional and technical (P&T) staff who have a minimum of an
undergraduate degree in engineering or a related subject. The majority are engineers who are also
members of a relevant professional institution or are undergoing training to gain membership. The
remaining 20 per cent of employees, including those in human resources, are classified by Halcrow as
non-P&T and provide corporate support services.
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In 2004, Halcrow launched its change programme, ‘Act now’, which was designed to help the Group ‘to
continue to develop in a dynamic and sustainable way’. The focus of ‘Act now’ was to align employees’
behaviours and approaches to Halcrow’s purpose, values, codes of behaviour and business principles
thereby improving individual, team and overall business performance. This was summarised in Act
Now: Your pocket Guide to Halcrow’s Change Programme as:
To take Halcrow’s existing personality, strengthen all those things that are good about it, for example,
our…
• Technical competence
• Dependability
• Friendliness
• Reputation for being a safe pair of hands
• Commitment
• Pride in one’s profession
…and give it some added extras
• Passion
• Dynamism
• Fleetness of foot
• Better listening skills
• Excitement
• Innovation
• Confidence (with a clear sense of self)
• Being more celebratory
• Consistent delivery to expectation
• Greater commercial edge
• Being performance driven
This change programme is intended to be continuous rather than having a specific end date. It
emphasises the need for flexibility and the sharing of good practices and learning throughout the
Group, the centrality of employees to achieving this, and the need to monitor and evaluate.
SHRM at Halcrow
The ‘Act now’ change programme is central to everything that Halcrow planned to do in relation to the
HRM strategy. The overriding concern is to change the organisation’s culture. It is often said that the
group is full of people who are professional engineers and who take pride in a job well done.
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In essence, technical excellence takes precedence over commercial success. By the very nature of
their training, Halcrow people tend to be concerned with ‘detail’ rather than seeing the bigger picture.
This has served the Group well. But a recent client satisfaction survey commissioned by the Group did
not show Halcrow in a uniformly glowing light. It reported that Halcrow emerged as technically excellent
and a ‘safe pair of hands’ but that clients were looking for much more than technical competence and a
track record. They wanted business partners whose behaviours were aligned to their own needs. In
addition the Group was also seen as rather ‘grey’. The challenge for Halcrow is to retain the reputation
for technical excellence and reliability while becoming increasingly commercially aware, flexible and,
above all, more responsive to customer needs.
Halcrow has designed several key HRM initiatives to support the change programme. These
are:
• The development of core competences. This is seen as important because Halcrow
employees have traditionally emphasised the importance of professional qualifications
above all else. The development of a core competence programme is designed to
move the emphasis from what people know to what they can do.
• The introduction of 360-degree appraisal. It is envisaged that this will make a
significant contribution to the ‘Act now’ culture change initiative. The Group’s culture
has always tended to reinforce the importance of hierarchy in that employees have
been very conscious of their position in the organisation. In addition, there had been
something of an ‘ignore deflect culture’ in which people sought to evade responsibility
for mistakes rather than being open enough to learn from them. By opening up the
system of employee appraisal to people above and below the individual being
appraised and by seeking the views of significant other stakeholders, particularly
customers, Halcrow management believe that a far greater degree of openness will be
developed.
• The instigation of a profit share bonus scheme. This is particularly designed to create
in employees a greater awareness of the Group’s profit performance. In the view of
senior Halcrow management, this has the potential to make a major contribution to
fostering in Halcrow employees more commercially aware values. In view of the fact
that senior management have set clear targets for increases in Halcrow’s profit
performance, greater knowledge of the Group’s profitability is seen as an effective way
of focusing the minds of employees on profit performance.
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• The development of ‘ideas labs’. This is an important part of the Halcrow management
of innovation programme which is designed to promote innovative thinking and enable
commercially valuable ideas to be implemented. It is designed to:
- Add value to the business;
- Encourage cross-fertilisation between disciplines; and
- Give staff ownership of the ideas put forward.
Overall, the key change issue that is driving SHRM, is the need for Halcrow to be more responsive in
the light of a more competitive industry. Therefore, the principle aim of the new HR initiatives is to
generate more competitive employee behaviours which, in turn, is envisaged will generate better all-
round employee business performance.
There are other critical issues facing HR at Halcrow. An important one of these is a consequence of
customer feedback. Increasingly this shows that customers are taking technical excellence for granted
when making decisions about which consultancy group to employ. In view of Halcrow’s reputation for
technical excellence among customers, this is bad news for the Group. As the HR director explained
the world has moved on. Clients are now more demanding and want more all the time. Among the most
demanding clients are the public sector. In the UK, Halcrow management feel that the UK government’s
Private Finance Initiative (PFI) has contributed to change in the industry. (The PFI is a mechanism
developed by the government to raise money to pay for new buildings and services. Under PFI
schemes a public authority buys the services of private-sector companies to design, build, finance, and
operate a public facility, such as a hospital. The private-sector companies borrow the money for the
scheme and then the government pays an annual fee to the companies under a long-term operating
contract for the services).
Three examples of the more demanding nature of clients are evident, each of which demands an HR
response.
The first is clients asking for an assurance that the staff commencing work on a project will stay with the
Group for the duration of the project. This is a key issue in an industry where the reputation of the
consultancy is such that, in effect, the staff appointed to a project can be more important factor in the
client’s decision to engage a particular consultancy than the consultancy group itself.
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The level of staff turnover at Halcrow and decline in the number of graduates entering the construction-
related industry has shaped another HR priority for the Group. This is to define more clearly a people
statement that states more precisely what is meant by ‘employer of choice’. In particular, Halcrow is
concerned about losing high-quality graduates to the financial sector, both at the time of graduation and
after they have worked with the Group for a short period. High-quality graduates can earn more money
in financial services. In addition, younger graduates are more concerned with the work-life balance
issues and their own staff development than were their predecessors. A measure of the significance of
this issue to Halcrow is the large number of graduates employed each year, this being 133 in 2003.
There is also worry over an ageing workforce in the construction industry in general.
It is felt by the HR director that employees and employee issues at Halcrow need to be higher on the
list of Group priorities. Staff turnover is now a key performance indicator for the HR director. In her view
‘it is no good imposing things upon people at Halcrow – the Group need to win hearts and minds.’
This is typical of companies employing a high proportion of professional staff who tend to define, and
act upon, their own standards of professional behaviour.
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2. The HR function at Halcrow has been largely administrative rather than strategic, a situation
that is now changing because of the HR challenges that Halcrow faces.
Discuss how managing human resources strategically will provide a competitive advantage to
Halcrow.
3. Evaluate the contribution of Halcrow’s ‘Act now’ change programme in contributing to the
emerging HR strategy.
4.2 Which of the HR practices implemented within your organisation are consistent with the
business strategy? Which HR practices are inconsistent with the business strategy?
4.3 Make recommendations to the HR director for the improvement of your organisation’s
approach to SHRM
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
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2.1 Introduction
Human resource managers are at the forefront of the worldwide war for competitive advantage.
Organisations need to find the best set of workers for meeting their strategic objectives, attract those
workers to their companies, and then get them to stay long enough to obtain some return on their
investment.
Organisations have to strive to make sure that the decisions they make with respect to who gets
accepted or rejected for jobs promote the best interests of the company and are fair to all parties
involved.
The purpose of this part is to examine factors that influence the supply and demand for labour, focus on
what human resource managers can do in terms of planning and executing human resource policies,
and familiarise you with the selection, induction and training process that give firms competitive
advantage in a dynamic environment (Noe et.al , 2015).
Figure 2.1 shows that there is a clear link between HR strategies and organisational strategies. This
integrative model presented below shows the flow of activities in executing workforce planning
effectively by means of integrating recruitment of labour with the objectives of the organisation (Nel and
Werner, 2014).
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Forecasting elements
Employee development
Figure 2.1
Workforce planning systems can be categorised into the following three basic focus areas: (Nel and
Werner, 2014)
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THINKPOINT
Discuss the relative merits of internal vs external recruitment.
What factors might lead an organisation to decide to switch from internal to external recruitment or vice
versa.
2.5 Selection
Having formulated the matching strategy and structures of the organisation the next logical step is
staffing. This includes hiring different people, transferring people from other branches or even
promotions. These people need to be selected to have the right person in the right job at the right time
(Nel and Werner, 2014).
Selection is therefore the process by which companies decide who will or will not be allowed into
organisations (Noe et. al., 2015).
The selection process is a series of steps through which applicants pass. These steps represent the
‘tools’, or methods of selection. The steps are mainly a number of eliminators, because as applicants
drop out of the process at each step, the applicant pool becomes smaller (Nel and Werner, 2014).
!
Figure 2.2
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The selection decision must focus on competency-related issues if the selection process is to contribute
to the organisation’s success. Nel and Werner (2014)
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Those were the candidates Dolan hired. Since then, Dolan says his experience with personality testing
has only reinforced his belief that this selection method helps Kinaxis identify the best candidates. For
example, one sales rep had scored low on “pace”, indicating that the individual might lack the patience
needed for the slow cycles required to close a sale of a complex software system. Dolan hoped the
issue could be overcome if he provided enough coaching, but in fact, the sales rep sometimes behaved
impatiently, annoying prospects. After three years of trying to help him grow into the job, Dolan laid him
off.
The company’s commitment to careful selection is expressed on its website:
“The Kinaxis recruitment process enables us to explore the potential of a partnership between our
company and each employee] by determining if there is solid alignment between your career
aspirations, your values, and your professional skills and the Kinaxis vision, culture, and passion.” (Noe
et.al. 2015)
Activity
Making reference to the Kinaxis case study above;
• Highlight the selection methods used by Bob Dolan for hiring salespeople
• Discuss the advantages for Kinaxis of using personality tests to help select sales
representatives. What were the disadvantages
• What improvements would you recommend to the process for decisions to hire sales
reps in the future
2.6 Induction
Induction is the last step in the staffing process and provides an overview of the organisation’s culture.
