Human Resource Management Defined

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Human Resource Management
Session 2
LO1: The nature and scope of HRM

Human Resource Management
Defined
Human resource management is defined as a
strategic and coherent approach to the
management of an oragnisation’s most valued
assets – the people working there who
individually and collectively contribute to the
atonement of its objective. (
Armstrong 2006)

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Best fit Approach
The best fit approach is in line with
contingency theory.
The life-cycle model
The life cycle model is based on the
theory that the development of a firm
takes place in four stages: start-up,
growth, maturity and decline.
Best fit and competitive strategies
Strategic configuration
Organizations will be more effective if
they adopt a policy of strategic
configuration (Delery and Doty, 1996)
by matching their strategy to one of the
ideal types defined by theories such as
those produced by Miles and Snow
(1978) whose typology listed
prospectors, defenders, analyzers and
reactors.
Comment
• Best fit models tend to be static and
don’t take account of the processes of
change.
• They neglect the fact that institutional
forces shape HRM.
• It cannot be assumed that employers
are free agents able to make
independent decisions. It is often said
that best fit is better than best practice
but this statement can only be accepted
with reservations
Best fit strategies
Three strategies aimed at achieving
competitive advantage were identified
by Porter (1985):
1.Innovation – being the unique producer.
2.Quality – delivering high quality goods
and services to customers.
3.Cost leadership – the planned result of
policies aimed at ‘managing away’
expense.
It was argued by Schuler and Jackson
(1987) that to achieve the maximum
effect it is necessary to match the role
characteristics of people in an
organization with the preferred strategy.

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The ‘Best Fit’ approach vs ‘Best
Practice
• The Best Fit approach emphasizes that HR strategies should
be congruent with the context and circumstances of the
organization.
• Best Practice approach assumed is that there is a set of best
HRM practices that are universal in the sense that they are
best in any situation. This is questionable
• Best fit involves vertical integration or alignment between
the organization’s business and HR strategies.
• There are three models: life-cycle
, competitive strategy,
and strategic configuration
.
Often said that ‘best fit is better than best
practice’ but best fit
models can be unrealistic.
Hard and soft HRM
Hard HRM
• The focus is on the quantitative, calculative
and business-strategic aspects of managing
human resources in as ‘rational’ a way as for
any other economic factor.
Soft HRM
• Employees treated as valued assets, a source
of competitive advantage through their
commitment, adaptability and high quality
• But the distinction between hard and soft
HRM is not precise.

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Workforce Planning
• Human Resource Information Systems
– Systems that make it possible to track and
monitor economic forecasts, competitors, and
legislation that influence long-range personnel
planning; to produce models for salary
forecasting, job analysis and evaluation,
recruiting, employee training, and annual
appraisal of employee performance; to provide
benefits to current and retired employees; and
more.

 

Workforce Planning
• Workforce Planning
– The process of determining future human
resource needs relative to an organization’s
strategic plan and taking actions necessary to
meet those needs in a timely manner.

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Human Resource Planning Process
(Based on Lewis, Pamela S et all 2001)
Compensation

Forecasting
Staffing
Recruitment Selection
Training
Performance Appraisal
Job Analysis

Impact of legal and regulatory
frameworks on HRM
• Legal Framework Guiding Recruitment
and Selection:
Sex Discrimination Act (1975)
Race Relation Act (1976)
Equal Pay Act (1970)
Disability Discrimination Act (1995)
Employment Act 2002

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Impact of legal and regulatory
frameworks on HRM
• Other Legislation
– Such as the Americans with Disabilities Act
and the Age Discrimination Act of 1967,
prohibits employment decisions based on biases
against qualified individuals with disabilities
and the elderly.
– In general, the purpose of EEO legislation is to
ensure that unemployment decisions are based
on job-related criteria only.

 

Impact of legal and regulatory
frameworks on HRM
• For employers in the UK the adjustment required by the
introduction of extensive employment law has often been
problematic as the UK’s labour market was historically one of
the least regulated in the world. There thus remains a strong
tendency for employers and their representatives to resist the
introduction of new regulation and to campaign for a reduction in
the existing ‘regulatory burden’ on the grounds that it both deters
organizations from taking new staff on, while also making the
UK economy as a whole less globally competitive than it would
otherwise be.
• Despite these misgivings, it is clear that employment law is here
to stay and that it makes good business sense to comply with its
requirements. Most employers have to face employment tribunal
claims from time to time and most HR professionals have to deal
with their consequences on a fairly regular basis.

