4. Recruitment
The process by which a job vacancy
is identified and potential employees are notified.
The nature of the recruitment process
is regulated and subject
to employment law.
Main forms of recruitment through advertising in
newspapers, magazines, trade papers and internal
vacancy lists.
5. Recruitment
Job description – outline of the role
of the job holder
Person specification – outline
of the skills and qualities required
of the post holder
Applicants may demonstrate their suitability
through application form, letter or curriculum vitae
(CV)
7. Selection
The process of assessing candidates and
appointing a post holder
Applicants short listed –
most suitable candidates selected
Selection process –
varies according to organisation:
8. Selection
Interview – most common method
Psychometric testing – assessing the personality of the
applicants – will they fit in?
Aptitude testing – assessing the skills
of applicants
In-tray exercise – activity based around what the applicant
will be doing, e.g. writing a letter to a disgruntled customer
Presentation – looking for different skills
as well as the ideas of the candidate
10. Employment Legislation
Increasingly important
aspect of the HRM role
Wide range
of areas for attention
Adds to the cost of the
business
Even in a small business, the legislation
relating to employees is important –
chemicals used in a hairdressing salon for
example have to be carefully stored and
handled to protect employees.
11. Discrimination
Crucial aspects
of employment legislation:
Race
Gender
Disability
Disability is no longer an issue for employers
to ignore, they must take reasonable steps
to accommodate and recruit disabled workers.
Copyright: Mela, http://www.sxc.hu
13. Discipline
Firms cannot just ‘sack’ workers
Wide range of procedures and steps
in dealing with workplace conflict
Informal meetings
Formal meetings
Verbal warnings
Written warnings
Grievance procedures
Working with external agencies
15. Development
Developing the employee
can be regarded as investing
in a valuable asset
A source of motivation
A source of helping the employee fulfil potential
17. Training
Similar to development:
Provides new skills for the employee
Keeps the employee up to date
with changes in the field
Aims to improve efficiency
Can be external or ‘in-house’
19. Rewards Systems
The system of pay and benefits used by the
firm to reward workers
Money not the only method
Fringe benefits
Flexibility at work
Holidays, etc.
21. Trade Unions
Importance of building relationships with employee
representatives
Role of Trade Unions has changed
Importance of consultation
and negotiation and working
with trade unions
Contributes to smooth change management and
leadership
23. Productivity
Measuring performance:
How to value the workers contribution
Difficulty in measuring some types of output – especially in
the service industry
Appraisal
Meant to be non-judgmental
Involves the worker and a nominated appraiser
Agreeing strengths, weaknesses and ways forward
to help both employee and organisation
24. HR Management Challenges
Workforce Availability and Quality Concerns
Inadequate supply of workers with needed skills for
“knowledge jobs”
Education of workers in basic skills
Growth in Contingent Workforce
Increases in temporary workers, independent contractors,
leased employees, and part-timers caused by:
Need for flexibility in staffing levels
Increased difficulty in firing regular employees.
Reduced legal liability from contract employees
25. HR Management Challenges
Workforce Demographics and Diversity
Increasing Racial/Ethnic Diversity
More Women in the Workforce
Single-parent households
Dual-career couples
Domestic partners
Working mothers and family/childcare
Significantly Aging Workforce
Age discrimination
26. HR Management Challenges
Organizational Cost Pressures and Restructuring
Mergers and Acquisitions
“Right-sizing”—eliminating of layers of management,
closing facilities, merging with other organizations, and
outplacing workers
Intended results are flatter organizations, increases in
productivity, quality, service and lower costs.
Costs are “survivor mentality”, loss of employee loyalty, and
turnover of valuable employees.
HR managers must work toward ensuring cultural
compatibility in mergers.
28. The term Human Capital has now become common in HR language to
describe people and their collective skills, abilities, experience and potential.
Human Capital is one of three elements to make up intellectual capital.
Intellectual capital describes the knowledge assets available to the
organizations and is a large part of intangible value. It can be described as:
Human capital – the knowledge, skills, abilities and capacity to develop and
innovate possessed by people in an organization
Social capital – the structures, networks and procedures that enable those
people to acquire and develop intellectual capital represented by the stocks and
flows of knowledge derived from relationships within and outside the
organization
Organizational capital –the institutionalized knowledge possessed by an
organization which is stored in databases, manuals etc. This would also include
HR policies and processes used to manage people.
Human Capital Definition
29. 29
There are many definitions of human capital, some of which unfortunately
refer just to the efficiency of the HR function - such as the average number
of training days per employee.
‘A strategic approach to people management that focuses on the
issues that are critical to an organization's success
A form of asset management: a plan for securing, managing and
motivating the workforce capable of achieving business goals
Human capital extends well beyond the HR function to encompass the total
people strategy of the organization and the management practices needed to
optimize performance and drive value creation.
Human capital owned by all of the business leaders and resides in
everyone within the organization.