It is an early opportunity for employers to set the right expectations with new employees. From an
employee perspective, it familiarises them with the systems and processes of the new workplace and
encourages learning. Although induction means to introduce or to initiate, it is part of the socialisation
process that is aimed at fully absorbing an employee into the organisation and turning them into a
productive worker with minimum delay. Some organisations have been using the term ‘engagement’ to
refer to the broader view of the whole process of induction. Orientation means to become familiar with
or adjusted to facts or circumstances. It is the process of informing new employees about what is
expected of them in the job and helping them cope with the stresses of transition. The broad purpose of
employee induction then is to introduce the new employees to the organisation’s goals and objectives
and is short-term focused.
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Strategic planning !
!
HR workforce planning
!
!
Shortage of certain
! qualified employees
!
! Recruitment
!
Selected employee’s Selection
!
induction
!
Development
! Training
Figure 2.3
Job-related issues:
Introductions to supervisor and co-workers
Job location
Job tasks
Job objectives
Relationship to other jobs (Nel and Werner, 2014)
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Figure: 2.4
(ROPES – Realistic Orientation Programmes for New Employee Stress)
(Nel and Werner, 2014)
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Onboarding then is a socialisation process designed to shorten the productivity curve, to help new
employees reach capacity quicker, increase employee engagement and decrease turnover by helping
new employees to build stronger relationships and establish credibility earlier (Nel and Werner, 2014).
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these programmes, which can include face-to-face training programmes (such as instructor-led
courses) as well as online programmes (Noe et.al., 2015).
The implementation of the Skills Development Act of 1998 requires organisations (with some
exceptions, including small and micro enterprises) to submit a workplace skills plan to the relevant
SETA for approval and for recovery of part of the levy.
This workplace skills plan is a comprehensive document which requires the employer to give detailed
information regarding:
• The current skills profile by number of employees in population groups and educational levels
• The skills priorities and the number of beneficiaries in population, gender and occupational
groups
• The process used to develop the workplace skills plan
• The steps used to consult employees about the plan, for instance, whether a training
committee has been established
• The plan’s relationship to the organisation’s employment equity plan
A proper analysis of the organisation’s training needs and skills requirements in the form of a skills
audit is therefore a vital step in the process of developing a workplace skills plan (Meyer et.al., 2012)
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A generic process approach to needs analysis, as developed by Meyer et.al. (2012), can be used to
ensure that needs are identified and correctly analysed. It consists of a series of steps as depicted in
Figure 2.5.
Figure 2.5 Key steps in Conducting training-needs analysis (Meyer et.al., 2012)
Activity
Describe how you would apply these key steps in the identification of the training priorities in
the organisation at which you are employed
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The Second stage requires the organisation to establish what skills are required per role, per job, per
task or per organisational process.
When combined into a matrix, these two sets of skill for the “desired skills” set for the organisation
The Third stage of the skills audit process is where the “desired skills” are compared to the “current
skills” which are ascertained through the assessment of employee skills.
Once the organisation has a skills matrix of required skills and a profile of the skills of each individual,
the Fourth stage of the process is to compare the two results to identify where the skills deficit exists.
Finally, in the Fifth stage the organisation prioritises skills deficits and develops a training plan to
ensure that the gap between skills required and actual skills is closed over time.
In order to ensure that skills audit information is usable for translation into workplace skills plans, skills
audits usually report on skills requirements per role, per position of role in an organisational structure
and per employee profile (this includes race, gender, and disability status)
Activity
Develop a framework that could be used to conduct a skills audit in your organisation.
Proper training-needs analysis provides the basis for the development and implementation of
workplace skills plans, the planning and organising of training programmes and the design of HRD
interventions which is dealt with in Part 2 of this study guide.
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QUESTION 2
2.1 Do you agree that all new employees, whether permanent or part-time as well as longer serving
employees should attend an induction programme?
2.2 Discuss benefits the organisation and the employee would gain from an induction programme.
2.3 Discuss the importance of follow-up and evaluation of the induction programme.
2.4 Did your organisation follow the typical Steps in the selection process?
QUESTION 3
3.1 Identify the most important reasons for conducting training-needs analysis in your organisation.
3.2 Highlight the key steps in conducting training-needs analysis and describe how you can apply these
steps in the identification of education and training priorities.
3.3 Develop and conduct a needs analysis in the organisation at which you are currently employed.
QUESTION 4.
Suggest ways for your organisation to improve their approach to recruitment, selection and induction.
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
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According to Noe et.al. (2015) Performance management consists of three major parts to its process,
which includes;
Step 1
Understanding and identifying important performance outcomes or results.
Divisions, departments, teams and employees must align their goals and behaviours and choose to
engage in activities that help achieve the organisation’s strategy and goals.
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Step 2
Understanding the process (or how) to achieve the goals established in the first step. This includes
identifying measurable goals, behaviours and activities that will help the employee achieve the
performance results.
Step 3
Organisational support – involves providing employees with training, necessary resources and tools,
and frequent feedback communication between the employee and manager focusing on
accomplishments as well as issues and challenges influencing performance.
For effective performance management managers and employees have to value feedback and
regularly exchange it.
Step 4
Involves performance evaluation, that is, when the manager and employee discuss and compare the
targeted performance goal and supporting behaviours with the actual results.
This typically involves the annual or biannual formal performance review. One way to make the formal
evaluation more effective is for managers to engage in frequent performance conversations with
employees rather than wait for the formal annual review.
Step 5
Involves the employee and manager identifying what the employee (with the help from the manager)
can do to capitalise on performance strengths and address weaknesses.
Step 6
Providing consequences for achieving (or failing to achieve) performance outcomes.
This includes identifying training needs, adjusting the type or frequency of feedback the manager
provides to the employee, clarifying, adjusting, or modifying performance outcomes, and discussions of
behaviours or activities that need improvement or relate to new priorities based on changes or new
areas of emphasis in organisational or department goals
(Noe et. al, 2015)
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Activity
Refer to the text (Human Resource Management. Noe et.al 2105) and discuss:
• The nature of each of these performance management approaches
• The strengths and weaknesses of each of these approaches
• Identify the approach that is implemented in your organisation
• What are the strengths and weaknesses of the performance management system in
your organisation
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Activity
Highlight the benefits and potential limitations of the 360-degree approach
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HR practitioners and senior managers are beginning to realise that the management of employee
performance must take place within the pursuit of strategic business goals. This is one of the major
reasons why many organisations are starting to favour a multi-rater, or 360-degree approach to
performance evaluation (Nel and Werner, 2015).
1. Consider the performance management system implemented by the organisation for which you
work. To what extent does this performance management system support your organisation’s
achievement of a competitive advantage
2. In his journal article “Is Performance Management Applicable in Developing Countries?” De
Waal (2007) identifies factors impacting on performance management in organisations
operating in Africa
2.1 To what extent are these factors evident in your organisation’s approach to performance
management?
2.2 What would you say are other emerging market related factors that impact on performance
management within your organisation
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CHAPTER 4: COMPENSATION
The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Discuss the objectives of a compensation system.
2. Apply the steps of the model to design and implement a new compensation system for an
organisation.
3. Debate the various emerging pay systems.
4. Explain when mandatory and voluntary benefits are used.
5. Compile a flexible benefits plan.
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ESSENTIAL READING !!
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• International Textbook
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
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4.1 Introduction
In the modern organisation, with a variety of costly employee benefit programmes, wage incentive
programmes and structured pay scales, the compensation task is even more difficult and challenging
for an HR specialist. Employees’ compensation affects their productivity and tendency to stay with the
organisation.
Employees’ need for income and their desire to be fairly treated by the organisation make developing
the compensation programme very important for the HR department (Wärnich et.al., 2015).
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Figure 4.1 A model for a new compensation system (Nel and Werner, 2014)
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Voluntary Benefits – employees can rely on a number of benefits which are non-mandatory or
voluntary benefits on the part of the employer. It should be noted that a number of the benefits
discussed do have certain legislated minimums such as the number of days vacation leave, the number
of paid public holidays, the number of days sick leave, and maternity leave benefits. In South Africa
these minimums are legislated in the Basic Conditions of Employment Act (No.75 of 1997):
• Vacation leave
• Paid public holidays
• Time for personal matters
• Sick leave
• Maternity leave
• Health and life insurance
• Medical aid schemes
• Pension funds
• Employee services
(Nel and Werner 2014)
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According to (Nel and Werner 2014) the terms ‘flexible benefits plan’ and ‘Cafeteria benefits plan’ are
generally used synonymously. The idea of cafeteria benefits allows the employee to put together his or
her own benefits package, subject to two constraints:
• the employers must limit the total cost for each total benefits package, and;
• each benefit plan must include certain non-optional items, such as the mandatory benefits.
The philosophy behind flexible benefit plans is that no one knows the employees’ needs better than the
employees themselves and their needs change through the years, so they can alter their benefits.
Activity
Despite the attractiveness of cafeteria benefits, what do you think are some of the limitations of
cafeteria benefits plans
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1. Consider the compensation and benefits practices of the company for which you are
currently employed at. To what extent do the compensation and benefits practices facilitate
the attraction and retention of talent?
2. At the organisation in which you are employed, what component of the total compensation
system is perceived to be most valuable to employees? Why do you think so?
3. To what extent are flexible benefit plans implemented within South African companies or
the country you currently reside in
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
• Wärnich, S., Carrell, M.R., Elbert, N.F., Hatfield, R.D (2015) Human Resource Management in
South Africa. United Kingdom: Cengage Learning
Additional resources
• www.labour.gov.za
5.1 Introduction
Labour law governing employment relations derives its force and effect from a plethora of sources. With
that being said, it would be almost impossible to set upon the task of understanding the multi-faceted
content of this subject without first engaging in the hierarchy of law governing South Africa.
