Post Graduate Diploma in Business Management HUMAN RESOURCE MANAGEMENT

Transcription

1 Post Graduate Diploma in Business Management HUMAN RESOURCE MANAGEMENT STUDY GUIDE Copyright 2014 MANAGEMENT COLLEGE OF SOUTHERN AFRICA All rights reserved; no part of this book may be reproduced in any form or by any means, including photocopying machines, without the written permission of the publisher REF: HRM 2014

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3 TABLE OF CONTENTS Section Title of Section Page Introduction Introduction to Human Resource Management Human Resource Strategy and Business Strategy Human Resource Planning Recruitment, Selection and Induction Employee Training and Development Performance Management Compensation Employee Benefits and Services Human Resource Strategy and Employee Relations Career Planning Bibliography

4 INTRODUCTION 4

5 AIMS OF THIS MODULE The broad aims of this module are to: Introduce the learner to the field of human resource management. Develop the learner s understanding of the integration of human resource strategy and business strategy. Develop the learner s understanding of human resource planning. Develop the learner s understanding of the HRM practices of recruitment and selection. Develop the learner s understanding of employee training and development. Develop the learner s understanding of performance management. Develop the learner s understanding of the HRM practices of compensation and the provision of employee benefits and services. Develop the learner s understanding of employment relations within the Southern African context. Develop the learner s understanding of career management. 5

6 Introduction This module, Human Resource Management, forms an integral part of the MANCOSA Master of Business Administration (MBA) qualification and serves to introduce the learner to the fundamentals of the field of human resource management. The module explores the integration of human resource strategy and business strategy, as well as human resource planning, recruitment and selection, employee training and development, performance management, compensation, employee benefits and services, employment relations and career management. Contents and Structure Section 1: Introduction to Human Resource Management This first section introduces the learner to the field of human resource management (HRM). In this section a definition of HRM is formulated, the aims of HRM are explored and the place of HRM within the enterprise is examined. HRM functions and the role of the HR manager are also given attention. This section also explores the nature of strategic human resource management, human resource career opportunities as well as current HRM issues and challenges. Section 2: Human Resource Strategy and Business Strategy Section 2 explores the integration of human resource strategy and business strategy. Here the importance of the relationship between HR strategy and business strategy is examined. The manner in which HR strategy may be integrated into the process of business strategy formulation, implementation and evaluation is explored. This section also studies the competencies required by the HR manager to successfully participate in and contribute to the strategic management process. Section 3: Human Resource Planning This third section examines human resource planning. The nature of HR planning, the process of HR planning and current issues impacting on HR planning are explored. 6

7 Section 4: Recruitment, Selection and Induction Section 4 explores the HR practices of recruitment, selection and induction. In this section the nature of recruitment, recruitment policies, factors influencing recruitment and recruitment sources are studied. The factors affecting selection decisions and the selection process are also explored. The objectives and benefits of an induction programme are studied. The planning, design, implementation and evaluation of an induction programme are also explored. Section 5: Employee Training and Development This section examines employee training and development. A distinction is made between the concepts training and development. The training process is examined, and the impact of the South African context on training within South African organisations is explored. The various approaches to development are also examined. Section 6: Performance Management Section 6 focuses on performance management. Performance management is defined, the performance management process is explored and the various approaches to performance management are investigated. Section 7: Compensation This section focuses on the HRM practice of compensation. The nature of compensation and factors influencing the determination of compensation are investigated. This section also explores compensation levels, the development of a compensation structure and challenges to compensation systems. Incentive compensation systems are also investigated. Section 8: Employee Benefits and Services Section 8 focuses on employee benefits and services. The nature of employee benefits and services is explored and the reasons for growth in employee benefits and services are investigated. This section also examines the different types of benefits and services. The administration of benefits and services is also studied. 7

8 Section 9: Human Resource Management and Employment Relations Section 9 focuses on employment relations. The nature of employment relations is studied and it is established that it is a living field of study that revolves around and is played out daily in workplaces around the world. Section 10: Career Management This section explores the area of career management. The nature of the career in the twentyfirst century is explored and the importance of career management is established. The various career stages, career planning and career development are also explored. How to Use This Module This module should be studied using this Study Guide and the prescribed textbooks. You should read about the topic that you intend to study in the appropriate section of this Study Guide before you start reading in detail in the prescribed textbooks. Ensure that you make your own notes/summaries as you work through both the textbooks and this Study Guide. At the commencement of each section of this Study Guide you will find a list of learning outcomes. These learning outcomes outline the main points that you should understand when you have completed the section with its supporting chapters in the prescribed textbook. Avoid reading all the material at once. Each study session should be no longer than two hours without a break. As you work through the Study Guide you will come across: Think Points Activities Reading Activities Self Check Activities Study Group Discussion Activities Sample Examination Questions These are designed to help you study and prepare for the examination. 8

