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The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 1 Chapter 1 The nature of Human Resource Management (HRM) What is management? There are a lot of different definitions! Most in common: to do something not unconciously but conciously. > Activity is goaloriented To reach certain goals: apply certain theories, methods, approaches >HRM = deal with people but management mostly has to deal with people > HRM = Basis for management activity (not all business activity)
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 2 Activity An Introductory Exercise List the activities that you associate with the phrase personnel management/human resource management. Describe the role of the line manager and the personnel specialist in these activities. Copy of Foot/Hook p 27ff
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 3 HRM for the 21st Century Must meet the strategic and financial needs of the business peoples aspirations/interests and Corporate mission Goals People performance
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 4 Businesses are diverse. Automotive industry, public companies, hospitals, hotels, restaurants, engineering companies: Different key success factors, different orientation but > all need to manage their human resources Major Importance of HRM: a constant balancing between meeting the strategic and financial needs oft the business and meeting the people's aspirations. At times the balance shifted too far in one direction: 1st half of 20th century: business success/performance 1960s-1970s: Focus on aspirations led to hierarchical bureaucracies > stagnant business. > Success measured in terms of profitability + number ob people employed. By the end of the 20th century: Focus on business lead to downsizing, What are effects ? > Reducing the number of people employed > create business that were lean, fit, flexible > Hierarchies > decreased > staff and function outsourced Concentration about short-term results and Rationalization can lead to reduced business performance (Beginning of the 21st century) People dont perform, they feel no responsibility to the company, revenge: every hour 10 minutes,….. Example: NASA: Columbia space shuttle 2003 disintegrated over Texas (copy) HR-Managers must be aware of the risks associated with cost cutting Major purpose of HRM: to ensure employees performance > meet also peoples aspirations
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 5 What do HR People Administer? The contract of employment The psychological contract for performance
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 6 Example of NASA: Management of humans employed both within the organization and outside the organization The contract of employment = legal basis of the employment relationship: Terms and conditions of employment, renumeration, basic rules of the employment relationship Within that framework > a psychological contract for performance Performance may come both from employees and non-employees A major goal of the work of hrm: psychological contract for performance: broad expectations > what each party thinks > will gain from the relationship: here related to performance Meets the need of employee and organization Employee has also a psychological need to perform, to do well and to fulfill personal needs that for many can best be met in the employment context.
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 7 Defining HRM HRM is commonly used in two ways. Generic approach: describes a body of management activities Distinctive approach to the management of people: distinct from personnel management The term hrm is not easy to define. Commonly used in two different ways Generic approach: Answers about questions: What are key objectives HRM suggests a distinctive approach: > to serve the modern business more effectively than traditional personnel management. A distinctive philosohy
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 8 HRM Mark 1 – a generic approach Four key objectives:
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 9 Staffing objectives: - Ensuring that the business is appropriately staffed > on human resources are available > which are need > reach goals, mission - This involves: Designing organizational structures : different groups of employee, type of contracts - Before: Recruiting, selecting and developing people with the right skills to provide the services needed > best workforce which is available - Developing employment packages that are sufficiently attractive to attract and retain staff Performance objectives: Ensure motivation and commitment of staff Training and development key role Reward systems attention to performance targets assist in Disciplinary systems > if performance standard is unsatisfactory > Welfare functions > can assist performance > performance fallen because of f.e. illness, family difficulties. Employee involvement initiatives
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 10 Change-management objectives Effectively managing change (important + difficult) sometimes Structural: re-organization of activities or introduction of new people to roles Cultural: alter attitudes or norms (M&A) Recruitment and/or development of those with required leadership skills to drive change process Administrative objectives Facilitate smooth running of the organization Maintain accurate and comprehensive data on individuals Comply with legal requirements Administer pay, sickness, taxation, leave etc.
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 11 Activity Each of the four types of HR objective is important and necessary for organizations in different ways. However, at certain times one or more can assume greater importance than the others. Can you identify types of situation in which each could become the most significant or urgent?