In terms of the Constitution ‘fair labour practice’ has been recognised as a fundamental right and as
such must be treated with the necessary attention and reverence. In line with the overall spirit of the
Constitution, Part 1 sets out the manner in which this right must be interpreted.
In looking at employee relations through the prism of various legislation, one must be sure to take in
account the underlying values of the Constitution when interpreting such legislation. Thus in looking at
any labour legislation, be it statute or precedent, it is mandatory to also consider,
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International Law as well as foreign law; it is also a Constitutional imperative that South African
common law, which includes labour law, be developed to bring it in line with the ethos of our
Constitution, to the extent that it is inconsistent.
It thus becomes clear, that when engaging in employee relations whereby the rights and regulations are
governed predominantly by legislation, one needs to continuously question the validation of such
provisions.
However, to be in a position to evaluate the law, one is required to not only understand the hierarchy of
labour law in South Africa but also keep abreast with international labour standards and developments
in foreign countries. This part aims to provide a ‘catch all reference’ in terms of relevant governing
legislation, as well as the parameters in which such legislation operates, in dealing with employee
relations on a day to day basis
Without sound labour relations or work employment relations South African organisations can forget
about becoming more competitive. Whether you are self-employed, work for a company or are
employed by the government, you will be working with people, and good relationships between people
in the workplace are a key requirement for sound labour relations. It is important to note that the
employment relationship is essentially a relationship between the employer (employers and employers’
organisations) and employee (labour and trade unions), as well as between employer/employee and
the state, thus making it a tripartite relationship (Wärnich et.al., 2015).
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Levels(of(Employment(Law(in(South(Africa(
The(Constitution(
Labour(Relations(Act(
(and(agreements(and(determinations(controlled(by(the(Act)(
Basic(Conditions(of(Employment(Act((( ((((((Employment(Equity(Act(
Occupational(Health(&(Safety(Act( ((((((Skills(Development(Act(
Contracts(of(Employment(
Common(Law(
Figure 5.1 Levels of employment Law in South Africa (Nel et.al., 2011)
The common law rules relating to labour law are not found in legislation but rather are derived from
custom and practice.
The employment contract may be defined as a contract between two persons, namely the employer
and the employee, for the letting and hiring of the employees services. In this type of contract the
employer has an obligation and duty to supervise and control the employee’s work (Nel and Werner,
2014).
The BCEA is a vital component of South Africa’s protective labour law framework.
The primary objective of the Act is to:
• Stipulate and regulate relevant conditions of employment and the variation of such conditions
• Contribute to the creation of a secure, equitable, non-exploitative and harmonious work climate
• Give effect to and regulate fair labour practices as advocated in the Constitution (Nel and
Werner, 2014)
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The Act is relevant to and has a considerable impact on a number of HRM key functions such as:
• Performance appraisal and management
• Training and development
• Discipline management
• Retrenchments
• Collective bargaining and employee participation
• Strike handling and dispute resolution (Nel and Werner, 2014)
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Development Levies Act (No. 9 of 1999), the Skills Development Act places a legal obligation on all
employers to improve the competency levels of their workforce.
The Skills Development Levies Act (No. 9 of 1999) imposes a skills development levy on most
employers, and imposes government departments to allocate a percentage of their budget to skills
development (Meyer et.al., 2012).
As part of South Africa’s national skills development strategy, the Skills Development Act (No.97 of
1998) was enacted Nel and Werner (2014).
The Purposes of the Act are:
• To develop the skills of the South African workforce
• To increase the levels of investment in education and training in the labour market and to
improve the return on that investment
• To encourage employers to:
- Use the workplace as an active learning environment
- Provide employees with the opportunities to acquire new skills
- Provide opportunities for new entrants to the labour market to gain work
experience and
- Employ persons who find it difficult to be employed
• To encourage workers to participate in learnership and other training programmes
• To improve the employment prospects of persons who were previously disadvantaged by unfair
discrimination and to redress those advantages through training and education
• To ensure the quality of education and training in and for the workplace
• To assist:
- Work-seekers in finding work
- Retrenched workers in re-entering the labour market and
- Employers in finding qualified employees and
• To provide and regulate employment services
The Skills Development Strategy is based on the National Qualifications Framework Act (No. 67 of
2008), which makes provision for the National Qualifications Framework (NQF), established by the
South African Qualifications Authority (SAQA) (Meyer et.al, 2012).
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This body of skills development legislation has fundamentally changed the face of education and
training in South Africa. The implications of these Acts for Human Resource Development (HRD) is
important to provide guidelines for designing and implementing relevant organisational strategies
(Meyer et.al, 2012).
Skills programmes are another form of learning intervention to achieve the objectives of the Act, and
is described as unit standard-based programmes that are occupationally based and presented by an
accredited provider, and when completed, constitute a credit towards a qualification registered on the
NQF (Meyer et.al, 2012).
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5.3 Conclusion
The protective labour laws outlined provide the legal framework that underpins labour legislation in
South Africa and guidelines for HRM and HRD practitioners.
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1. Provide a summary of the main provisions and purposes of the various labour laws that
underpin labour legislation in South Africa.
2. Outline and apply the practical steps that should be applied in your workplace to ensure
that HRD strategies are aligned with the skills development legislation.
3. Provide an analysis of your organisation’s business objectives and skills profile to identify
strategic priorities for education and training.
4. Identify the steps in a project plan to develop a workplace skills plan (WSP) that would
comply with the requirements of the Skills Development Act and its regulations and those
set by your organisation’s SETA.
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
• Grobler, P., Bothma, R., Brewster, C., Carey, L., Holland, P., and Wärnich (2012)
Contemporary Issues in Human Resource Management. South Africa: Oxford University Press
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6.1 Introduction
Business leaders are starting to make strategic HR risk management a core part of their talent
management agendas, from daily hiring activities to managing critical business events. Historically HR
Risk Management has largely been a defensive and tactical domain, mostly centred on compliance-
related activities, programmes and accountabilities (Goldberg and Dyer, 2012).
According to the National HR standard launched in 2013 HR Risk Management is a systematic
approach of identifying and addressing people risks (uncertainties and opportunities) that can either
have a positive or negative effect on the realisation of the objectives of an organisation (SABPP, 2015)
and an HR risk is any people, culture or governance factor that causes uncertainty in the business
environment that could adversely affect the company’s operations (Meyer, Roodt and Robbins, 2011).
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Like risk, human resources are pervasive in the business. Human resource management is most
effective when integrated with decision making throughout the business. This leads to recognition that
each production, financial and marketing decision has a human component or influence. Which choice
is made, how the decision is carried out, the follow-up and monitoring depend on people. Isolating
management team and employee issues from production, financial, and marketing management
frustrates people and creates unnecessary risk in a business enterprise ( Ervan, 2012).
To understand fully how human resource management and risk management are interrelated, one must
understand human resource management. It is the staffing, training, development, motivation, and
maintenance of employees to help accomplish organisational goals. Effective human resource
management also helps employees accomplish their career goals. Human resource management is a
process that can be broken down into specific activities and understanding these activities helps
explain the relationship between human resources and risk. Failure to successfully carry out these
activities increases risk and penalizes the business by not taking advantage of what its people could be
contributing (Ervan, 2012).
Managing risk should therefore form part of the strategic plan of the organisation where businesses
take a more integrated and proactive approach to ensure that they become resilient and develop
capacity to handle risks and disasters (Meyer, Roodt and Robbins, 2011).
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• Understanding trends in the business environment and being able to convert them into
business and HR strategies and policies.
The typical HR risks here are the inability of senior managers, including HR managers, to
analyse the internal and external business environment and understand what the key drivers
of change are and the inability to convert them into business strategies.
• People and corporate culture drive the implementation of the business’ strategies
Typical HR risks here are:
- Not having the right talent in the right places
- Not attracting and retaining key talent
- Performance that does not meet predetermined standards
- Training and development interventions that do not improve performance
- Absence of a constructive company climate.
• Carrying out operations – converting business or project plans into executable operations or
tasks.
Typical HR risks here are not having clearly defined operations and tasks or the right staff to
execute them.
(Meyer, Roodt and Robbins, 2011)
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Activity
Assume you are an HR Director at the organisation in which you are currently employed at;
• Firstly, identify some of the HR risks evident and discuss whether you would take a proactive
and aggressive approach to address the HR risks in your organisation or would you adopt a
‘wait and see’ attitude
6.3.5 Manager’s skills for effective integration of risk management and HRM
• Leadership responsibility
Every human resource manager has leadership responsibility. Even though delegation of
authority and responsibility and other tools for empowering employees decrease the need for
leadership, some leadership is necessary.
No group of people comes close to its potential without effective leadership
• Communication
Communication is an essential skill for effective human resource management. Sending clear
messages, listening and use if feedback are essentially important
• Training
Training is helping people learn and effective training requires teaching skills, an
understanding of how adults prefer to learn, patience, communication, a systematic approach,
and evaluation of whether the training has been effective
• Motivation
Motivation of employees challenges every mananger. Employee motivation helps the
organisation accomplish its goals while also helping workers accomplish their career goals.
• Conflict
Conflict is inevitable among employees, between employees and the management team, and
among the management team. Managers must learn to deal with conflict rather than avoid it.
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• Evaluation.
Employees have a fervent desire for evaluation i.e., information about their performance and
managers find it extremely difficult to share performance evaluations in an honest and helpful
manner. Both supervisors and employees need training in evaluation for it to be useful and
pleasant for both parties (Ervan, 2012).
Managers must Consider the most appropriate risk management strategies for each identified risk.
