1.1. History – From Personnel to Human Resources
Diane Arthur explained in “Fundamentals of Human Resources Management” that the idea of having an entire department that is handling recruitment evolved from nothing, the process being handled by managers about almost 100 years ago.
The idea of human resources has appeared on the mid ’20s. It was a time when finding, hiring and even firing was an activity made by managers directly and the other not so important task related to new employees was made by one or two employees that handled this issues.
When the ’30s arrived, managers already started to take more responsibility, this leaving them with little or almost no time to handle task related to finding new employees, the entire process of recruiting someone new. The fact that they would have a person handling the entire process started to sound like a good idea for managers, leaving them to have more time for actual task there were being handled by them directly and could not be delegated to no one.
Soon enough, this one person handling recruitment had become an entire group, an entire department, that had now started to take tasks that included keeping record and making sure that the government regulation were being kept. This “group” was known as Central office by connoisseurs. Slowly, the “group” kept receiving new responsibilities, new tasks, that would include creating programs for recreation and social life, even to organize athletic teams, as football maybe, or meeting that were meant to unite people (picnics or dinners).
The “group” was now being called Personnel, with lots of responsibilities and no authority what so ever within the company to make any organizational changes. Personnel had staff that came from education (former teachers that were eager to earn more money and had no interest in having authority) or former supervisors, collecting from all the fields, including sales, promotion and accounting.
World War II made a true impact on the personnel function started to need a bigger level of knowledge, experience, psychological background and with all of this came also authority and credibility, started to be seen as a “true” department.
Once WW II ended, personnel has started to actually, visibly grow. The development of industry and the burst of technology made that the need for college-educated and exempt-level employees (engineers and technically trained workers) increase.
In the ’60s and even ’70s legislation that was meant to be followed for employment activities. Every business had to offer equality when it came to employment, this actually influencing every activity, starting with recruitment and finishing with termination process. Once again, as in the beginning, personnel had to face activities they knew nothing about, no training was received, the only thing left was to learn from the mistakes and perform themselves new rules and new ways of performing the activities while respecting the legislation.
Chart 1.1. Evolution of Human Resorces
(source: http://www.slideshare.net/zulmohd1/changing-role-of-hr-v30)
During this period, personnel was obliged to get involved in acquisitions and mergers, specifically, the assessment of problems connected with the merging of benefit plans and the difficulties accompanying the acquisition of added labor, now more frequently being referred to as a company’s “human resources.”
The term human resources soon came to replace personnel when referring to the function or department. This was partially in recognition of the fact that personnel reflected a more traditional reactive function, primarily concerned only with employee utilization. Human resources, on the other hand, suggested a concern for making the most of human resources potential and a commitment to management by anticipation.
Midway into the first decade of the new millennium, HR continues to fine-tune its work in these areas while taking on still more tasks. Employee relations-related responsibilities continue to expand, e.g., increased employee demands for flexible work options have led to HR-managed work/life programs, and an expanding multicultural workforce requires greater attention to diversity. Also, a tumultuous economy demands more focus on increased numbers of employees who are telecommuting, hiring more contingent workers, and combating illiteracy in the workplace. And, while doing all this, HR moves decisively toward becoming more strategically aligned with an organization’s business side.
1.2. HR Management Roles
Several roles can be fulfilled by HR management. The nature and extent of these roles depend on both what upper management wants HR management to do and what competencies the HR staff have demonstrated.
Three roles are typically identified for HR. The focus of each of them, is as follows:
• Administrative: Focusing on clerical administration and recordkeeping, including essential legal paperwork and policy implementation.
• Operational and employee advocate: Managing most HR activities in line with the strategies and operations that have been identified by management and serving as employee “champion” for employee issues and concerns.
• Strategic: Helping to define the strategy relative to human capital and its contribution to organizational results.
The administrative role traditionally has been the dominant role for HR.
Fig 1.1. The roles of HR, Ulrich’s Four-role Model
(Source: http://www.slideshare.net/zulmohd1/changing-role-of-hr-v30)
1.2.1. Administrative role of Human resources
The administrative role of HR management has been heavily oriented to processing and record-keeping. This role has given HR management in some organizations the reputation of being staffed by paper shufflers who primarily tell managers and employees what cannot be done. If limited to the administrative role, HR staff are seen primarily as clerical and lower-level administrative aides to the organization.
Two major shifts driving the transformation of the administrative role are greater use of technology and outsourcing.
– Technology Transforming HR To improve the administrative efficiency of HR and the responsiveness of HR to employees and managers, more HR functions are becoming available electronically or are being done on the Internet using Web-based technology. Technology is being used in most HR activities, from employment applications and employee benefits enrollments to e-learning using Internet-based resources.
