Chapter 7

Managing Human Resource

 Human resource management (HRM)
HRM = Right People, Right Place, Right Time

• HRM is ‘the management function concerned

with getting, training, motivating, and keeping
competent employees.’
• The quality of an organization is to a large
degree determined by the quality of the people it
employs. Success for most organizations
depends on finding the employees with the skills
to successfully perform the tasks required to
 HRM (continued)
• All managers must engage in some human resource
management activities—even in large ones that have a
separate HRM department. Managers interview job
candidates, orient new employees, and evaluate their
employees’ work performance.
• Because human resources also involve appropriate ways
of treating co-workers, even nonmanagers must be
aware of basic HR principles and practices.
 The Human Resource Management
Process
The H R M process has three key goals:
 identifying and selecting competent employees
 providing employees with up-to-date skills, knowledge, and abilities to do
their jobs
 ensuring that the organization retains their competent and high-performing
employees over the long term
The H R M process is influenced by:
 internal and external environment
 organization’s strategy
Figure 6.1 The Human Resource Management
Process
Figure 6.1 The Human Resource Management Process

• The six important HRM activities (the yellow boxes)

are shown in Figue 6-1. The circle around those boxes
shows environmental factors that impact HRM, such
as organizational culture, economic conditions, labour-
market issues, government legislation, and technology
 Environmental Factors Affecting
HRM
• The key environmental factors that most directly
influence H R M processes are:
organizational culture
economic conditions
labour market issues
government legislation
technology
 organizational culture

• Organizational culture is ‘a system of shared values,

norms, and beliefs held by organizational members that
determines, in large degree, how employees act’.
• A positive organizational culture provides many
benefits to an organization, including loyalty,
commitment, direction, productivity, and retention.
 economic conditions

• The ability of employers to recruit is dependent on local (and

national) unemployment rates, competition in regional and local
labour markets, and industry-specific labour market conditions.
• For example, hospitals across the country are facing a shortage
of nurses, so provinces compete with each other, and
recruitment, training, and retention strategies in this sector
become more important. When the unemployment rate is high,
employers have more potential employees to choose from.
 labour market issues

• A labour market refers to the overall environment where

people look for jobs and employers search for workers.
• Understanding the labor market gives you insight on your
workforce. High demand for employment can create an
environment where employees are more likely to quit.
• In that tight labor market, where employees can easily leave
one position and re-enter the workforce quickly, you need a
more aggressive retention strategy. This may mean evaluating
the wages and benefits you offer, etc.
 government legislation

• The federal government has greatly expanded its

influence over HRM by enacting a number of laws and
regulations, including employment standards
legislation, the Charter of Rights and Freedoms, and
the Canadian Human Rights Act.
• The provincial governments also have their own labour
legislation that governs the workplace, meaning that
employment law in Canada involves 14 different
jurisdictions.
 employment standards
legislation
• The employment standards legislation in each
province and territory within Canada sets out the
minimum legal requirements that an employer must
follow within areas such as minimum wage, statutory
holidays, vacation and leaves, notice of termination
and many more.
 The Canadian Charter of Rights
and Freedoms
• The Canadian Charter of Rights and Freedoms
protects a number of rights and freedoms, including
freedom of expression and the right to equality. It
forms part of our Constitution – the highest law in
all of Canada – and is one of our country’s greatest
accomplishments.
 The Canadian Human Rights Act
• The Canadian Human Rights Act of 1977 protects
people in Canada from discrimination when they are
employed by or receive services from the
organizations that are regulated by the federal
government.
• People can turn to the Canadian Human Rights Act to
protect themselves against harassment or
discrimination when based on one or more grounds of
discrimination such as race, age and sexual
 technology

• Some companies use a Human Resources Information

System (HRIS) to capture and manage employee data.
• An HRIS can help reduce administrative costs, provide
information more quickly, ensure legal compliance,
provide for better talent management and enhanced
decision making, and streamline the entire people
management function.
 Technology: Example
• Nowadays companies are using artificial intelligence
software for recruitment and selection
• AI-powered interview tools use voice and facial
expression analysis to determine a candidate's tone,
demeanor, (behavior) and emotional state. These
insights are then combined with the content of the
candidate's answer to provide a more comprehensive
understanding of their personality and fit for the role.
 Planning Human Resource Needs
The first phase of the H R M process is human resource
requirement planning.
This involves three tasks:
1. Forecasting labour supply
2. Forecasting demand
3. Planning H R programs to balance supply and
demand
(1) How Does an Organization Do a Current HR
Assessment?