The HR Council of Canada identified the following strategies for managing risks:
Avoidance - Stop providing the service or doing the activity because it is too risky.
Acceptance - Some risky activities are central to the mission of an organisation and an organisation
will choose to accept the risks.
Modification - Change the activity to reduce the likelihood of the risk occurring or reduce the severity
of the consequences. Policies and procedures are an important part of this risk management strategy
because they communicate expectations and define boundaries.
Transfer or sharing - Purchase insurance or transfer the risk to another organisation through
signing a contractual agreement with other organisations to share the risk (for example, having a
contractual agreement with a bus company to transport clients rather than staff driving clients).
Additional options for dealing with risks as described by Meyer, Roodt and Robbins (2011) include the
following :
Treat - introduce preventative actions to reduce the probability or effect if the risk occurs and
maximise the potential for success.
Transfer - share the exposure, totally or in part, with a partner or contractor, or with an insurer.
Monitor any partnership carefully, as it may not be possible to transfer all risks.
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Tolerate – the ability of an effective action against some risks may be limited or the cost of taking the
action may be disproportionate to its potential benefits.
Eliminate – decide not to undertake the activity that is likely to trigger the risk. Where the risk
outweighs the possible benefits, eliminate the risk by doing things differently and removing the risk
!!
Have You Completed the ‘Essential Reading’ for this Part?
Now that you have been introduced to this part, source and work through the textbook
parts and journal articles listed in the “Essential Reading” list at the beginning of this part
It is essential that you read all of the textbook parts and journal articles listed.
1. Discuss the significance of business leaders starting to make HR risk management a core
part of their strategic management process
2. Evaluate the role of human resources and human resource management in risk
management
3. Identify the key drivers of change in your organisation and discuss the HR risk of the
inability of HR managers to forsee their strategic implications.
4. Discuss how you would attempt to create a “risk culture” in your organisation in order to be
able to manage risk more effectively
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbook:
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach.
4th edition. Durban: Lexis Nexis
• Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human
Resource Management. UK: Pearson Education Limited
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7.1 Introduction
The field of human resource development (HRD) in South Africa and abroad has evolved so rapidly
over the past ten years that traditional training is under threat. Traditionally training has been seen as a
tool to give employees knowledge and skills to perform their work more effectively. Today this view is
changing. An increasing number of companies view HRD as an important business imperative to
enhance competitiveness and overall business performance. South African companies that use HRD
as a strategic business strategy are likely to outperform their competitiors who fail to do so (Meyer et.al,
2012).
The role of HRD has broadened beyond training programme design. Effective instructional design
remains important, but HRD practitioners are increasingly asked to create innovative systems and
mechanisms to ensure performance improvement in the workplace. The HRD practitioner is no longer
only a trainer, but becomes a consultant to the rest of the organisation in providing the support that
enables the achievement of business objectives (Meyer et.al, 2012).
Video link :
This video illustrates the link between HRD strategy and organisational needs as it supports the
development of efficient and effective HRD program design and implementation. Ideas for video
content related to organisational strategy and core competencies were drawn from Mathis and
Jackson (2011); while content about HRD strategy and HRD programs were drawn from Werner
and DeSimone (2012)
https://www.youtube.com/watch?v=eHWDm0hgPPI
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From a South African perspective HRD is increasingly influenced by the new skills development system
based on skills development within occupations which is to be driven by the quality councils and in
particular the Quality Council for Trades and Occupations (QCTO). In this new paradigm, the emphasis
is on what the learner must be able to apply in the workplace as a result of learning. HRD is also a key
element of the National Skills Development Strategy and other supporting government initiatives aimed
at alleviating poverty and improving our competitiveness as a nation (Meyer et.al, 2012).
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• Training legislation – training legislation in South Africa regulates the training that takes place in
organisations.
The three main laws are the National Qualifications Framework (NQF), the Skills Development
Act (No.97 of 1998) and Skills Development Levies Act (No. 9 of 1999).
Companies and providers can no longer do what they want to do.
!
QUESTIONS FOR REFLECTION
After completing your study of this chapter” reflect on the following questions. (To
adequately address these questions you will need to have completed all the ‘essential
reading’ listed at the beginning of this part.)
1. Provide an analysis of the readiness of South African organisations to adapt to recent trends
and developments in the field of HRD
2. To what extent would you say, the organisation at which you are employed in, is in a position to
adapt to these recent trends of HRD ?
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Describe the strategic context, role and responsibilities of HRD.
2. Describe the strategically oriented cycle of HRD activities.
3. Discuss the link and integration between the organisational strategic context and HRD
4. Develop a strategic HRD plan for an organisation
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach.
4th edition. Durban: Lexis Nexis.
• Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human
Resource Management. UK: Pearson Education Limited.
8.1 Introduction
In order to ensure their survival, organisations need to create a strategic architecture, support
processes and learning mechanisms that facilitate continued learning and strategic renewal (Meyer
et.al. 2012). Arguably SHRD represents the latest extension of the training and development lineage
where training and learning are strategically integrated, vertically to an organisation’s strategic goals
and horizontally to other HR activities. This moves training and development from a process that is
largely directed at solving specific gaps in HR competences as they are identified to a potentially
proactive activity directed at improving corporate effectiveness (Millmore et.al. 2007).
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In light of the above, HRD managers are challenged to internalise the seventh critical outcome of the
NQF which states that the learner must be able to demonstrate an understanding of the world as a set
of inter-related systems by recognising that problem-solving contexts do not exist in isolation. This is
essentially what SHRD is all about (Meyer et.al. 2012).
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Achieving all the aforementioned through a high degree of collaboration with all relevant
stakeholders will ensure that the HRD architecture is so well established as to literally enable the
organisation to execute and accomplish its strategy (Meyer et.al. 2012).
René Angoujard, general manager of the Novotel London West Hotel, challenges the
commonly held view that training is a waste of time and money because it leads to staff leaving once
trained. He presents a stark alternative: ‘What if you don’t train them and they stay?’ For him, training
was at the heart of a culture change programme prompted by: client dissatisfaction; poor staff morale; a
staff turnover rate of 78 percent; and the need to profit from a major refurbishment programme and
market repositioning of the hotel from a tourist to business customer base. The hotel had, in his
opinion, lost sight of its service ethic and a ‘comprehensive customer service strategy’ was used to
forge a service culture.
HRD interventions included formal training around a set of core service behaviours and the use of
selected staff drawn from all levels of the hotel’s hierarchy to act as on-the-job exemplars and coaches.
Initial returns on HRD investment include: a 92 percent drop in customer complaints; a 10 percent
increase in sales; achievement of a repeat booking level of 70 percent; winning a number of training
and customer service awards; and reducing staff turnover by over half to 34 percent (Millmore et.al.
2007).
Muhlemeyer and Clarke (1997) (cited in Millmore et al., 2007:364) hold that their interpretation of the
training cycle (Figure 10.2) encapsulates a strategic orientation.
This can be found particularly in their emphasis on the whole cycle being driven by organisational
needs and securing knowledge transfer, and its exploitation, throughout the whole organisation. Their
emphasis on knowledge transfer prevents HRD outputs being simply locked up in the heads of those
directly involved in the training intervention and makes them available for others to utilise.
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Figure 8.1 A strategically-oriented cycle of HRD activities (from Millmore et.al., 2007)
McCracken and Wallace (2000) (cited in Millmore et al., 2007:355) develop Garavan’s nine
characteristics of strategic HRD to arrive at a revised definition and model of SHRD. They present their
construct of SHRD as being very strategically mature and compare and contrast this with HRD and
training where, in their view, strategic maturity progressively decreases. In this sense their ideas on the
development of SHRD can be presented as a continuum, working through training and HRD to the
fullest expression of strategic maturity represented by SHRD as depicted in Figure 8.2
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2. Top management support is too passive to fully enact SHRD and that what is required is top
management leadership.
3. Consistent with this leadership role and as part of its environmental scanning responsibilities,
senior management should assume responsibility for analysing the HRD implications of
external and internal environment changes and take over this role from HRD specialists.
4. The formulation of HRD plans and policies, although strategically oriented, reflects an
operational emphasis. To achieve a more strategic focus requires the development of HRD
strategies from which the policies and plans would flow.
5. Line manager commitment and involvement, while necessary, is insufficient to achieve true
integration of HRD into their broader managerial responsibilities. To achieve this integration
requires closer collaboration with HRD specialists and the development of strategic
partnerships between them.
6. Similarly, the existence of complementary HRM activities is insufficient in that it downplays the
need for their close integration under the SHRM umbrella. This makes more explicit the
necessity to ally vertical integration with horizontal integration and anticipates the development
of strategic partnerships between HRD specialists and their other SHRM colleagues.
7. The expanded role for HRD specialists needs to be further extended to elevate their facilitation
of organisational change function to a leadership of change role.
8. Similarly, the HRD function needs to extend its recognition of organisational culture, where
training activities are shaped, in part, by an awareness of the current cultural context, to a
position where it actively influences culture and, when necessary, plays a central role in culture
change.
9. That the emphasis on evaluation needs to be interpreted more rigorously to include a harder,
quantifiable edge, where HRD activities are evaluated in terms of their cost-effectiveness.
Activity
Develop a comprehensive definition of Strategic Human Resource Development (SHRD)
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1. Consider the Human Resource Development function implemented by the organisation for
which you work.
Would it be justifiable to position the HRD function implemented by the organisation for which
you work at the SHRD end of the HRD strategic maturity continuum?
2. Suppose you have been appointed as a group HRD manager at the organisation which you
work for. Develop a strategic HRD plan for the company.