– Outsourcing of HR Increasingly, many HR administrative functions are being outsourced to vendors. This outsourcing of HR administrative activities has grown dramatically in HR areas such as employee assistance (counseling), retirement planning, benefits administration, payroll services, and outplacement services.
The primary reasons why HR functions are outsourced are to save money on HR staffing, to take advantage of specialized vendor expertise and technology, and to be able to focus on more strategic HR activities. These activities are being outsourced to firms both in the United States and worldwide. Such contracting for HR services is an evolving practice that continues to change the administrative HR functions for many employers.
1.2.2. Operational and Employee Advocate Role for HR
HR often has been viewed as the “employee advocate” in organizations. As the voice for employee concerns, HR professionals traditionally may serve as “company morale officers,” but they spend considerable time on HR “crisis management,” dealing with employee problems that are both work-related and not work-related. Employee advocacy helps ensure fair and equitable treatment for employees regardless of personal background or circumstances. Sometimes the HR advocate role may create conflict with operating managers. However, without the HR advocate role, employers could face even more lawsuits and regulatory complaints than they do now. The operational role requires HR professionals to cooperate with various departmental and operating managers and supervisors, to identify and implement needed programs and policies in the organization. Operational activities are tactical in nature. Compliance with equal employment opportunity and other laws is ensured, employment applications are processed, current openings are filled through interviews, supervisors are trained, safety problems are resolved, and wage and benefit questions are answered. These efforts require matching HR activities with the strategies of the organization
1.2.3. Strategic role of Human Resources
Differences between the operational and strategic roles exist in a number of HR areas. The strategic HR role means that HR professionals are proactive in addressing business realities and focusing on future business needs, such as strategic planning, compensation strategies, the performance of HR, and measuring its results. However, HR often does not help formulate strategies for the organization as a whole; instead it merely carries them out through HR activities.
Many executives, managers, and HR professionals are increasingly seeing the need for HR management to become a greater strategic contributor to the “business” success of organizations. Even not-for-profit organizations, such as governmental and social service entities, must manage their human resources in a business-oriented manner. In fact, it has been suggested that the HR function should be managed as its own business. Therefore, a large number of senior HR executives are selected from outside HR experience. Doing this means that these individuals have a business focus, not just HR experience.
HR should be responsible for knowing what the true cost of human capital is for an employer. For example, it may cost two times key employees’ annual salaries to replace them if they leave. Turnover is something HR can help control, and if it is successful in saving the company money with good retention and talent management strategies, those may be important contributions to the bottom line of organizational performance.
“Contributing at the Table” The role of HR as a strategic business partner is often described as “having a seat at the table,” and contributing to the strategic directions and success of the organization. That means HR is involved in devising strategy in addition to implementing strategy. Part of HR’s contribution is to have financial expertise and to produce financial results, not just employee morale or administrative efficiencies. Therefore, a significant concern for chief financial officers (CFOs) is whether HR executives are equipped to help plan and meet financial requirements.
However, even though this strategic role of HR is recognized, many organizations still need to make significant progress toward fulfilling it. Some examples of areas where strategic contributions can be made by HR are:
• Evaluating mergers and acquisitions for organizational “compatibility,” structural changes, and staffing needs
• Conducting workforce planning to anticipate the retirement of employees at all levels and identify workforce expansion in organizational strategic plans
• Leading site selection efforts for new facilities or transferring operations to international outsourcing locations based on workforce needs
• Instituting HR management systems to reduce administrative time, equipment, and staff by using HR technology
• Working with executives to develop a revised sales compensation and incentives plan as new products or services are rolled out to customers
Stages in Human Resource Planning
Human resource planning is principally concerned with assessing an organization’s position in relation to its labor markets and forecasting its likely situation in years to come. The forecasting function has three general stages, the forth one involving the formulation of response to the forecasts.
Fig 1.2. Stages in an HR planning cycle (adapted from S. Taylor, 2005)
1.3. Forecasting Methods and Periods
Forecasting methods may be either judgmental or mathematical. Methods for forecasting human resources range from a manager’s best guess to a rigorous and complex computer simulation. Despite the availability of sophisticated judgmental and mathematical models and techniques, forecasting is still a combination of quantitative methods and subjective judgment.
Fig 1.3. HR Forecasting Methods ( adapted from Mathis and Jackson, 2010)
The factscmust be evaluated and weighed by knowledgeable individuals, such as managers or HR planners, who use the mathematical models as tools and make judgments to arrive at decisions. HR forecasting should be done over three planning periods: short range, intermediate range, and long range.