Defining Human Capital
30. Human Capital Management can be defined as
“an approach to people management that treats it as a high-level strategic issue and
seeks systematically to analyze, measure and evaluate how people policies and
practices create value”
Defining the link between HR and business strategy is an important issue to
understand the HCM
A human capital approach implies that a realistic business strategy must be
informed by human capital data.
how can a business pursue a strategy that doesn’t take account of the capacity
of all the resources available, including the human ones?
Human capital can be seen as a bridging concept between HR and business
strategy.
30
Human Capital Management (HCM) Definition
31. Andrew Mayo, Professor of, argues that what distinguishes human capital and
HCM from HRM is the emphasis on the value of people and what they produce,
rather than a focus on the HR function itself.
HCM, unlike HRM, is about assessing the impact of people management
practices and the contribution of people to bottom-line performance.
The development of human capital might develop as follows:
assessing the effectiveness of HR
evaluating the impact and effectiveness of people management processes
using human capital data
developing measures to calculate the return on investment in people
HCM, which includes strategically-focused areas HCM reporting.
As organizations evolve their human capital evaluation and reporting,
they increasingly adopt a more sophisticated approach to their
measurement techniques. 31
The Difference Between HCM and Strategic HRM
32. 4 Principles
Human capital should be viewed as a bridging concept linking business strategy and
HR practices.
It is a precarious asset – the potential mobility of individual employees could and can
undermine an organization's ability to deliver.
It is a paradoxical asset – the qualities that individuals bring, notably flexibility,
mobility and personal commitment, the very same factors that create competitive
value, are some of the most difficult to measure.
Human capital measurement is context-dependent.
The specific set of measures are less important than the process of measuring and the uses
for the information gathered.
Focus on internal rather than external reporting, as the latter is impossible without solid
internal information.
There are three core principles behind effective HCM:
insist on systems thinking get the 'right' facts focus on value.
32
HC Measurement and Reporting
33. The purpose of this Guide is to help organizations move forward with their internal HC
measurement and reporting, by providing practical information and setting out a
clear process to follow. This process has five key stages, and each section of the
Guide will cover each of these stages in turn.
Step 1 – Setting human capital management in context
This section defines what HC is and its links to the business strategy, and
provides an overview of the frameworks and models necessary HCM and
measurement.
Step 2 – Getting started: gathering and collating the data
This section provide guidance on the nature and sources of relevant
information for HC reporting, what measures and categories might be reported
on, and how this information can be collated to build a HC measurement
platform.
33
Guide for HC Measurement and Reporting
34. Step 3 – Measuring human capital: tools and methodologies
This section presents the spectrum of measurement techniques for
HC, introduces statistical methodologies which can be deployed to
leverage the measurement platform, shows how to communicate
results internally and select key metrics to guide human capital
decisions.
Step 4 – Reporting the data: from internal to external reporting
We address the links to the related issues of external reporting
requirements, what kind of information investors are expecting,
and propose a framework for external reporting.
Step 5 – Developing a route map to human capital reporting
This final step covers developing your own route map, identifying
who in your organization should be involved, determining
34
Guide for HC Measurement and Reporting
37. 37
Defining human capital
A recent research study, estimated that the value of human capital represented
over 36 per cent of total revenue in a typical organization - It's not
surprising, then, that there's a growing demand to define and measure its
contribution and the return on investment in it.
Defining human capital as an Intangible Asset:
A plan for securing, managing and motivating the workforce
capable of achieving business goals
With the growing realization of the importance of intangibles, financial
analysts and investors are calling for more transparency in methods to
measure their value.
38. From compensation to talent management, learning and development to
organization design, have sometimes been built up in isolation and from
'best' professional practice rather than being developed as an integrated
support for business needs.
Human Capital strategy seeks to address this by placing the investment and
development of the workforce as a key component of business strategy.
This implies that People Management should be clearly set out in a
framework that allows for a strategic 'fit' and for flexibility in matching
changing business requirements.
It's well worth producing a human capital business plan with a summary of
the organisation's human capital strategy.
38
Linking to the business strategy
39. HCM reporting should demonstrate the link between people management and
business performance.
The key is to develop and/or adapt an approach that best suits the thinking and
management style of the organization in order to create a framework to link how
people are managed with the delivery of business strategy.
The most commonly used models and frameworks for HCM are:
1. The human resource benchmarking model
2. The balanced scorecard
3. The Human Capital Monitor
4. The Human Capital Index
5. The engagement model
6. The organizational performance model.
39
HC Measurement Frameworks and Models
40. Benchmarking is an organized method for collecting data that can be used to improve
organizational performance, rather than simply gathering a mass of statistics that add
little or no value.
