Exceptional Proff 600

Introduction

Topics to be covered:

· Overview of human resource management

· The changing role of human resources

· Challenges for human resources in modern organizations

Human resources  refers to the people who work for an organization, performing the tasks necessary to achieve an organization’s goals and objectives. Human resources also refers to the office or department within an organization that handles the hiring, training and administration of an organization’s workforce. This includes dealing with associated issues, such as providing each employee with the resources needed to complete their work and addressing any disciplinary problems that may arise on the job.  Human resource management , or HRM, refers to the formal processes used to manage an organization’s people, or human resources. Generally, a human resource manager has responsibilities in three areas—hiring and training workers, providing workers with compensation and benefits, and describing and planning the specific jobs that will be performed by each employee in an organization.

This lesson will provide an introduction and overview of human resource management, including a discussion of the history of HRM. This discussion will include a look at the changing role of HRM as well as the challenges that HRM faces in modern organizations.

Human Resource Management: Early History

Historically, human resource management (HRM) was referred to using terms such as personnel management, employment management, or industrial relations. In the 1800s, organizations generally did not have an HRM department or even a single manager responsible for handling all HRM functions. Instead, organizations were likely to assign HRM duties to different managers within the organization. For example, an organization’s president might establish policies and procedures for employees to follow, while an organization’s treasurer or finance officer might be in charge of payroll, including the decisions of how much to pay each employee. Each manager might be responsible for hiring and firing the employees that he supervised, while recruitment might be handled by word-of-mouth and the supply and demand of the labor market (Kaufman, 2008).

In the 1800s, HRM was not a recognized function or profession, and organizations did not follow any established norms that could be regarded as best practices for HRM. Rather, organizations strove to manage labor in a way that treated workers fairly while encouraging them to be as productive as possible to support the organization in its efforts to maximize profits.

HRM in the 1920s

By the 1920s, many organizations, particularly large businesses and the federal government, had formalized HRM departments that specialized in handling the functions and issues associated with HRM. Generally, at this point, HRM, which was still referred to using terms such as industrial relations, was likely to focus on the following six functions (Kaufman, 2008):

· Personnel and training – Included hiring, firing, promoting, transferring, and training employees.

· Representation – Included discussion, adjustment, and arbitration of work.

· Medical – Included physical examinations of employees and first aid when employees were injured at work.

· Annuities and benefits – Included compensation for on-the-job accidents and benefits in the event of death.

· Safety – Included education on the prevention of accidents, inspections of work areas, and investigations when an accident occurred.

· Service – Included perks such as employee housing and recreation.

By this time, HRM had evolved to the point that it was a recognizable profession with an understanding of best practices that should be followed to have an effective and efficient HRM function in an organization. According to Kaufman (2008), these best practices included the following:

· Employees should be dealt with fairly, and this should include the payment of a fair wage.

· An organization should have specific policies to guide labor issues.

· Organizations should be planned to place the right employees in the right positions within the organization in an effort to support the organization’s chief executive.

· Employment should be standardized.

· Employees should be provided with insurance to protect them against illness, accidents, and death.

· Organizations should strive to reduce illness and accidents among employees.

· Employees should receive pensions and annuities.

· The salaries and base rates of pay for specific jobs should be standardized.

· Employees should receive non-financial incentives in addition to monetary compensation.

· Organizations should have a policy that allows for the systematic promotion of employees.

· Organizations should have agreements with unions, and employees should have representation of their rights.

The Labor Problem

The development of HRM as the field that exists in the present day began with late nineteenth century scholars’ focus on the  labor problem . This is an economics term that refers to issues, such as fair wages and safe working conditions, which were encountered as individuals began working for businesses and other organizations.