9 ? THINK POINT A think point asks you to stop and think about an issue. Sometimes you are asked to apply a concept to your own experience or to think of an example. ACTIVITY You may come across activities which ask you to carry out specific tasks. The aim of these activities is to give you an opportunity to apply what you have learnt and / or explore an issue relevant to the particular section. READING ACTIVITY Most sections of this Study Guide contain at least one reading activity. The reading activity requires that you read one or more of the recommended journal articles and then answer questions relevant to that journal article. The majority of the recommended journal articles are available from the Emerald library facility which learners may access via Mancosa s website. SELF CHECK ACTIVITY You will come across self-assessment questions which will test your understanding of what you have learnt so far. Answers to these questions are given at the end of each section. You should refer to the Study Guide and prescribed textbooks when attempting to answer the self check activities. 9

10 STUDY GROUP DISCUSSION ACTIVITY Study group discussion activities are provided at the end of each section of this Study Guide. You must have worked through the relevant section and supporting chapters in the prescribed textbooks prior to meeting as a study group. The study group discussion activities provide an opportunity for learners to apply what they have learnt, to share experiences with fellow learners and to learn from each other. SAMPLE EXAMINATION QUESTIONS Sample examination questions are provided at the end of each section. These provide the learner with an understanding of the type of questions which may be asked in the examination. Reading Prescribed Textbook o Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2012) Human Resource Management: Gaining a Competitive Advantage 8 th Ed. McGraw-Hill. Recommended Textbook o Nel, P.S., Werner, A., Haasbroek, G.D., Poisat, P., Sono, T. & Schultz, H.B. (2011) Human Resource Management. 8 th Edition. Cape Town: Oxford University Press Southern Africa. Recommended Reading Each section has a list of recommended books and recommended journal articles, which allow you to develop an understanding of the issues beyond the perspective of the prescribed textbooks and Study Guide. The majority of recommended journal articles 10

11 listed per section are available from the Emerald online library facility which is accessible via Mancosa s website. Module Assessment Assignment: You will be required to complete and submit an assignment. This assignment is assessed as part of your coursework. Therefore, it is very important that you complete it. Examination: An examination will be written at the end of the semester. The assessment strategy will focus on application of theory to practice. 11

12 SECTION 1 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT 12

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14 CONTENTS Learning Outcomes Reading 1.1 Introduction 1.2 Definition of Human Resource Management 1.3 The Place of Human Resource Management within an Enterprise 1.4 Human Resource Management Functions and The Role of the HR Manager 1.5 Strategic Human Resource Management 1.6 Human Resource Career Opportunities 1.7 Current Trends and Challenges 1.8 Summary Self Check Activity Study Group Discussion Activity Sample Examination Question 14

15 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the learner should be able to demonstrate a basic understanding of the field of human resource management (HRM). This overall outcome will be achieved through the learner s mastery of the following specific outcomes, in that the learner will be able to: 1. Define human resource management. 2. Identify and discuss the place of human resource management within the enterprise. 3. Identify and discuss human resource management functions. 4. Identify and critically discuss the role of the human resource manager. 5. Explain the nature of strategic human resource management. 6. Identify various human resource career opportunities. 7. Identify and critically discuss current trends and challenges in the field of human resource management. 15

16 READING Reading Prescribed Textbook o Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2012) Human Resource Management: Gaining a Competitive Advantage 8 th Ed. McGraw- Hill. (pp 2 68) Chapter 1 Recommended Textbook o Nel, P.S., Werner, A., Haasbroek, G.D., Poisat, P., Sono, T. & Schultz, H.B. (2011) Human Resource Management. 8 th Edition. Cape Town: Oxford University Press Southern Africa. (2 33) Chapter 1 Recommended Reading: Books George, J.M. & Jones, G.R. (2006) Contemporary Management: Creating Value in Organisations. 4 th Ed. Boston: McGraw-Hill International Edition. Pp (Chapter 15). Grobler, P., Wärnich, S., Carrell, M.R., Elbert, N.F. & Hatfield, R.D. (2006) Human Resource Management in South Africa. 3 rd Ed. London: Thomson. pp 2 38 (Chapter 1). Kleynhans, R., Markham, L., Meyer, W., Van Aswegen, S. & Pilbeam, E. (2007). Human Resource Management: Fresh Perspectives (Chapter 1 & 2). Snell, S. & Bohlander, G. (2007) Human Resource Management. Mason: Thomson. pp 3 44 (Chapter 1). Journals Gbadamosi, G. (2003) HRM and the Commitment Rhetoric: Challenges for Africa. Management Decision. Vol. 41, No. 3, pp Voermans, M. and van Veldhoven, M (2007) Attitude towards e-hrm: an empirical study at Philips Personnel Review. Vol. 36, No. 6, pp