What are the issues we need to address to survive and succeed?
it's critical to transform this benchmarking data into useful, value-adding
information
The following methodology can be used to transform benchmarking data into impact
o Decide where improvement is essential.
o Establish the parameters you're seeking.
o Establish your benchmarking team.
o Specify the data.
o Undertake collection of data.
o Locate suitable benchmarking partners.
o Analyze the results.
o Implement
40
1- The HR benchmarking model
41. This is one of the best-known methodologies. It aligns the evaluation of the people
dimension to a company's strategic aims through a balanced scorecard.
The scorecard originally had four elements:
Financial,
Customer,
Internal business process,
Learning and growth.
One of the main benefits of the scorecard approach is that it provides a simple
communication tool for internal and external stakeholders.
The need to create clear alignment between HR's own functional organization, the
supporting HR systems and employee behaviors – This suggests a strong link between HR
activity and the development of a firm's human capital.
The idea of an HR scorecard has reinforced the need for business measurement of HR
activities, and it is also a relatively popular tool which many HR functions use to assess
their own effectiveness.
41
2- Balanced scorecard
43. Andrew Mayo, a member of the CIPD's steering group, has sought to identify the human
value of the enterprise or 'human asset worth’. He emphasizes that people should be viewed
as an asset rather than a cost.
The main challenges are:
How an organization should recognize the intrinsic diversity in the worth of its people and value it
How to create a framework of people-related metrics as part of an organization's overall performance
How to quantify both the financial and non-financial value to stakeholders.
The human asset worth is defined as being equal to 'employment cost x individual asset
multiplier (IAM)/1,000'. This is a weighted average assessment of capability, potential to
grow, personal performance and alignment to the organization's values set in the context of
the workforce environment (how leadership, culture, motivation and learning are driving
success).
The process of measurement leads you to consider whether human capital is sufficient,
increasing or decreasing and highlights issues to address.
43
3- The Human Capital Monitor
45. Watson Wyatt have constructed a survey of companies linking their key management
practices to their market value concluded that four major categories of HR practice could be
linked to a 30 per cent increase in shareholder value,
The methodology focuses more on a 'best practice' concept of value-adding HR policies than
the 'best fit' approach applied in the models presented thereafter.
45
4- The Human Capital Index
Practice Impact on market value
Total rewards and accountability
that differentiate between high and poor performers
16.5%
Collegial, flexible workplace
environment encouraging teamwork and co-operation
9.0%
Recruiting and retention excellence
development of recruitment to support strategic aims
7.9%
Communication integrity
where goals are clearly stated
7.1%
46. The application of the engagement model looked at the employee–
customer–profit chain - if you keep your employees satisfied, they will help
ensure that your customers remain satisfied, and your customers in turn will ensure
and improve your corporate profits.
The result of this, in Measuring and Managing Employee Performance
is that the pursuit of employee satisfaction has become interlinked
with the concept of HR strategy and business alignment
Measuring and improving employee satisfaction has become an
important basis of organizational improvement.
Employee attitude or climate surveys have become a key measure of
human capital.
Surveys have shown links between employee morale and business
metrics, particularly at the business unit performance level
46
5- The Engagement Model
48. Mercer HR Consulting developed a model that links
HCM to organizational performance and, ultimately,
shareholder value
48
6- The Organizational Performance Model
49. Human Capital Strategy consists of six interconnected factors (MERCER):
People - who is in the organization; their skills and competencies on hiring; what skills and
competences they develop through training and experience; their level of qualification.
Work Processes – how work gets done; the degree of teamwork and interdependence
among organizational units; and the role of technology
Managerial Structure – the degree of employee discretion, management direction and
control; spans of control, performance management and work procedures
Information and Knowledge – how information is shared and exchanged among
employees and with suppliers and customers through formal or informal means
Decision Making – how important decisions are made and who makes them; the degree of
decentralization, participation and timeliness of decisions
Rewards – how monetary and non-monetary incentives are used; how much pay is at risk;
individual versus group rewards; current versus longer-term 'career rewards'.
49
The Organizational Performance Model
50. Define human capital management in the
organization.
Articulate a human capital strategy to
support your business objectives.
Produce a human capital plan.
Select a human capital management and
measurement work to demonstrate the
50
Step 1: Checklist Setting HCM in Context
51. 51
Step 2 – Getting Started: Gathering and Collating the Data
52. Gathering and collating human capital data requires an understanding of
type, analysis and use. Once the relevant data have been identified, you
can build a measurement platform and start to interpret the information,
then you'll be ready to demonstrate the connection between human
capital management practices and business objectives and performance.
This step Includes:
1. Gather the right facts
2. Assess the data sources and information systems
3. Identify and collect the relevant data
4. Build the human capital measurement database
52
Step 2 – Getting Started: Gathering and Collating the Data
53. High-quality and high-impact decisions need to be based on reliable and relevant
facts, the 'right facts' -
Gathering the right facts entails looking beyond what people 'say', and considering what
they actually 'do'.
It's essential to look at the actual behaviours of employees over time to inform your
human capital decisions.
