HR Management Excellence

CHR 1501

Evolution of HR and HR Planning

 Facilitator

Lecture-1 CHR 1501

 Historical Development of HRM
▪ The Craft System

▪ Industrial Revolution

▪ The Personnel Administration Movement

▪ Human Relations Movement

▪ Personnel Department

▪ Human Resource Management

Lecture-1 CHR 1501

 The Craft System

▪ The history of HRM can be traced back to England before the

Industrial Revolution, where masons, carpenters, leather workers, and
other craftsmen organized themselves into guilds.
▪ A guild (German: Gilde) is an association of craftsman in a particular
trade.
▪ The guilds were responsible for supervision of apprentice training,
production methods and quality, and working conditions.
▪ The guilds were the predecessors of trade unions.

Lesson-1 CHR 1501

 Industrial Revolution

▪ The Industrial Revolution was a period from the 18th to the 19th century where
major changes in agriculture, manufacturing, mining, transportation, and
technology.
▪ It began in the UK then subsequently spread throughout Europe, North America,
and eventually the world.
▪ Conversion of the economy from agriculture-based to industry-based.
▪ The Industrial Revolution century replaced the time-consuming hand labor with
mechanical means of production.
▪ With the rapid growth of manufacturing industry, emergence of supervisors and
managers widened the gap between the workers and owners.
▪ Strict working conditions with long hours of labor dominated by a pace set by
machines, child labor, dirty living conditions, and long working hours.

Lesson-1 CHR 1501

 Industrial Revolution

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 The Personnel Administration Movement

▪ Late 1800s, people problems were a very real concern in the workplace.
▪ For the average blue-collar worker, most jobs were low-paying, monotonous
and unsafe. Some industries experienced difficulty recruiting and retaining
employees because of the poor working conditions workers were exposed to.
▪ Concerns grew about wages, safety, child labor and 12-hour workdays.
▪ Workers began to band together in unions to protect their interests and
improve living standards.
▪ Forward-thinking employers recognized that productivity was connected to
worker satisfaction and involvement
▪ B.F. Goodrich Company was the pioneers in designing a corporate employee
department to address the concerns of the employees in 1900.

Lesson-1 CHR 1501

 The Personnel Administration Movement

Lesson-1 CHR 1501

 The Personnel Administration Movement (Cont…)

It's believed that the first Personnel Management department began at the National Cash
Register Co. (NCR) in 1902.
▪ It’s a separate department to handle employee grievances, record keeping, wage
management, training for supervisors on new laws and practices and other employee-
related functions.

▪ Many attempted to ease labor unrest by increasing wages.

▪ Ford experienced employee turnover ratios of 380 percent in 1913; in 1914, the company
doubled the daily salaries for line workers from $2.50 to $5, even though $2.50 was a fair
wage at that time.

Lesson-1 CHR 1501

 The Personnel Administration Movement (Cont…):

▪ Victorian entrepreneurs in the UK like Rowntree, Cadbury, Lever initiated

programmes providing company housing, basic health care, canteens.

▪ Business leaders still viewed the work itself as infinitely more important than the
people doing it, and production rates remained the top concern.

Lesson-1 CHR 1501

 The Personnel Administration Movement (Cont…):

▪ Fredrick Taylor’s Scientific Management introduced the

concept of ‘division of labor’ and advocated separate
responsibilities for management and workers
management’s responsibility to plan and workers’
responsibility to execute.

▪ He attempted to increase worker efficiency through

work methods, time and motion study, and job
specialization. He also argues for incentive-based
compensation systems to motivate employees

Lesson-1 CHR 1501

 Frederick W. Taylor (1856- 1915)
• founder of scientific Management
• one of the first people to study the behavior and
performance of people at work
• was a manufacturing manager
• became a consultant and taught other managers how to
apply his scientific management techniques
• believed that by increasing specialization and the
division of labor, the production process will be more
efficient.
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Will resume after 5 minutes
 Scientific Management

• The systematic study of relationships between people

and tasks for the purpose of redesigning the work
process to increase efficiency.

Lesson-1 CHR 1501

 Human Relations Movement

▪ Elton Mayo and his associates conducted several studies on worker productivity.
The studies pointed out the importance of social interaction and work group on
output and satisfaction.

▪ The human relations movement eventually became a branch in the study of

Organizational Behavior.