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 12 HRM Roles and Objectives
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 13 Large company > possiblity to spcicalise in HRM areas: Training & Development, Recruiting, Measuring HR > Working in small teams or allone Generalists: Develop policy + take responsibility for HR issues across the organisation as a whole or a division or part of the company. Smaller businesses > dont need, or cannot afford HR managers > Consultants and advisers Size of a company to have an own HR-manager? MA Line managers: Line manager plays a key role in hrm. Line manager = responsible for a department/area of the firm = a manager who has people to lead = a leader > Leadership = to do hr-activities. Have to combine their commitment to the task of his department + attention to their employees. > The HR-task of the line manager is one of the most often cited characteristics of hrm Research of Purcell et al (2003) study over 3 years about : What aspects of HRM actually make a difference to performance within organisations (see Foot p 21): > Strong values > enough line managers > able to bring HR policies and parctices to life
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 14 Activity Which of the various HR roles would you be most interested in undertaking? The generalistic role, a specialist role, a line manager role or perhaps that of a consultant or subcontractor? What are the main reasons for your choice? (Discribe the activities and the roles in these activites.)
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 15 HRM Mark 2 – a distinctive approach
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 16 Something that is qualitatively different from personnel management approach Disagreement about how fundamental a shift is Personnel management is workforce centered whereas HRM is resource centered Greater emphasis on planning, monitoring and control HRM is totally identified with management interests HRM concentrates more on what is done to managers than on what is done by HR-managers to other employees Proactive role for line managers
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 17 Evolution of Personnel and HRM Social justice Humane bureaucracy Negotiated consent Organization HRM A new HR?
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 18 Social justice: Late 19th and early 20th century Origins of personnel management, derived from the work of social reformers > to make live less harsh for the employees Aimed to improve the conditions of workers Patriarchic approach which led to a focus on welfare Schemes such as unemployment benefit, sick pay and subsidized housing (sozialer Wohbau) Supported by a business and ethical case Humane bureaucracy Increased focus on other organizational objectives Responsibilities included staffing, training and organization design Influenced by both scientific management (Taylor, Fayol > raise productivity) and human relations schools (Mayo > needs of employees) of thought Led to focus on social relationships in the workplace and employee morale > became equally to raise productivity. Negotiated consent Full employment after 2nd world war > labor scarce resource Growth in trade unions Personnel managers managed the new collective institutions Many negotiated with trade unions First specialist personnel courses designed
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 19 Organization: Late 1960s Personnel specialists begin to deal with management and be integrated into management activity Development of career paths Development of techniques of workforce planning: More quantitative, information technology > forecasting HRM Explained before A new HR? May now be a sixth stage in evolution of HR – but debated Themes: Global perspective, Concern with legal compliance, Multi-employer networks viewing employees as individuals and seeking to engage them emotionally Focus on employer branding and employer proposition
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 20 Activity Think of HR management roles. To what extend can you identify in it the presence of activities inherited from each of the five stages in the development of modern HRM?
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 21 Key Environmental Developments Globalization Technology Demographic Developments Attitudes of People Individualistic attitude: Focusing on themselves and their own career development
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 22 Globalisation Development of the international trade: > International Trade 1965: 150 million US$ > International Trade 1995: 6 billion US$ > International Trade 2005: 12,5 billion US$ (WTO 2006) Technology -Within 50 years, 50 million people have been reached trough radio. -Within 33 years, 150 million people have been reached trough tv. -It is estimated that about 1.3 milliard people use the internet at the beginning of 2008.