There are two basic types of employee data:
Perceptual – attitudinal or qualitative information, typically collected via interviews or
surveys
Archival – based on historical records; this includes employee history, financial or
operational data, customer records.
Time is another critical element. Data can be captured as snapshots at a particular
point in time - Only by looking at data over time you can collect relevant dat.
53
1- Gather the Right Facts
54. In the process of gathering and reviewing information, you'll need to work
closely with your human resource information system (HRIS) experts. You
need to start by asking basic questions:
What are the software packages currently used?
Over what period of time have existing systems been in place?
Do they differ by geography, by business unit, by division?
What amount and type of historical employee data is available?
Have there been any major organizational changes?
What are the key employee segments, line of business, function, geography?
The amount of historical data is also critical.
It's important in this phase to define the scope of the study.
Once you've clarified the feasibility, scope and focus of your analysis, you
can identify and collect the relevant data.
54
2- Assess the Data Sources and Information Systems
55. First, depending on the scope and the issue you're trying to
address, you'll need to select which data is relevant for your
organization.
Second, you'll need to focus on collecting relevant and reliable
data today and identify those areas you will need to capture or
harmonize in the future.
Three broad categories of data can be used for HCM:
1. HR practices and workforce data
2. performance data
3. external data.
55
3- Identify and Collect the Relevant Data
56. HR and workforce data is the 'must have' for human capital reporting.
Compiling and analyzing this data will enable the organization to understand the
characteristics of its workforce, measure the effectiveness of its people policies and
assess the value of its human capital assets.
Data sources:
HRIS payroll systems,
Ancillary systems,
Employee surveys.
Data elements:
HRIS and payroll data on the work force: demographics; status; job history;
availability; compensation; mobility; organization and management
Complementary workforce data: performance management; training and
development; skills and competencies; education; pre-employment; succession
planning
Perceptual data: employee survey; exit interviews; executive interviews.
56
1- HR Practices and Workforce Data
57. Performance data: a mixture of financial, operational and customer information.
By connecting workforce information to performance outcomes, you'll be able to assess
the impact of your HCM practices on the business and provide a basis for making HC
investment decisions.
Data elements: there are three categories of performance outcomes to consider:
Financial data: revenues, net income, economic profit, profit margins
Operational data: calls abandoned (call centers), customer waiting times (retail),
new accounts opened (financial services), patient care (healthcare)
customer data: customer satisfaction, customer retention, customer service ratings.
57
2- Performance Data
58. External data can provide valuable insights to help determine how successful
your policies and practices are likely to be in the face of competitive market
conditions.
Labor market data, such as local unemployment rates and/or industry salaries, will
influence both the availability of skills and the ability to buy necessary talent.
Industry or market data, such as market share or industry volatility, will allow you to
control for external influences that might mask the impact of human capital
management practices.
External data encompass national statistics, labor force surveys, industry reports
or compensation data.
Its important to distinguish between the use of external data as inputs to the
analysis and benchmarking the outcomes of the analysis across organizations.
58
3- External data
59. The building process involves the data acquisition, data 'cleaning' and the transformation of
data.
Cleaning of data will ensure that the format of the data you've received is: consistent,
reliable, and complete
Transforming means converting the various used formats (numeric, text, data base … to a
similar format to enable the integration to a single data platform, such as SPSS® or SAS®.
59
4- Build the HC Measurement Database
60. Gather the right facts.
Assess data sources and information
systems.
Identify and colorant data.
Build the human capital database.
60
Step 2: Checklist Getting Started: Gathering and Collating
Data
61. 61
Step 3 – Measuring HC: Tools and
Methodologies
62. There's a broad spectrum of assessment and measurement techniques and sources
of information available to organizations today.
The technique used will influence the value and business impact of HC reporting
in the organization and its reliability for making essential people and business
decisions.
62
The HC Measurement Spectrum
63. Corridor anecdotes: The weakest sources of information; highly subjective. for example;
'She's really good!' or 'That initiative worked well in XYZ division.'
Reactive checks: Immediate reactions to potential or real issues. If the average female pay
is 20% below average male pay.
Ongoing reports: provide internal benchmarks and some basis for human capital
measurement; such as on performance and absence monitoring,
Benchmarking: External benchmarking : is typically used to compare HR and
management practices across companies, either within industries or against recognized ‘high
performance companies. Internal benchmarking: can provide insights into how effectively
the workforce is managed and deployed
Correlation: Show statistical links between two or more given variables, for example,
employee morale and customer service and satisfaction. The difficulty with correlations is
that they reflect association rather than causation
The most powerful reporting methodologies look to determine causality in order to identify
the key human capital drivers of performance and predict and forecast the impact of people
strategy interventions. This then allows modeling of potential changes and their likely results.
63
Levels of HC Measurement Techniques
64. At the heart of this process is the need to test hypotheses to establish causal
relationships; for example, how do you know that your reward system will
drive better business performance ? three conditions must be met:
A simple correlation must first be found, - two or more variables are linked. This might
be, for example, that higher business unit results are linked to staff bonus payouts.