17 1.1 Introduction This section, the first section of the Human Resource Management module, introduces the learner to the concept of human resource management (HRM). The following issues are examined: Definition of human resource management Place of human resource management in the enterprise Human resource management functions and the role of the human resource manager Strategic human resource management Human resource career opportunities Current HRM trends and challenges 1.2 Definition of Human Resource Management ACTIVITY From your experience as an employee and/or manager within an organisation, develop a definition of human resource management. Comment on Activity Various management and Human Resources specialists define Human Resource Management (HRM) differently, placing emphasis on different aspects of HRM. Some definitions include: Human resource management (HRM) refers to the policies, practices and systems that influence employees behaviour, attitudes and performance. Many companies refer to HRM as involving people practices (Noe, Hollenbeck, Gerhart & Wright, 2012). the process of managing human talent to achieve an organisation s objectives (Snell & Bohlander, 2007: 4). 17

18 the productive use of people in achieving the organisation s strategic objectives and the satisfaction of individual employees needs (Nel, Werner, Haasbroek, Poisat, Sono & Schultz, 2011). Nel et al (2011) also emphasise the need for HRM to create fit between four dynamic components of the organisation: The environment The organisation The individual The job These organisational components, and their inter-relation, are diagrammatically represented in Figure 1.1 below. ENVIRONMENT Economic Social Political Technological INDIVIDUAL Abilities Knowledge Personality Values THE ORGANISATION Size Culture Structure Human Resources Policy Technology FIT THE JOB Challenge Variety Autonomy Figure 1.1: Human Resources Management: The Inter-Relation of Four Dynamic Components (Nel et al, 2008) 18

19 1.3 The Place of Human Resources Management within an Enterprise ACTIVITY Based on your experience of the human resource management function within the organisation, provide a diagrammatic representation of the place of HRM within the enterprise. Comment on Activity Human resource management occupies a functional place within the organisation s structure, as depicted in Figure 1.2. This diagram depicts the line authority vested in the HR Manager, where he/she holds a position of authority which provides for the issuing of instructions to his/her subordinates. 19

20 GENERAL MANAGER HR MANAGER MARKETING MANAGER PRODUCTION MANAGER FINANCIAL MANAGER Manager: Compensation Benefits Manager: Training & Development Manager: Recruitment & Selection Manager: Employee Relations Figure 1.2: The Place of the Human Resource Management Function in an Organisation (adapted from Nel et al, 2008: 9). Human resource management may also be depicted as occupying the heart of the organisation (see Figure 1.3), where functional authority and staff authority are exercised. Functional authority gives the HR manager the right to issue enforceable HRM-related instructions to individuals and departments throughout the organisation. On the other hand, staff authority enables the HR manager to issue advice (which is not enforceable) to various entities within the organisation. THE ORGANISATION TOP MANAGEMENT R & D DEPARTMENT LOWER MANAGEMENT MARKETING DEPARTMENT Functional Authority HUMAN RESOURCE MANAGEMENT Staff Authority TASK TEAMS OPERATIONS DEPARTMENT EMPLOYEES MIDDLE MANAGEMENT FINANCE DEPARTMENT Figure 1.3: Human Resource Management Functional and Staff Authority 20

21 1.4 Human Resource Management Functions and The Role of the HR Manager George and Jones (2006) identify the functions and activities of Human Resource Management to include: HRM Functions Recruitment and Selection Training and development Performance Appraisal and Feedback Compensation Employee Relations Activities Performed by HR Manager HR Planning Job Analysis External and Internal Recruitment Administering the Selection Process Outsourcing to meet HR needs Classroom based training On-the-job training Varied work experiences Formal Education Trait, behavioural and result appraisals Objective and subjective appraisals Effective performance feedback Determining pay level, pay structure and benefits Administering wages and salaries Union engagement Collective bargaining Responsibilities of HR Departments In order to effectively carry out these functions within the organisation, the HR Manager and his/her department need to fulfill the following roles: A Service Role which incorporates the everyday functions of the HR department, which includes activities relating to recruitment, selection, training and compensation; A Control Role which is more strategic in nature and could involve, for example, an analysis of key HRM outputs such as labour turnover; An Advisory Role which involves the provision of expert HRM related advice to various parties within the organisation (Snell & Bohlander, 2007). 21

22 Ulrich s Future Roles for HR Dave Ulrich (cited in Nel et al, 2011) identifies the following roles which the HR professional will need to fulfill to assist the organisation to compete in an increasingly dynamic and changing environment. HRM professionals will need to focus on the creation of value for the enterprise, and create mechanisms which provide for rapid business results. The roles are: Strategy Execution Partner: which involves the HRM function in: o Defining an organisational structure; o Conducting an organisational audit; o Identifying methods for renovating parts of the organisational architecture; o Taking stock of its own (HR) work and set clear priorities. Administrative Expert through improving and automating administrative systems. Employee Champion which would involve being an advocate for employees. Change Agent which would involve building the organisation s capacity to adapt to cope with and embrace change (Nel et al, 2011) 1.5 Strategic Human Resource Management Ulrich emphasised the need for the HRM professional to fulfill four roles which will assist the organisation with the creation and maintenance of its competitive advantage. While in the past the focus of HR was an administrative one, more recently HR has been recognised as being critical to the organisation s overall strategy (Grobler, Wärnich, Carrell, Elbert & Hatfield, 2006). Table 1.1 below distinguishes between the traditional approach to HR and the more recent strategic approach. 22

