The Role of HRM

The Role of Human Resources
Human Resource Management Day to Day

You have just been hired to work in the human resource department of a small company. You heard about the job through a conference you attended, put on by the Society for Human Resource Management (SHRM). Previously, the owner of the company, Jennifer, had been doing everything related to human resource management (HRM). You can tell she is a bit critical about paying a good salary for something she was able to juggle all on her own. On your first day, you meet the ten employees and spend several hours with the company owner, hoping to get a handle on which human resource processes are already set up.
Shortly after the meeting begins, you see she has a completely different perspective of what HRM is, and you realize it will be your job to educate her on the value of a human resource manager. You look at it as a personal challenge—both to educate her and also to show her the value of this role in the organization. First, you tell her that HRM is a strategic process having to do with the staffing, compensation, retention, training, and employment law and policies side of the business. In other words, your job as human resources (HR) manager will be not only to write policy and procedures and to hire people (the administrative role) but also to use strategic plans to ensure the right people are hired and trained for the right job at the right time. For example, you ask her if she knows what the revenue will be in six months, and Jennifer answers, “Of course. We expect it to increase by 20 percent.” You ask, “Have you thought about how many people you will need due to this increase?” Jennifer looks a bit sheepish and says, “No, I guess I haven’t gotten that far.” Then you ask her about the training programs the company offers, the software used to allow employees to access pay information online, and the compensation policies. She responds, “It looks like we have some work to do. I didn’t know that human resources involved all of that.” You smile at her and start discussing some of the specifics of the business, so you can get started right
away writing the strategic human resource management plan.

What Is Human Resources?
LEARNING OBJECTIVES


1. Explain the role of HRM in organizations.

2. Define and discuss some of the major HRM activities.


Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must have people to make their capital work for them. This will be our focus throughout the text: generation of revenue through the use of people’s skills and abilities.
What Is HRM?

Human resource management (HRM) is the process of employing people, training them, compensating them, developing policies relating to them, and developing strategies to retain them. As a field, HRM has undergone many changes over the last twenty years, giving it an even more important role in today’s organizations. In the past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and making sure forms were filled out correctly—in other words, more of an administrative role rather than a strategic role crucial to the success of the organization. Jack Welch, former CEO of General Electric and management guru, sums up the new role of HRM: “Get out of the parties and birthdays and enrollment forms.… Remember, HR is important in good times, HR is defined
in hard times.” [1]

It’s necessary to point out here, at the very beginning of this text, that every manager has some role relating to human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t perform all or at least some of the HRM tasks. For example, most managers deal with compensation, motivation, and retention of employees—making these aspects not only part of HRM but also part of management. As a result, this book is equally important to someone who wants to be an HR
manager and to someone who will manage a business.
Human Resource Recall

Have you ever had to work with a human resource department at your job? What was the interaction like?

What was the department’s role in that specific organization?

The Role of HRM

Keep in mind that many functions of HRM are also tasks other department managers perform, which is what makes this information important, despite the career path taken. Most experts agree on seven main roles that HRM plays in organizations. These are described in the following sections.
Staffing

You need people to perform tasks and get work done in the organization. Even with the most sophisticated machines, humans are still needed. Because of this, one of the major tasks in HRM is staffing. Staffing involves the entire hiring process from posting a job to negotiating a salary package. Within the staffing function, there are four main steps:
1. Development of a staffing plan. This plan allows HRM to see how many people they should hire based on revenue expectations.
2. Development of policies to encourage multiculturalism at work.Multiculturalism in the workplace is becoming more and more important, as we have many more people from a variety of backgrounds in the workforce.
3. Recruitment. This involves finding people to fill the open positions.