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 23 Californian winemaker > compete with Austrian The Austrian tourism > compete with Caribbean The German automotive manufacturer > with Japanese + American Boing produces parts of his airplanes in China + Europe and assemble it in Seattle…… International Trade (=cross boarder trade) : Sum of all exported goods and services. 6 billion = times zero > times of : double of 1965 > times of 1965 >tremendous increase of complexity and dynamic See model of Rieckman: Knowledge, time, ICC….Incompetence-Competencability-Compentence > How to deal with not-knowledge as a leader, as a specialist Technology Developments of informational technology, energy production, chemical engineering, laser technology, transportation, biotechnology are moving forward at an accelerating pace year by year. > revolutionizing the way that many industries operate. > maintain or develop their good competitive position. > E-Business > easy to compare quality, price Japanese automotive manufacturer > 2 year product-life-cycle Producer electronical appliances > some month financial market > some hours Questions: Mean for HRM/Consequences? How to improve quality (see Toyota)? Develop new products and services + bring it to the market > Volatility > flexibility of people working within the company > manage international workforce > manage diversity > deal with high qualified worker/ knowledge worker > how to get people able applying evolving technologies.
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 24 Demographic development in Germany People who are potential economically active Supposed net immigration: per year
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 25 Labor market: numbers of people and skills available. > skills shortage in recent years > impact varies form country to contry, depending: birth rate: More older peple retiring than young people enter the job, economic prosperty Ab 2002 Schätzwerte der 10.koordinierten Bevölkerungsvorausberechnung, Variante 5 mittlere Bevölkerung: Mittlere Wanderungsannahmen W2 (jährlicher Saldo von mindestens ) und mittlere Lebenserwartungsannahme L2 (durchschnittliche Lebenserwartung 2050 bei 81 bzw. 87 Jahren). Zu einer Reduktion der zur Verfügung stehenden Erwerbstätigen kommt es entsprechend einer Prognoserechnung des Statistischen Bundesamt (2003). Bei einem mittleren Wanderungssaldo (Einwanderung – Auswanderung) von jährlich Menschen, ergibt sich eine Reduktion der Erwerbstätigen von etwa 51 Millionen Personen im Jahr 2000 auf ca. 41 Millionen Personen im Jahr Dies bedeutet somit, dass dem Arbeitsmarkt Millionen potenzielle Arbeitskräfte weniger zur Verfügung stehen als im Jahr Massiv wirken sich die geburtenschwachen Jahrgänge ab 2020 aus. In den 30 Jahren zwischen 2020 und 2050 ist bei dieser Berechnung ein Rückgang von etwa 9 Millionen potenziellen Erwerbstätigen zu erwarten. Not sure: Women back to the labor market, immigration More older people, less younger people: Question: Consequences: Be attractive for employee, increasing of recruiting good and talented employees, training & development of young co-worker, bring in older people in their workplace
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 26 Attitudes of People Individalistic attidue Balance between home and work lifes Attitude to performance high willingness to perform not clear low willingness to perform
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 27 Individualistic attitude: Focusing on themselves and their own career development Balance between home and work lives Willingness to seek out employers who can provide this Bringt man mit Leistung die Qualität und die Quantität des Arbeitens in Zusammenhang, so kann als Beurteilungsmaßstab beispielsweise das Verhältnis von Ertrag zu Aufwand (Ertragswirtschaftlichkeit) oder die Höhe des Bruttoinlandsproduktes (als Maßstab des materiellen Wohlfahrtsniveaus) herangezogen werden. Bei Betrachtung dieser Daten zeigt sich, dass das Leistungsergebnis, trotz der immer wieder proklamierten zunehmenden Freizeitorientierung, heute beträchtlich höher ist als noch vor 40 Jahren, zu den Zeiten der Blütejahre der Wirtschaft. Eine Befragung von Jugendlichen (15-24 Jahre) in Bezug auf das Gegensatzpaar Leistungsorientierung versus Genussorientierung zeigt, dass zwischen 1991 und 1999 eine Verschiebung zugunsten der Leistungsorientierung stattgefunden hat (Fritsch, 2000). Hondrich 1988 Die zwei Antwortmöglichkeiten im Wortlaut: A1:Ich betrachte mein Leben als eine Aufgabe, für die ich da bin und für die ich alle Kräfte einsetze. Ich möchte in meinem Leben etwas leisten, auch wenn das oft schwer und mühsam ist. A2:Ich möchte mein Leben genießen und mich nicht mehr abmühen als nötig. Man lebt schließlich nur einmal, die Hauptsache ist doch, dass man etwas von seinem Leben hat.