As Galloway (1913) explained, historically, individuals had generally worked at home, producing small quantities of products for sale to a small group of consumers. During the 1800s, the economy in the United States changed, with more people living in cities, rather than rural areas. This created a concentrated and larger demand for goods and services. To respond to this demand, businesses and companies developed that had the resources necessary to produce larger quantities of goods and services. This change meant that many individual workers operating their own business at home and selling goods and services that they produced were replaced by large businesses. Instead of continuing to work for themselves, many of these individuals went to work for the new businesses.

Galloway (1913) argued that this was a significant change for laborers.

“By a series of economic changes he lost possession of the tools but still furnished the skill and muscle necessary in the production of goods. The next step…removed the tool from the direct guidance of the individual and made him a ‘machine tender’ rather than a craftsman. He still cooperates but neither the skill of his hands nor a feeling of proprietorship in the machine or the product is left to give him a personal interest in the outcome…The laborer feels his dependence and looks upon his cooperator capitalist with suspicion and distrust” (Galloway, 1913, p. 16 and p. 25).

This shift in the status of workers in the United States created the labor problem. Various scholars strove to find ways to make the workplace fair and equitable to workers while providing organizations with the human resources they need to accomplish goals and objectives. According to Kaufman (2008), as it evolved to address and resolve the labor problem, HRM has been influenced by a variety of movements. Let’s take a look at some of these movements.

Employment Management

Employment management  refers to a movement that sought to address both the technical and psychological aspects of the labor problem by focusing attention both on the processes that employees use to complete their work as well as the human relations issues that arise in the workplace. This movement led to the development of the following principles, which later became the basis for the established of the field of personnel management (Kaufman, 2008, p.173).

· Principle of Functionalization – Stated that organizations should have full-time managers and staff dedicated to handle personnel issues.

· Principle of Human Differences – Stated that individuals vary in their personal characteristics, including mental capabilities, and, as such, should be evaluated on an individual basis.

· Principle of Definite Personnel Requirements – Stated that each job to be filled in an organization should have a detailed job description, which can be used to ensure a good match between a job and the individual selected to fill it.

· Principle of Organization – Stated that an organization’s personnel program should be administered by professionals.

· Principle of Economy of Personnel – Stated that employees should be placed in an organization based on where each individual can provide the greatest service and value to an organization.

· Principle of Morale – Stated that employees should be assigned and scheduled to work in a manner that promotes a positive employee morale and spirit.

Human Relations

Human relations refers to a movement that focused attention on the psychological and social factors affecting an organization’s work environment to learn how these influenced employee behavior and affected their work.

The focus on human relations was partly driven by the outcome of the Hawthorne Studies. From 1927 to 1932, researchers conducted experiments at a Western Electric plant near Chicago to study the effects of various levels of lighting on worker productivity (Roethlisberger & Dickson, 1939). Researchers found that regardless of the variations in the lighting, worker productivity increased unless the lighting was reduced to the point that the workers could barely see. The researchers concluded that the majority of employees are motivated more by psychological and social factors on the job than the actual physical characteristics of their work environments. Feeling that they were part of a team and that their managers were interested in their work was more important to motivate employees and promote productivity than other issues such as financial incentives.

Theory X and Theory Y

You can watch the first two minutes of this video that describes the motivation and managerial aspects of Theory X and Theory Y at:  McGregor's Theory X and Y

In the late 1950s and 1960s, one of the most influential human relations approaches to management theory was Douglas McGregor’s Theory X and Theory Y. According to McGregor (1987), managers who follow Theory X believe the typical person dislikes work and tries to avoid it. As such, to motivate employees to work, a manager must coerce, control, and even threaten them. Theory Y managers believe that most employees enjoy work, and they expend the effort needed to work with the same zeal that they expend effort to play and do other activities in their lives. Theory Y managers think that their employees are committed to the organization’s goals and will exercise self-direction and self-control to help achieve those goals. They do not have to be coerced or punished to motivate them to do their jobs (McGregor, 1987).

Other Theories and Movements

Industrial democracy  refers to a movement that sought to give workers more representation and equality in the workplace, limiting employers’ ability to act as rulers over employees. This movement supported the rise of trade unions and collective bargaining in the workplace.