The most commonly used planning period of six months to one year focuses on short-range forecasts for the immediate HR needs of an organization. Intermediate- and long-range forecasting are much more difficult processes. Intermediate-range plans usually project one to three years into the future, and long-range plans extend beyond three years.
1.3.1. Forecasting the Demand for Human Resources
The demand for employees can be calculated for an entire organization and/ or for individual units in the organization.
For example, a forecast might indicate that a firm needs 125 new employees next year, or that it needs 25cnew people in sales and customer service, 45 in production, 20 in accounting and information systems, 2 in HR, and 33 in the warehouse. The unit breakdown obviously allows HR planners to better pinpoint the specific skills needed than does the aggregate method. Demand for human resources can be forecast by considering specific openings that are likely to occur. The openings (or demands) are created when new jobs are being created or current jobs are being reduced. Additionally, forecasts must consider when employees leave positions because of promotions, transfers, turnovers, and terminations. An analysis is used to develop decision rules (or “fill rates”) for each job or level. For example, a decision rule for a financial institution might state that 50% of branch supervisor openings will be filled through promotions from customer service tellers, 25% through promotions from personal bankers, and 25% from new hires. Forecasters must be aware of multiple effects throughout the organization, because as people are promoted from within, their previous positions become available. Continuing the example, forecasts for the need for customer service tellers and personal bankers would also have to be developed.
The overall purpose of the forecast is to identify the needs for human resources by number and type for the forecasting period. (2010, Mathis and Jackson )
1.3.2. Forecasting the Supply of Human Resources
Oncechuman resources needs have been forecast, then availability of qualified individuals must be identified. Forecasting availability considers both external and internal supplies. Although the internal supply may be somewhat easier to calculate, it is important to calculate the external supply as accurately as possible.
External Supply
The external supply of potential employees available to the organization needs to be identified. Extensive use of government estimates of labor force populations, trends incthe industry, and many more complex and interrelated factors must be considered.
Such information is often available from state or regional economic development offices, including these items:
• Net migration into and out of the area
• Individuals entering and leaving the workforce
• Individuals graduating from schools and colleges
• Changing workforce composition and patterns
• Economic forecasts for the next few years
• Technological developments and shifts
• Actions of competing employers
• Government regulations and pressures
• Circumstances affecting persons entering and leaving the workforce
Internal supply
Estimatingcinternal supply considers the number of external hires and the employees whocmove from their current jobs into others through promotions, lateral moves, cand terminations. It also considers that the internal supply is influenced byctraining and development programs, transfer and promotion policies, and retirementcpolicies, among other factors. In forecasting the internal supply, data from the replacement charts and succession planning efforts are used to project potential personnel changes, identify possible backup candidates, and keep track of attrition (resignations, retirements, etc.) for each department in an organization
Relationships between individuals and their employers can vary widely from favorable to unfavorable. The individual’s performance is a major part of why the employer wants the individual to stay or go. Competent employees who are satisfied with their employers, who know what is expected, and who have reduced turnover potential are assets to the organization. But just as individuals in an organization can be competitive advantage, they can also be a liability. When few employees are satisfied with their jobs, when people are constantly leaving, and when the employees who do remain work ineffectively, the organization faces a competitive disadvantage.
Understanding the relationships between individuals and organizations is more than just academically interesting. The economic health of most organizations depends on the efforts of employees with the ability and motivation to do their jobs well. The exchanges in the relationship between an employee and an employer affect both of them. Two considerations in these relationships include the psychological contract and motivation, which can help with understanding employee retention.
Psychological Contract
A concept that has been useful in discussing individuals’ relationships with their employers is that of a psychological contract, which refers to the unwritten expectations employees and employers have about the nature of their work relationships.
The psychological contract can create either a positive or negative relationship between an employer and an individual. It is based on trust and commitment that leads to meeting both the employer’s and employee’s expectations and needs. Unwritten psychological contracts between employers and employees encompass expectations about both tangible items (e.g., wages, benefits, employee productivity, and attendance) and intangible items (e.g., loyalty, fair treatment, and job security). Employers may attempt to detail their expectations through handbooks and policy manuals, but those materials are only part of the total “contractual” relationship.
The Changing Psychological Contract Traditionally, employees expected to exchange their efforts and capabilities for secure jobs that offered competitive pay, a solid range of benefits, and career progression within an organization, among other factors. But as some organizations have changed in economic terms, they have had to address various organizational crises by downsizing and eliminating workers who had given long and loyal service.
