Unit 2 Key Human Resource Functions

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Detailed Structure
2.0 Overview
2.1 Learning Outcomes
2.2 Terminology and Vocabulary
2.3 Introducing Human Resource Management Process
Planning(HRP)
2.4 Key HR Functions

2.5 Implementing HRM

2.6 Responsibility for HRM

2.7 Emerging trends in HRM practice

2.0 Overview

This unit is an introduction to the Human Management process and

the key Human Resource functions. The practice of human resource
management (HRM) concerns all aspects of how people are employed
and managed in organizations. The functions cover a wide range of
activities which include strategic HRM, human capital management,
resourcing (human resource planning, recruitment and selection, and
talent management), performance management, learning and
development, reward management,employee relations, employee
well-being and health and safety, the provision of employee

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services ,corporate social responsibility, knowledge management and
organization development.

This Unit will provide an overview of some of the key HR functions

and in subsequent Units, a number of these functions will be
discussed in more details.
2.1 Learning Outcomes
After completing this Unit, you will be able to:

 Explain the nature and scope of the HRM functions

Comment on their implementation Define some of the emerging
trends
2.2 Terminology/Vocabulary
Human Resource Management Process,HR functions
Implementing HR, Future trends

2.3 Introduction

Human Resource Management (HRM) is a very wide and

comprehensive management function in an organization. It focuses
on staffing function (human resource planning, recruitment, selection,
and placement of people), development function (training and
development, and organization development), welfare function
(safety, wellness, and benefits), utility function (maintenance and
record keeping, compensation) function, monitoring function
(performance appraisal and management), managerial function
(planning, organizing, directing and controlling), and above all
involves a strategic function (to bring in fit between organization
vision, mission and goals and the goals of people working in the
organization). However, it is not the exclusive domain of HR

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managers. In fact, it is to be performed by every line manager
concerned with motivation, communication, and supervision issues..

HRM models

The two most discussed models of HRM are:

 The Fombrun et al (Michigan or Hard HRM)model focuses on four

key HR functions of HRM,namely
Selection,Performance,Appraisal, Rewards and Development
 It emphasizes the “quantative,calculative headcount”aspects and the
main focus is how to improve employee utilization(cost-
effectiveness)
 Employees are expected to accept that their interests coincide with
those of the organisation(the unitarist approach) and HR aims to
recruit and develop employees who will “fit” the organisation
culture.
 .
These key generic HRM functions mentioned in this model,however,
can be expanded to include the following steps: Assess, Acquire,
Employ, Reward, Develop and Integrate human resources with the
strategic aims and objectives of the organisation.HRM would
therefor comprise of the following activities:

1. planning personnel needs, and recruitment,

2. conducting job analyses, 
3. selecting the right people for the job, 
4. orienting and training, 
5. determining and managing wages and salaries,
6. providing benefits and incentives, 
7. appraising performance, 
8. resolving disputes, 
9. communicating with all employees at all levels.

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 10. maintaining awareness of and compliance with local, state and
federal labor laws.

These are referred to as the main functions of human resource

management.From a Hard HRM perpective,employee will have little
scope to participate in decision making.

In contrast, the Beet et al(Soft HRM)model treats employees as the

most important resource in the business and a source of competitive
advantage.

The focus of HRM is to concentrate on the needs of employees –

their roles, rewards, motivation and involvement.The key HRM
features are:

 Strategic focus on longer-term workforce planning

 Strong and regular two-way communication
 Competitive pay structure, with suitable performance-related
rewards (e.g. profit share, share options)
 Employees are empowered and encouraged to seek delegation
and take responsibility
 Appraisal systems focused on identifying and addressing
training and other employee development needs
 Flatter organisational structures
 Democratic leadership style

Whether organisations adopt the Hard or Soft version of HRM,the

range of activities the HR managers will be called upon will have a
great deal of convergence.The following diagram presentsthe key
components of a typical Human Resource Management process.

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The range of interlinked activities,if properly carried out will staff an
organisation with competent,high-performning,employee who are
capable of sustaining their performance level over the long term.

2.4 Key HR Functions

Different authors have adopted different perspectives of the key hrm

functions involved in the hrm process.

For example ,Torrington et al (2009) has described the general role

of people management as comprising specific objectives under four
headings: staffing, performance, change management, and
administration.

● Staffing objectives are firstly concerned with ‘getting the right

people in the right jobs at the right times’ – i.e. the recruitment and
selection of staff, but increasingly these days also advising on
subcontracting and outsourcing of staff. Staffing also concerns

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managing the release of employees from the organisation by, for
example, resignation, retirement, dismissal or redundancy.