Industrial psychology  refers to a movement that attempted to understand human behavior in the workplace and use that understanding to train workers to be as efficient and effective as possible as they completed their work tasks.

Industrial welfare work  refers to a movement that focused on providing workers with benefits intended to improve their work environment. These benefits, which extended beyond cash compensation and compliance with legal requirements for the workplace, included items such as recreation programs, health and accident insurance, paid leave for holidays and vacations, drinking fountains, break rooms with lockers, beautification of workplaces with enhancements such as landscaping, and on-site medical services. This movement was guided by the following principles (Kaufman, 2008, p.82):

· Employees should be treated well and, in turn, they will treat their employers well.

· Employers should not take advantage of employees, which includes not striving to exhaust their energy.

· Employers will benefit if they are helpful to employees, which includes providing them with promotional opportunities.

· Quality goods and services are produced by employees who work together enthusiastically as a team.

· Employees should have the opportunity to offer suggestions for the workplace, as well as proffer complaints. They should not be fired for personal disputes with their supervisors and/or co-workers.

The Labor Process

The  labor process  refers to a movement that attempted to understand employee behavior from the perspective of Marxist philosophy. In particular, this movement distinguished between labor time and labor power.  Labor time  refers to the process of organizations hiring people and paying them a specific amount of money and other benefits in exchange for their time to work for the organization.  Labor power  refers to the physical, psychological, and creative efforts that an employee must put forth to accomplish his or her tasks, thus enabling an organization to produce goods and services and make a profit (Kaufman, 2008).

· The labor process movement argued that organizations want as much labor power from employees as possible for a minimal amount of money. Employees, on the other hand, want the maximum amount of pay possible for the least amount of effort. The labor process movement also argued that employers want to control employees as much as possible, and employees strive to resist that control as much as possible. These opposing goals tend to put employers and employees at odds with each other.

· The labor process movement motivated the development of two types of systems intended to control employees: technical system and bureaucratic system. The  technical system  is a process that strives to control employee’s work through standardization, which is intended to make their work more efficient. The technical system was based on the theory of scientific management. We will take a deeper look at the bureaucratic system in the next section.

The Bureaucratic System

The  bureaucratic system  is a process that strives to control employee’s work through routinization with specific policies and procedures that guide the work. German sociologist Max Weber originally defined a bureaucratic organization, arguing that bureaucracies usually have the following six characteristics:

· The work is based on a division of labor.

· The work is controlled through hierarchy and authority.

· Written documentation formalizes the work.

· Staffs are trained and specialized in their work.

· Promotions are meted out based on merit and opportunities.

· The work is guided by rules and administration.

Bureaucracies tend to be structured as either a mechanistic type or organic type.  Mechanistic type bureaucracies  emphasize “vertical specialization and control with impersonal coordination and a heavy reliance on standardization, formalization, rules, policies and procedures” (Schermerhorn, Hunt, & Osborn, 2005, p. 400).  Organic type bureaucracies  emphasize “horizontal specialization, extensive use of personal coordination, and loose rules, policies, and procedures” (Schermerhorn, Hunt, & Osborn, 2005, p. 400).

Personnel Management and Scientific Management

Personnel management  refers to an approach to the management of people that focuses on administration and the enforcement of personnel policies. Personnel management is influenced primarily by scientific management, industrial welfare work, industrial psychology, and human relations (Kaufman, 2008).

Scientific management  refers to a theory of management that applies science to work processes by analyzing and standardizing procedures in an effort to increase work efficiencies. Developed by Frederick Taylor, scientific management was an effort to make work more efficient. To achieve this, Taylor advocated for organizing work around the following four principles.

· Managers should standardize work processes, identifying the specific steps that workers should follow to complete each task.

· Managers should select qualified workers using scientific and standardized selection processes.

· Employees should perform their work according to scientific processes, using the specific steps identified as the optimal way to complete tasks.