• Managers begin by reviewing the current human

resource status. This review is typically done by
generating a human resource inventory.
• Human resource inventory is ‘a report listing
important information about employees such as name,
education, training, skills, languages spoken, and so
forth.’
 (1) How Does an Organization Do a Current HR
Assessment?
(continued)

• This inventory allows managers to assess what talents

and skills are currently available in the organization.
• This would also be where an organization assesses
the availability of internal candidates, known as
succession planning.
 Job analysis
• Another part of the current assessment is job analysis.
• Job analysis is an assessment that defines jobs and the
behaviours necessary to perform them.
• Job analysis is the process of gathering and analyzing
information such as the knowledge and skills required
to perform a specific job, as well as, the context in
which jobs are performed.
 Job analysis: example
• For example, a job analysis for a software developer
position may highlight programming languages,
software development methodologies, and knowledge
of specific technologies as key requirements. This
confirms that the recruitment and selection process
targets individuals who possess the prerequisite
technical skills.
 job description
• A written statement of what a jobholder does, how the job is
done, and why the job is done.
• It is a written narrative that describes the general tasks, or
other related duties, and responsibilities of a position.
 job specification
• A statement of the minimum qualifications that a
person must possess to perform a given job
successfully.
 (2) How Are Future Employee Needs
Determined?

• Future human resource needs are determined by the

organization’s strategic goals and direction. Demand
for human resources (employees) is a result of demand
for the organization’s products or services.
• On the basis of an estimate of total revenue, managers
can attempt to establish the number and mix of people
needed to reach that revenue.
 (3) Balancing Supply and Demand

• After assessing both current capabilities and future needs,

managers can esti-mate talent shortages —and highlight areas in
which the organization is overstaffed. They can then develop a
plan that matches these estimates with forecasts of future labour
supply. Employment planning not only guides current staffing
needs but also projects future employee needs and availability.
 Labour shortage Vs Labour
srplus
• A labour shortage exists when the supply of employees
cannot meet the organization’s demand. Short-term
solutions include scheduling overtime hours, hiring
temporary workers, subcontracting work, or even
convincing employees to delay retirement.
• A labour surplus exists when the internal supply of
employees exceeds the organization’s demand.
 Exhibit 6.2 Solutions for a Labour Surplus

Option Description
Firing Permanent involuntary termination
Layoffs Temporary involuntary termination; may last only a few days or extend
to years
Attrition Not filling openings created by voluntary resignations or normal
retirements
Transfers Moving employees to different branches; usually does not reduce costs
but can reduce supply–demand imbalances within organizations
Reduced Having employees work fewer hours per week, share jobs, or perform
workweeks their jobs on a part-time basis
Early Providing incentives to older and more senior employees for retiring
retirements before their normal retirement dates
Job sharing Having employees share one full-time position
 Recruiting
• Recruiting is ‘the process of locating, identifying, and
attracting capable applicants.’
• Recruitment is the overall process of identifying,
sourcing, screening, shortlisting, and interviewing
candidates for jobs within an organization.
 Where Does a Manager Recruit
Applicants?
Exhibit 6.3 Recruiting Sources
Source Advantages Disadvantages

Internet Reaches large numbers of people; can get Generates many unqualified
immediate feedback candidates
Employee referrals Knowledge about the organization provided by May not increase the diversity
current employee; can generate strong and mix of employees
candidates because a good referral reflects on
the recommender

Company website Wide distribution; can be targeted to specific Generates many unqualified
groups candidates
College recruiting Large centralized body of candidates Limited to entry-level positions

Professional recruiting Good knowledge of industry challenges and Little commitment to specific
organizations requirements Organization

