Introduction to Human Resource Management Session 1
The Management Process PlanningControlling Organizing Leading Staffing
Human Resource Management at WorkWhat Is Human Resource Management (HRM)? The policies and practices involved in carrying out the “people” or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising.
Human Resource Management at Work Acquisition Fairness Training Human Resource ManagementHealth and (HRM) Appraisal Safety Labor Compensating Relations
Definition of HRDA set of systematic and planned activities designed by an organization to provide its members with the necessary skills to meet current and future job demands.According to Leon C. Magginson, the term human resources can be thought of as “the total knowledge, skills, creative abilities, talents and aptitudes of an organisation’s workplace, as well as the value attitudes and beliefs of the individual’s involved.It is just like any natural resource.
Objectives of HRM To create and utilize an able and motivated workforce, to accomplish the basic organisational goals. To establish and maintain sound organisational structure and desirable working relationships among all the members of the organisation. To secure the integration of individuals and groups within the organisation by coordinations individual and group goals with that of organsational goals. To create facilities and opportunities for development of individual , group and that of the organisation To provide adequate and fair wages, benefits, social security, recognition, status, challenging work, prestige, incentives etc. To provide an opportunity for expression and voice in management To provide favourable atmosphere and proper working conditions To provide fair , acceptable and efficient leadership
Primary Functions of HRMHuman resource planningEqual employment opportunityStaffing (recruitment and selection)Compensation and benefitsEmployee and labor relationsHealth, safety, and securityHuman resource development
Secondary HRM FunctionsOrganization and job designPerformance management/ performance appraisal systemsResearch and information systems
Personnel Aspects of a Manager’sJob Conducting job analyses Planning labor needs and recruiting job candidates Selecting job candidates Orienting and training new employees Managing wages and salaries Providing incentives and benefits Appraising performance Communicating Training and developing managers Building employee commitment
Personnel Mistakes Hire the wrong person for the job Have your people not doing their best Waste time with useless interviews Have your company in court because of discriminatory actions Have your company cited by labor inspectors for unsafe practices Have some employees think their salaries are unfair and inequitable relative to others in the organization Allow a lack of training to undermine your department’s effectiveness Commit any unfair labor practices
Basic HR ConceptsThe bottom line of managing: Getting resultsHR creates value by engaging in activities that produce the employee behaviors that the company needs to achieve its strategic goals.
HRM in IndiaIn the 1970s and 1980s typical HRM functions in organization included: • Personnel and administration • Industrial relations • Labor welfareUp to the mid-80s human resource management in Indian organizations grew through various phases under the influence of the following factors: • A philanthropic viewpoint about doing good for workers • A legislative framework • Government policies • Trade unions • Emerging trends/concepts in management • Changes in the economy
Human resource planning
What is Human ResourcePlanning?“an effort to anticipate future business and environmental demands upon and organization and to provide personnel to fulfil that business and satisfy that demand” (Bowey, 1974)
DefinitionIt is the process by which a management determines how an organisation should move the right number and the right number and the right kinds of the people at the right places, at the right time,to do things which result in both the organisation and the individual receiving the maximum long- range benefit.
ObjectivesTo maintain and improve the organisation’s ability to achieve its goal by developing strategies that will result in optimum contribution of human resources.
Activities of HRPForecastingMaking an inventoryAnticipatingPlanning
NeedTo carry on its workReplacing old/ retiredTo ensure smooth flow of workTo meet expansions programmeTo meet new challenging need and technology advancementTo identify surplus or shortage in manpower.