· Managers and employees should divide their work equally and cooperate to achieve an organization’s goals and objectives.

Vocational Guidance

Vocational guidance  refers to a movement that focused on increasing efficiency in the workplace by hiring workers who were better educated and used to perform tasks that were better suited to their skills and experience. The vocational guidance movement offered the following guidance to workers and employers (Kaufman, 2008, p. 121).

· Workers should obtain an education that is vocationally useful.

· Workers should prepare for a specific occupation.

· Workers should learn about opportunities in the workforce.

· Workers should select an occupation and enter the workforce.

· Employers should offer workers opportunities for advancement and promotions.

The philosophy of the vocational guidance movement is still relevant in present day HRM and is the motivator for training and development of employees.  The movements we examined are not intended as a comprehensive list and description of the movements that led to the development of HRM. Rather, this information will help you understand that HRM has a long history, and the field has been influenced by a variety of theories and philosophies regarding the relationship between employers and employees.

Knowledge Check

1

Question 1

Roxanna has been studying the history of HRM and has decided that her organization should adopt the Principle of Human Differences, which states that individuals vary in their personal characteristics, including mental capabilities, and, as such, should be evaluated on an individual basis. Which movement resulted in the development of this principle?

Employment management

Human relations

Vocational guidance

Industrial psychology

I don't know

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Knowledge Check

1

Question 1

To make her organization’s work more efficient, Roxanna thinks the organization’s managers should standardize the organization’s work processes, identifying the specific steps that workers should follow to complete each task. In addition, she thinks the organization’s managers and employees should divide their work equally and cooperate to achieve the organization’s goals and objectives. What is Roxanna advocating for her organization?

Bureaucratic system

Scientific management

Vocational guidance

Labor process

I don't know

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The Changing Role of Human Resources

In the twenty-first century, HRM generally is concerned with the following activities as HRM managers strive to ensure an organization adequately manages its people, enabling an organization to meet its goals and objectives (Cascio, 2010, p. 6):

· Staffing  – Refers to the process of determining the jobs that an organization needs to fill to achieve its goals and objectives, identifying the skills needed by the individuals who fill these jobs, and hiring qualified individuals who have these skills and can do the jobs.

· Retention – Refers to the process of providing employees with the incentives they need to motivate them to stay on the job. Such incentives include compensation, benefits, and other rewards as well as things such as a safe work environment that promotes a positive working relationship among employees and the organization’s managers.

· Development – Refers to the process of providing employees with training and other assistance needed to help them improve their knowledge and skills to be more competent on the job.

· Adjustment – Refers to activities, such as employee discipline, that are intended to promote and enforce an organization’s policies.

· Change management  – Refers to the process of analyzing an organization’s environment and market trends to anticipate and prepare for changes necessary to ensure an organization remains viable and capable of meeting any challenges facing it.

These five activities are interrelated and necessary to hire and sustain an organization’s human capital. Together, these five activities comprise an organization’s  HRM system .

Knowledge Check

1

Question 1

Roxanna has called several of her organization’s staff members to her office so that she can issue a letter of reprimand and inform them that they are on probation for a recent violation of the organization’s policies. In this situation, which activity in the HRM system is Roxanna doing?

Retention

Adjustment

Development

Staffing

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Challenges for Human Resources in Modern Organizations

In modern organizations, HRM is faced with a variety of challenges. Some of the more prominent challenges include the following (Banfield & Kay, 2008, pp. 8-9).

Independent and Self-Employed Workers-Many organizations must deal with workers who are independent and self-employed. As opposed to working for a single employer, more workers are maintaining their independence, working as self-employed contractors. This gives them the option of working for multiple employers if they wish, rather than devoting their efforts to a single employer. In addition, they may choose to work on a temporary basis, doing a project for one employer and then moving on to another employer for additional work.

Legal Issues-Organizations must handling legal issues posed by laws that regulate employment. For example, various countries have passed laws that give more rights to workers and restrict an organization’s actions if those actions may have an adverse effect on employees.