23 Dimensions Strategic HRM Traditional HRM Participates in overall formulation of Involved in operational Planning and company strategy. planning only Strategy Aligns HR functions to company Formulation strategy Authority HR Director afforded high status and HR Manager has medium authority status and authority Concerned with all managers and Concerned mainly with Scope employees hourly, operational and administrative employees Decision- Involved in strategic decision making Involved in operational Making decision making only Fully integrated with other Moderate to limited Integration organisational functions (marketing, integration with other finance, operations, etc.) organisational functions Table 1.1: Differences between Strategic HRM and Traditional HRM (adapted from Grobler et al, 2006: 6). Strategic HRM will be addressed in greater depth in Section 2 of this Study Guide. 1.6 Human Resource Career Opportunities? THINK POINT What types of human resource career opportunities exist within your organisation? An HR professional may enter into the HRM field through various types of positions. Various generalist and specialist HR positions exist throughout all levels of the organisation. These include positions in: Employee relations Recruitment and selection 23

24 Organisational development Training and development Performance management Compensation and benefits 1.7 Current HRM Trends and Challenges Given the dynamic and competitive nature of the current business environment, HRM is currently affected by a number of trends and challenges HRM Trends A summary of the HR trends identified by HR Future (2006) are provided below. It is likely that the student of HRM identify at least one of these trends in the organisation in which he / she works. Global Labour Shortage: A growing labour shortage is a trend across the world. In the United States it is expected that by 2010 approximately 10 million jobs will be unfilled. This will provide qualified employees with the power to choose the job and organisation which most fulfills them. It is also likely that organisations will outsource certain functions to organisations in countries such as India and China (HR Future, 2006). Skills Gaps: There are deficiencies in key skills required by organisations which result in poor performance and a loss of competitive advantage. Organisations will have to invest considerably in training and development to address these skills gaps (HR Future, 2006). Retention of Key Talent: Research from the USA shows that an employee s average tenure with a company is 3.6 years. As organisations compete on human capital it is imperative that companies find ways to retain their talent through recognition and reward strategies (HR Future, 2006). Loss of Organisational Knowledge: When staff leave an organisation, they take with them organisational knowledge which is then lost to the organisation. To address this it is important that organisations put in place measures to retain such knowledge (HR Future, 2006). 24

25 Employee Self-Service & Online Forms: The intranet is being used more and more to provide Human Resource services to employees. Employees and management now submit HR related forms (such as leave applications) on line which saves time and money. This requires that HR departments invest in and maintain a suitable IT infrastructure which will enable them to deliver online services. Older Retirement Age: Many employees from the baby boomer generation will continue to work past their retirement age. The reason for this is that they do not have the funds to stop work and that they are still fit and well to continue to work (HR Future, 2006). 25

26 1.7.2 HRM Challenges HRM CHALLENGES Sustainability Challenge Technology Challenge Global Challenge Figure 1.4: HRM Challenges Sustainability Challenge Noe et al (2012) define sustainability as the ability of a company to service and succeed in a dynamic competitive environment. Sustainability depends on an organisation s ability to meet the needs of its stakeholders, as well as the ability to deal with social and economic changes.? THINK POINT Think about the organisation in which you are currently employed. What is the sustainability challenges facing your organisation? What implications do these sustainability challenges have for your organisation s HRM practices? Comment on Think Point Some of the commonly experienced sustainability challenges are described below: Economic Changes: Many organisations now have to work within an uncertain economic environment. Some of the challenges which economic changes bring about for organisations include: 26

27 o Competition Amongst Organisations for Employees: Research shows that within the USA employment is expected to increase by 18.9 million (13%) between 2004 and New employees will need to fill vacant positions within organisations due to retirement, death and disability. The projected fastest growing occupations within the USA include network systems and data communications analysts, medical assistants, physical assistants as well as computer software engineering applications. o Valuing of Intangible Assets and Human Capital: A company s value comprises its financial assets, its physical assets and its intangible assets which include human capital, intellectual capital, social capital and customer capital. In the knowledge economy it is the organisation s intangible assets which provide for competitive advantage (Noe et al, 2012). One way in which a company can increase its intangible assets is through the recruitment and selection of knowledge workers who contribute and apply specialised knowledge in the manufacture of a company s product or the rendering of a service. Adopting a learning organisation philosophy will also assist an organisation in growing its intangible assets (Noe et al, 2008). o Changes in Employment Expectations: In the past, employees expected to receive job security and opportunities for promotion in exchange for their time, effort and skills. However, given the change with which organisations are constantly faced, job security and promotion opportunities can no longer be guaranteed. Organisations now demand high levels of performance and longer working hours without job security from employees and employees expect flexible working schedules, more autonomy, comfortable working conditions, financial incentives as well as training and development opportunities (Noe et al, 2012) in return. o Employee Engagement: Employee engagement refers to the degree to which employees are fully involved in their work and the strength of their job and company commitment (Noe et al, 2012). Organisations have concerns about employee engagement as it directly impacts competitive advantage. o Talent Management: This involves the attraction, selection, development and motivation of employees. One of the key challenges experienced with respect to talent 27