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THE PURPOSE OF EMPLOYMENT
LAW
• To deter employers from treating their employees unfairly or
from exploiting them unjustly
• To help make work more attractive to people
• To promote flexibility in the labour market
THE PURPOSE OF EMPLOYMENT LAW
• Employment law exists to protect employees from unjust exploitation or
unfair treatment by their employers. Necessary because for the vast
majority of workers, the employment relationship is very unequal in terms of
the power that each side is able to exercise over the other. Employers are
vastly more powerful making it relatively easy for them to abuse that power
by treating their employees poorly, by dismissing them or discriminating
against them for no good reason, underpaying and overworking them, or
causing them to risk their heath, safety and welfare while at work.
• Two major further reasons behind employment regulation in today’s
economic context. First, governments have sought to use employment law
to promote good practice in the employment relationship. Second,
governments are keen to promote flexibility and competition in the labour
market. They want to ensure that employees are free to leave their
employment and join another organization easily and that they are not
prevented from working because of domestic commitments. They also want
to ensure that when people persistently perform their jobs poorly or when
their jobs are genuinely redundant employers are able to terminate their
contracts swiftly and cheaply.

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THE PURPOSE OF EMPLOYMENT
LAW
• Examples include:
1. Direct discrimination: failing to promote a woman
because she is a woman.
2. Indirect discrimination: requiring a devout
employee to work on a holy day.
3. Victimization: refusing to give a reference to a
former employee who brought a race
discrimination claim against the organization.
4. Harassment: teasing someone about their sexual
orientation.
THE PURPOSE OF EMPLOYMENT
LAW
• The defences available to employers are limited. Direct discrimination
and victimization on most grounds are almost always unlawful,
although in the cases of discrimination on grounds of disability and age
the former can be defended where there is a good, genuine business
reason. Direct discrimination is also lawful when the nature of a job
requires that it is reserved for members of one sex (eg., acting and
modelling jobs) or a particular race (eg., waiters in ethnic restaurants)
or religion (eg., clerical roles). Indirect discrimination occurs when an
organization has a rule or policy in place that has the effect of causing
a disadvantage to one group or another, even though this may be
entirely unintentional. This can be defended when the rule can be
shown to be ‘a proportionate means of achieving a legitimate aim’, in
other words, an objective business need.

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DISCRIMINATION LAW
There are four headings under which an employer’s
actions can be challenged in court:
1.direct discrimination
2.indirect discrimination
3.victimization
4.harassment
DISMISSAL LAW
Former employees who have completed more than two years
service (one year if employed prior to April 2012) are entitled
to seek compensation or re-instatement when they have been
unfairly dismissed.

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DISMISSAL LAW
• To be lawful it is essential that any dismissal
is managed in accordance with a fair
procedure. In a case of poor work
performance this means that an employee
must be invited to a formal meeting, given a
formal warning in writing, allowed an
opportunity to appeal, given a reasonable
opportunity to improve and, only then,
dismissed following a further formal meeting
with aright to appeal
.
DISMISSAL LAW
• Only when an employee is guilty of gross misconduct
such as stealing, fighting or serious insubordination,
is an employer entitled to dismiss summarily without
notice. Here too though, a fair procedure must always
be followed, employees being given every
opportunity to defend themselves and to appeal the
dismissal. A further requirement is that employees
facing hearings at which they may be dismissed must
always be allowed to be accompanied by a work
colleague and represented by a trade union official.

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HEALTH AND SAFETY LAW
There are two distinct parts to health and safety law:
1.the criminal law, which is enforced by health and safety
inspectors
2.personal injury law, under which workers who suffer an injury at
work or fall ill as a result of their work can sue their employer for
damages
HEALTH AND SAFETY LAW
• Health and safety inspectors carry out
routine inspections of employers’
premises without warning, following
which they can issue
improvement
notices
requiring that changes are made
to operations or
prohibition notices that
prevent the employer from using a piece
of equipment or operating a system until
recommended changes have been
made.