Lesson-1 CHR 1501

 The Hawthorne Studies were conducted from 1927-1932 at the Western
Electric Hawthorne Works in Chicago, where Harvard Business School
Professor Elton Mayo examined productivity and work conditions.

Mayo wanted to find out what effect fatigue and monotony had on job
productivity and how to control them through such variables as rest
breaks, work hours, temperatures and humidity.

Lesson-1 CHR 1501

 Personnel Department

Personnel Departments emerged in the organizations first time in the 1920s

in order to bridge the gap between the management and the workers.

▪ But early personnel departments were only concerned with the blue-collar
workers.

▪ These departments were mostly involved in recordkeeping, dealing with

union troubles, arranging farewell parties, annual picnic, etc.

▪ Greater emphasis on collective bargaining and labor relations within

personnel management. compensation and benefits administration
Lesson-1 CHR 1501
 Human Resource Management

▪ Between the 1960s and 1970s, the HRM movement gained further momentum
due to the passing of several acts like the Equal Pay Act of 1963, the Civil Rights
Act of 1964, the Employee Retirement Income Security Act of 1974 (ERISA), and
the Occupational Safety and Health Act of 1970 Income

▪ During 1970s, ‘personnel management’ gradually evolved into ‘human resource

management’ broadening its scope in the organizations.

▪ HRM function was integrated into the organizational goals and strategies. The
crucial role of HRM became gradually evident in attaining the strategic and
competitive advantage of organizations for survivals

Lesson-1 CHR 1501

 PM vs. HRM
Personnel Management:
personnel Management is that part of management concerned with people at work and
with their relationships within an enterprise.

HRM
Human Resource Management (HRM) is the philosophy, policies, procedures, and
practices related to the management of people within an organization. – Wendell French.
HRM is the process of acquiring, training, appraising, and compensating employees ,
and attending to their labor relations, health and safety, and fairness concerns.- Gary
Dessler
A strategic approach to managing employment relations which emphasizes leveraging
people’s capabilities is critical to achieving sustainable competitive advantage, this being
achieved through a distinctive set of integrated employment policies, programs and
practices. (Bratton & Gold)

Lesson-1 CHR 1501

 Basic Concepts…
Old assumptions (PM) New assumptions (HRM)
Reactive piecemeal interventions in response Proactive, system-wide interventions, with
to specific problems. emphasis on fit, linking HRM with strategic
planning and cultural change
People are a variable cost People are social capital, capable of development
Self interest dominates, conflict between Co-incidence of interest between stakeholders can
stakeholders be developed
Seeks power advantages for bargaining and Seeks power equalization for trust and
confrontation collaboration

Control of information flow to enhance Open channels of communication to build trust,

efficiency, power commitment
Relationship orientation Goal orientation
Control from the top Participation and informed choice
 What is HRM?
Human resource management is the function performed in organizations
that facilitate the most effective use of people to achieve organization or
individual goal.

Competitive Challenges Facing HRM Emerging Employee Issues in HRM

• Globalization • Diversity of background

• Technology • Age distribution
• Change management • Gender issues
• Development of human capital • Education levels
• Market responsiveness • Employee rights
• Cost containment • Privacy issues
• Attitude towards work
• Family concerns
 HRM Today
HRM Model
The scope of HRM today has been defined
by a model developed by ASTD (American
Society for Training and Development):
•Training and development
•Organization development
•Organization/Job design
•Human resource planning
•Selection and staffing
•Personnel research and information systems
•Compensation/Benefit
•Employee assistance
•Union/Labor relations

Lesson-1 CHR 1501

 HRM Today

HRM Model
The model suggests that these nine areas
have impacts on three human resources
outputs:

• Quality of work life

• Productivity
• Readiness for change

Lesson-1 CHR 1501

 HR Planning

The process by which an organization ensures that it has the right

number and kinds of people, at the right places, at the right time,
capable of effectively and efficiently completing those tasks that will
help the organization achieve its overall objectives.

The process by which an organization assesses the future supply of

and demand for human resources.

Lesson-1 CHR 1501

 HR Planning Process
Development of Plans for Action
• After analyzing the demand for and the supply of future human
resources, these two forecasts are compared to determine the
courses of action.
• The discrepancy between the demand and supply forecasts
may lead to two situations:
► Shortage of human resources
► Surplus of human resources
Development of Plans for Action

• Shortage of Human Resources: the options

open for an organization in order to fill up
the shortage include:
▪ Overtime
▪ Recruitment and recall
▪ Temporary employment
▪ Outsourcing
Development of Plans for Action
Surplus of Human Resources: the options open for an
organization to deal with the surplus employees include:
▪ Demotion and transfer
▪ Early retirement
▪ Layoff and termination
▪ Attrition
▪ Downsizing
 Job Analysis
Job
A job is a type of position held by a person within an organization.