Changing Policies-Organizations must also change and manage policies and procedures to address work processes that are powered more by employees’ knowledge, creativity, and intellectual capital as opposed to physical abilities and manual labor.

Diversified Workforce-Companies must address the needs of a diversified workforce. Today’s organizations are staffed with individuals who come from a variety of backgrounds featuring diversity in race, ethnicity, culture, religion, sexual orientation, gender, age, and so forth. HRM must be sensitive to the varied expectations that individuals will have based on their different backgrounds. HRM also must be aware that diversity can lead to culture clashes in the workplace as people from different backgrounds have different values and perspectives. In addition, they likely are motivated by different things. HRM must be able to balance these issues and create a work environment that respects diversity and promotes the ability of an organization’s members to cooperate and work together despite their differences.

HRIS and Virtualization-In addition to these items, HRM also has a role in ensuring that an organization maintains a competitive edge by embracing new technology that will enhance an organization’s operations. One of the most important features of an efficient and effective HRM operation is the maintenance of a human resource information system (HRIS). By maintaining records electronically and using technology to assist with HRM processes, HRM activities can be less labor-intensive, and they can be done with greater speed and accuracy.Many organizations are conducting some or all of their activities virtually, and this requires HRM to change its perspectives as it hires and manages employees who work remotely and may never visit an organization’s offices.

Globalization-In addition, some organizations are downsizing, doing more with less, to remain viable in a competitive marketplace.  Globalization , which refers to the process of organizations expanding their operations beyond their country’s borders to compete in markets around the globe, also poses challenges for HRM as organizations hire and manage employees who work in other countries.

This information is not intended to offer you a comprehensive list of the challenges facing HRM in modern organizations. But, hopefully it shows that the HRM operations of most organizations face a variety of issues that require HRM functions to be carefully planned and managed as they support organizations in their effort to sustain a viable presence in the marketplace.

Conclusion

Without employees, no organization can achieve its goals and objectives. HRM is a complex effort that is critical to any organization as it hires and manages its employees. To be effective, HRM operations must be carefully planned and managed. The following lessons in this course will provide you with information intended to help you better understand HRM and how to successfully implement and carry out an organization’s HRM function.

Key Terms

ADJUSTMENTOne of the activities in an HRM system. Adjustment refers to activities, such as employee discipline, that are intended to promote and enforce an organization’s policies.

BUREAUCRATIC SYSTEMProcess that strives to control employee’s work through routinization with specific policies and procedures that guide the work.

CHANGE MANAGEMENTOne of the activities in an HRM system. Change management refers to the process of analyzing an organization’s environment and market trends to anticipate and prepare for changes necessary to ensure an organization remains viable and capable of meeting any challenges facing it.

DEVELOPMENTOne of the activities in an HRM system. Development refers to the process of providing employees with training and other assistance needed to help them improve their knowledge and skills to be more con the job.

EMPLOYMENT MANAGEMENTRefers to a movement that sought to address both the technical and psychological aspects of the labor problem by focusing attention both on the processes that employees use to complete their work as well as the human relations issues that arise in the workplace.

GLOBALIZATIONRefers to the process of organizations expanding their operations beyond their country’s borders to compete in markets around the globe.

HRM SYSTEMThe five interrelated activities that organizations use to manage people. Includes staffing, retention, development, adjustment, and change management.

HUMAN RELATIONSRefers to a movement that focused attention on the psychological and social factors affecting an organization’s work environment to learn how these influenced employee behavior and affected their work.

HUMAN RESOURCE MANAGEMENT Also known as HRM, this refers to the formal processes used to manage an organization’s human resources.

HUMAN RESOURCESRefers to the people who work for an organization, performing the tasks necessary to achieve an organization’s goals and objectives. Also refers to the office or department within an organization that handles the hiring, training, and administration of an organization’s workforce.