28 management is the development of employees into high potential managers and then retaining them in high level positions (Noe et al, 2012). o Alternative Work Arrangements: This involves the use of contract workers, temporary workers and independent contractors as and when required. o Demanding Work but Greater Flexibility: The globalisation of the world economy and the emergence of e-commerce have resulted in the 40 hour work week becoming obsolete. Employees are expected to work longer hours and this is made possible through technological aides (laptops, PDAs, cellphones, etc.). This results in greater employee stress and lower satisfaction. To offset the negative impact of demanding work, some employers try to provide employees with greater flexibility to ease the pressure of trying to balance work and life activities, while at the same time increasing productivity and satisfaction (Noe et al, 2012). Meeting Needs of Stakeholders, Shareholders, Customers, Employees and Community In order for an organisation to be sustainable, it needs to meet the needs of its stakeholders: o Balanced Scorecard: This is a means of performance measurement that gives managers a chance to look at their company from the perspectives of internal and external customers, employees and shareholders (Noe et al, 2012). It is important that the balanced scorecard links Human Resource Management to the business strategy, so that it may evaluate the extent to which HRM is contributing to the achievement of the organisation s goals. o Social Responsibility: Companies that implement social, ethical and environmental responsibility initiatives improve their image in the marketplace, which in turn contributes to their sustainability (Noe et al, 2012). Customer Service & Quality Emphasis Due to high levels of competition and knowledgeable customers, customers are in a position to demand excellent service. This requires that organisations meet and exceed 28

29 these demands so as to attract and retain customers. To ensure their sustainability, many organisations implement quality standards such as Total Quality Management (TQM), Malcolm Baldrige National Quality Award, ISO 9000:2000 and the Six Sigma Process (Noe et al, 2012). Workforce Diversity & Changing Demographics The following three changes to the demographics and diversity of the workforce have been predicted: o Aging Workforce: Forecasts in the USA predict that by 2014 the total size of their country s workforce will be 162 million of which 34 million workers will be 55 years and older. This represents a 49% increase in the 55 years and older age group since The implications for HRM are that considerable attention will need to be given to career plateauing, retirement planning and the upskilling of older workers (Noe et al, 2012). While this is the situation that pertains to the United States, it may well be different in African countries. o Diversity of Workforce: The workforce of today is increasingly diverse in terms of race, gender as well as disability. o Influence of Immigration: Many industries rely on immigrants (often times illegal immigrants) for labour intensive and / or short term contract work. The changing nature of the workforce requires HRM practices that ensure that the talents of a diversity of employees are optimally utilised. Legal & Ethical Issues Countries across the world have numerous pieces of legislation which impact on HRM practices. HRM issues which these pieces of legislation focus on include equal opportunity, health and safety as well as pay and benefits. It is important that HRM practices support the implementation of the relevant pieces of legislation, so as to avoid court battles and costs (Noe et al, 2012). 29

30 The Global Challenge? THINK POINT Think about the organisation in which you are currently employed. What are the global challenges facing your organisation? What implications do these global challenges have for your organisation s HRM practices? Comment on Think Point For many organisations expansion into the global market is important for creating and sustaining a competitive advantage. Further, the global economy does not only affect organisations with international operations, but affects local organisations who buy materials from international organisations (Noe et al, 2012). Entering International Markets: Organisations can enter into international markets through exporting their products overseas, establishing manufacturing facilities internationally, entering into alliances with foreign countries and offering products and services through e-commerce. Offshoring: this refers to the exporting of jobs from developed countries, such as the United States, to countries where labour and other costs are lower (Noe et al, 2008: 41). Countries to which jobs are often offshored include India, China and Russia. The main reason for offshoring jobs is to reduce labour costs - for example, a computer programmer in India earns $10 per hour while a computer programmer in the United States earns $60 per hour. Another key reason for offshoring jobs is to capitalise on the available, highly skilled and motivated labour pool in some of the developing countries. Offshoring does, however, have its disadvantages which include the costs associated with working with different languages, cultures and time zones (Noe et al, 2012). 30

31 The Technology Challenge? THINK POINT Think about the organisation in which you are currently employed. What is the technology challenges facing your organisation? What implications do these technology challenges have for your organisation s HRM practices? Comment on Think Point Advancements in technology have resulted in changes to the way in which we plan our work, the way in which we communicate, as well as the location of our work. For example, electronic and networked calendars facilitate employees setting up of meetings; cell phones provide organisation s with 24 hour access to their employees; and laptops enable us to work from home, from hotels and from airports. These changes in how and where employees work has a significant impact on HRM practices. How and Where People Work The internet, PDAs, ipods and cellular phones have lead to changes in many aspects of HRM. Employees are able to access a considerable range of information and resources via the internet, and they are able to communicate with experts through newsgroups. As a result of technological advancement, telecommuting is becoming an option for many employees. Telecommuting has the advantages of reducing traffic, air pollution, providing for family-friendly work practices as well as increasing employee productivity (Noe et al, 2012). However, technological advancement has also resulted, in some instances, in employees being on call 24 hours a day, 7 days a week. High Performance Work Systems High performance work systems refer to work systems that maximise the fit between the company s social system and technical system (Noe et al, 2012). 31

