2.

1 The functions and evolution of human resource management

1. Human Resource Management (HRM) is the strategic approach to the effective management of an
organization’s workers so that they help the business gain a competitive advantage.

It involves the planning, organization, and development of all what is required to promote the
efficient performance of the workforce within a business structure.

2. Supply of labor: Total number of people willing and able to work.

3. Labour turnover refers to the movement of employees into and out of a business in a given time
period (usually a year).

It is a measurement of how long your employees stay with a company and how often you have to
replace them.

It is an indicator of how stable a business is.

A high labour turnover rate suggests that the business has labour problems.

A low turnover rate may indicate a stable business. However, stability can lead to complacency and
lack of progress.

New employees tend to bring energy and new ideas, especially if they have just left college or
have been retained and/or reskilled.

4. Relation between labour turnover and HR Management:

HR plan should be designed to make sure that the labour turnover rate is kept at an acceptable level.

Labour turnover can quickly get higher as a result of a significant change in circumstances either in
or outside of the business.

By tracking the labour turnover rate, the business can try to correct internal factors or mitigate
against external factors.

5. Human Resource Planning is the process of analyzing and forecasting the number of workers
and the skills of those workers that will be required by the organization to achieve its objectives.

It aims to get the right number of people with the right skills, experience and competencies in
the right jobs at the right time at the right cost.
 5.1. External Factors for HR planning
- Technological change
- Demographic change
- Changes in education
- Government regulations
- Social Trends
- Labour mobility
o Occupational
o Geographical

5.2. Internal Factors for HR planning

Changes in business organization
Changes in labour relations
Changes in business strategy
Changes in business finance

5.3. HR planning parts:

- Recruitment
- Training
- Appraisal
- Termination

6. Recruitment:
It is the process of identifying the need of a new employee, defining the job to be filled and the
type of person needed to fill it, attracting suitable candidates for the job and selecting the best
one.
The process of recruitment can be internal (assessment of the current staff) or external
(assessment of the current pool of job candidates).

6.1. Internal Recruitment:

- Assessment of the employer’s current staff to ascertain if any of the employees is
sufficiently skilled or qualified to perform required job vacancies.
- When a business engages in internal recruitment, a current employee might be
reassigned to the new position by giving them either a promotion or an internal transfer
6.2. External Recruitment:;
- assessment of current available pool of job candidates, other than existing staff, to
ascertain if any are sufficiently skilled or qualified to fill and perform existing job
vacancies.
- A head hunter might be used to facilitate the search, contact and recruitment process.

6.2.1. Methods of external recruitment

 - Recruitment agencies, Job centers, Specialist publications, Personal contacts
6.3. Recruitment Agencies:
Act as the link between the employers and the potential employees.
Recollect, keep, and manage records of potential employees.
Save an organization the trouble of advertising, interviewing, and selecting candidates.
The organization has to rely on the agency to provide the right person for the job position.
6.4. Job Centers:
Help potential employees and employers match their requirements so that both needs are
satisfied.
Advertise job vacancies and provide means to contact the employers

6.5. Specialist Publications

In contrast to newspapers and newsmagazines oriented mainly to offer news of general
interest, specialist publications offer a more in-depth review of a specialized topic.
Enable an organization to target a particular profession.

6.6. Personal Contacts

Recruiting employees involves a fair degree of risk.
Some organizations prefer to rely on friends and professional contacts to make recruitment
recommendations.
Takes the cost element out.

7. Training:
Work-related education to increase workforce skills and efficiency.
It helps existing staff adopt new innovation.
It can be a source of motivation and can help to build team spirit.
It might be used to develop junior staff so that they are able to cover for a short- or long-term
absence of senior staff.
Professional development of staff through training and education can help an organization to
achieve its objectives.

7.1. Orientation
- Also called induction training
- Introduces the organization’s history, key staff and the location of key facilities
- Explains how the business objectives are met and the expectations of the staff
- Usually undertaken in-house
7.2. On the job-training
- Watching or working closely with existing experienced members of staff is a frequent
component of this form of training.
- Includes methods and technics such as apprenticeships, job rotation, job enlargement,
and shadowing.
- Cheaper than sending recruits on external training courses.
- The content is controlled by the business itself.
 7.3. Off the Job training
- Includes lectures, conferences, case studies, role play, and simulation.
- Usually undertaken by outside trainers.
- These courses can be expensive, yet they may be indispensable if the firm lacks anyone
with this degree of technical knowledge.

Cognitive training: helps employees develop their thinking and processing skills so they can make
quicker and more effective decisions.

Behavioural training: helps employees develop their interpersonal skills and intrapersonal skills. It
concentrates on emotional intelligence or stress management when working in project teams and
positions of leadership.

8. Appraisal:
- An appraisal system aims to assess the performance, effectiveness and value of
employees in an organization.
- It is typically annual so that targets can be set, and progress can be monitored.
- Can be costly and time consuming, especially when done well.
- An appraisal record will often comment on a subordinate’s ability to meet certain
criteria and may suggest areas and action for improvement.
8.1. Benefits of appraisal
For an employee, appraisal can:
- Be motivating, instructive (an employee can learn from past mistakes)
- Help employees progress along their career path.
- Lead to a change in career direction.
For the business, appraisal can:
- Act as a check on performance; - Help to review new initiatives;
- Be useful to record and document performance.
- Be motivating as it formally recognized good performance.