Deciding goals or objectyivesEstimating future organisational structure and manpower requirementsAuditing human resourcesPlanning jib requirements and job descriptions developing HR plan
Human Resource Planning ( HRP ) Human Resource is the primary resource without which other resources like money, materials etc cannot be put to use. HRP is the process by which an organisation ensures that it has the right number and kinds of people, at the right places, right time, capable of effectively and efficiently completing those tasks that will help the organisation achieve its overall objectives. It plans into the number of workers needed to meet those objectives. HRP is a process which includes forecasting, developing, implementing and controlling by which a firm ensures that they have right people at right time for things which they are economically useful
Objectives of HRPEnsures optimum use of human resource currently employedAvoid unbalance in the distribution and allocation of manpowerAssess or forecast future skill requirement of the organisations overall objectivesProvide control measures to ensure availability of necessary resources when requiredControl the cost aspect of human resourcesFormulate transfer and succession policy
Steps in HRP1) Assessing current Human Resources and making an inventory2) Forecast of future human requirement3) Drawing up recruitment plan4) Designing training and development plan
Relationship Between HRM and HRDHuman resource management (HRM) encompasses many functionsHuman resource development (HRD) is just one of the functions within HRM
HRD FunctionsTraining and development (T&D)Organizational developmentCareer development
Competing in the Global EconomyNew technologiesNeed for more skilled and educated workersCultural sensitivity requiredTeam involvementProblem solvingBetter communications skills
Need for Organizational LearningOrganizations must be able to learn, adapt, and changePrinciples: Systems thinking Personal mastery Mental models Shared visions Team learning
SummaryHRD is too important to be left to amateursHRD should be a revenue producer, not a revenue userHRD should be a central part of companyYou need to be able to talk MONEY
Compensation and Benefits ( Session 2)Source : Personnel Management by C.B.Memoria & Strategic human resourcemanagement (publisher prentice hall)
Employee CompensationThe term employee compensation includes remuneration,incentives, fringe benefits and retirement benefitsThe term employee remuneration includes both wages and salaries. Wages are commonly considered as the price of labour paid to the workers for the services renderd to the organisation employing them.Where the quantum of services rendered is difficult to measure the payment is called salary.Generally the wage period is shorter that the salary period.
Definitions : Compensation, wage & salaryCompensation : money received in the performance of work plus benefits and services that organization provide. Money comes under direct compensation Benefits are indirect compensationSalary refers to the weekly / monthly rates paid to clerical, administrative & professional employees (White collar workers)Wage (pay) : is the remuneration paid for the service of labor in production, periodically to an employee/ worker Wages usually refer to the hourly rate paid to such group as production and maintenance employees (Blue collar employees)
Definitions : Wage levels & structureWage levels represent the money an average worker makes in a geographic area or in his organization Wage levels are only a average: specific markets or firms and individual wages can vary wildly from the averageWage structure is used to describe wage / salary relationships within a particular grouping The grouping can be according to occupation or organization
Three Concepts of Wages1) Minimum Wage – A Minimum wage which is sufficient tosatisfy at least the minimum needs of a worker2) Fair Wage – Fair wage are equal to that received by workers performing work of equal skill, difficulty or unpleasantness.3) Living Wage – Is the highest amount of remunrationa dn it would includes the amenities which a citizen living in a modern civilised socially is entitled to expect, when tha econmoy of the country is sufficiently advance and the employer is able to meet the expanding aspirations of his workers.
Factors influencing wage & salarystructureThe organizations ability to pay Profits Economic conditions sectorSupply & demand of laborThe prevailing market rate What competitors pay Laws Trade unions want parity irrespective of geographies Functionally related firms need to pay same pay for same skills Quantity & quality gets affected if prevailing market rate is not given
Cost of living Minimum pay criterion Escalator clausesLiving wage Higher than minimum wages Based on opinion on how much needed to sustain worker & family Sore point in negotiationsProductivity Difficult to pinpoint who / what is responsible
Trade union’s bargaining power Stronger unions force high hikes If subsequent productivity rise is not enough, company will lose ourJob requirements Difficult jobs pay better Skill, effort, responsibility & job conditions help to grade jobsManagerial attitudes What the CEO desiresPsychological and sociological factors Wage levels are equated with success
Goals of Compensation Plans• Employers are able to attract and retain employees who will contribute to the organization’s success• Employees feel they are compensated/rewarded fairly/equitably for their efforts and contributions to an organization’s success
Employee Benefits Total Compensation 3770 Beardshear HallHuman ResourceServices Employee Satisfaction Supportive Corporate Culture Executive Sponsorship Rewards Benefits • Bonus • Health Plans • Salary Increases • Retirement Plans • Promotions • Vacation/ time off • Equity Offerings Salary • Paid Training • Awards • Pay • Working Hours • Recognition • Overtime (if in non-exempt classification) • New job assignments
What Factors Determines Pay• Employer considerations – Where employers compete for talent – local or national – What talents an employer competes for – the skill/knowledge level – How strongly the employer wants to compete • Lead the market • Meet the market • Lag the market
Employer Challenges• Structuring employee benefit packages that meet the needs of a diverse workforce – one size does not fit all• Helping existing employees understanding the “value” of their benefits• Administering benefit programs – costly and time- consuming. Not a profit-making venture!• Continued rising health care costs• Limited budgets – Benefits average 25% - 40% of Payroll in most organizations• Government restrictions/legislation/public policy
General Concepts• Publicly traded companies will tend to structure pay/benefits that incorporate more equity (stock options, savings match in company stock, bonus tied to company performance, etc)• Non-publicly traded companies/organizations will spend more on non-cash incentives• Governmental organizations will on average spend more on benefits in lieu of salary
Fringe BenefitsThe term fringe benefits refers to various extra benefits provided to the employees, in addition to the compensation paid in the form of wage or salary.