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HEALTH AND SAFETY LAW
In either case a failure to make the required changes
can result in a criminal prosecution. Such
prosecutions are also brought when an employer’s
negligence or recklessness leads either to a death or
a serious injury.
In the most serious cases, charges of corporate
manslaughter can be brought against an
organisation.
Most personal injury claims also involve demonstrating
that an employer or a fellow employee has acted
negligently.
HOURS AND WAGES
Two main legal provisions:
• The Working Time Regulations 1998
• National Minimum Wage regulations

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HOURS AND WAGES
Working Time Regulations: The key right here is not to
be required to work in excess of 48 hours a week.
However, in practice, many employees continue to do
so. This is partly because actually the law only limits
working time to 48 hours averaged over 17 weeks, so
employers can lawfully require their staff to work
many more hours in particularly busy weeks,
provided on average over any 17-week period the 48
hour rule is observed. In the UK there is also an optout system in place, under which employees can
remove themselves from the right not to work more
than 48 hours a week. This is common because
employers can lawfully require new starters to sign
opt-out agreements as a condition of being offered a
job.
National Minimum Wage Regulations:
These require that all workers are paid
a minimum amount for every hour that
they work, rates being set by the
government each year after consulting
with the Low Pay Commission.
ENFORCEMENT
Aggrieved employees and former employees can bring cases
relating to the alleged breach of an employment statute before
their local Employment Tribunal.

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ENFORCEMENT
In most tribunal cases the burden of proof lies with the
claimant (the person bringing the case), but on some
questions of law it can reverse so that the respondent
(the employer) must satisfy the tribunal that it did not
act unlawfully as is alleged.
Employment tribunals then decide cases ‘on the
balance of probabilities’ having weighed the evidence
presented to them by each party or its
representatives.
ENFORCEMENT
In most tribunal cases the burden of proof lies with the
claimant (the person bringing the case), but on some
questions of law it can reverse so that the respondent
(the employer) must satisfy the tribunal that it did not
act unlawfully as is alleged.
Employment tribunals then decide cases ‘on the
balance of probabilities’ having weighed the evidence
presented to them by each party or its
representatives

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What are Labour Markets?
• Mechanism through which human labour is bought
and sold as a commodity
• Means by which labour demand (the number and type
of available jobs) is matched with labour supply (the
number and type of available workers)
• Nature of interaction between organisation and labour
markets reflects choice of ‘make’ or ‘buy’ strategies
for employee resourcing
The external labour market
• External supply of labour; the stock of available
labour
• Segmented labour markets – Geography, skills,
educational level, etc.
• Labour market ‘power’ through legitimate and
illegitimate means
• Shaped by a range of processes which can be both
planned and directed or largely uncontrolled and
unpredictable
• Reflexive relationship between the supply and demand
for labour

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Labour Market Supply and Demand

Labour market supply Labour market demand
Changing societal attitudes to
work and education
Economic conditions (regional,
national and international
)
Changing demography
Government policy – Both
national and international (e.g.
European Union)
o Employment regulation
o Level and target of
investment in education and
training
o Industrial policy
o Wider social policy
Changes to the external
business environment
Changes in the internal
business environment
Changing communications
and production technologies
Changes in the political
context
Economic restructuring
Changing skills requirement
Regional, national and
international economic
conditions – Inflation, level of
unemployment and interest
rates

The internal labour market
• An organisation’s internal supply or stock of labour
• Mechanism for attribution of work roles
• Device for managerial control over the workforce
through stratification, division and the detailed
allocation of responsibility
• ‘Form’ determined by HR practices, contextual
factors and organisational characteristics
• Potential source of ‘positive’ employment experience
• Erosion of ‘strong’ internal labour markets?

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Employee turnover, stability and
retention
• Employee turnover is the outflow of people from an organisation. It is
usually expressed as the proportion of people who leave the business
over a specific timescale, typically during a 12-month period. It is for
each organisation to decide what its optimum level of labour turnover
is and this will depend on a range of factors, for example sector, size
and location.
• If labour turnover is too high, the organisation can suffer a range of
negative impacts including the financial cost of recruiting replacement
staff and the loss of corporate knowledge and skills.
• Total labour turnover” covers all types of employee departures,
including resignations and dismissals. “Voluntary labour turnover”
refers to those employees who resign from the organisation
.
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Employee turnover, stability and
retention
• The stability rate calculates the proportion
of the workforce employed for a specified
period and measures how effectively the
organisation is retaining experienced staff,
typically those with at least one year’s
service.
• The retention rate calculates the proportion
of staff recruited in one year that remain in
post after a specific number of years.

References
Armstrong, M (2006), A Handbook of Human Resource
Management Practice, 10
th Edition,Kogan Page Ltd.
Hendry, C. (1995), Human Resource Management a
strategic approach to employment, Butterworth –
Heinmann.
Institute of Personnel Management (1990), Continuous
Development: People and Work 3
rd Edition, Wimbedon
IPD.
Lewis, Pamela et all (2001) Management Challenging in
the 21
st Century 3rd edition, South Western Publishing of
Thomson Learning
Torrington, D. (1989), Human Resource Management and
the personnel funtion, in J Storey (ed.)
New perspective in
Human
Resource Management. London: Routledge