● Performance objectives: people managers have a part to play in

assisting the organisation to motivate its employees and ensure that
they perform well. Training and development, reward and
performance management systems are all important here. Grievance
and disciplinary procedures are also necessary, as are welfare support
and employee involvement initiatives.

● Change management objectives include employee

relations/involvement, the recruitment and development of people
with the necessary leadership and change management skills, and the
construction of rewards systems to underpin the change.

● Administration objectives include the maintenance of accurate

employee data on, for example, recruitment, contracts and conditions
of service; performance; attendance and training; ensuring
organisational compliance with legal requirements, for example in
employment law and employee relations; and health and safety.
Further, he has observed that:

General managers are increasingly involved directly in all of the first

three types of objectives. Other than in managerial oversight for legal
compliance issues, administration objectives tend to remain the
preserve of dedicated PM/HR support staff.

Wilton (2010) has noted that the following five broad functions of
HRM are central to managing the workforce:

 People resourcing – Ensuring adequate staffing for current and

future business needs through activities that include human resource
planning, recruitment, selection, induction, talent management,
succession planning and the termination of the employment
relationship (including managing retirement and redundancy).
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 Managing performance – Managing individual and team
performance and the contribution of workers to the achievement of
organisational goals, for example, through goal-setting and
performance appraisals.
 Managing reward – Designing and implementing reward and
pay systems covering individual and collective, financial and non-
financial reward, including employee benefits, perks and pensions.
 Human resource development – Identifying individual, team and
organisational development requirements and designing,
implementing and evaluating learning and development
interventions.
 Employment relations – Managing employee ‘voice’,
communication and employee involvement in organisational
decision-making, handling union– management relations (including
industrial action and collective bargaining over terms and conditions
of employment), managing employee welfare and handling employee
grievance and discipline.

Since HRM is an evolving discipline,in to the functions mentioned

above ,there are other tasks and activities that come under the remit of
HRM. These include diversity and equality management, talent and
knowledge management, e-HRM and outsourcing, customer service
and quality, culture change, human capital management, human
resource accounting.

The HRM process invariably begins with the determination of the

HR needs,present and future,followed by the identification and
selection of the qualified and competent employees;the
orientation,training,performance management,compensation and
benefits and career development.

It is important to bear in mind that the whole HRM process will be

influenced by a set of external factors and developments, which will
constitute both opportunities and constraints for the organisation.

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2.5 Implementing HRM

The key HR functions will be discussed in greater details in the Units

that follow.

But it should be clear that there is an important shift in the end

purpose of HRM, compared to that of traditional Personnel
Management.-it has to focus more on delivering than simply doing.
Its responsibilities, roles and competencies have evolved over time.

For his part, Dave Ulrich (2013) has argued that,in the
implementation of HR activities and functions, HR professionals will
have to:

 Adopt and “outside-in perspective” and be more focussed in

bringing value to external stakeholders, the customers and the
investors
 Be the architects who offer ideas, frameworks, solutions, and
accountabilities for delivering business results through talent,
capability and leadership.
According to Guest (1987), in a changing context ,there are a
number of important HRM issues that need to be addressed. The issue
of HRM integration is a key theme running through many of the
models of HRM which according to him lies at the heart of HRM. He
identifies integration at three levels:

 integration of HRM policies with business strategy (external

fit);
 integration of a set of complementary HRM policies (internal
fit);
 integration of HRM into the line management function

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Linking HRM strategy and business strategy requires HRM to play a
proactive role in shaping the business strategy, as opposed to a more
reactive role, in which business strategy determines HRM strategy.
This is not always an easy task and “the literature provides little
practical guidance in relation to linking HRM with business strategy.
Indeed it often ignores the significance and power of both
organisational politics and culture as variables in shaping (and
possibly subverting) the links between HRM and business strategy”.
(Purcell and Ahlstrand,1995)

The second integrative aspect of HRM relates to internal fit, or the

integration of a proactive and complementary set of HR policies. How
to achieve such fit is problematic, particularly in organisational
structures in which there are divisions of responsibilities between
central and line departments.
Tyson, (1995) has observed that:
“The literature suggests that in order to develop an integrated set of
policies, it is necessary to critically assess the structure and
responsibilities for HRM at central level. In this way it can be decided
what policies should remain centralised and what can and should be
decentralised to line department level. Furthermore, if HRM strategies
are to support business strategies, different HRM strategies may be
required within different line departments where a centre-line
structure exists.”
The final integrative aspect of HRM concerns line management.
Tyson, 1995 has observed that :

“The literature suggests that in order to develop an integrated set of

policies, it is necessary to critically assess the structure of and
responsibilities for HRM at central level. In this way it can be
decided what policies should remain centralised and what can and
should be decentralised to line department level. Furthermore, if
HRM strategies are to support business strategies, different HRM
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strategies may be required within different line departments where a
centre-line structure exists”.