3. Then develop a plan to measure the effectiveness of the strategic HRD plan once it has been
implemented
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
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9.1 Introduction
The importance of managing HRD from a strategic point of view has evolved rapidly over the past five
years. It is now more difficult than ever to strategically plan HRD over the long term. The changes in the
business environment are so rapid and unpredictable that strategic HRD must be aligned on a more
regular basis. This means that strategic HRD plans must be flexible enough to accommodate changes
in the environment. In addition, major strategic decisions, such as whether to outsource the
organisation’s training activities wholly or partially, have to take costs savings and business
improvements into consideration. Moreover, the worldwide skills gaps have forced companies to
institute aggressive talent management strategies to attract, develop and optimise the available talent
in both the broader marketplace and specific industries (Meyer et.al.; 2012).
Video link :
https://www.youtube.com/watch?v=VfgmIEBZG3A
https://www.youtube.com/watch?v=vxuxmUZfmpI
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For example, ask selection interview questions to determine if the candidate has the knowledge
and skills to do the job, and then train and appraise the employee based on whether he or she
shows mastery of that knowledge and skills.
4. Actively segments and proactively manages employees. Taking a talent management
approach requires that employers proactively manage their employees’ recruitment, selection,
development and rewards. As one example, many employers pinpoint their “mission-critical”
employees, and manage their development and rewards separately from the firms’ other
employees.
5. Integrates/coordinates all the talent management functions. Finally, an effective talent
management process integrates the underlying talent management activities such as recruiting,
developing and compensating employees. For example, performance appraisals should trigger
the required employee training.
The case study above recognises that all HR practices are inter-related, aligned with business needs,
and help the organisation manage talent to meet business goals.
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Empowering employees through effective talent management means entrusting to them the
accountability and ownership of individual and team achievements, which is a step in the right direction
to also apply talent branding appropriately.
Because of the skills shortages that exist in South Africa it is crucial for organisations’ HR practitioners
to be aware of this within the context of Talent Management (TM) in order to attract and retain talent in
order to contribute to an organisation’s bottom line (Nel and Werner, 2104).
Four diverse talent management activities emerge from the above definition
• Recruitment
• Performance management
• Leadership development
• Organisational strategy;
with the following roles to be performed by HR
• Focusing on scarce skills and fitting talented people to required roles or positions
• Safeguarding key business capabilities
• Accelerating leadership development
• Providing full business exposure to rising stars in the organisation
• Avoiding loss of key talent
• Selecting successors with leadership abilities
• Focusing on senior managements’ commitment to development and performance standards
The aim of career management within a talent management perspective is thus to plan and shape the
progression of the employee within the organisation in accordance with, firstly, the organisational needs
and goals and secondly, the employee’s performance potential and personal preferences and
aspirations.
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1. Discuss why it is important for managers to view recruiting, training, appraising and paying
employees as a talent management process.
2. Explain to the head of the HR department in your organisation how he/she could use the
talent management approach to improve the organisation’s performance
3. Describe the link and the role of Human Resource Development (HRD) in career
management.
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Provide an overview of the Learning Organisation.
2. Discuss the differences between traditional training and the learning organisation.
3. Describe and apply the characteristics of organisational learning within an organisation.
4. Develop a plan to transform an organisation to a learning organisation.
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
• Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human
Resource Management. UK: Pearson Education Limited
10.1 Introduction
Learning occurs at individual, work group and organisational levels and a key focus of SHRD is the
creation of a learning environment and structural design, which promotes learning and development for
performance improvement and competitiveness. This positions learning as an organisational capability
such that those organisations that are able to learn more quickly than their rivals secure significant
competitive advantage. It is this premise that has led to interest in the concept of the ‘learning
organisation’ (Millmore et.al., 2007).
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The learning organisation learns from the environment, but actively encourages learning within the work
environment. The learning environment encompasses the culture of the organisation. Learning occurs
in all activities of the members of the organisation. From this perspective it is evident that the learning
organisation represents major challenges for HRD in organisations (Meyer et.al; 2012).
It is important then to consider those organisational practices and support mechanisms that help build
towards a learning organisation.
These frequently collate around:
• The creation of a learning culture where learning and experimentation are actively promoted,
as evidenced through such things as the resources allocated to learning and development
activities.
• Structural mechanisms to support organisational learning, such as routines for collecting,
analysing, disseminating and applying information, and identifying and addressing learning and
development needs as well as the organisation structure itself
• The importance of evaluation as a continuous process that not only underpins the principle of
the learning organisation and knowledge management but informs organisational investment in
HRD/SHRD; and
• The psychological maturity of an organisation’s human resources such that, for example,
employees at all levels are receptive to the greater levels of accountability, autonomy and
responsibility that underpin the construct of the learning organisation (Millmore et.al.; 2007).
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While a learning organisation cannot exist in its idealised form, and is better viewed as an aspirational
vision than can at best be pursued as a never-ending journey, some organisations will exhibit some of
the characteristics of learning organisations (Millmore et.al.2007).
Activity
Research the characteristics of learning organisations, and then determine whether you would consider
the organisation in which you are employed a ‘learning organisation’ or one that is aspiring towards a
‘learning organisation’
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The generic model of the phases in creating a learning organisation depicted in Figure 10.1 can be
adapted by organisations
Activity
The management team of the organisation at which you are employed have realised the need to
become a learning organisation in order to keep abreast of technological developments.
Using the generic model of learning organisation implementation, develop a plan to transform your
organisation into a learning organisation.
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10.5 Conclusion
The concept of the learning organisation constitutes a new approach to learning and workplace
performance that requires a new way of managing organisations. Not only does it necessitate changes
to education, training and development interventions, but it also encompasses a totally new way of
managing people, processes and systems in the modern organisation. A change in organisational
culture is therefore needed in order to effect the change from a traditional organisation to a learning
organisation.
Learning is no longer restricted to an individual experience. Learning becomes a team and
organisational process which requires new and innovative ways of learning and managing performance
improvement. Learning becomes part of a continuous process of sharing information with people and
the environment. To be of value to organisations, organisational learning must be encouraged, nurtured
and managed for the improvement of performance.
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The operations director, Zodwa Dlamini, gathered all the plant managers and chief engineers together
to share information about how the new process works. All members agreed that it was a breakthrough,
but only the Saldanha plant managed to follow the example set by the East London refinery. This was
due to regular contact between these two refineries on the implementation of the new system.
After a year Zodwa realised that only two plants were productive as a result of implementing the new
system. After an investigation, she realised that most people, had more disincentives than incentives
for adopting new processes. Each refinery had plenty of other things on its plate. This new procedure
required installing some new equipment , and it meant changing some things that had been in place or
a long time. Most supervisors and employees resisted any change to new procedures and technology.
1. Which characteristics of the learning organisation are evident at the East London plant?
3. How can resistance to the new procedures and technology be broken down?
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The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
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ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Brown, D.R. (2014). An Experiential Approach to Organisation Development. England:
Pearson New International Edition.
• Blanchard and Thacker (2010) Effective Training. Systems, strategies, and Practices.
Fourth Edition. New Jersey: Pearson Education
11.1 Introduction
Organisational Development (OD) is an effort planned, organisation-wide, and managed from the top,
to increase organisation effectiveness and health through planned interventions in the organisation’s
‘processes’, using behavioural science knowledge. Organisational development or renewal is a series
of techniques and methods that managers can use in their action research to increase the adaptability
of the organisation (Nel et.al.,2014).
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Organisational development is a change process through which employees formulate the change that’s
required and implement it, often with the assistance of trained consultants. OD has several
distinguishing characteristics:
1. It usually involves action research, which means collecting data about a group, department, or
organisation, and feeding the information back to the employees so they can analyse it and
develop hypotheses about what the problems might be.
2. It applies behavioural science knowledge to improve the organisation’s effectiveness.
3. It changes the organisation in particular direction – toward empowerment, improved problem
solving, responsiveness, quality of work, and effectiveness (Dessler , 2013).
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Organisational turnarounds often start with a change in the firm’s strategy, mission and vision – with
strategic change (Dessler, 2014)
The field of OD can help organisations manage change effectively. OD techniques provide methods for
change to occur in an objective, goal-directed manner that addresses the needs of both the
organisation and the employees affected by the change (Blanchard and Thacker; 2014).
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Psychologist Kurt Lewin formulated a model to summarise what he believed was the basic process for
implementing change with minimal resistance. To Lewin, all behaviour in organisations was a product of
two kinds of forces: those striving to maintain the status quo and those pushing for change.
Implementing change thus means reducing the forces for the status quo or building up the forces for
change.
Lewin’s process consisted of three steps:
1. Unfreezing means reducing the forces that are striving to maintain the status quo, usually by
presenting a provocative problem or event to get people to recognise the need for change and
to search for new solutions
2. Moving means developing new behaviours, values and attitudes. The manager may
accomplish this through organisational structure changes, through conventional training and
development activities, and sometimes through the other organisational development
techniques (such as team building)
3. Refreezing means building in the reinforcement to make sure the organisation doesn’t slide
back into its former ways of doing things. (Dessler, 2014).
Managing change is important in today’s challenging environment. Professor Edward Lawler says that
as more employers face rapid competitive change, “focusing on strategy, organisation development,
and organisational change is a high payoff activity for the HR organisation. (Dessler, 2014).
The case of Nokia below illustrates an organisation faced with the decision about what to change.
A few years ago, Nokia was the worldwide leader in handsets and smartphones. Then Apple introduced
its first iPhone. Within a year, Nokia’s smartphone market share plummeted, and its sales increasingly
relied on low-price handsets. By 2010, Nokia’s board knew something had to be done. It appointed a
new CEO with Silicon Valley experience, Stephen Elop. He knew Nokia faced pressing problems. Its
smartphone share was down, and it was losing low-cost handset business to Asian competitors.
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Nokia’s R&D was behind the times. Its Symbian mobile operating system couldn’t handle many of the
leading applications that Apple’s and Microsoft’s systems could. Stephen Elop had to jumpstart Nokia.