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 28 hat, Leistungsbereitschaft durch einen Index zu messen. Er hat zu diesem Zweck drei Typen der Leistungsbereitschaft definiert: Hoch leistungsbereit, gering leistungsbereit, uneindeutig. Als uneindeutig bezeichnete Hondrich diejenigen Befragten, die weder alle Bedingungen der einen noch der anderen Kategorie erfüllten. Diese Gruppe ist irgendwo zwischen den Polen besonders hoher und besonders geringer beruflicher Leistungsbereitschaft einzuordnen. Es ergab sich folgendes Bild (siehe Abbildung 14): Es zeigt sich, dass einen hoher Anteil der Befragten der Kategorie uneindeutig zuzuordnen ist. Gerade diese Gruppe stellt aber für die Führung eine wichtige Gruppe dar. Diese Gruppe kann relativ leicht motiviert oder auch demotiviert werden. Dies ist eine bedeutende Erkenntnis für die Personalführung. Interessant ist auch eine Untersuchung, die folgende Frage gestellt hat: Wann haben Sie das Gefühl, etwas geleistet zu haben? Die Ergebnisse sind in Abbildung 15 ersichtlich. Questions: Consequences? Other expecations regarding psychological contract Leadership
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 29 HRM Debates Key Environmental Developments Psychological Contract HR Strategy: Best Practice v. Best Fit Future of Work – Different Perspectives
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 30 What are major trends > evolving in the business environment What HR managers should be doing Psychological Contract Expectations employees have about the role they play and what employer provides in return Switch from old to new approach – involves less job security and requires less loyalty Instead: given more development opportunities, given more employee flexibility > Reflects the needs of present business environment Debate about the extent to which change has taken place HR Strategy: Best Practice Certain HR practices that will help organizations achieve competitive advantage Clear link between HR activity and business performance Best practice bundle – advanced selection methods, commitment to employee involvement, investment in T and D, individualized reward systems, etc. HR Strategy: Best Fit Identifies link between HRM practice and achievement of competitive advantage All is contingent on particular circumstances HR policies are required that fit and are appropriate to situations Key variables include – size, dominant product market, etc. Future of Work – One Perspective Speculative and impossible to prove A world of work different in many respects than is currently experienced Shift towards knowledge work > Knowledge leadership Job as we know it will become rarer > self-employment Long-term work guarantees a thing of the past Future of Work – A Different Perspective Continuation of established approaches Some reversal of trends that developed in 1980s and 1990s > no fall in number of manual jobs: Continuation of traditional approaches towards employment
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 31 Activity How would you characterize your current psychological contract at work? To what extend and in what ways does it differ from psychological contracts you have experienced in previous jobs or from those of your friends and family?
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 32 Philosophy of HRM HRM is a series of activities which ensures peoples performance, in order to reach the business goals. HR-managers have to foster and demand line managers in order they bring HR practice to life More soft HRM than hard HRM
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 33 Different HRM philosophy in different companies and books. Philosophy taught in our courses Soft HRM: behavioral approach Hard HRM: quantitative, measure approach The two are not mutually exclusive Torrington/Hall/Tayler: HRM is a series of activities which: first enables working people and the organization which uses their skills to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled. (Torrington, Hall and Taylor, 2005, p.14)
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 34 Summary (1 of 2) HRM is fundamental to all management activities Generic HRM describes a body of management activities Specific approach to HRM signifies a particular approach to carrying out these activities HRM managers are concerned with meeting 4 distinct sets of organisational objectives
The nature of human resource management © FH-Prof. Dr. Herbert Gölzner Page 35 Summary (2 of 2) HRM activities are carried out in various ways through the organisational structure Current debates over HRM generally focus on the extent and nature of responses needed to face changes in the business environment There are three main current HRM debates: psychological contract; best practice versus best fit and the future of work
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