Any change must precede the outcome. Time matters, this means that the increase (or
decrease) in bonus payments must precede the increase (or decrease) in business results. This
is why historical data is more valuable than snapshot surveys.
This concerns statistical controls. Multiple factors may be influencing the variable of
interest, it's important to account for their effects.
Analyzing the data, both qualitative and quantitative, will allow you to review
scenarios and test hypotheses.
The following example illustrates the three fundamental steps in establishing
causality
64
Establishing Causality and Testing Hypotheses
66. No decision should be made on the analysis of results alone.
Consultation and involvement, ie of line managers and employees, in scoping, gathering
and using data is critical to ensure it reflects the reality of day-to-day operations and value-
creation in your organization.
Presenting the results of your human capital analysis is an important aspect of gaining the
support of your business managers.
Once you have a record of data and areas for improvement have been identified, quantify
your key targets wherever possible.
Quantitative results, measurable targets and 'high-impact' recommendations are most likely
to convince your line managers, finance director or chief executive, win their buy-in and
encourage them to take action or unlock the necessary budgets.
Tracking and reporting progress against objectives on a regular basis, monthly or quarterly,
is essential to ensure that you keep your internal stakeholders engaged and to show that you
deliver on your promises.
66
Interpreting and Communicating the Results
Internally
67. Research proves, and case studies illustrate, that there is no 'best-
practice' set of measures that are relevant for all organizations'
internal reporting.
Depending on its strategy or the issues an organization seeks to
address, the corresponding metrics and targets for success will
differ.
Internal reporting should present the few most appropriate metrics
to drive human capital management.
The metrics you report to external shareholders might differ.
Shareholders want to see evidence of how well you're managing
your workforce to support your business strategic objectives and
what value is delivered to the business.
67
Selecting, Monitoring and Reporting the Key Metrics
68. Identify the measurement technique to apply to the
human capital analysis.
Formulate and test hypotheses by establishing
causality
Interpret the analysis and communicate the results
Monitor and report the key metrics
68
Step 3: Checklist Measuring human capital
69. 69
Step 4 – Reporting the Data: From Internal to External Reporting
70. The CIPD Accounting for people (AfP) task force, was set up to look at human capital
management and external reporting.
According to AfP, HCM has a direct impact on performance and should therefore be
included within this main reporting vehicle.
Operating and Financial Review (OFR) should provide shareholders with details of the
company's objectives, strategy, past performance and future prospects, including:
its policy towards employees, customers and suppliers
its impact on the environment
its social impact
its impact on the wider community.
The OFRs will have to consider information about employment policies and practices
and should be evaluated using the AfP task force's report on measuring human capital
management.
70
The Rise of External Reporting Requirements
71. The AfP recommended a broad framework that companies should use in drawing up their
reports (individual organizations determine which measures are appropriate for them):
Present a strategic focus,
Provide information on workforce practices in five areas:
size and composition of the workforce ;
the retention and motivation of employees ;
skills and competencies necessary for success, and training to achieve these ;
remuneration and fair employment practices ;
leadership and succession planning
HCM should be balanced and objective, following a process that is susceptible to
review by auditors
Reporting should provide information that enables comparison over time.
Directors of companies producing OFRs should include information on human
capital management or should explain why it is not material.
71
The AfP Recommendations
72. The profile of the workforce and its diversity
Senior executive remuneration
The quality of leadership and management strength
How well labor costs have been managed over time
Evidence of a coherent, robust people strategy which is mapped to
the stated business strategy for the next three years
Evidence that current people management practices are affecting
organizational and business performance
Current and forecasted returns on people investments
The valuation of current human capital assets and future investments
72
What kind of Information are Investors
Expecting?
74. The CIPD stresses the importance for external reporting to provide a
holistic, future-oriented account of HCM.
Organizations report on the following components:
Human capital strategy
Sections on acquisition and retention, learning and development, and
human capital management
Information on human capital performance
Comparability and flexibility of external reporting
Most recognize that the more comparable human capital management
information becomes, the greater the utility for shareholders in assessing
trends over time and across organizations.
measures that are relevant for one sector and organization may be much
less useful in another.
74
The CIPD External Reporting Framework
75. Be prepared to report on HCM
Refer to the recommendations of HCM reporting from
Accounting for People Task Force (AfP)
Take investors' expectations into consideration.
Establish data-gathering systems to populate this framework
linked your internal human capital information.
75
Step 4: Checklist Reporting the Data: From
Internal to External Reporting
77. Human capital and the people strategy encompass the whole organization –
the chief executive, the senior management team, line managers, staff and all
the various functions.
The HR function may be the likely catalyst in human capital reporting and
most certainly needs to take up the challenge
ultimately the chief executive should be held to account as investors and
stakeholders seek the assurance that their organization's human capital is
being effectively deployed and nurtured for the future. This is why board-
level commitment and involvement is so important.