INDUSTRIAL DEMOCRACYRefers to a movement that sought to give workers more representation and equality in the workplace, limiting employers’ ability to act as rulers over employees. This movement supported the rise of trade unions and collective bargaining in the workplace.

INDUSTRIAL PSYCHOLOGYRefers to a movement that attempted to understand human behavior in the workplace and use that understanding to train workers to be as efficient and effective as possible as they completed their work tasks.

INDUSTRIAL WELFARE WORKRefers to a movement that focused on providing workers with benefits beyond cash compensation and compliance with legal requirements that were intended to improve their work environment.

LABOR PROBLEMAn economics term that refers to issues, such as fair wages and safe working conditions, which were encountered as individuals began working for businesses and other organizations.

LABOR PROCESSRefers to a movement that attempted to understand employee behavior from the perspective of Marxist philosophy. In particular, this movement distinguished between labor time and labor power.

LABOR POWERRefers to the physical, psychological, and creative efforts that an employee must put forth to accomplish his or her tasks, thus enabling an organization to produce goods and services and make a profit.

LABOR TIMERefers to the process of organizations hiring people and paying them a specific amount of money and other benefits in exchange for their time to work for the organization.

MECHANISTIC TYPE BUREAUCRACIESOrganizations that emphasize vertical specialization and control with impersonal coordination and a heavy reliance on standardization, formalization, rules, policies and procedures.

ORGANIC TYPE BUREAUCRACIESOrganizations that emphasize horizontal specialization, extensive use of personal coordination, and loose rules, policies, and procedures.

PERSONNEL MANAGEMENTRefers to an approach to the management of people that focused on administration and the enforcement of personnel policies.

RETENTIONOne of the activities in an HRM system. Retention refers to the process of providing employees with the incentives they need to motivate them to stay on the job.

SCIENTIFIC MANAGEMENTTheory of management that applies science to work processes by analyzing and standardizing procedures in an effort to increase work efficiencies.

STAFFINGOne of the activities in an HRM system. Staffing refers to the process of determining the jobs that an organization needs to fill to achieve its goals and objectives, identifying the skills needed by the individuals who fill these jobs, and hiring qualified individuals who have these skills and can do the jobs.

TECHNICAL SYSTEMProcess that strives to control employee’s work through standardization, which is intended to make their work more efficient. The technical system was based on the theory of scientific management.

VOCATIONAL GUIDANCERefers to a movement that focused on increasing efficiency in the workplace by hiring workers who were better educated and used to perform tasks that were better suited to their skills and experience.

Sources

Banfield, P., & Kay, R. (2008). Introduction to human resource management. New York: Oxford University Press.

Cascio, W. F. (2010). Managing human resources: Productivity, quality of work life, profits (8th ed.). New York: McGraw-Hill/Irwin.

Dessler, G. (2009). A framework for human resource management (5th ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Galloway, L. (1913). Organization and management. New York: Alexander Hamilton Institution.

Kaufman, B. E. (2008). Managing the human factor: The early years of human resource management in American industry. New York: Cornell University Press.

McGregor, D. M. (1987). “The human side of enterprise,” in Classics of public administration,(2nd ed.), 256-262. Pacific Grove, CA: Brooks/Cole Publishing Company.

Roethlisberger, F. J., & Dickson, W. J. (1939). Management and the worker: an account of a research program conducted by the Western Electric Company, Hawthorne works, Chicago. Cambridge, MA: Harvard University Press.

Schermerhorn, J. R. Jr., Hunt, J. G., & Osborn, R. N. (2005). Organizational behavior, (9th ed.). Hoboken, New Jersey: John Wiley and Sons, Inc.

Taylor, F. W. (1987). Scientific management. In J. M. Shafritz & A. C. Hyde (Eds.), Classics of public administration, (2nd ed.), pp. 29-33. Pacific Grove, CA: Brooks/Cole Publishing Company.

York, K. M. (2010). Applied human resource management: strategic issues and experiential exercises. Thousand Oaks, CA: Sage Publications, Inc.