32 o Working in Teams: Work teams are now frequently used within organisations to offer high levels of quality and service to customers. The work teams perform many of the responsibilities which would have previously been executed by a manager, such as selecting of new team members, scheduling the team s work and coordinating the team s activities with customers and other teams within the organisation. The use of work designs such as work teams requires new HRM practices such as providing compensation and rewards linked to team and company performance; providing ongoing upskilling to team members; and ensuring that team members have competence in selecting new team members (Noe et al, 2012). o Changes in Skills Requirements: New technologies which form part of a high performance work system require that employees have sufficient technical skills to work with the technological equipment (Noe et al, 2012). o Working in Partnerships: Technology has enabled organisations to form partnerships with one or more other companies. Virtual teams are often used as the basis of the partnership. Virtual teams are separated by time, geographic distance, culture and / or organisational boundaries and rely exclusively on technology for interaction between team members. (Noe et al, 2012). o Changes in Company Structure and Reporting Relationships: In the traditional organisation, managers were responsible for the dissemination of information and the making of decisions. However, technology allows employees to have immediate access to information which allows them to make decisions rather than wait for the manager s decision. Technology provides for the adaptive organisation where employees are constantly learning and improving performance and traditional boundaries between management and employees, and employees and customers, are no longer relevant (Noe et al, 2012). o Human Resource Information Systems (HRIS): A Human Resource Information System (HRIS) is a system used to acquire, store, manipulate, analyse, retrieve, and distribute HR information (Noe et al, 2012). An HRIS is used to store large amounts of employee data, and is also used to distribute information to employees regarding human resource issues. The HRIS can support the organisation in strategic decision 32

33 making and can assist the HR Department with day to day decision making (Noe et al, 2012). o Increased Use and Availability of e-hrm: Electronic HRM or e-hrm provides for the processing and transmission of digitised information used in HRM (Noe et al, 2012). e-hrm has the following implications for HRM practices: Recruitment: Jobs can be posted online and candidates can apply for jobs online. Selection: Online simulations can be used to measure a candidate s ability to deal with business challenges. Training: Employees can engage in online learning, allowing them to update their skills from any location at any time. Compensation and Benefits: Employees may review their salary and bonus information on line. They may also seek information about various benefit plans (Noe et al, 2012). READING Read the following journal article and answer the questions which follow. Voermans, M. and van Veldhoven, M (2007) Attitude towards e-hrm: an empirical study at Philips Personnel Review. Vol. 36, No. 6, pp In the space below, provide a summary of the key points that were made in the journal article. 33

34 Comment on Reading Activity Voermans and van Veldhoven (2007) conducted research into the implementation of an e- HRM system at Philips Electronics Netherlands and Philips Netherlands, the staff complement of which was 1000 employees all together. The e-hrm system includes a performance management system, enables employees to view their salary slips online and includes a learning and development tool. Voermans and van Veldhonven s (2007) research focused on whether employees favoured the introduction of the e-hrm system. It was found that those employees who viewed the role of HR to be a strategic partner, change agent or administrative expert favoured the introduction of e-hrm. However, those employees who viewed the role of HR as being primarily that of a change agent opposed the introduction of e-hrm. The opposition from these employees could possibly be a result of the fear that the e-hrm would result in a loss of personal contact with HR specialists (which is a key component of being a change agent). The research also showed employees who found the system easy to use and who were backed up with good IT support were very positive about the e-hrm system (Voermans and van Veldhonven, 2007). Experienced user support was found to be important to managers. Voermans and Veldhonven (2007) conclude that if the image and perceptions around IT within an organisation are generally positive, the introduction of an e-hrm system is likely to be favourably received by employees. However, if the image of IT within an organisation is poor, employees will take quite some time to establish trust in a new e- HRM system Voermans and Veldhonven (2007) also comment that HR professionals generally leave the creation of an e-hrm system to the technical specialists. However, they emphasise that this is a missed opportunity and HRM should actively participate in the creation of the e-hrm system. 34

35 1.7.3 HRM and African Specific Challenges READING Read the following journal article and answer the questions which follow. Gbadamosi, G. (2003) HRM and the Commitment Rhetoric: Challenges for Africa. New Mandate for Human Resources. Management Decision. Vol. 41, No. 3, pp In the space below, summarise the Gadamosi s HRM challenge for Africa. Comment on Reading Activity Gbadosmosi (2003) asserts that western management concepts and writings have dominated the thinking of academics and managers in Africa for a long time. Such writings have not shown how culture might be taken into account in the managerial practice. Many Africans would claim that there are indigenous management practices in Africa Africans, for example, have a systematic approach based on historical and practical experience to solving human problems, 35