Virtuous circle is generated by organizations committed to effective
measurement. The measures are in some ways less important than the
activity of measuring and of continuously developing and refining the
understanding of human capital and its links to business performance.
77
Who should be involved?
78. By Linking management to measures, measures to reporting, reporting to
management, companies are beginning to build the credibility, information
flows and knowledge necessary to embed a human capital perspective in
management and measurement practices both at HR and top management
level.
78
The Virtuous Human Capital Circle
80. Identify who should be involved in the human capital team.
Review your current position in the capital management
Journey and plan what is required for you to move to the
next stage.
Review the Guide, take each step, and tick off all the
checklist's items.
Embark on the journey to HC measurement and reporting
80
Step 5: Checklist Developing a Route Map to HC
Reporting
82. What We Need to Know About Training and Development
for
the 21st Century
Training and development play a significant role in achieving a
company’s strategic goals.
Training is crucial to bring about change and the operation of a
world-class organization.
Recognition of cultural differences and different work practices
and approaches is important.
Training and development programs must be monitored to
respond to changing needs.
Training and development must be differentiated.
83. Factors Contributing to the Growth of
HRD
The role of HRD in improving organizational
competitiveness
The recognition of employees as a valued resource
Technological change
A shift in the demographic composition of the
Canadian work force
84. Human Resource Development:
Relation to Other HRM Functions
Work/Job
Analysis
Human Resource
Development
Activities
Staffing
Process
Organizational
Change
Organizational
Design
Performance
Management
Systems
85. HRD Responsibilities Within an
Organization
Employee
Responsibilities
HRD
Responsibilities
Supervisor
Responsibilities
86. Steps to Identifying and Implementing
Appropriate Skill Development Activities
Analyzing performance needs
Distinguishing instructional needs
Applying relevant learning principle(s)
Recognizing ability levels of participants
Selecting appropriate instructional formats
Identifying program delivery options
Evaluating the effectiveness of the HRD
program(s)
87. Reasons for Performance Needs
Lower than desired performance levels
The introduction of new technology
An inability to hire qualified applicants
A desire to prepare employees for the
future work demands
Implementation of new organizational
structures
88. Types of Instructional Needs
Information acquisition
Motor skills
Interpersonal skills and attitude change
Decision-making and problem-solving
skills
89. Key Learning Principles
Learning requires feedback
Learning occurs more quickly with
reinforcement
Skill development requires practice
More learning occurs when individuals are
intrinsically motivated
The application of new skills is facilitated
through transfer of learning
90. Factors Necessary for Transfer of
Learning to New Situations
Maximize the similarity between the learning and
performance situation
Practise the new task extensively (overlearning)
Provide a range of learning experiences
Identify key elements of the material or behaviour so
that the learner is able to determine the appropriateness
of transfer
Emphasize knowledge of general principles
Provide feedback on job performance and otherwise
reinforce proper transfer of new materials and
behaviour to the job
91. Types of Instructional Interventions
Classroom Training
- Lectures
- Role-plays
- Case methods
- Vestibule training
Learning Technologies
- Programmed instruction
- In-basket exercises
- Business games
- Intranet
- IVI
Learning on the Job
- Structured OJT
-Apprenticeship
-Job Rotation
92. Advantages of Developing Intranet Training
Programs
Consistency can be created, since the same training materials can
be viewed by an employee at different times and locations
Interactivity can be created through discussion groups,
comprehension tests, and two-way communication tools
Training materials can be kept current at a central location
where updating of publications and training materials is done
User-friendly interfaces, with point-and-click navigation, can be
developed
93. Recommendations to Increase the
Effectiveness of Job Rotation
Proactively manage job rotation as a component of the overall HRD
system
Outline the specific skills that are expected to be developed in a job-
rotation system
Link rotation with the career development planning process so that
employees know the developmental needs addressed by each job
assignment
Ensure breadth of job rotation by opening opportunities to all
groups of employees, not just managerial and professional groups
94. Sources of Data to Evaluate
HRD Programs
Measures of knowledge or skill, obtained through
tests or other standardized measures
On-the-job behaviour and performance measures,
such as individual production rates, error rates,
customer complaints
Organizational measures, such as profitability,
production costs, and scrap rates
99. PM is NOT performance appraisal
Performance Management
Strategic business considerations
Driven by line manager
Ongoing feedback
So employee can improve performance
100. PM is NOT performance appraisal
Performance Appraisal
Driven by HR
Assesses employee
Strengths &
Weaknesses
Once a year
Lacks ongoing feedback
102. Contributions of Performance Management
For Employees
Clarify definitions of
job
success criteria
Increase motivation to perform
Increase self-esteem
Enhance self-insight and development
103. Contributions of Performance Management
For Managers
Communicate supervisors’ views of
