Chapter 10:

HUMAN RESOURCE PLAN IN NEW

AND SMALL ENTERPRISES

Trần Minh Thu PhD

Email: [email protected]
 PREPARED FOR THE HR PLAN
1. Determination of human needs
2. Determination organizational structure
3. Identify the key management team
 I. DETERMINATION OF HUMAN NEEDS

Businesses should answer the following questions:

• How many people do businesses need?
• What knowledge will they need?
• Where will the enterprise recruit the necessary human
resources?
• How will the business recruit them?
• Have they been trained yet? If not, how will the business
train them?
• The cost of that workforce AT the present and in the
future?
 II. DETERMINATION
ORGANIZATIONAL STRUCTURE
1. Process of determination of organizational
structure
Step1. Determine the strategic goals of the
business plan
Step2. Identify the necessary functional
activities
Step3. Divide the organization into parts
Step4. Determine the relationship between
 II. DETERMINATION
ORGANIZATIONAL STRUCTURE
Decisions related to organizational structure
• How to divide work and group into divisions
• Establish authority and responsibility
• Coordination and cooperation between divisions
• Concentration and decentralization
• Reporting system
 II. DETERMINATION
ORGANIZATIONAL STRUCTURE
2. Organizational models
•Traditional models
– simple structure
– functional structure
– divisional structure
•Modern models
– team-based structure
– Project and matrix structure
2.1. Simple structure
•Characteristic: low level of division, wide control,
centralized authority, low level of formalization
•Advantages and limitations:
(+) Fast, flexible and low cost
(+) Clear responsibilities
(-) does not apply to medium-sized or large organizations
(-) risk due to dependence on a person
•Appropriate Scale: Small Business
2.2. Functional structure
• Characteristic :
- Similar or related professional work is grouped into departments
- Main functions: Manufacturing, Finance / Accounting, Marketing,
Human Resources, Research and Development
• Advantages and limitations:
(+) Cost savings through specialization
(+) Achieve economies of scale, minimize overlap
(+) Staff feel more comfortable
(-) The parts do not stick to the organization's objectives
(-) Difficult to develop senior administrators
• Appropriate scale: medium-sized enterprises
2.2. Functional structure
Director

Human resource Production

Sale manager Chief accountant
manager manager

Material supply

Manufacture of
products

Quality
inspection
 2.3. Divisional structure
•Characteristic : Division divisions revolve around product,
customer or geographical area
•The head of each subdivision is a director responsible for
operating and exercising strategic and operational decision-
making rights.
•Role of the headquarters: monitoring, coordinating and
controlling subdivisions, providing support services
•Advantages and limitations
(+) Focus on results
(-) duplicate functions and resources
2.3. Divisional structure
• Organizational structure by product

General Manager

CFO
Human resource manager
Marketing manager

Director of software Director of Director of computer Director of

production program communication program production program communication program
2.3. Divisional structure
• Organizational structure by geographical area
General
manager IN
TOKYO

