HRM - Lec 03

Human Resource
Management (HRM)
Cluster 01
Introduction to HRM
Lecture 03 - Introduction to
HRM
The Nature and scope of HRM/ Intro to HRM
▪ Definitions of HRM
▪ Main functions and activities of HRM
▪ The ‘Best Fit’ approach vs ‘Best Practice’
▪ The hard and soft models of HRM
▪ Workforce planning
▪ Types of labour market, labour market trends
and PESTLE
4
The Nature and scope of HRM
▪ The internal labour market

▪ Analysing turnover, stability and retention
▪ The impact of legal and regulatory frameworks
▪ The impact that advances in technology have had
upon improving the efficiency of HR practices
5
Labour market trends/changes
Labour demand Labour supply

(the number and Labour
(the number and
type of available Market
type of available
jobs) workers)
6
Labour market trends/changes
Labour market supply Labour market demand
▪ Changing societal attitudes to work ▪ Changes to the external
and education business environment
▪ Economic conditions (regional, ▪ Changes in the internal business
national and international)
environment
▪ Changing demography
▪ Changing communication and
production technologies
7
Labour market trends/change
▪ Government policy – Both national ▪ Changes in the political context
and international (e.g. European
Union)
▪ Economic restructuring
▫ Employment regulation
▫ Level and target of investment in ▪ Changing skills requirement
education and training ▪ Regional, national and
▫ Industrial policy
international economic
▫ Wider social policy
conditions – Inflation, level of
unemployment and interest rates
8
Case-Study: Labour Market
trends/changes
9
Factors affecting labour market changes - PESTLE
▪ PESTLE analysis is an environmental scanning tool

▪ It covers the factors:
10
▪ In context of labour markets, PESTLE will be used to
understand the impact of these factors on labour market
trends/changes
11
• Government Policy
Political • Employment Regulation
• Immigration policies
• Level of unemployment
• Interest rates, inflation and exchange rates and their
Economic impact on the cost of living
• Household income
• Labor availability and cost
• Demographic shifts in age
Social •
•
•
Consumer tastes
Education and skills profiles
Values
12
• Automation
Technological • Changing skill requirement
• Health and Safety Law

Legal • Employment Law
• Increased interest in environmental impact

• Need for innovative technology and
Environmental practices to decrease use of resources or
environmental impact
13
Labour turnover, stability and retention
Employee Turnover
▪ Employee turnover occurs when employees leave an
organization
▪ Reasons for leaving are generally classified as:
▫ Voluntary
▫ Involuntary
15
Employee Turnover
▪ The percentage of workforce that leaves an organization
within a given period (usually a year)
Employee turnover rate = No. of employees leaving during a period X 100

Average no. of employees in that period
16
Activity – Turnover rate
Early risers is a manufacturer of breakfast cereals. In

last 12 months it has employed an average of 80 staff.
During the same period the business has recruited 12
staff to replace the 15 that left. What is the employee
turnover rate?
Employee turnover rate = No. of employees leaving during a period X 100

Average no. of employees in that period
17
Impact of Turnover
Turnover has a variety of consequences on the organization,
such as:
▪ It negates the time, effort, and monetary investment it takes
to fill an open position
▪ It results in lost training time and lost knowledge and skills
▪ Increased work pressure on the remaining staff
▪ It negatively impacts employee morale & productivity
18
Impact of Turnover
▪ Harder to maintain required standards of quality and

customer service
▪ It results in additional time required to rehire and retrain
▪ Consequently, higher turnover rates negatively impact the
productivity and business performance
19
Labour Retention
▪ Employee retention, a set of actions designed to keep good
employees once they have been hired
▪ Retention is the ability to keep talented employees in the

organization. Organizations aspire to keep high performers
and to exit the low performers.
20
Labour Retention
▪ A comprehensive employee retention program can play an
important role in both attracting and retaining key
employees as well as in reducing turnover and its related
costs
Retention rate =
No. of employees who remain employed for entire measurement period X100
No. of employees at start of measurement period 21
Factors contributing to Labour Retention

▪ Organization’s branding and recruitment efforts
▪ Assessing qualified applicants for cultural fit during the
selection process
▪ Offering competitive compensation and benefits
▪ Realistic job previews in the selection process
22
Factors contributing to Labour Retention

▪ Performance management system (leads to development
and reward)
▪ The quality of the employer-employee relationship
▪ Opportunities for development and advancement e.g. tuition
reimbursement programs
▪ Employee well-being through e.g. work/life balance 23
Case Study: Labour Retention
24
Upcoming Lesson
▪ The impact of legal and regulatory

frameworks
▪ The impact that advances in technology
have had upon improving the efficiency
of HR practices
25
Thanks!
Any questions?
You can find me at:
▪ [email protected]
k
26

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Human Resource

▪ The internal labour market

Labour demand Labour supply

▪ PESTLE analysis is an environmental scanning tool

• Demographic shifts in age

• Health and Safety Law

• Increased interest in environmental impact

Employee turnover rate = No. of employees leaving during a period X 100

Early risers is a manufacturer of breakfast cereals. In

Employee turnover rate = No. of employees leaving during a period X 100

▪ Harder to maintain required standards of quality and

▪ Retention is the ability to keep talented employees in the

Factors contributing to Labour Retention

Factors contributing to Labour Retention

▪ The impact of legal and regulatory

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