performance more clearly
Managers gain insight about subordinates
Better and more timely differentiation
between good and poor performers
Employees become more competent
104. Contributions of Performance Management
For Organization/HR Function
Clarify organizational goals
Facilitate organizational change
Fairer, more appropriate administrative
actions
Better protection from lawsuits
106. Disadvantages/Dangers of Poorly-implemented
PM Systems
For Employees
Lowered self-esteem
Employee burnout and job dissatisfaction
Damaged relationships
Use of false or misleading information
107. Disadvantages/Dangers of Poorly-implemented
PM Systems
For Managers
Increased turnover
Decreased motivation to perform
Unjustified demands on managers’ resources
Varying and unfair standards and ratings
110. Reward Systems
Definition
Set of mechanisms for distributing
Tangible returns
and
Intangible or relational returns
As part of an employment relationship
121. Administrative Purpose
Provide information for making decisions
re:
Salary adjustments
Promotions
Retention or termination
Recognition of individual performance
Layoffs
129. Thorough
All employees are evaluated
All major job responsibilities are
evaluated
Evaluations cover performance for entire
review period
Feedback is given on both positive and
negative performance
131. Meaningful
Standards are important and relevant
System measures ONLY what employee can
control
Results have consequences
Evaluations occur regularly and at appropriate
times
System provides for continuing skill
development of evaluators
133. Identifies
effective and ineffective performance
Distinguish between effective and
ineffective
Behaviors
Results
Provide ability to identify employees with
various levels of performance
135. Valid
Relevant (measures what is important)
Not deficient (doesn’t measure
unimportant facets of job)
Not contaminated (only measures what the
employee can control)
136. Acceptable and Fair
Perception of Distributive Justice
Work performed Evaluation received
Reward
Perception of Procedural Justice
Fairness of procedures used to:
Determine ratings
Link ratings to rewards
137. Inclusive
Represents concerns of all involved
When system is created, employees should
help with deciding
What should be measured
How it should be measured
Employee should provide input on
performance prior to evaluation meeting
138. Open (No Secrets)
Frequent, ongoing evaluations and
feedback
2-way communications in appraisal
meeting
Clear standards, ongoing communication
Communications are factual, open, honest
141. Ethical
Supervisor suppresses self-interest
Supervisor rates only where she has
sufficient information about the
performance dimension
Supervisor respects employee privacy
143. PM provides information for:
Development of training to meet
organizational needs
Workforce planning
Recruitment and hiring decisions
Development of compensation systems
145. Total Rewards and Compensation
Total Rewards
Monetary and non-monetary rewards used to
attract, motivate, and retain employees
Rewards System Strategic Objectives
Legal compliance
Cost effectiveness
Internal and external equity for employees
Recognizing contribution to maximize performance
and manage talent
146. Compensation Approaches
Traditional Approach Total Rewards Approach
• Compensation primarily base
pay
• Bonuses for executives only
• Fixed benefits tied to seniority
• Pay grade progression based on
organizational promotions
• One organization-wide pay plan
for all employees
• Variable pay used with base pay
• Annual/long-term incentives
provided to all employees
• Flexible and portable benefits
offered
• Knowledge-based broadbands
determine pay grades
• Multiple pay plans consider job
family, location, and business
units
154. More Compensation System Design Issues
Identification of the required
competencies
Progression and
compensation of employees
Limitations on who can
acquire more competencies
Training in the appropriate
competencies
Certification and maintenance
of competencies
Competency-
Based Pay
Systems
155. More Compensation System Design Issues
Team
How to develop
compensation programs
that build on the team
concept.
Individual
How to compensate the
individuals whose
performance may also
be evaluated on team
achievements.
Individual vs. Team Rewards
162. Valuing Jobs with Job Evaluation
Methods
Job Evaluation
Means used to identify the relative worth of jobs
within an organization.
Compensable Factor
Job value common among a group of jobs.
Something for which an organization chooses
to compensate an employee.
166. Valuing Jobs Using Market Pricing
Market Pricing
Using market data to identify the relative value of jobs
based on what other firms pay for similar jobs.
Advantages Disadvantages
• Ties organizational pay levels
to the external job market,
without “internal” job
evaluation distortion.
• Communicates to employees
that the compensation system
is “market linked.”
• It relies on market survey data.
• A specific job may differ from a
“matching” job in the survey.
• The market data’s scope (range
of sources) is a concern.
• Tying pay levels to market data
can lead to wide fluctuations.
167. Pay Surveys
Collection of data on compensation
rates for workers performing similar
jobs in other organizations.
Benchmark Jobs
Jobs found in many organizations.
Internet-Based Pay Surveys
168. Pay Structures
Job Family
Group of jobs with common organizational characteristics.
Common Pay Structures
Hourly and salaried
Office, plant, technical, professional, managerial
Clerical, information technology, professional, supervisory,
management, and executive
Pay Grades
Groupings of individual jobs having approximately the same
job worth.
170. More on Pay Structures
Market Banding
Grouping jobs into pay grades based on similar market survey
amounts.