Types of Fringe BenefitsFor Employment Security – Unemployment insurance, technological adjustment pay, leave travel pay, over time pay, maternity leave, holidays, jobs to sons / daughters etc.For Health Protection – Accident Insurance, Disability Insurance, Health Insurance, Hospitalisation, Life Insurance, Medical care, Sick Benefits, Sick Leave etc.For Old Age & Retirement – Deferred Income plans, Pension, Gratuity, Provident Fund, Old Age Assistance, Medical for retired employees, travelling concessions to retired, jobs to children of the deceased etc.For Personal Identification , Participation & Stimulation – Anniversary Awards, Attendance bonus, canteen, Co-op Credit Societies, Educational facilities, housing, recreational , safety measures etc.
Laws Affecting Employee Benefits and Compensation• Fair Labor Standards Act (FLSA)• Employee Income Retirement Security Act of 1974 (ERISA)• Age Discrimination and Employment Act (ADEA)• Family Medical Leave Act (FMLA) of 1996• Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001• Health Insurance Portability and Accountability Act of 1996 (HIPAA) (and amendments)• Pension Protection Act of 2006• many, many others
Evolution of Industrial Policy Industrial Policy Resolution 1948 Outlined the approach to industrial growth and development Emphasized the importance of securing a continuous increase in production and ensuring its equitable distribution. active role for the State in the development of Industries. State monopoly: Arms and ammunition, atomic energy and railway transport State exclusively responsible for the establishment of new undertakings in six basic industries-except where, in the national interest, the State itself found it necessary to secure the cooperation of private enterprise. Industrial Policy Resolution 1948 Rest of the industrial field open to private enterprise though the State would also progressively participate in this field.
Industrial Policy Resolution 1956 - Objectives: Improvement in living standards and working conditions for the mass of the people. Reduction in income and wealth disparities Prevention of private monopolies and concentration of economic power in different fields in the hands of small numbers of individuals. Industrial Policy 1973 - Certain structural distortions called for policy changes in IPR 1956. Compulsory export obligations, merely for ensuring the foreign exchange Industrial Policy 1977 - Emphasis on developing smalll scale industries and making adequate marketing arrangements. upgrading the technology of small units. Promoting the development of a system of linkages between nucleus large plants and the satellite ancillaries
The Industrial Policy Statement 1980 - Formulated wrt the Industrial Policy Resolution of 1956 to provide for (i) Optimum utilization of installed capacity; (ii) Maximum production and achieving higher productivity; (iii) Higher employment generation; (iv) Correction of regional imbalances; (v) Strengthening of the agricultural base through agro based industries and promotion of optimum inter- sectoral relationship; (vi) Promotion of export-oriented industries INDUSTRIAL POLICY 1991 - Govt . recognizes the need for social and economic justice, to end poverty and unemployment and to build a modern, democratic, socialist, prosperous and forward-looking India India to grow as part of the world economy and not in isolation Greater emphasis placed on building up ability to pay for imports through our own foreign exchange earnings development and utilization of indigenous capabilities in technology and manufacturing as well as its up gradation to world standards.
Reward ManagementDefinition - Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization”(Armstrong and Murlis 2004)
Objectives of Reward ManagementSupport the organisation’s strategyRecruit & retainMotivate employeesInternal & external equityStrengthen psychological contractFinancially sustainableComply with legislationEfficiently administered
Rewards by Individual, Team,OrganisationIndividual: base pay, incentives, benefits rewards attendance, performance, competenceTeam team bonus, rewards group cooperationOrganisation profit-sharing, shares, gain-sharing
Closing Thoughts• How employees are “compensated” takes many forms – salary, benefits, working conditions, challenging/stimulating work, co-workers, etc. The right “mix” for each person is different• Pay policies will differ for every employer – some will focus on cash compensation and some will focus on Total Compensation• The employer’s main goal is structuring compensation and benefit programs is to be able to attract and retain the right employees needed to help the employer be competitive
Closing Thoughts• Employee benefits have huge budget impacts to employers• Benefits are the “hidden paycheck” for employees• Employees need to understand the “total compensation” an employer provides – not just the “salary.” Employers need to sell Total Compensation – not just salary• Employees need to be “educated consumers” of benefit programs – especially health care and retirement programs• Employees should take advantage of retirement plan offerings and save early (time value of $$) – and always save enough to at least take advantage of employer’s matching contribution