Faced with situations like these managers like Stephen Elop can change one or more of five aspects of
their companies – their strategy, culture, structure, technologies, or the attitudes and skills of the
employees.
Elop embarked on a strategy to renew Nokia by streamlining Nokia’s product development process and
by entering into a partnership with Microsoft with the aim of introducing a new Microsoft-based
smartphone within a year.
In terms of structure Nokia split responsibility for its smartphones and handsets into two new units. He
replaced managers in Nokia’s mobile phones unit and markets unit. In technology, Elop reduced the
Symbian operating system’s central role in its smartphones replacing it with Microsoft’s mobile
operating system.
With its culture, Elop had his new management team change the firm’s culture, for instance, by
impressing on Nokia’s employees the need to eradicate bureaucratic decision making and to execute
on Nokia’s new strategy.
(Dessler, 2014)
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Activity
Assume that the organisation at which you are currently employed is affected by rapid technological,
social, economic or some sort of organisational change.
Using the 8-step process for leading change, discuss how you as an HRD manager would lead the
organisational change process at your organisation.
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Figure 11.1 depicts a five-stage model of the total organisation development process.
Each stage of the process is dependent on the preceding one, and successful change is more probable
when each of these stages is considered in a logical sequence.
Activity
Refer to the text, Brown (2014) Experiential Approach to Organisation Development. 8th edition.
Pearson
Research the VW scandal dubbed the “diesel dupe” and the resignation of Martin Winterkorn, the CEO,
at the time of the scandal and discuss, using the organisation development model in the text stated
above, how VW would apply an organisation-wide approach to the structural changes they faced
The most effective way to ensure the seamless implementation of performance improvement plans is to
integrate HRD and OD. Trainers and OD professionals interests are intimately connected. Each provide
a valuable service to the other.
Trainers and OD professionals have differences in the nature of the change they are responsible for.
One reason for the division between them is that companies typically organise around their different
functional activities, and OD and HRD departments are often separated.
This separation increases the differences in perspective, role, value of service, clients, etc.
A solution would be to house them together in the form of a performance improvement department
within HR. This would be an example of a structural change to align the organisation’s internal structure
with its strategic direction (Blanchard and Thacker, 2014).
1. Discuss the link between OD, strategy and change and then discuss how HRD may be
integrated into OD activities.
2. Analyse the HRD environment at which you are currently employed at and discuss whether
there exists a distinct link between HRD and OD activities or whether these departments
operate separately
3. Assume you are the HRD manager at the organisation at which you are employed.
Consider the competitive strategy of your organisation and provide recommendations on the
integration of OD activities into the organisations strategic plan.
The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Distinguish between HRIS, E-HRM and E-learning.
2. Discuss the benefits and types of e-learning methods.
3. Develop a comprehensive management plan for the implementation of e-learning within an
organisation.
4. Explain how social media can be used as an option for e-learning.
ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach.
4th edition. Durban: Lexis Nexis
• Wärnich, S., Carrell, M.R., Elbert, N.F., Hatfield, R.D (2015) Human Resource
Management in South Africa. United Kingdom: Cengage Learning
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek,
L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Bothma, R. (2015) “Five trends that will transform technology: technology upgrade – word of
mouse” HR Future. July. Pp34-35 (sabinet)
• Jackson, H.G. (2015) “HR Technology: The future is Here” HR Magazine. 60(8) pp6-6 (ebsco)
• Lovely, K. (2014) “Delivering on the Promise of Improves HR Service Delivery: Why the core
HRMS is not enough.” Workforce Solutions Review. 4(6) pp 4-7 (ebsco)
12.1 Introduction
HR is increasingly playing a strategic role as business partner in the organisation and as such, adds
value through making high impact decisions. HR stays the custodian of HRM functions, policies,
systems and processes, but it also acknowledges the role others play in the collaborative effort of
attaining strategic goals.
It provides HR executives, line managers, and employees with HR information and knowledge that
enable them to make sound decisions. The devolution of the HR function and dissemination of HR
knowledge throughout the organisation with complete online support for improved decision-making is
labelled E-HRM (Nel et. al., 2014).
Greater use of technology has led to the use of human resource management systems (HRMS), also
called human resource information systems (HRIS), which are integrated systems providing information
used by HR managers in decision-making.
Sophisticated HRIS keep track of employee information, such as who’s doing what jobs and where,
what are they paid and what training they have already had.
The delivery of some HR services online through Web-based HR home pages has led to the
development of what may be termed E-HR (or E-HRM) (Warnich et.al, 2015).
Organisations embracing E-HRM do not simply use technology to support HR, rather they see
technology as an enabler for things to be done differently in the HR function by changing the manner in
which information flows and how social interaction and communication take place.
Technological applications have become a necessity in society and the modern business environment.
All jobs and functions are affected by information technology. How does technology affect training in the
workplace and are HRD practitioners equipped to deal with the technology revolution (Meyer et.al.,
2012).
In response to the technology challenge, some companies have started to make use of technology-
based training or electronic learning (e-learning), the application of electronic technological systems to
support the learning process (Meyer et.al., 2012).
E-learning, commonly used interchangeably with computer-based training (CBT), online learning, and
web-based training refers to instruction and delivery of training by computer through the Internet or
Web. To enhance learning all of these training methods can include and integrate into instruction text,
interaction using simulations and games, video, collaboration using blogs, wikis, and social networks,
and hyperlinks to additional resources.
The training programme can be accessed using a password through the public Internet or the
company’s private intranet (Noe et.al., 2015).
There are many potential features that can be included in online learning to help trainees learn and
transfer training to their jobs.
For example, online programmes that use video may make it an interactive experience for trainees.
That is, trainees watch the video and have the opportunity to use the keyboard or touch the screen to
answer questions, provide responses to how they would act in certain situations, or identify the steps
they would take to solve a problem. Interactive video is especially valuable for helping trainees learn
technical or interpersonal skills.(Noe et.al.,2015)
1 2
E-learning needs analysis E-learning platform and design
• Select analysis methods • Assign project team
• Assess training needs • Review needs analysis report
• Assess learner profile • Design a project team
• Conduct cost-benefit analysis • Acquire e-learning resources
• Obtain management support • Develop e-learning system and
platform
• Train e-learning staff
• Market e-learning system
5 3
E-learning improvement E-learning delivery
• Review evaluation reports • Revise project plan
• Compile improvement plans • Assign responsibility
• Communicate to whole organisation • Present programme
4
Evaluation
• Reaction
• Learning
• Behaviour
• Results
The implementation of e-learning should be carefully planned and managed to ensure effective training
and transfer of skills. When making decisions regarding e-learning, the phases and sub-steps indicated
in Figure 12.1 should be used.
By implementing e-learning and accelerating learning in and outside the workplace by means of m-
learning, and s-learning, progressive South African organisations can gain a competitive edge if they
deliver to their customers quality products and services better than those of and more quickly than their
competitors.
1. Prepare a presentation for the top management at your organisation to convince them about
the benefits of E-learning for your organisation
2. Include in your presentation the various types of e-learning methods and highlight the method/s
that would be most suitable to your organisation
3. Suppose you were tasked to implement e-learning in the organisation at which you are
currently employed. Discuss the process you would follow and the factors you would consider
when planning and designing e-learning implementation.
The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a
broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the
learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Understand HR measurement.
2. Apply HR metrics in the correct context.
3. Discuss and apply and calculate the various types of HR metrics.
4. Critically discuss the application of HR metrics in its contribution towards organisational goals.
ESSENTIAL READING
Learners are required to read ALL of the textbook parts and journal articles listed
below.
Textbooks:
• Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource
Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
• Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L.
(2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press
Southern Africa.
• Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th
edition. Durban: Lexis Nexis
13.1 Introduction
HR departments are continually under pressure to illustrate the financial value that they add to the
organisation which is expressed as ROI (return on investment). The HRIS enables the HR department
to determine the baseline and cost of many activities, behaviours and programmes in the organisation,
such as labour turnover, absenteeism or training interventions. This constitutes HR metrics, which is
information expressed in quantities, such as percentages, ratios or rand value, used to highlight HR
trends and measure the impact of HR processes and interventions.
An example of a HR metric is the percentage of newly appointed employees who leave the company
within six months due to performance (Nel and Werner, 2014).
13.3 HR Metrics
It is important that we measure the impact of HR initiatives and projects in terms of the cost and the
impact they have on the company. This should be done using different types of measurements known
as HR metrics and may include:
• Diagnostic measures
• Evaluative measures and
• Human capital measures
Each of these are used for different purposes.
Diagnostic measures can be used for simple calculations of employee turnover and the number of
applications received for each vacancy, among other things.
Diagnostic measures can also be used for compensation-related measurements such as the calculation
of overtime costs or for training and development for the calculation of the total cost per employee for
training.
In general, diagnostics measures are used to generate regular reports that management can use to
measure a variety of HR initiatives.
Evaluative measures mainly focus on the measurement of effectiveness. This is usually done by
means of quantitative data, for example when companies determine the reduction in recruitment costs
for jobs vacated by retirees to measure the effectiveness of the use of internal staffing and succession
planning, or qualitative data, for example the measurement of the impact of good communication in an
organisation on the level of employee engagement.
Human Capital metrics includes looking at the metrics of the business that have an impact on the
whole business, for example the impact of management practices on the workforce. Human capital
metrics measure value more than cost whilst HR metrics focus more on costs
The important aspect is that the correct measures are used for the particular aspect that you want to
measure (Wärnich et.al., 2015).
The cost of recruitment can be determined by taking overall recruitment costs and dividing it by the
number of people recruited.
The yield: cost ratio shows the most effective and efficient recruitment method. The average time taken
to fill positions can also be determined by dividing the number hired into the total days taken to fill a job.