Armstrong (1997) has argued that line managers may be only too
glad to let the personnel department deal with the people management
aspects of their job, particularly in relation to disciplinary and
grievance matters. He suggests that the successful devolution of HRM
to line
managers requires a 'delicate balance' between providing help and
advice to line managers and creating a 'dependency culture' in which
line managers are reluctant to take responsibility for people
management issues. He further asserts that if human resources really
are so critical for business managers, then HRM is too important to be
left to operational personnel specialists.
Research by Bevan and Hayday (1994) indicates, however, that
managers may be reluctant to take on HRM responsibilities which
they do not perceive to be a legitimate part of their job, particularly if
they are not adequately consulted about the devolution of such
responsibilities creating a 'dependency culture' in which line managers
are reluctant to take responsibility for people management issues.
This reluctance is not helped where there is poor organisational
support for the devolution of HRM to line managers. For example, in
a recent study of a number of UK organisations, Hope-Hailey et al
(1997) found that the managers' roles in HRM activities were rarely
included in the objectives set for them, or assessed as part of the
performance appraisal process. In addition, this study found that short
term priorities of the organisation to obtain
tangible results, coupled with workload pressures, resulted in a
tendency by managers to view HR activities as less of a priority. As a
result, people management activities were often the first to be
'squeezed out' of the line managers’ day-to-day activities.

Similarly, Marchington and Wilkinson (2008) suggest that many line

managers may feel that they are already suffering from work
overload, and thus will not place a high priority on HRM activities.
They suggest that even where the mission statement of the
organisation places an emphasis on staff development and
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management, line managers may pick up contrary signals from senior
management about the ordering of priorities, and thus will focus on
the achievement of targets which are more measurable and valued
than HRM related activities.

Legge (1995) considers that the achievement of the three integrative

aspects of HRM will involve a repositioning of the role of the
personnel function.

2.6 Responsibility for HRM

One of the main responsibilities in HRM has to do with the following
issue:
Is there any evidence that the implementation of HRM has a
significant effect organizational economic performance? And by
extension on national /international performance?
Auditing HRM

According to Price(2011) unlike in the past when there was

insufficient research combined with the difficulty of measuring an
“intangible resource” like human resources, considerable progress has
been made. He refers to a study in 2000 that looked at 315 firms in
Taiwan and related their human resource practices to their
organizational performance. The study study shows a significant
relationship between performance and the effectiveness of their HR
functions, including planning, staffing, appraisal, compensation, and
training and development. Another study in UK in 2001 surveyed
over 200 manufacturing firms in the UK to investigate the
relationship between corporate performance and the use of flexible
work practices, human resource systems and industrial relations. They
found that 'low-road' practices - including short-term contracts, lack
of employer commitment to job security, low levels of training and
unsophisticated human resource practices - were negatively correlated
with corporate performance. In contrast, they established a positive

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correlation between good corporate performance and 'high-road' work
practices - 'high commitment' organizations or 'transformed'
workplaces. They also found that HR practices are more likely to
make a contribution to competitive success when introduced as a
comprehensive package, or 'bundle' of practices.

 Importance of HR metrics
In all the debates about the meaning, significance and practice of
HRM, the link between HRM, its effectiveness and organisational
performance is the most critical. This has to do with the measurement
of outcomes known as HR metrics-measurements used to determine
the value and effectiveness of HR strategies.
HR accounting and auditing are important aspects of ascertaining HR
effectiveness.
The American Accounting Association’s Committee on Human
Resource Accounting (1973) has defined Human Resource
Accounting as:
“the process of identifying and measuring data about human resources
and communicating this information to interested parties”.
On the other hand ,HRM auditing is more elaborate process and is
considered to be
“a systematic formal process, which is designed to examine the
strategies, policies, procedures, documentation, structure, systems and
practices with respect to the organization’s human resource
management. It systematically and scientifically assesses the
strengths, limitations, and developmental needs of the existing human
resources from the larger point of view of enhancing organisational
performance”.
The word “audit” is derived from the Latin verb ‘audire’ ,meaning to
listen. Listening is a precondition to ascertain a state of affairs and to
compare the current state of the affairs with what was expected/
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promised. In the field of finance, auditing is a routine exercise and is
a statutory obligation. In case of HRM, there is no statutory obligation
for auditing, and HR audits can differ from standard Financial audits
by addressing HR needs and issues.
http://www.whatishumanresource.com/Human-Resource-audit [5]

HR audits act like annual health-check for organisations and help

organisations to detect the causes of problems and to take corrective
actions. HRM auditing is now being recognised as important process
for judging HRM effectiveness.