36 and often strive to move from the real to the idea.the need to understand the values of the average African worker who are the teeming majority of employees that the African manager local or foreign must deal with is thus imperative (Gbadamosi, 2003: 274). Gbadosmosi (2003) identifies organisational commitment to be a topical HRM issue as it has a significant impact on employee performance and organisational effectiveness. Committed employee behaviour is at the heart of HRM and is a central feature that distinguishes HRM from traditional personnel management (Gbadosmosi, 2003: 274). The African context is highly communalistic which requires that African managers focus on inter-personal issues. In seeking to foster organisational commitment amongst its employees, the African manager should address the following: The African manager should focus not only on the career advancement and job environment of employees, but should also show an interest in non-work activities which impact on an employee s performance (Gbadosmosi, 2003). If employee commitment is voluntary and dynamic, the manager s style should be dynamic and persuasive. Relationships at work are important across the globe, and particularly within Africa. The African manager needs to therefore foster positive working relations with and between his / her African employees. Managerial communication must be consistent and regular. Managerial practice must be dynamic and cautious in managing change. This is because the employee with a high level of organisational commitment will resist change which they perceive to be harmful to the organisation and will embrace change which they perceive to be beneficial for the organisation. The African manager must understand and address socio-cultural influences in his managerial practice (Gbadosmosi, 2003). 36

37 1.8 Summary This section provided the learner with an introduction to the study of Human Resource Management (HRM). A definition of human resource management was investigated. The place of HRM, the functions of the HR department, the role of the HR manager, and HR career opportunities were also investigated. In closing, current trends and challenges for the function of HRM were studied. SELF CHECK ACTIVITY Check your understanding of some of the principles and theory addressed in this section by answering the questions below. 1. Sizwe, the HR Director at Nenaca Pharmaceuticals has ed the Marketing Director, the Operations Director and the Financial Director instructing them that their departmental performance management process must be completed by the end of the month. He emphasises that no extensions will be allowed. Sizwe s instruction to the Marketing, Operations and Financial Directors is an example of: A. Functional Authority B. Staff Authority C. Both A and B D. None of the above 2. Ismail, the Marketing Director at Nenaca Pharmaceuticals meets with Sizwe to discuss how he should deal with one of his Sales Manager s poor levels of performance. Sizwe advises that before issuing formal warnings to the Sales Manager, a training needs analysis should be conducted for the Sales Manager and he should be sent on appropriate training to address the identified needs. Sizwe s advice to the Marketing Director is an example of : A. Functional Authority B. Staff Authority C. Both A and B D. None of the above 37

38 3. After his meeting with Ismail, Sizwe conducts a workshop for the employees of the Operations Department. The purpose of the workshop is to discuss the pending restructuring of the department and to provide employees with the necessary competence to cope with the pending changes. This is the third workshop of this nature which Sizwe has conducted for the Operations Department thus far. He has been conducting them on a monthly basis, but as the restructuring is to be implemented within two weeks he feels that he will need to hold them more frequently from now on. In conducting the change workshops for employees within the Operations Department, identify the HR role that Sizwe is fulfilling: A. Administrative Expert B. Employee Champion C. Change Agent D. All of the above 4. Krishnie, the HR Manager of Team Build, is concerned about the status which HRM holds within her organisation, a construction company. There is no HR Director position and as a result, HR never participates in the strategic planning of the organisation. Furthermore, her work tends to be limited to processing leave forms and maintaining employee records. Based on the information presented in the case study, what approach to HR does Team Build follow? A. Strategic HRM B. Expert HRM C. Traditional HRM D. None of the above 5. Dewald, the CEO of Modern Furniture, a furniture manufacturing company, is concerned about the rising cost of labour. Dudu, the HR Director suggests that the company s manufacturing operations be moved to India as the cost of labour is cheaper there. 38

39 Dudu s suggestion is an example of : A. Onshoring B. Offshoring C. Immigration D. Alternative work arrangements Answers to Self-Check Questions 1. A 2. B 3. C 4. C 5. B STUDY GROUP DISCUSSION For this section, your Study Group is required to compare and contrast the HRM approach adopted within the different organisations of team members. Prior to the Study Group meeting, each individual team member must prepare a summary of the following with respect to their organisation s HRM approach: Structure of the HR Department Size of the HR Department in relation to size of total workforce Approach adopted towards HRM (e.g. strategic approach, traditional approach) Management and employee s perceptions of the HRM Department Key challenges confronting the organisation, and your HR Department s approach to dealing with these challenges At the Study Group meeting each individual team member must be given the opportunity to present the information on HRM within their organisation. The differences between organisations must be critically discussed by the Study Group. Record your notes on the Study Group discussion in the space provided below. 39