8.2. Appraisal systems may include these methods:

- Formative
- Summative
- 360 degree
- Self-appraisal

9. Termination, dismissal and redundancy

The final stage in the HR plan is when an employee leaves the business.
- This situation might happen because: The employee chooses to leave the business, the
business decides that the employee should no longer work there, both the employer
and the employee agree that separation is in the best interests of both parties.

- A contract of employment is a legal document that sets out the terms and conditions
governing a worker’s job. • Good businesses will have a set of procedures to minimize
the impact of losing employees and acquiring new ones.
9.1. Termination:
 Employees can “terminate” or leave the business at the end of their contract for a variety
of reasons, including:

• Change of career

• Professional development

• Promotion

• Retirement

• Lifestyle choice

• Family reasons

These employees would expect to receive a reference from the employer to use in their
search for their new job.

Employees should give some advance notice to their employer of when their resignation
will be effective.

9.2. Dismissal
- Being removed or ‘sacked’ from a job due to incompetence or breach of discipline.
- Could result from the employee being unable to do the job to the standard required.
It may also be that the employee has broken one of the crucial conditions of
employment.
- A key area of employment law is the ability of an employer to dismiss an employee for
unacceptable behavior or poor performance.

There is no reference for dismissed employees.

Employees should receive a “Period of notice”.

In some instances, employees do something so bad that they face a “summary dismissal”, which
takes effect immediately

Summary dismissal can also happen when the employer fears that the employee facing dismissal
will damage the property of the business or steal from the business

9.3. Redundancy
Redundancy is when a business no longer has any work for an employee.

Because employees have lost their job through no fault of their own, they would normally
expect to receive a redundancy payment and a letter of reference.

The longer an employee has been with the business, the greater the redundancy payment
will be.
 When a large number of positions are made redundant, deciding which employees to retain
can be difficult for managers.
They would normally have two options to offer:
- Voluntary redundancy: employees may choose to be made redundant
- Involuntary redundancy: may be based on age, years of service, or some other criterion
or criteria.
10. Work patterns, practices, and preferences.

Many changes that affect employers and employees have occurred in work patterns, practices,
and preferences.

These changes have stemmed from external and internal factors affecting the pool of labour.

Factors changing the working environment:

- Privatization and the move away from public-sector to private-sector employment.

- Increased migration of potential employees in a country or region and across the globe.
- Increasing participation of females in the workforce.
- Changing educational opportunities.
- Increasing urbanization and the consequent rise in stress levels.
- An ageing population and increasing average age of the workforce.

10.1. Changes in work patterns

- The types of jobs required by business as well as the types of jobs people want.
- ICT also provides opportunities to match people seeking positions with countries or
regions with shortages of people with certain skills. • ICT allows for faster processing of
data.
- As a result of this improved information is that many people are migrating because of
work.

10.2. Changes in work practices:

The nature of work routines has changed as businesses have responded to greater
demands for more flexible working practices.

10.3. Changes in work preferences

- Career breaks (sabbatical): an employee decides to stop working for a time, usually a
year or more, before returning to work in the same career.
- Job share: two or more employees decide to share a job in order to free up more time
for other activities.
- Downshifting: an employee gives up a senior position or highly paid employment in
order to change career into another lower-paid field or area of interest.
- Study leave: an employee is granted time off work to acquire a new qualification such
as an MBA.
11. Outsourcing:
Outsourcing is the hiring of a third party (company or individual) to perform diverse activities
instead of using the own resources.
- The aim is to eliminate certain operations to focus on its main activities (core activities).
- This way, the need for hiring many workers is reduced
- Although the business would have to pay subcontractors to complete the work, it could
cut costs by doing this.
- The subcontractors are likely to be specialists in either manufacturing or distributing

The factors that encourage outsourcing are:

• The search for competitiveness • The specialization • The existing infrastructure • The flexibility
of labour laws

Typical business functions that can be outsourced:

• In marketing, using an advertising agency. • In operations management, licensing a producer to

make your product. • In HR, employing an agency to “headhunt” potential staff. • In finance, hiring
accountants to run an external audit.

The services of outsourcing with greater demand are: • Information technology • Legal and judicial
• Finance and accountancy • Human resources • Storage • Call centre • Cleanliness • Transportation

11.1. Advantages of outsourcing

- For the company outsourced:
• Develop economies of scale • Prestige for association • Opportunity to gain
experience • Greater competitiveness
- For the company outsourcing:
• Lower costs • Reduction of risks • Better operations • Improvement of the strategic
approach

12. Offshoring:
• An extension of outsourcing is offshoring. • When a business outsources outside its home
country. • With improved global communication, offshoring has been a growth area in the
modern business environment.

13. Re-shoring
For many reasons, many of the original expectations of this process have not been fulfilled, so
some companies are now bringing HR back home by re-shoring all or some of the functions that
were originally outsourced / offshored.
14. Innovation:
A business committed to being innovative must have a greater strategic focus on HR than any
other business function.
- Innovations come from people.
- The business will not be successfully innovative unless it recruits and retains the right
people.
- Developing a supportive and stimulating business environment will help the creative
process.

15. Ethical Considerations.

- HR plans are based on relationships, which are reflected in the way that the business
treats its employees.
- Social network sites can be places where employees treated badly can tell others how
they have been treated.
- Businesses have to be careful to act in an ethical manner, or at least to create that
appearance.
16. Cultural differences:
- Cultural differences can also have a significant effect on the HR plan for any business
that employs a multicultural workforce.
- Many domestic businesses also employ migrant workers.
- Businesses that adapt their HR plan to suit a more varied cultural workforce are more
likely to be successful with a diverse workforce, especially if their markets are as diverse
as their workforce.