Market Line
Shows relationship between job value as determined by job
evaluation points and job value based on pay survey rates.
Shows distribution of pay for surveyed jobs
Linear trend line to be developed by the least-squares regression
method.
173. Pay Ranges
Broadbanding
Using fewer pay grades having broader pay ranges that in
traditional systems.
Benefits
Encourages horizontal movement of employees
Is consistent with trend towards flatter organizations
Creates a more flexible organization
Encourages competency development
Emphasizes career development
174. Individual Pay
Rates Out of Range
Red-Circled Employee
An incumbent (current jobholder) who is paid above the range set for the
job.
Green-Circled Employee
An incumbent who is paid below the range set for the job.
Pay Compression
Pay differences among individuals with different levels of experience and
performance in the organization are reduced.
178. HUMAN RESOURCE
MANAGEMENT
“… human resource management (alternatively, ‘employee
relations’ or ‘labor management’) includes the firm’s work
systems and its models of employment. It embraces both
individual and collective aspects of people management. It is not
restricted to any one style or ideology. It engages the energies of
both line and specialist managers… and typically entails a blend
of messages for a variety of workforce groups.”
Purcell & Boxall (2003) P. 24
179. STRATEGY
“The determination of the basic long-term goals and
objectives of an enterprise and the adoption of courses
of action and the allocation of resources necessary for
carrying out these goals.”
Alfred Chandler, Strategy and Structure, (MIT Press, 1962), P. 13
180. STRATEGY
At the core, its is the debate between best fit and best
practice
Used for gaining a competitive advantage
Innovation
Offer something new; different from competitors
Quality Enhancement
Products and services
Cost Reduction
Attempt to be the lowest cost provider
Optimal strategy depends on the wants and nature of
competitors
181. TYPES OF STRATEGY
Business
Examines correspondence between each firm’s
competitive strategy and its system of high performance
work practices
Operations
An internal approach; connected to the work organization
inside a firm
Resource View
Views human resources as sources of sustained
competitive advantage
182. STRATEGIC HRM
“(S)trategic HRM is about how the
employment relationships for all employees
can be managed in such a way as to
contribute optimally to the organization’s
goal achievement.” Legge (2005) P. 223
183. HR PRACTICES LINKED WITH
COMPETITIVE STRATEGY
Recruitment
Training
Career Path
Promotions
Socialization
Openness
184. HIGH PERFORMANCE
PRACTICES
Features
Comprehensive selection/recruitment procedures
Incentive compensation
Extensive employee involvement/training
Expected Results
Improve knowledge, skills, and abilities of employees
Increase motivation
Reduce shirking
Enhance retention of quality employees (reduce tenure of
non-performers)
Huselid (1995) P. 635
185. HIGH COMMITMENT
PRACTICES
Unique to the High-Performance Paradigm
Sophisticated selection and training
Emphasis on values, human relations skills, and knowledge skills
Behavior-based appraisal
Single status policies
Contingent pay systems
Traditional Personnel Practices
Job security
Above market pay and benefits
Grievance systems
Godard (2004) P. 351
186. CONCLUSION
Model of the Basic Strategic HRM Components
HUMAN CAPITAL POOL:
Knowledge, Skill, Ability
EMPLOYEE RELATIONSHIP BEHAVIORS:
Psychological Contracts, Citizenship, Discretion
Wright, P. Dunford, B. and Snell, S. (2001) Human Resources and the Resource Based View of the Firm, Journal of Management, 27:6
PEOPLE MANAGING PRACTICES:
Staffing, Training, Rewards, Appraisal,
Work Design, Participation, Recognition, Communication
187. CONCLUSION
Effectiveness can be increased by
systematically melding human resource
practices with the selected competitive
strategy
The success or failure of a firm is not likely
to turn entirely on its strategic human
resource management practices, but these
practices are likely to be critical
Editor's Notes
Base pay
Hourly wages
Salary
Cost-of-Living & Contingent Pay
Usually permanent increases in pay based on either cost of living or performance
Covered in more detail in Module 11
Incentives (short- and long-term)
Used to increase performance
E.g., bonuses (short term) or stock options/ownership (long term)
Income Protection
Sometimes required under law, such as
Social Security (what about unemployment insurance in the USA?) Disability pay,
medical insurance,
pension plans,
savings plans
Allowances
E.g., housing
transportation (e.g., company provides car)
Work/life focus (to help employee balance work/home life)
Such as vacation time,
flextime and telecommuting,
services (e.g., counseling, financial planning, fitness activities)
Relational Returns
Such as recognition,
status,
employment security,
challenging work,
opportunities to learn,
opportunities to form personal relationships
Note: the following is slide used before (some of this is not in Module 1)
Links employee activities with organization’s mission and goals
Identifies results and behaviors needed to carry out strategy
Maximizes extent employees exhibit those behaviors and results
Only 13% of organizations use PM to communicate organizational purpose and goals