Consequently, in these firms, a growing number of remaining employees are questioning whether they should remain loyal to and stay with their employers. When individuals feel that they have some control and perceived rights in the organization, they are more likely to be committed to the organization and utilize their knowledge, skills, and abilities to accomplish performance results.
Table 1.1. Components for psychological contract
Psychological contracts can be strengthened and employee commitment enhanced when the organization is involved in a cause the employee values highly. Conversely, psychological contracts can be violated, not only in reaction to personal mistreatment, but from a perception that the organization has abandoned an important principle or cause.
For instance, when unethical or illegal behavior of upper management occurs, the psychological contract is violated. Thus, employees may feel anger, distrust, reduced loyalty and commitment, and increased willingness to leave. Also, social exchange relationships in organizations can be affected by psychological contract breaches and violations.
Global Psychological Contract Concerns
With many organizations having global operations, the psychological contract becomes more complicated. Employees in foreign countries and expatriate employees from the United States have varying psychological contract expectations.
For expatriates, if the organizational expectations are not made clear prior to their relocation, more of them will be likely to quit within the first year or demand return to their home country. An additional concern for multinational firms is to meet the psychological contract expectations of individuals in different cultures and countries.
Chapter 2. Information Technology in HR
2.1. Human Source Information System
Human Resource Information System is a systematic way of storing data and information for each individual employee to aidcplanning,decision making and submitting of returns and reports to the external agencies.
The purpose of Human Resource Information System is to store and data for each employee in order to use the data whenever it’s needed in future. Also, It’s used in order to have a base for planning, organizing, when decision are takin, to control and so on.
HRIS has plenty applications: personnel administration, salary administration, leave / absence recording, inventory, medical historic, s.o.
Capabilities of HRIS:
• Input Function
Fig 2.1. Input Function ()
• Data Maintenance Function
Fig 2.2. Data Maintenance Function
• Output Function
Fig 2.3. Output Function
2.2. Computer applications
There are many different ways in which information technology can be used to support and undertake human resource planning.
They can be divided into three broad categories: information provision, modelling and presentation.
An important role played by computer databases is storing the information required to undertake meaningful forecasts of staffing demand and internal supply.
Not only do computerized personnel information systems (CPIs) allow more data to be stored about jobs, employees and past applicants, they also permit far swifter generation of reports summarizing the data that is ever possible using the manual information storage systems. The larger and more complex the organization, the more added value is gained by the presence of CPIS with such capabilities.
Much information held in CPSIs can be used in human resource planning, and forms the basis for the calculations and judgments referred to above.
The following list is indicative but by means comprehensive:
• Sex
• Test scores at selection
• Internal career history
• Age
• Turnover record
• Career history prior to joining
• Educational qualifications
• Start date
• Skills or training completed
• Pay level
• Performance or productivity ratings
• Sickness or absence records
• Promotion record
Data such as this, analyzed for hundreds or thousands of present and past employees, provides raw data for calculation of formulae such as the wastage and stability indices, and for the analysis of cohorts and promotion patterns. It also permits HR planners to calculate correlations between wastage and variables such as age, sex, type of job and pay rate.0
In addition, it facilitates analysis of the organization’s bank of skills when calculations are being made about its ability to meet future demand internally. Furthermore, the reporting facilities built into personnel databases readily permit comparative analysis between one department and another so as to make forecasts more accurate.
The second major application of informational technology in human resource planning is the field of modelling. The ability of a computer to handle vast quantities of data permits highly complex formulae containing numerous variables to be built up and results to be calculated in seconds. C
While specialist modelling programs are available on the market, most human resources forecasting can be undertaken using basic spreadsheet programs.
Human Resource Software
Every single day a new software appears, a software that is meant to make the recruitment easier within the company, either if you speak about internal recruitment or external.
• Workable, from Workable Software
Workable is affordable, useable hiring software. It replaces email and spreadsheets with an applicant tracking system that your team will enjoy using. From writing great job descriptions and building a branded careers page, to posting to multiple job boards, Workable makes it simple. It’s easier to browse rich profiles of candidates Img. 2.1. Logo Workable
and work effectively with the hiring team on a platform that keeps notes, communication, schedule and
analytics in one place.
• Jobscience Talent Acquisition, from Jobscience
Jobscience – Talent Acquisition is a Recruiting Software for enterprise companies hiring internally.
Img 2.2. Logo JobScience
• IBM Kenexa, from IBM
Building and maintaining a Smarter Workforce can significantly affect bottom line results. However, businesses continue to face the ongoing challenge of finding and retaining top employee talent while getting Img 2.3. Logo IBM
the best efforts from their current workforce. IBM talent management products help organizations to build and maintain a Smarter Workforce by identifying and retaining top employee talent while getting the best efforts from their current workforce.