 Criteria and approaches

Broadly there are two sets of criteria for HR auditing:
efficiency(doing things right) and effectiveness(doing the right
things).
Efficiency aims at determining whether outputs are being maximised
relative to inputs whereas effectiveness aims at establishing whether
the outcome match the expectations.
For carrying our HR audits, there are a number of approaches
available:

1. Comparative approach
2. Outside authority approach
3. Statistical approach
4. Compliance approach
5. Management by objectives (MBO) approach

 Comparative approach
The HR audit results of an organization are compared with that of
another Company or its industry.

 Outside authority approach

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Company audit results are compared with standards set by an outside
consultant as benchmark

 Statistical approach

Statistical measures are developed and used to compare audit

results with the company’s existing information.

 Compliance approach

Auditors review and compare past actions and establish e

whether those activities comply with legal requirements and
industry policies and procedures.

 Management by objectives (MBO) approach

Auditors used pre-set specific goals, against which actual

performance is be measured and conclusion are drawn
One popular approach used is the personnel audit which involves two
exercises: the procedural audit and the functional audit
The procedural audit establishes whether all steps are being followed
and whether they are being carried out within set time frames. The
functional audit is examines the value addition of HRM activities to
overall organisational goals .
Overall, the contribution of HR auditing in positioning HRM as a
business function cannot be underestimated in a context of
competitive pressures. It a means that HRM has to demonstrate its
effective contribution to organisational goals and strategies.
According to Price(2011)

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“HR Directors are now starting to follow common practice in other
business functions - measuring input costs, establish ongoing
performance metrics, and building business cases for new initiatives”.

Kunalan (2010) in HR Matters magazine has commented on the

significance of HR metrics and measurement as follows:
“What HR metrics represents is a comprehensive analysis of key
indicators focused on the HR structure, HR processes and activities,
financial expenses, and time spent by an organisation. It seeks to
provide detailed information on the effectiveness and efficiency of an
organisation’s HR management system in comparison to the overall
organisational performance. In essence, HR metrics portrays the HR
function’s contribution to the organisation. As a method of
quantifying the impact of HR, its programmes and activities, it
includes both leading (future predictors) and lagging
(historical/financial) indicators”.
http://www.hr-matters.info/feat2010/2010.apr.03.htm [6]

Activity Suggest 5 metrics that can be used to assess HR

effectiveness.

2.7 Emerging trends in HRM practice

HRM is a dynamic and fast evolving discipline.Its quality,relevance

and effectiveness will depend a lot upon how it adapts to a fast
changing and competitive talent landscape and stays current on—or
ahead of—the latest HR trends.

Human Resources Today has identified 5 key trends that will

influence HR practices.They are :

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 1 The Growth of People Analytics and AI(Artificial Intelligence)
“Analytics and AI have the ability to touch every aspect of HR,
from recruiting to performance management to employee
engagement. As analytics technology continues to improve, and
more companies adopt these tools, it will only become easier to
measure, track, understand, and predict employee behaviors and
trends.”

2 Intelligent Recruiting Technology

“Recruiting technology goes hand-in-hand with people

analytics. As HR pros develop a clearer picture of skills gap
within their organizations, as well as traits shared by their
highest-performing employees, they can make data-driven
decisions on resource allocation and recruitment efforts.”

Creative Employer Branding

Organisation will continue to leverage “branding as a culture-
building and recruiting tool. This requires a shift from being
reactive to proactive.”
In this context:
“The important thing is for the company’s internal, day-to-day
culture to match the brand that they’re sharing with the world.
Because if there’s a disconnect, new hires will quickly realize, word
will get out, and turnover rates could spike.“

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 The Growth of the Remote Workforce

“Human resources departments can leverage the remote

workforce to their advantage. Contract work allows freelancers
greater flexibility in their career, and it provides the same benefit to
companies looking for talent. Rather than hiring employees full-time,
organizations can tap into a global network of talented freelancers and
independent contractors, building relationships on a short-term,
project-by-project basis.”
An Emphasis on Soft Skills
“While younger employees tend to be more tech-savvy than their
seasoned colleagues, they’re also more likely to lack important soft
skills. So, these types of interpersonal skills should be a priority in
recruiting and training/development efforts for many organizations in
the year ahead.”

Extracted form : http://www.humanresourcestoday.com/hr-trends/?

open-article-id=9515784&article-title=five-hr-trends-that-will-define-
2019&blog-domain=reflektive.com&blog-title=reflektive

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