4. Selection. In this stage, people will be interviewed and selected, and a proper compensation package will be negotiated. This step is followed by training, retention, and motivation.
Development of Workplace Policies
Every organization has policies to ensure fairness and continuity within the organization. One of the jobs
of HRM is to develop the verbiage surrounding these policies. In the development of policies, HRM, management, and executives are involved in the process. For example, the HRM professional will likely recognize the need for a policy or a change of policy, seek opinions on the policy, write the policy, and
then communicate that policy to employees. It is key to note here that HR departments do not and cannot work alone. Everything they do needs to involve all other departments in the organization. Some
examples of workplace policies might be the following:


Discipline process policy

Vacation time policy

Dress code

Ethics policy


• Internet usage policy

These topics are addressed further in Chapter 6 "Compensation and Benefits", Chapter 7 "Retention and

Motivation", Chapter 8 "Training and Development", and Chapter 9 "Successful Employee

Communication".
Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair, meets industry standards, and is high enough to entice people to work for the organization.Compensation includes anything the employee receives for his or her work. In addition, HRM professionals need to make sure the pay is comparable to what other people performing similar jobs are being paid. This involves setting up pay systems that take into consideration the number of years with the organization, years of experience, education, and similar aspects. Examples of employee compensation include the following:


Health Benefits

Pay

401(k) (retirement plans)

Stock purchase plans

Vacation time

Sick leave

Bonuses

Tuition reimbursement


Since this is not an exhaustive list, compensation is discussed further in Chapter 6 "Compensation and

Benefits".
Retention

Human resource people must be aware of all the laws that affect the workplace. An HRM professional might work with some of thHRM Retention involves keeping and motivating employees to stay with the organization. Compensation is a major factor in employee retention, but there are other factors as well. Ninety percent of employees leave a company for the following reasons:
The job they are performing

Challenges with their manager

Poor fit with organizational culture


Poor workplace environment

Despite this, 90 percent of managers think employees leave as a result of pay. [2] As a result, managers

often try to change their compensation packages to keep people from leaving, when compensation isn’t

the reason they are leaving at all. Chapter 7 "Retention and Motivation" and Chapter 11 "Employee

Assessment" discuss some strategies to retain the best employees based on these four factors.
Training and Development
Once we have spent the time to hire new employees, we want to make sure they not only are trained to do

the job but also continue to grow and develop new skills in their job. This results in higher productivity for the organization. Training is also a key component in employee motivation. Employees who feel they are developing their skills tend to be happier in their jobs, which results in increased employee retention. Examples of training programs might include the following:

Job skils training, such as how to run a particular computer program

Training on communication

Team-building activities

Policy and legal training, such as sexual harassment training and ethics training

We address each of these types of training and more in detail in Chapter 8 "Training and Development".

Dealing with Laws Affecting Employment

Human resource people must be aware of all the laws that affect the workplace. An HRM professional might work with some of these laws:

Discrimination laws

Health-care requirements

Compensation requirements such as the minimum wage

Worker safety laws

Labor laws

The legal environment of HRM is always changing, so HRM must always be aware of changes taking place and then communicate those changes to the entire management organization. Rather than presenting a chapter focused on HRM laws, we will address these laws in each relevant chapter.
Worker Protection

Safety is a major consideration in all organizations. Oftentimes new laws are created with the goal of setting federal or state standards to ensure worker safety. Unions and union contracts can also impact the requirements for worker safety in a workplace. It is up to the human resource manager to be aware of worker protection requirements and ensure the workplace is meeting both federal and union standards. Worker protection issues might include the following:

Chemical hazards

Heating and ventilation requirements

Use of “no fragrance” zones

Protection of private employee information

We take a closer look at these issues in Chapter 12 "Working with Labor Unions" andChapter 13 "Safety

and Health at Work".
Communication

Besides these major roles, good communication skills and excellent management skills are key to successful human resource management as well as general management. We discuss these issues in Chapter 9 "Successful Employee Communication".
Awareness of External Factors

In addition to managing internal factors, the HR manager needs to consider the outside forces at play that may affect the organization. Outside forces, orexternal factors, are those things the company has no direct control over; however, they may be things that could positively or negatively impact human resources. External factors might include the following:

Globalization and offshoring

Changes to employment law

Health-care costs

Employee expectations

Diversity of the workforce

Changing demographics of the workforce

A more highly educated workforce

Layoffs and downsizing

Technology used, such as HR databases


10. Increased use of social networking to distribute information to employees

For example, the recent trend in flexible work schedules (allowing employees to set their own schedules) and telecommuting (allowing employees to work from home or a remote location for a specified period of time, such as one day per week) are external factors that have affected HR. HRM has to be aware of these outside issues, so they can develop policies that meet not only the needs of the company but also the needs of the individuals. Another example is the Patient Protection and Affordable Care Act, signed into law in 2010. Compliance with this bill has huge implications for HR. For example, a company with more
than fifty employees must provide health-care coverage or pay a penalty. Currently, it is estimated that 60

percent of employers offer health-care insurance to their employees. [3] Because health-care insurance will

be mandatory, cost concerns as well as using health benefits as a recruitment strategy are big external challenges. Any manager operating without considering outside forces will likely alienate employees, resulting in unmotivated, unhappy workers. Not understanding the external factors can also mean breaking the law, which has a concerning set of implications as well.

Figure 1.2




An understanding of key external factors is important to the successful HR professional. This allows him or her to be able to make strategic decisions based on changes in the external environment. To develop this undersnding, reading various publications is necessary.

One way managers can be aware of the outside forces is to attend conferences and read various articles on the web. For example, the website of the Society for Human Resource Management, SHRM Online, [4] not
only has job postings in the field but discusses many contemporary human resource issues that may help the manager make better decisions when it comes to people management. In Section 1.3 "Today’s HRM

Challenges", we go into more depth about some recent external issues that are affecting human resource

management roles. In Section 1.1.2 "The Role of HRM", we discuss some of the skills needed to be

successful in HRM.



Figure 1.3



Most professionals agree that there are seven main tasks HRM professionals perform. All these need to be considered in relation to external and outside forces.
KEY TAKEAWAYS


• Capital includes all resources a company uses to generate revenue. Human resources or the people

working in the organization are the most important resource.

• Human resource management is the process of employing people, training them, compensating them,

developing policies relating to the workplace, and developing strategies to retain employees.

• There are seven main responsibilities of HRM managers: staffing, setting policies,compensation and

benefits, retention, training, employment laws, and worker protection. In this book, each of these major

areas will be included in a chapter or two.

• In addition to being concerned with the seven internal aspects, HRM managers must keep up to date with

changes in the external environment that may impact their employees. The trends toward flexible

schedules and telecommuting are examples of external aspects.

• To effectively understand how the external forces might affect human resources, it is important for the HR

manager to read the HR literature, attend conferences, and utilize other ways to stay up to date with new

laws, trends, and policies.




EXERCISES


1. State arguments for and against the following statement: there are other things more valuable in an

organization besides the people who work there.

2. Of the seven tasks an HR manager does, which do you think is the most challenging? Why?






[1] Kristen B. Frasch, David Shadovitz, and Jared Shelly, “There’s No Whining in HR,” Human Resource Executive

Online, June 30, 2009, accessed September 24,

2010,http://www.hreonline.com/HRE/story.jsp?storyId=227738167.

[2] Leigh Rivenbark, “The 7 Hidden Reasons Why Employees Leave,” HR Magazine, May 2005, accessed October

10, 2010,http://findarticles.com/p/articles/mi_m3495/is_5_50/ai_n13721406.

[3] Peter Cappelli, “HR Implications of Healthcare Reform,” Human Resource Executive Online,March 29, 2010,

accessed August 18, 2011, http://www.hreonline.com/HRE/story.jsp?storyId=379096509.


ill Society for Human Resource Management, accessed August 18,

2011,http://www.shrm.org/Pages/default.aspx.