During selection, psychometrics, which is just another form of HR metrics, gives a quantitative
indication of an applicant’s abilities and aptitude.
Each selection criteria, such as experience and presentation skill, can be given a weight in terms of
importance and each applicant can be rated on each criteria and a final score determined (Nel and
Werner, 2014).
Monitoring absence rates forms a key element of absence management and most organisations track
absenteeism on a weekly, or monthly basis to monitor the effectiveness of absence management
strategies. This often involves calculating absence using a formula and comparing the resultant figure
with an internal or external benchmark standard (Banfield and Kay, 2008).
• It is calculated as follows:
Example:
A team of five people who each work five days a week , less bank holidays, can work a total of
(365 – 104 – 8) 253 days each, making a team total of 1265 potential working days. If 50 days
were to be lost through absence, the team’s absence rate would be:
50
Total time lost = _________ X 100
5 x 253
= 3.95%
• The international benchmark for absenteeism is three percent. It is unlikely that an organisation
can drive absenteeism down to 0 percent as people do get sick. However, competitive
organisations strive to bring the absenteeism rate down to less than three percent. (Nel and
Werner, 2014).
One of the limitations of the lost time rate calculation is that it cannot distinguish the pattern of absence
in terms of whether few employees are taking long periods of absence or whether many employees
have infrequent bouts of absence. (Banfield and Kay, 2008).
Consequently the calculation of Absence frequency gives an indication of the number of absence
incidents per employee.
An incident is one spell of absence, irrespective of the number of days involved.
A high absence frequency rate suggests that absence incidents are of a shorter duration, and thus
more disruptive to the organisation.
It is easier and less costly to make contingency plans when it is known that an employee will be absent
for a longer period than for short, unexpected absence incidents.
The absence frequency rate is calculated as follows and expressed as a ratio:
Labour turnover is considered as the permanent withdrawal from the work situation and can be
disruptive and costly to an organisation. Therefore the retention of key talent in organisations has
become a major challenge for many organisations, especially with regards to valued employees with
scarce skills.(Nel and Werner, 2014).
It is inevitable, that, from time to time, employees will choose to leave and either pursue careers
elsewhere, retire, take a career break or return to education (Banfield and Kay, 2008)
It is important that employers find out what the reasons are why employees are leaving so that effective
strategies can be implemented to retain them. A certain amount of labour turnover can be beneficial, as
long as it provides the organisation with new, enthusiastic employees who bring creative ideas with
them (Banfield and Kay, 2008).
However, high turnover rates create particular pressures for the HR department, which is primarily
responsible for replacing those who leave, but also for line managers who face disruption to production
and service standards (Banfield and Kay, 2008).
Labour turnover, according to (Nel and Werner, 2014) is divided into controllable and uncontrollable
labour turnover, depending on management’s ability to prevent it or not.
• Controllable labour turnover :
Voluntary resignations – can be controlled if management provides better leadership, wages,
opportunities, working conditions, and so on.
Dismissals – can be prevented through proper employment, training, policies, and procedures.
Only controllable labour turnover is included in the measurement of labour turnover
25)
LTO = __________
X 100 %
275
= 9.09 %
The above analysis provides an indication of the course of action that should be taken in order to
reduce labour turnover.
If a high percentage of employees leave the organisation voluntarily soon after employment, the
employment, induction, and placement practices should be re-evaluated.
If many employees are dismissed, employment practices as well as training should be reconsidered.
Employees who leave after reasonable time periods often feel that they have started to stagnate and
leave for better opportunities or more challenges.
If many employees leave after a long service with the company, it will be an indication that changes
have taken place that they found difficult to cope with. Resistance to change should be managed by
informing and involving employees in advance of changes (Nel and Werner, 2014).
The measures or “metrics” you use may be broad organisational measures (such as return on
investment , and profit margins. Or they may focus narrowly on specific human resource management
and activities (such as “hours of training per employee”). In any case, the bottom line is that measuring
“how we’re doing, and why” is important for managing one’s human resources (Dessler, 2014).
The company contracted an HR consultant to assist them with addressing these problems. The HR
consultant introduced the management of Petal Engineers to the use of metrics as a diagnostic tool and
assisted them in collecting information about their HR processes. The analysis revealed that it took
approximately three months to fill an engineering position in comparison to eight weeks average for
project leaders. Of the engineers recruited through employment agencies, only 40 per cent stayed in
the company. Exit interviews with engineers who resigned and a focus group discussion with existing
engineers revealed that they were mostly dissatisfied with their remuneration. The HR consultant also
assisted the company in determining the number of construction workers and the level of skill required
for specific projects and a gap analysis was done. A link between skill levels and lost time injuries were
also established. The cost of training employees in the company versus sending employees to an
external training provider was determined.
The GAR for the company as well as for different groupings of employees was calculated. It was found
that absenteeism was exceptionally high (13 percent) among construction employees belonging to
Project team 3. This was also the team experiencing the highest turnover among engineers.
Once all the figures were presented to senior management, they understood their HR problems better
and were better able to decide what interventions to take, and how their decisions would affect the
long-term direction of the company,
1. Discuss how Petal Engineering can use HR Metrics to address the attraction and retention of
employees.
2. Discuss how HR metrics in absenteeism management may be used to assist Petal Engineering
to address their absenteeism levels in the company.
3. Analyse the labour turnover at Petal Engineering and discuss the use and significance of HR
metrics as applied to this situation.
4. Discuss the overall contribution that the HR department can make, by use of HR metrics, to the
overall attainment of organisational goals.
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APPENDIX A:
CASE STUDY 1: PART 1 – HRM
RECRUITMENT – A SPECIALIST RECRUITER’S PERSPECTIVE
Recruitment agencies/firms could broadly be categorised into three categories – general recruiters,
specialist recruiters and search firms/head hunters.
I founded of the most specialised investment banking and investment management recruitment firms in
South Africa and what differentiates us from other agencies is the fact that we exclusively recruit within
the fields of investment banking and investment management, whereas the vast majority of financial
services recruiters cover the financial services sector as a whole. Our clients include some of the top
investment banks and investment managers in SA.
My definition of a specialist recruiter is someone who has the appropriate theoretical foundation /
qualifications coupled with the practical experience to enable him or her to accurately interpret job
descriptions and CVs of candidates operating with its chosen field/industry of specialisation. In my case
I have six years front-office financial markets experience (excluding recruitment experience) coupled
with a post-graduate commerce degree and professional qualification in investments
Our recruitment approach is a sharp shooter approach, as opposed to a shot-gun approach used by
many recruiters, so for most vacancies we rarely introduce more than three candidates and in many
cases we only introduce one candidate.
Normally the recruitment process kicks off with the receipt of a job description of a new vacancy from a
client, but it should be noted that we are also expected by our clients to introduce top talent on an
unsolicited basis, as and when we come across these top candidates in the market place.
On receipt of a job description form the HR department, I normally ask for additional information
pertaining to the remuneration range offered for this role; information pertaining to particular team’s
make-up; whether it is a newly created vacancy or resignation and whether the role is earmarked for
Employment Equity candidates only. From time to time I may also request a telephonic /in-person
discussion with the line manager, should the job description be unclear.
Once I have a proper grasp of the role, I draft a much shorter, more generic job description, which I use
to advertise the vacancy. The reasons for not just using the official job description are mainly to
disguise who the employer is, so that candidates do not contact the employer directly, and also to
better explain the job functions requirements.
I then follow a two-pronged approach: a more passive recruitment approach where I load the vacancy
on the job portals I use and then review applications; and a more active approach where I literally
search various databases, including social media platforms (such as LinkedIn) for suitable candidates.
As social media platforms and direct employer recruitment websites became more prominent over the
last decade, the recruitment landscape changed significantly with a strong move towards active
recruitment, as opposed to the traditional passive approach.
For the vast majority of vacancies we work on, there are only a small number of suitable candidates
available in SA mainly as a result of the pressures to employ Employment Equity candidates, but
because all the vacancies we work on are highly specialised.
Once a potentially suitable candidate has been identified, I make contact with the candidate and either
meet him or her in person (where possible), or conduct a telephonic interview. Before the interview, the
candidate is provided with the official job description, as well as a link to the employer’s website and
other pertinent information I may deem important. Given the seniority and specialist nature of
candidates, the interview is generally a frank, to-the-point discussion about the candidate’s reasons for
seeking alternative employment, how well the candidate’s profile fits the technical requirements of the
role, how well the candidate fits the ‘softer requirements’, such as corporate culture and also how well
this role fits within the candidates long-term career plans. I also check that the candidates current
remuneration package, as well as remuneration expectations is in-line with the indicative range
provided by the employer, but I would normally not divulge the clients range to candidates , so as not to
create expectations. If I pick up on something of concern, or an area in which the candidate falls
severely short from the requirements, I hone in on that area and the conversation could at times
become highly technical so as to ensure that I accurately understand the candidate’s technical
expertise and ultimately to enable me to make a decision whether to introduce the candidate to the
employer or not.
It is important to note that a candidate’s profile will only be discussed, or formally introduced to the
client, once the candidate has given his or her explicit consent to proceed with the process.
Introducing the candidate’s profile to the client normally entails (a) converting the candidate’s CV into
my standard format and while doing so, ensuring that it ‘speaks’ to the particular vacancy and that it is
an accurate reflection of the candidate’s profile. (b) I then draft a short motivation (normally about two to
three paragraphs) which will be in the body of the email accompanying the candidate’s CV - the
objective with the motivation is to explain to the employer why I believe the candidate to be a suitable
candidate for this role . I will also use the motivation to explain my thinking in those cases where
candidates are not an exact fit, but in my opinion they have the right potential to grow into this role.