• CakeHR, from HR Bakery
CakeHR is the ideal choice for start-ups and established small-to-medium businesses that don’t want to get bogged down in using spread sheets or paper to manage their employees’ time off. CakeHR automates every step of the procedure, from requesting time off, to the manager’s approval, to recording the time off on the shared company calendar,
and updating individual Img 2.4. Logo Cake Hr
employees’ entitlements and accruals.
• LanteriaHR from Lanteria
SharePoint solution for talent management & HR that creates a collaborative environment where employees & line managers can cooperate. This one is not specially for HR but it can make the process easier and faster. Img 2.5. Logo Lanteria
This are just a few examples of software that are being used in the moment in the companies in order to find the necessary of human resources.
Within the next chapters we will create a parallel between the programs and explain how every one of them work, which one is better to use and which one not so much.
Chapter 3. The Nature of Human Capital Management
Human Capital Management is the strategic and operational management of activities to enhance the performance of the human resources in an organization.
Today organizations face an environment that is characterized by:
– Extremely high levels of competition
– Rapid technological change
– Dynamic legal, social and political conditions
– Consumers demanding high quality at low prices.
The result is that organizations have to make fundamental changes in the way they manage their human resources.
Goals
Traditionally, the specific goals associated with human resource management have been attracting talented applicants, retaining desirable employees, and motivating and developing employees to realize successfully the goals of the organization.
However, the many changing forces (technology, business restructuring, legal and social concerns) that organizations need to attend to today in order to be able to compete effectively in the 21st century make it necessary to place a high value in managing their human resources as effectively as possible.
Fig 1.1. Activities in Human Resource Management, By Florin Danalache
HC planning: understanding the environment and meeting its demands.
• Increasingly, successful HR management depends on understanding the current business environment, both externally and internally.
Important aspects of the external organizational environment include levels of domestic and international competition, work force and demographic changes, societal and legal considerations and general economic and technological trends. The aspects of the internal organizational environment that an organization needs to understand relate to the business strategy of the firm, its structure, culture and size.
• Central to meeting the demands of the business environment is effective HR planning.
This activity involves planning and forecasting short and long term requirements, analyzing jobs and designing jobs in the organization.
Staffing the organization
• Once the organization’s needs have been determined, staffing can take place.
This includes recruiting job candidates and selecting the most appropriate job applicants for the available jobs.
Training and developing human resources
• Activities related to training and development include determining, designing and implementing programs to increase ability and employee performance, and creating and implementing the organizational practices and HR activities to improve total quality in organizations.
Appraising employee behavior and performance
• Once on the job, employees’ performance must be evaluated.
This is accomplished by gathering performance appraisal information and then utilizing this information.
Compensating employees
• Lastly, employees are rewarded on the basis of the value of their job, and their performance. Apart from direct rewards, a number of indirect benefits are also provided to employees. Thus, the compensating activity includes the administration of both direct and indirect compensation benefits
The roles of the HR department
• The human resource department is the group formally established by an organization to assist in managing the organization’s human resources as effectively as possible.
There are two major roles associated with the management of human resources in organizations: strategic and operational.
The strategic role of HC emphasizes that the people in an organization are valuable resources, representing a significant organizational investment. Strategically, human resources must be viewed in the same context as the financial, technological, and other resources that are managed in organizations. Thus, at the strategic level HR departments get involved in broader decisions, providing overall direction and vision for the organization.
The operational role of HC refers to a wide variety of activities, typically associated with the day-to-day management of people in organizations. At the operational level, compliance with equal employment opportunity and other laws must be ensured, applicants must be interviewed, new employees must be oriented to the organization, employees and supervisors must be trained and developed, their performance must be evaluated, and wages and salaries must be administrated.
Human capital management (HCM) is an approach to employee staffing that perceives people as assets (human capital) whose current value can be measured and whose future value can be enhanced through investment.
• An organization that supports HCM provides employees with clearly defined and consistently communicated performance expectations.
Managers are responsible for rating, rewarding, and holding employees accountable for achieving specific business goals, creating innovation and supporting continuous improvement.
In the back office, HCM is the part of enterprise resource planning (ERP) that deals with employee records. The records provide managers with the information they need to make decisions that are based on data. HCM software streamlines and automates many of the day-to-day record-keeping processes and provides a framework for HR staff to manage benefits administration and payroll, create map out succession planning and document such things as personnel actions and compliance with industry and/or government regulations.