Job Analysis

The process of systematic analysis of a job in order to determine the

task, duties, and responsibilities of the job and the knowledge, skills,
and abilities required to perform the job. The outputs of a job analysis
include:
► Job description
► Job specification
Job Description

The list of tasks, duties, and responsibilities of a job.

▪ Task: a task is a distinct work activity
carried out for a distinct purpose.
▪ Duty: a duty is a number of tasks.

▪ Responsibility: an obligation to perform

certain tasks.
Job Specification
The list of knowledge, skills, abilities, and other characteristics that an individual
must have to perform a job.
•Knowledge: an organized body of information,
usually of a factual or procedural nature applied directly to the performance of
a task.

•Ability: a demonstrated competence to perform

an observable behavior or a behavior that results
in an observable output.
Job Specification
•Skill: a competence to perform a learned, psychomotor act,
and may include a manual, verbal, or mental manipulation of
data, people, or things.

•Other Characteristics: the personality factors (attitudes),

aptitudes, or physical or mental traits needed to perform the
job
 Job Analysis

Job Analysis Methods

• Observation Method
• Interview Method
• Questionnaire Method
•Diary/Logbook Method
• Most commonly used method
– very adaptable
• Usually conducted with
– job incumbents
– technical experts
– supervisors
• Questions like:
– what are your most typical duties?
– How long do they take?
– How do you do them?
• Con: people may misrepresent/exaggerate job
• method is most useful for comparing
jobs
• very commonly used (esp. with
interviews)
• Unobtrusive method
– camera; video; audio
• Excellent for understanding and appreciating conditions
under which job is performed
• Allows analyst to experience aspects of job that worker
may not be aware of
• Not as good for understanding why behaviors do/do not
occur
• Worker makes systematic entries in book outlining
activities
• May be useful for jobs that are difficult to observe
• But, not commonly used
• Reduce Role Conflict and Ambiguity
– reduce discrepancy between what organization thinks job is and
what job is in reality
• Design and Evaluation of Training
– focus training on most difficult and/or most frequent elements of
job
• Performance Appraisal
– criteria for appraisal should be matched with most important
elements of job
 Job Evaluation

▪ What is Job Evaluation?

• Job evaluation is a systematic process of deter mining the
value of each job in relation to other jobs in the organization
in order to determine which jobs should be paid more than
others.
▪ Job Evaluation Methods
• Job ranking
• Job classification
• Point method
• Factor comparison
▪ Job Ranking
• Job ranking involves arranging all jobs in an organization in a simple
rank order – from the simplest to the most difficult.
• Qualitative in nature.
• This method is suitable for small and simple
organizations having less number of jobs.
• But not suitable for big and complex organi-
zations having a large number of jobs.
• Subjectivity and lack of definite or consistent
standard is another limitation.
▪ Job Classification
• Job classification is the process grouping jobs into different grades or
classes on the basis of differences in skills, duties, responsibilities,
knowledge, working conditions and other job- related factors. Then those
grades of jobs are ranked by levels of difficulty or sophistication.
• Qualitative in nature.
• This method is quick, simple, and cheap. It is
also easy to understand and communicate.
• But it may lead to inappropriate grouping of
some jobs and consequent feeling of inequity.
Point Method
• Point method involves breaking down jobs on the basis of certain
identifiable criteria (such as skill, effort, responsibilities, etc) and then
allocating points or weights to each of these criteria as per their
importance. The points of each job are then added and jobs with similar
point-totals are placed in similar pay grades.
• Quantitative in nature.
• This method is the most consistent one with
least rating errors.
• But it is complex, costly and time-consuming.
▪ Factor Comparison Method
• This method involves identifying certain key jobs in the organization and then
comparing them by using a universal five-factor (that is, skills, responsibilities,
physical effort, mental effort, and working conditions) scale. A base rate is decided
for each of the key jobs which is then allocated among the five criteria.
• Quantitative in nature.
• It is a step-by-step systematic method which
can be tailored to meet specific needs of each
organization.
• But this method is also complex, costly and
time-consuming.