Once the candidate is introduced to the client, I provide the client with any additional
information/documentation they may require and also arrange all interview/meetings. I am also
responsible for following up on references and verifying the candidate’s credit record, criminal record,
and academic qualifications. I do this by means of a third party verification service such as MIE. Once
the candidate has been interviewed and the client decides to extend an offer to the candidate, I am
usually consulted first to ensure the remuneration offered falls within the candidate’s expected
remuneration range. Once the formal offer letter or Letter of Employment is received, I present the offer
to the candidate and facilitate any questions / concerns the candidate may have and if all goes well
return the signed contract to the client. In cases where candidates have to decide between two or more
offers, I play a significant role in promoting my client’s offer and convincing the candidate to accept my
client’s offer. Once the candidate accepts the offer, he or she is, for all practical purposes now, an
employee of my client and as such the client and candidate communicate directly from here on forward.
The most common problems experienced are:
• A lack of knowledge/understanding by clients and HR practitioners:
In most cases direct contact with the line manager would be a much more effective means of
contact for both myself and the manager, as generally HR practitioners just do not have a
strong enough technical understanding of investment management to be in a position to
accurately assess a candidate’s level/degree of fit. I have experienced many instances where I
introduce a candidate to the HR person, who then through a lack of understanding deems the
candidate unsuitable. When I then get an opportunity to speak to the line manager and provide
an overview of the rejected candidate’s profile, he or she shows a keen interest and in the very
least asks to see the candidates CV.
• Unethical behaviour by other recruiters:
Some recruiters will introduce the candidates to employers without the candidate’s consent, or
without providing the candidate with sufficient information about the employer and vacancy to
enable the candidate to make an informed decision. In such cases it becomes a significant
problem when I then follow all the necessary steps, obtain the candidate’s consent and
introduce the candidate, only to be informed that the client has already received the candidate’s
application through another agency.
• Unethical behaviour by candidates:
Candidates will at times act unethically by overstating their technical expertise, over-stating
their current remuneration package and trying to apply for a vacancy for which they have been
turned down via another agency.in most cases these candidates are identified before
submission to the client and a note is made in our internal database warning us not to have
contact with this candidate in future. As a specialist recruiter I have accurately identified
numerous candidates over the years who have overstated their technical expertise and by
doing so saved my client valuable time. (Nel and Werner, 2014)
Instructions to Learners
This case study is to be analysed and prepared in your Study Groups. Your Study Group is required to
present the analysis of this case study at Workshop 2. Your presentation should not be longer than 15
minutes.
The questions that you are required to address in analysing the case study are:
1. Based on the given perspective of the recruiter’s perspective, compile a recruitment policy for
this organisation
2. Provide recommendations to the recruiter on some of the current and future trends in
recruitment.
3. Considering the common problems that are experienced, provide suggestions and
recommendations to how this recruiter can improve the way he addresses these problems
4. Discuss the nature of an induction and socialisation programme that would be beneficial should
a candidate from the case described above be appointed in an organisation
APPENDIX B
CASE STUDY 2: PART 2 - HRD
INA BEARING COMPANY
INA Bearing Company is a medium-sized manufacturer of high-precision engine components for the
automotive industry. Based in Llanelli, South Wales, it is one of a number of manufacturing companies
across Europe owned by the multi-national Schaefler Group.
In 2001 the company was facing a crisis. Its market position had been declining rapidly since the late
1990s as a result of orders being switched to low-cost producers in eastern Europe. This period
resulted in successive reductions in the worforce from around 860 to 360 jobs. In 2001 prospects
looked bleak. INA’s German parent had plans to switch even more production capacity to units in
eastern Europe which, if implemented would have resulted in the loss of a contract accounting for
around half the plant’s output and further job losses of 120.
Faced with this bleak scenario, the personnel manager led a strategy workshop to reformulate the best
way forward. It was accepted that competing with its European counterparts on the basis of cost was
not a viable option. Instead INA decided to compete on the basis of quality with a vision to become the
group’s preferred location for high-tech production work. At the same time, it was recognised that this
transformation in production orientation could not be achieved without radical realignment of the
company’s skill base. This led INA to a commitment to compete on the basis of workforce capability.
Investment in machinery was to be switched to investment in human capital with the clear intent of
building an employee skills base, developing a continuous improvement culture and building towards a
learning in order to realise the company’s vision.
In effecting this transformation, INA had to confront a number of potential obstacles. The demands of
continuous production severely limited the time available for staff development. The failure of previous
turnaround initiatives had left the workforce cynical about management’s intentions. Over time, the
demands of production had resulted in the HR roles of managers, supervisors, and team leaders
becoming diluted. Team leaders spent too much time helping out with production, meaning that the
management hierarchy was becoming distorted as supervisors operated as team leaders and
managers as supervisors. The grape vine was rife and the works council operated more as a forum for
discussing housekeeping issues.
Previous attempts to build skills through NVQ (Nationa Vocational Qualifications) programmes had
foundered because of lack of time and commitment among supervisors to undertake the necessary
assessments of employee competences. The workforce was characterised by long-serving employees
who had received little task-based HRD. Lastly employee relations had deteriorated to the point that
some unresolved issues had prompted strike ballots.
In addressing these potential obstacles, INA took two early important steps towards facilitating the
desired learning culture where survival was seen to depend on learning faster than the rate of change.
First, one-to-one meetings were held with every employee to explain the company’s vision, and signal
management’s commitment to that vision. The emphasis was on communicating the company’s
position honestly, whereby if the company failed to achieve its vision, its decision to base its strategy
around HRD investment would have at least resulted in employees having been equipped with high-
level, portable skills that would significantly enhance their employability. The second was to forge a
partnership agreement with the trade union Amicus. This resulted in the union signing up to the change
programme and securing funding for significant investment in the company’s learning centre.
These two interventions have changed the employee relations climate and opened up a genuine two-
way dialogue. The individual meetings allowed employees to share their perceptions on obstacles to
the development of a learning culture. They particularly stressed the importance of a unified team. This
resulted in the harmonisation of terms and conditions, the introduction of an inflation-linked pay system
and the re-alignment of the works council. Shop stewards now report that collaboration has replaced
confrontation, evidenced by the way that the works council now plays a key role in developing strategy.
Also the council’s sub-committees have been charged with leading important initiatives. These include
a review of internal communications and the development of systems to support company financed
individual learning plans (similar to EDAPs)
The platform for skills development was the relaunch of the NVQ programme. This time around, the
roles of managers, supervisors, and team leaders, have been redefined to enable them to commit to
their HRD responsibilities. This surfaced a number of management skills gaps among these groups,
such as communication, and led to the introduction, of an NVQ level 3 in business improvement
techniques for supervisors and an NVQ level 3 in management for team leaders. To reinforce their
commitment to HRD, senior managers assist in customising training to meet INA’s context and
participate in its delivery to those with leadership roles.an NVQ level 2 programme in performing
manufacturing operations is being delivered in collaboration with a local college. This is being taken by
all the company’s production operators, some of who are now progressing through levels 3 and 4 of the
programme.
For some operators, gaining the NVQ award represents the first ever external qualification. However,
NVQ’s while addressing identified skills gaps, represent only one step in the direction of forging a
learning culture. The development of the learning centre represents a significant milestone in this
journey. Computerised learning facilities provide a network of HRD possibilities for all staff and so far,
for example, 100 employees have signed up for the government-initiated Learndirect courses. In-house
continuous improvement courses further reinforce the focus on learning which is increasingly being
supported by those already trained becoming involved as coaches, mentors, and NVQ assessors in
order to help cascade the outputs of the various training programmes throughout the organisation. As
roles are redefined, HRD support is offered to help facilitate changes. For example, programmes to
develop meeting skills have supported the now active engagement of employees in the works council
and its sub-committees. The trade union, Amicus, appoints and sponsors four learning representatives
and uses TUC courses to support their role development. The company’s investment in individual
learning plans is yet another step along INA’s journey towards internalising a learning culture
throughout the company. Although some of the HRD outcomes of these plans involve employees
attending non-work related study in their own time, the message the company wishes to communicate
is that learning is valuable for its own sake.
This process of transformation has already yielded substantial benefits. The works council has reported
that the grapevine is now regarded as the least reliable information source by employees. Labour
turnover has fallen form an alreadymlow8.1 percent in 2001 to 2.5 percent and absence rates have
been reduced by 50 percent. Cost-reduction projects have produced savings in excess of £324,000,
alongside improvements in productivity and the company’s health and safety record. The company’s
efforts have also received external recognition, including a number of HR accolades. The company was
named ‘Welsh people development company of the year’ in 2003 and shortlisted for CIPD’s annual
People Management Award in both 2003 and 2004.
Despite this progress, and representations made by employees to the German parent, by the end of
2003 INA did not know whether all of this would turn around its fortunes within the Schaeffler Group.
However, the vision of becoming the Group’s production location of choice’ took a large step towards
becoming reality when in 2004 it was announced that Llanelli plant would not only retain production of
the ‘at risk’ component but would also be commissioned to produce a new high-tech engine component
for a prestigious car manufacturer.
Source : (Millmore et.al. 2007)
Instructions to Learners
This case study is to be analysed and prepared in your Study Groups. Your Study Group is required to
present the analysis of this case study at Workshop 3. Your presentation should not be longer than 15
minutes.
The questions that you are required to address in analysing the case study are:
1. Discuss whether INA has been successful in their attempt to create a learning culture towards
building a learning organisation
2. Despite the important roles employees, line managers and senior managers have in
contributing to SHRD, analyse the extent to which these stakeholders represent obstacles to
the development of SHRD at INA and discuss how these obstacles may be addressed
3. In terms of INA’s HRD activities, justify the position of INA on the strategic maturity continuum
and provide recommendations to help INA move further towards HRD strategic maturity on the
continuum