Deputy director Deputy director Deputy director

Deputy CFO
of HR of marketing of R&D
2.4. Team-based structure

•Characteristic :The entire organization is built on the

foundation of the group
•Groups are decentralized and accountable for all activities
and results within the group
•Advantages: Helps organizations simultaneously achieve
performance goals and flexibility
 2.5. Project and matrix structure
•Matrix structure
- ... specialists from different functional divisions are
assigned on one or several projects
... project director, functional director and staff?
Advantages and limitations
(+) Flexible, highly adaptable
(-) violates the principle of unity of command
• Project structure
– Employees are assigned permanent jobs in projects
– There are no functional departments
2.5. Project and matrix structure
4. Span of Control
• Span of control refers to the number of subordinate
employees that an administrator can manage effectively
and efficiently.
• There are management levels in the organization because
of the Span of the control. Broader control would require
less levels of managers, and narrower control would lead to
more levels of managers.
• It is necessary to decide how many subordinates can be
directly controlled by each manager, and this number is
very different for different organizations.
• In recent years, the trend has been toward the broader
control.
4. Span of Control
• Factors affecting the Span of control:
✓ Skills and competencies of the manager:
➢ The Span of control and the level of executives are
proportional (other constant factors).
➢ The Span of control and clarity in defining tasks, powers
and responsibilities is proportional.
➢ The style of the administrator: democracy, freedom or
autocracy.
✓ The complexity of governance activities and the scope of
control are inversely proportional.
4. Span of Control
✓Level and sense of respect, obey the orders of
subordinates with the scope of control is proportional.
✓Characteristics of assigned work:
- The similarity of the work.
- The complexity of the work.
- The level of familiarity with the work of subordinates.
- Level of standardization of processes / work.
✓The level of modernity of the organization's information
system.
✓Organizational culture.
5. Concentration / Concentration and delegation, authorization
5.1. Centralization and decentralization
• Concept
✓ Authority in organization is the degree of independence for each person by giving
them decision-making rights.
✓ Tập trung (centralisation): An organization in which all decision-making power is
focused on the highest level manager of organization.
✓ Phân quyền (decentralisationThe tendency to disperse decision-making power to
lower levels of manager in the hierarchy.
✓ The content of decentralization and centralization is relative (1 organization never
be centralized or decentralized completely). Some of the work is focused on
centralization such as payroll, purchasing and personnel policies, and many other
tasks that are more devoted to decentralization such as production and marketing.
5.1. Centralization and decentralization
Factors affecting centralization and decentralization:

Centralization Decentralization

- Stable environment - Complex and uncertain environment

- Lower level managers lack the capacity - The lower level administrator has the
and experience to make the decision as capacity and experience to make
senior executives. decisions.
- Important decisions - A lower level administrator wants to
have a say in decisions
- Decisions are relatively less important
5.1. Centralization and decentralization

Centralization Decentralization

- Organization is facing crisis or risk of - Open corporate culture allows

bankruptcy executives to engage in what is
- Large scale enterprises happening.
- The effectiveness of the company's - Geographically dispersed businesses
strategies is dependent on the ability of - Effective implementation of the
executives to decide what happens. company's strategies depends on the
involvement of the management and the
flexibility in making decisions.
5.1. Centralization and decentralization
Advantages of decentralization:
– Top managers have more time to develop general plans and
strategies for the organization.
– Being given more important jobs should help develop the
cognitive skills of lower - level managers.
– Lower-level managers are more specific about the situation
than top managers, so they know the facts better and can
make decisions that are more relevant, faster, and therefore,
they can work more effectively.
– The distribution of power foster enthusiasm and reduce the
pressure of achievement among managers.
5.2. Authorization
• Authorization in delegation: the superior's behavior gives
some subordinates the authority to do certain things on their
behalf.
• Authorization process:
- Determine desired results.
- Select people and assign tasks.
- Assign authority to perform those tasks.
- Requires the authorized person to be responsible.
- Employees and managers must maintain contact with each
other throughout the work process.
- Monitoring and evaluation..
5.2. Authorization
• Principle of authorization:
➢ The superiors delegate authority to the immediate
subordinates without being exceeded.
➢ Authorization does not lose or diminish the responsibility of
the authorized person.
➢ The principle requires the correspondence between
obligations, rights and responsibilities
➢ The contents and boundaries of the mandated task must be
clearly defined
➢ Authorization must be self-imposed, not imposed
➢ Authorized person must have sufficient information before
embarking on the job.
➢ There is always a check in the process of performing the
authorization
6. Formalization
Formalization represents the level of work in the organization
that is standardized and the implementer must follow the
rules and procedures.
If a highly formalized job is performed, the person who
performs it will have a minimum level of control over what
is being done (when the job is done and how it is done) ->
clear public description, many of the organizational
regulations and procedures are clearly defined for work
processes.
In organizations where low levels of formalism, the way the job
is handled is not clearly structured and employees are freer to
handle work.
The level of formalization can vary widely between
organizations and even within the organization.
 FORMAL HRM PLAN
• Job analysis
• HR planning- organizational structure
• Recruitment and selection
• Training and development
• Performance appraisal
• Compensation
• Employees relationship management