SOURCE: S. P. Robbins and M. Coulter, Mary, Management, 13th Ed., © 2016, p. 346.
Reprinted and electronically reproduced by permission of Pearson Education, Inc., New
York, NY.
 Selection
• The process of screening job applicants to ensure
that the most appropriate candidates are hired.
• Selection is the process of identifying an individual
from a pool of job applicants with the requisite
qualifications and competencies to fill jobs in the
organization.
 selection process is a prediction
exercise
• It seeks to predict which applicants will be
“successful” if hired; that is, who will perform well on
the criteria the organization uses to evaluate its
employees.
• For a position as a sales representative, it should
predict which applicants will be successful at
generating high sales volumes.
 performance-simulation tests
• It is a selection devices based on actual job
behaviours.
•A performance simulation test is used by
organizations as a way of evaluating candidates for
a job position.
• There are two types of simulation tests known as
work sample test and assessment centers.
 performance-simulation tests
(continued)
• Work samples are used where the job is monotonous
(boring/repeated pattern) and routine. These jobs are well
defined and can be matched with the performance output of
the candidate. Work sample technique is used to hire skilled
labor such as electricians, welders, machine workers and so on.
• Work sampling is the statistical technique used for determining
the proportion of time spent by workers in various defined
categories of activity (e.g. setting up a machine, assembling
two parts, idle…etc.)
 performance-simulation tests
(continued)
• Assessment centers however are used to evaluate
candidates for a managerial position. Potential
candidates are put through a series of jobs and
challenges that they could face while being observed a
trained psychologist and/or line managers.
• Candidates are put through various exercises such as
interviews, and group discussions each involving
decision making situations.
 Realistic job preview (RJP)
• A preview of a job that includes both positive and negative
information about the job and the company.
• A realistic job preview (RJP) is the presentation of both positive
and negative information about the job and the organization to
prospective applicants. This is aimed at showing a realistic picture
of the job and organization to applicants.
• To increase job satisfaction among employees and reduce
turnover, managers should consider a realistic job preview (RJP).
 Orientation
• The introduction of a new employee to his or her job
and to the organization.
• reduce the initial anxiety all new employees feel as
they begin a new job;
familiarize new employees with the job, the work
unit, and the organization as a whole; and
facilitate the outsider–insider transition.
 How Are New Hires Introduced to the
Organization?
• Orientation introduces a new employee to the job and
the organization:
• Job orientation
• Work unit orientation
• Organization orientation
• Successful orientation makes transition easier for new
members, lowers the likelihood of poor performance,
and reduces turnover among new employees.
 Job orientation

expands on the information the employee obtained

during the recruitment and selection stages,
clarifies the new employee’s specific duties and
responsibilities as well as how his or her performance
will be evaluated, and
corrects any unrealistic expectations new employees
might hold about the job.
 Work unit orientation

familiarizes an employee with the goals of the work

unit,
clarifies how his or her job contributes to the unit’s
goals, and
provides an intro-duction to his or her co-workers.
 Organization orientation

informs the new employee about the organization’s

goals, history, philosophy, procedures, and rules;
clarifies relevant HR policies such as work hours, pay
procedures, overtime requirements, and benefits; and
may include a tour of the organization’s physical
facilities.
 Training
•A learning experience that seeks a relatively
permanent change in employees by improving their
ability to perform on the job.
 Traditional Training Methods
On-the-job—Employees learn how to do tasks simply
by performing them, usually after an initial
introduction to the task.
Job rotation—Employees work at different jobs in a
particular area, getting exposure to a variety of tasks.
Mentoring and coaching—Employees work with an
experienced worker who provides information,
support, and encouragement; also called
apprenticeships in certain industries
 Traditional Training Methods
(continue)

Experiential exercises—Employees participate in role

playing, simulations, or other face-to-face types of
training.
Workbooks/manuals—Employees refer to training
workbooks and manuals for information.
Classroom lectures—Employees attend lectures
designed to convey specific information.
 Total Rewards: Five Key
Components
• The five components combine into one reward strategy that is
integrated and results in happy, committed, and productive
employees.
1. strategic compensation
2. benefits (employment insurance, CPP)
3. work–life balance (flexible working arrangements)
4. performance management
5. career development (provide opportunities for career
advancement)
 1 Strategic Compensation
Exhibit 6.7 Factors That Influence Compensation and
Benefits

SOURCE: Based on A. Murray, “Mom, Apple Pie, and Small Business,” Wall Street
Journal, August 15, 1994, p. A1.
 Note:
capital intensive vs labor-intensive businesses
To be capital intensive organization requires lots of money,
whereas to be Labour intensive organization requires an efficient
and motivational workforce.
For example, if a company spends $100,000 on capital
expenditures and $30,000 on labor, it is most likely capital-
intensive. Likewise, if a company spends $300,000 on labor and
only $10,000 on capital expenditures, it means the company is
more service- or labor-oriented.
 performance management

• Evaluating employee performance is part of a

performance management system, which is a process of
establishing performance standards and appraising
employee performance in order to arrive at objective
human resource decisions and to provide documentation
in support of those decisions.
• Performance appraisal is a critical part of a performance
management system.
 Conclusion!
• In conclusion, human resource management is
essential because it benefits the company, including
the company can utilize existing human resources
well, the productivity of existing employees is
increasing, determining the needs of employees/labor
—handling of employment information, and research.