40 This Study Group Discussion activity provides the Study Group with an opportunity to reflect on and compare different organisational approaches to HRM. Group members, in sharing their experiences will learn from each other which in turn will enable them to better understand and respond to HRM practices within their own organisations. 40

41 SAMPLE EXAMINATION QUESTIONS Instructions: Read the case study below and then answer the questions which follow. Pumla has recently been appointed to the position of HR Director at the Box Company, a manufacturer of cardboard and plastic boxes used by various manufacturers to package their goods. The Box Company comprises 500 employees. The position of HR Director within the Box Company is a new one while an HR Department did exist prior to Pumla s appointment, it was staffed only by three HR administrators who were responsible for administrative processes such as processing leave forms and printing payslips. The position of HR Director was created at the advice of Sipho, a management consultant who was brought into the organisation to assess the reason behind the low levels of employee motivation. One of Sipho s key recommendations was that the Box Company expand the HR Department to include an HR Director and a number of HR consultants so that the HR needs of both the organisation and the employees can adequately be addressed. When Pumla accepted the position she knew that it was not going to be easy. In particular she was concerned about turning around the way in which both employees and managers perceive HR. Indeed, prior to her appointment, HR was simply a lowly administrative function and Pumla knew that many people within the organisation still viewed it this way. Thabani, the CEO, shares Pumla s concerns and so he has asked her to join each of the departmental meetings in the coming week. During the meetings she will be given a 15 minute slot to inform employees of the Box Company s changed approach to Human Resources Management. 41

42 1. Write the speech which Pumla will deliver to each department and in which she will outline: 1.1 How the Box Company s new strategic approach to HRM differs from the previous traditional approach. 1.2 The various roles of the new HR Department. 1.3 The challenges facing HRM in organisations generally, which are likely to be relevant to the Box Company as well. (25 marks) Guidelines for the Answering of the Examination Questions: The length of your answer should be guided by the mark allocation. Generally one coherent point / fact equals one mark. The following sections of this Study Guide are relevant to the sample examination question: o Question 1.1: Section 1.5 (Strategic HRM) o Question 1.2: Section 1.4 (Role of the HR Manager) o Question 1.3: Section (HRM Challenges) 42

43 SECTION 2 HUMAN RESOURCE STRATEGY AND BUSINESS STRATEGY 43

44 CONTENTS Learning Outcomes Reading 2.1 Introduction 2.2 The Importance of the Relationship Between HR and Business Strategy 2.3 Linking HR Strategy with Business Strategy Strategy Formulation Strategy Implementation Strategy Evaluation and Control Consolidation 2.4 Strategic Human Resource Management Competencies 2.5 Summary Self Check Activity Study Group Discussion Activity Sample Examination Question 44

45 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the learner should be able to demonstrate a holistic understanding of the integration of human resource strategy and business strategy. This overall outcome will be achieved through the learner s mastery of the following specific outcomes: 1. Explain the importance of integrating a company s human resource strategy with overall business strategy. 2. Explain the strategic management process. 3. Discuss the strategic management phases of strategy formulation, strategy implementation and strategy evaluation and control. 4. Critically discuss the function and role of human resource management within the strategic management process. 5. Discuss the various human resource practices associated with the various generic and directional strategies. 6. Identify and discuss the competencies which an HR professional requires to effectively participate in the strategic management process. 45

46 READING Prescribed Textbook o Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2012) Human Resource Management: Gaining a Competitive Advantage 8 th Ed. McGraw- Hill. (pp ) Chapter 2 Recommended Textbook o Nel, P.S., Werner, A., Haasbroek, G.D., Poisat, P., Sono, T. & Schultz, H.B. (2011) Human Resource Management. 8 th Edition. Cape Town: Oxford University Press Southern Africa. ( ) Chapter 16 Recommended Reading: Books Grobler, P., Wärnich, S., Carrell, M.R., Elbert, N.F. & Hatfield, R.D. (2006) Human Resource Management in South Africa. 3 rd Ed. London: Thomson. pp 2-8 (Chapter 1). Kleynhans, R., Markham, L., Meyer, W., Van Aswegen, S. & Pilbeam, E. (2007). Human Resource Management: Fresh Perspectives (Chapter 2). Snell, S. & Bohlander, G. (2007) Human Resource Management. Mason: Thomson. pp (Chapter 2). Journals Bergeron, C. (2004) Build a Talent Strategy to Achieve your Desired Business Results. Handbook of Business Strategy. pp Human Resource Management (2004) Maximizing the Return on HR Investment: The benefits and challenges of global strategic human resource management. Human Resource Management. International Digest.Vol. 12, No. 3, pp Pollitt, D. (2006) Raise a Glass to HR at Wolverhampton & Dudley Breweries Human Resource Management International Digest. pp Sheehan, C. (2005) A Model for HRM Strategic Integration. Personnel Review. Vol. 34, No. 2, pp Wang, D.S. & Shyu, C.L. (2008) Will the Strategic Fit between Business and HRM Strategy Influence HRM Effectiveness and Organisational 46